UK House prices: News & Views

[Van]

House prices drop 0.6%

 

UK house prices fell by 0.6% in June (May: +0.2%), according to Nationwide, leaving the value of the typical home 1.5% lower than a year ago, at £165,738.

 

The lender attributes the monthly decline to the difficult economic backdrop and the temporary boost to the market seen earlier this year prior to the ending of the stamp duty holiday.

 

As for the year ahead, Nationwide regards the coming months as “highly uncertain” for house prices because economic conditions are likely to remain challenging.

 

Seasonal H2 weakness has started a month early

[Van]

So, seems John Doe is still odds on favourite to bag the "guess for the next year" two years running

 

But you predicted "between -5% and -10%" which looks like a pipedream.

 

 

Reckon my forecast of -2% (159k eoy) is looking remarkably good.

 

 

 

[John Doe]

But you predicted "between -5% and -10%" which looks like a pipedream.

 

 

Reckon my forecast of -2% (159k eoy) is looking remarkably good.

 

??? Keep on hoping Van.

 

We are only half way through the year, and the spring bounce is over.

 

Do you really think the next 6 months will be better than the previous 6?

 

Really? Just another 0.5% off over the next 6 months?

 

Good luck with that

 

(PS my forecast was actually up to 5% nominal, and up to 10% real )

http://www.greenenergyinvestors.com/index.php?showtopic=15757&view=findpost&p=235751

[Van]

???

 

But Van, we are only half way through the year, and the spring bounce is over.

 

Do you really think the next 6 months will be better than the previous 6?

 

Really? Just another 0.5% off over the next 6 months?

 

 

No, you'll find that prices fell in H2 2011 too, so to keep the YoY declines going prices have to fall by at least as much in H2 2012.

Surely you know this by now.

[drbubb]

DELUSION is Rampant - amongst both Buyers and Lenders

=======

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2012

J. : : 224,060 : 438,324 : 146,967 - 0.28% / 162,228 = n/a = 160,907 158,879 : £160,554 : - 0.16% :139.6% :

F. : : 233,252 : 449,252 : 149,658 +1.83% / 162,712 = n/a = 160,118 158,897 : £160,805 :+ 0.16% :145.1% :

M : : 236,939 : 455,159 : 151,853 +1.47% / 163,327 = n/a = 163,803 163,419 : £163,373 :+ 1.60% :145.0% :

A : : 243,737 : 464,944 : = n/a = : = n/a = / 164,134 = n/a = 159,883 161,180 : £162,657 : - 0.44% :149.8% :

M : : 243,759 : 469,314 : = n/a = : = n/a = / 166,022 = n/a = 160,941 161,785 : £163,904 : +0.77% :148.7% :

J. : : 246,235 : 477,440 : = n/a = : = n/a = / 165,738

======================================

mom:+1.01% : +1.73 % : Est.DI : 150.2% / - 0.17% = n/a = :+0.66% : +0.38% :+0.77% :

Highest (estimated) Delusion Index in my records

 

EXCERPT - From Rightmove's Release - They never let the market "clear" in a Recession

 

Previous recessions have been driven by measures taken to combat inflation, with soaring interest rates

and repossession numbers. Those high numbers of forced sales helped to provide liquidity in the housing market,

something the current downturn lacks. The result is a very patchy market characterised by reduced transaction

volumes, with low interest rates helping to keep people in their homes, exacerbating the supply shortage in

locations of high demand. At £477,440, London is up 1.7% (£8,126) on the previous average asking price high set

last month, while the South East is 0.5% (£1,662) above its previous record set in October 2011. The South West

too is only some £300 off an all-time high. Removing London’s record-breaking performance from the dataset

demonstrates the extent of its impact on the national average. Stripped of all the capital’s properties, the average

asking price across the rest of the country would still be more than 5% adrift of its peak recorded nearly five years

ago in August 2007.

