Van

Some charts reposted from FreeTrader's HPC thread.

It is likely now, imo, that we closer to the end of the UK property bear market than the start.

90% mortgages are OK imo so long as they are not given out at more than x3.5 or maybe x4 salary, and on a repayment basis only. Maximum LTV on interest-only should be capped at 75% or 80%, max.

At the end of the day lenders must be sensible.

RICS comes in at -26, a small improvement from last month's -31.

all areas are negative except London - I wonder how much of an effect the new 5% stamp duty on +£1m purchases is having. There is a very important point here - the deadline is 6th April on completion (not on exchange as other recent changes have been). Therefore there is an almighty rush at the moment to get things done and dusted before the deadline.

Nice bearish figure from Halifax today.

Nationwide too should begin to go much more YoY negative over the next few months as last year's data falls out of the calculation:

Mar-10 0.8 1.4 9.0 164,519

Apr-10 1.0 0.8 10.5 167,802

May-10 0.4 1.3 9.8 169,162

Jun-10 0.0 1.4 8.7 170,111

The 2nd big downleg in the UK housing bear market is now well underway. I don't think we'll get the spectacular YoY figures that we got off the peak in 2008 but from here on in it will be a more shallow and drawn out affair for the next 3 years as the austerity programme bites.

Anecdotally I am seeing a big supply of new housing coming onto the market now. I doubt there are enough buyers to match this extra supply, so there will be massive overhang this summer. Reductions are still commonplace - sometimes as soon as 2 or 3 weeks after inital instruction when it's obvious there's no mugs left to buy at a premium or even at the market rate.

Hometrack -0.2% Feb 2011, -2.7% YoY.

And it's back!

 

The 90% mortgage makes a return to the UK.

 

And guess who's offering it?

 

Yep, the Northern Rock!

 

http://www.guardian.co.uk/business/2011/fe...-cent-mortgages

Most of the major lenders have had 90% mortgages for a while- you'll pay at least a 6% rate with such a small deposit, though.

stuff

Dude, you seriously need to grow up. There are plenty of vampires and leeches who suck off the system, who could work but don't, or who are in immoral, overprotected, and overrewarded professions. Life is not fair, and it's not going to get any fairer.

> If 1.3m homes came to the market and 884,000 sold, that left a new overhang of just under half a million properties.

You can track the number of properties for sale within a postcode here:

http://www.rightmove.co.uk/house-prices-in...chLocation=sw16

It's very noticeable that in "nice" areas houses still seem to be selling, whereas in less desirable area like Streatham and Walthamstow no one seems to be buying and the supply is at the same level as it was last summer. Prices have come down much more in these areas.

I have notice many more houses coming to the market just this week. The spring rush is definitely here - supply will balloon this summer. That half million overhang could easily double.

Yep, 5yr fixed rates are up too.

http://www.moneysupermarket.com/c/news/bor...s-rise/0011001/

According to some recent number-crunching from moneysupermarket.com, the average cost of a two-year fixed rate has risen from 4.27% to 4.52% just in the past month. The number of two-year fixes that lenders are offering has also fallen from 802 to 658, as banks and building societies keep their coffers closer to their chests in preparation for harder times.

It's the same story for five-year fixed rates. Last month, the average cost of one of these deals sat at 5.24%, compared to 5.50% in mid-February - an even bigger rise of 0.26%. The number of deals available in this lending camp has also slumped from 365 to 344 in the last month.

So, borrowing costs up, number of products down.

Looks like mortgage approvals are going to be plumbing new lows this year.

Mortgage rates have risen in the last week.

 

2 deals that I have been monitoring:

 

Nationwide 2yr fixed 85% LTV 4.39% -> 4.99%

ING 2yr fixed 80% LTV 3.69% -> 3.89%

 

Despite the bullish Rightmove figure, the reality is that the screws are being turned on the UK housing market as economic reality begins to bite.

Even since this post on Monday, lenders are raising their rates.

Nationwide have raised all their rates and other lenders are doing likewise. That 4.99% deal is no longer available - it's up to 5.29% now.

