The outlook of the UK housing market for 2009 is looking grim, with property sales expected to remain low and losses to the industry players keep mounting.
The Council of Mortgage Lenders (CML) in the UK has predicted lesser activities in the UK housing market for 2009. Homes sales are expected to slump below 50% of 2007 level, as reported by Scotsman.
The volume of housing transactions is anticipated to have dropped to 700,000 from 900,000 in 2008 and 1.6 Million in 2007. CML expects gross mortgage lending to be around £145 Billion in 2009.
The Royal Institution of Chartered Surveyors (RICS) released the findings of a survey showing that per estate agency sales in terms of number during September-November 2008 slashed to 10.6, while they stood at 10.9 in the month of October 2008.
The UK financial market is facing stiff credit crunch; as a result, home sales in the country fell drastically. Banks have tightened their lending conditions which are making accessing loans hard nut to crack for home buyers.
Moreover, companies are resorting to layoffs to offset their operational cost, resulting in the downfall of the UK housing industry. The ongoing economic slowdown is also making a large number of people unemployed, translating into low consumer purchasing power. Hence, people are not investing in the real estate sector.
Although the prices of properties are falling, sales continue to decline primarily due to less liquidity in the credit market. The crunch has significantly reduced the home prices. Home prices are likely to continue to fall this year also by nearly 10% on average and 3% in the following year (2010).
Industry experts also revealed that the demand for property is falling due to the inaccessibility of mortgage finance. Bank of England and the UK government have poured in hundreds of billions of pounds in the credit market, but no signs of easing have appeared yet.
According to a Research Analyst at RNCOS, “The UK economy is badly hit by the continuous downfall in the housing market. Despite fall in prices of properties, the sales are plummeting, not a good sign for industry players. Moreover, it is likely that home prices will continue to fall this year; consequently, the industry players will have to bear loss for some more time.”