 

Shipside comments: “These strong rises in the south of the country have helped to push the national average

asking price into new record territory. In these uncertain economic times, lenders feel safer to lend to those with a

cash-cushion, and those sitting on that cash often feel more comfortable with it invested in tangible assets,

including bricks and mortar. The better properties in the better areas remain in short supply, giving sellers of

sought-after stock, and their agents, the confidence to come to market at a higher price. The right property within

commuting or holiday bolt-hole distance of the capital seems to be an attractive each-way bet with the potential

to be both recession-proof and offer good odds to keep pace with, or even outstrip, inflation”.

 

/more: http://www.rightmove.co.uk/news/files/2012/06/june-2012.pdf

 

I don't think that London's outperformance, in economic growth and in home price rises, is quite as assured as Rightmove seems to think. There may be a great SHOCK ahead, when the UK's borrowing capacity "hits a wall", a very predictable wall.

[drbubb]

STAMP TAX impact

 

How much of a boost did the stamp duty holiday give to lending?

 

The expiry of the stamp duty holiday for first time buyers towards the end of March created significant volatility in the lending data in recent months making it even harder than usual to discern the underlying trend. Mortgage lending to first time buyers in March totalled £3bn, around 40% above

usual levels. Moreover, 63% of first time buyer purchases in March were between £125,000 and £250,000, compared with around 50% normally.

 

It’s not hard to understand why the effect on the timing of transactions was so strong - bringing forward purchases offered substantial savings. We estimate that over 200,000 first time buyers benefited from the stamp duty holiday over the last two years, saving a total of nearly £375m - around £1,800 each. It is harder to assess the extent to which the stamp duty holiday generated “additional” first time buyer activity, i.e. purchases that would not otherwise have taken place. Similarly, it is hard to judge how much activity will be dampened by its re-imposition.

 

However, history provides some comfort that the negative impact will be short-lived. Indeed, the decline in activity in recent months echoes the pattern seen at the end of the last stamp duty holiday in December 2009 (see chart below). This provides some comfort that much of the recent softness in housing market activity will subside in the months ahead.

 

/see chart: http://www.nationwide.co.uk/hpi/historical/June_2012.pdf

[borassic]

How much was the online EA (if you don't mind me asking) and did the local one do much better (and did that cost anything considering you were already advertised etc and the buyer came from the first one)?

 

I'm guessing the local one had a number of potential buyers on their books?

 

On the negotiating, I've directly negotiated all but two of my house buys, and all but one of my sells. I used to regularly negotiate on £1m+ semiconductor fab tools 10 years back and I still really enjoy it (actually get a buzz from it). Horses for courses and all that ).

 

Online fee circa £1000. The local EA did not bring in any viewings, which surprised us as, like you, we though there would be their applicants list.

 

The extra fee was the EPC, photos and floorplan - £150 (how does anyone make a living doing those?

 

PS Quite agree re. banks. I see Dymond gets £20m if he resigns. This is like some bizarre moral universe. The banks are like the UK manufacturing Unions of the 1970s. It will destroy itself, and we need to close our accounts to hasten that.

[John Doe]

Online fee circa £1000. The local EA did not bring in any viewings, which surprised us as, like you, we though there would be their applicants list.

 

The extra fee was the EPC, photos and floorplan - £150 (how does anyone make a living doing those?

 

PS Quite agree re. banks. I see Dymond gets £20m if he resigns. This is like some bizarre moral universe. The banks are like the UK manufacturing Unions of the 1970s. It will destroy itself, and we need to close our accounts to hasten that.

 

Thanks for the info borassic, hope it all goes through OK. Think the banks should all be nationalised now. Burn the bond-holders and get things moving again.

 

 

No, you'll find that prices fell in H2 2011 too, so to keep the YoY declines going prices have to fall by at least as much in H2 2012.

Surely you know this by now.

 

Thanks for the usual patronising post Van. (Did you really teach your granny to suck eggs?)

 

Take the land reg figure for dec 2011, then take the land reg fig for dec 2012 and work out the difference.

 

Simples

 

All the rest is irrelevant noise (surely even you know this?) .

[John Doe]

Looks like Van and I both might have been a bit pessimistic on our 1 year forecasts. (Although nowhere near as pessimistic as some here )

 

http://www.bbc.co.uk/news/business-18671908

 

The average home increased in value by 0.5% in May compared with April, and was 0.4% higher than a year earlier, the Land Registry said.

