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2011 UK House Prices Predicted To Decrease Seven Percent

by Jim ONeil on December 23, 2010

in uk loans news

Economists are predicting that home prices in the UK will decline by seven percent during 2011 due to the continued mortgage freeze. During the past year, mortgage lending sharply decreased because buyers were unable to locate affordable deals.

Economists say that the low, but stabilizing activity within the housing market indicates that housing prices will trend down, rather than crashing.

In 2010, mortgage lending dropped by ten percent to £135 billion and lenders continue their stringent lending restrictions. They are gun-shy due to increasing unemployment and the fear that borrowers may default on mortgage loan repayments. Mortgage advances during 2011 should remain unchanged. November house purchase advances reported on the Trends in Lending report from the Bank of England reflect a meager £5.6 billion.

During November, just 45,000 mortgages were approved for UK home purchases by major banks, according to the Bank of England. This figure is a slight increase from the 44,000 approvals made during each of September and October. However, it is 26 percent lower than the figure of November 2009.

Overall, economists say that by the end of 2011, housing prices will be ten percent lower than the peak 2010 levels. Since prices have already fallen by about three percent during recent months, they believe prices will decrease by an additional seven percent during 2011. What will greatly affect this figure is the number of additional homes put up for sale, availability of mortgages, and job and economic conditions.

The Council of Mortgage lenders reported a November lending figure of £11.1 billion, a five percent decrease from October. Year over year changes reflect 2009 market distortion due to expiration of the federal stamp duty holiday. This resulted in people purchasing properties with sale prices of up to £175,000 to rush through the sales process before the end of that year.


to include the middle 80%,
it has to be 40% on either side of the mean

looking up a z- table, the z- values are – 1.2816 & + 1.2816

thus the max price = 145,500 + 1.2816*1500 = 147,422

& the min price = 145,00 – 1.2816*1500 =143,578

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