Thursday, Jan 17, 2008
That's a 50% drop in price ... in plain speaking !!!
Property Week: Estate agent confidence 'at lowest since 90s', says RICS
In its UK housing market survey for December 2007, made available today, RICS reports that 61% of surveyors have reported a fall in prices over the last three months compared to 38% recording no change and 1% recording an increase.
The figures indicate that the seasonally adjusted balance of surveyors reporting a rise in prices is -49.1% - the worst since November 1992.
Posted by fahrenheit451 @ 12:00 PM (2138 views) Add Comment
45 Comments
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1. fahrenheit451 said...
The only trouble here is that I do not actually see a 50% drop in price. If they were to say 10%, then I would give them more credit, but 50% is just headline grabbing.
However we are seeing a good 10% rise in the cost of rents.
2. hpwatcher said...
I agree. I want to start seeing prices falling in a major way, but I'm only seeing small adjustments.
3. Dim St Thomas said...
It's not a 50% drop in price, it's 50% (seasonally adjusted) of surveyors reporting a fall in prices. It doesn't say anything about the size of the fall. Say the average fall reported by the 50% reporting a fall was 5% and the other 50% said there was no change, that would give a 2.5% drop in prices. In reality it is probably even less than that.
4. I_cannot_see said...
All trash.....I can not see any price reductions in South east....in fact they are up compared to last two months....
5. Distant_daz said...
Agree - In the southwest I have seen an increase in the number of flats and houses in an area I monitor. Flats have dropped slightly in the last 4 months while houses have risen slightly (despite the bad press!).
6. denzil said...
The thing that leaves me bemused with recent comments from VI's is how they seem to be taken by surprise by the slowdown in the property market and falling prices. Did they really believe that prices could keep on rising at double-digit rates without a correction occuring at some point?
7. Bloke111 said...
No, it means that the number of surveyors reporting price falls is 50% greater than the number of surveyors reporting price rises.
So if you speak to 100 surveyors, expect about 60 to report falls in price compared to about 40 reporting price rises.
8. bystander said...
'The Bank of England may have to cut rates further if the market is to remain in a stable condition'
Stable condition - rises of double digits each year for the past five - these guys at RICS need a reality check, like the retailers who are shocked that their overdone profit forecasts are not reached. Reality is beginning to bite, it is a shame that it had to come to this before people in positions to cushion the inevitable correction (Estate agents, Surveyors etc) are forced to act. Had the BoE, at the request of Crash and Bluuuuuuuuuur, had not lowered interest rates in 2005 then we would have been in a much better shape to deal with this storm.
9. Mfarley said...
I thought this meant that the net percentage reporting a fall is -50%, not that prices themselves have fallen 50%??
This measures people's sentiment rather than prices... I think.
10. shipbuilder said...
It's not a 50% drop in price, it's that 3 months ago, 50% of surveyors were reporting increases (amount of increases unspecified), whereas now, only 1% are reporting increases.
11. Si said...
Errr guys, its not reporting a 50% drop in price. Read it again.
12. This comment has been removed as it was found to be in breach of our Blog Policies.
13. dbnazz1 said...
I think the full in prices will start to gather more pace, but ther is no way i can see 50% reductions. That would just bring the whole system crashing down, and that would never be allowed to happen.
14. inbreda said...
Can we all stop thinking that the report suggests a 50% fall in prices. It doesn't.
that comes later.
15. techieman said...
Its quite clear what this indicator is but @dbnazz1 "Never be allowed to happen"? I'm confused by that statement - do you mean there will be reflation by further increase of the money supply? How exactly will they stop that from happening. And what will be "allowed" 10%, 20%?
16. theboltonfury said...
I've notice rental prices coming down by 10% as people get desperate to pay their BTL mortgages.
17. Ejc75 said...
You won't ever see an 50% overnight drop in either asking prices or the official figures, thats not how a crash will show itself. What you see will be monthly declines of around 1, 2 or 3% versus a year ago. These small monthly declines will have a cumulative effect over a year which is when you start to see the double digit declines.
18. Handel said...
You really are absurd! What us your agenda for wanting house prices to crash? OF COURSE a drop in confidence of 49% is not any indicator of a 50% price drop! This is utterly stupid, and what is worse is that you influence buyers - we are trying to sell our house which we know is worth £650,000 but have had only insulting offers. It is the likes of you who are driving prices down - and you all probably have daddy's country pile to fall back on! DESPICABLE.
