Thursday, Jun 04, 2009
The effects of QE..
BBc: UK house prices 'up 2.6% in May'
UK house prices rose by 2.6% in May compared with April but activity remains low in the market, according to the latest survey from the Halifax.
The lender, now part of the Lloyds Banking Group, warned against placing too much weight on one month's figures.
Posted by hpwatcher @ 09:18 AM (2662 views) Add Comment
27 Comments
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1. hpwatcher said...
The government may be falling apart, the economy may be completely sunk.....but everything is okay, house prices are rising......
This isn't good news for anybody.
2. hpwatcher said...
a completely political move....
3. mrflibble said...
You love it...
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5. house said...
It is a matter of time, maybe another 12 months. QE can only work in the short term over a longer term market forces decide.
6. maddison said...
Well, I always felt that 25% down was a potential floor as it was the rise of 25% post 2005 IR drop that was pure speculation and completely unsustainable...
7. Natural_born_pessimist said...
I appreciate your point Maddison, but affordability looked unsustainable before 2005, see link below.
http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php
The argument for further drops is well rehearsed and robust. Unfortunately, we just have to wait.
8. wdbeast said...
Brilliant news.
Ok BOE, the crash is over, you can now start to increase interest rates back to where they should be.
A 0.5% increase this month would be a start, what more evidence do you need?
9. ted the red said...
All the problems that caused prices to fall(ie insolvent banks) have been transferred from the banks to the government.
So the deflation has stopped for now and will resume when the government has to address its consequent solvency issue and causes
a 1980 style recessionary meltdown.
10. sold out said...
Well Maddison, according to you one months figures and its all over!
I really cannot see the logic of your comment
"I always felt that 25% down was a potential floor as it was the rise of 25% post 2005 IR drop that was pure speculation and completely unsustainable"
Surely reaching a floor in the housing market is much more complicated than your simple logic.You cannot predict the bottom of the market based on the preceding pattern and size of the rise.
To reach a floor the market needs to reach affordable levels (and will of course overshoot) and then of course the economy needs some strength to sustain it.
I don't see any evidence of that strength in our economy, these rises are purely the result of the IR and QE policy, and will not last.
Spring Bounce, DCB, Bear trap call it what you like, but i expect this "recovery" will run out of steam within weeks.
11. jack c said...
The headline implies that all UK residential house prices are "up 2.6% in May" which of course is not the case. The downward trend will soon resume.
12. need-a-crash said...
I can't believe I've missed the boat! Oh well... just have to wait another 15yrs!
On a more serious note I do partially agree with Maddison the 25% post 2005 was pure speculation and that increase has been stripped away in the last 18 months. So it is logical that the 2005 level will provide the "floor" for the Bear Trap. Prices will of course fall further from her but probably not quite so quickly as they have done over the last 18 months.
13. nomad said...
Small sample and as we saw from the Moneyweek email yesterday, prices pretty much levelled off for 12 months before continuing downwards.
There are people ready to buy. A few who have saved a deposit. A few with cash. A few with parents able and willing to help. A few investors ready to gamble.
These are irrelevent to the overall trend, which will be controlled by economic circumstances like rising unemployment, lower salaries, shorter working week, higher food and petrol prices, lack of lending from struggling banks and building societies - all leading to a lack of money to spend on housing. As well, the common desire (except in government circles) to deleverage, and the realisation that a house has become a home rather than a money cow.
14. peter_2008 said...
This may only mean that more expensive houses are sold rather than house price became more expensive.
But the desparators won't or don't want to know the difference. That's why the place where I live, the asking price shot up about 10% in a month. Why would you ask 10% more than your neightbour's house when theirs has not sold for 18 months?
The place I live has near 9% unemployment rate, worst for 16 years. 1/4 to 1/3 of the high street shops have closed or are closing down.
The local council promised more jobs by developing another out-of-town shopping centre!
If we see a surge in properties with unrealistic price for sell from this point on, it only prove the scale of people in trouble.
15. jack c said...
Guy's - post 2005 wasnt just pure speculation - you also need to factor in a significant amount of fraud which also helped fuel prices. This is now a lot less prevelant than before. Just remember the line from the film all about Eve - "Fasten your seatbelts it's going to be a bumpy ride".
