Monday, Jul 23, 2007
Average prices rising below RPI in July
Tgraph: House prices hit by rate rises
The average saving accound has fared better in July! A sudden outflow of migrants and renewed emphasis on couple formation, with a sharp decrease in student population and the discovery of new land offshore have caused the sudden stand still of asking prices... amazing eh? Sound like David_2004's supply theories.
Posted by confused76 @ 10:58 AM (197 views) Add Comment
11 Comments
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1. david20040_0 said...
""""with average prices rising just 0.3pc in July""""
Still rising, where is this supposed crash then? Oh yeah there isn't going to be one.
2. confused76 said...
David2004
wake up, HPI < RPI is the crash.
to start with, it is a real price fall. But then is areas like Wales prices slipped in nominal terms by 1.99% last month. The rest will happen soon. You dont get it, do you?
You said: "According to the Land Registry, house prices in Newport fell 1.99% in the period – the biggest drop anywhere in the UK.""
A 1.99% drop when they have risen by 136% is hardly a lot now is it.
Not really, if the average mortgage leverage is 70% then 1.99% / (1-70%) is a whopping 6.63% equity loss in one month. That stinks, in my book. But maybe you like it, you do not have to be a rational investors.. do you?
You said:
"The latest weakness should also not detract from the fact that prices for the year are up by 9%.""
That is still more than inflation and more than the highest interest rate offered on a internet savings bank account of 6.3% by ICICI.
You guys are getting way too ahead of yourselves!"
You sure David. Invest wherever you please, but remember that your returns will be the future returns not the past returns. When the price of your nice BTL flat goes down by 3% in 2008 (which is possible, eh?) with 30% equity that means 10% negative return on your investment, then you tell me if you are still not impressed with savings accounts. Alternatively, look at what happened with the commercial property investment funds: 18% returns per year for 3 years (2004-2006), then suddently a drop of 5-10% in the past six months... yeah yeah but commercial property is different, there are no commercial immigrants, and commercial people do not divorce and there are not commercial students... yadayadayada...
3. maddison said...
Please let this argument begin!
4. royston said...
The 'rise' that these statistics show is misleading. Banks are steadily cutting back residential mortgage lending to the poorest borrowers who buy the cheapest housing. They prefer to concentrate their current lending on the middle and upper market segments where borrowers tend to have a lot of equity with which to protect the banks against price declines. Comparing an 'average price' in a month which contains some low end properties with a subsequent month comprising only middle and high end properties creates the false impression of a rise. It's a bit like Tesco sacking all their shelf-stackers and claiming they have become a better employer because the 'average wage' they pay has increased!
i.e. On like-for-like properties, prices are actually falling now. Do a comparison of your local property papers now with a few months ago. In my area (South-West London), I reckon prices have fallen between 5% and 10% in the last 6 months.
5. maddison said...
South West London Market is interesting to observe as it reflects the aspirations of the young rich professionals but not necessarily the super rich individuals. I would agree with Royston prices are definitely stalling. It is the high level of unsold properties that concerns me. Especially in new builds in and around Clapham and Streatham. One "luxury" development I have seen is only 30% sold since it was finished autumn last year. The discounting will have to start soon.
6. tony marshall said...
Near us - central south coast - the sign on a 'new' development of starter and small family homes, started about 2 years ago, still says 'Last chance to buy', having been up there for well over a year...
7. confused76 said...
David2004,
London house prices will follow this chart, with one year delay
http://finance.yahoo.com/charts#chart2:symbol=hbos.l;range=1y;indicator=split+dividend;charttype=line;crosshair=cross;logscale=on;source=undefined
you are warned
8. Orwell said...
Confused
Explain your figures please?
Thanks...
9. david20040_0 said...
Dudes,
I want house prices to crash and burn.
I know that RPI is 4.4% and CPI is supposedly going down (yeah whatever).
However even when house prices are at their supposed weakest they are still managing to go up by 0.3 to 0.6% percent every month. Whilst this isn't amazing it is still keeping up with the CPI.
I am mega impressed with my savings accounts, Icesave is giving me 6.2% and ICICI is giving me 6.3%. I am just a little wary of having my money held in non UK banks.
However when the best Halifax can offer me is 5.05% on its websaver I have to move.
Onto the main point, we have seen little dips of 1% before in 2005, then the Bank of England cut interest rates and they went rocketing up. When something has risen 136% and dipped 1.99% that is not exactly a lot is it.
As for investing in BTL, no way I wouldn't go near it. I'd rather leave my money in high interest bank accounts thanks.
Commercial property is different. Businesses are relocating out of the UK because of the stupidly high rents you have to pay here. Why base your business in London, UK when you could take it to somewhere cheaper to run, parts of the United States, Canada, Australia or New Zealand perhaps?
I do not want prices to stall or keep up with inflation, no way, I want a mega mega crash the likes of which will burn all these BTL investors who are destroying my future. I want them to crash. House prices are going up faster than I can earn it. That really frustrates me because it means every year I am further and further away from buying a house.
10. Matt said...
Unfortunately David, it doesnt work like that. In the last recession,interest rates soared, credit was 'crunched' and borrowing was a last resort to put bread on the table.
If we see a sharp correction in the housing market,what do you think the effects will be?
I see it that people will not spend any unnecessary cash on luxuries,so the top end of the market will go,no porsches or rolexes being sold.
The middle sector of the consumer market will suffer as peoplke will stick with what they have got,so no Mondeos being sold.
The bottom end of the market will remain fairly static as they will use secondhand and discount goods anyway,just fewer of them.
When the housing market goes,the high street goes,followed by service industry followed by manufacturing(what little we have left).
It may be a long time indeed before you can afford a house my mate.
On another note,be careful holding your pot in another country,who do you think they will credit first when they pop? Locals banging on the door or foreign savers?
11. Limeyb said...
The Bank of Scotland has an Instant Access Savings Acount with 5.75% AER, I can't believe people are putting all their money in these internet based banks, many dont even have a phone number to call!!
I think things will be very interesting by Xmas.. once the benefit to inflation figures from utility price cuts balances out, inflation will rise again and interst rates will surely continue to climb.
What effect will all the flood damage, insurance claims etc have on the ecconomy as a whole??