LONDON, Nov 14 (Reuters) - Prime central London house prices
will fall 30 percent from peak 2007 levels before mounting a
recovery in 2010 as economic sentiment and job security in the
UK capital plunges, consultant Savills
In a bearish revision on earlier estimates, Savills said London's prime house prices would fall 5 percent further than the 25 percent falls forecast for the UK as a whole because of the capital's dependency on a thriving financial sector.
Currently, prime London residential values are 12 percent down year-on-year and expected to be 20 percent down by the year's end, with a further 10 percent fall seen in 2009, Savills said.
This sharper than anticipated fall could indicate a U-shaped recovery for prime central London, and not the V-shaped recovery seen in past downturns, but if the outlook for jobs fails to improve, a longer and deeper UK housing market depression could unfold.
"There are risks to this forecast, particularly if City-based job losses exceed 10 percent, which would give a worst case scenario that would see prime central London values fall by up to 35 percent from peak," Savills said.
"Currently, the turning point in prime central London is anticipated in mid 2010, but the effect of a fall of this magnitude would be to push this back, thus delaying the ripple effect nationwide recovery by six to nine months."
The mainstream UK residential market is forecast to fall a total of 16 percent by the year end, taking average values from 182,080 pounds ($269,500) at their peak in December 2007 to 152,947 pounds by December 2008. Further falls of 11 percent are forecast for 2009, taking average values down to 136,123 pounds, with recovery to peak levels across all regions reached by 2018.
(Reporting by Sinead Cruise)
(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)