House prices in the UK are set to decline on average 13-15% during 2009, according to Jones Lang LaSalle's latest Residential Market Forecast, with the North West expected to fare better than London.
The forecast also predicts that prices will fall by a further 1-3% in 2010, with the bottom of the market due to be Quarter 3 or Quarter 4 of that year before recovering by 4-6% in 2011.
Ian Thomlinson, head of Jones Lang LaSalle's residential development and investment team in Manchester, commented: "Regionally, we expect the North West market to hold up better than London and the South East, primarily because housing is more affordable and the employment base is more diverse and less exposed to the financial sector.
"Although the headline rates of price reductions will be skewed by a high proportion of distressed city centre sales in Liverpool and Manchester, we still envisage a reasonably robust market for traditional housing stock in good locations. We forecast average house price falls of 12-14% in the North West against falls of 14-20% in Greater London and the South East by the end of 2009."
He added: "There are some signs that the UK housing 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."
Thomlinson concluded: "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."