Double dip property crash

June 28, 2010

The property price crash that homeowners were fearing may well be around the corner, the experts are saying

With the axing of the unpopular Hips (Home information packs), has resulted in the market being flooded with properties, and marked a turning point.

Property website Rightmove says that the abolition of the packs has caused a 22% rise in the number of properties hitting the market, as a result it says the average price of a property has hardly risen.

Now I appreciate that’s no fall. It may be a one-off effect caused by the removal of the packs, and in many ways it could be considered a sustainable rise.

But that’s argument doesn’t wash. It comes on the back of a 0.7% rise the previous month, so it constitutes a slowdown. The thing about the property market is that it works on faith, and if buyers see a slowdown they are more likely to haggle harder and push for a discount just in case the market falls.

Many more properties currently on the open market, means prospective house buyers are more likely to haggle due to the choice, in which this may continue to push house prices down.

Things could get a whole lot worse too. Surely the only thing propping up the market for over a year has been the rock bottom interest rates, but this may be a signal that the Bank of England may have to raise rates in order to control inflation.

That could easily turn a slowdown and a small downturn into a crash. Given that this is going to coincide with massive pay freezes and redundancies in the public sector, we could easily see this turn into the kind of property crash people take decades to recover from.

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