More evidence that house prices are really falling comes from the Nationwide building society, in its latest official house price index.
While it tries to draw attention more to annual figures in the accompanying commentary, which are still very much up, the quarterly figures for January to March 2008 are dreadful. House prices haven’t fallen across every region of the UK like this since the early 1970s:
[TABLE=5]
A few points:
- The negative spin would be that just as the bubble had spread out across the whole of the UK (instead of it being only London and the South East that went crazed, as in previous years), this time it’s bursting everywhere.
- If you were more bullish, you might say the uniformity of the falls reflects the impact of lenders making mortgages more expensive, rather than any particular changes in demand…
- …but still, doesn’t that drop in Northern Ireland of 10% have all the hallmarks of a bubble bursting?
You can download the first quarter 2008 figures from Nationwide as a PDF, or just the figures for March.
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Is that really -10% for Northern Ireland or a typo for -1.0%?
Sorry, ignore my comment. I was reading too hastily.
I am thinking of selling my BTL property in London, especially as CGT will be reduced in a few days. I’m torn though, what with the Olympics in 2012 and London being London…I don’t know, I’m just thinking that shares at the moment have a better upside potential. What do you think?
@David,
As you probably realise, I can’t give personal advice.
My general view is that shares certainly look better at the moment. It’d be quite easy to create a dividend paying high yield portfolio with FTSE 100 shares yielding over 6% (search this site for “hyp dividends” for some articles on it). That’s never likely to drop much for more than a year or two, although the capital value is bound to fluctuate, perhaps a lot.
I think that, or even just a FTSE 100 ETF offering around 4%, is a much more attractive buy than a low yield BTL right now, with all the extra hassles the latter entails, but of course you can’t get a mortgage to buy shares!
In general re: property, I’ve got to be honest and say you’d have lost money if you followed my views on house prices in recent years. I thought London was overvalued in 2003 (!), and while it looks like the day of reckoning has finally come, prices would have to fall by 30% or so to get back to those prices in real terms, which is possible but at the high end of even pessimistic expectations.