Monday, May 18, 2009
Rightmove: +2.4% MoM
Daily Mail: House prices up 2.4% as they rise for FOURTH month in a row
Property asking prices have increased for the fourth successive month, jumping by 2.4 per cent, new figures showed today.
The average price of a home in England and Wales rose by £5,000 to £227,441, during the four weeks to May 9, according to property website Rightmove.
But the group warned that the increase in asking prices may be over-optimistic and was more reminiscent of a boom market.
Industry experts say the run of positive factors has stoked belief of a revival and proves that the worst of the housing slump is over.
Posted by little professor @ 12:45 AM (2559 views) Add Comment
53 Comments
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1. crunchy said...
This means banks will have to loan more money. If one looks at the whole picture a massive effort is being made to recapitalise banks.
This does not make any sense when banks are losing capital through mortgage, corporate and private debt defaults with no end in sight.
I am taking this (asking) with a pinch of salt.
2. gone-to-colombia said...
Counts as nothing.
3. charlie brooker said...
So who is correct? Nationwide, Halifax, The Land Registry or Rightmove?
4. Sam said...
Homeowners are putting up their asking prices, because they know that their are only a handfull of serious buyers out there, and they are bargining hard, severely knocking asking prices down.
If you put your asking price up, it confuses buyers into thinking they've got a better deal when they knock you down, and you may just gain a little, because who truely knows the exact price of a house. One mans trash is another mans Gold !!!
5. hpwatcher said...
So who is correct? Nationwide, Halifax, The Land Registry or Rightmove?
Does the question really need to be asked?
6. bidin'matime said...
The depressing thing is that the Mail doesnt even try to draw a distinction between asking and selling prices - it happily blurs the two. Still - this will draw even more into the bull trap and help trigger phase two...
7. mrflibble said...
The slow moving train wreck continues...
This is either the perfect bull trap or a return to the land of milk and honey.
Place your bets gentlemen, my money is on the former.
8. crunchy said...
3. charlie brooker said...So who is correct? Nationwide, Halifax, The Land Registry or Rightmove?
They will all lie, I mean make mistakes to aid recovery. What the politicians don't get in there efforts to get people spending again is that people will have to borrow, spend savings, and withdraw money out of investments to do it. That will take us back to banks being p1ss poor again. The printing of money is another destructive senario. All does not bode well for the future on all fronts. House price expectations rising? A mental destraction from doom, cooked up by the TV dream weavers.
9. doomwatch said...
Yeah, and while you've at it, get down to a local show room where some desperate car salesman will trip over himself to sell
at a £2000 discount for an old banger instead of the 30% [much bigger for a decent car] discount they have to give to anybody who walks off the street.
10. peter_2008 said...
These are the classic bull trap signs. It just shows that how desperate vendors are. There is no rational explanation of this kind of any increase, and yet any insignificant blips have been exaggerated 10, 20 folds by those desperate people.
The current market cannot sustain this increase. Even the VIs are probably quite scared about how grotesquely over optimistic the vendors are. A significant increase in unrealistic prices will take the last breath away from the housing market.
11. uncle tom said...
Charlie Brooker @ 3 "So who is correct? Nationwide, Halifax, The Land Registry or Rightmove?"
All of them - the differences reflect their respective methodologies.
Despite the many dark whisperings on this site over the years, there is very little evidence that any of them wilfully distort their statistics - how they present them in their press releases though, is a different matter.
Nationwide & Halifax are focused solely on properties financed with a mortgage from their respective companies. Historically, Nationwide mortgages have tended to be more attractive than those from Halifax for purchasers of cheaper homes, so the Nationwide figures have tended to be lower.
The Land Registry provides a record of all home sales, regardless of whether the property was mortgaged or not - this should be the best indicator, but it is always late to press compared with the other indices.
Rightmove looks at asking prices. That their index is now so far adrift of the other indices shows two things:
1) That vendors are still failing to accept the reality of house price falls.
2) That the market is now hopelessly overloaded with relatively expensive property that no-one wants to buy.
The market reality is that people who might previously have traded up to a more expensive home are now unable to do so, partly because they don't have the equity for a deposit, and partly because they paid too much when they entered the market.
