Thursday, Mar 08, 2007
HBOS survey
Reuters: UK house prices up 1.8 pct m/m in Feb
The HBOS house price suvrey suggests that the higher costs of borrowing haven't impacted demand for houses. The price of the average house rose 1.8% in February, the highest amount since October. This brings house price inflation to 9.9%. HBOS attributed the rise to a mismatch of supply and demand in Europe.
Posted by jellycaster @ 08:43 AM (173 views) Add Comment
5 Comments
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1. Steve said...
Every month there is supposed to be a slowdown, but a 1.8% rise is a massive one. The average house price is nearly 192K, a 1.8% rise is nearly 2k.
This is huge inflation.
Surely if there was a crash coming the dramatic rate of house price inflation should have slowed down somewhat.
Banks always say that they predict a slowdown later on in the year but this supposed slowdown never happens.
I personally predict house prices will rocket this year with 15% growth as the stock market declines and more and more people put their money into property.
2. Steve said...
From The Times:
Britain’s biggest mortgage lender today cautioned that the housing market was beginning to slow despite seeing prices rise by an average of £121 a day last month.
£121 is a massive increase, who on earth can afford that.
3. Weycresto said...
HBOS = Mandy Rice Davies. "they would say that, wouldn't they." The only limit to their ambitions, being how much debt they can stuff down people's throats.
4. Davros said...
> I personally predict house prices will rocket this year with 15% growth.
So you're saying that with rates higher this year and expected to rise and with affordability even further stretched, we'll see 50% more growth that last year?
Dream on.
5. dohousescrashinthewoods said...
To balance this, remember that if you put down a 5% deposit (generous by some lenders' standards) that is only £6.05 per day to add to your deposit, about £185 a month. If you can save more than this, you are actually improving your hold on the market. Even at 10% deposit, that's £270 a month, which is not a ludicrous sum, assuming a reasonable salary.
For many waiting on the sidelines, choosing not to take the "lemming's leap" of faith in "non-reversible asset prices", it should be quite viable to keep up with this. If prices stagnate, they can still buy - or indeed increase the proportion of deposit - and if they fall, they will see the "value of their equity" (i.e. savings) rocket (to reuse a media term) as a proportion of the purchase price.
So £121 per day isn't as big as it sounds because houses are a "leveraged" purchase so you only need to keep up with a fraction.
*** It gets even better:
Spin warning: do the maths! 1.8% per month would be a 21.6% yearly rise, which is disingenuous. No one is seriously forecasting that. The Nationwide figures zig-zag up and down, 1.8 just happens to be a bounce-up from last month's poor market performance. £121 per day is about 44K. If actual HPI were to reach 10% this year, that implies a 440K house, which is hardly national average territory! (So rude!)
The quote is actually assuming HPI of 20% on a ~£220K average. If the average is 200 and HPI were to level out at a bullish 7%, the figure would be about £38 or £39 per day, not the fantastical, twisted, headline-grabbing, bubble-propping £121 that this supposedly respectable national rag which is the Times is peddling! That makes is £59 per month to keep pace on a 5% doposit or £116 on a 10% deposit. People spend more than that on a night out.
I would always agree one should do the maths, but when you actually do, it's stunning the sheer bull we swallow and happily digest!