Christian Harper of Oliver Finn takes a behind-the-headlines look at the market effect on Chiswick property prices.
Here are just some of the latest dramatic headlines to add to the already gloomy market forecasts for the UK property market: ‘House prices - steepest decline since early 1990s; House prices suffer biggest fall since 1990s crash; UK housing bubble is bursting and it's serious; Prices fall in every UK region.'
The headlines follow a report from Halifax, Britain's biggest lender, which reveals that the average cost of a home dropped by 2.5 per cent during the March, the biggest monthly fall since September 1992 and the second largest drop ever.
But behind the headlines there are widespread regional variations, the West Midlands fell by 5 per cent during the first three months of the year, while at the other end of the scale house prices actually rose by 1.6% in London.
Christian Harper: ‘It is fair to say that house prices have cooled, but locally the figures show a rise, albeit a modest one. It is important not to put undue emphasis on one report. When you examine the core data, the headlines reflect the national picture, and price wise you can’t compare property in West London to West Bromwich.’
‘Most importantly it’s buyers’ confidence that is falling. They’re trying to figure out whether to buy now or make a judgement that the market has yet to bottom out. All I would say with regard to the dramatic headlines is that property in Chiswick is still worth more than it was this time last year.’
The housing market has been coming under increasing pressure in recent months due to a combination of problems. Figures from the Council of Mortgage Lenders, also released today, report that the number of mortgages fell for the fourth month in a row during February to a new low.
In addition, the picture is changing daily, as lenders take products off the market, raise their rates and increase the deposits they demand. First-time buyers were dealt a further blow today when Abbey withdrew one of the last remaining 100 per cent mortgages.
Christian Harper: ‘The financial institutions are learning lessons from the US credit crunch and don’t want to get their fingers burnt. Banks are re-positioning themselves at the moment regarding lending but in due course they will have to improve their rates to accommodate market forces and retain market share. During this transition things will be difficult.’
Gloomy predictions are a godsend for headline writers but a red herring for everyone else.
