The Royal Institution of Chartered Surveyors (RICS) this month reports that recent increases in house values have been held up by a dearth of properties being offered for sale. At the same time the Centre for Economics and Business Research envisage that house prices will decrease by a further 3% this year before increasing by 2% next year.

These forecasts follow closely on the Nationwide and Halifax Bank reports of small price increases in recent months, and the calculation by the Nationwide that prices could end 2009 higher than they started 2009.

Evidence and predictions in recent months have all implied small changes, in either direction, for the property market. It now would appear certain that there will be no further remarkable falls. The recent falls have merely driven vendors out of the market as previous ambitions to Sell House Fast have been discarded by many would be sellers. At present price levels many vendors are simply sitting tight in the hope of a price recovery. In this climate I would certainly not try to Sell my House fast.

There is also a very logical reason why there is a floor under house values, and this is the level of mortgage lending in place on many properties. Vendors are often faced with no sale opportunity if values decline to a point where equity is too low, or even non existent. Such vendors may want or need to Sell Property Fast, but are stopped from doing so by the simple economics of the sale transaction. They will stay out of the market whether they like it or not. Many predictions of house prices have concentrated on the demand side of the equation, a dearth of buyers and of mortgages will stifle demand and force down values. What is evident is that the supply side is also having a large effect in shoring up values.

Vendor shortage means that buyers are chasing fewer properties so the simple law of supply and demand is causing prices to remain firm, or rise slightly. And until prices rise further then lots of vendors will continue to remain out of the market. It could be said that the value correction has gone too far and this may be the basis of the Nationwide prediction of further increases during the rest of this year. However, if vendors do start to return in greater numbers then this flimsy recent growth could dissolve and further falls might well be on the cards. Luckily we now appear to be in market conditions where modifications, either way, will be quite small. If there are further falls they are likely to be gentle and similarly any recovery likely to be weak and slow.

Taken overall a scenario of flat property values over the next 6 to 12 months, and little probability of achieving a Quick Property Sale at an attractive price for the vendor should shock no one.

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This entry was posted on Thursday, August 27th, 2009 at 5:23 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.