Double Dip? We could talk ourselves into this.

Yesterday morning’s July housing market report from the Royal Institute of Chartered Surveyors (RICS) continued the trend of worrying reports following the British Retail Consortium’s (BRC) July retail figures which show a 0.5% dip in like-for-like sales which appear to threaten a double-dip recession.

RICS asked 242 surveyors across the country the following simple question:  Indicate by how much average house prices have changed over the last three months.  Surveyors were asked to choose one of three answers namely falling the same or rising.

The results show that more chartered surveyors report a fall rather than a rise in house prices for the first time since July 2009 due to demand from purchasers slipping back and the number of  properties coming to the market continuing to increase.

At first sight these results are slightly alarming but I think it is important to take a step back here for a moment and look at the context. 

May and June this year was a period of great political and economic uncertainty with a Hung Parliament followed closely by an Emergency Budget.  It is our belief that this uncertainty created a slight lag in new buyer demand as people waited to see the true colours of the new Coalition Government.  This period of uncertainty was then closely followed by the traditional July housing market lull as potential buyers put plans to move house on hold while they went on holiday.

This lag has been picked up in the RICS report but it does not mean that either the economy or the housing market is going into a double-dip recession.  My own view is that September will bring with it a very different market. The holiday season will be over and recent announcements over interest rates staying low for the foreseeable future will give buyers the confidence they need to make an offer on that dream home.

My real concern is not the content of either the RICS or BRC reports but their potential effect on consumers.  The danger is that media reports of double-dip recession drops in like-for-like sales and falling house prices create a self-fulfilling prophecy which sends us back into recession when all the real signs suggest otherwise.

What are those signs?  Unemployment is lower this recession than previous ones the bank predicts economy growth somewhere between 2.5% and 3% next year below its previous forecast but above the Office for Budget Responsbility''s current estimate of 2.3%.  Our own experience echoes this.  We have seen a reduction in visitors to our sites but we have also seen an improved quality of buyer and an increase in the conversion rate in May and June whilst maintaining our sales rate. 

So my advice is to ignore the negative news bias in the media and take advantage of unprecedented conditions in the housing market including low prices and low interest rates to make your move now.

By Sue Warwick National Sales & Marketing Director Miller Homes
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