 

Unless we take London out of the equation

 

However, prices have risen sharply in the last year in London but dropped in six of the English regions.

 

(and here are the monthly if anyone's interested)

 

http://www.housepricecrash.co.uk/indices-land-registry-national-monthly.php

 

Dec 11 was £160,384

 

2% fall by Dec 12 is ~£157,176

5% fall is ~£152,365

 

Currently £161,677 about 0.8% up on the year so far (not including inflation).

[chazza]

Mate just selling in London, bght in 2007, made 50% in 5yrs...

[John Doe]

Mate just selling in London, bght in 2007, made 50% in 5yrs...

 

Tiz madness, sheer madness .

 

Prices are at least 15 to 20% down from peak here in Glasgow (and at least 10% in the real nice bits too).

[drbubb]

UK recovery in doubt as construction slumps

 

Reuters - ‎34 minutes ago‎

By Jonathan Cable LONDON, July 3 (Reuters) - Britain's economy is too weak to produce a meaningful recovery, the British Chambers of Commerce warned on Tuesday, as a survey showed construction activity fell at its fastest pace in two-and-a-half years ...

[John Doe]

UK recovery in doubt as construction slumps

 

Reuters - ‎34 minutes ago‎

By Jonathan Cable LONDON, July 3 (Reuters) - Britain's economy is too weak to produce a meaningful recovery, the British Chambers of Commerce warned on Tuesday, as a survey showed construction activity fell at its fastest pace in two-and-a-half years ...

 

Ah, that'll be the Jubilee effect

[tinecu]

BTL has been propping up the market thus far...

 

Perhaps not for much longer:

 

http://www.home.co.uk/guides/news/story.htm?more_tenants_in_serious_arrears_with_rent_payments

 

The growing number of severe tenant arrears cases and evictions has yet to filter through into increasing buy-to-let mortgage arrears.

 

In Q1 2012, the number of buy-to-let mortgages more than three months in arrears fell by 4% compared to the previous quarter, representing an annual decline of 19%.

 

However, at 23,700, there are still almost double as many buy-to-let mortgages in severe arrears than four years ago.

 

Jardine said: “The rising level of severe tenant arrears has yet to filter through into buy-to-let arrears. In fact, buy-to-let mortgage arrears have been steadily falling since the Bank of England reduced interest rates in 2009.

 

“Landlords have been enjoying historically low mortgage payments, which has cushioned the blow of late rent payments, and many have met the lower mortgage costs with money set aside from slush funds, or rental guarantee schemes. However by necessity an increased number of landlords have had to resort to court orders to remove tenants in long-term arrears, and this has increased.

 

“While landlords’ mortgage arrears are unlikely to rocket up until the interest rates are hiked, rising tenant arrears and an unsteady labour market will provide upwards pressure.”

[drbubb]

BTL has been propping up the market thus far...

Perhaps not for much longer:

http://www.home.co.uk/guides/news/story.htm?more_tenants_in_serious_arrears_with_rent_payments

However, at 23,700, there are still almost double as many buy-to-let mortgages in severe arrears than four years ago.

 

Jardine said: “The rising level of severe tenant arrears has yet to filter through into buy-to-let arrears. In fact, buy-to-let mortgage arrears have been steadily falling since the Bank of England reduced interest rates in 2009.

 

“Landlords have been enjoying historically low mortgage payments, which has cushioned the blow of late rent payments, and many have met the lower mortgage costs with money set aside from slush funds, or rental guarantee schemes. However by necessity an increased number of landlords have had to resort to court orders to remove tenants in long-term arrears, and this has increased.

 

When are the bankers going to wake up, and start charging MORE for BTL mortgages,

and lending lower LTV there ?

The pressure will intensify greatly after the Olympics IMHO.

