by Calculated Risk on 5/09/2005 09:36:00 PM

Forbes reported today that UK housing prices are up " 0.31 pct from the previous quarter". That is a slight decline in real terms. However the "volume of sales decreased by 34.77 pct". That is exactly how a housing bust usually works:

"Housing "bubbles" typically do not "pop”, rather prices tend to deflate slowly in real terms, over several years. Historically real estate prices display strong persistence and are sticky downward. Sellers want a price close to recent sales in their neighborhood, and buyers, sensing prices are declining, will wait for even lower prices. This means real estate markets do not clear immediately, and what we usually observe is a drop in transaction volumes."

It is the drop in transaction volumes that causes general economic problems (slower retail sales, lower employment, etc.).

UPDATE: In the comments, David Bennett recommends General Glut's comments. Globblog is an excellent site!

See this morning's post on Angry Bear concerning UK housing: When will Housing Slowdown?