Subscribe Feed (RSS)House Price Crash, House Price Slump or simply a Flat, Depressed Market?
July 30th, 2008 by Karelia | Filed under Property Market News.Musings of a London Property Search Agent
The Evening Standard carried a story today quoting a report from City Credit Analysts Standard & Poor’s, stating that house prices will slump by a further 17% and that 1.7million home owners will be plunged into negative equity.
Standard & Poor’s credit analyst Andrew South said: “”The downward trend in UK house prices now seems well established and we expect prices to continue falling in the near term,”" The Evening Standard reported.
What is interesting is that nearly a year on from the beginning of the credit crunch in August last year, the Land Registry only reports average house prices are down 0.89% in London and 0.44% in the South East. The whole of England and Wales has only gone down 1.1% according to Land Registry figures. Yet a huge number of experts have been predicting annual drops of c. 20% – 40%, since last year. That means we should be down 20% or more already doesn’t it?
It is certainly true that a number of home owners are accepting price reductions of 20% and more but if the whole market was affected the way it has been reported for the last 11 months, the beginnings of significant price deflation would show up in the Land Registry statistics.
The point that no-one ever seems to mention is that although buyer numbers are down by c. 40%, supply is also down and in some cases vendors would rather rent or stay put than sell for significantly less. So a great deal of supply has been removed from sale this year. Which means that although it’s certainly easier to buy a property for 20% – 50% less than the vendor wishes to sell for at the moment, it’s difficult to see any evidence of a house price crash, house price slide or house price slump in monetary terms. We are in the middle of a slow market, granted. Vendors will find it difficult to sell. But we would call drops of 0.89%, 0.44% and 1.1% in 9 months a flat or slightly depressed market. What would you call a 1% change? This London Property Search Agent is waiting to hear from you.
Tags: House deflation, House Prices, London House Prices, London Property Search Agent, London Supply and Demand, Supply and Demand