 

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2012

J. : : 224,060 : 438,324 : 146,967 - 0.28% / 162,228 = n/a = 160,907 158,879 : £160,554 : - 0.16% :139.6% :

F. : : 233,252 : 449,252 : 149,658 +1.83% / 162,712 = n/a = 160,118 158,897 : £160,805 :+ 0.16% :145.1% :

M : : 236,939 : 455,159 : 151,853 +1.47% / 163,327 = n/a = 163,803 163,419 : £163,373 :+ 1.60% :145.0% :

A : : 243,737 : 464,944 : 152,815 +0.63% / 164,134 = n/a = 159,883 161,180 : £162,657 : - 0.44% :149.8% :

M : : 243,759 : 469,314 : 152,803 - 0.01% / 166,022 = n/a = 160,941 161,785 : £163,904 : +0.77% :148.7% :

J. : : 246,235 : 477,440 : 153,332 +0.35% / 165,738 = n/a = 162,417 163,240 : £164,489 : +0.36% :149.7% :

 

======================================

mom:+1.01% : +1.73 % : Est.DI : 149.7% / - 0.17% = n/a = :+0.66% : +0.38% :+0.36% :

 

 

This looks Bullish, but I don't quite believe it is important.

HaliWide prices have pushed above the Moving Averages that usually are key resistance,

but it has done this during a seasonal highpoint :

 

HaliWde : 12mMa: 48mMa

====== ====== ======

£160,554 163,685 165,244 : J

£160,805 163,633 164,711 : F

£163,373 163,626 164,263 : M

£162,657 163,518 163,803 : A

£163,904 163,445 163,467 : M

£164,489 163,326 163,204 : J

 

 

But this is not yet true for Rest-of-UK Prices

 

 

RestUK : 12mMa: 48mMa

====== ====== ======

146,967 153,405 156,233 : J

149,658 153,219 155,669 : F

151,853 153,096 155,174 : M

152,815 152,895 154,703 : A

152,803 152,584 154,280 : M

153,332 152,241 153,930 : J

 

Meantime, Greater London prices have gone on rising, as we approach the Olympics

 

[drbubb]

(From DrB's Diary - belongs here too !):

 

ANY COMMENTS? - there are Man-Months of work that backs all this up !

 

 

 

BARRATT IS ON THE TOP of a channel - Downturn Coming ?

 

Barratt Dev'l / BDEV : Weekly chart : Monthly chart : Daily chart : http://tinyurl.com/BDEV-610d

 

BDEV has given us excellent early warnings of TURNS in UK house prices.

 

From major double LOWS in 2008 (July at 22p, and Nov at 43p), Barratt/BDEV had a long A-B-C rally into a Sept. 2009 high at 280p. At a key point in the rally, we noticed that BDEV's price suddenly shot up in late March 2009. So in early April 2009, we predicted a 12 months "Dead Cat bounce" in UK property prices (in an Apr.4th podcast that you can still listen to, while looking at the Charts I describe.) In hindsight we can see a major low was made in HaliWide prices at £153,477 in Feb. and £154,066 in March - but those March figures were not available until April.

 

The expected rally duly arrived as buyers responded to the BofE's near-Zero Interest Rate Policy.

 

Since we did not think that the downwards correction was over after just a 2-year drop: We watched BDEV for a sign that the house price rally would peter out. From Sept. 2009 and its 280p peak (184p, on a split-adjusted basis), BDEV began to fall. This drop in the share preceded a fall in actual house prices, as measured by various property indices. A key point in the decline, was when BDEV slid back below its 252 day/1 year moving average. That occurred in Feb 2010. We anticipated that the confirmed break of BDEV's 1yr-MA would signal a renewed drop in UK Houseprices.

 

Within a few weeks, in Spring 2010 a second downleg in UK property prices began. And it was clearly reflected in the HaliWide / H&Nindex (the average of the non-seassonally adjusted Halifax & Nationwide indicies), which peaked in April 2010 at £169,287. The new downwards drift in UK prices came despite continued ultra-low interest rates. But prices only fell by £7,946 (-4.7%) to £161,341 in seasonal low of Jan. 2011.

 

 

BDEV slid lower for most of 2010, but the rate of decline slowed and the stock bottomed in late Nov.2010 at near 71p, which was well above the Nov 2009 low of 31p. Then, a year-end rally in BDEV stock began, taking BDEV back near 90p by the end of 2010. We watched to see if the bounce in stocks was going to be strong enough to push back above the 252d/1 year MA near 100p, thinking if that occurred, it should signal a reversal the downturn drift in UK property prices.

