HOUSE PRICES are set to fall in 2012 as unemployment rises and household income stays depressed, according to yesterday’s forecasts from the Council of Mortgage Lenders (CML) and today’s LSL house price index and e.surv mortgage monitor.
The weak economic outlook is also set to push up repossessions as more borrowers fail to keep up with mortgage repayments.
CML forecasts predict a rise in repossessions from 36,200 in 2011 to 45,000 in 2012 and a jump in the number of mortgages in arrears of 2.5 per cent or more from 159,400 last year to 180,000 by the end of this year.
“Worsening unemployment and continuing pressures on the cost of living seem likely to result in some further deterioration in the position of households in 2012,” the Council reported.
Weak demand has also pushed down prices a further 0.2 per cent in January, LSL Property Services’ index showed today, taking the annual decline to 1.4 per cent.
London prices rose three per cent on the year, buoyed by foreign buyers seeking a safe location in which to invest.
Transaction volumes rose 5.1 per cent year on year, the index showed, as mortgage finance increased in availability.
According to the e.surv mortgage monitor, also out today, 58,610 loans were approved for house purchases in January – the highest level since December 2009 and a 29 per cent increase on the year.
The jump was driven by larger numbers of low-deposit buyers being offered mortgages, helping first-time buyers get onto the property ladder, the surveyors said.