Today, Nationwide data showed a 0.9% rise in house prices for the month of June. But recent Land Registry figures paint a different picture of the housing market. What should you believe?
We think the Land Registry data is more believable. It bases its data on completed sales. And the so-called ‘stabilisation’ in prices as suggested by Nationwide and Halifax is only due to a drop in property supply corresponding to low buying activity.
House prices fell for a 13th straight month in May. First-time buyers are still finding it hard to get mortgages. Net lending has dived to its lowest recorded levels in 16 years, standing at a mere one-tenth of last year’s figures. And mortgage lenders aren’t going to ease their lending criteria anytime soon.
The chart below shows the Land Registry’s records of the average yearly change in residential property prices for England and Wales (green line) and London (yellow line) for the five years to May 2009. You can see the 15.9% drop compared to last year. And look how far they’ve nosedived from their mid-2007 peak.
Britain’s housing market remains weak
Source: Land Registry
The hits just keep on coming. The average number of property transactions between Dec-2008 and March-2009 have halved from a year earlier. Houses may be getting cheaper, but the recession and increasing unemployment means few buyers are taking advantage. And sellers continue to withdraw from the market.
We’re not buying in to headlines calling a housing market bottom. It’s merely the pace of decline that has slowed. The battered housing market is still in the doldrums.
We think house prices have further to fall. In fact, you could see as much as a 10% drop between now and mid-2010.
Brace yourself.
For a recent article on the housing market by our popular writer Bill Bonner please click here
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