Mapatasy

Annual house prices up 5.1pc with 'no signs of significant corrections in the market' (HM Land Registry and ONS)

Recommended Posts

1 hour ago, PerfectCircle said:

Now for what must be 90% of the household in London, we see a slowing pace of price increase but no collapse.  

Nice false dichotomy, I saw what you did there.

If we use the October 2017 volumes and the December 2017 HPI (both from the December report published today) you'll find that 47% of the sales come from boroughs reporting real terms falls (discounted at the rate of wage inflation). If you restrict your interest to boroughs where prices are falling or flat in nominal, it's still 20%.

Maybe London will collapse, maybe it won't, but right now there are parts of London where prices are falling, even on the Land Registry data which is noted for its lag.

 

.

 

Edited by Beary McBearface

Share this post


Link to post
Share on other sites
2 hours ago, PerfectCircle said:

It 's a dominoes game, but the first piece hasn't moved yet.  

Another interesting chart from Acadata suggests the first and second pieces heading South, plus the NE:

image.png.3ca911ceef9d62a1d749e8aaf088f1be.png

Share this post


Link to post
Share on other sites
1 hour ago, Beary McBearface said:

giphy.gif

Unlike you adarmo to pile in behind some bullish distortion of the statistics.

Not really. There's a difference been what i think will happen and what i want to happen. 

I'd quite like leveraged btl to get burned. 

Share this post


Link to post
Share on other sites

Re: London

I think a forum like this is always going to have to self-scrutinize for confirmation-bias and it is good that it is not merely an echo-chamber or it would serve no purpose. That said I also think it is incredible that macro conditions have not had to fundamentally shift much at all to check and derail price appreciation. London property prices have almost certainly spiked and it is extremely hard to see any more upside.

These conditions are going to deteriorate as interest rates start to rise and the UK's precarious (knife-edge) financial position puts Gov't / BoE in a position where it doesn't have any firepower left without systemic risk. Similarly, while IR's have been a matter of preference for the past decade, the recent BoE statement was Carney effectively admitting that the BoE is in real danger of losing control of that process if it moves too slowly.

Anecdotally what colleagues in architectural services are hearing off the record from London agents in both residential and commercial sectors are that things are looking grim. Having said this, industry press releases have a far more optimistic tone:

Case in point: Today's statement from Savills World Research:

“Prime residential markets around the world reacted quickly to quantitative easing by central banks and the consequent yield shift in line with low interest rates. This was a one-off yield shift and expectations are that central banks are moving towards raising rates, reducing the potential for price growth.

“Importantly, while some cities have recorded small falls, we generally don’t expect these to become significant, but we do expect prices to remain relatively stable, on a high plateau for some time, though we will continue to see volatility in oil dependent economies, for example.”

Reminded me of Irving Fisher's classic from 1929 a few days before Black Tuesday: 

“Stock prices have reached what looks like a permanently high plateau..”

Aside from macroeconomic conditions, something of a perfect storm is forming in terms of sentiment and the potential for new regulation. There is additional political pressure (and little risk) at this point for Gov't to further squeeze LL's and overseas / nonresident investors generally so we may well see additional draft legislation in the coming months as HM opposition makes it their key focus.

The timeline will probably surprise everyone (as tends to happen) by taking longer than anyone imagines possible to manifest itself and then will probably unwind surprisingly quickly. While I think affordable house prices are absolutely essential for all sorts of social reasons, the ancillary effects of that wider deleveraging process are going to hit hard for many industries who wouldn't consider themselves reliant on HPI whatsoever.

I say we are going to be in 2019 before this really  hits, it may even take longer but I do think you can see the first signs of the inevitable - to use a roller coaster analogy, the clicking of the chain lift has just stopped and you are now travelling ever so slowly past the apex.. 

Just my two-cents.

Share this post


Link to post
Share on other sites

A few observations from the Dec LR figures compared to Nov.

Inner London down £13,000, Milton Keynes down £3,500. Stoke on Trent up £1000 (!?), Derby up £1400

Edited by bear.getting.old

Share this post


Link to post
Share on other sites
51 minutes ago, Beary McBearface said:

Nice false dichotomy, I saw what you did there.

If we use the October 2017 volumes and the December 2017 HPI (both from the December report published today) you'll find that 47% of the sales come from boroughs reporting real terms falls (discounted at the rate of wage inflation). If you restrict your interest to boroughs where prices are falling or flat in nominal, it's still 20%.

Maybe London will collapse, maybe it won't, but right now there are parts of London where prices are falling, even on the Land Registry data which is noted for its lag.

 

.

