Double dip concern mounting…..
Posted by jamesdearsley on February 12, 2010
It wasn’t long ago that I wrote a blog about a “W” shaped recovery in the housing market (click here for the article) and I have to say I have a slight concern that it is just starting to come true – certainly in the UK. But why do I think this?
Arguably the US started this property recession a little bit earlier than we did in the UK and you could also say that areas of the States also started to recover a little bit quicker (there is huge differences because of the sheer size of the market that I cannot simply generalise the whole country) . Therefore you will understand my concern when I read an article entitled “Signs of a double dip in US Real estate Prices” which was reported on the Property News site “Property Wire” (click here for the full article)
Now lets get back to the UK market. We have all seen the rally from the lows last year and it still seems to be going but is there an imbalance here in the statistics. There was a report recently for The Daily Mail newspaper (and for the life of me I cannot find the link so I apologise) stating that only 7 postcodes in the UK were responsible for the positive figures seen at the moment (and of course this were all in London and the South East).
This is evidence enough to be concerned at the moment and then you also back it up with facts and figures like those conjured up by Money Week recently (click here for the article) talking about the prices property is achieving at auctions. They are stating that the price gap between Auction bargains and real time prices are widening suggesting that prices are a little bit inflated once more.
There is also a small concern for me in that the growth in London and the South East has been helped by Foreign buyers (specifically Europeans recently). As the Euro continues to suffer of late due to the problems in Greece, Portugal and Spain, it means property in the UK is not as cheap as it once was.
Now, I don’t want to sound pessimistic as we all know that property in the UK is historically a good buy and we do know that the W shape recession usually means the 2nd dip is always less than the 1st, but we just need to be aware.
My concern is that the media will jump on the bandwagon here and they could make the 2nd dip worse than it could be. We need some intelligent journalism now to allow the market to deal with the situation naturally and not over sensationalise what may be about to occur.