Falling asking prices can be a tell-tale sign of an impending drop in house prices and falling asking prices are exactly what the Rightmove House Price Index for November 2018 has revealed.
According to the index, asking prices fell by 1.7% nationally in November 2018 (equivalent to -£5,222) – the biggest monthly fall since 2012.
The 1.7% fall was preceded by a 0.9% rise in October, a 0.7% rise in September and a 2.3% fall in August. It compared to a 0.6% fall in November 2017.
First year on year fall
The November fall made it the first countrywide year on year house price fall since 2011 – down 0.2%.
On a regional basis, the biggest fall was in Yorkshire & Humberside at 2.4%. The fall in the South East was 2.1% and in London 1.7%.
The London fall was expected to some extent as seasonal variation is typically greater there than other parts of the country.
On an annual basis the London boroughs with the biggest falls were Lambeth (-6.8%) Hackney (-4.9%) and Tower Hamlets (-3.9%). In a few boroughs asking prices increased – most of all in Hammersmith & Fulham up 2.8%, Bexley up 2.8% and Bromley up 2.1%
In the North East the monthly change was -0.6%, the annual change 3.5% and the average time to sell 77 days.
In the North West the monthly change was -0.6%, the annual change 3.2% and the average time to sell 65 days.
In Greater London the monthly change was -1.7%, the annual change -2.4% and the average time to sell 71 days.
In the South East the monthly change was -2.1%, the annual change -1.2% and the average time to sell 66 days.
The average time to sell a property nationally was 61 days in October 2018 compared to 59 days in October 2017.
Average stock held by agents in October 2018 was 52 compared to 48 in October 2017.
What is happening?
The fall in November made it falls in two out of the last four months and the trend seems to be downwards.
The fall into negative territory, though only by 0.2%, is important as the first fall since 2011.
The stats match up with the fact that properties are taking slightly longer to sell than a year ago (61 to 59 days) and agents are holding a slightly larger stock of unsold properties (52 to 48).
The fact of homes taking longer to sell is supported by other data.
The Rightmove stats add to the growing number of indicators suggesting a national fall in house prices and not just localised falls in parts of the South.
In the short term at least, it is definitely more logical to predict a fall in prices rather than a rise.
Extent and duration of the fall
Of course the extent and duration of the fall cannot be known. However unless there is a disorderly Brexit or major economic upheaval, there are no compelling reasons to believe that it will be much longer than a year or two.
However the smart response is to hope for the best while preparing for something very serious – a downturn of up to 5 years and price falls in excess of 20%
Consider the pros and cons of selling before a crash.
The best decision for you will be determined by your personal circumstances and whether you intend or need to sell in the short, medium or long-term.
5 smart steps to sell your home fast (simple practical steps to speed up selling)
Selling fast for a good price (how to get the best price when you need to sell)
How to speed up your sale (effective things you can do to find a buyer fast)
You should expect the worst and plan accordingly.
Here are some practical steps you can take to protect your position in the event of a significant fall in house prices or an outright crash:
- Ensure that you have a reserve large enough to meet your mortgage and other household expenditure in the event of being out of work for up to 6 months
- Have funds ready to cope with an increase of up to 3% in mortgage interest rates
- If you are on a variable mortgage rate consider moving to a fixed rate to give you greater certainty as to future payments
- If you are a property investor encumbered by mortgages, conduct a thorough review of your portfolio, stress-testing it on the basis of interest rates increasing by up to 3% and non-receipt of rents for up to 6 months – putting contingency plans in place as necessary.
Falling asking prices are an ill wind; how long it will last or its malevolence is very much unknown. What is clear is the desirability of expecting and planning for the worst.
Have you reduced your asking price recently or know of someone who has done so? What was the reason for the reduction? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com
Categories: 10 Trends