Have House Prices Bottomed Out?

Published 07th Aug 2008

While homeowners and property investors absorb the latest dire figures on house price falls, the reality is that house prices are already 20% or more off their peak according to property veteran Simon Agace of estate agent Winkworth.

Last week Nationwide reported that prices are now falling at the fastest rate since it began recording data in 1991, with an average drop of 1.7% in July - more than double the 0.8% decline recorded in June.

House prices are now falling at an annualised rate of 8.1%, the fastest rate of decline for nearly 20 years, according to Nationwide while Halifax reckons the rate of decline is 10% a year. The average property price in the UK has dropped £3,099 - down from £172,415 in June to £169,316 in July. This is the lowest level since August 2006.

Howard Archer, chief UK and European economist at Global Insight, said it was ‘odds-on that house prices will continue to head rapidly south.' He expects prices to fall by 15% this year, with further falls of 12% in 2009, to leave the average home costing £136,196.

But Agace, chief executive of estate agent Winkworth, who has been in this market for over 40 years, says prices have already fallen by up to 20%. ‘Forget these monthly reports of price drops, whether they be a couple of per cent or just a fraction, the fact of the matter is that property prices have fallen between 15% and 20%, and sometimes more (depending on the area in question), since their peak in spring/early summer 2007,' says Agace.

Winkworth says asking prices alone have fallen by around 7% to 10%, while a further 10% to 13% is being negotiated off these. For example, Winkworth sold a good two bedroom flat in Acton for £265,000 in early 2007. The same flat went back on the market in April 2008 for £254,950. The vendor needed a quick sale, so it was reduced to £249,950 and then again to £229,950. A sale has finally been agreed at £225,000.

Similarly, Winkworth Hammersmith has just agreed a sale on an unmodernised house in Gunterstone Road at £1,175,000. Last year a similar property achieved £1.5million. ‘The market has fallen quicker than anyone, other than the vendors and agents, who are in the thick of it, could have ever anticipated,' says Agace. He points out that prices are currently being agreed well under asking price.

But looking on the bright side Agace believes that house prices might have already bottomed out. ‘The transactional level may have just about reached the bottom, so things could soon be on the up,' he says.

Source: ' reuters '

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