Thursday, Sep 13, 2007
House Price Crash starts in London?
Firstrung: London house prices fell £4,200 August - Home.co.uk
The UK housing market is in trouble. 6 out of the 9 regions in England registered falls this month, with asking prices for homes in Greater London falling fastest of all, by 1.2%, the Home Asking Price Index report revealed today...The overall drop for England and Wales was 0.4%, which equates to a loss of £1,030 in a single month for the average homeowner, while the average London property lost £4,208.
Posted by converted lurker @ 12:02 PM (1372 views) Add Comment
19 Comments
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1. Mark said...
is this the start of that big C....
2. Orwell said...
Watch interest rates go down then and a run on the pound and higher inflation. Is a Harold Wilson style devaluation on the cards?
3. dohousescrashinthewoods said...
We seemed to be about 12 months behind the US, and I was wondering if ours would unfold quicker to catch up. Notwithstanding that these are only asking prices, it looks like we may be playing catchup. The UK is normally only about 6 months behind.
4. converted lurker said...
I've always rated Home.co.uk's index, spoken to Calnea at length in the past, it's as good as any other index IMHO. Quite a reversion although I seem to remember this has happened with London this time last year.
5. confused76 said...
CL,
London... things are different now...
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/09/scything_the_city_1.html
"So brutal redundancies are now only days and weeks away, as it becomes commonly accepted that the turmoil in financial markets will depress certain lines of business for months if not years.
The boss of one investment bank tells me he expects a first wave of job cuts that will see individual banks reduce their headcounts between 5 and 15 per cent."
6. confused76 said...
i like the following paragraphs at the same link...
"...And he says he wouldn't be surprised if that was followed just a few months later by a second wave of similar or even greater magnitude.
First out the door will be many of the creators of the current crisis: the manufacturers and traders of assorted asset-backed securities that you can hardly give away right now; all those debt whiz-kids who engineered the poisonous collateralised debt and loan obligations; the banking servants of a hedge-fund world that’s shrinking fast and of a private-equity industry in cryogenic storage."
ahahahhah... sorry I like the picture of PE folks immersed in a liquid nitrogen bath...
7. dohousescrashinthewoods said...
I think that merits posting. Give me a sec..
8. confused76 said...
David,
echoing one of your bullish comments of a couple of weeks ago...
when you make £4,200 in a month on your house value it is a lot of money. you even said that you do not care about what yield that would be, cause you do not look at percentages. but when you lose £4,200 in a month how does that feel? it stinks, doesn't it?
Now, multiply your feeling by the 1 million buy to let properties that were bought in the UK over the last 4 years...
and you know what happens: a rush for the exit, to place money in nice savings accounts
hurry up before prices really plunge...
and remember that a long-term investment is a short-term one that has gone awfully wrong
9. Nosignofdavid90210 said...
It's interesting to see the following:
1) London house prices have fallen on average £4,200 in the last month.
2) Oil hovering around the $80 per barrel mark.
3) No sign of David "Oh I really want a crash (honest)" 90210.
10. Sds said...
Dwho is DAvid?
11. dugmug said...
Quote from the actual HAPI report that appealed to me, "The Buy-to-Let Snowball Effect: Investors in residential property who have been ‘steering by the rear view mirror’ are likely to be in for a shock. In particular, highly leveraged buy-to-let investors will find that, without the promise of capital gains and with rents essentially static, their sums will no longer add up. Lenders are also beginning to realise that landlord loans are becoming riskier and some are putting up their rates accordingly. The obvious course of action for some landlords will be to place some of their properties on the market to reduce their debt burden. Add these to the increasing numbers of distressed sales from sub-prime borrowers and the ‘snowball effect’ is well on its way."
I don't think I've seen truly bearish comments in this report before, so this seems a big deal. I've also commented before that initial asking prices are usually the last to change when things do turn-down, so I wasn't expecting it to happen for a while and am therefore pleasantly surprised; perhaps things are going to crash more quickly than in the past, as some of you have suggested, due to the sheer size of the boom, faster communications via more use of internet, etc???
12. dugmug said...
Eh...it's not 2:53PM is it...that's not what it says on my watch or PC...have the clocks gone back early this year? :-)
13. dugmug said...
Sds...David_2004 is a very disillusioned young man. Obviously various people have been predicting a house price crash for a few years now, but becuase predicting the timing of these things is so difficult, they have so far been wrong. David obviously believed them and got his hopes up, only to have them dashed, leading to dissappointment and unhappiness. So he has decided the best way to protect himself from further dissappointment is to make himself fervently believe (to a level that you could call religious zeal, and as with religion based on "faith" rather than looking for facts) that house prices will just go up and up and up and up, forever and ever, amen. He'll be as pleased as anyone when the crash finally, indisputably, arrives, but until that day arrives he will dispute away like nobody's business!!
OR...some of the other guys have suggested he's a stooge in the pay of the Estate Agents, sent to post here to spread uncertainty!
Either way, when he does post it usually produces a lot of debate so he definitely adds to the fun here.
14. The Capitalist said...
I'm working on a flat refurb in Little Venice W9. It belongs to my boss who is moving out of town. The area here is very wealthy - lots of flash cars and filthy rich. My boss is nervous as hell as he expects prices to fall and we are still 6 weeks away from completing the project. He hopes to get over £1m..I'll keep you posted.
I think confidence has evaporated in recent weeks in terms of ANY INVESTMENT. This is nature's way and how bubbles end. I urge you all to read Robert Shiller, Marc Faber. Jim Rogers and Bill Bonner. All on U Tube and making sensible, logical statements about why we behave like sheep in markets.
Grubby Labouring Capitalist earning £100 a day.
15. Drewster said...
I sympathise with David though. Back in January 2003 the economist Andrew Oswald wrote a long piece for the Times in which he said house prices would be falling by 2004, and many of us (myself included) took those words to heart. This bubble, like the dot-com bubble, went from rational boom to irrational exuberance around 2002. Since then we've all been waiting for a crash, but as John Manyard Keynes said, "The market can stay irrational longer than you can stay solvent".
16. confused76 said...
about City bonuses and high-end housing market:
http://www.dailymail.co.uk/pages/dmstandard/frame.html?in_bottom=http://www.thisismoney.co.uk/news
'End to big bonuses and housing boom'
It is thought that Spencer will warn of job losses in areas such as credit derivatives, private equity and hedge funds. But he is expected to add: 'Job losses in these areas will be offset by growth in others. The rest of the City looks strong.
'If you look at the way this affects the London housing market, we are not going to see the same cash injections that we saw at the beginning of this year. A lot of the people who were getting really big bonuses are not getting them anymore. But the market is still short of prime supply at the very top end and there are still a lot of overseas buyers.'
people are simply unable to accept that the past two years have been an abnormal bubble both in the credit and the housing market
if we fall 30% from where we are (both in terms of bonuses and house prices) this does not imply that the City has become "weak" all of a sudden, it implies we go back to normality
17. enuii said...
Interestingly this is the Home Asking Price Index not the Land Registry Figures, if this is the case then expect bigger drops when the haggling is factored in on sales in a month or so's time.
18. enuii said...
With regard to dave90210, he was here to wind folks up and won't appear if there is no mileage to be gained for his ego.
19. David 90210 said...
This is just a blip, cant you see that??? House prices will pick up soon and then go on to boom!