Monday, August 20, 2007

Are London investors now becoming wary?

London falls 'could signal property slump'

....property experts at Rightmove believe things are changing. Commercial director Miles Shipside said: 'This fall is the first we have seen for some time and is an early warning signal that even the buoyant London economy is susceptible to market forces.' Rightmove believes the situation in the capital will be reflected across the rest of the country. Mr Shipside added: 'The fall was only slight, at just 0.1%, but has to be seen against the fact that London prices have risen by an average of 2% a month for the last 12 months.'

Posted by loneranger @ 04:27 PM (512 views)
Please complete the required fields.



One thought on “Are London investors now becoming wary?

  • Even as the market starts to turn, people are reluctant to drop their asking prices – I would normally expect to see some sustained falls in actual sale prices being reported for a while, before asking prices started to catch up – no agent or seller wants to be the first to drop their prices; it takes a while for them to realise that sentiment has truly changed and so they are going have to drop in order to make a sale. So this news about falling asking prices seemed a bit soon to me when I saw it yesterday (much as it is welcome, I felt it was probably a blip and that the real falls wouldn’t start for a few months yet).

    Having thought about it though, perhaps I have an answer – is it down to these Hips after all? The estate agents always claimed that it would reduce the number of properties coming on the market, because there would be less speculative business. I found it hard to believe that large numbers of people out there, even in “stupid land”, go to the trouble of putting their house on the market just for a laugh, and then when they get an offer say, “oh well, go on then, I will move after all”!!! But maybe I have been wrong and people are really that bizarre in their behaviour! You see, if there were less more expensive properties coming onto the market in the first place, that would indeed affect the overall average in this way…

    If you look at the latest Land Registry data on sales volumes (which is for April), the overall number of sales had gone down 11% from the year before, but the volume of properties sold for over £250K had actually gone up! If you sell proportionately more expensive properties than cheap ones, the flat average will increase even if prices remain static – that is why average prices are so often still quoted as rising strongly even though demand is already dropping. Example: sell two houses for £150k and one for £400k one month, average is £233K. Next month sell one house for £150K and two for £400K and the average shoots up to £317K. Newspapers report a 36% price rise and everyone panics, but in reality like-for-like prices have not increased.

    So, if the HIPS for 4 bedroom properties has really reduced the number of them coming on the market, the reverse will work with asking prices – if there are less expensive properties being included in RightMove’s figures, it will seem to have come down. This way around, however, the quirk in the maths works to HPC’s advantage, as reports of price drops will help the negative sentiment along nicely, so this is one instance where I’m happy for people to be fooled! 🙂

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>