The forecast also predicts that prices will fall by a further 1-3% in 2010, with the bottom of the market due to be Q3 or Q4 of that year before recovering by 4-6% in 2011. During 2012 and 2013 Jones Lang LaSalle expects growth to accelerate by a further 8-10%, while peak Q3 2007 levels will not recover until the end of 2015.
James Thomas, Head of Jones Lang LaSalle's Residential Investment team, commented: "There are however some signs that the market is improving, with the Halifax reporting that prices rose in January and with the RICS claiming that buyer enquiries are increasing. The cut in interest rates and the consequential benefit for affordability will also have played their part in improving perceived market conditions.
However we do not believe these traits will be sustained or sufficiently outweigh the increasing burden of higher unemployment, the greater financial caution by consumers, the difficulties in borrowing and the inevitable increase in housing availability.
During 2009 prime central London prices are expected to be hit sharply with declines of between 16-20%. The first half of the year will prove particularly weak as annual price falls approach 25%, however declines will start to ease towards the end of the year. Greater London witnessed among the highest falls in price across the UK during Q4 2008 (6% compared to the 5.1% average) and they will continue to decline faster during 2009, with annual falls of up to 17%. However, during 2010 house prices will start to rise again from Q3 in both prime central and greater London, and by the year end could increase by 2%.
James Thomas concluded: "We had already built in a very weak housing market in 2009 but the deeper recession this year than previously anticipated does not imply that the housing market will be overly sensitive and fall at an even faster rate. We maintain our view that the housing market's biggest hit will have been 2008 rather than 2009, both in terms of price falls and turnover. However, we still expect 2009 to be a very poor and troublesome one for the UK housing market. On a more positive note, the three monthly trend in house price falls has already begun to ease and when this becomes a more established trend over the next few months it should signal that the bottom of the market is in sight."