 

I am not trying to do anything, I want a London crash more than anyone else here. We had some bitcoin type capital gain since 2012 (+50%-100%) depending on the area, and you keep splitting hair to prove we are done 1-2% rather than up  by the same amount. Volume is the only thing collapsing right now, but sellers don’t want to cut prices and buyers can’t afford to pay more, market is stalled. Fact.

 

Price falls are never gradual and sustained to bring back historical prices to historical average, they are sudden, brutal and unexpected. When we will have one, we won’t have this debate, it’ll be obvious to even amateur BTLers but it’s not happening just now.

46 minutes ago, nickb1 said:

Another interesting chart from Acadata suggests the first and second pieces heading South, plus the NE:

image.png.3ca911ceef9d62a1d749e8aaf088f1be.png

London and part of the SE are totally dislocated to their respective population's income, we re talking about 12x multiple. Valuation are a lot tighter outside the commuting belt hence the capacity for a fall nowhere near the same, it is a two speed train, and possibly no strong correlation between them.   

Share this post


Link to post
Share on other sites
2 minutes ago, PerfectCircle said:

London and part of the SE are totally dislocated to their respective population's income, we re talking about 12x multiple. Valuation are a lot tighter outside the commuting belt hence the capacity for a fall nowhere near the same, it is a two speed train, and possibly no strong correlation between them.   

That is why there can be a crash in London and the South East, which you seem to think there is no sign of. Well here is a sign that a slide is starting. The London decline seems to be picking up pace, from the chart. As for the rest, the falls after 2008 were interrupted by QE, props etc. Who knows how far they would have fallen without that? I don't have data to hand on multiples outside the commuter belt, but there must be other areas that are extended.

Share this post


Link to post
Share on other sites
2 hours ago, Dorkins said:

Which London estate agent did you say you worked for again?

I thought that too - inspecific VI waffle.

Share this post


Link to post
Share on other sites
59 minutes ago, nickb1 said:

That is why there can be a crash in London and the South East, which you seem to think there is no sign of. Well here is a sign that a slide is starting. The London decline seems to be picking up pace, from the chart. As for the rest, the falls after 2008 were interrupted by QE, props etc. Who knows how far they would have fallen without that? I don't have data to hand on multiples outside the commuter belt, but there must be other areas that are extended.

There are plenty of bubbles all around the country, many of them due to people moving away from the SE, cashing in on their mad gainz in search of a better life.

To think these areas are uncoupled and protected from big falls in the SE is dangerous, everything is connected.

Why buy in Exeter/Cheshire/Harrogate/Norwich/Edinburgh etc when the SE starts to look like fairer value, especially with the possible negative effects of Brexit on regional business. The SE will always (rightly or wrongly) be the jobs hub of the UK, and in dark times holds stronger than most.

The ripple doesn't only travel outwards.

Edited by Barnsey

Share this post


Link to post
Share on other sites
3 minutes ago, Barnsey said:

To think these areas are uncoupled and protected from big falls in the SE is dangerous, everything is connected.

 

Quite. London and the SE typically lead the rest of the UK.

The chart shows that in all areas, the year on year increases are either less than they were 3 months ago, zero or negative. Because these are year on year comparisons they are also seasonally adjusted. So the signs are there, I hope it continues. Though as 6ix suggests, there will be accompanying adverse economic conditions in a general crash.

Share this post


Link to post
Share on other sites
1 minute ago, nickb1 said:

The chart shows that in all areas, the year on year increases are either less than they were 3 months ago, zero or negative.

I mean one month ago ...

Share this post


Link to post
Share on other sites
1 hour ago, PerfectCircle said:

I am not trying to do anything, I want a London crash more than anyone else here. We had some bitcoin type capital gain since 2012 (+50%-100%) depending on the area, and you keep splitting hair to prove we are done 1-2% rather than up  by the same amount. Volume is the only thing collapsing right now, but sellers don’t want to cut prices and buyers can’t afford to pay more, market is stalled. Fact.

(Emphasis added)

I think the whole idea of proving that London prices are going up or down is idiotic. There's the data, there's legitimate interpretation of the data and then there's the truth of things. The truth of things is not ours to know so it's best to let the data do the talking. What I was trying to do is challenge your "I've looked at the London data and it's all going up" post higher up the thread (link).

The latest Land Registry data suggests that London HPI continues to fall. It's also just a plain fact that in 9 of the 33 boroughs the LR data have London prices as flat or falling year on year (in nominal) which doesn't tally neatly with your assertion that "almost every authority, including central ones, are up YoY". There's room for debate about how many boroughs need to be falling before the qualifier "almost every" moves from exaggeration to falsehood but you're definitely in exaggeration territory. If an experimental treatment is given to 100 patients and 27 of them die anyway then people might look sceptically on the claim that it "almost" saved them all.

