Prices resume falling
UK house prices fell by 0.2% in September, following sixteen consecutive monthly price rises. Annual house price growth in London slowed somewhat, from 25.8% in Q2 to 21% (-4.8%) in Q3. Nevertheless, at Â£401,072, average prices in the capital reached a record high, 31% above their 2007 peak. In the UK as whole, prices are around 2% above their pre-crisis peak (excluding London they are less than 1% above their 2007 peak). âPrice growth may soften further in the final quarter of the year, given the high base for comparison from Q4 2013. However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand is starting to moderate.
Start of a new trend
This is Money: You wait ages for a decent 5-year fix mortgage and then five come at once: Nationwide and Barclays latest to cut rates back below 3%
Anybody viewing bond rates will have seen that the longer term bonds are collapsing as the yield curve flattens like a pancake. My prediction is that this trend will continue unabated until we see affordable 15, 20 and even 25 year fixed terms. This is a longer term trend yet, since fixed rates were not even at all available in the 1970's for most people. With oil prices starting to collapse, wages not rise for at least three years and petrol prices plunging 5p in recent weeks, expect lower central bank rates before they rise. Expect negative rates before we see them much higher.
Sainsbury's slashes petrol 5p/litre
Interest rates set to remain low for AT LEAST three years
Wise words from down under - equally appropriate to UK
"Paretoâs pioneering study was actually in relation to population and wealth. His very first piece of research found that 20% of the population owned 80% of the land in Italy, and he observed the obvious inequality that followed. He then carried out surveys on a variety of other countries. To his surprise, he found that a similar distribution applied. Now, the fact that land ownership is concentrated should not have surprised Pareto. And it shouldnât surprise you, simply because land is economically worthwhile to accumulate â to collect the economic rent. And since only 20% of the people are collecting this rent, this leads to an obvious concentration of wealth."
When government intervention helps the free market
Interest in taking on record levels of debt in decline
This was not news for me as I have been watching the mortgage market very closely via google trends. The reason for using google trends is that I believe it to be less manipulated than bank/government stats. If you also take trends for Rightmove's website interest and the above 'mortgage loan' website category you will find a strong correlation between google search interest and property prices. There is a few months lag between prices falling and interest in mortgages falling, but that could be the land registry and sales process lag. You will also find that price rises also correlate with increased interest in mortgages. The above chart if for UK only.
Less money chasing and extra 130k properties this autumn
The Bank of England said mortgage approvals numbered 64,212 last month, the weakest reading since May, and down from 66,100 in July. Analysts had forecast a modest fall in approvals to 65,000. Monthly mortgage approvals are still short of the 90,000 level seen before the 2008 financial crisis, and below a recent peak of more than 76,000 in January. Recent surveys of the housing market have suggested the pace of its recovery has slowed, after rapid growth in activity and house prices at the start of the year. The British Bankers' Association reported last week that the number of mortgages approved by its members fell to a 12-month low in August.
The students who pay £1000pw in Prime Central London
Students from wealthy families from Middle East, Russia and Africa are now the biggest luxury rental market in Central London, according to a study by London Central Portfolio. Naomi Heaton, chief executive of London Central Portfolio, said students are now the firm's biggest market, occupying 41% of its properties at an average of £600 a week, or more than £2,500 a month. The number of wealthy, overseas student renters in the areas of Mayfair, Belgravia, Knightsbridge, Chelsea and Kensington, has doubled from 12% to 29% between 2006 and 2012.