[lolacarrascal]

2buyornot2buy, on 26 May 2011 - 02:51 PM, said:

RICS and chairman of Irish Auctioneers and Valuers Institute. Obviously not potential of bias towards high house prices there then. It would be interesting to know if there’s a BTL as a pension plan.

Just reinforces the often made point about the importance of doing your own research.

I had another look at the data on the DCLG, Nationwide, Halifax and UU house price indicies and put together some comparative charts by rebasing them all to Q1 2005.

In the 1st chart it can be seen that on the way up to the peak, the 4 indicies were very consistent, but obviously much less so on the way down. I think it's safe to say that is due to the smaller sample sizes and volumes which resulted in the big swings in the data sometimes seen in the surveys from one quarter to another. Also noticeable is that the DCLG index tends to lag the others by about one quarter, reflecting the different point in the house sale process at which it takes its data. The Composite HPI also shown is just the simple average of the 4 indicies at each data point.

In the 2nd chart the DCLG data has been shifted back one quarter to better reflect its time relationship to the other surveys (a value for Q1 2011 is estimated based on the average change in the other indicies). Now there is quite a remarkable consistency on the way up to the peak. The Halifax index was looking quite good up to Q3 2009 and it can be shown mathematically that is was in fact following the composite with least deviation up to that point. After that however the data becomes eratic with big swings in movement not seen in the other indicies. As it happens, on 16th Oct 2009 Lloyds Bank announced that it was selling its Halifax Estate Agency Business to Reed Rains for £1.

In the 3rd chart the Halifax data has been excluded from the point at which it seems to have become unreliable at q3 2009. The Composite HPI now shows a very smooth transition in trend across the time period and the indicies have converged again over recent quarters.

The 4th chart shows the annual rate of change in the Composite HPI data used in the 3rd chart. From this, it could be argued that house prices are curently falling at a greater rate of annual change than at any time since the rally point reached in prices in Q3 2009. If the UU index shows another reduction in Q2 2011 (as the current trend might suggest) then this would have a further negative impact on the annual rate of falls as the UU was suggesting prices were rising over the same period in 2010.

But as ever, time will tell whether that turns out to be the case.

What has surprised me most is the remarkable consistency in price movements shown by the 4 indicies up to the point when sample sizes started to fall signficantly in q3 2007. I know the reports get criticised but this is often more about how the data has been interpreted or what spin is applied in the narrative. Perhaps also worth noting is the fact that the UU index ended up having the least measured deviation from the Composite HPI over the complete time period covered.

[Shotoflight]

lolacarrascal, on 26 May 2011 - 06:26 PM, said:

Just reinforces the often made point about the importance of doing your own research.

I had another look at the data on the DCLG, Nationwide, Halifax and UU house price indicies and put together some comparative charts by rebasing them all to Q1 2005.

In the 1st chart it can be seen that on the way up to the peak, the 4 indicies were very consistent, but obviously much less so on the way down. I think it's safe to say that is due to the smaller sample sizes and volumes which resulted in the big swings in the data sometimes seen in the surveys from one quarter to another. Also noticeable is that the DCLG index tends to lag the others by about one quarter, reflecting the different point in the house sale process at which it takes its data. The Composite HPI also shown is just the simple average of the 4 indicies at each data point.

In the 2nd chart the DCLG data has been shifted back one quarter to better reflect its time relationship to the other surveys (a value for Q1 2011 is estimated based on the average change in the other indicies). Now there is quite a remarkable consistency on the way up to the peak. The Halifax index was looking quite good up to Q3 2009 and it can be shown mathematically that is was in fact following the composite with least deviation up to that point. After that however the data becomes eratic with big swings in movement not seen in the other indicies. As it happens, on 16th Oct 2009 Lloyds Bank announced that it was selling its Halifax Estate Agency Business to Reed Rains for £1.

In the 3rd chart the Halifax data has been excluded from the point at which it seems to have become unreliable at q3 2009. The Composite HPI now shows a very smooth transition in trend across the time period and the indicies have converged again over recent quarters.