Annual-price-change-for-England-and-Lond

As others have pointed out already, the Land Registry is the laggiest data set but nevertheless the trend in the Land Registry London data is consistent with the LSL Acadata series which is claiming that as of right now London is down 4.1% YoY.

Separately, the posts on this thread show that as per the latest Land Registry data (being October 2017) volumes are steady compared to a year ago so if you have any evidence for your assertion that transaction volumes are "collapsing" you better present it (I won't hold my breath).

 

Share this post


Link to post
Share on other sites
4 hours ago, 6ix said:

Re: London

I think a forum like this is always going to have to self-scrutinize for confirmation-bias and it is good that it is not merely an echo-chamber or it would serve no purpose. That said I also think it is incredible that macro conditions have not had to fundamentally shift much at all to check and derail price appreciation. London property prices have almost certainly spiked and it is extremely hard to see any more upside.

These conditions are going to deteriorate as interest rates start to rise and the UK's precarious (knife-edge) financial position puts Gov't / BoE in a position where it doesn't have any firepower left without systemic risk. Similarly, while IR's have been a matter of preference for the past decade, the recent BoE statement was Carney effectively admitting that the BoE is in real danger of losing control of that process if it moves too slowly.

Anecdotally what colleagues in architectural services are hearing off the record from London agents in both residential and commercial sectors are that things are looking grim. Having said this, industry press releases have a far more optimistic tone:

Case in point: Today's statement from Savills World Research:

“Prime residential markets around the world reacted quickly to quantitative easing by central banks and the consequent yield shift in line with low interest rates. This was a one-off yield shift and expectations are that central banks are moving towards raising rates, reducing the potential for price growth.

“Importantly, while some cities have recorded small falls, we generally don’t expect these to become significant, but we do expect prices to remain relatively stable, on a high plateau for some time, though we will continue to see volatility in oil dependent economies, for example.”

Reminded me of Irving Fisher's classic from 1929 a few days before Black Tuesday: 

“Stock prices have reached what looks like a permanently high plateau..”

Aside from macroeconomic conditions, something of a perfect storm is forming in terms of sentiment and the potential for new regulation. There is additional political pressure (and little risk) at this point for Gov't to further squeeze LL's and overseas / nonresident investors generally so we may well see additional draft legislation in the coming months as HM opposition makes it their key focus.

The timeline will probably surprise everyone (as tends to happen) by taking longer than anyone imagines possible to manifest itself and then will probably unwind surprisingly quickly. While I think affordable house prices are absolutely essential for all sorts of social reasons, the ancillary effects of that wider deleveraging process are going to hit hard for many industries who wouldn't consider themselves reliant on HPI whatsoever.

I say we are going to be in 2019 before this really  hits, it may even take longer but I do think you can see the first signs of the inevitable - to use a roller coaster analogy, the clicking of the chain lift has just stopped and you are now travelling ever so slowly past the apex.. 

Just my two-cents.

Very insightful post. On the point you make about timing, these things tend to happen when not expected. At the moment the most widely predicted time for things to go downhill is 2019/20, as you also suggest. Perhaps, because so many people are complacently expecting this year to be OK, like the previous few years, the unexpected will find a way of putting the boot into those expectations.

Share this post


Link to post
Share on other sites

I have no doubt that property prices will deflate......all HPI up sleeve tricks have over time been exhausted, comes to a point when carrying on as has been going will do lasting damage to the economy.....rewind time, not a bad thing imo.;)

Edited by winkie

Share this post


Link to post
Share on other sites
8 hours ago, PerfectCircle said:

I have checked London data, almost every authority, including central ones, are up YoY. Situation is simple, nothing is going to collapse until we have forced sellers

(Emphasis added)

4 hours ago, PerfectCircle said:

London and part of the SE are totally dislocated to their respective population's income, we re talking about 12x multiple. Valuation are a lot tighter outside the commuting belt hence the capacity for a fall nowhere near the same, it is a two speed train, and possibly no strong correlation between them.   

(Emphasis added)

There are two interesting ideas here. One I agree with, and one I disagree with.

Firstly you're spot on about the extraordinary behaviour of London house prices.

