19th July 2010
The summer slide in house prices, as reported here on the BBC, has got the pessimists as excited as it is possible for pessimists to be.
Whole swathes of the Internet are dedicated to the imminent crash in UK house prices.
Quite aside from the dedicated websites, such as housepricecrash.co.uk, the mainstream media is whipping up a storm as well.
The Telegraph reports that house prices have been branded 'risky assets' by PricewaterhouseCoopers, while Lorna Bourke on Citywire advises anyyone who needs to remortgage to do it pronto to take advantage of the fact that mortgages are now at their most affordable in 35 years.
The arguments for a house price crash have been well-rehearsed, but are neatly summed up by Naz on The Telegraph site, in response to the above article: "The lending criteria are tightening up – no more self cert mortgages; banks unwillingness to lend as before in 2007; Government budgets tightening up; prospects of Government cutting waste with resultant unemployment in the public sector; inflation prevalent in the economy will require an increase in interest rates in the very near future; the huge debt levels in society forcing people to cut back; macro economic activity reduction."
His conclusion is that there will be a double digit fall in house prices.
The trouble is that people have been saying this for years. That doesn't make it any less likely to happen; but it does demonstrate that house prices have confounded expert analysis for some time.
In 2009, for example, every single pundit, except for Ray Boulger of mortgage broker Charcol predicted a fall in house prices. Look at this from Yourpropertyclub from the start of 2009.
Boulger thought they would be flat.
The market actually rose, though the extent of the rise varied according to the group doing the review. According to thisismoney it was all dependent on which region you live in, but about 2.5% on average. The BBC plumped for the Nationwide's more optimistic 5.9%.
Those who are still interested in the experts' analysis can pick up their latest view on The Times site.