HOUSING MARKET AND THE REAL ESTATE BUBBLE

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House Price Fall Slows To Lowest Level In A Year
Elizabeth Judge
Times Online
September 28, 2009


The annual drop in house prices in England and Wales has slowed to its lowest level in a year.

The annual rate at which prices dropped in September eased to 5.6 per cent from 6.7 per cent in August, Hometrack, the property data company said, the slowest annual pace of decline since August 2008.

On a monthly basis, prices grew by 0.2 per cent, in the second consecutive monthly rise.

The data is the latest evidence of a pick-up in Britain's battered housing market.

Last month, Nationwide's monthly index revealed that property prices rose in August for their fourth consecutive month and are increasing at their fastest rate for two-and-a-half years.

The building society said that low interest rates had helped to make properties more affordable for first time buyers while the Government's injection of cash into the economy through its quantitative easing programme was also fuelling a mini-boom in the market.

Interest rates have been held at a historic low 0.5 per cent by the Bank of England since March.

Hometrack said a lack of housing for sale was bolstering prices while confidence had been boosted by talk of a general improvement in property.

However, Richard Donnell, Hometrack’s director of research, warned that the market remained fragile. "A fundamental imbalance still exists between supply and demand and question marks remain as to how long this situation can last and how resilient the market will be to changes in both levels of demand and sentiment."

As prices rise and sellers become more demanding, he said, the recent pick-up in activity could slow over the autumn.

The market could also receive a fresh hit, he said, from the potential impact of cuts to Government spending and any budgetary changes which could in turn affect households post tax disposable income.

The survey, which was based upon 6,237 responses from agents and surveyors across the country, revealed that the average time on the market for properties slowed from 8.7 weeks in August to 8.6 weeks while the proportion of asking prices achieved hit 92.4 per cent from 92.1 per cent a month ago.

It found though that price rises in the past two months had been concentrated in London and the South East.

Last month a survey from the National Housing Federation forecast that house prices could rise by 20 per cent from 2012 to 2014.

http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6851593.ece