  Median prices/earnings Median earnings  
  2007 2016 Change 2007 2016  
England and Wales 7.16 7.58 5.9%          24,300          28,353 16.7%
England  7.14 7.72 8.1%          24,500          28,503 16.3%
North East 5.75 5.11 -11.1%          21,026          25,650 22.0%
North West 5.85 5.62 -3.9%          22,833          26,178 14.6%
Yorks & Humber 6.00 5.70 -5.0%          22,381          25,957 16.0%
East Midlands 6.34 6.20 -2.2%          22,544          26,593 18.0%
West Midlands 6.47 6.37 -1.5%          22,559          26,278 16.5%
East of England 7.32 8.33 13.8%          25,526          30,000 17.5%
London 8.38 12.88 53.7%          29,841          33,776 13.2%
South East 8.06 9.43 17.0%          26,666          30,752 15.3%
South West 8.19 8.40 2.6%          22,951          26,789 16.7%
Wales 6.44 5.73 -11.0%          21,589          25,667 18.9%

Data source: ONS Ratio of house price to residence-based earnings (lower quartile and median) March 2017

Whilst in six of the ten regions the ratio of median house prices to median earnings has fallen since peak in London it went up from 8.38 to 12.88 between 2007 and the latest data in this release. Hence I agree that something weird has been going on in London since the 2008 crisis and during the subsequent period of unconventional monetary policy.

One of the things that has definitely been going on is that lots of speculative money has flowed into London.

Firstly, there's the July 2015 Bank Underground blog detailing how buy to let was disproportionately in London and the South East

2015_18_fig2.jpg?w=500&h=242

Secondly, there the matter of how many of the imputed cash buyers are really overseas buyers whose leveraged is 'disguised' because it is not from UK banks. Neal Hudson wrote a little something about this in January last year (When Cash Buyers Aren’t) citing his own earlier work for Savills; the following graph is taken from the Savills report:

image.thumb.png.0a711a00c7a2f5e734061f5b74b54a98.png

Hence the point on which I disagree is the need for forced sellers. London has an enormous number of potential discretionary sellers who may sell off to close out leveraged positions if they feel that it is in their own best interest to do so.

If part of what is going on with London is that it has been borne up on the by tide of loose money unleashed on the world by central banks after the crisis then things could get very interesting if enough  investors (domestic and foreign) start to believe that the tide is turning and that they ought to make discretionary sales accordingly.

Edited by Beary McBearface

Share this post


Link to post
Share on other sites
1 hour ago, Beary McBearface said:

Secondly, there the matter of how many of the imputed cash buyers are really overseas buyers whose leveraged is 'disguised' because it is not from UK banks. Neal Hudson wrote a little something about this in January last year (When Cash Buyers Aren’t) citing his own earlier work for Savills; the following graph is taken from the Savills report:

image.thumb.png.0a711a00c7a2f5e734061f5b74b54a98.png

 

Is that 46% of prime London being purchased by international buyers? I had no idea of the scale of it.

Edited by Steppenpig

Share this post


Link to post
Share on other sites

And Daily Express fans...bet you can predict the front page spread on tomorrow's paper....

HOUSE PRICES SOAR £1000 A MONTH!!   :rolleyes:

Getting desperate now to keep that sentiment positive for house price growth, aren't they?

 

Share this post


Link to post
Share on other sites
7 minutes ago, moonriver said:

And Daily Express fans...bet you can predict the front page spread on tomorrow's paper....

HOUSE PRICES SOAR £1000 A MONTH!!   :rolleyes:

Getting desperate now to keep that sentiment positive for house price growth, aren't they?

 

George Osbourne went to edit the Evening Standard. 

Diane Abbott will go to edit the Express and I wouldn't use it to light my fire. 

Share this post


Link to post
Share on other sites
10 minutes ago, adarmo said:

George Osbourne went to edit the Evening Standard. 

Diane Abbott will go to edit the Express and I wouldn't use it to light my fire. 

Thread about house prices. Obvious troll starts talking about Diane Abbott.

Obvious troll is obvious.

Share this post


Link to post
Share on other sites
1 minute ago, Beary McBearface said:

Thread about house prices. Obvious troll starts talking about Diane Abbott.

Obvious troll is obvious.

Oh house prices. That's what this site is about. 

Thanks

Adarmo x

Share this post


Link to post
Share on other sites
13 minutes ago, adarmo said:

George Osbourne went to edit the Evening Standard. 

Diane Abbott will go to edit the Express and I wouldn't use it to light my fire. 

*Osbourne*

I don't make the rules about how we spot the BTL trolls ;-)

Share this post


Link to post
Share on other sites
1 minute ago, Beary McBearface said:

*Osbourne*

I don't make the rules about how we spot the BTL trolls ;-)

Osborne. Thank you sir. You clearly know him better than I. 

I remember you telling me once that the troll thing would never cease to be hilarious. You were right. 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Final Brexit Deal   166 members have voted

    1. 1. When the government negotiations are over, do you want a vote on the final deal?


      • Yes
      • No

    Please sign in or register to vote in this poll. View topic