TheCountOfNowhere, on 09 October 2009 - 04:04 PM, said:
It's comical that the only one based on actual sales is the lowest.
I have a new moto....facts not stats. I've given up caring what the hali-wide-rightmove indexes say, the land registry is the only one worth following, the others seem flawed and are biased since they are generated by vested interest groups, so should always be taken with a pinch of salt. They are a good indicator of sentiment and stupidity though
So how do we interpret this ?
We are told that lenders valuations are coming in 20% + under peak.
We are told that lenders best rates are for 60% LTV , above this the risk is reflected in a 90% LTV costing the lender 5x's more and therefore higher interest rates.
We told over and over that loan to income HAS to adjust back to being closer to its historic norm, with Fitch saying this week:
The group's head of UK residential mortgage backed securities (RMBS), Alastair Bigley, said Fitch expected unemployment to peak next year and remain elevated into 2011, a factor which would inevitably weigh on house prices.
He said that the long term average earnings to house price ratio – currently 3.5 times earnings – was not expected to increase, and as such prices needed to decline in order to meet this level.
He added: 'Despite the fact that a global economic recovery is underway, the economic fundamentals do not auger well for a sustained strong recovery in the UK housing market.
'Although households are reducing debt and increasing savings, the upfront cost of house purchase for first time buyers is likely to stifle housing demand.'
With these factors weighing, Fitch expected to see further sharp falls in house prices. The group's head of global economics and Europe, Middle East and Africa (EMEA) Sovereigns, Brian Coulton, said: 'The UK's average house price to income ratio remains significantly higher than the long term average.
'A 30% fall from the peak of October 2007 would bring this ratio back in line with the long term average.' Given that prices are currently down 13% from peak, Fitch is therefore expecting a further fall of 17%.
We are told that none of the factors that contribute to a stable let alone recovering market have changed, lending is severely restricted and will be for years to come . New liquidity rules will see banks having to hold billions in gilts as a safety net whilst at the same time Lenders Need to Cut Lending by £500billion
FTB's can't afford to enter the market , approvals are well below what is considered needed for a stable market, interest rates can only go up , so what is happening?
Is it simply that the only houses are selling are those that are selling to the cash rich prepared to pay 2007 values therefore leaving all the other properties sitting on Rightmove unsold?
Are we saying that if all the backlog of houses unsold on RM were forced to sell to people who needed a mortgage they would have to come down 30% to fall in line with the all the factors needed for a recovering market, that is recovering at pre 2001 levels pre RMBS and back to sensible loan to incomes?