Comments: Nationwide down, approvals down

But surely house prices can't fall; what about immigration, what about shortage of supply, what about the new paradigm, the lower price of risk? What about all those poor people who've parted with hundreds of thousands of pounds for small oddly shaped flats in Notting Hill?

Could that nice woman from Property Ladder have been ecumenical, or was it ergonamical, or egomaniacal ...with the truth?

Posted by Jonathan at November 29, 2007 07:13 PM

No market goes up forever, but when betting on a crash timing is everything. I'm sure I remember Roger Bootle from Capital economics writing articales in the Telegraph a few years ago about an imminent 20% crash in house prices. He may eventually be right, but had he gone short at the time he would have stopped out by now.

Also remember that the absence of conditions for a boom isn't the same as a crash. House prices will only seriously decline when people are forced to sell into a falling market. At the moment there may be few buyers, but no-one is compelled to sell. If the economy turns south while inflation remains high, and unemployment starts to rise. then there could be trouble. But this seems unlikely to me, given the continuing global economic boom.

Posted by Harry Potter at November 30, 2007 01:02 PM

I would like to add to that by asking what percentage of mortgage advances have been made to the sub-prime segment of the market. This can hurt the market by itself without having to dwell into recessionary factors, coupled with the fact that cheap money will no longer be accessible in the near future.

Posted by Hitesh Damani at November 30, 2007 03:36 PM

I agree with Harry in so far as plenty of people, myself included, have been saying property prices are overblown for some time now. Frankly I'd got rather sick of saying it only to see them continue to rise at rates bearing no relation to the CPI or wage inflation. And I will readily admit that if one sticks to ones guns long enough in this respect one will probably be proved right - the market has shown cyclical patters in the past.

I'd also agree that the market price is whatever the market will pay and that those under no pressure to sell don't have to test that market. However where Harry and I part company is in our take on whether or not there will be selling.

As I understand it there has already been a modest spike in the number of properties coming onto estate agents books. Alistair Darling's rather murky position on CGT has led some to suggest that there will be more properties coming onto the market ahead of likely changes in April. The buy to let brigade, particularly those who bought late in the market basing their projected returns primarily on capital appreciation rather than rental may be tempted to get out if prices appear to be moving downwards (and people have been known to try to sell ahead of a predicted fall in asset prices, and some say that can help make a prediction a self fulfilling prophesy) and then there are those stymied by a downturn in consumer spending, the failure of financial institutions to pay out big year end bonuses and all those who have to sell because they need to move......

Market prices can move sharply lower on small volumes. I'll readily stick to my guns and predict a sharp correction beyond that suggested by most institutional analysts. Time will inevitably show who is right.

Posted by Jonathan at December 2, 2007 08:33 AM

Property took of here the most in N.Ireland it is now tumbling!

A local estate agent ( henry graham) took out an advert (2 page full spread) in a local newspaper here in lisburn the paper was the ulster star.

It listed approximately 60 houses here on its books showing previous price and the new reduced prices!
They dropped between 10,000 and 20,000 approximately but one very nice house as dropped 100,000.

This is just the start in my books interest rates in the new year will go up like they did last year(it was said in december of last they would come down) after everyone spent their money they went up.

Posted by Busdriver at December 2, 2007 12:25 PM

Sorry for commenting again so soon but one particular point about the prices going down here in N.Ireland is house prices have never went down here ever!
But they are now r

Posted by BUSDRIVER at December 2, 2007 12:41 PM

You didn't finish your second point but what is happening in Northern Ireland doesn't surprise me - the indices had been showing something like a 50% rise in prices in a year, presumably a spillover from the Republic.

Posted by David Smith at December 2, 2007 03:53 PM
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