Playing the percentages

House prices to fall 30%. Sounds like scary stuff, eh?
Except it's not quite like that.
The headlines came from an interview John Varley, the boss of Barclays Bank, gave this morning.
What he actually told Sky News was that by the time the recession has hit the deck, house prices will have fallen 25-30% from their peak. He also said he thinks we're about half-way there.
Which means house prices will actually fall up to 15% from where they are now.
That's still a substantial chunk of money off what you might be advertising your house for at the moment.
But it's a relative figure.
House prices peaked in early 2007. They will probably trough late 2009. So prices will have fallen up to 30% over two-and-a-half years.
That equates to a £100,000 house in 2007 being worth £70,000 in late 2009, a £150,00 house being worth £105,000, a £200,000 house being worth £140,000, a £250,000 house being worth £175,000.
These are big falls in any money. But they have been gradual rather than immediate, and they are of course relative – just as your house price falls, so should the price of the one you're after.
So unless you're trying to make a giant leap, affordability should in theory stay the same.
Estate agents may take a little comfort from stories like this as it could concentrate the minds of sellers trying to hang on to an unrealistically high price.
It also adds to the view that with the bottom of the housing market in sight, buyers may re-enter the arena from summer 2009 onwards, knowing that even if the property they buy still has a short way to fall it will probably be worth more than what they pay within a couple of years.