Thursday, Apr 30, 2009
Still a long way to go....
BBC News: UK house prices 'down 0.4% in April'
'House prices in the UK fell by 0.4% in April reversing some of the rise seen in March, according to the Nationwide. The building society's figures show that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.'
Posted by hpwatcher @ 07:05 AM (1731 views) Add Comment
21 Comments
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1. hpwatcher said...
There will still be EA's claiming that the housing market is improving and that prices will be going up soon and that you should buy to avoid missing out ZZZZZZzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz....
2. taffee said...
Still 6 x average salary...(which is falling)
3. it_is_going_with_a_bang said...
"The group welcomed some of the moves made by Chancellor Alistair Darling in the Budget but warned this would not bring a swift turnaround in the market."
Why should there be a trurn around? I want to hear the justification for prices to 'turn around' and increase again. Except those who just want to use property as a piggy bank / income.
4. mark wadsworth said...
*Sigh*
We're still not five-year-negative. I'll have to postpone this irrelevant yet significant moment until next month perhaps.
*/sigh*
5. Bricor Mortis said...
So all the ramping, spring peak buying season..... and prices still drift downward. With the BBA figures indicating a strong downward momentum in the popeline, its game set and match to HPC.
So much for the Daily Express claims.
6. magnifico said...
I_I_G_W_A_B, I completely agree. The Government should let HP re-adjust to sensible levels and their efforts should be directed towards devising new law/ regulation/ taxation to stop the bubble from inflating again at an unsustainable rate.
7. On The Edge said...
@magnifico: efforts should be directed towards devising new/law/regulation/taxation to stop the bubble inflating again
how about something simple and cheap like Land Value Tax
8. will said...
Once Nationwide et al have declared the final house price correction, then maybe the UK can begin to adjust their selling prices accordingly. For many the denial stage continues.
9. magnifico said...
@ On The Edge.... or maybe tax quick transactions ( eg buying and selling before, say,a period of 3 years). That would discourage quick-buck speculative transactions.
...or random mortgage checks and punishment for careless lenders and/or fraudolent applicants.
10. str 2007 said...
Anecdotally
A couple of months ago I as seeing alot of house sales going through, so in a way this doesn't surprise me.
However since then sense that things have calmed down and have actually seen 2 sold houses come back to the market.
Also noticed a few more people fessing up to further house price falls.
So I would say I am more bearish now than 3-4 months ago when they first drastically cut interest rates.
Perhaps ironically enquiry levels in the office fit out industry seem to have picked up again (London area).
Personally now I will be surprised if we don't see significant falls for the rest of the year and into next year after perhaps just another month or 2 of spring bounce.
11. mark wadsworth said...
@ Magnifico, mucking about with CGT is superficially attractive, but the way forward is to replace all existing property of wealth related taxes (Council Tax, Business Rates, SDLT, CGT, IHT etc etc) into a LVT set at a flat percentage of all pure land values i.e. a certain base level for 'bricks and mortar' per square yard has to be decided, and everything above and beyond that attracts a tax of X%.
Provided the deemed land value for each postcode sector (or street or ward or whatever) is updated each year on the basis of actual sales (upwards or downwards), this will keep land values (and hence property values) low and stable, so there won't be any fast buck to be made and so no reason to have capital gains tax anyway.
Of course pensioners would be able to roll up to be repaid out of estate. And the whole 'ability to pay' argument is a non-argument - if a newcomer to the area is happy to pay x% LVT plus mortgage interest + repayments on the whole price (which we can take to be broadly equal to the rental value) then existing owners with smaller or no mortgages would easily be able to pay it.
12. timmy t said...
I still disagree with the way that all these places claim to know what the change in house prices is from month to month. What they actually know is the average price of houses that were bought using one of their mortgages, and how that has changed from last month. To assume that this accurately reflects the actual change in the value of every house is just wrong. I'm sure there are people on here with more knowledge of statistics than me, but just the variation between Halifax and Nationwide illustrates the point. Try asking Vauxhall and Porsche what the average value of a second-hand car is in the UK - you reckon they'd have the same answer? I say it every month so I'll say it again, FTB's have disappeared from the market so your "average" transaction is further up the chain. It would be interesting to know what the average number of bedrooms in these transactions is from month to month so you could compare this to the average price. Square footage would be even better but I guess far too difficult. You would then see a much clearer picture of what's happening.
13. magnifico said...
I hear you Mark,
the unfortunate fact is that all these options will be spurned by a Government whose main preoccupation is the engineering of HP increases, because it creates an election-winning feel-good factor.
14. little professor said...
Average house price actually rose by almost a grand in April, but the seasonal adjustment turned this into a 0.4% decline.
15. little professor said...
bouncy bouncy...
16. mark wadsworth said...
