The Inside Edge
Since the start of 2012, various organisations and property experts have been analysing fresh statistics in the hope of finding positive signs for the housing market. In the UK, the stamp duty window which is due to close in March was expected to yield a ‘spring spike’ in sales and elsewhere, some claims had pointed towards chances of a slight recovery.
However, figures released this week by the Royal Institution of Chartered Surveyors paint what is arguably the gloomiest picture yet for 2012 and they claim that Europe as a whole is in the grip of property market ‘agony’ which shows no sign of abating.
In countries such as Austria, France, Switzerland and Norway, there was actually a rise in prices of 5% or higher but this was comfortably countered in countries such as Ireland and Spain, which suffered property price falls of 17% and 10% respectively in 2011.
The Rics European Housing Review went on to suggest that the future for property prices remained bleak unless the Eurozone Crisis were to be resolved. It also claimed that building booms prior to the crash were also contributing to the decline.
“Not only did Ireland, Spain and Cyprus all have substantial price booms prior to their crashes, but they also had huge building booms as well,” the report stated.
“Each one in consequence is still suffering from severe new supply overhangs.”
Across Europe, Ireland’s fall of 17% was the biggest recorded but the Rics went on the claim that the UK property market was currently one of the worst. While Great Britain posted a slim 1.5% fall on the Halifax institute, the report’s author Michael Ball claimed that high inflation meant that the drop in real terms equated to 5.7%. Furthermore, since 2007, that real term fall has resulted in property prices slumping by almost a third.
“Most probably, the housing market will continue to be broadly flat in nominal terms for some time yet and inflation will gradually erode house prices and indebtedness,” Mr Ball said.
“A sustained upward change will only happen when the economy as a whole shows more signs of growth. In the meantime, the housing market remains a drag on the economy as a whole.”
Overall, the report rather puts into perspective some of the suggestions of a possible recovery this year. If the Rics projections are true then the property agony that they refer to could continue for a long time yet.