It seems that almost every analyst, lender and agent warns that while top homes in London and the country may hold their value, most others will experience 2010 price falls of up to 10 per cent.
There will be relatively few sales, too. Top-end purchasers are likely to sit tight until after the May election and some deals, mainly in central London, may collapse if they were relying on City bonuses that are now being taxed or scrapped. "The attack on high-value bonuses has the potential to hit that sector of the housing market hard, at least in the short term," says Ray Boulger of mortgage broker John Charcol.
At the other end of the scale, the typical first-time buyer, who already has to find a 20 per cent deposit for a home, must now secure an extra £500 thanks to the end of the stamp duty holiday on January 1. In the past year, 132,500 purchasers – more than a quarter of all transactions – took advantage of the break, and most were first timers.
The rest of us, those who buy homes priced £250,000 to £750,000, may well be unlikely to feel like moving, what with a deteriorating economy, growing unemployment, rising taxes, falling public spending and possibly interest-rate rises.
These middle-ranking properties face 10 per cent falls in value next year, easily wiping out their 2009 gains, according to business consultancy Capital Economics.
"Our hunch is that considerable job losses are in the pipeline," warns Capital Economics spokesman Ed Stansfield. "But even if we're wrong and the recovery turns out to be stronger than we expect, the housing market looks vulnerable to the increase in interest rates that would be triggered by a strong recovery."
The reintroduction of full VAT at 17.5 per cent may have an effect. Everything from conveyancing fees and estate agents' charges to the hire of removals firms will rise in cost from next week. Peter Bolton King of the National Association of Estate Agents says: "There's a danger that the property slump that hit thousands of families hard over the past 12 months will hit thousands more, harder, in the year ahead."
Yet it may not be all dreadful. There will be significant regional variations according to the research and Bournemouth itself may not be as hard hit.
07/01/2010