What limited activity there is, is largely confined to the purchase by impatient FTB's of smaller properties. This little accumulated head of steam will be well spent by the autumn, when the cold chill of market reality will at last become recognised.
12. tyrellcorporation said...
'What limited activity there is, is largely confined to the purchase by impatient FTB's of smaller properties. This little accumulated head of steam will be well spent by the autumn, when the cold chill of market reality will at last become recognised.'
Spot on UT I have noticed a fair bit of capitulation amongst my friends who've gotten fed up waiting and gone in with both feet. It's a shame as many of them have (like us) waited for years for this moment. I too believe these last few months have been the last hurrah of a doomed market. Supply is severely depleted, prices are still too high and mortgage rates are rising so demand is waning again and against a backdrop of rapidly rising unemployment, prices have nowhere to go but down.
I'm comfortable in the knowledge that by autumn/early winter we will have a much clearer picture of where the housing market and the economy is heading.
13. mark wadsworth said...
UT and TC have said what I would have said.
Or as I said to Her With The Nesting Instinct - we've got this far, we've signed up for another year renting, let's just sit tight, house prices do not suddenly rebound in a V after 18 months, crashes drag on for years, at least 3 by my reckoning, but it might be 5 or even 10 (see also 'Japan').
14. techieman said...
TC - the point is this. Your friends capitulation is part of the issue. The interesting thing is when the Bears all (or a high %) finally capitulate because they are persuaded that this was a blip down. When YOU - not your friends start to question if you were in fact wrong, particularly if there is a big counter trend rise, thats the time i would be looking for the move back down.... Reminds me of Roger Bootle who was a bear since 2004 (at least). He (Capital economis) became relatively bullish in 07 - i.e he threw in the towel!
It might be a good idea to see the % of bulls / bears on this site to assess this. We have very few bulls now which is a worry to me, i would like to see some bulls come back and quickly.
15. Bear said...
This bounce is occuring, because new sellers, panicked into the market, are flooding in, and haven't re-adjusted expectations from the August peak. This will fade once properties have been on the market for six months without a single viewing.
16. letthemfall said...
This all goes to show that the psychology of the population has still to shake off the belief that housing is a sure-fire investment, and that price falls are merely blips to be taken advantage of - a bit like the dotcom bubble (although I don't think housing behaves like shares). Even if a large tranche of the population is convinced that prices will take off again, the shortage of funding makes this impossible. Economic gravity will not be denied.
17. tyrellcorporation said...
Well Techie, I must admit myself and my wife have recently glanced more than once at the local property rag - we started to wobble! Thankfully we've pulled back from the edge again and as Mark just said, there is almost zero prospect of a vee shaped recovery in house prices so I'll keep waiting. As you say though the bulls have gone which is to some degree understandable but also slightly disconcerting.
18. techieman said...
TC - sometimes i think we are edgy because we subscribe to this website!!! We analyse every movement looking for clues. Perhaps if we stayed away from our "addiction" and went cold turkey for a few months it would be better?
This is particularly so on markets which dont move that much in a day /week. You are looking for something to happen but if it doesnt do it fast enough, human nature dictates that we second guess ourselves.
Lets be aware, although "we" often have a pop at analysis of the EAs and BTLs based on their VI - havent we also got a VI?
19. crunchy said...
If the bulls had any reason to be here waving there wads and calling us rent boys, believe me they would make a stand.
They are screwed and they know it. This will be a bull free zone for some time yet, but don't you miss them. lol
I get your point with the last bull. Relax!
20. mander said...
We proably will experience the worst in this country because with asking prices going up so the sellers can give the discount needed to sell is not the way forward. House prices are way too high in relation to income and they need to go down as FSA realised. Or we can go after America's economic disaster. People will not afford to pay those astronomic mortgages and more bailouts will be need at least every ten years.
Claims that buyers are returning do not make sense. Credit worthy buyers are returning as well?
21. tenant super said...
@ techieman "sometimes i think we are edgy because we subscribe to this website!!! We analyse every movement looking for clues. Perhaps if we stayed away from our "addiction" and went cold turkey for a few months it would be better?"