Amazingly story of Ireland's Boom and Bust:

Panorama (may be UK only)

http://www.bbc.co.uk/programmes/b00z0fyd

I think the likely scenario for UK PLC is that inflation is allowed to run between 3-5% for the next 4 years or so. Real wages are eroded while the austerity programme is worked through and employment gradually heads back to 2m by the middle of the next parliament. House prices continue to fall nominally by a few percent a year because of restrictive lending but there will be few forced sellers because mortgages rates will remain low. 4 years of 4% inflation, coupled with 4 years of 3% nominal falls will result in house prices being 25% lower in real terms than they are today, probably below the long term average on most measures and a targetable bottom. Anyone buying houses between 2014-2017 will do very well imo.

Mortgage rates have risen in the last week.

2 deals that I have been monitoring:

Nationwide 2yr fixed 85% LTV 4.39% -> 4.99%

ING 2yr fixed 80% LTV 3.69% -> 3.89%

Despite the bullish Rightmove figure, the reality is that the screws are being turned on the UK housing market as economic reality begins to bite.

Hey. I've been following this conversation and I'm inclined to agree with you. Although, it can become quite tempting to buy a place.

 

The"experts" say that if the purchase price for properties similar to the one you rent is less than 15 times your annual rent, then buying makes sense. Where I am in the American Midwest this is easily true. In fact, I can buy a flat or even a townhouse (attached) that is considerably nicer than the shoebox rental I currently call home for 10-15 times my rent. If I went to the suburbs I could buy a single family home (with garden and all) for less than 15 times my rent. So I sometimes think I am "throwing money away" renting. Of course, given the economy and the RE market it seems like rents should be much lower - but it hasn't happened yet.

 

And, you know, sometimes it almost hurts to look at pictures online of places I can afford to buy that have much nicer baths, kitchens, woodwork, etc. But, especially being single, I don't want to get married to my local jurisdiction/politicians/tax policies.

Yes, x180-200 the monthly rent is about the "correct" price for a house for the long term average. The trouble is that ZIRP has hugely distorted the market. Mortgages are so cheap IF you can find 15-20% deposit, but who has a spare £50k lying around? Prices are not going up and lender are not keen so no one can MEW to release equity to inject back into the bottom of the market. It's a standoff and that's why transactions are still on life-support levels.

Where abouts are you van?

 

Also, what did make of the new "leading indicator" they have on page 10?

 

After their mainly negative comments, I thought this a little contradictory?

I'm in West Ken at the moment. It's a decent enough area, if a little spartan. I've searched just about all properties with W- and SW- postcodes under £350k.

The p10 chart - I see nothing to be bullish about here - if you look closely it shows that turnover jumps at this time every year; in fact in previous years it has jumped far more.

Very interesting article -

"The number of properties reduced in price has leaped to 65,692 for the

month of January, a massive 64% more than in January 2010."

http://www.home.co.uk/asking_price_index/HAPIndex_FEB11.pdf

Tallies with what I am seeing on the ground - loads of sellers are slashing prices, month by month. Some by a few percent, a few more agressively. My Property Bee is a sea of red.

That's incredible if you consider a ~66% reduction in the number of sales on top of that!

Nationwide and ING have the best deals for new mortgages. ING in particular are being very aggressive and undercutting just about everyone else in an effort to gain market share in the UK. I was quoted 2yr fixed at 3.69% with a 20% deposit.

+0.8% is nothing like what is going on in the "real world".

Here's a snapshot of my Property Bee. Look at this flat in Clapham - it has been cut from £300k to £240k in the 5 months that it has been on the market, with two cuts alone in the last month. The froth is still coming off the market, and these are the sort of reductions that are going on for the seller to actually secure a sale.

Don't believe the hype. EAs know that they have to talk prices down to get a sale, and I am seeing reductions everywhere. The 0.8% Halifax figure is probably a reflection of Halifax's loan book and the special 3% rate they offer to existing customers who are moving home - and can therefore afford to "trade up".

