Saturday, Aug 09, 2008
A reversal indeed, but as pronounced as others would have us believe?
FT.com: Regional house prices suffer falls
The contrast between the FT House Price Index and those of Halifax and Nationwide, two of the UK’s biggest mortgage lenders, in part reflects the fact that each measures somewhat different things. The FT Index ... tracks actual transactions adjusted to reflect the mix of housing nationwide ... and includes properties purchased without a mortgage. Nearly 40 per cent of UK homes are owned outright without a loan and these sellers are able to bypass mortgage lenders.
Posted by jayk @ 11:04 AM (399 views) Add Comment
8 Comments
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1. sold out said...
From yesterdays financial times
"House prices fell by almost 11 per cent in the year to July, figures showed yesterday - one of the biggest year-on-year falls recorded in the UK.
The decline, which means all house price gains since June 2006 have now been wiped out, underscores the speed at which the nation's housing market is deteriorating. The Halifax House Price Index showed prices in July were 10.9 per cent lower compared with the same month last year, and 1.7 per cent below those of the previous month."
Which index do you believe?
2. jonb said...
They are based on land registry figures.
As I understand it, these exclude Scotland, which appears to be lagging the rest of the country in house price falls and Northern Ireland which is falling from a much higher peak, so the falls are higher. Scotland and Northern Ireland have their own Land Registries, so the English/Welsh Land Registry doesn't include their sales.
The Land Registry figures also exclude transfers arising from repossessions and divorces, as apparently they skew the figures. With repossessions up considerably, and auction prices down considerably, where they manage to sell at all, this is an area of the market that isn't really covered adequately by any of the house prices indices.
3. Jayk said...
@sold out,
And what is your point exactly? FT is a news organisation. They report news. That was a news item not OpEd. You should be glad they are prepared to report information which conflicts with their own stated views and data, unlike most of their contempories who merely pander to the opinions of their readers.
Oh, and since you ask, I'd believe the FT over financial institutions trying to influence an interest rate cut any day of the week and twice on Sunday. Note how HBOS release just before the MPC votes.... At least the FT looks at 100% of the market in E&W and not 60%.
4. Cb said...
"Nearly 40 per cent of UK homes are owned outright without a loan and these sellers are able to bypass mortgage lenders." Huh? Since when do sellers need lenders. They're not the ones buying a home!
5. sold out said...
Jayk,
Thanks for the feedback.
I prefer not to blindly believe any of the stats from any of the indices.Seems rather daft to me and perhaps some people just like to pick and chose what they believe because it suits their agenda.
I think it may be far wiser to question why the FT one is far lower than the halifax or nationwide ones? Is it because of the reasons stated by jonb?
A truer picture of house price falls can be seen from recent auction results, they are up to date and devoid of spin.They also indicate falls in excess of 11%.
http://www.auction.co.uk/default.asp?Auction=R
6. crash bandicoot said...
Jayk, you always seem to put a lot of faith in the FT index. Now I know that you have had this pointed out to you before, but I'll repeat it again for those who weren't listening before. The land registry figures lag the other indicees by about 3 months. The FT index seems heavily weighted towards this (at the moment anyway) and so shows smaller falls than the Halifax etc. The point about the FT index including cash purchases is verging on the comical (if you intend it to support the prices aren't falling that much message). Do you really believe that somebody who has enough cash to buy a house is going to pay more than somebody who takes out a mortgage for a house. The fact that you have a big wedge of cash implies that you have some basic barganing skills!
7. Jayk said...
#6
''Always''?!? I think I've mentioned the FT in about 1% of my posts so don't invent things to try to make your point. Strawman much? And do you complain about those who constantly quote the indices showing the largest drops? As for ''but the Land Registry doesn't include this data'' and ''but the FT doesn't include that data'', those who say it seem to forget that HBOS and Nationwide exclude the same and more. Consequently, if not including ''this'' or ''that'' renders an index less valuable, then that also applies to a greater degree to those you are defending.
8. crash bandicoot said...
Jayk, I didn't mean that you always mention it in every post, just that you seem to champion it above all others. I think that you make a valid point about picking figures that suit your argument (of which you are sometimes guilty yourself). By far the best way to understand the current situation is to look at the long term trend for any single index - it won't be pointing up any time soon.
Do you have a comment on my suggestion that cash purchases are likely to be for a lower price than mortgage ones?