19. fahrenheit451 said...
£%*@£$
Should have put my reading specs on. Sorry, its 50% (seasonally adjusted) of surveyors showing a drop in price.
Not such headline news.
So 50% do not show a drop in price as well... Er so that means what, nothing happening ???
Given that all new builds are over valued anyway, its all those "Inside Track" VI's that are taking the hit.
Ooohhhh, its going to get "interesting" ... "Don't get mad, get even"
20. Gantlord said...
Jeez, what's wrong with you guys? Why is shipbuilder the only one to point out that this does not in any way mean a 50% drop in prices! All it means is that 61% of estate agents perceive house prices in their area to be falling, 38% perceive them to be staying the same and 1% perceive them to be rising. Two things to note:
1) There's no mention whatsoever of how much prices are changing by
2) This is about estate agents perceptions, and they've not all audited their estate agency to get an absolute handle on what prices are doing.
Anyway, wouldn't it be a tremendous co-incidence if average house prices stayed exactly the same over any significant period of time in 38% of estate agents areas!
21. Loculou said...
I have never, ever, before read anything so absurd as your statement that a 49% drop in estate agents' confidence equates to a 50% drop in prices!
This kind of absurdity undermines your credibility. Furthermore, it pushes prices down by frightening gullible buyers.
Where is your evidence? According to one survey, prices actually rose last month! May one ask exactly why you are so desperate for a housing crash? Such an event would benefit very few.
22. cyril said...
@ techieman - I agree with dbnazz1 - a 50% drop would never be allowed to happen because they would disguise it by general inflation, which as we all know, is fiddled anyway.
I reckon houses will go down by about 20% in cash terms, and inflation will take care of the other 30% (e.g. 10% over 3 years).
23. maddison said...
Especially as it looks like that the Government will nationalize Northern wreck and have £50bn of houses on its books....
24. techieman said...
@ fahernheit - I dont think it means that either - gosh you are having a bad day :-). its the BALANCE - 49 percent more Chartered Surveyors reported a fall than a rise in house prices. So say out of 100 - 40 reported a rise but 60 (50% more) reported a fall. Of course that wont be right because some will be reporting no change so it will be more like:
40 no change , 24 a rise and 36 a fall. Therefore (unless im haing a bad day and ive got it wrong!) its not as bearish as you first blogged but more bearish than your 1:31 blog. I do think they have confused it with a "negative rise" thats not the way the RICS probably puts it!
25. japanese uncle said...
Headlines such as 'lowest sincen 90's' will soon be replaced with 'lowest since 20's'
26. george monsoon said...
What a difference a year makes..
House prices will drop, but the effect will be like a snowball effect. At first the difference will be minute, but as time goes on, the effect will grow significantly.
the general public are only now becoming aware of the awful mess that is the British economy. This acceptance to the fact will compound the crash and fuel bigger falls in the future.
Come on guys, just before Christmas the VI's were posting modest gains in values, now we are starting to see double digit falls. By the end of the year, its anyones guess how the market will look, but I am itching to buy my own home and there is no chance that I will jump into the game until I see the mean average breached, which by the state of things, won't be very far away.
27. Ian said...
I am amused by comments about what might be "allowed" to happen or not. In a free market economy such as the UK houses are like anything else. They are only worth what a buyer will pay for them. Governments are ultimately powerless to influence events and if the market crashes it will take its course regardless of what the BOE and Gordon Brown etc care to do about it.
I remember the last housing crash around 1990. At that time only London and the South-East were affected by the boom and it was nothing compared to what we have seen over the past ten years. Considering that and what happened then and in countries like Japan estimates of price drops of 30% are very conservative. Expect some distressed sellers (eg BTL landlords) taking 60% below their asking price.
28. Gazelle said...
This stat is one of the more confusing ones. 1% of surveyors saw an increase in prices while 61% saw a fall,giving a balance of minus 60%. RICS have then seasonally adjusted this to -49%. You can't infer anything about the % price change - except obviously that the direction is downwards.
The new primelocation report is out as well, showing a drop of 1.3% in asking prices outside London in December.
29. techieman said...
