Why house prices will keep falling - fast

Despite what you may have heard, house prices are falling because there is no demand from buyers. And prices are going to continue falling – fast. The problem, says Merryn Somerset Webb, was never a shortage of supply.

Worried about the housing market? Well you shouldn't be. Or so says Graham Norwood in The Observer. Why? Because we aren't building enough houses to meet government house building targets. Gordon Brown's plan was to make sure that 240,000 to 297,700 houses were to be built every year until 2016. Yet this year, a mere 110,000 will end up being built and next year we can expect to see no more than a "dismal 55,000."

The result? "Supply has fallen so far behind demand that an upturn is inevitable." So convinced of this is Norwood that he quotes without question a forecast from who else The National Housing Federation, that suggests the average house price will rise 25% from its current levels by 2013. "Demand is going up while the supply of new houses is going down," says NHF chief executive David Orr.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.