RBS Slightly Optimistic About House Prices

There has been a lot of news about how house prices have fallen recently and that the property market is weakening. RBS is finding some signs for optimism, however.

Halifax reported a 3.6% fall in house prices in September, which has flagged warning signs of impending weakness in the property market, particularly as house prices also fell by one percent over the last quarter.

With consumers fearing further weakness in house prices and Government cut backs and tax increases looming, it is of little surprise that house price rises are slowing down – there has only been a 2.6% increase in home values over the last twelve months.

Whilst acknowledging these challenges, RBS is stating a more positive outlook, as Fionnuala Earley, Consumer Economist, Royal Bank of Scotland explains:

“The 3.6% fall in prices during September reported by Halifax is shocking, but it’s a mistake to read too much into one month’s figure. This is true when markets are stable, but when transaction levels are low and markets are at turning points, the data tends to be particularly volatile.”

“The latest RICS data shows signs that supply may be tightening up again, forced sales are very low, while new home building remains at very low levels. If these supply trends carry on, they offer support for house prices even with low levels of demand and a weak economy.”

“The likelihood would then be only modest falls in house prices, rather than a dip on the scale of 2008.”