After a strong rebound from March last year, UK house prices are now in danger of the second-dip scenario analysts have long warned of. Since last March there have been many occasions when it looked like the second dip would become a reality, but this time the signs are mounting up one on top of the other.
The biggest (biggest in terms of importance) of these signs arose in the last couple of weeks. It is a well known fact that weak supply (mainly in the south and south west of England) putting sellers back in charge, has been the main driver for the growth in prices that we have seen. Now signs are emerging that supply is increasing faster than demand, a foretold precursor to the second coming.
Firstly the Royal Institute of Chartered Surveyors said that the number new homes for sale had increased faster than new buyer registrations for the second consecutive month in its February review of the housing market.
Then, on Monday (Mar 15), Rightmove revealed its index of asking prices for March, which rose just 0.1%, the smallest ever rise recorded for March by the UK’s largest property portal. The portal said that this was because of a surge in the number of people putting their property up for sale. According to Rightmove there are more properties up for sale than there has been for 18 months, after a 17.5% increase on the previous month, a 34% increase on the previous year.
Then, we have to add in the fact that mortgage approvals are falling again: according to the Council of Mortgage Lenders the number of mortgages approved in January 2010 was 49% lower than December 2009, and down 25% according to the British Bankers Association (45,650 – 35,083). This is of course only 1 monthly fall after several months of rising approvals, so it could well be simply a blip, but coupled with 2 months of rising supply (RICS) it is still very worrying.
With all this in mind, it is little wonder that both indices of the UK’s largest lenders recorded price falls in February. According to the Nationwide UK house prices were 1% lower in February than in January, and according to the Halifax they were 1.5% lower in the same period. It is still far too early to say that the second dip is now inevitable, but there have now been far too many indicators to say that it definitely won’t happen either.
This article written by Liam Bailey of Property-Abroad.com