I believe that my addiction to bear porn is causing me unnecessary frustration. I sold my place in 2004, by 2006 I had given up on buying and like many others, by 2007, I had almost started to believe the VIs that this time was different. I remember reading this site in early 2007, then not coming here until summer 2008 after reading the evening standard billboard that prices were finally coming down. I remember the joy at seeing the decline for the first time on the Nationwide Graph on the homepage.
Now, I am frustrated by the slowness of the decline and am seriously trying to stop searching news articles on Google and not browsing HPC or scouring property websites for any sign of capitulation. Apparently, El Nino means we're in for a hot summer. I'm going to forsake the aimless surfing and spend my time chilling on my balcony with a good book instead. I'll come back in late Autumn and hopefully the sight of the graph on the homepage will once again gladden my weary heart.
Easier said than done though!
22. wiltshire said...
It's a really strange moment in time right now. It feels like the calm before the storm moment/the moment when you bungy jump and you've literally just gone past the point of no return - when suddenly all your senses are heightened by a sudden change in atmosphere and you can sense something coming. The last few bulls are looking around, wondering if they're the only ones left and what is coming next.
I cannot see which aspect of the situation we are in is going to allow for a V shaped recovery. Obviously that doesn't mean there won't be a V shaped recovery but WHAT will enable it to happen? Which of the fundamentals are going to support such a recovery? I can't see any. I think a lot of people are reacting to interest rates that are so low that buying must, in relation to that factor, look like a real opportunity. We'll see won't we?
This is how so many people must feel as a dead cat bounce turns into the REAL downturn. Are they the only bull left? Has the bottom already been reached and did they miss it? Is this the moment when the market begins it's real capitulation? Hmmmmm.............
23. wiltshire said...
Ooops, schoolboy error, I've mixed up me bulls n bears!!!
24. tyrellcorporation said...
In exeter EAs have virtually nothing left on their books after a pretty hectic Spring buying spree - i've looked. I see precious little coming onto the market because all the talk of green shoots has, IMO, pursuaded potential sellers to hold on a little longer as the market will improve and they'll get a higher price. This surely means EAs are being hoisted by their own petard - talk of an upturn is ironically reducing sales volumes.
25. jack c said...
In response to techie's point regarding VI "Lets be aware, although "we" often have a pop at analysis of the EAs and BTLs based on their VI - havent we also got a VI?"
- not all regular contributors (IMO) have a VI for example I suspect several "regulars" continue to own residential property (myself included and fortunately in my case its unencumbered) - the reality is that the UK property market will continue to slide in price - the key to the whole market is genuine affordability - here is a simple test - how many people if starting out again could afford to purchase the property in which they are currently living?
26. need-a-crash said...
An impatient FTB friend of mine, with no belief in house price crashes (they are female!) was looking to buy this Spring and found property to be too expensive so has reluctantly decided to postpone until next year.
I think a lot of the so called "increased buyer interest" will end up like this as a result of vendors new bullishness with asking prices and FTB's inability to get mortgage funding.
27. S Davis said...
As i seller, i have just increased my asking price by 5k by after initially lowering it by 20k, simply because due to the huge deposits required i can not afford to sell my house for any less. Im guessing that alot of people are in the same position as me, were not being greedy or unrealistic about house value the simple fact is id like to move but if buyers are expecting me to drop any further i wont and il just take the house of the market as what would be the point of selling and not being able to get a mortgage to buy another house! Those who need to sell to avoid repossession and those selling houses that were left to them in wills etc, will probably drop their prices for a quick sale but the majority of sellers are selling purely because they would like to upsize/downsize and therefore their house is worth what they are prepared to sell it for not what the media says. Eventually people waiting for a bargain will end up increasing house prices because there will hardly anyone selling so demand will be greater and youl all be fighting for the same property.
28. Gruppenfuhrer said...
Uncle Tom, Tyrellcorporation, Mark Wadsworth: riddle me this.
GDP after last crash. Went down but then back in the black by mid 1993. Ten successive strong GDP quarter rises came on and on before HP growth in 1995. Surely we can not expect sustained HP growth until we have significant GDP growth? And then I think the market will take a long time to reflect.. Capish? It seems horribly simple to me.
