London Property Notes - Fall 2010

[John Doe]

Actually, I've just spent 30 minutes reading HPC. Maybe we are doomed.

Yes, the old HPC therapy as we used to call it.

 

We have friends in Balham, who earn quite respectable wages (6 figs each), but are unable to move up from a 1 bed. Instead they are paying an extortionate amount on extending their property, just to add one room!

 

It seems even the builders earn ridiculous amounts down there.

[Van]

Hometrack index has recorded -0.4% for September, the 3rd monthly decline. YoY is now only +1%. I actually rate the Hometrack index very highly, it's less volatile than other indices and also gives some good leading indicators such as % of asking price achieved, average time on market, and change in number of buyers & sellers (all these indicators are beginning to turn down).

 

I do think, however, that we need an increase in interest rates to accelerate the speed and severity of any price falls, otherwise, we will simply be in a long term decline. The nightmare scenario for renters is 5-10 years of zero percent interest rates like Japan had and a slowly, slowly slowly deflating bubble.

[Van]

Yes, the old HPC therapy as we used to call it.

 

We have friends in Balham, who earn quite respectable wages (6 figs each), but are unable to move up from a 1 bed. Instead they are paying an extortionate amount on extending their property, just to add one room!

 

It seems even the builders earn ridiculous amounts down there.

 

Really?

Six figs each, 200k total income can easily buy you a 2up/2down on a reasonable borrowing multiple. Even in Balham. Maybe they need to look at other aspects of their lifestyle, not just their income and house prices.

 

[John Doe]

Really?

Six figs each, 200k total income can easily buy you a 2up/2down on a reasonable borrowing multiple. Even in Balham. Maybe they need to look at other aspects of their lifestyle, not just their income and house prices.

 

Maybe. I don't know the area well at all, but the place cost them ~£250k several years back and they don't want to leave the area. They couldn't find anything bigger in the part they like, so are spending ~£100k on an extension!

 

Maybe that was the cheaper option and maybe they didnt want a huge mortgage?

[drbubb]

Hometrack index has recorded -0.4% for September, the 3rd monthly decline. YoY is now only +1%. I actually rate the Hometrack index very highly, it's less volatile than other indices and also gives some good leading indicators such as % of asking price achieved, average time on market, and change in number of buyers & sellers (all these indicators are beginning to turn down).

 

I do think, however, that we need an increase in interest rates to accelerate the speed and severity of any price falls, otherwise, we will simply be in a long term decline. The nightmare scenario for renters is 5-10 years of zero percent interest rates like Japan had and a slowly, slowly slowly deflating bubble.

Interesting. Have you the link for the Hometrack data?

I might add a column to the Database on page 1, of: http://tinyurl.com/UKtrap

 

I found it very difficult to find all the different monthly figures, which is why I am collecting them on the UKtrap thread.

[drbubb]

DATA BANK: / WHAT HAS HAPPENED since 2009:

 

Mon.: Rt'move : London : Hometrack / Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx

When?: 18th? - 18-20th : - 25 - 30th chg / -28th ? : Next mo.on 8th?

2009

J. : : 213,570 : 386,653 : 157,??? - 1.0% / 150,501 159,818 163,945 163,966 : £155,159 : = n / a : 137.6%

F : : 216,163 : 387,988 : 157,000 +X.X% / 147,746 160,327 160,104 159,208 : £153,477 :- 1.08% :140.8% : LOW

M : : 218,081 : 398,867 : 156,100* -0.6% / 150,946 157,326 157,622 157,066 : £154,066 :+0.38% :141.6%

A : : 222,077 : 387,161 : 155,600* -0.3% / 151,861 154,716 154,663 157,156 : £154,508 :+0.29% :143.7%

M : : 227,441 : 397,646 : 155,600*+0.0% / 154,016 158,565 159,111 160,869 : £157,442 :+1.90% :144.5%

J. : : 226,436 : 397,140 : 155,650 +X.X% / 156,442 157,713 158,445 158,807 : £157,624 :+0.12% :143.7%

Jl : : 227,864 : 402,761 : 155,650 +X.X% / 158,871 159,623 159,749 160,686 : £159,778 :+1.37% :142.6%

A : : 222,762 : 387,265 : 155,806 +0.1% / 160,224 160,973 160,947 161,930 : £161,077 :+0.81% :138.3%

S : : 223,996 : 390,768 : 156,118 +0.2% / 161,816 163,533 163,487 164,854 : £163,335 :+1.40% :137.1%

O : : 230,184 : 416,157 : 156,430 +0.2% / 162,038 165,528 165,349 165,430 : £163,734 :+2.44% :140.6% : RM HIGH

N : : 226,440 : 403,069 : 156,743 +0.2% / 162,764 167,664 167,451 165,617 : £164,191 :+0.28% :137.9%

D : : 221,463 : 398,426 : 156,900*+0.1% / 162,103 169,042 168,763 167,260 : £164,681 :+0.30% :134.5%

 

