Falling Sales Warn of Price Correction in UK Housing Market

Monthly Report on the UK Housing Market for January 2005, by independent website housepricecrash.co.uk

(PRWEB) January 18, 2005 -- Can UK house prices stay at their current levels? We at Housepricecrash.co.uk (HPC) believe this is unlikely. With sales falling, supply increasing and demand falling this is creating a buyers market that can only lead to one thing: price reductions.

The rush to buy that many first time buyers felt in an atmosphere of rising house prices has abated due to the numerous comments in the press that prices are expected to stagnate or slowly rise. This might galvanise into a decision to hold off on a purchase if prices are seen to start falling. As one HPC member stated "As a frustrated first time buyer even if prices do fall I will wait to see how far they fall before buying".

Comments from the December report of property website Rightmove, such as "demand and supply are now severely out of kilter" reinforce our view that the balance has firmly switched from sellers to buyers as supply out numbers demand. Unsold property has risen for the sixth month from an average of 49 properties per estate agent branch to 67 over a third higher in the last year this coupled with a fall in the number of registered buyers creates a supply imbalance. The increasing property sale times and falling sales (32% to an average of 22 per surveyor in the November RICS report) are a consequence of this.

We feel that the much-heralded spring bounce in house prices will not materialise. Most anecdotal evidence implies that many sellers are holding back on putting their property to market until the traditionally more buoyant spring period. This could flood the market unbalancing supply and demand even further.

The new variable of this housing boom against the late eighties boom is the large number of amateur Buy To Let (BTL) investors. Unlike traditional owner-occupiers they will not be selling the roof over their heads; instead they will be selling an investment. If prices start to slide they are likely to rush to sell. If a crash does occur, it will be those investors that sell last who will lose the most. This thought might sway their thinking.

We feel that the downward pressure on prices will continue. The current imbalance in supply against demand makes current prices unsustainable. The question is if prices start to drop will it cause a stampede to sell pushing up the supply of housing and forcing prices ever lower?

About housepricecrash.co.uk:
Housepricecrash.co.uk (HPC) is the fastest growing independent house price website and discussion forum in the UK. Regularly achieving over 350,000 page hits each day. Our aim is to provide an area for discussion for those who believe that a house price correction is both possible and realistic. In addition to the active forum discussion boards, HPC features daily news summaries, property charts, and an extensive summary of property price statistics. It is THE place for anyone with an active interest in the property market.

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