Of course the ACTUAL NSA number was : -1.08%*

 

Here's an interesting excerpt from the report:

The low interest rate environment has reduced the burden of servicing mortgage

debt. Typical mortgage payments for a new borrower have fallen from a peak of 48% of

average disposable earnings in mid 2007 to 29% in the last quarter of 2010. This key

measure of affordability is at a better level than the long-term average over the past 25 years

(37%) and is an important factor supporting housing demand.

 

Despite this, House prices are FALLING at crash cruise speed.

 

DO YOU THINK, that maybe both banks and borrowers are a little concerned that ultra-low rates

may not persist, and the borrowers might face paying mortgages when rates are a bit higher?

Actually I think the large deposits lenders are asking are causing this. I'm sure that if you could get a mortgage with 5% deposit then prices would be into the stratosphere at current interest rate levels. Simply, after a few years of non-rises, people have run out of ways to raise the required deposit. Everyone who was sitting on the sidelines waiting to jump in has jumped in, and there's no more lemmings left.

-1.3% is very nice and welcome BTW. It's a good small step for the health of the UK economy overall in the long term where we need lower house prices.

Hometrack -0.8%, -1.1% YoY

http://www.guardian.co.uk/business/2010/no...demand-plummets

5th consecutive month of falls recorded.

Nationwide/Halifax figures are right around the corner. Nationwide should be very close to going YoY negative, and Halifax should almost certainly be YoY negative with the next set of figure.

I believe you have misunderstood by 180 degrees.

 

In Feb 2011, the three bigger numbers fall out as you have pointed out. However, this give us the smaller Feb 2010 figure for our new YoY calculation. This plays in to the hands of the housing bulls.

 

Apologies in advance if it is ME who has misunderstood by a number of degrees and I will be grateful if you could point this out to me.

No, the figures will work to the bears' advantage. Nov10/Dec10/Jan11 will need to match the monthly increases of last year just to keep the YoY figure flat. Eg, if there is no rise at all in house prices in the next 3 months, then we will look something like this:

Jan 2010/ 169,484

...

Oct 2010 164,990

...

Jan 2011/ 164,990 (hypothetical)

Jan 2010 - Jan 2011 YoY = -2.65%

I believe you have made an error.

 

The 2 quotes I have picked out below are not consistent. How can a higher MoM make the YoY smaller?

 

Apologies in advance if it is ME who has made the error and I will be grateful if you could pint this out to me.

 

 

i.e. If MoM = 0%, YoY will be below 1%

 

 

i.e if Mom = 0.5%, YoY will be below 0%

Sorry, I meant any MoM drop of 1% or more will take YoY negative, so -1% or worse.

As I've already highlighted though Halifax is already technically YoY negative, and it is only the fact that they use the 3monthly average to calculate YoY is why it still appears positive. I'm confident that H'fax/N'wide will both be YoY negative in the next 1 or 2 months, and that it will get worse as last year's figures fall out of the current YoY calculations.

Nov 2009/ 167,451

Dec 2009/ 168,763

Jan 2010/ 169,484

As these months fall out of the Halifax YoY figures in the next few months, this index will be turning a nice deep shade of RED!!

I've just had a look at the Halifax raw data, and by my reckoning we are already YoY negative here:

[from HPC]

Here is the Halifax raw data:

Oct 2009/ 164,990

Nov 2009/ 167,451

Dec 2009/ 168,763

Jan 2010/ 169,484

Feb 2010/ 166,703

Mar 2010/ 168,433

Apr 2010/ 168,212

May 2010/ 167,287

Jun 2010/ 166,351

Jul 2010/ 167,536

Aug 2010/ 168,124

Sep 2010/ 161,974

Oct 2010/ 164,919

Oct 2009/ 164,990

Oct 2010/ 164,919

By my reckoning that's already YoY negative! Has this been picked up on yet, or have we missed it in their glossed over seaonsal adjustments?

Oct 09 - Nov 09 was +1.5%, so as that month falls out of the YoY we will head negative here too!

Happy bear days.