The front page of today's Daily Express was hysterically funny. It seems that "home owners are breathing a sigh of relief after new figures revealed house prices are rising again in many areas. A predicted slump in the housing market has not arisen, despite the credit crunch."
The source of this unfounded optimism was the Nationwide who had published data showing that property prices nationally "were up 4.8 per cent year on year." As an aside, when 2007 property prices are adjusted for RPI inflation (which is currently at 4.3 percent), the real rate of house price growth is pretty close to zero.
Without any hint of irony the article then states that "average house prices across the country dropped 0.5 per cent in December compared with last month." So despite the reassuring headline, the data shows that the crash is well underway.
To add to the foolishness of the headline, the Nationwide data referred to November prices not December. When I looked at my calender this morning, we still had a day or two of December left. In the sloppy world of Daily Express jounalism such things are mere details.
The article then quotes housing expert Peter Bolton King from the National Association of Estate Agents, who reassured us with the following gem of wisdom; "Despite the considerable doom and gloom lately, the figures show that there is no need for pessimism."
Well, Peter, have you looked at recent mortgage approvals data? According to the the Council of Mortgage Lenders, new approvals are down 43 percent. I wonder who optimistic you will remain when house sales fall by a similar forty percent. That would put a dent in real estate commissions.
Personally, I am not a bit pessimistic about the property market. I confidently predict a great year in 2008. As a "UK housing expert" I confidently predict a 5 percent fall in prices next year, with a futher 5 percent in 2009.
4 comments:
I disagree, the Nationwide/Express article will set the atmosphere for the crucial spring selling season.
If people can be convinced that house prices have stabilized, home buyers will not put in low ball offers, plus home owners will not accept low offers.
The government has shown that it will do anything to stablize, and then cause home prices to rise (e.g the Northern Rock bail out)
Also, you should remember that if the Labour Party does badly in the May elections, Gordon Brown will be history - this guarantees that the government will try everything they can to increase house prices.
remember
Falling house prices means electoral suicide,
witness the Tories after 1992.
Alice--all this time I thought you knew something I didn't, but if you are only predicting 5% declines for the next two years, that's hardly a crash, is it? More like a gentle decline after houses doubled in price over the past three years. And tripled over ten. You talk in cataclysmic terms, but in truth you don't believe the severity of your own prophecies! Big disappointment. Signing off once and for all...
Indeed, the 5% business is strange. History shows us that prices fall faster than they rise.
Why do you say 5% and 5% rather than say 20% and 30% for the next two years?
I hope they do crash but I am sure that Gordon will try and hang on to his "miracle" economy a while longer... I bet you that.. EVEN IF INFLATION GOES UP TO SAY 10%, THE BANK OF ENGLAND WILL REDUCE INTEREST RATES TO PROP UP THE HOUSING MARKET, because the housing market IS THE UK ECONOMY.
Gordon KNOWS that without house price inflation, consumer spending would stop in it's tracks.
Gordon will jump ship when there are signs that no matter what the BOE does, houses start to go down in value (by large amounts - not by this petty 0.5% stuff !).
That way, people will blame the new man in charge... Dave Cameron perhaps and Gordon will go down in history as the man who gave people champagne lifestyles whilst earning lemonade wages !
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