House prices will have fallen over 30 per cent in real terms

Unless something odd happens, this week is likely to see an interesting but under-announced milestone: falls in house prices, in real terms, from their 2007 peak, exceeding 30 per cent (on the well-known Halifax measure). In cash terms, house prices peaked in August 2007, and fell 22 per cent to March 2009. After picking up a little in the second half of 2009 and early 2010, they went back to falling from mid-2010, and have been broadly flat during 2011.

But because inflation is high, that flat performance in cash terms for housing in 2011 means that, after adjusting for inflation, house prices have been falling apace. In real terms, since January 2010, house prices have fallen a further 12 per cent.

David Gilmore from imove Cornwall says :
"In real terms, house prices are now down 20 per cent.  They are now back to the levels seen in 2002 – a year in which prices rose around 19 per cent. If the experience of the 1970s and 1990s is duplicated, they would fall perhaps another 5 to 10 per cent. In our view they are only over-priced about 5 per cent now. But when there are large swings, markets overshoot. The price-earnings ratio is now around 4.4. In 1995, the price-earnings ratio fell below 3.1. Falling back to that would mean nearly 30 per cent further falls in prices – as much again as we’ve already had".

"If sellers are motivated to sell they need to be pricing their property to sell.  Do your own research on average prices in your area and select a competitive marketing price".

imove Cornwall is the UK's first not-for-profit online estate agents. Sell any size property for just £399 (no VAT) with all profits donated to local good causes.  www.imovecornwall.org