Fitch’s house price predictions: more crash and correction to come

The house price outlook for the eurozone, says ratings agency Fitch, is continued crash on the periphery and continued correction in most core countries

That means price falls of 15-20% in the worst hit countries – Ireland, Spain and Greece – and falls of around 13% in Italy and Portugal.

The correction will be midler elsehwere – no more than 10% in the UK, France, Belgium, and the Netherlands.

On the global front, Fitch‘s most favourable house price  outlooks are for Germany, Australia and the US. For Germany,  the outlook is positive for the short-to- medium  term after almost two decades of stagnation.

For the US, where  house prices are stabilising after five years of sharp falls, Fitch  assumes a minor further correction towards a sustainable house  price level over the next few years, although with significant  regional differences. Australian home prices are expected to  remain stable.


UK forecast

In its discussion of the UK housing market, the report notes that the need for  more than  200,000 additional  houses annually over the next two decades, far exceeding build rates, will support prices:

 Undersupply is concentrated in the South East. This imbalance has  meant that while headline house prices have remained broadly stable since the latter part of 2009, the London and South East regions are approaching pre-crisis highs, while the rest of the UK market remains  around 12% off the peaks experienced in 2007.

Fitch expects regional imbalances to continue to exacerbate historic  regional house price disparities.  Overall house prices are likely to  move sideways or slightly downwards  in 2013, masking a continued  regional divergence. The agency’s cautious base case scenario foresees house prices dropping by 10% over the medium term.

1 Comment

Leave a Reply


%d bloggers like this: