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House price fall is confirmed by surveyors

House prices are falling for the first time since July 2009, according to surveyors who suggest that sellers are testing their luck in the market after the government's abolition of home information packs.

House price fall is confirmed by surveyors

House prices are falling for the first time since July 2009, according to surveyors who suggest that sellers are testing their luck in the market after the government's abolition of home information packs.

The increased supply is not being met by demand, which is dropping, according to the report from the Royal Institution of Chartered Surveyors (Rics).

While the many measurements of house prices have shown varying trends over recent months, most now show that house prices are falling, albeit only by a small percentage. Nationwide recently reported the first drop in house prices since February. Halifax, which had reported consecutive months of house price falls, reported last week that it had in fact recorded a 0.6% drop in prices in July.

In its report, which is based on a survey of its members, Rics found that surveyors are now seeing falling rather than rising prices. Exceptions include London and the north west where more surveyors are still reporting price increases than decreases.

Expectations for house prices among surveyors are now more negative than previously, but remain positive overall.

Ian Perry, a spokesperson for the organisation, said: ‘The forward-looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties.’

11 comments so far. Why not have your say?

Dislexic Landlord

Aug 10, 2010 at 08:43

up and down like a fiddlers elbow

I think prices will fall more for what its worth and im as thick as they come I dont even have a O Level to my name

With all the problems the country faces you dont need a degree to prodict a fall in property prices

As A BTL landlord this is a fantastic time to BUY BUY BUY what else is there to invest in pensions and the stock market

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Chris B (Slough UK)

Aug 10, 2010 at 10:22

Down Down Deeper And Down

Expect prices to keep falling like Japans 20 years stagnation and deflation, where some properties fell by a whopping 96% from their peak. If you are making an investment, then this is the wrong time to buy a house. Rents will also have to fall as wage reductions and redundancies and government policies force people to find cheaper alternatives for accomodation. There is always a bull market somewhere, you just need to find it!

Why were people counting on China for a recovery anyway, surely it is people buying Chinese goods that has led to the massive trade deficits, funny old world isn't it?

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Aug 10, 2010 at 10:38

I agree with Chris in Slough. The price of housing has a long way to fall. 60% of the UK population has a gross annual income of £23,000 or less. Banks are no longer in a position to lend high multiples of income and the price of housing is determined by the amount of capital available to buy it. Although there will be some vendors who will "refuse to sell" they will be left holding a steadily decreasing asset. The correction may be a long time in coming but come it will and you cannot buck the market. Some unique properties will buck the trend but this is the exception and not the rule and owners of what is all too often bland and poorly constructed housing would be best advised to get out now while they can.

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Peter Thoresen

Aug 10, 2010 at 11:37

The market has been gently shfting, first level prices then falls, if you look at prices achieved on one of the Land Registry linked websites. There have been some massive drops from prices asked in the past two years, but that reflects the absurdity of some prices being asked which were 30% above the 2008 peak. The owners and agents didn't want to acknowledge that the real market was falling.

The argument that the removal of HIPS has affected the market is complete nonsense. If you really wanted to sell then a £300 HIP report wasn't going to stop you. If there are now lots of properties on the market because owners are testing the market in the absence of a HIP, then that implies that many properties on the market are not really for sale at all.

Current actual sale prices are now down at 2006 levels and moving fast into 2005. There will always be exceptions in some areas due to particular market forces, and unique properties can only be compared with their own last sale price, having no similar neighbours for comparision.

I am not optimistic about how the market may move and how fast. Just look at much of the USA housing market and far that has dropped!

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Stephen Roach

Aug 10, 2010 at 12:19

Surely if house prices continue to fall it will be impossible for house builders to make a profit on a home, so no point building them. So with an ever increasing population and less homes being built, prices will have to start and rise again due to supply and demand.

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Aug 10, 2010 at 12:42

Estate Agents and mortgage lenders are still trying to put on a brave face, e.g. putting up "SOLD subject to contract signs on the cheapest houses" but the cracks in the plaster are becoming more visable every day. I take note of the number of houses for sale where the "Owners" have moved out and left them empty. I check to see if the Estate Agents have reduced the price. In some cases the price has been dropped by 20% or even 30%

There are very few people who can afford to simply abandon a property as they have to live somewhere which leads me to conclude the these houses have been repossessed but the mortgagors are reluctant to auction them for fear of instigating a landslide.

Something's got to give as more and more people become desperate to sell. I agree with the comments made previously house prices must fall until they equate rationally which disposable incomes

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Pete N

Aug 10, 2010 at 12:42

Some good points there Chris B,

Dislexic Landlord should really be either putting some savings by or paying off his mortgages while interest rates are on the low side for a couple of years.

I hold the same view about there always being a Bull Market somewhere to invest in and have been invested in Equities in the late 90's, switched to property from 99-07 and then took advantage of the weak US Dollar. The buying of US Dollars was a bit of luck and hope rather than trading experience but it paid off.

I just could not think about investing in property right now, it's not in the right part of the cycle to gamble on although for those buying a home to live in things could be different

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a j

Aug 10, 2010 at 13:01

I am curently makiing monthly extra payments on my mortgage and begining

to wonder If I would be better investing them into my stocks and shares ISA instead.

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Aug 10, 2010 at 13:10

Reply to Stephen Roach.

The Supply and Demand argument falls down when you apply basic economic tests. There is a huge demand for houses in Brazil and South Africa but the cruel reality is that if your income is below the affordability of a properly constructed house you will be forced to live in a shanti town.

Also it must be remembered that the present values of British property have evolved from grossly inflating the cost of residential building land. In some cases this notional value represents 80% of replacement costs. The big national house builders would have no problem in contructing houses profitably at lower cost if their land banks were devalued, but shareholders and bank creditors would have to take a dive.

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Stephen Roach

Aug 10, 2010 at 14:37

To Hotrod.

If i understand you're initial comment correctly you say that house prices must fall until they eventually equate with disposable income.But in your reply to my comment you refer to SA and Brazil where people are forced to live in shanti towns because they can't afford a real house.So presumably the fact that people can't afford real houses in SA and Brazil hasn't caused the price to drop to a level where they can.

I do however agree that my argument relies significantly on the price of building land, although there is also the cost of labour, materials and finance to consider.

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john brown

Aug 14, 2010 at 08:15

Spoilt UK- get to uni,paid for by grant and loan to get by- schooling free. get a good job, then buy a house -watch value go up- its been all too easy..

now its over -real situation , too many graduates , core numeric and english skills lost in a morass of text messages and i-pods, dumb down economics and education..back to trades and simple higher education , affordability and stop passing the parcel of property price increases and false equity increase-

simple choice rent or mortgage interest -no risk, v risk- this will become a clear fact over the nexct few years , and as no houses in the mainstream get bullit the Social houses will again like the 60' and 70's

By 2020 there will be mortgage tax relief again insome shape to persuade people to buy-

History repeats -just like fighting in the middle east-

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