Saturday, 29 December 2007
Are you having a laugh?
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.