Samuels Says...

Jonathan Samuels - 01 March 2012

It's official. UK homeowners are insane. This is the only conclusion that can be drawn from the fact that, according to the latest Rightmove House Price Index, the average asking price of new sellers increased by 4.1% during February - the highest monthly rise since April 2002.

So let's put this into context. Unemployment in the UK is rising, we're on the brink of a double-dip recession, the Bank of England is so terrified about the ability of the economy to cope that it's creating Monopoly money, oil prices are soaring, the Eurozone, our biggest export market, is on the brink of collapse, corporate insolvencies are going through the roof and the credit ratings agencies are looking ever closer at us with their beady eyes.

So what do people do in a market that looks like it was dreamt up by Hieronymus Bosch? They whack up their asking prices and wait for the offers to come in. Which of course, they won't. Because so many people are scared stiff to buy right now - and certainly won't buy if the properties they are looking at are over-priced.

OK, we all know that there are some properties out there that can still command a good price. They're in just the right area and are just the kind of home that people want to buy. But these properties are the exception rather than the rule. The problem we're faced with is that too many people who are the rule believe they are the exception.

If the property market is ever going to start moving again then the vast majority of sellers are going to have to take a reality check and soon. Until properties are priced at levels that correlate with the economic environment we find ourselves in, the paralysis that we have seen for the past 18 months will remain.