Monday, 15 June 2009

Gap between asking and selling price narrows...

From the latest RICS survey:

Almost 60% of surveyors are now reporting that the gap between asking and selling price of houses is narrowing according to RICS research published today.

It said that across the UK, houses are selling at an average of 11% below the asking price with sellers in some regions being forced to accept as much as 26% discount off their advertised price.

This is the kind of story that sends a shiver down my spine. If true, we could be on the verge of a return to the bad old days of the bubble.

We have seen a couple of these "housing market recovery" stories over the last month or so. Mostly, they have been produced by industry insiders, such as the RICS or mortgage lenders.

In many respects, this story from the RICS is typical. It reports what appears to be some good news. However, the "uptick" is relative to an absolutely dreadful baseline. Even this report indicates that market conditions are forcing some homesellers to take a 25 percent discount.

However, behind these numbers is something distinctly darker and more malign. It is the Bank of England's policies. The BoE is busily cooking up a tidal wave of liquidity. Sooner or later, this wall of cash will hit the housing market, and it doesn't take too much imagination to see what happens next.


Jo said...

Panic not Alice.

Absolutely not a chance of another bubble any time soon - seen what mortgage rates are doing?

Alice Cook said...


I have and I am reassured.

Thanks for the comment.


Neville said...

The funniest version of this I saw was several weeks ago, from a skeptical observer here in the US. It went something like this:

'Housing professionals say April figures announce housing market rebound, just like they did last year'.

Sure enough, one year earlier they were saying the exact same things to journalists, who went ahead and printed them.

Anonymous said...

Neville - Linky please?

Anonymous said...

Please don't be scared! All the geniuses who sold at the top, are proving their true genius credentials by jumping straight back in. There is a small army of them, but they all can only get back in once! This is know in the stock market as a short covering rally, and is a sell signal. They are the firm ground the market has rested on (the markets call this "finding a bid"). The first bid found is never the secular bottom, as they run out of puff once they have all bought once, and then the firm ground is no longer there. I PROMISE you that there will be another leg down once this "floor" of buyers turns into part of the critical mass of indebtted owners.