Hi

I found this interesting article on the Mortgage Solutions Website:

Prices flatlining not declining

There is currently no evidence of a market crash, according to data collated by research firm Asstez.

It has reported property prices have remained firm since the beginning of the year, with a current average of £211,014 in April – down only £4,015 (1.9%) from the peak experienced six months ago – £215,089 in October 2007.

The average house price in April 2008, taken from the average price provided by all five major indices showed a decrease of just £915, compared with the previous month’s average figure and an increase of £2,279 in the twelve months from April 2007, when the average price of a home was £208,735.

Stuart Law, chief executive of Assetz, said: “While house prices fell by 0.6% in April, prices remain up on the previous year and I am yet to see any firm evidence of a housing market crash. We saw a steep increase in house prices leading up to a peak in October last year.

“This was widely regarded as an unsustainable level of growth and we are currently embedded in a period of stabilisation, throughout which house prices in this country have remained extremely robust in spite of the difficulties in the mortgage market – down only 1.9% in April since the highest recorded average, taken in October last year - a far cry from the property crash that many commentators are misleadingly quoting.

“Over the long term, demand for housing will continue to outstrip supply and with Government targets of three million new homes by 2020 now looking impossible, as a number of housebuilders announce a halt to new starts, this will support future house prices and rental growth.

“The mortgage market problems (and to some extent the uncertainty over the housing market) is at present causing significant pent-up demand from first-time buyers, and once the mortgage market frees up I expect this demand to return strongly. The effect of this release of demand back into the purchase sector will probably surprise many, supporting house prices and even causing them to grow again in due course.

“The risks to house price stability over the coming months are primarily driven by the mortgage market. However, with announcements from some mortgage lenders that they are now reducing their mortgage rates, movement should return to the market and we should soon return to a degree of normality, perhaps as soon as September.”

 Regards

Wasim

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