Assetz® News - Ignore the Hype, Statistics Prove There is No Housing Crash

Ignore the Hype, Statistics Prove There is No Housing Crash

28th April 2008 |

Figures from the latest Assetz House Price Watch*, which analyses data from the five main house price indices, suggests that the market is in fact flattening, and not dramatically falling as reported by some.

House prices are down just 0.1% since the end of 2007
The average house price in March 2008 was down just 1.5% since the peak in October 2007
Three month average prices for annualised house price growth have actually bounced back since the start of the year

Moving averages suggest market is flat-lining

Between January and March 2008, the average house price was £212,141, representing a marginal 0.66% fall compared to the three month average price for October to December 2007, which was £213,551. More importantly the three monthly average house prices for January through to February are virtually flat.

Stuart Law, Chief Executive of Assetz comments:

“Whilst headline annual rates of house price growth are slowing, it is the short term data over the last few months that shows how robust the housing market is proving in 2008. Our analysis of average monthly prices across the main house price indices, combined with averaging these across the prior three months, takes out all of the volatility and statistical errors that are evident in the monthly data announced by the main indices.

“Three monthly average house prices paint a much clearer picture of market performance and reveal that average annual price growth has now flat-lined at around 0%, with no significant decline having taken place.

“Despite the current climate, house prices in March were down just 1.5% since their peak in October last year and just £217 since the end of last year – when you take these factors into consideration, the situation is far from bleak and could be even be called robust given the great pressure from the more limited mortgage market at present.

“As I have been stating for some time now, the housing market is very unlikely to crash. The fundamental economics of supply and demand support this – the Government has made it clear we need to build 240,000 new homes per year up to 2016 to meet current targets but in reality, today’s housebuilders are building no-where near this target. In fact, a fall, as opposed to an increase, in new starts is expected over the next two years.

“Only last week one major housebuilder announced that it plans to hold starts on all new sites until the mortgage market improves. With this in mind, the lack of supply looks set to worsen – fundamentally helping to support and even increase house prices.

“At the start of 2008 I predicted 5% house price growth for 2008 and with the current data in mind, I still stand by this, albeit with some significant uncertainty introduced over the questionable ability of the Banks, the Government, the Bank of England and the FSA to resolve the mortgage market problems in an efficient and timely manner.”