National House prices set to 'fall in the short term'

Since the summer property prices have seen a small decline and the building society does not expect the fall in house prices to be as dramatic as it was in 2008. This is because of the current low interest rate, which should curb mortgage arrears and repossessions.

The Building Society have released its interim results that show a profit of £259 million and that the value of its bad debts were reduced by 44 per cent to £179 million, with only 0.67 per cent of residential mortgages in arrears, less than one third of the industry average.

Gross mortgage lending in October confirmed that demand for new mortgages is low. The total was an estimated £12.4 billion, the same as September, but down nine per cent from October 2009.

The Council of Mortgage Lenders commented on their finding, they said: "The month-on-month annual comparison is likely to continue to decrease a little in the coming months, because underlying lending volumes rose sharply in the latter part of 2009 as borrowers rushed to take advantage of the stamp duty concession before the end of the year.

Everyone seems to have their own opinion on the future of the housing market and house prices. The figures released by the Building Society indicate that there will be a substantial decline in the number of buyers actively looking to purchase properties nationwide, which in turn could put further downward pressure on house prices. While other economists expect the market to stagnate until mortgage availability improves, thus lending to the first time home buyers and the overall economy outlook looks brighter. Only time will tell.......