The 4th chart shows the annual rate of change in the Composite HPI data used in the 3rd chart. From this, it could be argued that house prices are curently falling at a greater rate of annual change than at any time since the rally point reached in prices in Q3 2009. If the UU index shows another reduction in Q2 2011 (as the current trend might suggest) then this would have a further negative impact on the annual rate of falls as the UU was suggesting prices were rising over the same period in 2010.

But as ever, time will tell whether that turns out to be the case.

What has surprised me most is the remarkable consistency in price movements shown by the 4 indicies up to the point when sample sizes started to fall signficantly in q3 2007. I know the reports get criticised but this is often more about how the data has been interpreted or what spin is applied in the narrative. Perhaps also worth noting is the fact that the UU index ended up having the least measured deviation from the Composite HPI over the complete time period covered.

You, my friend, obviously have way too much time on your hands (for which I, for one, am extremely grateful)

Do you/did you, perchance, study at the feet of the Guru - the Professor of Property Investment (wonder has the title been changed yet)?

Seriously, a very useful and OBJECTIVE reference, a welcome addition to the debate.

[lolacarrascal]

Shotoflight, on 26 May 2011 - 06:43 PM, said:

You, my friend, obviously have way too much time on your hands (for which I, for one, am extremely grateful)

Do you/did you, perchance, study at the feet of the Guru - the Professor of Property Investment (wonder has the title been changed yet)?

Seriously, a very useful and OBJECTIVE reference, a welcome addition to the debate.

Ta ta, sentiment appreciated and yes I have too much time on my hands.

I said near the end that the UU index showed prices still rising in Q2 2010, in fact they had just turned down again although the annual rate of change in prices was still positive so maybe not as big an impact. Tried to edit but too late.

This post has been edited by lolacarrascal: 26 May 2011 - 07:17 PM

[lolacarrascal]

It is very evident that the 50% drop in house prices recently reported by the Halifax BS represents a significant milestone in the unwinding of the Northern Ireland house price bubble. However the UU often reports there has been significant regional and house type variation. This is supported to a degree by the anecdotal comments posted on this forum. The attached pdf compares house prices by region and type at Q1 2011 with Q1 2005 and Q1 2003 (earliest data available from UU online). Blank cells are due to no data being available, red shades = above average i.e, reduced less than average, green = below average, i.e. reduced more than average.

As timing an entry back into the market becomes ever more relevant, it seems to me that there are several points worth thinking through now.

1. What has happened so far in terms of regional and house type variation in price reduction?

2. Will regional and house type prices eventually revert to approximate relative positions e.g at Q1 2003?

3. Where can further significant/less significant price movements be anticipated.

Although the data is somewhat incomplete and probably misleading in some instances at sub-level, I found it very interesting to see just how much variation there was.

Numbers and data might not be everyone's cup of tea, but I thought I would share this for those interested.

[lolacarrascal]

So as a general observation, the data suggests that the market has corrected from bottom up in price terms, by both geographical location and house type. Hardly surprising, but unless there have also been significant changes to impact on the relative supply/demand that previously existed between areas and house types say 6-8 years ago, then by implication further significant realignment in prices can be expected across Greater Belfast generally and particularly with the detached house type in most areas as the unwinding process continues. Anecdotal comments point to an accelerating thawing of the top end of the market with asking prices continuing to tumble (without yet seemingly attracting any significant interest from buyers that I been able to observe.)

This next pdf takes a closer look at the how the bubble inflated and deflated by geographical location. Again some missing data post peak and some swings in movement demonstrating the impact that just a few sales can have when sample sizes are as small as they currently are. But in some areas there's a story to be told that perhaps individuals can identify with using their own particular knowledge of their target market.

More to follow.............................................

