House prices fall again, but own­ers up­beat about the fu­ture

Yorkshire Post - Property - - FRONT PAGE - Tim War­ing

HOUSE prices fell for the 21st con­sec­u­tive month in March, ac­cord­ing to the lat­est House Price Sen­ti­ment In­dex (HPSI) from Knight Frank and Mar­ket Eco­nom­ics. The house price in­dex, which is based on a na­tion­wide sur­vey of 1,500 house­holds, showed that London was the only re­gion where house­holds felt that the value of their prop­erty was higher this month than last.

But the sur­vey, which also asks house­holds about what they think will hap­pen to the value of their home over the next 12 months, gave the most up­beat read­ing for fu­ture house prices in nearly two years, per­haps re­flect­ing the slightly more pos­i­tive news from the econ­omy. The fu­ture house price in­dex climbed to 54.3 in March, up from 50.2 in Fe­bru­ary.

Any fig­ure un­der 50 in­di­cates that prices will fall, and the lower the fig­ure, the steeper the de­cline. Any fig­ure over 50 in­di­cates that prices will rise. House­holds in six of the 11 regions ex­pect the value of their homes to rise over the next year.

House­holds in London (65.2) ex­pect the strong­est rises, with those in the east of Eng­land (56.2), the south east (60.2) and the south west (58.1) also ex­pect­ing prices to climb.

Sen­ti­ment about fu­ture house prices has also risen sharply in Wales (55.1) and Scot­land (56.3). But house­holds in the Mid­lands and the North of Eng­land are more down­beat, with those in the North East (43.6) ex­pect­ing the big­gest falls in the value of their home over the next 12 months.

York­shire house­holds are seem­ingly keep­ing an open mind, at an in­dex read­ing for the re­gion of 48.7, (up from 43.7 in Fe­bru­ary) and close to the im­por­tant wa­ter­shed of 50.

So what does this mean for the mar­ket in York­shire dur­ing 2012? An in­crease in con­fi­dence seems to be en­dorsed by the 10 per cent in­crease in our in­dex from Fe­bru­ary to March. Not­with­stand­ing al­low­ing for sea­sonal vari­ance as we move to­wards the tra­di­tional spring mar­ket, all agents are re­port­ing an in­crease in view­ings with re­sul­tant of­fers from po­ten­tial pur­chasers. Those who are in a po­si­tion to pro­ceed quickly, for ex­am­ple liv­ing in rented accommodation hav­ing al­ready sold, are look­ing to ne­go­ti­ate from a po­si­tion of strength but these buy­ers do need to re­alise that not ev­ery seller is des­per­ate and pre­pared to re­duce their price by a sig­nif­i­cant per­cent­age “be­cause it is cash”. To ex­pect a ven­dor to con­sider a 15 per cent to 20 per cent drop on their ask­ing price within the first week of mar­ket­ing is per­haps a lit­tle un­re­al­is­tic.

There is a spring like feel to the mar­ket and one can only hope that this pos­i­tive view­point on the mar­ket con­tin­ues, al­beit in a mar­ket place where re­al­ism re­mains a watch­word, a view that seems to be en­dorsed across York­shire by our In­dex.

In the short term the de­bate about stamp duty will in­evitably be an is­sue to po­ten­tial pur­chasers, both at the top and lower end of the mar­ket. For sales tak­ing place in York­shire above £2m, there will be mar­ginal im­pact on the mar­ket, per­haps with some tak­ing a view that if you can af­ford to ac­quire a prop­erty at this level, then you can cer­tainly af­ford the ad­di­tional duty.

With the end of the stamp duty hol­i­day on prop­er­ties up to £250,000, we ex­pect this will be re­flected in ne­go­ti­a­tion by some po­ten­tial pur­chasers. If one looks at it in the round, the ac­tual ad­di­tional pur­chase costs that arise are mod­est in the con­text of the over­all cost of ac­qui­si­tion and the cost of longer-term own­er­ship and as such, we do not be­lieve the mar­ket place will be sig­nif­i­cantly af­fected by the rein­tro­duc­tion of the tax.

Our Na­tional House Price Sen­ti­ment In­dex (HPSI) is prov­ing to be a very use­ful in­di­ca­tor and we will be mon­i­tor­ing it care­fully as we move through the course of 2012.

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