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Forecasting House Prices - By Geoff Marsh

The Times (Bricks and Mortar)

FORECASTING house prices is an unsavoury business at the best of times, which these are not.  From an ethical standpoint, the incessant spotlight on house prices might seem tasteless given the millions made homeless by the tsumnami.  From a technical viewpoint, the governor of the Bank of England has stated that he cannot forecast house prices with any reliability, which does not stop a "squabble" of economists.  Genuine experts and motley soothesayers have a go.  Thus I can confidently predict that you will read that prices in 2005 will go up, stay the same or go down.  As far as London goes, my bet for 2005, and I say "bet" deliberately, is that prices will start to rise in the seccond half.  Why do I think this? First, prices in some of the trendier area's have been slow or stagnant for five years and as a result have become affordable.  Second corporate confidence is rising amoung London's biggest employers, which in turn will help confidence return to the housing market.  The January market overview jus published by Hurford Salvi Carr, a central London firm of agents , explodes the poplar myth that London house prices have boomed in recent years.  Its report states that "average prices in the city and Docklands, along with the rest of Central London, are now only 12 per cent higher than at the end of 1999".  In other words, the central London Bubble has long since given way to a soft landing.

All this means that staff in the glittering sectors of finance, law and media can look forward to better job security, rising pay and fancy perks.  The fundamentals are looking good for central London residential property, so forecasters will still have an eagar audience.