16. Maddison said...
The trouble is that owning a house is really only for the rich now and history tells us that the rich don't get hit as hard in a recession as the poor! No-one predicted the banking crisis would have much more effect on the industrial base than the service sector. Service sector even saw growth...
17. mander said...
More adiction to property porn. The green shots gave wings to sellers putting the asking price up 20% in some areas. They are asking a lot more now because they know a discount should apply. So QE worked and there is money for more bubbling.
Let's have more green shots that only will give wings to a pig that won't fly.
18. denzil said...
Out and about in my county (Somerset), it's fair to say that the amount of property that has gone from "For Sale" to "Sale Agreed" or "Sold" within the last 10 weeks is quite staggering. The properties that are not selling quite so well is the new development dross that was built for the BTL brigade. Lots of building sites are still only employing a skeleton staff.
Is this going to develop into a sustained uptick in property prices? Way too early to call and probably unlikely IMHO but if the mooted upturn in the economy for end of 09 early 10 occurs then we probably are not far off the bottom.
19. Happyrenting said...
"figures released to the BBC earlier this week from financial information service Moneyfacts found that mortgages were still being rationed, making the initial outlay for first-time buyers relatively expensive." 'Relatively' expensive??! Today I walked past an estate agent in Bristol advertising a 2-bed terraced house for £284k. Assuming your average FTB would like a starter home with a spare room/office, possibly to start a family, how are they expected to afford this when average wages are still far too low to satify the LTV criteria now demanded by almost all high street lenders...?
20. stillthinking said...
This is a meaningless blip. By any measure the UK economy is in a full scale collapse, which is just -starting- to arrive into the public consciousness. This is a historical event which will be studied after we are all gone.
The prices of London flats will be dictated by the housing benefit payable by a bankrupt government i.e. not much.
21. phdinbubbles said...
Everything that happened after 2001-2002 was speculation, which was then followed by fraud by the lenders and the borrowers.
Any floor reached over the next year or two will be due to unsustainable public spending. Prices have a long way to fall over a very long period of time.
22. luckyjim said...
Just playing devil's advocate here.
"The worst of the recession is still ahead of us" - true but that doesn't mean that the biggest House Price falls are not already behind us. In most markets prices fall before the bad news takes effect. The timescales get compressed. Let say we should have had 25% falls over three years. Only a fool would buy when further falls are expected so the full 25% drop gets compressed into one year. We are at the bottom but I think the majority of the drop has already happened.
"To reach a floor the market needs to reach affordable levels." Peoples' natural preference is to buy rather than to rent so prices cannot fall so much that it becomes significantly cheaper to buy than to rent. That is the floor IMHO. When you take interest rates into account (even long term fixed rates) the cost of buying has dropped by nearer 40%. The cost of renting has barely changed. Even the worst recession won't drag rents down as our housing benefit is ludicrously generous. If you are waiting for a house in london to become affordable forget it - those days are gone.
"We are still 5 times income" - yep, and who is to say that is not the new norm. The 4 times figure often quoted dates back before Thatcher. Local authorities used to build 100 000 concil houses a year - now they build something like 2000. I think it is a fact that we spend more of our income on housing now than ever before.
23. luckyjim said...
should have read 'we are NOT at the bottom
24. sold out said...
hello lucky jim, not heard from you for a while.
Did you buy that new build that you spoke about a few months back?
25. luckyjim said...
Hi Sold Out,
Yes, I did buy the new build. Just as well I think. Private vendors are still holding firm here while the new builds have now all been sold off at a discount. I'd be getting nervous if I was still renting and waiting for the private vendors to crack.
I logged on today to see what people made of the Halifax figures but it's nice not to have to think about it too much now. I'm just enjoying the house and not worrying too much about what it's worth.
26. sold out said...
good luck jim, with your new home.
i must admit i am becoming a bit fed up with the hpc and waiting and renting.
i will probably start seriously looking to buy at the end of this year.......unless their is a major event that really causes a proper meltdown,then maybe i will wait a bit longer.
i am convinced that the back end of this year we will see further major falls in house prices.....we will see.
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