Monday, Jan 21, 2008
Positive spin on bad news...
Independent: House prices fall for third consecutive month but agents see signs of recovery
''House prices are continuing to fall, although the new year has seen a moderation in the rate of decline, according to the latest data from the online estate agency Rightmove.
Having recorded a sharp decline of 3.2 per cent in values in December, partly caused by a glut of properties rushed on to the market to beat the Home Improvement Pack (HIP) dead-line, UK real estate values declined by an average of only 0.8 per cent in January, the group said. The annual rate of increase now stands at 3.4 per cent, its lowest since December 2005.''
Posted by hpwatcher @ 08:46 AM (1128 views) Add Comment
28 Comments
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1. hpwatcher said...
I think the first half of this year is going to tell us whether a HPC is on the cards. I'm looking for clear and unambigious signs; hopefully we are beginning, and will continue to see them now.
2. it_is_going_with_a_bang said...
Surely it matters most what the RICS members feel, as they will be doing the valuations and telling people what the properties are worth.
Probably going to get a lot more down-valuations along with p***ed off estate agents and sellers.
The only saviour of the housing market is seen as "quick and large interest rate cuts".
Problem for these people is rates have been high enough now for long enough that FTB can see how much it hurts - even when rates are not that high.
Of course the financial advisors should still be then 'advising' people to take out loans and build into it a rate increase over term of at least a few % to make sure they can afford it.
That would be responsible advice and lending......
Having said all that - what exactly are these 'signs of recovery' - reading the article I wasn't exactly convinced the Headline made sense at all.
3. hpwatcher said...
''reading the article I wasn't exactly convinced the Headline made sense at all''
I agree; but it's the expression of a sentiment, one that they are going to express whether true or not.
4. inbreda said...
There are probably an awful lot of property developers who are reading these reports and starting to feel a bit nervous about their current project. There are also probably a lot with properties on the market that are not selling, or not getting the stupid offers tehy are used to getting. Another few months will see these guys starting to get realistic about what their homage to laminate flooring projects are worth (not to mention the period they are able to sustain mortgage payments to keep a property on the market), and that's when we will see a real slide.
5. mark said...
maybe they mean signs of recovery for first time buyers, as when prices drop they will be able to buy...lol
6. new user 2007 said...
Not sure how new entrants will pay prices that are merely stagnating. Salaries are not rising by 4% so they will not catch up even if prices just stabilise in real terms. If the main driver of rises was access to money, and this came from ever growing income multiples, and these are being slashed, how will prices remain stable? All these limits were reached before the credit crunch, The confusion is perhaps asking prices….
Real prices and nominal prices are falling now BUT I hope no one feels confident about the line that you will be buying at low risk based on Rightmove numbers. If a house was worth 200k in January 2007 and the Rightmove asking price fell from say 280k to 250k for the same house between October and December, that is still overvalued i.e. a price increase of 25% i.e. from 200k to 250k. Talk of 8% being the long-run average price growth should also not provide comfort. This is based on many decades of very high inflation i.e. from the 1950s to the 1980s.
Even though I do not think the official inflation numbers reflect true inflation now, they are still lower than for decades. So we should be looking at real price rises. These have been incredibly high relative to the past over the last decade. Real debt (mortgages etc) will fall more slowly now inflation is lower. The other issue is our so-called 4trn in housing assets versus 1.4trn in debt. If everyone started selling those assets prices would collapse BUT the debt stock has to be paid no matter what.
7. planning4acrash said...
"Some homebuyers are now able to find properties that have fallen into their affordability zone."
This suggests that nobody could afford anything before the falls and that one or two folk can now, not really groundbreaking stuff then!
8. daft boy said...
House prices will now continue to fall until they come back into line with wages
9. maddison said...
So London is still very strong with 5% increase in asking prices in Wandsworth/Lambeth/Kingston. Poor Bonuses dont seem to have effected the market at all. To be honest I was a bear turned bull and the more I see this defying in Gravity the more amazed I am.... I still think agents are ramping prices and there will be a fall. I await the Land registry stats in about 3 months...
10. denzil said...
I still remain unconvinced as to whether we are on the verge of a crash but I will without question state that blaming the slowdown on HIPS is as ridiculous as saying that a seagull crashing into the side of the titantic was the cause of it sinking.
11. wdbeast said...
Although the figures have clearly been spun to manipulate consumer reaction, the language is still quite clear.
"House prices fall for third consecutive month " (House prices are falling)
"but agents see signs of recovery" (things may get better but don't buy anything just yet)
All this will do is encourage buyers and sellers to continue to sit on their hands.
The big test will be the spring when the market normally picks up and sales volumes start to increase dramatically.
If/when this does not happen, we will start to see large price reductions, which will come through to the statistics from June onwards.
The crash is happening, we just need to be patient to see the stats that prove it.
12. theboltonfury said...
I agree, I am not convinced this is a crash yet. A blip maybe, but I think the next 6 months could go one of two ways. A massive crash (I hope!) or the realisation that our this has been a massive false alarm, caused by our Fisher Price PM....
13. Sold My Soul To The Never Never Never said...
New User 2007 - you are quite right. Inflation at its present level will not erode the debt and the fact that many homeowners have taken on interest- only mortgages on large income multiples will find themselves 10 years down the line with the large debt still to pay and property prices probably similar to what they are now.
I feel that we are about to hit unprecedented territory and it will turn quite ugly for the new entrants that came into the market in the last 18- 24 months.
14. hpwatcher said...
