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Written by rosalind renshaw

Households expect house prices to rise over the next 12 months, despite most feeling that prices have dropped back so far this year.

The Knight Frank Markit house price sentiment index, published this morning, which is based on feedback from 1,500 households, found that only 11% of those questioned believe that the value of their home has risen since February.

Nevertheless, households in six of the 11 regions expect the value of their homes to rise over the next year.

Households in the Midlands and North expect falls, but in the South-East and South-West about 60% expect property values to climb, and in London, 65% believe house prices will rise.

Chris Williamson, chief economist at Markit, said: “The recent air of gloom hanging over the housing market appears to have lifted further in March.”

Comments

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    rant - thank you for complimented me earlier on my grasp of the concept of compound deflation.

    However, I feel I must take you up on something you said below:

    "The newsagent round the corner from me can price their packets of crisps at £10 each if they want. If I have a tenner in my wallet, it doesn't mean I am going to buy those crisps though."

    Interesting analogy. You would rather RENT a bag of crisps for a high proportion of the cost of buying them - then give the crisps back and buy a bag of your own...?

    I somehow feel that you won't be so complimentary of my understanding of THIS theory, matey - but I look forward to our usual reasoned debate about it! ;o)

    • 18 March 2012 10:01 AM
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    Your analysis Chris paints the supply side of the housing market as being in robust health. From where I'm sitting, many who have bought since 2004 are just about clinging on, with the benefit of low interest rates being wiped out by static wages (for those who have kept their jobs) and rampant inflation in fuel and food costs. Signs that lender forbearance is coming to an end, rises in SVRs and news that lenders are investigating the many who are on IO mortgages are creating a real climate of fear.

    • 17 March 2012 12:09 PM
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    Rant, no one is asking for prices to rise, it's just inevitable that they will rise if demand outstrips supply.

    Not pent-up demand, actual demand from buyers actually buying.

    Last week we saw a first-time-buyer gazump a buyer in a chain. The original buyer couldn't believe it and offered the full asking price to get the house back, but the vendor stuck with the first-time-buyer!! It was a small 2-bed Victorian semi. While prices might be falling in your area, perhaps the estate agents over-valued them in the first place and what you are really seeing is prices coming down to what they should have been in the first place!
    I consider prices falling if I have to sell a property this year for less than we sold an identical property for last year!

    Mabe the estate agents in your area are pricing their properties in the same way your newsagent is pricing his chrisps!!!

    I'm not saying that the market WILL pick up this year, but in my opinion 2012 is the last year of low house prices. I am sure you will come up with a million reasons why it shouldn't, but things are definitely looking brighter from where I'm sitting and we have hardly any available houses left to sell!!!

    • 17 March 2012 11:46 AM
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    FYI Chris - I can buy some relatively uninspiring two-bed houses round my way right now, with cash. I am choosing not to though, because they are clearly overvalued and slowly falling in price.

    Don't confuse those who can't buy a house at today's prices with those who wont.

    The newsagent round the corner from me can price their packets of crisps at £10 each if they want. If I have a tenner in my wallet, it doesn't mean I am going to buy those crisps though.

    • 17 March 2012 11:25 AM
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    There's a lot of dots you've tried to join up there Chris, but there's gaping holes in what you've posted.

    Where are banks going to get the money to lend to buyers? Who have they turned to recently to cough up some extra cash (hint - ask those who have a mortgage with Halifax and Bank of Ireland). The pent-up supply is going to be unleashed through higher interest rates before the pent-up demand can be supplied with loans.

    There will be no economic recovery whilst younger people are shelling out more and more of their income on putting a roof over their heads. This is why housing price bubbles are so disastrous for an economy. No extra wealth is produced, just transferred from younger folk to people like yourself who were born at the right time to already be on the ladder. Money that should be lent to businesses to create real wealth is sitting in economically unproductive bricks and mortar instead.

    EVERY country that has tried to generate wealth through allowing house prices to inflate has had to learn this lesson the hard way. The economy only turns around when the bubble is allowed to burst. House prices are down sharply in the US and now their economy is picking up.

    High house prices are what have caused this recession. High house prices are most certainly not going to lead the nation to recovery.

    • 17 March 2012 11:17 AM
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    Cassandra said: "If prices rise from here it will be a disaster. It would just mean less people can afford to buy one. It's hard enough getting a sale now.

    The households happy about prices rising is silly. It's only people trading houses as a commodity that want prices to rise.

