Musings of a London Property Finder
House prices have risen in May 1.2% according to statistics produced by Nationwide, however Chief Economist Martin Gahbauer warns that rises are due to decreased supply and cheap prices and are not necessarily signs of a recovery, although he says they are evidence of some improvement in the property market.
Commenting, Gahbauer said “Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.”
€œDuring the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods. In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet€œ, added Mr Gahbauer.
In other news this week, the British Bankers€™ Association said the number of mortgages approved for house purchases rose by 4% in April compared with the previous month, rising from 26,671 to 27,685 approvals. However, compared with April 2008, this represented a fall of 15.5%.
The average house price now stands at £154,016. This is 11.3% lower than a year ago, much better for house sellers than the 15% annual decline reported in April.
Gahbauer added that during the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods. He concluded: €˜Survey evidence suggests that buyer interest has picked up strongly in response to lower prices and lower interest rates. If this buyer interest translates into actual sales and outweighs any potential increases in supply, then the recent moderation in price falls may continue. For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months.€™
But as with other indices showing house price rises recently, market commentators were quick to advise caution about any hopes of a sustained recovery.
On a positive note, for property purchasers, property porn afficionados and Property Finders like us the long-term prognosis looks good for buyers now. As the graph above shows, prices have now dipped to in line with the long term real house price trend, so although they may well drop further in the short term, buying the right property at the right price now should bode well for the future, in the long term at least.