This post has been edited by lolacarrascal: 04 June 2011 - 08:40 AM

[Shotoflight]

lolacarrascal, on 04 June 2011 - 08:32 AM, said:

So as a general observation, the data suggests that the market has corrected from bottom up in price terms, by both geographical location and house type. Hardly surprising, but unless there have also been significant changes to impact on the relative supply/demand that previously existed between areas and house types say 6-8 years ago, then by implication further significant realignment in prices can be expected across Greater Belfast generally and particularly with the detached house type in most areas as the unwinding process continues. Anecdotal comments point to an accelerating thawing of the top end of the market with asking prices continuing to tumble (without yet seemingly attracting any significant interest from buyers that I been able to observe.)

This next pdf takes a closer look at the how the bubble inflated and deflated by geographical location. Again some missing data post peak and some swings in movement demonstrating the impact that just a few sales can have when sample sizes are as small as they currently are. But in some areas there's a story to be told that perhaps individuals can identify with using their own particular knowledge of their target market.

More to follow.............................................

You are spoiling us.

South Down is my area and have only limited knowledge of my little patch. Council houses that were bought by HAs 4/5 yrs ago for £170k are now on below £80k and struggling to make £70k. This is repo territory - Reeds Rains. Construction and public sector (belfast catchment) both historically big here, and a little bit of retail. All very poor and still deteriorating for many well known reasons. Does not feel like a recovery, however weak. I am convinced there is an oversupply of newer houses, rushed up with corners cut on quality, space, no gardens/garage tight plot, into side of hill etc etc, . The 3 Ds (Death, Debt, Divorce) are slow but are having an effect

EA's doing very little except repos and rentals. i have spoken to a couple. They make the right noises - buyers market/back to 2005 but this is not, for the most part, the reality I am seeing.Sales are up, now is a good time to buy, no more drops is their mantra - against all the evidence.

Overstreched mid agers dug in like ticks clinging on by fingernails, old timers paid off and going no where, youngsters watching others fingers being burnt and standing well back. Investors/developers(those still solvent) very cautious, bottom picking and few and far between -most probably getting the nod from the EA before the prop even hits the market. Everyone now knows that property is a big negative with more to come. It's the word on the street.

Unless absolutely necessary, further up the 'ladder', detached good town area, vendors still have difficulty in facing reality (stubborn) - many don't have to, but the very few quick sales tell the tale. EAs happy to play the game or have just given up - money in bank from earlier years and rentals. The number of props reaching 1, 2 and 3 yrs on the market is very substantial, even those that are trying a little and chasing the market down. EAs still quite content to newly list detached props at RV + 50%.

Detached pads in the country however are following trend - many chancers and speculators having the financial taps turned off rushing to offload - I'm talking £250k houses dropping from £350k and higer houses dropping in £50k increments, getting new EA's involved but always behind the curve.

The ghost estate is alive and well where I am with other bankrupts 'building out' and many 'garden grabs' have fallen through. No deposit needed for FTBs in one bankrupt estate (or Development) but tiny £5k price drops when they happen. Very many sales fall through, probably because of rose tinted purchasers outlook on A - the value of your own house, B - how quick you can sell it and C how much the bank will lend you (like they used to!) Estate did have promise but now has negative image due to high proportion of rentals and poor quality workmanship/materials. Still unadopted after 8 yrs.

Bungalows still seem popular enough, which I can't understand, as I don't like them. Demographics perhaps. But they're going down too.

Some meat for your excellent data bones which show, to me, a great amount of fracturing underlying all of the averages prob influenced by low numbers in part. The travel of flow, however, is consistent.

thanks for the hard work.

[lolacarrascal]

Shotoflight, on 04 June 2011 - 10:02 AM, said:

You are spoiling us.

