Wednesday, Mar 28, 2007
Still reckon it started Nov 2006 when rates reached 5%
Firstrung: House prices cool in March - Nationwide
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: "The housing market showed further signs of cooling during March. The price of a typical house increased by 0.4% during the month, bringing the annual rate of house price inflation back into single digits at 9.3%. The price of a typical property in the UK is now £177,083, £15,000 higher than at this time last year. This is the equivalent of a monthly rise of £1,250 per month or £41 per day".
Posted by converted lurker @ 10:32 AM (158 views) Add Comment
17 Comments
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1. David20040_0 said...
Please don't raise rates Bank of England, why do these stories always emerge just as the BoE is going to make its decision then as soon as it has the Express comes out with house prices ROCKET?????????????
We need rates to RISE!
2. dohousescrashinthewoods said...
Also on the FT: http://www.ft.com/cms/s/4e4e69b0-dcee-11db-8d42-000b5df10621.html
I note that £41 per day is one third of the £120 figure that was being flag-waved around just last month by such rags as the Times, BBC, Daily Mail etc.
3. tyrellcorporation said...
In a perverse way I don't really want to see a cooling of the market now! Houses might as well be a million each for a 3 bed semi. A slight cooling isn't any good and in fact is exactly what the VIs are hoping for.
4. royston said...
"Not only are insufficient numbers of homeowners putting their properties on the market, but levels of house building continue to undershoot the levels of demand. "
Does she really believe that speculators are going to continue buying now that it is clear they can not expect to flip the property for a quick profit?
Fionnuala, sweetheart - wake up and smell the coffee - IT'S OVER!!!!!!!!!!!!!!!!!!!!!!!!!!!
5. converted lurker said...
Tyrell, I recently read a report from Alex Bannister (who used to Ms Earley's job) from 2002. He suggested in 2002 the market was disconnected. Then we got BTL & sub prime etc. The froth on the market could be as much as from 2002 onwards, average prices then were 102K, now N-wide reckons its 177K. Would that be a 40% correction?
6. Davros said...
Looking at the bigger trend, it's definately down. Has anyone ever checkout out the annual increase graph? It's been peak trough every 2 years since 96. The peaks have been lower every year since 2003 and the troughs are generally 10-15% lower than the peak. If there's anything in this, we should see negative territory at the start of 2008.
7. Sam said...
Well, if there are enough BTLers out there they could force up rents on the basis that there are so many of them stretching themselves. We're about to move out because the landlord is going to sell up. whom ever buys from him will probably rent it out making no profit at all. personally I think he's called it late. our neighbours are moving out becuase they simple refuse to pay the rent increase. (the interest rate rises must be hurting).
Also I think london will see the crash last, so many people percive it to be totally different to the rest of the UK that they'll keep the market going for the sheer . I would put a correction of 30-40% being on the cards. once rents go up too much people will end up moving out, a few polish mates are already tired of living hand to mouth and thinking about going back.
8. tyrellcorporation said...
I still dream about the peak to trough 80% fall in Japan! Even a 5% fall over here would be pretty serious for the market but won't go anywhere near compensating for the huge gains over the last few years.
9. tyrellcorporation said...
I'm surprised landlords think they can just ramp up rents. If the current tenants chose to move out, the resulting void period would wipe out any gains made by increased rent. In fact the landlord would be much worse off unless the new tennants were prepared for a long term let.
10. Scott said...
Hi guys,
Where I work in London is losing many of its best people, high earners, because they just cannot afford to live near work (by that I mean on the London tube map which covers a very big area) and the boss is getting angry but he does not blame them. I will be next to leave by the way. The sad truth is that this problem has affected normal workers in the big city for years but govt does not care about these people. As far as they are concerned, anyone can sweep the road, flip burgers, etc. However, house prices in Aspen, due to rich Americans buying skiing homes there, got so bad that the city ended up with an exodus. The teachers left, the police left, fireman, engineers, nurses, even doctors and so on. The govt must do something for its own sake or this will happen here.
11. Albertini Albertino said...
Um... isn't it at least a week till the next MPC meeting? Aren't Nationwide a bit quick-off-the-mark this month?
Anyway, let's get rid of the flaccid Doveid Blanchflower, posture a bit more in the Middle East for added instability (keeping oil on the up-up-up again) and go for a +0.50% move. Who was it that mentioned delicious inflationary pressure (is RPI at 5% yet?) - lovely jubbly indeed.
12. converted lurker said...
Tyrell, they cant just 'ramp up rents' London has as big an over supply of rental as anywhere else in the UK, as for this London will ride out the storm nonsense...jeez...in value it'll be hit hardest and earliest if a correction takes hold.
13. dohousescrashinthewoods said...
I see this as a developing trend - curving over the top and then accelerating downwards.
Where I live, a decent family home is 300K. A 20% correction would save us 60K. When you stand to make more than your gross annual salary (incidentally, #$%& you, Brown) suddenly HPC looks like a hopeful prospect. (Though the potential human suffering is awful, so it's somewhat ambivalent)
In any case, the blindingly obvious point is that you should only buy in, or trade up, in a crash - that's when the amount of money you need to reach ANY rung (first or next) is smallest. The only financially astute thing to do at the height of a boom is sell (buy low, sell high, right?) - and maybe emigrate to a different market.
14. denzil said...
I don't know if anyone would care to donate. Hear me out. I'm going on a charity bike ride and I intend to ride through every city and town in the UK where housing is unaffordable for FTB. The purpose is to raise much needed cash to insert a brain into the void between Ms Earleys ears. I could probably buy a Korean monkeys brain from the Internet which would probably be a great inrprovement on the current incumbent of Ms Earleys cranium.
Now is 9.3% YoY cooling. Hmmm you decide. Protestations like this from Ms Earley are simply patronising.
15. David20040_0 said...
This is absolute rubbish how can the market be 'cooling' when they are rising at over 1k a month!!!!!!!!!!!!
16. dugmug said...
Sam said...
"Well, if there are enough BTLers out there they could force up rents on the basis that there are so many of them stretching themselves."
I don't see this happening. They'd have to operate like a cartell to achieve this, becuase otherwise there's simply too much competition between each landlord to attract tenants with such a lot of rented property now available (BTLs are their own worst enemy - shame).
There's also a lot of people out there on Housing Benefit, and the maximum they can claim is set by the local Rent Service (a government agency) for each area - they won't be prepared to just ramp up their rental assesments at the drop of a hat, so if a landlord puts rents too high, they knock out a large proportion of their potential tenants (at the lower end of the rental market at least - not swanky pads in Belgravia I'll grant you).
And of course there's the fact that, within limits, if house prices go up and you want to buy, you can just borrow a higher multiple of your salary to secure the house and then spread the repayments over a longer period to afford the monthly bill. Rents are obviously different - you can't (unless you're really dumb) borrow to pay the rent, so you can't just borrow a higher multiple or spread the payments over a longer period; you have to meet the monthly rent out of 1X salary, every month. This is the reason why average rents have gone up only at the same rate as incomes in the last 10 years (52% increase for wages, 53% increase in rents).
So the more prices rise ahead of wages, the less BTL is a going concern, yet part of the point of BTL is the capital gain from prices rising: mmm, it was always going to be doomed wasn't it.
17. taffee said...
btl will at first be desperate to rent their property and I have actually noticed rents going down as the realisation hits that you have GOT TO GET INCOME.
After they still cannot make money, they will begin to dump their properties on the market and the rest will be history.