Market slowdown still preferred to crash
Property experts trying to predict the likelihood of a sharp decline in UK house prices are now juggling data from the property and mortgage sectors alongside major events in the banking industry.
While the Northern Rock crisis will have undoubtedly reduced confidence in the housing market, there seems to be a consensus that it is unlikely to trigger a crash in the market, which was showing signs of a slowdown before the bank’s predicament hit the headlines.
House prices in England and Wales were beginning to decline in the four weeks to early September.
During this period, Rightmove.co.uk, the property website, recorded a 3.1% drop in Yorkshire and Humberside prices; a 3.3% decrease in prices in the South-east and a 4.1% decline in the South-west.
In Greater London asking prices in late August and early September dropped 2.5%.
Rightmove has reported that during the four week period, the number of properties coming onto the market was at its lowest since the same period in 2004.
However, Rightmove’s commercial director, Miles Shipside, does not believe that this drop in business is a sign that the market will grind to a halt, or that prices will fall significantly.
The Royal Institution of Chartered Surveyors has been bold enough to put a figure on the likelihood of a slump; it believes there is a one in ten chance of steep falls in property prices.
At the same time, the Institution’s chief economist, Simon Rubinsohn, sees the possibility of a 12 to 15-month period of stagnation as the more likely scenario.
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