Wednesday, May 06, 2009
Halifax April House Price Index
Halifax: -1.7% MoM
Commenting, Martin Ellis, housing economist, said:
"The average UK house price declined by 1.7% in April, slightly less than the 1.9% monthly fall in the previous month.
The house price to earnings ratio – a key measure of housing affordability – is at its lowest level since the autumn of 2002 at 4.26. Mortgage rate cuts have reduced monthly payments for the average existing borrower by £111 since October 2008, also boosting affordability. Mortgage approvals remain at historically very low levels.
Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months. As a result, further house price declines are likely."
Posted by phdinbubbles @ 09:40 AM (2080 views) Add Comment
22 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. matt_the_hat said...
Have we gone 5yr negative? Finoooola what does your time machine say?
2. will said...
Martin Ellis comments on the long term house price to earnings ratio as being 4.0 . How does he come to such a figure? Do they include things like student debt, maternity leave, periods of illness or redundancy etc? I think the Banks are miscalculating what we are willing to pay for our homes, and that's why we have stopped buying.
3. ana lytics said...
There's going to be a great deal of attention on this -1.7% number............... it is all Seasonal Adjustment........... the NSA number is +0.1% (rounded)......... and the SA is the -1.7% figure quoted............. average house price is up 100 quid.......
As I have said before, the SA factor has worked "against" the falls over the winter, and it works "with" the falls in spring, so it all balances out, but the VIs are gonna have a field day on this one...........
I have 5 yr-on-yr at +1.8% (NSA) and 0.1% (SA), so we're still not negative over 5 years, but a knock from a feather will tip it negative next month.........
It's interesting that the Halifax and Nationwide numbers are starting to drift away from each other a little - expect a (small, temporary) bounce from the Halifax numbers soon I reckon..........
4. pelethar said...
The annual decline has probably bottomed out, as some large monthly drops will fall out of the calculation over the next few months. So enjoy these headlines while they last.
5. matt_the_hat said...
3. ana lytics - can you do a real 5 yr-on-yr comparison taking into account inflation - this may be the feather you were alluding to
6. will said...
ana lytics @3
I have always felt that the 'index' calculations do not tally with what is going on with actual asking/selling prices, due to seasonal adjustments and inflationary factors. Index falls alone will not convince buyers to return to the market, we want true affordibility.
7. mr_smith said...
surely we have hit 5yr negative (using SA)
april 09 £154,716
april 04 £154,449
so thats negative right? woohoo
the -'the price of a home is now the same as 200x...' figures are now going to slow right down as we have reached the point historically where the prices were rockting at nearly 20% per annum. still 5yr negative is something to be celebrated
8. nomad said...
@4 pelethar. I'm expecting large monthly falls this year as we get over the government generated Spring (Dead Cat) Bounce.
9. japanese uncle said...
And this -1.7% may well prove to be the figure after a whole lot of manipulation.
Anyway -1.7% for single month could theoretically amount to -1.7% x 12 = - 20.4%. 65% HPC is nigh, people.
By the way, the current deposit requirements of 40%-50% is really amusing to see, as I recall posting the following, a couple of years ago.
-------------------------------------
Mortgage is quickly becoming a very rare commodity and people will soon have to raise at least 50% deposit in normal mortgage arrangement. By that time, unemployment would certainly reach the level not seen since the 80’s while average salary might well be 10～20% lower than now. And again how many hundreds of thousands of the financially naives have squeezed thousands of pounds out of nowhere but their own houses in the name of ‘equity release’? They will be receiving fateful calls from their banks sooner rather than later, telling them that they will have to place their houses on the market. Flooding houses vs ultimately shrunk affordability. Better than average eleventh form student can tell the answer.
10. will said...
Inflation should only be added to the calculations if it is 'wage inflation'. The average UK wage has only risen by 35 % over the last decade.
11. will said...
Mr Smith @7
Now we wait for the whole country to come to terms with the falls and drop their prices accordingly, not just a few distressed sales.
12. matt_the_hat said...
I read somewhere that there is a hidden claus in most mortgage contracts that says borrows must maintain LTV ratio's - is this correct and if so will banks activate this??
