UK House prices: News & Views

[stunlee]

2017?

Do you really think Ultra-low rates will last that long, StunLee?

 

It was announced a couple of months ago by one of the Fed Governors.

It does seem implausible.

[drbubb]

I think the Govs may get a shock well before then, from some "unpredictable" outside event

[John Doe]

Wonder if people are still trying to make out that supply didn't affect the UK market compared to all the others that had big price falls?

 

 

The number of foreign-born residents in England and Wales has risen by nearly three million since 2001 to 7.5 million people, the 2011 census shows.

 

http://www.bbc.co.uk/news/uk-20677515

[drbubb]

Looks like a 5th of 5th blowoff is completeing

 

 

+ Relative prices have reached unprecedented levels. Greater London is now 298% of HaliWide prices and 329% of Rest-of-UK prices.

 

Ask yourself, why have London prices reached these insane multiples. and what can you do to take advantage of the yawning gap?

[Perishabull]

Looks like a 5th of 5th blowoff is completeing

 

 

 

Ask yourself, why have London prices reached these insane multiples. and what can you do to take advantage of the yawning gap?

 

What's the closest thing to executing a short against Candy and Candy?

 

[drbubb]

Get their bank to call them for MARGIN

 

What's the closest thing to executing a short against Candy and Candy?

 

 

The one on the right looks worried about something

[Chartered Surveyor]

Housing supply to a degree will affect house price values under normal market conditions. Yet does not explain the current housing market. Cheap money does.

 

I am now gearing up for a new house price boom in London and the rest of the UK. A Bond bust will result in a flood of money seeking a home. In turn a wage price spiral will take place then a currency event in £pounds will occur. Guess 3-5years.

 

The Bank of England is not buying gold like other Central Banks. Why not? My opinion is that they consider that the UK commercial and residential market is a sound asset class. Well the only one they have got, so they are pumping up this asset to accomodate a reset of the system.

[drbubb]

If mortgage rates rise as "A Bond bust" occurs, the boom will not happen

[Chartered Surveyor]

• I disagree. My opinion is rising interest rates will be accompanied by a wage price spiral. Total destruction of the pound will be the outcome
  

[drbubb]

I think the slide in the Pound would be the cause, not the effect.

 

In such circumstances, wages tend to lag way behind inflation, and many jobs are lost.

Property prices may go up, but are likely to lag way behind other inflation

[John Doe]

Housing supply to a degree will affect house price values under normal market conditions. Yet does not explain the current housing market. Cheap money does.

 

To an extent yes, yet cheap money in US, Spain and Eire didn't help them. The UK had a massively growing population and a dismal amount of new housing built.

 

Each of the others had a massive building boom.

 

I've never said it was the only reason, but for many years I was called every name under the sun for even suggesting such an effect.

[OnStandbye]

• I disagree. My opinion is rising interest rates will be accompanied by a wage price spiral. Total destruction of the pound will be the outcome
  

 

Sorry, I'm probably being a bit thick here, but what is going to support rising wages across the board?

[Meralti]

Sorry, I'm probably being a bit thick here, but what is going to support rising wages across the board?

 

It won't happen. The point of any devaluation would be to make the UK more competative. Halving the value of Sterling but doubling wages across the board would not achieve that objective. Sterling may devalue but no wage spiral would result from this, wages could rise eventually but certainly not immediately.

[John Doe]

Constant news of doom, gloom, crisis, etc etc has the country so scared that they are (and for several years now have been) taking wage cuts in an otherwise inflationary environment.

 

Coincidently, (perhaps ), big company profits are doing just fine and dandy. Hmmmmm.

 

I have a feeling wages might eventually rise, when people stop shitting themselves about losing their jobs and decide to stand up for a wage that will allow them to live without having to rely on government top-ups and pay-day loans.

[Van]

I have a feeling wages might eventually rise, when people stop shitting themselves about losing their jobs and decide to stand up for a wage that will allow them to live without having to rely on government top-ups and pay-day loans.

 

Won't happen, at least for the bottom 3/4 of the workforce, as most of their jobs can easily be outsourced, and unemployment will remain very high as the tax and benefit system punishes those trying to enter the workforce at the lowest rungs.

[John Doe]

Won't happen, at least for the bottom 3/4 of the workforce, as most of their jobs can easily be outsourced, and unemployment will remain very high as the tax and benefit system punishes those trying to enter the workforce at the lowest rungs.

 

Sadly, that's probably right.

 

However, I still hope to one day see someone have the balls to say enough is enough. A living wage would enable a cut in these crazy top-up benefits (which are effectively state subsidies for companies) we have.

 

Although this would possibly cause an initial rise in unemployment, those on the living wage would also have more disposal income, thereby creating new jobs with their spending.

 

Where those jobs would be is another story. Protectionism has always been a dirty word, and while I'm actually quite for a free trade type world, I think that also means allowing currencies to find their own level, basically keeping the playing field more fair (i.e china allowing it’s currency to free float etc).

