It was only two weeks ago that I wrote that house price optimism is probably misplaced and yesterday’s news that house prices fell slightly in August goes some way to support my view that the property market is bumping along the bottom right now.
The Land registry reported that average house prices fell by 0.1% in August. OK, that is a very small drop – just a £202 reduction, however the fact that house prices are not rising is of more importance.
There is no doubt that there have been green shoots appearing in the property market this year, particularly in early summer, however it strikes me that the slight upward trend is running out of momentum.
House prices registered by the Land Registry show the actual transactions from deals struck earlier in the summer, so in fact sellers were having to work hard to make a sale just when things were looking more buoyant.
We have since heard that RightMove are showing a slow down in market activity, as less houses are being marketed, and also the Bank of England reported a fall in mortgage approvals in August too.
This indicates that buyers are still reluctant, or unable, to buy into the property market right now, resulting in lower achieved sale prices.
The problem that I see for the property market is that this is happening when interest rates are at an all time low. What is going to happen when interest rates rise again, which is inevitable?
Call me a pessimist, but if I were looking to buy into the property market, I would sit on my hands and wait a bit longer.