Rightmove hints at housing market recovery

Rightmove's latest house price index suggests prices could bottom out before the end of this year...

by
Last Updated: 31 Aug 2010

Property website Rightmove said UK house prices tumbled again last month – but the good news (for some) is that we could see the market start to pick up again towards the end of 2009. Although prices dropped again last month, according to its latest index, Rightmove says there are fewer houses coming onto the market, which should lead to a faster alignment between supply and demand. Now houses have become more affordable, and with the Government actively encouraging more mortgage lending, more buyers are likely to crawl out of the woodwork – which could mean that prices start creeping up again before the year is out.

Of course the picture is still pretty gloomy for homeowners, particularly those that bought their properties at the top of the market. According to Rightmove, last month’s 1.9% drop (to an average of £213,570) means prices are now 7.3% down in the last year. And bear in mind that this is just asking prices – sale prices will be considerably lower, with the likes of Halifax pointing to a 16.2% drop in the last year. What’s more, they’re all expecting further drops this year: economists are predicting that house prices still have another 10-12% to fall.

However, there was some cause for optimism from Rightmove today. Unlike the previous recession of the 1990s, the supply of homes for sale is actually shrinking - the number of new listings in January was less than half last year’s figure, as homeowners decide to sit tight and ride out the slump, while housebuilders are also bringing fewer properties to market. ‘The reduction in the number of properties coming to market appears to be aligning supply and demand more quickly than in previous downturns,’ said Rightmove’s Miles Shipside. Meanwhile new buyer enquiries are on the rise, as would-be buyers start sniffing out bargains (although it does mean that lots of people are choosing to rent instead of sell, leading to over-supply in the lettings market and possibly forced sales in the future).

The other glass-half-full angle is that affordability has improved drastically in the last year. In fact, Lombard Street Research reckons that house prices are now (relatively speaking) at or even below their 50-year average; in other words, for the first time in years, buyers can get their hands on a house for more or less its fair value. Although that’s assuming you can find any way to finance the deal. ‘If you can get access to a mortgage, have managed to keep hold of your job and have a decent deposit for your mortgage, the affordability situation has improved greatly in the past year,’ LSR’s Jamie Dannhauser told the Telegraph today. That’s three pretty big ‘if’s, there...


In today's bulletin:

Banks bailed out again as RBS faces £28bn loss
Rightmove hints at housing market recovery
Big beast Clarke back in Business
Tough break for KPMG staff
UK plc forced into service

Find this article useful?

Get more great articles like this in your inbox every lunchtime

What pushy fish can teach you about influence at work

Research into marine power struggles casts light on the role of influence and dominant bosses...

The traits that will see you through Act II of the COVID crisis ...

Executive briefing: Sally Bailey, NED and former CEO of White Stuff.

What's the most useful word in a leader’s vocabulary?

It's not ‘why’, says Razor CEO Jamie Hinton.

Lessons in brand strategy: Virgin Radio and The O2

For brands to move with the times, they need to know what makes them timeless,...

Why collaborations fail

Collaboration needn’t be a dirty word.

How redundancies affect culture

There are ways of preventing 'survivor syndrome' derailing your recovery.