 

Outsourcing can only go on at the current rate as long as the wages in China etc are super low. The rate of wage inflation there is astounding, so much so that comparative wage (taking account of cost of living, west vs east) point is fast approaching. Coupled with transport costs for imported goods, this should limit the effect, possibly even within 5 years.

 

I read recently about a model globalisation situation where a country that can produce say efficient (cheap) cars, can only sell them to another country in exchnage for something that country produes efficiently, say computers for example.

 

Well, it's a nice thought (although something has to be done, or we are all (well at least the bottom third) really screwed). I think it was here in a thread on HPC regarding free trade/protectionism etc....(starts slow)

 

http://www.housepric...howtopic=185852

 

As for the benefits trap, the IDS single credit looks interesting (at first glance). Devil will be in the detail.

[Van]

Long run wages are driven by productivity; the only justification for a "living wage" is to become productive enough that your output is deserving of higher wages.

Unfortunately this truth has been long since lost in the culture of entitlement that has gone hand in hand with the growth of the State.

 

It is not an equilibrium situation where we constantly run huge trade deficits importing goods from developing countries while there is such high domestic unemployment; the unemployed should be producing the goods that we are currently needing to import.

[John Doe]

Long run wages are driven by productivity; the only justification for a "living wage" is to become productive enough that your output is deserving of higher wages.

Unfortunately this truth has been long since lost in the culture of entitlement that has gone hand in hand with the growth of the State.

 

It is not an equilibrium situation where we constantly run huge trade deficits importing goods from developing countries while there is such high domestic unemployment; the unemployed should be producing the goods that we are currently needing to import.

 

Prior to the mass globalisation experiment (early 70’s?), more than a million unemployed in this country was unacceptable and had governments being thrown out. (That's back when the real figure was 1 million, not the fiddled equivalent today).

 

It's also the case that the traditional link between increasing productivity equalling increasing wages was broken sometime in the early 90's. Productivity increased massively over the 90's 00's, yet wages hardly even kept up with inflation.

 

However the shortfall was masked by cheap credit, (creditor nations flooding us with cheap credit and goods, masking inflation figures also, another bad effect of globalisation**) and also by government top-up schemes like tax credits etc.

 

Indeed, it was this extra credit (practically limitless cheap loans being handed out to anyone) that resulted in our house price bubble (years of double digit HPI with no corresponding wage increase) and brought us to the situation we have today. Our governments just sat by and watched. They have a lot to answer for.

 

As such, the "culture of entitlement" has been driven by our pathetic governments rather than the man on the street that continued to go to work each day, becoming ever more produtive while his wages failed to keep up.

 

How we get back to the old relationship, I do not know. I think it's possible, but it's going to take a long time (and possibly some fairly radical actions).

 

 

** (I realise that 100's of millions have been taken out of poverty too, but I'm not convinced that this couldn't have happened by those countries building up their internal markets more).

[Meralti]

Delusion index revisited:

 

Record monthly falls on the Rightmove index. I wonder how big an impact London is having on this index. Rightmove is a seriously flawed index as discussed above but it's a good indicator of sentiment and confidence. No news coverage of these figures on mainstream sources yet.

 

Despite this they are forecasting a rising market next year as the headline to this report!

[drbubb]

Wiping out most of the year;s gains

 

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% :

Jl : : 242,097 : 460,304 : 151,633 : - 1.11% / 164,389 = n/a = 161,094 162,619 : £163,504 : - 0.60% :148.1% :

A : : 236,260 : 454,875 : 150,173 : - 0.96% / 164,729 = n/a = 160,256 160,200 : £162,465 : - 0.64% : 145.4% :

S : : 234,858 : 456,237 : 149,719 : - 0.30% / 163,964 = n/a = 159,486 160,437 : £162,201 : - 0.16% : 144.8% :

O : : 243,168 : 478,071 : 151,123 : +0.94% / 164,153 = n/a = 158,426 159,818 : £161,986 : - 0.13% : 150.1% :

N : : 236,761 : 483,709 : 147,163 : - 2.62% / 163,853 = n/a = 160,879 161,016 : £162,435 : +0.28% : 145.8% :

D : : 228,989 : 464,398 :

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

mom:- 3.28% : - 3.99% : Est. DI : : 141.0% / - 0.02% = n/a = : +0.15% : +0.75% : +0.28% :.

 

 

New sellers have chopped an average of £7,772 (-3.3%) off asking prices this month. While this is the largest

monthly decrease ever reported by Rightmove, it follows an established pattern of December drops over the

previous eight years.

 

Miles Shipside, Director and housing market analyst at Rightmove comments: “December is the most likely

month for sellers coming to market to get very real about the price they ask for their home. This year they’ve

gone a bit further than ever before, though in truth it is symptomatic of the ‘all or nothing’ pattern of 2012.