South Down is my area and have only limited knowledge of my little patch. Council houses that were bought by HAs 4/5 yrs ago for £170k are now on below £80k and struggling to make £70k. This is repo territory - Reeds Rains. Construction and public sector (belfast catchment) both historically big here, and a little bit of retail. All very poor and still deteriorating for many well known reasons. Does not feel like a recovery, however weak. I am convinced there is an oversupply of newer houses, rushed up with corners cut on quality, space, no gardens/garage tight plot, into side of hill etc etc, . The 3 Ds (Death, Debt, Divorce) are slow but are having an effect

EA's doing very little except repos and rentals. i have spoken to a couple. They make the right noises - buyers market/back to 2005 but this is not, for the most part, the reality I am seeing.Sales are up, now is a good time to buy, no more drops is their mantra - against all the evidence.

Overstreched mid agers dug in like ticks clinging on by fingernails, old timers paid off and going no where, youngsters watching others fingers being burnt and standing well back. Investors/developers(those still solvent) very cautious, bottom picking and few and far between -most probably getting the nod from the EA before the prop even hits the market. Everyone now knows that property is a big negative with more to come. It's the word on the street.

Unless absolutely necessary, further up the 'ladder', detached good town area, vendors still have difficulty in facing reality (stubborn) - many don't have to, but the very few quick sales tell the tale. EAs happy to play the game or have just given up - money in bank from earlier years and rentals. The number of props reaching 1, 2 and 3 yrs on the market is very substantial, even those that are trying a little and chasing the market down. EAs still quite content to newly list detached props at RV + 50%.

Detached pads in the country however are following trend - many chancers and speculators having the financial taps turned off rushing to offload - I'm talking £250k houses dropping from £350k and higer houses dropping in £50k increments, getting new EA's involved but always behind the curve.

The ghost estate is alive and well where I am with other bankrupts 'building out' and many 'garden grabs' have fallen through. No deposit needed for FTBs in one bankrupt estate (or Development) but tiny £5k price drops when they happen. Very many sales fall through, probably because of rose tinted purchasers outlook on A - the value of your own house, B - how quick you can sell it and C how much the bank will lend you (like they used to!) Estate did have promise but now has negative image due to high proportion of rentals and poor quality workmanship/materials. Still unadopted after 8 yrs.

Bungalows still seem popular enough, which I can't understand, as I don't like them. Demographics perhaps. But they're going down too.

Some meat for your excellent data bones which show, to me, a great amount of fracturing underlying all of the averages prob influenced by low numbers in part. The travel of flow, however, is consistent.

thanks for the hard work.

Really detailed summary of your market which you obviously know inside out, many thanks for the insight. There must be wealth of collective knowledge about local markets on this forum which just isn't getting heard - a few people posting specifically about each area could be an interesting development for the NI forum.

The dataset for Mid/South Down looks reasonably complete except for SD bungalows and recent sales of apartments. If you are interested I'll do some similar analysis to that I've already done for Belfast. Probably won't tell you that much more that you have already deduced but could be a useful source of empirical corroboration for your own assessment of the local market.

Plaster cast on the leg not coming off for another few weeks so I've plenty of time to play on excel.

[Shotoflight]

lolacarrascal, on 04 June 2011 - 12:30 PM, said:

Really detailed summary of your market which you obviously know inside out, many thanks for the insight. There must be wealth of collective knowledge about local markets on this forum which just isn't getting heard - a few people posting specifically about each area could be an interesting development for the NI forum.

The dataset for Mid/South Down looks reasonably complete except for SD bungalows and recent sales of apartments. If you are interested I'll do some similar analysis to that I've already done for Belfast. Probably won't tell you that much more that you have already deduced but could be a useful source of empirical corroboration for your own assessment of the local market.

Plaster cast on the leg not coming off for another few weeks so I've plenty of time to play on excel.

S down is not homogenous like Belfast ie rural and town v city, and apartments wouldn't be as common, though the boom did increase them exponentially. Bad sites seem to be a bigger factor and poor quality - greed in finishing out or overpricing older properties that need work. In the boom, these things didn't matter. They do now - to me anyway.

I am a vested interest like so many on here in that I would like a reasonable property reasonably priced, all things considered. I consider myself sensible rather than difficult to please or even overly choosy. Like most, money is hard to come by (the house buying amount) & I will not give it up and expose myself to financial difficulties further down the line easily. I've waited over 2 yrs ready to move and will wait 2 more, or else just switch off debt free at that stage, which is why I feel I can comment locally.

