Monday, Jul 16, 2007
May figures suggest house price inflation slowing
Firstrung: House prices fall according to latest government survey (DCLG)
The mix-adjusted average house price in the UK in May 2007 stood at £211,056, up from £209,454 in April 2007 (not seasonally adjusted). UK annual house price inflation in May 2007 was 10.9 per cent, down from 11.3 per cent in April 2007. Annual house price inflation in London was 14.5 per cent in May, up from 14.0 per cent in April. The UK annual house price inflation rate for the 3 months to May was 11.0 per cent and 14.1 per cent in London...
Posted by converted lurker @ 10:56 AM (140 views) Add Comment
6 Comments
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1. paul said...
It's all going pear-shaped for the property shills ...
2. converted lurker said...
Hi Paul, this is May's figure, if June/July/Aug follow the same pattern then HPI could be back into single figures, as to whether this pattern will accelerate is the question I reckon
3. planning4acrash said...
Not exactly torrid conditions. I increasingly think that it will be at least another year before chickens come to roost. Commercial property will hit the buffers first due to more sophisticated institutional investors heading for government bonds to ride out higher interest rates. I expect a crash in commercial property by the new year and a residential crash sometime next year, possibly next autumn "when" interest rates hit about 7%. Novice BTL investors will buffer initial losses expecting rent charge growth that will fail to materialise, whilst they get bitten by further interest rate hikes and notice too late, at the point where they cannot sell. With DCLG figures this strong, it could be a long wait, just enough time for me to save up a deposit !!!!!
4. confused76 said...
Hi,
I think the market has to get to a real standstill before prices plummet, and that will only happen when people are forced to sell.
Forced to sell, i mean either by fear of repossession, or fear of a bigger devaluation or both.
In my book, this is a very "non-linear" phenomenon that feeds itself once started, but it needs a trigger.
The good news, we do not need "macroeconomic factors" as triggers, since this is an asset speculation bubble (i.e. prices are basically detached from fundamentals, or - which is the same - people do not really know why they are paying a certain sum of money for a house). So I am hoping that the IR shock of mortgages coming off the 2yr fixes can do the trick after the summer.
But there is also a time dimension. Here in central london properties are on the market for 100+ days at stupidly inflated prices, and these prices are coming down by 5% steps, as you can see at propertysnake. Mildly discerning BTLers are not buying anymore and are selling bits of their portfolios, as a result volumes are very low and EAs are mounting pressure to "be realistic". But in an environment of lowering prices buying decisions are postponed, and it becomes a self fulfilling profecy. I remember when this happened at the end of 2004, both sales prices and rentals went down in a matter of 2 months.
5. tipping point said...
confused76
People in fear of repossession don't sell, they put there head in the sand and eventually the bailiffs move in. If I was a bank I'd be breaking ranks now before the crash and getting as much of my money back from sub-primes as I could. Yer the bad press would hurt but it would hurt a lot less than trying to auction houses in a crash.
6. chilli said...
'auction houses in a crash'
Music to my ears!!!!