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Double dip in house prices ‘unlikely’: Assetz

by: Mortgage Solutions
  • 15/10/2009
  • 0
A double dip in house prices is extremely unlikely as the market will strength over the next few years, according to investment specialist Assetz.

The firm said the widespread ideas over the causes of house price falls are misplaced. It said future interest rate rises will not trigger a rise in forced sales because the bank base rate will remain low for the foreseeable future.

While many in the market have predicted there will be more distressed sales due to rising unemployment, Assetz said the private sector has reached the end of its job reduction phase.

There will also not be a sudden rush of stock availability which could push down prices because sellers will only gradually return to the market. New home building is set to remain subdued for the foreseeable future, which will further reduce the prospect of the market being flooded with property.

Stuart Law, chief executive of Assetz, also said lenders will be under severe pressure to reduce margins and bring in more competitive deals once the main house price indices start showing positive annual growth.

He explained: “As soon as lenders are confident that the housing market is making a sustained recovery and the risks are diminishing, they will move to offer more attractive products to borrowers. I expect this to happen within three months of the major house price indices moving into positive growth, which means improving lending terms in the first quarter of next year.”

 

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