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The housing market - fantasy or reality?

Following recent data releases, economists are forecasting that house prices will fall by up to 20 per cent in the next two years.

However, some are not taking this warning seriously. Indeed, here is the reaction from estate agents in Wales, one of whom says that the house prices are going UP!

Get real guys.

As someone who has been avidly researching the house market in Cardiff for the last six months, I can tell you that the reality of falling house prices has yet to filter through into actual sales prices, many of which are the same as they were in late 2007.

Given that IMF indicated, only last year, that house prices were overvalued in the UK, what has been the role of estate agents in fuelling this increase, especially as the 'finger in the air' pricing approach that seems to be going on is completely different to the reality in the market?

Comments

Anonymous said…
Bear in mind that estate agents are sales people, like car salesmen. Their skills are finely honed to take your money off you. That 1.4% fall for Wales is in old money. There has been a 4%, or thereabouts, rise in RPI over that period. Crudely you could say there has already been a 5-6% fall. Looking at it that way, we are already well on our way to the 20% the economists are talking about. If prices stayed flat (sorry) for a year and RPI turned out at 5%, then cumulatively we would have over ten percent fall in old money.
One thing that differentiates the housing market is that sellers can, and do, withhold, i.e. not accept a bid that is reasonably in line with current market conditions. By now there may be properties in the hands of lenders, as the result mortgage defaults. By and large these are the ones most likely to present a bargain to buyers, as the lender is less likely to hold out, especially in current market conditions.
May 31, 2008 4:17 pm
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