2nd stage of house price slump underway?

A survey by Halifax has indicated that national property values dropped 0.5% in May and 0.6% in June suggesting that forecasts of a ‘W’-shaped pattern predicted some months ago were not without basis.

Spring and summer usually result in a slight increase in price as buyer demand increases.

The stagnation in the market in 2009 meant that proportionally more properties came on the market in the spring and there was less activity from buyers which combined, resulted in the fall.

Howard Archer, economist at HIS Global Insight said: “It is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in which will hit people’s pockets and lead to serious job losses in the public sector.”

The coalition government’s abolishment of HIPs has encouraged more homeowners to put their house on the market over the last two months which has only added to the glut and further pushed prices down.

Monitoring activity online by Jeanes Holland Burnell in Wells it would seem that a flurry of sales have been made during the last two weeks so it is not all cause for doom.

A local estate agent reassured that as long as vendors remain realistic about valuations for their property, the market in Wells should survive a 2nd-wave slump should it come about, but acknowledged that the government’s cuts will reduce buyers’ spending power and the market will definitely slow, even if prices don’t fall significantly.