 

BDEV rose above 110p, pushing beyond the 252d MA, suggesting that Spring 2011 would bring "upwards bounce" UK-wide home prices. But the action was unconvincing, despite the upwards trend.

 

Early in 2011, I asked on GEI: "Will the UK house price rally last? I think not."

 

The Homebuilder rally faded after the Spring of 2011, and BDEV rolled over at 120p and slid into the summer, as global stock markets suffered a correction. BDEV made a low of 65P in Aug. 2011. And following that pattern with several months lag, the UK Haliwide index peaked at £166,723 in July, and drifted down to a low of £160,554 in Jan. 2012.

 

In Q4-2011, the stock market pessimism was overdone. Global stock markets rallied, and that helped to propel a nice jump in BDEV, all the way up to 150p+ in March 2012. That was a 34% higher high than in 2011. But so far, UK-wide Houseprices have lagged behind the levels seen in the prior year. Perhaps Barratt's share price is benefitting from its London focus, where house prices ARE hitting new highs. Even so, as I write this in July 2012, the stock remains in a clear long term downchannel, albeit it has risen to the top of that channel.

 

BDEV has surged again after a Spring dip, rising to over 140p but remains below its 153p high. A drop in BDEV back below key support at/near 110p on high volume (If we see that), would be a sign that Crash Cruise Speed (with falls averaging more than 0.5% per month), is likely to resume in the housing markets. I expect we will see that after the London Olympics, when I expect realism to return to UK property markets.

 

I still expect a serious slide in UK House prices into 2013 or later.

[BoldAsBrass]

I still expect a serious slide in UK House prices into 2013 or later.

 

Well I don't. Haven't had it yet, can't see where it's coming from in the next year.

 

I went to visit friends at the weekend where I used to live near Wokingham in Berkshire. I saw little housing development of 5 detached houses crammed into a plot that as far as I can remember used to contain one bungalow with a long garden. Anyway, being nosy, I had a look around. Two are sold, three are available. Usual modern estate fodder, nice looking from outside, nice landscaping etc. but from the point of view of what you get for your money ... smallish houses, tiny back gardens, a single garage and crappy shared parking arrangements.

 

I used to live in a 4 bed estate detached house not too far away - and it's worth about £450k. These new builds - and two of them are sold - with people living in them are OVER 800k.

 

I was flabberghasted. The madness continues with, as far as I can see, no end in sight.

 

These are the properties http://www.rightmove.co.uk/new-homes-for-sale/property-37675859.html

[Chartered Surveyor]

Those that work in the construction industry traditionally were always the first to see a slow down in the economy. Equally a pick up in this sector usually heralded that green shoots lay ahead. Bubbs uses the BDEV chart as a gauge to an economies health ie that being the construction industry. If he is seeing signs of weakness based on this data and on strong volume then things may not be looking too rosy in the near future.

[BoldAsBrass]

Those that work in the construction industry traditionally were always the first to see a slow down in the economy. Equally a pick up in this sector usually heralded that green shoots lay ahead. Bubbs uses the BDEV chart as a gauge to an economies health ie that being the construction industry. If he is seeing signs of weakness based on this data and on strong volume then things may not be looking too rosy in the near future.

 

Hasn't he been predicting the imminent demise of UK house prices for 10 years now? And for a long time basing the next leg down on Barrat's share price?

 

10 years on from the birth of sites like HPC and still no crash.

[Chartered Surveyor]

Give the man some due. When weakness has been expressed against BDEV deflationary pressures have taken ther toll on UK house prices. The difference is a free market versus and centrally controlled market that we now have in the UK. So any weakness in BDEV is a buying opportunity. The QE effect raises the asset value in nominal terms when valued in sterling. Set against gold has been a different matter. In the Soiuth East over the last 6 - 9 months sterling has out performed gold against house prices, but my view is that this is about to term again.