13. growler said...
... and unemployment is not even half as much as it will be. With this not predicted to reduce until 2011, insolvencies booming and inflation likely to be low for at least 12-18 months, I have no idea where any kind of confidence is going to come from that things will go up. Once the ECB follow suit to rescue Euro economies, the exchange rate won't be as cheap as it is now (for export customers). Add to this all the cuts that will have to be made 2010 onwards to pay for the Broon Boom...
14. ana lytics said...
matt
5 yr-on-yr is VERY negative if you factor inflation into the model, NSA or SA.......... I'll try to put something together after 5pm (if someone doesn't beat me to it!).
I did just quickly extrapolate the NSA and SA 5 yr numbers for the next few months (to see what would push it negative at 31/05/09)........ and get this............ a figure of +1.1% (PLUS 1.1%....... not negative 1.1%) would push both the NSA and SA figures into the red over 5 years....... (this is because the May 2004 monthly figure which drops out of the model next month was +3.0% and +1.8% respectively for NSA and SA)........... hence a smaller positive figure in May 2009 can still push the 5 year number into the red.............mission accomplished next month perhaps?
Pelethar is right though.......... the -17.7% YoY figures won't last............. expect a smaller negative YoY figure from now on IMHO........
15. peter_2008 said...
The rate of fall will/is indeed stabilising, say at -10% or maybe even -5% YoY. But that is irrelevant. The relevant thing is that it is falling at a CRASHING speed.
The VI's arguments are like people falling off from 20th floor saying "I have better chance of surviving than people falling off from 25th floor!" No, you both are going to die. You see green shots? Are you sure it is not just you fast approaching the grass ground head first?
16. brickormortis said...
japanese uncle: I am not sure about your 12 months x 1.7% calculation!!! You should be compounding the decay, surely?!
(1-0.017)^12 would be better giving: 0.841 or 84.1% leaving a 15.9% annualized fall extrapolating forwards.
17. inbreda said...
@12
Yes matt there is such a clause. There have been a couple of articles posted about banks that have actually invoked this clause, but I think it is always for commercial borrowings. It would be very bad PR if they applied it to residential mortgages, but I am guessing they may start to invoke it against their bigger BTLoser portfolios. As I remember a BTLer saying in a documentary a long time ago "if you owe the bank 1000 pounds you should be concerned, but if you owe the bank a million pounds the bank should be concerned". I imagine some of the banks will be taking this advice to heart and checking on the multi property BTL customers - i.e. those that kept removing equity to fund the next purchase, constantly leveraging up - and invoking this clause not with any intention of doing anything about it, but just to make it clear to the BTLer that they need to sell a few or remortgage elsewhere to reduce the exposure to their bank. This alone will sink a lot of BTLers and a downward spiral begins. It would not be so bad if none of the banks invoked these clauses, but can you really see each bank trusting the others not to get first in line with this?
18. mark wadsworth said...
Analytics and Mr Smith have beaten me to it, problem is, using Halifax All Mon (NSA) tab, average price in April 2004 was £154,433 and in April 2009 was £157,156.
So we'll have to postpone 5Y-on-5Y negative until May 2009 (May 2004 average was £159,000)
But at least Fionalalalala has left her Time Travel Machine in the shed this month.
19. will said...
peter @ 15
lol
20. Andy said...
What is the reason behind seasonally adjusting prices? I can understand adjusting the volumes, but are they actually saying that there is a statistical tendency for the properties sold in the spring to be larger, more expensive properties? Or is it purely advertising, ie people like to buy in the spring anyway so they can artificially reduce the prices in the spring in order to increase them in the slower winter months - it probably worked quite nicely for them in the bull market; shame they've obliterated their spring bounce now the prices are falling.
21. matt_the_hat said...
Lets say inflation is 2% a year (just to please GB)
april 04 £154,449 (nominal)
april 04 £170,820 (real) - calc 154449*(1.02)^5
april 09 £154,716
22. japanese uncle said...
brickormortis
You R right. I must correct my statement.