At Last Some Sense on UK House Prices and the Cat Bounce Bottom

At last some sense; an article in the Telegraph titled The bottom in UK house prices is no bottom at all, which goes around the houses I have covered many times relating to the last crash, before finishing with a forecast of a further 17% decline before prices bottom.

The article also told me something I didn't know: UK house prices go into negative growth whenever mortgage approvals drop below 75,000 per month. This means, that even as optimists are quick to highlight the fifth monthly rise in new house purchase mortgage approvals, with fewer than 23,000 currently being approved we still have a long way to go before prices will definitively stop falling.

Richard McKay, director of private property sales community site Zungalow.com agrees that prices still have farther to fall, but believes vendors can still beat the market by having their property on the market without an asking price, and gauging the interest of the burgeoning masses, he said:

"As far as we are concerned, the current price stabilisation is not indicative of a real market bottom, lenders still want a 25% down payment from first time buyers, which is £37,000 based on the average UK house price.

"Thus houses are still unaffordable to first time buyers, which are in shortage anyway because of the state of the general economy. We allow potential vendors to put their property on the site in a speculative fashion for just £29 per year with no asking prices. This then leaves them open to offers from interested parties."

I am going to stick with my forecast I have held since last month. Prices will fall at least another 15% before the market bottoms, and possibly by as much as 40% depending on how quickly the economy recovers.