My interest would be in detached property and your analysis that these are starting to trend down, as the bottom has already done, chimes with what I am seeing. One of the problems I have come across is the EAs use 'comparables' so when a larger house does sell, it is used, even though these sales are rare (perhaps after 2 yrs on the market) or some time ago, and the market moves ever downwards between that sale and the next similar - if there is one. If it sells at a reasonable price or below, it is discounted as a firesale and not used for other valuations/asking prices. More are selling quicker at the bottom and these properties are mostly similar in terms of type/location, so competition is tighter and the market is easier to follow.

I liked what was said at the recent southern auction - we've tried selling at what sellers think their property is worth, this didn't work. Now we'll try to sell for what buyers are prepared to pay. Then we'll know what it's worth. There's still too much of the former up here but we're slowly moving to the latter scenario.

I wouldn't ask you to do any work for my circumstances(but don't let that stop you!), don't wish to hog your skills, but a quarterly update of the main graphs already produced would, I'm sure, be valuable to most on here (do we need to break your other leg to make sure you do this?).

It's impassionate analysis like that below which I am interested in (from your earlier post). When UU uses EAs for data, overseen by a professor of Property Investment alongside a Govt body (when Govt. policy actively promotes home ownership) I appreciate a different take on said data, in comparison with other data if only for validation purposes and to dispel my cynicism.

From this, it could be argued that house prices are curently falling at a greater rate of annual change than at any time since the rally point reached in prices in Q3 2009. If the UU index shows another reduction in Q2 2011 (as the current trend might suggest) then this would have a further negative impact on the annual rate of falls as the UU was suggesting prices were rising over the same period in 2010.

If the above expectation comes through, It will be nicely timed for the autumn/winter. And it adds to my (and I'm sure others) understanding of the current position.

I see houses in ROI now average 2000 prices and USA are late 90s. I see no reason why we won't follow suit. In fact, I expect it.

Speedy recovery.

[lolacarrascal]

doccyboy, on 04 June 2011 - 02:37 PM, said:

Thank you for all your work it is fascinating to see the graphs and your time and effort is much appreciated.

Glad you are finding it interesting, thanks. I'm actually enjoying doing it in an 'anorak' kind of way.

Shotoflight, on 04 June 2011 - 04:56 PM, said:

I wouldn't ask you to do any work for my circumstances(but don't let that stop you!), don't wish to hog your skills, but a quarterly update of the main graphs already produced would, I'm sure, be valuable to most on here (do we need to break your other leg to make sure you do this?).

My pleasure, in fact it's already done and I set it up like a template, so not a whole lot of effort required to replicate for all areas. But if you don't mind, I'll post it all in a few days once it's complete.

I thought perhaps it would be useful now to take a look of what got sold during the run up to the peak and after the bubble burst and to try to identify any emerging pattern. The UU report breaks down it's sample size each quarter in % terms by the 6 main house types from which we can build a picture of what was selling most (or not selling as the case my be) at any particular time. I've added a 4 quarter moving average to make the trend more obvious as the data was a bit erratic from one quarter to the next. Again, anyone who has had a keen interest in the NI housing market over the past few years can probably readily identify with what the data seems to be telling us.

This post has been edited by lolacarrascal: 04 June 2011 - 08:14 PM

[lolacarrascal]

So in using share of market data, we see that in the early stages of the bubble, terraced/townhouses began to increase in demand, and as developers geared up to mostly satisfy investors, this was followed by a significant increase in demand in apartments. At the same time the other house types lost out in market share but when the bubble burst, we see again how market share began to revert to previous norms.

The next pdf takes at look at how changing demand for house types affected prices and again the data supports what would be expected in simple demand/price economics.

