UK House Prices News Roundup, Second Dip Still Looms

I thought it was about time I put pen to paper on UK house prices and the housing market. I grew fed up of covering every minor piece of news, none of which were changing my view point away from the fact that a second dip is inevitable. So, has anything happened since I last wrote on UK housing market to change my view, sadly, the answer is no.

Since I last wrote, Rightmove have put out their asking price index for November, in which they said asking prices were down 1.6% compared to October, when they had risen 2.8% compared to September. November asking prices are still 1.6% higher than last year, according to the index.

As I have always said, falling asking prices are a step in the right direction for the market, because vendor realism, or the lack thereof is one of its biggest hindrances.

However, now that house prices are rising, vendor realism isn't an issue. And I have come to the conclusion that Rightmove's index is hardly worth bothering with, because it only contains data on new properties added to the site in the fortnight before its release. This makes it vulnerable to things like estate agents upping price expectations to win instructions etc.

I covered the Savills forecast on house prices falling until 2011, and how it mirrored my own forecast, but now Nationwide has also come out with a downbeat forecast on 2010 house prices. The lender says that rising unemployment in 2010 will inevitably exert downward pressure on house prices.

In contrast, most RICS members are forecasting price rises in the short term. The simple fact is, there are far more things that look likely to drive prices downward than upward.

Things likely to push UK house prices down:

• Finance is still restricted and unaffordable to most.
• The stamp duty holiday is about to end.
• Average mortgage repayments are still well over 90% of the average first time buyer's salary.
• Unemployment is still rising, though the situation is improving slightly according to the latest data.
• Millions of repossessed homes are still to come onto the market in 2010, which will push supply up.

Things likely to push prices up

• Restricted supply
• Increasing demand
• Improving sentiment

So you can see why a lot of analysts are forecasting a second dip in UK house prices. If or when it does happen, the only surprise for me and many others will be how it managed to stay away for so long.

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