Tuesday, Feb 17, 2009
10.2% Decline in a year?
Telegraph: House prices falling at record rate
"Homes lost 10.2 per cent of their value during the 12 months to the end of December, the first time the Department for Communities and Local Government has recorded a double-digit drop since it first started collecting the data in 2003." This roughly tallies with my personal observations.
Posted by quiet guy @ 11:29 PM (1474 views) Add Comment
20 Comments
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1. quiet guy said...
Another take on this story here:
http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=10942
with a link to the Communities and Local Government report at the end of the article.
2. str 2007 said...
Lovely
I was waiting for this to go double digit.
Just the title of the survey says - this is as much as it is possible to fiddle things in our favour.
And true to form this survey out of all (excl rightmove asking prices) shows the smallest falls, less even than land registry.
This is the survey I want to see at -25%, by which time Haliwide will be -35% from peak.
3. Johan said...
Look at http://www.residentialprices.info/ ... interesting map of price distribution in western EU.
4. str 2007 said...
Incase you don't make it to the end of the article I'll copy and paste the last paragraph for you, it reads :-
''The group said that while the Halifax and Nationwide house price indexes showed a fall of around 20 per cent since house prices peaked in 2007, many surveyors think the drop in transaction prices is closer to 30 per cent. ''
I enjoyed that bit.
5. str 2007 said...
quiet guy
According to your articles headline this survey recorded a ''collapse'' of 6.4% in the final 3 months of the year.
That's a nice steady pace annually of over 25% falls.
6. montesquieu said...
My favourite
''December's price fall was driven by a steep drop in the average price of a detached home, which fell by 4.1 per cent during the month, while flats lost 2.4 per cent of their value and the price of bungalows and semi-detached homes eased by 2.3 per cent and 2 per cent respectively. ''
Catching up at last, VIs can no longer spout on about how it's only flats dragging down the averate.
Don't you love the word 'eased' as well ....
7. Timewilltell said...
I know recent purchases, ie less than 3 months ago, that bought into the full steam ahead again in 2009 attitude. they won't even believe this hype any more. as for me ..bring it on, bring it on !!.
my area has seen very little drops in the bottom end, 10% drop is livable, 20% drop is what I need , when the good feeling turns to panic...
8. uncle tom said...
We're in the freefall stage now - no-one really knows what a house is worth any more.
But it is not yet the time to buy - those sitting in the wings should still wait patiently.
It would be surprising if there was not a false dawn before the market plumbs its lowest depths, and that might well happen this autumn. But I would say wait - the false dawn will draw out some waiting cash, but as that runs dry, prices will plunge again as interest rates get forced up.
For entering the market, about 12-16 months from now is currently looking optimal, but don't plan on borrowing more than 50%..
9. happy mondays said...
This still looks a small fall compared to the economic mess we seem to be in, and if property has risen 300% in the last 10 yrs surely it has a lot further to fall, especially if you take it back to the days of 3.5 X 1 annual salary? to which this seems to be the lenders intention!
I hope!
10. Paul Maleski said...
The house price ratio of 3.5 x 1 salary, historically is about right. This equation assumes that there is one salary earner, quite often there are more than one. What one has to scrutinise are the long term structural changes in the labour market over the next decade, things like rises in unemployment, increased part-time employment and dramatic reductions in pay rates, and reduced government top-ups of low income workers. I reckon total average earnings will fall by one third; that is including : reduction in hourly wages, less or no bonuses, overtime etc. So I predict over the next five years house prices will fall in real terms by around half. The FTSE is hovering around 4000, if deflation kicks in with a vengeance, as it will, I reckon the FTSE will drop by around a third during the next bear cycle. My advice is to invest in pharmaceuticals that produce anti-depressants or in the rope industry.
11. str 2007 said...
Uncle Tom
Haven't seen your name in a while, nice to see you back.
Do you think they will raise interest rates much ?
Personally I see rates very low for a long time as low rsates will increase inflaton which they want and higher rates will now kill everything stone dead.
What are you anticipating rates to be in 12-16 months ?
Happy Mondays
3.5x1 salary is a nice thought but prices will settle at the level they lend at. HSBC were offering 4xjoint the other day with a 40% deposit in place.
