House Prices Close To The Bottom?
Well done to the FT’s excellent Alphaville blog for spotting an interesting chart in the Nationwide’s quarterly report – one that suggests house prices are just a hair’s breadth away from returning to their long-term trend.
The diagonal line is the long-term trend; the drunken squiggly one plots how house prices have deviated wildly from the straight and narrow.
Does this mean we’re close to the bottom? Well, as the graph reveals (1990-1996), prices tend to undershoot after they’ve soared. So we probably have a way to go yet.
Nationwide, in fairness, accept this: “Prices have further to fall before significant numbers of buyers will be willing to return to the market. But, as the market adjusts, property will start to look cheaper and this will encourage more activity.”
Just so. This is a graph worth keeping an eye on.