I still think 2012 Olympics will kick start a lot in this country - including HPG.
What say you?
29. This comment has been removed as it was found to be in breach of our Blog Policies.
30. Gruppenfuhrer said...
S Davis? You are joking aren't you?
31. Soldandwaiting said...
@ #27...
'...and therefore their house is worth what they are prepared to sell it for not what the media says. ..'
No, you are quite wrong. A house is ONLY worth what a buyer is prepared to pay for it. That can never change.
32. Soldandwaiting said...
S Davis,
you write ...and therefore their house is worth what they are prepared to sell it for not what the media says...
You are however, quite wrong. A house will only ever be worth what a buyer will pay for it. That will not change
33. S Davis said...
What i mean is, if sellers cant afford to lower their prices due to negative or very little equity then it doesnt matter what house prices are as no one will be selling.
34. techieman said...
I think S Davis' point is that the price of houses is actually at the margins. Im not quite sure i follow the logic though. Surely if he wants to upsize it is in his interest for falls - since the differential erodes? Basically i came out the market because i was looking to get more for my money - and i thought it looked very toppy.
As for how much you want isnt that dictated to by what i said above? Also "Eventually people waiting for a bargain will end up increasing house prices because there will hardly anyone selling so demand will be greater and youl all be fighting for the same property". Im not sure of that - that assumes that the choice is buy or dont buy - but of course you can rent as a third option. A more fascinating move would be how acceptable rent becomes as a lifestyle option. If it does then perhaps prices might stabilise in this country and we could actually concentrate on producing things for fair value..... oh look pinky and perky have just passed my window.
35. letthemfall said...
I've got a garden shed worth £10 million. Offers via this site please
36. Btl_and_milking_it said...
Techie @ 10:48am
The reason most bulls have vanished from this site is due to the barrage of mouth-frothing abuse given by the die-hard doom mongers here, at the mere sniff of a bullish post.
The way i see the market, it's a 2 way pull. Yes economic data has been in freefall recently, and money supply is choked, BUT.. we have purchased 7 properties in the last 10 months at auction. These properties were marketed by local estate agents prior to auction, obviously without success. Now we are finding it impossible to buy in our proven market area, as they are being sold prior by the agents, and appearing at the auction room as sold prior. The properties are listed very reasonably and draw in 1st time buyers who then engage in a bidding war with each other.
Buyers are starting to believe if they dont buy now they will never be able to. Desirable property is selling. Confidence is returning. Figures released today say agents sold more property per agent than they have done for the last 18 months. These people are on the front line, and their figures cannot be dismissed. Then there's supply and demand. There is a lot of pent up demand and no volume of new property construction.
Shoot me down if you wish, after all its the nature of this site, but if you want interaction from people with an alternative perspective then you need to at least consider the flip side of the argument.
37. jack c said...
@S Davis (Monday, May 18, 2009 12:41PM)
A property will only be worth what someone is willing and ABLE to pay
The days of cheap and easy money are for now behind us - this along with widespread corruption fuelled a ridiculous boom and the correction is far from over !
38. phdinbubbles said...
"As i seller, i have just increased my asking price by 5k by after initially lowering it by 20k, simply because due to the huge deposits required "
So how's that going to help the buyer make their deposit? Think you're going to be stuck in your house for a long time Mr Davis.
39. george monsoon said...
S Davies said "Eventually people waiting for a bargain will end up increasing house prices because there will hardly anyone selling so demand will be greater and youl all be fighting for the same property"
Interesting point of view, but I am struggling to see how this would work?
In a falling economy (most of the world at this point) you get rising unemployment which will push more property onto the market, because people will be reposessed. Others will be defaulting on mortgages due to the massive increase in living costs and credit card debt.
(all these figures are now showing in the increased number of reposessions being reported)
.
We have very tight lending practices as a result of the failing bank system. Most FTB's require at least a 20% deposit AND a shining credit rating before the banks will contemplate giving a mortgage. Even on a modest home, we are probably talking in excess of 10k
This does not take into account moving costs, solicitor bills, and all the other hidden costs when buying a house.
I would require a personal fortune of about 25k just to contemplate buying a small 2 up 2 down terrace in my local area.