This post has been edited by lolacarrascal: 05 June 2011 - 12:44 PM

[lolacarrascal]

[attachment=20476:terrace house price index 2003-2011.pdf]From the previous pdf we saw how each of various house types contributed to the overall bubble across NI and how they have subsequently deflated. Clearly some have had a bigger impact than others and taking the analysis down a level, we can now look at how much impact each may have had in the geographical sub-regions.

Starting with terrace/townhouse, we already know that this house type made an early entrance in the race to the top. It subsequently increased in price in % terms more than any other house type but has since fallen the most in % terms after the bubble burst. The next pdf shows us which of the geographical areas were most impacted by the rise and fall of the terrace/townhouse category. Again some missing data and erratic swings in trend with small sample sizes. Also shown for comparative purposes is the NI all house price index and the NI terrace/townhouse price index.

(Edit for correction to Q4 2009 terrace value for Enniskillen/Fermanagh/S'Tyrone)

This post has been edited by lolacarrascal: 05 June 2011 - 08:19 PM

[Shotoflight]

lolacarrascal, on 05 June 2011 - 07:36 PM, said:

From the previous pdf we saw how each of various house types contributed to the overall bubble across NI and how they have subsequently deflated. Clearly some have had a bigger impact than others and taking the analysis down a level, we can now look at how much impact each may have had in the geographical sub-regions.

Starting with terrace/townhouse, we already know that this house type made an early entrance in the race to the top. It subsequently increased in price in % terms more than any other house type but has since fallen the most in % terms after the bubble burst. The next pdf shows us which of the geographical areas were most impacted by the rise and fall of the terrace/townhouse category. Again some missing data and erratic swings in trend with small sample sizes. Also shown for comparative purposes is the NI all house price index and the NI terrace/townhouse price index.

They say a picture (graph) is worth a thousand words and, in my opinion, these graphs provide a very useful backdrop and context to the available raw data. I look forward to any others which appear and, hopefully, any subsequent updates.

All things being equal (which they aren't - they're getting worse) it would appear, and my view is, that these trends will continue.

Taking the contrarian view, what is there in the short to medium term that would arrest these drops, stabilise them or even reverse them? Anyone any ideas, just for completeness?

[lolacarrascal]

We saw that the semi-detached house price index had followed the all house price index quite closely up the peak. Surpassed it a little at the very top and seems to have followed it closely again on the way down. We also saw that it's market share fell as the bubble progressed but it has picked up again post crash quite quickly and now has the largest share of the UU sample size, reinforcing the important position this particular rung has in the housing ladder and probably because of more sales of better priced new builds. This pdf shows how the price of SD houses has changed at sub-regional level.

(From the downloads it seems there's still an interest in this stuff so I guess I'll keep shovelling it out till you all get bored! I'll do the main house types and then finish off by collating at each geographical area. Can't guarantee that it's 100% accurate as the data was a bit awkward to take out of the UU pdf files into excel, but I think I've found most of the wrinkles now)

[lolacarrascal]

So not that much drama with the SD house type, just the familiar roller coaster ride to the top and down again. A few areas demonstrating a bit more speculation perhaps and some missing data making it hard to work out what's actually happening in others. But this house type might also hold the key for forecasting where the market goes from here, maybe come back to that later.

Now for a closer look at the detached house type. We know already that the detached house price has very much lagged on the deflation side of the cycle having tracked the all house trend up to the peak quite closely. You might also have noted the little rally peak in detached house prices in early 2009 and then another in early 2010. Over this period detached houses also regained their former share of the UU sample size which supports the anecdotal comments on the forum about the top end of the market beginning to thaw. It even looks as if the two rallies in detached house prices might have been the primary reason why we saw the corresponding rally in the all house price index which started at the beginning of 2009. If this hypothesis has some validity, the next pdf shows the detached house price index at sub-regional level from which it might be possible to identify the very areas where a few sales of expensive houses (in a small sample size) could have had such a positive impact on the overall NI house price index.

[2buyornot2buy]

This is realty fantastic stuff thanks for the effort you're putting in here.