Sunday, Nov 16, 2008
David Smith says no
Times: Are house prices really falling at a record rate?
Many people say to me that they keep reading house prices are falling at a record rate, but that their memory of the housing bust in the early 1990s is that it was a lot worse.
House-price data from the two main lenders, Halifax and Nationwide, suggests a record annual fall, down 14.9% and 14.6% respectively. Other house-price measures, however, continue to point to smaller falls. The government's DCLG figure is down 5.1% since last year, while the FT index is down 6.2%.
Last week, at a Chartered Institute of Housing conference, I shared the stage with David Orr, chief executive of the National Housing Federation. He reminded us that the factors that pushed up prices have not gone away, and their research suggests shortages will push prices up 25% over 2011-2013.
16 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. quiet guy said...
"Many people say to me that they keep reading house prices are falling at a record rate, but that their memory of the housing bust in the early 1990s is that it was a lot worse."
To be fair to David Smith, I don't see much acknowledgement of falling house prices in my day-to-day dealing either. Is it really different this time? I doubt it. I have no intention of buying at the moment and am content to wait and see. Interesting times.
2. dohousescrashinthewoods said...
ROTFL - great find LP. The guy really is a nit.
I'm sure I've heard of industry folks saying that it's actually worse than the official figures admit.
One VI at a troop-rallying conference and he's reporting that it's all ok?
Will he be eating humble pie in short order? I'd take that bet, except I recall people saying he has a short and "flexible" memory.
3. bystander said...
"PS: A lot of people struggle with the basics of economics, as I know from responses to these pieces on the internet. Many readers tell me they could do with a refresher. Help is at hand."
.....DO YOU THINK HE IS REFERING TO US???? :0)
Shameless plug Mr Smith. Also Blanchflower is not 'honourable' he is simply feathering his own nest like every other 'expert' given a platform to plug their own agendas, just like yourself. How is the BTL portfolio looking these days???
4. Fjcruiser said...
properties will start falling down very quickly from next January, with people loosing their jobs. The fact that banks are not lending (unlike in the 90s) mean that prices have to drop further.
5. Henryweston said...
"He reminded us that the factors that pushed up prices have not gone away"
Has he not heard about the credit crunch ?
6. harold said...
"Help is at hand."
From the guy who has been consistently WRONG. No thanks.
7. Luckyjim said...
I sold at the start of the year (now renting) and am watching the market very closely in my area (cambs). Most genuine prices for large family homes have barely moved. The odd house will drop it's price by 10% and these are the ones that have sold. It may be a buyers market but their isn't much choice.
In the 90s, when I bought my last house, we had dozens of houses to choose from - all of them at much lower prices than the peak. In the 90s interest rates were high which effected the market from top to bottom. The market corrected itself very quickly.
Now interest rates are low but first time buyers cannot get a mortgage. The market seems unable to cope with this. So what we have is a freezing up of the market and vast differences in the effect on prices. The average price drop is irrelevant since none of us is average.
It's important that we try to understand this market. Don't simply dismiss views you don't like.
8. stillthinking said...
If you are looking to rent and were concerned about the government using your tax money to bid against you as a renter, at least you can take some solace from the fact that most of the new builds are rejected on quality grounds.
Bit unfair in some ways, workers housing being worse than social housing but anyway.
9. richc said...
Ah yes, David Smith, the man who was claiming 18 months ago on his blog that house prices in the US were not actually falling because prices hadn't fallen in the survey produced by the US Office of Federal Housing Enterprise Oversight (those folks who did such a fantastic job of regulating Fannie Mae and Freddie Mac). This was despite every other US index showing massive falls. I don't like to engage in personal attacks, but David Smith really doesn't know what he's talking about. He didn't know that the OFHEO data only included houses that were bought with mortgages issued by Fannie Mae and Freddie Mac, and that the quality and value of those mortgages is limited in such a way that they exclude subprime mortgages and most sales in California, Florida, New York and other expensive areas of the country that had seen the biggest gains in the bubble. Of course if you exclude houses that appreciated in the bubble, you're not going to see the falls in the bust, but that hardly means that prices aren't falling. His latest article actually shows the same line of thinking -- if you exclude all the areas that experience massive appreciation in the bubble, then prices aren't really falling in the bust. I wouldn't necessarily expect a UK based journalist to know all the ins and outs of the US housing data, but if you don't know what you're talking about, then don't spout off with your opinion, especially when you're being paid to be an expert (supposedly) on the topic.
10. Gtrjazz said...
The house prices have a long way to fall yet you can buy a 1970s ex council house around here for around £170000, but even after putting down a £20000 deposit that leaves still repayments of £1000 a month.
Now the average wage here is £20000 which is £1250 take home so being sensible if you need to raise a family (the whole point of buying a home) or if one of you cannot get a job the figures do not work.
Its not until you get down to a £90000 asking price spread over 25 years with a £10000 deposit that it all starts to look more realistic.
11. Neo-serf said...
Fool
12. jonb said...
Some points to take away from this -
It is not so bad in the south east, but much worse in the rest of the country. That may well be true, and if it is the people in the SE who say they remember it being worse last time, you have your explanation.
The factors pushing up prices are still there. Two of the factors are:
Immigration - bigger demand for property. That factor has gone away. We nbw have a net outflow of Poles. I'm not sure how much of a factor that ever was as house price increases seemed to be inversely proportional to the number of immigrants in the area.
Mortgages are more affordable this time round - probably still the case, but only if you can actually get one. The actual availabilty of mortgage money is now about the same or worse than last time round.
13. phdinbubbles said...
"Another snippet I picked up at the conference: it is not just price and funding issues that are stopping housing associations buying unsold homes from builders to let to tenants. In many cases, it is because they are not built to the associations’ high specifications."
He had to go to a conference to pick up this information! This has been discussed on this site for what seems like an eternity. It's table-talk amongst my friends (normal people who don't have such an obsession with house-prices), especially those that live in Leeds and are dumbfounded about how the developers ever got planning permission. And this man is an expert?!
14. This comment has been removed as it was found to be in breach of our Blog Policies.
15. This comment has been removed as it was found to be in breach of our Blog Policies.
16. This comment has been removed as it was found to be in breach of our Blog Policies.