Q. What is happening to house prices, it’s so confusing trying to read the market at the moment with so many conflicting opinions?
A. I agree with so many differing opinions on the state of the market it’s difficult to know what to believe. Not for the first time, and almost certainly not the last, the monthly house price statistics published by Halifax and Nationwide showed distinctly different movements during the month of September. The Nationwide index showed virtually no change on the month, whereas the Halifax showed a fall of over 3%. More than anything else, these figures serve to highlight the difficulties of measuring short-term changes in house prices. One thing that is crystal clear is that the recovery in house prices seen since early 2009 have come to an end, as price levels have definitely weakened over the past few months. This largely reflects an increase in the number of properties on the market following an earlier drought that looked set to push prices up. Sadly there also appears to be a slight loss of confidence amongst buyers which is obviously not helping matters either. It is unlikely however that this overhang of supply will persist for long. Despite the amount of property available there are few forced sellers and potential vendors who do not achieve their asking price are likely just to withdraw their properties from the market rather than sell at a loss. Because of the inherent difficulties involved in the measurement of house prices, month to month movements in price indices can be volatile and do not provide evidence of changes in trend. Consequently, the apparently simple question of what is happening to house prices does not have a simple and unqualified answer. However, at the broadest level, it is clear and undeniable that prices rose sharply in the period to August 2007, fell calamitously in the second half of 2008, showed a modest recovery through to the middle of this year and have subsequently weakened again. It’s little wonder then that so much confusion surrounds the current state of the market and just to add further to the uncertainty we are now approaching the quietest time of year for the property market in the run up to Christmas. 2011 is only just around the corner though and as always New Year brings with it new beginnings let’s hope we see the green shoots of further recovery that the market is crying out for.