This is not a case of refusing to buy a house, this is basic economics, which are removing my option to buy a home completely.
I am on a fairly decent wage and so is my wife, but with current living costs and low yield interest accounts, It is almost impossible to build up any kind of lump sum in the bank. I have speculated that to save 25k (1 years wage) will take me 17 years 3 months ...IF nothing goes wrong with my car in that time, we have no appliance failures and take no foreign paid holidays.
There is only one way house prices can go.. Do you remember the Status Quo song "Down down deeper and down"
40. techieman said...
GM - to be fair he did say "eventually" im not sure he meant "eventually" from here! Maybe we can be enlightened....eventually?
41. p. doff said...
Might be worth a try S Davis, if you have an unusual or desirable property.
A friend of mine increased his asking price from £395K to £430K and promptly managed to get a buyer to pay £405K.
I was gobsmacked, but the buyer was apparently patting himself on the back thinking he had negotiated the deal of the century.
Most sellers won't be so lucky though.
42. S Davis said...
@37 loved the status quo quote
I completely agree with you, its ridiculously difficult for a first time buyer to get an affordable mortgage and if your renting then its very hard to pay rent and save a large deposit. I agree that house prices are far too high compared to wages but I am trapped with a large mortgage due to splitting up during the boom and having to buy out an ex. There seems to be alot of people who think that home owners have all been greedy and used property to fund a lavish lifestyle but some people are in a mess through no fault of there own. If i was a buyer of cause id be hoping prices would continue to drop but if you were a seller with very little equity yould be hoping that things had levelled out. I agree that prices should be more in line with wages but then what happens to all the buyers that bought 1 or two years ago when prices were at there peak? The market is a mess and people should never of been able to borrow so much money. Some people should have grounds to sue the mortgage companies for being allowed to borrow such huge amounts of money, 6x's people earnings and 110% mortgages! No wonder were in a mess.
I am unsure as to what will happen with regards to house prices in the future but i know that whilst mortgages are so hard to obtain then I will not be lowering my price anymore and i will just stay where i am and be grateful i have a roof over my head. If they brought back 100% mortgages at low rates then i could afford to drop my price as i wouldnt be reliant on the equity to mortgage another, which is funny to think that what caused this mess could also fix it for some people.
43. letthemfall said...
The idea that prices will rise because no one is selling is a false premise. If no one sells then there is no market, and prices become purely notional, rather like the CDOs that caused so much trouble. At present there is a restricted market in houses for reasons already noted, which is why asking prices are way above transaction prices. Furthermore, the value of something is not necessarily the same as its price. Value is intrinsic, based on future earnings in the case of shares, on incomes with houses. Price can be higher or lower, depending on various factors, not least the supply of people daft enough to borrow a fortune to buy a box with a front door.
44. timmy t said...
S Davis - Thank you for showing regulars on this site just why crashes happen the way they do. Seeing it from a vendors perspective really helps. We can all now rest easy - knowing that this crash will probably kick off again late summer, and finish about 18 months later with prices down about 50% from peak.
45. uncle tom said...
I can S. Davis' logic - there is a widespread belief that house prices will rebound, so ask what you need and wait - simple..
..unfortunately, it ain't going that way.
To answer Gruppenfuhrer -
I don't see any material diversion from my original projections.
Much as happened in the early nineties, we are seeing an incredible degree of denial (although I actually thought the internet would mitigate against that this time).
Once that denial is over, prices will continue down. Most important is that the degree of over-pricing was too great for a recovery to take place quickly - the early 90's saw a slump in prices, while this will be a true crash leading to significant over-correction. That will be followed by a rebound that may also over-reach before the market settles toward a flat-line.
That flat-line, in real terms, will be less than 60% of peak price; and for properties that peaked in the £500k - £1M bracket, it could be significantly lower.
In terms of time-line, a lot depends on the outcome of the BOE's money printing game (aka QE)
At the moment everyone seems to regard this as a temporary little measure to tide the economy over, but a more considered view reveals that having started down this path, stopping is going to be very difficult in the absence of a strong economic recovery.
I simply don't see the seeds, let alone green shoots, of economic recovery - some people look at the history or recessions and point out that they normally don't last very long; but this is not a normal downturn, nor are there any good precedents for comparison.
