Wednesday, Feb 11, 2009
The Bulls are back in the capital
FT: First-time buyers return to London property market
The number of first-time buyers (FTB) in London increased significantly in January, as property prices start to stabilise. According to estate agency Kinleigh Folkard & Hayward, buyer registrations were at their highest level last month since Spring 2008, with over 35 per cent of them coming from FTBs. Lee Watts, managing director of Kinleigh, said: "We have seen a sharp increase in the level of new buyer registrations during the first month of 2009, and even more encouragingly a significant week-on-week increase in the percentage of first-time buyers.
Posted by jack c @ 12:16 PM (2600 views) Add Comment
31 Comments
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1. need-a-crash said...
However, Watts added that "putting this into perspective, buyer registrations are still 20 per cent down compared with January 2008, and 60 per cent down compared with January 2007".
VI Spin from the FT again!
2. titaniccaptain said...
I am starting to see the psychological importance to this potenial DCB/bull trap.......if the sheeple see that after the DCB/bull trap that prices will continue to fall thats when we will see panic selling.........and I mean PANIC selling....the crash percentages will take on new life and we will see 5%+ monthly drops......even if it is for a short while.....
3. mountain goat said...
TC - Yes. Unfortunately it probably this has to go through a bounce where housing bulls get burned. At some point we will have signs of a small recovery, we get fear of "missing the bargain" which draws in the buyers in a suckers rally. Then we get the real crash after that because all the bulls are homeowners. It's cruel to those first time buyers and I wish it could be different, but it probably won't.
4. james stephenson said...
Thanks MG - excellent graph.
Most HPCers miss out everything on the downside of the cycle - Denial/Fear/Capitulation and have gone straight to despair.
And rightly so.
5. titaniccaptain said...
Most of the people who are going to get caught in this bull trap will be cash buyers................this I have heard from a few estate agents all over wales......when the cash buers run out........then look out houses will be exchanged for what cash can buy..............no one wants to get a mrotage when no ones job is safe............
6. titaniccaptain said...
mortgage even
7. techieman said...
Boom Boom Boom everybody say eh-o eh-o......
8. Papabear said...
An absolutely ridiculous 'article'! Just one London estate agency's *opinion*, predictably putting a positive spin on things. What is it with the FT though? They keep publishing this sort of rubbish every couple of weeks...
9. magnifico said...
Am I right in thinking that the bull trap could only regard asking prices( or Valuation on the excellent graph posted by MG) and real selling prices could still be falling while it takes place?
10. shining wit said...
Vested Interest says "buyers returning to market" - Uncheckable data from estate agents - Wow
11. will said...
They don't tell us what discounts the FTB's achieve to make a deal.
12. timmy t said...
You would have thought that a key requirement of a First-Time Buyer is that they are a BUYER - kinda implied in the title I think. These people are walking into an estate agent and getting added to a mailing list.
13. tyrellcorporation said...
Maybe negative real interest rates are driving out a few savers. It's bound to happen and a direct policy of the government/BoE.
14. another alan said...
I know someone who became an FTB recently, and it seems that the builders are still manipulating the markets. No deposit down, but the builder's trick is to sell all of the property for 85% now, and ask for the 15% in ten years time. This enables people to get mortgages with no (or negligible) deposit...
No lessons learned, and any trick going will do to offload properties.
15. hash browne said...
@13
See: http://www.millerhomes.co.uk/promo/miway/
I believe these schemes are actually backed by the Governement too.
16. need-a-crash said...
"...(remember house prices can go up or down)."
They even make this statement at the end of their example. Ahh if only a few more VI's had made this statement over the years... just think no sub-prime mortgages, no global bank crisis, no depr... sorry recession, no Gordon Brown lies, just people getting on with their lives living in affordable housing... Sorry dream over!!
17. Sogy said...
Looks like the bull trap to me.
London isn't very hot at the moment, job wise.
Certainly doesn't prompt me to run to an EAs and buy right away. Doubt I'll miss the boat.
18. Archijc said...
Lots of life in the housing market if you're:
a) post-mortem, and
b) feline.
For the rest of us, the outlook's a bit more dreary.
19. Norfolk&clue said...
Thanks from me too Mountain Goat - interesting graph.
As for the article to me it seems like someone is trying to spin 'buyer registrations' which effectively means nothing. Personally I check the local (Yorkshire) estate agents websites myself rather than give them my details.
20. Hiccup said...
Please pm me when it happens. lol
21. jack c said...