[BoldAsBrass]

Give the man some due. When weakness has been expressed against BDEV deflationary pressures have taken ther toll on UK house prices. The difference is a free market versus and centrally controlled market that we now have in the UK. So any weakness in BDEV is a buying opportunity. The QE effect raises the asset value in nominal terms when valued in sterling. Set against gold has been a different matter. In the Soiuth East over the last 6 - 9 months sterling has out performed gold against house prices, but my view is that this is about to term again.

 

I am not 'having a go' - we are all guilty of interpreting facts to suit our position. But I really don't get this particular proposition - that Barratt's share price foretells the movement of UK house prices.

 

House prices in Berkshire since 2000

 

Barratt's share price since 2003

 

Where is there any correlation whatsoever?

[drbubb]

People have such distorted memories - Just check the web !

 

Hasn't he been predicting the imminent demise of UK house prices for 10 years now? And for a long time basing the next leg down on Barrat's share price?

10 years on from the birth of sites like HPC and still no crash.

Nonsense!

My Blow-by-blow track record is laid out HERE: http://tinyurl.com/GEI-data

... and here: http://tinyurl.com/GPC-Diary

For all to see.

 

If you don't believe me, and you can spare the time,

Go back and listen to the Podcast, recorded 4 April 2009: MP3

http://globaledge.podbean.com/mf/web/djn359/GeiConf3.mp3

Right on the Low, when almost everyone was still Bearish

BACK AT THE LOWS in April 2009,

Few saw that the Turn was already underway.

Here's the old survey from HPC in April 2009:

 

POLL: Speed of UK House price declines (118 member(s) had cast votes in April 2009)

====

My belief about a bounce, or signs of stability, if we see them :

 

[50.00%] : There will be no bounce this year (59 votes )

[38.98%] : What I am seeing, will be nothing but a Spring bounce (46 votes )

[: 5.08%] : The stability could eventually lead to a recovery (6 votes )

[: 2.54%] : This is THE LOW in the cycle (3 votes )

[: 3.39%] : No comment (4 votes )

...I forecast a one year bounce, which was exactly what we got.

Since then, Barratt interpretations have given accurate signals, as you can see here:

 

Do you see a Crash here?

 

I do - a 20% drop in 2 years is a serious matter. And it is not complete yet IMHO.

If you saw it adjusted for inflation, it would be even more clear.

 

 

BTW. How's your forecasting record ???

Seriously, do you know anyone who has called the individual twists and turns of the UK-wide market better?

(No one is perfect: What BDEV and my interpretations of it have not forecast well is: LONDON PROPERTY Prices.)

 

Speaking practically: I moved to Hong Kong, partly to sidestep economic troubles in the UK,

and did better with property investments here than I could have in the UK or London.

[drbubb]

I am not 'having a go' - we are all guilty of interpreting facts to suit our position. But I really don't get this particular proposition - that Barratt's share price foretells the movement of UK house prices.

 

House prices in Berkshire since 2000

 

Barratt's share price since 2003

 

Where is there any correlation whatsoever?

Who spoke about correlations?

 

It is the turning signals provided by BDEV that I have been interpreting.

It is not casual stuff. It requires some work, and effort to interpret, or anyone could do it.

[neil324]

The HaliWide index is very interesting, caught my attention straight away. Is it a fake out or not.

 

What I am seeing is mayor support and demand at these levels suggesting to me at the very least a floor or bottom is in around me. London well where to begin except I don't really see any triggers only public debt getting external attention.

 

I wouldn't be surprised seeing rising prices from here.

 

 

[drbubb]

The HaliWide index is very interesting, caught my attention straight away. Is it a fake out or not.

 

What I am seeing is mayor support and demand at these levels suggesting to me at the very least a floor or bottom is in around me. London well where to begin except I don't really see any triggers only public debt getting external attention.

 

I wouldn't be surprised seeing rising prices from here.

You mean this one?

 

The "Hali-Wide" index is the Average of NSA Halifax and NSA Nationwide figures, and therefore less biased by temporary distortions than eother on its own.

 

I think we are in a Triangle now, and chartwise, it could go either way. But my fundamental and cyclical view is that the recent weak rally will so fade, and prices will slide below the 2009 lows, probably before the end of 2013.

 

But I will reconsider my view if BDEV soon shoots up to a new high.