    5% a year drops for 10 years is what we need. Good for estate agents, removal firms, solicitors, surveyors due to a high turnover of sales. Good for the economy as people have disposable income again instead of just spending their second income on a larger mortgage"

    I don't think you understand how it works. Prices will only increase if demand increases. I.e. more people are out there buying property and vendors become confident about selling for higher prices. In other words, more sales are actually happening!

    This is good for agents, good for the industry, good for families in negative equity and bad for only those people that want to buy, but don't have the financial ability to get onto the housing ladder at a time when many others are doing.

    If they miss the start of the race because they can't buy when many others are starting to buy, they will lose out and be forced to pay more when they can afford to buy or be forced into become a long term tenant.

    Life isn't fair, but the market will always find its own level. Prices will rise if demand from buyers is there and it will fall if there isn't.

    There is a lot of pent up demand at the moment. Millions of people would want to buy, but can't or won't just yet.
    This ressession won't last forever and the banks WILL start lending again when they can see the economy inproving. When these two things align, buyers will flood back and prices will climb quickly.

    People wanting to buy like "Rant" will try to talk the market down until he is in a financial position to buy himself, but I feel he is the little Dutch boy with his finger in the dam trying to hold back the flood, which WILL eventually come!

    • 17 March 2012 10:48 AM
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    Quick tip of the hat to PeeBee for correctly stating that 5% falls per year over a decade does not equal a 50% reduction. As posted earlier, I reckon there are few people who understand the difference or why.

    • 16 March 2012 21:29 PM
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    .....and politics is the last place where a man with no discernable ability can make a decent living.

    Cassandra - shame you do not have 1/4 the wit of the Cassandra in journalism who wrote for the Daily Mirror many a year ago.

    He had a brain you know and you have amply demonstrated that you do not hence my 2 remarks aimed squarely at you above.

    • 16 March 2012 19:13 PM
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    Bu99er it - I'm back! Left you all alone for a week and look what happens... ;o)

    'Cassandra': "5% a year drops for 10 years is what we need. Good for estate agents, removal firms, solicitors, surveyors due to a high turnover of sales."

    Talk me through this one, please...

    If a buyer was to cotton on to the idea that the house they could buy today will cost them £150k - but this time next year it would only be £142,500; £135375 the year after, de da de da de da... then why the H£LL do you imagine they would buy today? Or next year even?

    Incidentally, your '5% a year for ten years' would result in a property which is currently worth £150,000 being only worth £85,320 in 2023. NO wage inflation? ZERO PERCENT growth in the economy in a decade? Do me a favour.

    "The people who paid too much will just have to suffer the consequences of their folly for the greater good."

    Well - that's real big of you to offer that on their behalf!

    Utter, unadulterated MDT.

    For one horrible moment when I read your post I thought you were actually an Estate Agent. Thank the stars I was clearly wrong...

    • 16 March 2012 17:12 PM
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    The latest update on Agents Diary is however reason to believe that there is still some sanity out there:
    --------------------------------------------------------------------------------
    http://agentsdiary.blogspot.com/2012/03/time-was-wednesday.html


    ‘So what do you think. Honestly?’ That’s two questions actually, I feel like saying. People often want to know what I think about property prices but only if it corresponds with their take and that usually depends if they’re buying or selling. The honestly bit, that really doesn’t help most of the time. Denial being more often a couple with negative equity, than a river in Africa…

    I’m sitting in a pleasantly weathered lounge, which I might describe as a drawing room if the price warrants it. The walls are as faded as the old couple perched attentively on matching threadbare high-backed chairs. Original wooden plate racks run around the room to complement the 1930s carved fireplace with matching hearth. This is the sort of house I dreamt of growing up in. The type of home, with a warm welcoming kitchen and an Aga, that friends lived in and I visited hoping some of the family unity might come home with me. It didn’t.

    ‘Only,’ continues the old man as his wife watches him lovingly. ‘I don’t want all that bull the kids in shiny suits come out with. You look as if you’ve been around the block a bit, son.’ That’s a backhanded complement if ever there was one, I ponder swiftly, as I wonder just how much honesty I should provide and if it will cost me the business again. I’m happy with the recognition of my maturity and experience but I don’t really need reminding I’m looking as worn out as this house’s exterior paintwork – although you don’t often get called son once you find the first grey pubic hair.

    I fence for a while. Talking about market forces, shortage of supply and the fact homes like this one still don’t come to the market often. When they do, they are usually converted to flats, something I’d rather not see if I didn’t depend on property sales for a living.

