House prices can go down aswell as up but some people just dont want to believe it...........
House Rat on the state of denial surrounding the decline in property
Daily Telegraph 6th Sept
Nick Clark, the managing director of this month's Property Investor
Show in Docklands, is getting a little hot under the collar.
"Many so-called experts have been overtly pessimistic in their
predictions for the market's future in their quest for media notoriety
at the expense of sensible analysis," he said last week. "Double-digit
house-price inflation was indeed unsustainable, but wide economic
conditions and the continuing high demand for housing lend themselves
to a relatively strong market and, at the very worst, a stabilisation
I am sure property investors everywhere will be reassured to hear this
voice of reason among the nihilistic ramblings of the country's
economists, who of course are so vain that they will say anything to
get their name in the papers. Or maybe not.
Either way, the property market is not behaving as it was supposed to
when the Bank of England cut interest rates a month ago. According to
the Nationwide, prices fell by 0.2 per cent in August, reducing annual
house-price inflation to 2.3 per cent, the same as the Government's
preferred measure of inflation, the Consumer Prices Index (CPI).
Don't expect that situation to last for long. The CPI is rising
sharply, while annual house-price inflation is falling steadily. You
can forget about a revival caused by a quarter-point cut in interest
rates: fixed rates, which are influenced by how the market expects to
move in the future, rose last month.
The question is what happens when annual house-price inflation falls
below zero. Will starry-eyed buy-to-letters, drunk on the easy profits
of the past, still want to flock along to Mr Clark's property
investment show then?
For many homeowners, falling prices already are a reality. Not that all
seem able to believe it. On one online property forum last week a woman
from Cambridge wrote in to say that her property, which she bought for
£350,000 last year, had now been valued at £300,000. She wanted to
know if she could sue the surveyor who had valued it at £350,000 in
her homebuyer's report.
That certainly is a novel way of losing money in the property market:
running up large legal bills trying to sue a surveyor who did not spell
it out in idiot's language that house prices can go down as well as up.
- posted 14 years ago