@ nice one Cyril - showing my age there. First of all they cant disguise it - that makes no sense at all to me - its either a real terms fall or an absolute terms fall, but secondly i really think (assuming by "they" you mean the government) your confidence in them being able to stop a fall of a particular magnitude or after a particular percentage is misplaced. Having said that how far the fall will go - is of course up for grabs, but i think the governments are less powerful than you think. If they were so powerfull they would not have created a "bust" free environment by continually reflating the debt bubble (by that i mean they would have done it a different way).Taking a line from S2R1 - this thinking duplicates that in any K-Autumn (governments will protectus from recessions / depressions) which takes the K-Winter's onset to change sentiment.
30. justwatching said...
Techiemen, unfortunately you are wrong on this occasion. A couple of months ago when the balance was in positive territory the beeb did analyse the stats in the way you have. But no longer. The non-seasonally adjusted results were 1% UP HAHA. 38% the same AND 61% DOWN, DOWN,DOWN
To express as a % of those who gave a fall rather than a rise its about 6000% more report a fall than a rise (61-1/1 X 100)
the seasonally adjusted figures read a bit better.
Regional figures are more interesting, not many rises reported at all (bar Scotland)
31. techieman said...
@Justwatching - Thanks - I stand corrected, and bow to your superior knowledge (not being sarcastic there) !!! I was basing my point looking at the November 2007 RICS on their website. So although it looks like both Farenheight AND myself are having a bad day , in general the site is having a good day :-). Apologies for adding to the confusion!!
32. Cheekie Charlie said...
In 18 months to 3 years time people will be buying reposesions in auction houses for upto or over 50% reduction of last summer values. This doesn't mean property values on average will fall by 50%!
33. drewster said...
@fahrenheit451, @theboltonfury:
The direction of rents differs depending on where you live. London appears to be rising slightly; but in Manchester and Liverpool letting agents are falling over themselves to offer incentives and discounts to move in. I've just posted a new article from CNN Money about falling rents in the USA - check the main blog.
34. David-2040 said...
Who is to say that house prices won't rise?
35. techieman said...
Everyone but you David!
36. techieman said...
@Loculou - sounds like you are a newbie. Welcome to the pleasuredome.
37. growler said...
@loculou: "May one ask exactly why you are so desperate for a housing crash? Such an event would benefit very few". This is what I normally hear from the property "professionals". I agree, perhaps a 50% and over crash will have stuctrural problems with it that are not so good, but a correction back to trend - say a 30-35% drop - will be no bad thing at all. The Collateralised Debt Obligation industry of the last 5 or so years has caused this boom (for this is what it undeniably is) and it is also what will cause the demise. The problem is that this type of marketing of second-rate debt for good debt has duped not just the end-user, but also the banks. Both should have known better, and both know that just 10 years ago the sort of credit they enjoy know would NEVER have been granted. For banks it is "caveat emptor" I'm afraid, but in my view end-users have been misled and should be seeking legal regress. For every time I've read "recession" I've read "questionable lending practices" in the press. Sadly, people have fallen for the all-alluring and easy available advances. These in turn have fuelled more growth to drive a self-fulfilling prophesy. The quantity of buyers has been artificially inflated leading to a compund growth effect - a bit like compound interest. It needs to get back to reality, and surprise, surprise: the players on the property gravy train (which includes the taxman) don't like it.
38. techieman said...
@ Handel I think this is a wind up but assuming it isnt I think it best to respond to you via a number of points
1. No seller KNOWs what their asset is worth until they come to sell it. At that point its worth whatever a willing buyer will pay for it.Thats called a market. No doubt you have a nice house but its almost certainly overvalued by any measure.
2. There are at a maximum a couple of thousand bloggers on this site. Do you really think that of a population of 60 million plus such a small number of people could influence the market? People here are just expressing view, supported with logic.
3. If as you say every blogger here “all probably have daddy's country pile to fall back on” [I assume you would include “mummy’s” because it’s a bit sexist otherwise], then why on earth would anyone here (as you say) want to encourage a house price fall? I am assuming that it would be accepted that the country pile would include property?
4. You / We have benefited from a huge credit and debt bubble brought about in part by the government and in part by the K-Wave autumn. I don’t blame you for benefitting but all good things come to an end and the party’s over. Now how the end manifests itself is an open issue. Some think that house prices remain static and wages - through inflation – “catch up”., others think that we reach affordability through a correction or crash in prices, or a combination. Of course others think that there is a right for house prices to rise in perpetuity, if you think that then please get Peter Pan to get his sat nav and give you directions to never - never land.
