The Inside Edge
Property Prices In Yet Another Tumble
Once again the housing market has taken a tumble. The average cost of a home fell 1.4% last month – a drop that hasn’t been seen since July 2009. The Halifax house price index reports the latest plummet has led to property values being 3.7% lower in April than during the same period last year. This is the biggest decrease since October 2009.
What’s the Cause?
Well, Halifax have blamed the recent fall on fragile and cautious consumer confidence. The economic climate is still relatively uncertain and this has decreased demand on property and caused a downward pressure on property prices. Since the low that property prices hit in April 2009, they have only risen 4% whilst they are still 20% below the peak they hit before the credit crunch struck back in August 2007.
During the past year, house prices have been particularly volatile and if you’ve been keeping track of the Big Property List blog then you’d have seen our reports of house prices going up and down like a yo-yo. House prices have dropped in seven months, risen in four and remain unchanged in one month and that volatility looks set to continue.
Often seen as a slicker and better indicator of property market trends, the quarter on quarter indicators showed acceleration in the rate of falling property prices. During the three months towards the end of April, homes lost 1.2% of their value. That’s double the 0.6% drop that was recorded during the three months to the end of March and also the most dramatic quarterly fall since October last year.
Regardless of these miserable figures, the Halifax has said that they expect the rate of falling property prices to slow down. Martin Ellis, Halifax’s housing economist, said “Signs of a modest tightening in property market conditions, an increase in the number of people in employment, and a relatively low burden of servicing mortgage debt are all factors that are likely to provide support for house prices, curbing the pace of the decline.”
Are the signs there?
Martin Ellis also went on to say that he thinks the signs that the housing market is stabilising are there albeit at a lower level than the historical average. However, Howard Archer, chief UK and European economist at HIS Global Insight showed less optimism saying, “We believe that house prices are likely to end up in decline by around 10% overall by the start of 2012 from their peak in 2010. This implies that they will fall by about 5% more.”
It seems to be a tough one to call, but one thing’s for sure. The Big Property List will be reporting on property market news as it happens and giving you access to the latest views from the industry experts.
We are in deep water and we can see land ..but there are sharks in the way. These sharks are the interest rates and inflation. We will not feel ready to head for the land until we tackle the sharks at a comfort-level we are used to….ME? I am heading for that land while some of the sharks are tame !!
The housing market in the UK has been shaky for some time, and it’s difficult to predict when it might reach the heights of 2007-8. This may or may not put you off entering the housing market but whatever you decide, it’s worth considering an alternative to buying – why not build your own home? After all, the government has plans to simplify the planning application process, and you’d be surprised at how affordable it is. Your biggest hurdle will be finding suitable land for sale, but once that’s been achieved, the costs are remarkably low, and certainly within most peoples’ budgets. Have a look around, there’s plenty of useful information to be found online, and good luck!