This summer also saw big falls with the distractions of the Jubilee and the Olympics, though prices did

rebound in October. It seems that sellers who come to market at times when they know that buyers’

attention is focused on other events realise that their prices have to be extra keen in order to compete

 

[Van]

N

Delusion index revisited:

 

Record monthly falls on the Rightmove index. I wonder how big an impact London is having on this index. Rightmove is a seriously flawed index as discussed above but it's a good indicator of sentiment and confidence. No news coverage of these figures on mainstream sources yet.

 

Despite this they are forecasting a rising market next year as the headline to this report!

 

Indeed, no one flies a kite in December.

I fully expect the traditional rush of over optimistic house sellers to push the Rightmove Index back to near its highs by next spring.

 

Latest RICS came in at -9.

 

It has to be said that with the absurdly low mortgage rates on offer I would not be surprised to see some genuine improvements in the market over the next 6 months that show up in Halifax/NW/LR.

 

I'm predicting a 1.5% GAIN in Halifax/NW for 2013... 5% rally in H1 followed by a 3.5% drop in H2 - on the condition that ZIRP is maintained. However if we get an inflationary spike and bonds begin to fall then all bets are off.

[fexx]

To an extent yes, yet cheap money in US, Spain and Eire didn't help them. The UK had a massively growing population and a dismal amount of new housing built.

 

Can I have your sources please? Places I have looked suggest otherwise, this shows in housing supply increasing around 7% over population (Not that constraints in housing supply has historically prevented crashes, eg Japan)

 

This graph shows the percentage increase in different types of housing between 1992 and 2007, including both new builds and stock that has been converted to a different form of tenure....Housing stock in the UK increased from 23.5 million to 26.6 million homes (a 13.2% increase)

http://www.hnm.org.u...ing-supply.html

Increase in population during same period 5.916% (1992-2007) ((60,986,600-57,580,400)/57,580,400*100)

http://www.google.co...q=uk population

[Van]

Can I have your sources please? Places I have looked suggest otherwise, this shows in housing supply increasing around 7% over population (Not that constraints in housing supply has historically prevented crashes, eg Japan)

 

This graph shows the percentage increase in different types of housing between 1992 and 2007, including both new builds and stock that has been converted to a different form of tenure....Housing stock in the UK increased from 23.5 million to 26.6 million homes (a 13.2% increase)

http://www.hnm.org.u...ing-supply.html

Increase in population during same period 5.916% (1992-2007) ((60,986,600-57,580,400)/57,580,400*100)

http://www.google.co...q=uk population

 

Some excellent debunking!

 

One thing I will say is that the population growth has of course not been uniform. Many northern areas have actually seen populations falls, while the population has become much more dense in the S/E.

[John Doe]

Can I have your sources please? Places I have looked suggest otherwise, this shows in housing supply increasing around 7% over population (Not that constraints in housing supply has historically prevented crashes, eg Japan)

 

Hi fexx, long time no see?

 

Yes, that old chesnut. Japan is a red herring (as has been pointed out before) as it has a totally different demographic (and non comparative culture), and we have a massively increasing population, they don't.

 

Are you not also assuming that supply in the UK 10 years ago was adequate? I'd argue it was not.

 

Now look at how single person households have increased in the UK compared. Then all the illegal immigrants (no numbers available, could be huge). Now look at number of rooms per dwelling in the new housing compared to previous (demolished housing and net number of bedrooms etc etc). Then look at how the number of older people here has increased and the number of children under 15 has devreased. i.e more houses needed NET, even in a static population, as children don't have their own houses, older people do. Do you have these numbers to hand? They are all here somewhere (or on HPC).

 

And then consider how in London alone, for the last few years ~half of all new buildings were bought by foreign buyers as investments and safe havens. How many of those lie empty most of the year?

 

Note also, I never said the uk had an undersupply, I stated clearly it was a dismal supply and that the others had a huge over supply. A huge oversupply here (especially in the areas people wanted housing, as opposed to where they didn't) would have brought prices down more, and quicker (and we'd all be the better for that).

 

Just have a look at the previous figures we have put in this thread over the years if you want the actual numbers.

 

So, all that aside, my point was (and always was) that the oversupply in those countries was far greater than in ours and that this was part of the explanation why our prices didn't fall as far as fast.

 

Or are you saying this was not the case? To be clear, are you saying that the US, Spain and Eire did not have a huge oversupply compared to the UK?

 

And Van, slow down there. Your observation about population is correct, but the main point is not debunked by using red herring (HPC) arguments and a couple of statistics in isolation.

[John Doe]

PS

 

Here's Spain http://www.globalpro...n/Price-History Note their MASSIVE over supply (estimated 20 years worth!!) and also how their rents collapsed. (http://www.google.co...iw=1236&bih=581) if you cant acces the main site, go in from the second graph at the top on this page (lets you use once without registering)

 

Here's Eire http://www.globalpro...d/Price-History Same story.