5. I am surprised that people don’t realise the effect this has on a social level. Do you really believe that your greed outweighs societies need to house people? I feel sorry for Children when they leave school how on earth will they be able to afford somewhere to buy? Unless you would prefer that they live ALL their lives with an overwhelming debt burden.
6. Instead of blaming people on this site, you would be better off looking closer to “home” – you will probably have some time :-). Start with your estate agent and then perhaps look in the mirror , but then again in your world that will probably tell you that YOU are the fairest of them all…..
Good Luck!
39. crash bandicoot said...
Hey Handel I'll give you £350000 right now! Remember this in five years time, when you'll be begging for that much unless you see sense and sell for your real value pretty sharpish.
40. Jackas said...
HEY HANDEL
Farenheight has already 'fessed up to getting his numbers wrong. Me-thinks he's done that alot quicker than you will regarding your house is being "worth " £650,000 when nobody can afford to pay that money for it, by the sounds of things.
I wish you the best of luck - and I welcome the fact you are now starting to feel some of the emotions that FTB have been feeling for the last 6/7 years.
Enjoy.
41. growler said...
@ Handel. Maybe irony, but your name is German for "trade" ;-). I have a leaflet from Savills and Ashington Page sent as a mailshot. They are all on the same theme of the cooling sentiment, the latter one called "Selling your home in a cooling property market". Included in the "valuable advice for those thinking of moving in 2008" is a point amongst others that says "which details are more important than ever now sellers don't have the upper hand". This is not a wind-up. Email report1@ashingtonpage.co.uk. What does this tell you about the market? Remember: This EA's area is the South Bucks hot spot!
42. it_is_going_with_a_bang said...
Loculou :-
It amazes me that the people think ever increasing house prices and therefore debt is a good thing.
History has always proved otherwise.
We have an interest rate / government policy that apparantly had ' nothing to do with' house prices - now that it becomes a political killer it suddenly is a political issue that requires intervention on so many levels.
Too much credit / too much debt / a complete change in society about what is important in life.
A crash is a good thing. It brings people back to 'reality'. It did in the 90's and it will again sometime soon.
43. confused76 said...
Rents in central london are falling. Asking rent 700 pw, just offer 600 and will be accepted.
44. denzil said...
Handel said:
>>You really are absurd! What us your agenda for wanting house prices to crash?
So people who cannot possible afford to buy a property can actually afford to buy at sensible multiples of their income as opposed to the "absurd" prices that currently are being asked for within this property bubble. Very simple really.
45. Wiltshire said...
Handel, I think techieman @ 38 is the perfect response to your statement.
As for 'What is your agenda.....', I think you will find many thousands of people in this country whose agenda involves wanting to live in their own home and either not being able to afford to or not being prepared to pay the ridiculous sums that are expected thus incurring astronomical debt for many years, along with those who want to move up the ladder but who can't, again because of prices. You're thinking "Tough on you, losers" aren't you? Well, the tide is turning pal. I reply "Tough on you, Mr Smug".
I assume you're new to this site, if so you should take some time to read and appreciate what many of the posters here write because you will come to understand that rampant HPI is not good for the general well-being of society. Whether or not you choose to accept the opinions of the majority of posters here is your decision but, whether you like it or not, you are about to find out about the down-side of rampant (and unchecked) HPI, house prices bubbles and personal debt bubbles. Want to know what the situation in the UK is going to be like over the next couple of years? Read what's happening in the USA right now and hope it's not worse than that for us, because it probably will be.
If you want to get angry at someone, I'd suggest you do some research on what Tony Blair and Gordon Brown have been doing to this country for the last ten years. Some hints -
Brown lost £2bn selling UK's gold - http://www.timesonline.co.uk/tol/news/politics/article1654931.ece
BoE Takes Property Blame - http://news.sky.com/skynews/article/0,,30400-1256664,00.html
IMF raises spectre of UK house price correction - http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/17/bcnimf317.xml
UK debt is at 'time bomb' levels (NOTE, BBC story from March 2005!!!!!) - http://news.bbc.co.uk/1/hi/business/4366225.stm
I wonder how many more Handel's are going to find this site over the coming months and blame the 'doomsayers' here for global economy meltdown?