A picture of a fragile and lacklustre housing market overshadowed by the UK economy and wider eurozone worries is painted by Hometrack this morning.
Notably, it says the market in the South outside London is weakening.
Overall, new buyer registrations slipped by 0.5% last month, with the growth in housing supply outpacing demand.
The property analyst forecasts demand to decline further, with a downward pressure on prices.
Hometrack also said that weaker demand means that house prices were down in seven regions in June, compared to three in March. Only in London did house prices increase last month, up by 0.3%.
Richard Donnell, director of research, said that regionally, house prices had fallen in southern regions outside London.
In March, just 10% of the South-East registered house price falls, but in June the proportion grew to 26%. In the South-West, the proportion grew from 2% to 32% over the same period, while the change has been from 11% to 30% in East Anglia.
Donnell expects house prices to slip by 1–2% over the next six months in southern England.
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Comments
Mr RR...
I simply cannot believe that you actually highlight threads such as this on your woeful website, as testament to your capabilities. I would disown this cr@p in a heartbeat, If I were you...
POINT ONE: The Laffer Curve (NOT Law as you erroniously refer to it...) is based upon its relativity to TAXATION, not supply and demand in the housing or any other market for that matter. You saw a curve and decided it suited your purpose, admit it. OH - and Mr Laffer is getting his fair share of being Laffed AT, from what I see in the press. Seems that those in the know believe that he has shot his ficsal bolt and "seems to have forgotten, or ignored, some pretty basic concepts in economics." Bit like you and the housing market, methinks...
POINT TWO: You spouted "Demand is always price-related, in case you didn't know.
Supply levels also affect price. The more there is available to buy, at any one time, the lower the market price becomes."
Erm... No, and No. Demand is NEVER price-related. It is related to need; to want; to aspiration; to desire... the list goes on. And IF your second ridiculous statement was anywhere near being accurate, perhaps you would care to explain what happened during 2003, 2004, 2005, 2006, and 2007 - when record numbers of properties became available, and SOLD, and prices rose month-on-month for that entire period?
It is YOU, Sir, who needs to do some research. Not into Laffer's CURVE - but into the concept of REALISATION, and of REALITY.
Your use of those terms within your pen-name makes you appear a bigger fool than I ever could...
Puzzled, you are in trouble if RR has to tell you "a firmer grasp of what is happening currently, and why". He has no idea what day it is old RR, I could not sell mt proeprty on my own web site so used Connells, great stuff!
@ (troll) puzzled of tunbridge wells:
I'd like to try and help with your puzzlement.
Unfortunately, understanding economics is a bit like understanding how to drive a car. If you don't already know, it would take quite a few lessons to learn what the controls do, and how best to use them.
The housing market is very much the province of and subject of economics.
Demand is always price-related, in case you didn't know.
Supply levels also affect price. The more there is available to buy, at any one time, the lower the market price becomes.
The amount people choose to borrow affects the equation, assuming they are allowed to do so (or loans are made available to them). Reducing credit availability can, in certain circumstances, lower market prices.
No time to say more here, but I hope this is of some help at least.
You really ought to research Laffer's Law to get a firmer grasp of what is happening currently, and why.
Not sure economic models are much use in the housing market because prices are set at the margins.
In the housing market:
Demand is infinite - most people want to live in bigger or better home and many people would like more than one property
At any point in time only a limited proportion of stock is available to be bought
Everyone wants to live in a nice area and will pay more for an equivalent house to do so
Most people need to borrow money to buy property
The availability and cost of credit varies
To buy it you have to take a 25 year view of your earning power and health
Well, as no-one else is kicking this one off for comments, I might as well, as I have a theory about this based on Laffer.
I'd be interested in some genuine views.
The Laffer Curve and supply-side policies:
This economic theory underpins everything that is going on and supports the reasoning set out above, academically speaking.
The Laffer Curve may be directly applied to the UK housing market instead of to the poverty or earnings trap, as originally espoused by the author of the theory, Professor Arthur Laffer. As regards house prices, I suggest his theory states:
As house ‘asking’ prices increase above market price, because of the disincentive effects of this on actual sales, the total number of these will start falling. As this outcome develops, the market itself begins failing and those house owners in the market trying to move to a new location in the UK, for whatever reason, have their plans frustrated.
Finding a remedy for this is obviously particularly relevant because of the pressing need to lower barriers to the mobility of the nation's labour force.
The theory explains that market prices determine both the maximum price and also the maximum scale of activity in the market at any one time.
Therefore, the setting of appropriate asking prices is crucial both to current and future market activity.
Asking prices should be geared to the actual prices able to be achieved in the market.
Pretending asking prices, are merely arbitrary, as many estate agents currently do, is not only unhelpful to their clients but is in addition, extremely foolhardy!
Until this is understood more widely by agents in particular, the very significant obstacles stopping those hoping to move house (and to get better jobs), will remain. This does incalculable damage to the whole nation's economy, particularly at times when it is experiencing an economic downturn.