    ‘Yes, but don’t you think theses silly prices are unsustainable?’ Presses the old boy doggedly. His wife nods gently in agreement and stares at her husband like some time-warped teenager.

    ‘I only reflect what the market is saying.’ I reply. I’m as disappointed in the response as he seems to be, judging by his crinkled brow.

    ‘My grandchildren will never be able to afford to buy if this nonsense continues.’ Presses the owner, as his wife turns towards the mantelpiece and points to the photos and says. ‘That’s them there. Would you like to see?’ Not really isn’t an option, so I spend five minutes cooing over some kids in school uniforms who look exactly like a hundred other kids in school uniforms, although the oldest girl will be hot in a few years….

    ‘Do you know what we paid for this house?’ Asks the husband when we are back to property prices. I already know they’ve been in situ forty years and brought up three children. The kids’ bedrooms haven’t been decorated for decades to prove it - I hadn’t seen a Duran Duran poster in a while. Of course I’ve done this before and I know it was probably about £38,000 but curiously they like you to go higher.

    ‘Oh I don’t know, about £60,000?’ I say innocently. They both smile knowingly.

    ‘£35,000 son, £35,000. Who’d have thought it? And now it’s worth what, £650,000?’ Oops, I was thinking £595,00 so he wasn’t wanting that much honesty.

    ‘Of course we don’t really need the money now.’ Says the wife. ‘But we’d hate this house to be bulldozed completely. It’s a family home you see. I’d like someone like us to have it and bring up children here. Make a tree house, like our kids used to.’

    The reality is not many young families could afford their Enid Blyton dream and I reckon their own children wouldn’t want them to flog their inheritance off on the cheap, just so five could go mad in a quarter acre garden.

    ‘If they could turn back the clock,’ begins the man, as I think please don’t ask me to guess your age now, they always want you to play that game. But he’s on a different tack. ‘They should half all the prices and get some sense of normality back. We’ve got more than enough equity and our grandkids might have a chance of getting on the ladder.’ I’ve not seen any sign of a router, but this old boy should silver surf and join my fans at House Price Crash. They’d love him – or at least his house at half the going rate. Although, the truth is it usually takes a death to get these people to leave their memories, at any price.

    Time will tell.
    -----------------------------------------------------------------------------------

    • 16 March 2012 13:37 PM
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    Just think how stupid the average person on the street is; then you realise that half of all people are more stupid than that.

    • 16 March 2012 12:56 PM
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    If prices rise from here it will be a disaster. It would just mean less people can afford to buy one. It's hard enough getting a sale now.

    The households happy about prices rising is silly. It's only people trading houses as a commodity that want prices to rise.

    5% a year drops for 10 years is what we need. Good for estate agents, removal firms, solicitors, surveyors due to a high turnover of sales. Good for the economy as people have disposable income again instead of just spending their second income on a larger mortgage.

    The people who paid too much will just have to suffer the consequences of their folly for the greater good.

    • 16 March 2012 10:19 AM
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    I'm sure they're right - after all, a spike in sales volumes/prices preceeding a cut-off point for a government subsidy has no historical precedent whatsoever and they are probably smart enough to realise that this is actually a new paradigm, completely underpinned by an improvement in fundamental conditions.

    • 16 March 2012 10:14 AM
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    This is the same public who reacted with shock when SVRs increased while the Bank of England rate remained frozen...

    I'll match AC's 65% of the population being deluded and raise you the fact that on the whole they have a very basic understanding of loans, compound interest, inflation and that rising house prices means more debt to move up the ladder.

    • 16 March 2012 09:47 AM
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    households are a bit silly

    • 16 March 2012 09:29 AM
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    I know that there are lies, damned lies and statistics, but has ANYONE actually looked at the HPI index for their region on the Land Registry website?

    Surrey (where I am) peaked in 2008, dropped massively and recovered to about 4% below peak value.

    It bumbles along: up a bit, down a bit, up a bit, down a bit.

    The banks are STILL screwed, there's no change there, and there are huge numbers of people in arrears and/ or negative equity.

    When the Olympics have been and gone, the shine on the London market is likely to vanish (certainly all the survey reports I have seen in that area have mentioned the "Olympic Effect").

    Europe is still screwed too.

    It goes to show that 60-65% of the UK population are deluded.

    Keep smiling ;-)

    • 16 March 2012 09:09 AM
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