It will be interesting to see how many people get sucked in by VI spin which is completely at odds with what is now taking place in the economy - see news.bbc.co.uk/1/hi/business/7883255.stm
The governor of the Bank of England, Mervyn King, has warned that the UK is facing a deep recession in 2009 and said rate cuts may no longer work. In its latest forecast for economic growth and inflation, the Bank says that the UK economy will decline sharply in the first half of the year. And it says that there is a significant risk that the recession will be even longer and deeper than expected. The Bank forecasts the economy will shrink by 4% from mid-2008 to mid-2009.
Here is an example of what is now generating FTB interest www.mandale.com/home.php
22. Old_traveller said...
I think this crash is so dramatic there will not even be a bull trap phase. No spin can stop this. And cash buyers will probably not make a dent in overall statistics. At any rate, not something as dramatic as shown in the graph above. Let's wait and see.
23. mark wadsworth said...
"buyer registrations were at their highest level last month since Spring 2008, with over 35 per cent of them coming from FTBs"
Good spin. At a guess I'd say "buyer registrations" is meaningless, maybe it's just HPCers doing it for sport? As somebody else points out, 60 per cent down is 60 per cent down. "35 per cent" is meaningless as we don't know what the normal fraction is, and even if we knew, then the proportion of FTBs can go up merely by dint of the fact that there aren't any buyer-sellers any more.
24. sceneclub68 said...
When you see those crucial words 'according to estate agency...', you know that you can safely ignore the rest of the article!
25. letthemfall said...
mountain goat
But do you think there is such a thing as a suckers' rally in housing, given the inertia in such a slowly transacting asset? My feeling is we will see a statistical blip or two as prices fall more or less steadily. It's too big a boat to switch about.
26. Jamess said...
I have been keeping track of the London housing market avidly for the past couple of year whilst i wait for prices to fall. There has undoubtedly been a significant upturn in purchasing activity in a lot of London areas since the New Year. I have also seen some flats coming back onto the market at higher prices than they were advertised towards the end of 2008. Under Offer and Sold is appearing next to many of the flats that have been on the market for some time in the £400k - £500k 2-3 bed garden flat bracket in Clapham and Putney.
I was finding this all deeply disconcerting, however the graph posted above has helped settled my fears and re-affirmed my decision to hold out for the time being.
I would not be surprised if we had a couple of months of positive house price growth again this quarter however...
27. mountain goat said...
Letthemfall - IMO it is a big frozen boat. The 20% fall so far is fairly meaningless, it is on low volume. Asking prices have not fallen much, so the sales have been from financially distressed sellers, the minority. The average seller is not prepared to drop even 10%. So we are in the denial phase. How many sales would it take to push hp statistics back up? What is reported is selling price not volume. If sellers read this kind of article they will not drop prices.
Personally I hope this bounce happens soon, it means the ultimate crash is getting closer. What we have now is a frozen market with very low volume of sales, I don't trust the statistics yet. I know the banks can't start lending like they did, that game is over. But if they could the market would bounce to 2007 levels very quickly because there has not been capitulation yet. The whole mental frame has to change of sellers and buyers.
I suppose a crumbling economy means the change in mentality could come from outside. But personally I think it has to happen inside the housing market. When the housing bulls still out there get sucked into the trap but the Ponzi scheme carries on its inevitable collapse we will get a new mentality "don't buy a house, that is the way to lose money".
28. jackas said...
An estate agent said that?
Really? They said that?
Has this ever happened before?
29. pelethar said...
This is nothing to get worked up about. Prices have fallen 20%+. Let's say they will fall another 20% and then bottom out at the end of this year, for the sake of argument. New enquiries were at rock bottom for the whole of last year. It would be stupid to imagine they will stay at rock bottom and then suddenly rise fivefold once the market bottoms - they will increase gently as prices continue to fall.
We have to accept the fact that, as this year progresses and prices continue to fall, the earliest leading indicators like new enquiries and, eventually, mortgage approvals, will start to ratchet up. And sections of the media will trumpet each increase as proof that the market has turned.
30. Mmeg said...
The more FTB enter the market the greater downward pressue on rents (less demand) ... it will be interesting to see how long the long term investors will go during increased void periods.
31. voiceofreason said...
Here is Southampton the prices aren't falling. And properties are selling at still way over 3.5 x earnings.
So as far as I can see, there is no need for "quantative easing".
The credit lines and cash lying around from the boom are still swilling around, and inflation is defo not dead.