Land Registry Records UK House Price Rise in September, Where is the Second Dip?

Well, I am in shock. The Land Registry index has recorded a rise of almost 1% in UK house prices in September.

Bang goes the second dip theory. For those of you just tuning in, the Land Registry began showing prices rising in June on a monthly basis. This confirmed the other indices of the Halifax and Nationwide, which began showing monthly rises earlier. The rises were based on marginally rising demand meeting massively contracted supply. This, said I was unsustainable, a second dip must be looming.

So when the Land Registry said prices had fallen in August, by a whopping 0.1% I was quick to shout from the roof top about how this was the start of the second dip. Now it looks like I was wrong.

I do still believe that there will be a second dip, in fact the longer that prices rise now, when it is too early, the more another correction becomes imminent. This is because, homes still aren't affordable, mortgages still aren't available to the majority of people without a huge deposit, and a large portion of the population is either unemployed or facing unemployment.

See this article for a full explanation of why another correction will happen sooner rather than later, because of affordability alone.

According to Richard McKay, director of private property sales portal Zungalow.com says there is also another problem making a correction more necessary.

"Prices should not have started rising, because the market never bottomed. The gap between vendor expectations and buyer estimations never closed, triggering the increase in sales you would expect when this has happened and the market has bottomed. Thus, if (or should I say when) supply does increase, we will be back at square one waiting for vendors to realise they need to drop their price if they want to sell," he said.

If you are wondering why someone in charge of a portal would be so bearish on the market, it is because Zungalow says a down market makes no difference to people wanting to sell their house, because they save as much buying their new property as they lose on the sale of their old one.

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