Monday, August 20, 2007

Fall in London house asking could signal easing across the country

Asking Prices in London Start to Fall

Asking prices for properties in London have fallen for the first time in a year, bringing hope that softer conditions in the capital could ease affordability pressures across the country. Rightmove, the property website, said that London asking prices, which had risen by around 2 per cent per month for the past year, fell by 0.1 per cent in the past month. The data suggested that sellers are adopting more realistic pricing expectations as purchasers struggle to cope with the impact of five rises in interest rates over the past year and mounting global economic uncertainty.

Posted by cash_buyer @ 07:21 AM (710 views)
Please complete the required fields.



8 thoughts on “Fall in London house asking could signal easing across the country

  • What a piss-take article. Prices drop by 0.1% after rises of 10-30% in the past 2 years. Crash here we come! For God sake!

    Reply
    Please complete the required fields.



  • After frenetic rises, a small retrenchment was hardly surprising. What happens next, in the light of the present credit crisis, is much more interesting.

    Across the board, debt is going to get more expensive, both for business, and the consumer.

    Corporate debt servicing costs will add to inflationary pressures, limiting the scope for western central banks to cut rates – however dire their economies.

    The growth of consumer debt is likely to slow markedly, and existing debt will cost much more to service – in the UK alone, I reckon this will knock back discretionary consumer spending by up to £50bn p.a. – which will be devastating for companies like DSG (Dixons), Punch Taverns & Easyjet

    It will also cause UK unemployment to rise, perhaps by about 1m, and as their home economy prospers by comparison, I expect a large proportion of the Poles who have swept in to return home.

    And for the UK housing market, where prices have become dependant on those prices rising year-on-year?

    I expect it to stall initially, with asking prices remaining high, but static, and very low volumes changing hands. I expect the BTL brigade to effectively stop buying – partly because lenders will become thin on the ground, and partly due to cold feet on the part of landlords.

    FTB’s will also be stuck – with lenders backing away from 100% deals – and earnings multiples of more than 4. Self-cert? – forget it!

    However, HIPS will become the main scapegoat for the market’s woes…

    While asking prices will probably not show any marked falls at first, the Land Registry data will start to tell a different tale. With year on year price changes dropping towards zero, and their mortgage rates rising, the more savvy BTLers will head for the door – to be followed by the fools when it’s too late.

    These things never happen quite as fast as one would like, but once the trapdoor is sprung, the floor of the market will be an awful long way down..

    Reply
    Please complete the required fields.



  • Tyrellcorporation says:

    Good comments UT.

    Also EAs will play an important role in bringing house prices down. I’m already seeing many poor souls in EAs offices either playing wityh Newtons Cradles and drinking coffee or energetically phoning sellers to drop prices (Exeter). Their incomes are evapourating as custom dries up – it’s better to get 2% commission on £250k than 0% on £285K!

    For a long time in Exeter there have only been orange baby boomers buying and selling property in Exeter and now they are staying away from EAs and preferring to eat themselves to death at local bistros and bars. The buyers market is here again but this is one buyer that’ll not be buying for a while!

    Reply
    Please complete the required fields.



  • Two friends of mine have just sold in Cheltenham, both had to accept over 10% off the asking. It seems to have just gone down dramatically since May. We are heading into August now and there is a glut of unsold property left on the market. Not only that, but new property is coming on every week. Cheltenham was one of the most over inflated towns in the UK and is a good barometer for outer London price changes. A quick drive through the town will show there is a real problem in terms of unsold property, there are sale boards everywhere.

    Reply
    Please complete the required fields.



  • The Bank of England will cut interest rates if things look bad –

    Reply
    Please complete the required fields.



  • UT, I think the sequence will be just as you describe. The trap door of the BTL brigade may already be opening, however, with the coincidence of the Rightmove data and the “mortgage crisis” as they will see it. The wise ones will start selling up now, or already have started. It is when the majority blink that we will see prices plummeting. Resets will contribute too. I expect full scale plummeting to start by end November? Anyone else hazard a guess on the timeframe?

    Reply
    Please complete the required fields.



  • C'mon Correction says:

    Tower hamlets, London – 6.9% drop in one month ! Ouch. Camden, Brent etc nearly as bad. Funny how the media never pick up on big corrections downwards.

    Had an area gone up 6.9% in one month, the media would report it as “London house prices rise 82.8% annually” (annualised figure in tiny writing at the bottom !!)

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    For a timescale, look at Ireland.
    Last year the huge change in sentiment in Ireland came in July/August 2006.
    Asking prices were down 5-10% by xmas and land reg figures reported a 2% YOY fall for Q1 2007

    Sentiment is still strong here in Berkshire.
    I know 2 friends that sold in the last 2 weeks for good prices.

    I’ll give the the UK sentiment 2-4 more months before we see the radical changes that eventually define the top of the market.

    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>