Let's face it predicting house price movements is like trying to forecast the British weather. You can have a vague clue from the available data, but you are likely to be onto a loser more often than not if you try to pin down how things will turn out in a given part of the country at a given time.

That doesn't stop us trying. For most of us having some clue is better than having none. Not everyone can be Rhett Butler about either house prices or the weather.

So, given the all that, why are the latest set of figures - now showing two consecutive falls in asking prices of 1.2% and 1.8% - worth taking note of?

Well, partly because in previous months they appear to have been moving in a paradoxical direction, going up when most pointers were heading down.

But this was not unreasonable, as they measure asking prices not sale prices. So what they were suggesting was that in the face of falling sale prices, vendors were pushing up their prices.

This may have been vendors looking to give themselves more wriggle room to make discounts while getting close to their view of fair value, or perhaps to take a punt before exiting the market. Or they may genuinely have had higher expectations of the value of their homes than the market will take.

The mainenance of robust asking prices over many months despite falling prices does fit with the view that one reason for sales plummeting was the growing gap between buyers and sellers expectations of an acceptable price. In effect there was .

If vendor expectations are really falling and they are prepared to take less than was otherwise the case, this may lead to more movement in the market. That would be a good thing as it is generally felt that the greatest hardship in the market at present is being caused by low levels of transactions.

There is of course the other way of looking at things, one that might loosely be described as the snowball effect. This would have it that once buyers smell blood they will be looking for ever lower prices in anticipation of further falls.

Either way, unless buyers' ability to buy improves markedly, which seems very unlikely in the short to medium term, vendors in pursuit of a swift sale may have to start reajusting themselves to just how much their house is worth. Which shouldn't be difficult in most cases, as it will still be a vast increase on what they paid for it.

Topics