My feeling is that QE will be followed by more QE, then more still - followed by the collapse of Sterling on the foreign exchanges, which in turn will kick off inflation. Inflation begets interest rate rises, and the consequences of that are not hard to guess...
I now have a depressing feeling that this is going to be a long drawn out affair, and that we may not see the bottom of the property market before 2011..
..but patience WILL be rewarded!
46. timmy t said...
UT - "Much as happened in the early nineties, we are seeing an incredible degree of denial (although I actually thought the internet would mitigate against that this time)." - What do you mean? I think the internet is the perfect vehicle to transform the EA industry, but until that transformation has taken place, the internet has only really replaced newspapers. I think the transformation will happen during this recession.
47. george monsoon said...
As usual Tom, your reading actually makes sense, even to a layman like myself.
However as far as mitigation via the internet, I believe that anyone who is currently up the creek without a paddle will fuel their denial by searching out the "positive" spin on the internet and hanging on to these promises of green shoots, for dear life!
S Davis, thanks for your reply, but I have had this conversation many times and I always end up pointing out the obvious.
Houses are overvalued and nobody on the bottom rung can get a foothold. No FTB - no chain - no sale.
48. phdinbubbles said...
"Some people should have grounds to sue the mortgage companies for being allowed to borrow such huge amounts of money,"
That's like MPs blaming the speaker for their bad behaviour. Do you also think that criminals should be allowed to sue the police for allowing them to break the law?
49. shipbuilder said...
S Davis - the reality is that there will be people in your area and with a similar house that will be able to sell at a lower price, and they will take the existing buyers - they will be the ones to set the prices, as any new properties will be marketed at this new 'market value'.
What this essentially means is that your house is not really for sale because you cannot sell at the market price. Therefore you should withdraw your house from the market - by the sound of it, you are, or will be soon, in negative equity. It is only your idea that you set the price and not the buyer that is preventing you from seeing this.
As prices inevitably decrease, the deposit you require will decrease and you may be able to move. However, you are the one in the unusual situation and the market will move on without you. Good luck.
50. uncle tom said...
Just to clarify my point about the internet - in the early 90's was there was far less information available, and far less scope for finding out what was really going on. Even the press were not very well informed.
Things have changed a lot over the last couple of decades, but that hasn't stopped the denial!
51. mr g said...
What the hell is this cr*p about the average house price being £227,441?
I don't recall it exceeding £200K at the height of the housing bubble.
Off topic, does anyone else think that the female on the Property Mentor advert on this page is a smug looking so and so, typical of a lot of BTL'ers?
52. Neo72 said...
I think for anyone wavering, you just need to remind yourself of the facts; some of these are open to interpretation ie. the strength of the effect that various economic factors (eg GDP, unemployment etc.) will have on lowering house prices. However, for me, the most important facts I have come across recently are a) BTL mortgages are a fraction of what they were in the boom and are continuing to fall b) The % of mortgages handed out in 2007 where no proof of income was required (I'm pretty sure 45%, correct me if I'm wrong).
Even leaving aside the effects of unemployment, repos, increased interest rates etc, the 2 facts cited above mean that house prices WILL come down considerably further as without the confounding factor of speculators and mortgages based on peoples actual income (wow-fancy that!) FTBs will no longer be propping up an over-inflated market. If sellers cannot accept this, they will not sell their house - end of. And for those thinking this will reduce supply (and thus increase prices), consider this - those sellers who take their house off the market will then no longer be buyers either so balancing supply and demand. Finally, VIs are keen on pointing out that an increase in sales make 'stabilising' the market more likely, so less houses on the market = less sales = further falls. BTW my prediction is at least another 20% off over the next 3-4 years.
53. quiet guy said...
@Uncle Tom
"My feeling is that QE will be followed by more QE, then more still ..."
Surely in that scenario, QE will help draw a line under prices? The smart money will be seeking solid assets that will hold value if we enter a highly inflationary era. I also share your concerns about QE - it will be a very hard habit to give up.
@Btl_and_milking_it
I agree that abusive posting are wrong and I encourage you to keep posting.