''A massive crash (I hope!) or the realisation that our this has been a massive false alarm,''
The property market is ripe for a crash, everything is now in place....it just depends on what happens next.
It's not a question of ''if'' but ''when''. I'm not sure we are there yet, but at least people are beginning to talk about a recession in the UK. The HPC won't happen without a recession, that's a vital condition - in my view.
15. theboltonfury said...
jp
I agree. My worry is, as already stated before, that Brown's economy and therfore his job is built on HP. He will do / fiddle anything to dupe the public that all is well.
Surely, all is in place, but people believe what they are told, and the media is still generally erring on the side that there is no problem - their vested interests will not allow any alternative
16. hpwatcher said...
''Surely, all is in place, but people believe what they are told, and the media is still generally erring on the side that there is no problem - their vested interests will not allow any alternative''
Yes. But their confidence will be shaken if these people i.e. media, GB are saying all is well but inflation continues to rise and people choose not to buy.
17. theboltonfury said...
Hp
we (people on this site) are coming at this argument as people with our fingers on the pulse, clearly with at least a basic grasp of the true situation. We are talking about a large proportion of the British public here that voted Kerry Katona as celebrity Mum of the year and are fascinated by the life and times of Jordan and Peter.
18. su said...
tbf
Most of the people I know are not Jordan and Peter fans. They tend to be of above average intelligence BUT their understanding of world events tends to be dictated by the Press. They may be suspicious of certain tabloids but they totally trust the BBC and their chosen "reliable" paper.
19. Meow said...
HPCWatcher - I'm sure there's been a few threads on here about how a HPC "preceeds" a recession, not follows it.
20. theboltonfury said...
sorry Su, i was going for a cheap comment to highlight my hatred for Kerry Katona. Incidently, since she moved into Wilmslow the value of properties in her immediate vicinity have fallen, I suspect for other reasons that HPC
21. denzil said...
Actually tbf your comments got me thinking about the similarities between Jordan and the Labour Party and Jordan and Brown and Darling.
Firstly I take my hat off to Jordan because as with the Labour party both have little to offer but use the media to portray the illusion that they do.
Secondly Jordan and Brown/Darling. One has the other are a right pair of t*ts.
As for Katona, i'm not sure who she is but I think she may have been on:
"I'm a Celebrity but you would never have guessed it" or "Love Island" and used to be married to Barry Mcfaddiaddian.
Seriously though, "theboltonfury" makes solid and interesting observations about the sources Joe and Joanne Public take their political and social news from and how spoonfed and spun news can dictate sentiment of the masses.
22. talking rot said...
House prices dramatically increased over the period 1999 to 2006 because of the easy availability of cheap credit, rather then production-driven wage growth. If cheap credit is easily available, then house prices will continue to rise and 2007 will be seen as a blip in a similar manner to late-2005. If cheap credit stops being easily available, house prices could be expected to fall. Hang on, house prices don’t fall. No one accepts a significantly lower offer on their house unless they are FORCED to, or the mortgage lender accepts a lower offer on behalf of the mortgagee.
What circumstances exist that will place a significant minority of mortgage-holders in a position of FORCED SELLING? Currently none! Unemployment is not [yet] high; repossessions, while rising, are a long way off from the levels seen in the early 1990s; interest rates are historically low and unlikely to rise because Central Bankers have spines of jelly when faced with politicians.
This is a race situation. Which will occur first: The return of easily available cheap credit or crashing house prices due to forced sales? My money is currently on the return of cheap credit because Crash Gordon and his team are in power.
23. talking rot said...
Oh yeah, forgot to add one point.
Crash Gordon and his team will continue to make bankruptcy and IVAs easier, cheaper and quicker. Crash Gordon and his team will continue to lean on the MPC. Crash Gordon and his team will change tax laws to favour long term property ownership.
In the immediate future, this will enhance the credit available to the market but at the expense of the long term. And the long term is merely a whole bunch of short-terms happening one after the other.
Hence my belief that cheap credit will become easily available before house prices start to crash.
24. Sold My Soul To The Never Never Never said...
Talking Rot - yes you could be right but the City is looking a bit precarious - shares have been falling like a stone on the back of talks that there could be a possible RECESSION.
25. Micasasucasa said...
I know people (FTBs) who are considering buying at the moment, and people who think that they'll have no problem selling this year. The general public are clueless!
26. The Xyy Man said...
Part of the reason this crash has been resisted for so long is all of the VI spin Joe Public has been subjected to.
This spin will continue even when we have crashed and crashed big. And stats will be manipulated to hide the fact that, one at a time, each maxed-out member of society will hit the buffers. A domino effect will ensue. It is already happening all around you.
Ignore the spin and look at what is actually happening. Local radio/papers are full of adverts for companies who buy your house (70% of value) and rent you it back. These companies are sprouting up all over - and they are masking some of the effects by allowing people to avoid repo's. These sales won't appear on any of the stats from EAs, RICs etc, and they're ALL below market value. These sales avoid the shame of repo and/or bailiffs, but they are forced sales none the less, and they are increasing.
The biggest speculative bubble of all-time is crashing now and it cannot be stopped, no matter what anybody says. The iceberg has already been hit, and the ship is sinking - and it is going all the way to the bottom.
27. su said...
tbf
I really must get out more. I have no idea who Kerry Katona is. :-)
28. wiltshire said...
Su, if getting out more will give you insight into who Kerry 'Chip Shop' Katona is then you made the best decision by staying in. Honestly, all she is is a Chav Superstar (a la Jade 'My surname makes me a living oxymoron' Goody).