This time of the year habitually sees a myriad of predictions by all sorts of pundits as to what the coming 12 months will see for house prices.
Without much exception these expert commentaries are about as similar in reliability as the preverbial fortune teller at the end of the pier. Generally wrong but with a lucky stab here and there.
Few predicted that 2011 would see a broadly flat market in terms of values given the economic backdrop. Add in the Euro crisis and if this had been factored in to this year’s performance you can bet that every pundit would have been running for the nearest bottle of pills. The likes of Capital Economics and House Price Crash.com (or the ‘If we bang on about lower prices then the resulting self fulfilling prophecy will allow us to buy a house ourselves’ mob) were once again woefully overly pessimistic at predicting a crash of ‘more than 20% by 2012’.
This year has seen low transactional volumes but, says the Halifax, prices slipped just 1%. The Nationwide, its volume mortgage lending bed fellow, puts the figure at an INCREASE of 1.6%. So these two major indices combined gives a broadly unchanged average and that picture is reflected if you take account of all of the main house price indicators such as the RICS, Hometrack, the DCLG and the HM Land Registry etc. (Rightmove doesn’t count as it only measures ASKING prices NOT actual sale prices).
For the Olympic year ahead the forecasts are again sketchy and, frankly, to be largely ignored. The ‘annual house price prediction fest’ is a bit like pancake races and Halloween. They come around every year but we’re not really sure why we have them or what the point is.
The Nationwide predicts that 2012 will be ‘flat or modestly lower’. A vague and particularly unhelpful punt.
The Halifax, with a bias in customers in the North, says, bewilderingly that prices will go up 2%. Or they might go down. (And to think that an in house economist there is probably paid big money to make such prophecies?).
The Royal Institution of Chartered Surveyors claims to foresee a 3% fall.
Hometrack, the housing market intelligence people, say the same.
Economic challenges and potential Euro collapse will certainly make the next year an interesting one for property values albeit that the truth will never be gleaned from convenient broad brush UK averages for the regional differences are stark. Northern Ireland vs London for instance shows a 9.3% decline against a 0.5% hike. Some difference, shielded by the typical, generic numbers spouted by the media.
Our prediction for this coming year? We don’t do predictions unfortunately. We leave such things to crystal ball gazers perched on chairs in tents next to helter skelters overlooking the beach. Because they are more reliable than property experts.
But one thing is certain ongoing. The housing market has stalled due to one thing and one thing only despite the cries of ‘mortgage droughts’ and ‘economic uncertainty’ from all and sundry.
Buyers are not buying only because sellers will not sell to them at realistic prices. And estate agents, fearful of rejection by prospective selling clients, pander to sellers’ stubborn approach by ‘valuing’ property higher than is achievable.
The result is market lock up that will remain until vendors price lower in accordance with the true market and whilst estate agents across the UK shy away from being frank and, dare we say, honest.
The Rightmove index of house asking prices has remained unchanged since the peak of 2007. Whilst ‘average’ house prices have fallen by 15%. Until that gap in reality is bridged by lower price tags, no amount of loosening of mortgage funding or fiscal stability will improve matters.
Price well and prosper in 2012…