Supply continues to fall at a fast rate and demand is getting stronger. Nevertheless the short term sales price outlook still remains stuck in neutral. This is due to a number of factors including negative sentiment among ordinary home buyers and a tendency for appraisals to be extra cautious which tends to push transaction prices a little lower than they otherwise would be if prices were determined by buyers and sellers alone.
However inventory is now down to the same levels (3.8 months supply) as in 2002 when average pricing used to appreciate at 2 to 5% per year. As we said last month, the changes in indicators other than price are almost all positive and therefore we do not see another significant price drop on the horizon unless and until circumstances change.
The last three and a half months have been the most stable in pricing that we have seen for many years. (excerpt from the Cromford Report Commentary April 17)
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