@ Magnifico, exactly. Plus most MPs seem to own second and third homes (or two homes and a caravan in the case of Harry Cohen, Labour, Leyton & Wanstead)
It's nice to lay into Labour's collossal incompetence vis a vis credit and house price bubbles, but it's not like the Tories are any different. I do often wonder how bad the credit and house price bubble would have been if the Tories had been in power this decade - worse? just as bad? not quite as bad?
17. ana lytics said...
lp@10.23am
Yep, actually a +0.61% rise in non-seasonally adjusted average HP in April, seasonal adjustment factor is approx -1% bringing the SA figure to -0.4%. No doubt our friend Stuey will pick up on this, and fair enough really......... the SA factor worked against the falls over winter (when volumes are traditionally low) and hence you would expect it to work "with" the falls in spring (when volumes are normally higher).
Interestingly, this little spring hiatus in the falls means that it may now be June before we see the 5 year-on-year go negative. It would take a -1.9% May figure to send it negative next month, but only a -0.12% fall over the next 2 months for June to go 5y-o-y negative. Assuming there is a little flattening of the market whilst the cash buyers (not included in the Nationwide stats I know) and family-home upgraders (needing smaller mortgages - hence included in the Nationwide stats) are buying into the market (in the hope that this is the bottom (!!))....... then even if the nationwide quotes 0.0% for the next few months, then the 5 yr-o-y goes negative in July..........
@str2007 10.02am - yeah, I'm with you.......... it's fairly clear that there is only a small portion of the housing market working - cash buyers and families upgrading............ 2 demographics who almost NEED to buy now (as cash in the bank is earning them nothing, so a 6% letting yield is better than 1% in their savings account.......... and families maybe want to lock into the low interest rates (if they have significant equity in their houses))............ all of the other people who WANT to buy (FTBS, 2nd TBs now in neg equity) cannot get a mortgage.......... it will take a significant change of tack by the lenders to swing that around, and if interest rates go up then even the cash buyers and families will stop going into the market........ there's a few more months of falls around the corner for sure.......... it's hard to see the MPC upping interest rates before the election (yes, I know they are supposed to be independent, but really - are they?)....... so maybe there will some change of tack by the lenders towards the end of this year or beginning of next year (especially if prices fall another 10% or so, as then they will be more inclined to offer more competitive deals in the 90% LTV market, perhaps sensing that it would be unlikely for prices to fall significantly more than ANOTHER 10% again)......... personally I'm all for sitting on this for 6 months and reviewing the situation come Oct/Nov............ the picture will be clearer then.........
18. Papabear said...
And already the BBC have buried the story. If you go to the business section (http://news.bbc.co.uk/2/hi/business/default.stm) I can't see the headline anywhere. Amazing! I really have no time for conspiracy theories, but I'm starting to think the BBC is a hornst's nest of BTL-ers...
19. str 2007 said...
ana lytics
I had the difficult decision at Christmas time of being able to get a mortgage ( 2years of good books) or staying off and risking not being able to get a mortgage in a years time if I have a poor year financially - I decided to go with the latter, time will tell if I was right or not.
20. ana lytics said...
str 2007 @ 2.27pm
yep, agreed - it's likely to be a trade off between a lower interest rate fix and a lower nominal house price when the time comes eh? (and personal circumstances of course too). timing the "in" after the majority of the nominal fall has passed (but still whilst momentum is downward in order to secure a discount) and before interest rates hike is the key........... a lot of luck and a little bit of judgement should be the key........... end 2009 for me maybe..... it won't be the bottom of the market (10% off bottom MAX perhaps imho), but a mortgage of £z at y% is cheaper than a mortage of 0.9z (or even 0.85z) at 2y%........... this is of course as long as you of the opinion that interest rates will rise a fair bit (I am)......
e.g. 100K over 25 years at 4% = 533 per month
90K over 25 years at 8% = 702 per month
85K over 25 years at 8% = 663 per month........
Even if the IR is 1.5y, the numbers are better with higher nominal and lower IR (within reasonable limits):
e.g. 100K over 25 years at 4% = 533 per month
90K over 25 years at 6% = 586 per month
85K over 25 years at 6% = 554 per month........
the intention here would be to take the heftier mortgage and lower IR, then overpay/save as much as you can before the fixed rate ends.........
swings and roundabouts though eh?
i'm sure you'll be fine str2007.......
21. Tenyearstogetmymoneyback said...
@20 ana lytics did loads of estimates
Now a real figure
1989 - 1995 . £1100 a month on a house which cost £65500. Pretty much the same as my monthly wages over that period.
Admittedly this is also a theorectical figure as it includes depreciation, and I didn't accept the (best) offer I got of
£48000 back in 1989. I had no hesitation in accepting the offer of £70500 I got in 1999 though.
:- Duncan
p.s If anyone else wants to do some calculations how about comparing rents with depreciation.
p.p.s My neighbours have just Sold To Rent ! Actually had a nice chat about HPC.co.uk with him once he told me this.