Mon.: Rt'move : London : Hometrack / Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx

2010

J. : : 222,261 : 407,731 : 156,116 - 0.5% / 163,481 169,777 169,484 165,514 : £164,497 :- 0.11% :135.1% : HFsa HIGH

F : : 229,398 : 427,987 : 156,584 +0.3% / 161,320 166,857 166,703 165,997 : £163,659 :- 0.51% :140.2%

M : : 229,614 : 417,461 : 157,054 +0.3% / 164,519 168,521 168,433 167,808 : £166,164 :+1.53% :138.2%

A : : 235,512 : 421,822 : 157,368 +0.2% / 167,802 168,202 168,212 170,772 : £169,287 :+1.88% :139.1% : H&N HIGH

M : : 237,134 : 420,203 : 157,682 +0.2% / 169,162 167,570 167,287 169,204 : £169,183 :- 0.06% :140.2%

J. : : 237,767 : 429,597 : 158,700*+0.1% / 170,111 166,203 166,351 166,395 : £168,253 :- 0.55% :140.5%

Jl : : 236,332 : 422,248 : 158,500 - 0.1% / 169,347 167,425 167,536 168,331 : £168,839 :+0.35% :140.0%

A. : : 232,241 : 405,058 : 158,200 - 0.3% / 166,507 = n/a = 167,953 168,889 : £167,698 :- 0.68% :138.5%

S. : : 229,767 : 399,019 : 157,600* -0.4% /

mom: -1.07% : - 1.49% : 157,600* -0.4% / -1.68% : = n/a = :+0.25% +0.33% : - 0.68%

 

*actual figure Honetrack index; others are calculated from mom changes.

Criteria for indices : http://www.houseprice.org.uk/articles/house-price-indices/

Comparison of Criteria : http://firstrung.co.uk/page.asp?pagekey=115

Other : http://www.acadametrics.co.uk/acadHousePrices.php

 

 

I will add Hometrack, if I can find the data.

[ecoface]

 

 

Can we get a bit of perspective in this thread and compare real house prices with nominal prices?

 

CC touches on this and compares HP to gold, but this is a bit intangible for most (who don't buy food, energy, and are paid in gold).

 

How about comparing HP to the real cost of living.

 

Personally I am similar to CC in that we will see falls, but not a crash. The steepest downward curve will be in real house prices, and nominal will be, just that "nominal".

 

And yes, sentiment is turning. As you may know I am a housebuilder and Chartered Surveyor and without going in too much detail we have just launched a site for sale (lower risk - detached houses in suburbs in Home county).

 

There is absolutely no doubt about it that activity is DOWN in the last 2-3 weeks.

 

I recently have spoken to 4 agents from solid respectable firms who I have known for many years and are not bullsh**ers. Their take-ons, phone calls, viewings have dried up. Last weekend was dead. To quote one "it's like the tap has just been turned off". Offer's being made have the cushion in them of around 5%+ plus below marketing price.

 

I asked (as I am sceptical of most agents) if this was just their gold-fish bowl comparison to record levels in June-August as some agents around here have had. With the answer being not at all, and that it is most like the early days in Winter 07/08.

 

The agents think that their cash flow until Spring will be extremely tight; and this is what they are planning for.

 

So, coal-face or not, the view is whether or not we are dipping into a early seasonal market, or if this is more sinister.

 

I remember the Autumn-Winter of 2005-2006 very well when we all got very nervous about a similar drop off of activity, and then BoE tinkered with rates and dropped them, which facilitated the winners-curse in the market.

 

This time round will we get another round of winter QE to inject more contradictory asset inflation?

 

I do think that QE2, or is it 3 (?), will keep the market sufficiently above water for nominals to not go anywhere south too much in the next year - again though, keep an eye on real prices.

 

 

 

 

[Van]

Interesting. Have you the link for the Hometrack data?

I might add a column to the Database on page 1, of: http://tinyurl.com/UKtrap

 

I found it very difficult to find all the different monthly figures, which is why I am collecting them on the UKtrap thread.

 

Unfortunately not. They've kinda slipped off the radar and are far less high profile than NW/HF. They used to publish their multi-page report on their website until a few years ago, and now all they give are the "market snapshot" summaries. I think you can still get the full report if you pay for it.

[drbubb]

moving this thread to GPC