Henry Pryor Blog
Wednesday 14th December 2011
This week, the monthly charade that is the RICS’s ‘sentiment survey’ was published with the collective views of about 250 chartered surveyors and what their gut instincts say has happened to house prices in the past four weeks.
Then, inspecting the seaweed, they have a punt at what the future may bring. Not very scientific! Contrary to the impression I give, I actually have considerable respect for the RICS, but I wish they would stop passing themselves off as estate agents.
Very few are. In fact, most are highly qualified individuals scattered across the world bringing high standards to the property profession. Most members would regard selling homes to be beneath them.
The latest RICS survey simply confirms that the balance of those few surveyors who don’t think that nothing is going to change is marginally negative.
Last month’s Halifax survey saw a modest fall in prices, the Nationwide inexplicably recorded a rise in prices, and the Roightmove index of asking prices saw a significant fall of over 3% in November.
Most people would be forgiven for thinking that house prices have dipped only a little, but that is only because of the London Effect skewing the rest of the market.
In fact, average prices outside the gated community of the M25 have dropped like Daybreak’s ratings, according to average sold prices from the Land Registry.
Across England and Wales, prices are typically 12% below their peak reached in January 2008. But even this headline masks more real pain.
Prices in Newcastle, home of Northern Rock, are 17% lower. Peterborough is 20% down. Average house prices in Hartlepool are 30% below their peaks reached when credit crunched.
Of course, there is good news for the residents of the Royal Borough of Kensington & Chelsea. Here, prices have actually risen by 16% since 2008.
There is, of course, also a huge gap between the average asking price (reported by Rightmove) and the average sale price (calculated by HM Land Registry). Sellers and their agents are becoming less and less realistic.
I suspect that the real story may be the fall in transactions. This affects more than just estate agents and the mortgage market. Plumbers, builders, removal companies, retailers in the High Street – all are losing out as less than half the number of homes sell this year than sold in 2006 and 2007.
Over Christmas and New Year we traditionally take stock of the housing market, reflect on what has happened in the past year and look at the tea leaves for 2012. If you ignore London, then it would be fair to say that the housing market is in a pretty perilous state.
With little change anticipated to lending criteria and most loans unaffordable to all but those who don’t need them, the outlook is bleak.
Government announcements last month to help the building industry by offering vulnerable first-time buyers help may please the shareholders of construction companies, but if you had taken up one of these ill-conceived offers and bought a home in most parts of the UK four years ago, you’d now be in negative equity. Worth a thought when you find a housing charity rattling a tin in the High Street in the next couple of weeks.
Happy Christmas and thank you for letting me abuse your inbox with my emails. A happy 2012 too!
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