Property market is in reverse

Permalink: Property market is in reverse
by Kay Murchie

Hometrack, the UK’s housing intelligence specialist, has claimed that property prices are falling faster now than they have done in the last 3 years. The group has also said that confidence in the property market is ‘in reverse’.

Richard Donnell of Hometrack said the latter half of 2007 has seen a major reversal in confidence on the back of higher interest rates and fears over the outlook for the financial markets.

Hometrack’s latest monthly survey established that the average house price fell 0.3% in December compared to November - the largest monthly fall since January 2005. The year-on-year increase in prices fell back slightly to 3%, the lowest rate since June 2006.

The group said that next year could be a tough time for the housing market, as it said that the average time taken to sell a house (just over 8 weeks) is the greatest since Hometrack started surveying the market in 2001.

Mr Donnell added that potential buyers are in ‘wait and see’ mode and in spite of interest rates being reduced to 5.5% earlier this month, it is likely that the market will remain subdued throughout 2008. Just as the financial markets have faced a liquidity squeeze, the housing market is in danger of facing its own liquidity squeeze in the first half of 2008 he added.

The gloom continues with the Royal Institution of Chartered Surveyors (Rics) saying price falls had increased for the fourth consecutive month with 40% more of its members reporting a decline rather than an increase in prices.