Regional National 2017 property crash would see £399 a week wiped off UK property values 2017 property crash would see 399 a week wiped off UK property values
While the Royal Institution of Chartered Surveyors (RICS) has forecast that house prices in the UK will rise by around 3 per cent this year, a Times survey of leading economists has predicted that 2017 could be the year the London property bubble finally bursts, almost a decade on from the last market crash
This has led online estate agent eMoov.co.uk to investigate the impact any market crash could have on current property prices across the UK. During the 2007/8 crash, it wasn’t just London that saw property prices plummet, but the whole of the country.“Although the UK property market as a whole is faring very well, there are signs that the London market, particularly the prime central end, is running out of steam heading into 2017,” said Russell Quirk, founder and CEO of eMoov.co.uk.
“Even so, it is unlikely that we will witness a market crash as monumental as the one we experienced a decade ago, so homeowners should rest assured that this research acts as a warning of what the worst case scenario might look like with London homeowners losing £858 a week in property value. “However, it is a warning none the less and one that the majority of homeowners should heed. A turbulent year for the property market has seen many buyers and sellers back off from their sale or purchase and batten down the hatches to wait out the storm.Quirk added: “Whilst the market itself remains resolute, it will inevitably stutter to a halt without the buyer-seller activity it needs to operate. Those considering a sale now would be wise to act before it’s too late, as a reduction in asking price of a few hundred pounds in the current market climate, is a lot easier to stomach than a loss of up to £80,000 a year or so down the line should the market crash.
”With house prices once again reaching a dangerously inflated level, eMoov looked at the decline in values between the end of 2007 and beginning of 2009 (21 months) across each region of the UK, before applying that percentage decrease to the current average house price to highlight the loss homeowners could experience this time round.At the end of 2007 when the market was on the cusp of a meltdown, the average UK house price was £189,424. Property values then went into freefall until 2009, falling by 16.7 per cent (-£31,618). If the same 16.7 per cent drop in values was seen today on the current average UK house price of £217,928, homeowners across the UK would see £36,393 wiped from their property price, £399 a week over 21 months, bringing it down to £181,535.It is, of course, in London where homeowners stand to lose the largest sum should the market crash again in 2017.During the last market crash, homeowners in the capital saw their property depreciate by 16.3 per cent, a loss of £48,421.
However, since then the average London house price has soared to £481,648 but the same percentage decrease would result in a loss of £78,267 or £858 a week over 21 months, returning the average house price in the capital to just over £400k (£403,381).Despite Londoners suffering the largest monetary loss, the capital didn’t see the largest percentage decreases during the last crash. These were found in the South East (-17.6 per cent), the East of England (17.4 per cent the South West (17.2 per cent), the East Midlands (16.8 per cent) and the West Midlands (16.5 per cent), with homeowners in these regions seeing their property value fall by between £24,000-£42,000.Although a market crash in 2017 would mean a smaller monetary loss than London, these homeowners would still be in line for a substantial hit, the lowest being a loss of £29,656 in the East Midlands resulting in the average house price falling to £146,868, climbing to £55,146 in the South East where the loss would reset the average house price to £258,188.
The ripple effect of the 2007 crash did reach north of the border, however at a drop of 7.4 per cent, homeowners in Scotland saw the smallest depreciation in their property values with a loss of just over £10,000. With the current average house price (£143,033) only marginally higher than it was in 2007, the same decrease in 2017 would result in a similar drop in values and an average house price of £132,449.During the last crash Wales saw the third lowest fall in values behind the North East and Scotland. But the 15 per cent drop still equated to over £20,000 being wiped from the average house price of £148,565.The property market in Wales has struggled ever since and the current average house price has failed to reach the peak of 2007, still at just £146,742. Therefore, it is the only region where a crash in 2017 would actually result in a lower monetary loss for homeowners when compared to the previous crash. A 15% drop would see £22,011 wiped in value and a resulting average house price of £124,731.