(LONDON) UK homeowners should brace for an additional 20 per cent drop in the average value of their homes in 2009 as a vicious recession threatens to slash tumbling prices even further, data from the property derivatives market shows.
According to the latest swap pricing, average UK house prices are expected to fall by almost 30 per cent between December 2008 and December 2010, indicating that the worst of Britain's housing slump is far from over. The projected 2009 fall is almost double the forecasts for UK house price depreciation from the Royal Institution of Chartered Surveyors (RICS), and house price index (HPI) compilers Rightmove and Hometrack.
Average UK house prices, as measured by the non-seasonally adjusted Halifax house price index, have already sunk to £162,848 (S$351,360) in November from a peak of £201,081 in August 2007.
Halifax posted an 18.9 per cent fall in UK house prices in 2008, while rival Nationwide recorded a 15.9 per cent fall over the same period. Both groups originally predicted static house prices in 2008 and have declined to make a 2009 forecast.
Above are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax house price index derivatives.
The young and relatively illiquid over-the-counter market provides investors with an opportunity to increase or hedge exposure to the UK housing market synthetically - in a cheaper and more efficient way than buying or selling bricks and mortar.
The table is based on indicative HPI swaps mid-price data provided by interbank brokers Tradition Property, CB Richard Ellis-GFI and Tullett Prebon, and is made up of simple averages. -- Reuters
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