Are we double dipping?

After a disastrous welsh defeat on Friday, I decided to ignore all sports news and concentrate on that subject that is so close to my heart… property! My two year old, after being given chocolate, (hopefully his mother won’t read this) settled down just long enough for me to peruse the musings of David Smith.

 Are we double dipping? David asks. The Nationwide reported on Friday that prices have fallen by 1% this month (it takes its readings from the middle of the month), after nine consecutive increases. The market is still 9.2% up on a year earlier, but could this be the beginning of the second leg of the house price fall?

The article went on to say that, according to the Bank of England monetary policy committee’s expert, the recent strength in house prices were unlikely to last due to mortgage lending still being so restricted. She claims that she was surprised by the strength in housing figures last year. David Dooks, head of BBA’s statistics, tell us that it was no surprise to see the January mortgage figures falling back from December; transactions were being pushed through to beat the end of stamp duty relief. The bad weather further suppressed market activity.

 The Land Registry reported a 2.1% jump in prices for January, although its figures are regarded as more backward-looking than Nationwide, since they come at the end of the house-buying process. Approvals should bounce back over the next couple of months, but the strong upward trend of most of last year was beginning to tail off even before the snow struck. That fits with other evidence that the supply of mortgages, having come back from its lows, is unlikely to rise much this year.

In my opinion, prices may well plateau this year.It is hard to see any wild swings in house prices coming up. This stability is no bad thing. After the roller-coaster ride of the past couple of decades, a period of consolidation could be just what the housing market needs.