Prices may well under shoot a bit but the sheeple will borrow to the max.
I do know exactly what you mean though with regard to the price rises. IMO asking prices should be at least 25% below where they are now and falling fast. But I guess if you were selling a house you'd try and get as much as you could.
Note my post No. 3 above - the surveyors seem to be seeing bigger falls than the surveys currently suggest.
12. Eternal Sceptic said...
True to form, yet another set of dodgy statistics that intend to portray the price of houses but make no mention of the true value. There is
much further to go yet. I suspect we may be nearing the bottom when Labour is out of government and totally destroyed as a political entity.
13. Dbc Reed said...
@happy mondays
It does look like the lenders are only going to lend on houses when they fall to 3xtimes salary again but this will take years! It needs something dramatic/revolutionary to signal the end of the hpi era to stop owners clinging on for an up-turn..Brown should announce that when the market bottoms out a tax will kick in to stop them going up again: the old Schedule A of pre 1963/4 which kept house prices flat in the fifties and sixties or the Big One = LVT.He needs to get lending going again before the next election and it just ain't happening now nor will it until existing homeowners realise the steady stream of untaxed capital gains from housing has dried up for good.
14. str 2007 said...
Eternal Sceptic
Don't forget the Conservatives are taking advice from Kirsty (I'll eat my hat if house prices drop) Allsop.
Sorry, but I thought I'd remind you of that before you get too excited about the alternative to labour.
15. inbreda said...
very true str2007. The tories, by employing krusty, showed their true colours. They are like Z list celebrities. No talent, no brains, nothing to offer, but desperate for everyone to admire them. There should have been much more made of the PR disaster that they created when they employed the silly fat cow.
16. mark wadsworth said...
@ paul, STR and others, the price-to-earnings is always expressed as a multiple of a single salary, the long term base line of 3.5 means exactly that, i.e. at today's salaries, about £100,000 - £120,000 for an 'average' home (bearing in mind that FTB's have slightly above average salaries for that age group, or they'd still be renting or in a council flat.
@ DBC 13, yes of course LVT would be best, but there were two other things we had in 1950s and 1960s that kept prices low and stable, namely sensible banking and building lots of new homes (albeit mainly council houses, it's all good).
17. uncle tom said...
str,
There is a persistant illusion that the central Banks dictate interest rates, when in fact, all they do is set a rate that is close to that dictated by market forces - they have very little scope for deviation from that rate.
With massive state borrowing across the globe, money is going to start getting expensive, and that means raised interest rates.
And forget deflation theories - inflation is now an economic necessity that the printing presses at Loughton are getting ready to ensure!
18. Janethor said...
Hi
This morning on the WrightStuff the "expert" money guy reckoned interest rates would be low for two years and he was quite positive about the "green shoots of recovery" in the housing market. Should I be wooried? We sold up almost two years ago and are still sitting back in rented accomodation worrying about our money in the bank!
19. it_is_going_with_a_bang said...
Just to remind everyone what the Conservatove Party had to say of Kirstie when I complained ...
Dear Mr ....,
I am replying on behalf of David Cameron to thank you for taking the time to write to us with your concerns about Kirstie Allsopp's involvement with the Conservative Party.
Kirstie Allsopp has, and continues to be, a valued contributor to the home buying review which the Conservative Party is currently undertaking. She has been extremely helpful in adding a public face to what has been, in the past, a largely closed process.
Kirstie is very experienced in the home-buying and selling process, having been a property search agent for over 10 years. Every week she travels over the UK dealing with the fears, worries and frustrations of buyers and sellers and she sees the full extent of the resulting stress that they all too often suffer in the process. Reducing this stress through increased certainty and speeding up the process is a key objective of the Conservative Home-Buying Review and as such, Kirstie’s involvement in the review has been useful and worthwhile.
You should not feel that because Kirstie is the most visible face of the home buying review that she is by any means the only contributor. We are endeavouring to ensure that all relevant parties are involved to the greatest level possible with the process.
If you are interested please take the time to look at our website: www.homebuyingreview.com which also gives you the opportunity to contribute to the review and put forward any concerns you have.
Thank you, once again, for writing.
Yours sincerely,
Lara Moreno Perez
Office of the Leader of the Opposition
House of Commons
London
SW1A 0AA
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