House Prices Rise Again - Maybe
A survey from Halifax suggests that house prices rose in January, but it's probably just a blip.
The price of the average UK house rose 1.9% in January, according to the Halifax House Price Index (HPI).
At first glance, that sounds like a major piece of news, but it's probably best not to read too much into one month's figures.
In fact today's press release from Halifax points out that prices don't always move in the same direction month after month - even in a strong downturn. Back in 1989, house prices fell for seven successive months, but then rose for the first three months of 1990 before starting to fall again.
What's more, this is only one survey that could perhaps be distorted by a few significant deals. I suspect the picture will look different when other surveys come out for January.
I think the most interesting part of Halifax's press release is in the accompanying commentary, not the headline number.
Chief Economist, Martin Ellis says: `There are some very early signs that market activity may be stabilising, albeit at quite a low level,' but then admits that `2009 will be a difficult year for the housing market.'
Gloomy
I'm not an estate agent so I can't say for sure whether there are any `very early signs of recovery.' But I can say that I remain gloomy.
Unemployment is on the rise and it's still very hard for some people to get a mortgage. Until the banking system frees up, I reckon the property market will stay in the doldrums.
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"Shares down 30%, property down less than 15% (so far)." £50k in shares => lose £15k £50k in property @ 75% LTV => lose £30k £50k in gold => gain £15k ;-)
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Is Ciff on holiday? I was expecting an article from him trashing the Halifax report.. Use the stats when they support you, abuse them when they don't.. I'd still rather have been invested in property than shares during the last 12 months.. This subject always gets everyone so heated! Shares down 30%, property down less than 15% (so far). Down is not good.. hmmm should've sold my index trackers a year ago and rented some shares instead! hahaha
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A house may well cost double in 20 years, but will it be worth any more (and what will a new washing machine cost)? If you don't spend money maintaining the property then the depreciation will be obvious. It should be obvious but expertise in the economics of the property and land markets has absolutely nothing to do with home ownership. Did you get a degree certificate (or were you asked to return one) when you exchanged contracts? Pick up a copy of this week's Moneyweek magazine if you want an expert's opinion, with research and all that complicated stuff.
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10 February 2009