House price movements cause confusion

By Sharlene Goff
Published: April 4 2009 03:00 | Last updated: April 4 2009 03:00
Is the homeowners’ nightmare of tumbling house prices finally at an end, or is there even worse to come? This week has been a confusing one for anyone attempting to read the runes of the UK housing market.
Nationwide reported a surprise rise in house prices this week, prompting hopes that the bottom of the market may be in sight. But as fast as some analysts have boldly called an end to price falls, others have cautioned that the sunny upland of rising prices will not rapidly be regained.
There was plenty of fuel for the gloom mongers yesterday as Halifax released data showing thathouse prices were still falling. In March its index dropped by 1.9 per cent – although during the full first quarter of 2009 prices fell at a slower pace than they had last year.
The picture emerging from estate agents is similarly mixed. Many agents in London are reporting a sharp increase in buyer interest and a higher volume of sales. In some areas the number of property transactions has more than doubled since last year.
Some agents have claimed this pick-up in activity has resulted in more properties selling at, or close to, the asking price. Others have even spotted the real estate equivalent of the first swallow of summer: instances of competitive bidding. Marsh & Parsons, the London agent, for example, said more than 25 properties had gone to sealed bids – where buyers tender their best offers in secret – in the past two months.
Other agents are more cautious, warning that any evidence of an improvement in property prices is a rare glimmer of hope in a still clouded market.
“We may have seen the end to continual and significant price falls but I don’t think we are quite at the bottom,” said Liam Bailey, head of residential research at Knight Frank. “For the rest of the year I think we will see alternating months of growth and falls.”
Nationwide, which re-ported a 0.9 per cent increase in prices in March, was quick to temper hopes of a rapid recovery in prices.
Knight Frank said higher numbers of sales were only being achieved in areas that had suffered the most severe slump in prices. Even then buyers were trying to negotiate substantial discounts on already lower asking prices.
But, while there may be no sign of a rebound in prices, even the most pessimistic commentators agree that the sharpest price falls seem to have passed.
Most forecasts point to a further 5-10 per cent drop by the end of this year before prices start to stabilise.
David Adams, head of residential at Chesterton Humberts, another agent, said prices were close to the bottom in specific “hotspots” – predominantly prime areas that are popular with foreign buyers – but not necessarily the market as a whole.