Summer sale has started in the housing market, says Rightmove
Today’s Rightmove figures showing a drop of 2.2% in the price sellers are asking for their homes provides a reminder of the need to remain cautious about the direction of the housing market.
The numbers are obviously being spun to point to the £5,000 drop in prices providing summer bargains to buyers.
More interestingly perhaps though is that some of the biggest falls are in London and the South East, where sellers have enjoyed the better of things over the past year.
But for all that, not too much should be read into these figures.
Because…
…with transactions down all housing statistics are less reflective of what might be described as the “real current price” for a house.
Seasonal factors also play a part in distorting the figures. Firstly because there appears to be a seasonal fall anyway and secondly because even fewer homes come onto the market during the holiday period, so the smaller than normal sample we currently see is made even smaller.
However, I noted an interesting piece in the Financial Times that should send a further cautionary message to those with a tendency to over exuberance when it comes to house prices. It seems that those bidding in auctions are once again seeing growth in the discounts available.
This would be suggestive of a softening in prices and is billed by the FT as an early indicator.
Without prodding the data in more detail I am a bit cautious about over reading it. There may prove to be something in it, but regional, seasonal or market segment factors may be at play distorting the aggregate figure and leading to a misinterpretation if this is then applied to the housing market as a whole.
Either way, put the two bit of information together and it does suggest reasons for a pause for thought before jumping to the conclusion that the only way is up for house prices from here.
2 thoughts on “Summer sale has started in the housing market, says Rightmove”
We seem to have plenty of houses available in our neck of the woods.
I have just read the FT piece and surely the problem is the lack of the right house at the right price / rent.
Wages are too low for the vast majority of people to support gneral needs let alone service mortgage payments and lifestyle expectation and the easy credit that supported the deficit between needs and earnings is no longer availble.
Banks will no longer lend the crazy high multiples on the mortgages and now requre a low risk customer – high deposit and low debt – to lend to.
Sellers who bought at the height of the market to live or invest in the expectation of rising prices have been caught out and may need to sit tight or swallow the loss as an investor. What about those who have used equity release as well?
Inequalities in society are now greater than ever and whilst many walked away from the banking crisis with an awful lot of money many other families must be desperate. As you note unemployment is still rising – among them the vast numbers of building employess at the coal face so to speak
So I too cannot see how the only way can be up.
I liked your idea in a previous post about the Government instituting a major housbuilding programme – but who we could really trust to oversee the programme to ensure value for money for the taxpayer would worry me.
We need massive increases in affordable rented housing and why shouldn’t we build quality housing for all. Surely the important thing is to keep skills and quality in the industry?
Bang on the money Cathy. Loads of properties for sale near us, many of which have been on the Estate Agents books for MONTHS. People are slowly waking up to the realisation that £250K is an awful lot of money to pay for a humble UK property. They can no longer rely on living in a flat for 3 years before selling up and using the equity to buy a small family home. Deposits need to be saved for, salaries and job security need to be proved. AND ALL THIS WITH INTEREST RATES AT GIVE AWAY PRICES! The property ladder is becoming difficult to climb once again (and not before time). Watch for the next dip commencing Sept / Oct this year. Remember we are yet to start seriously paying back Gordon Browns debt monster as well… Total Armageddon if the IMF are brought in next year to bail us out (ie: an excuse to raise rates).
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