what's the likelihood of house price falls?
Nov 03, 2006
A new report from accountancy firm Pricewaterhousecoopers claims that the risk of house prices falling between now and 2010 could be as high as 33 per cent.
Even though the UK housing market is relatively strong, potential home buyers and investors should not underestimate its volatility in the medium-term, the report said. When the relationship between house prices and earnings is taken into consideration, the likelihood of a house price fall nearly doubles, making a fall more likely than not.
However, a separate 'optimistic' forecast by the company puts the chances of a house price fall before 2010 as only six per cent. When it comes to a longer-term view, the company predicts a rosier figure for the housing market, claiming that there is an 87 per cent chance that house prices in 2020 will be higher than they are today, after inflation is taken into account.
Its main scenario suggests that house prices could be 20 to 40 per cent higher in 2020 than they are today.
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