Monday, Jul 20, 2009
Ever get the feeling that the government are doing everything to make sure house prices keep rising?
BBC: Summer rise in mortgage lending
''The total amount of UK mortgage lending rose sharply in June compared with the previous month, according to lenders.''
Posted by hpwatcher @ 10:57 AM (1770 views) Add Comment
31 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. hpwatcher said...
It's clear, that BOE and the UK goverment are going to throw absolutely everything they to make sure that house prices keep rising.
It's now the UK's number 1 [taxable] industry.
2. mrflibble said...
Once the housing crash took shape the media got behind it and gave it extra momentum. People with cash stayed away as they knew prices would fall for some time. 18 months of falls rolled in and we hit the Spring of 2009, the expected bounce came. The media is now behind the bounce and cannot pump out enough stories about 'the bottom' and 'rising house prices.'
People are nervous, 18 months is a long time for something to keep on falling, and most are thinking surely it has now fallen enough . The current uptick is strong, stronger than I expected, but that's all it is, an uptick, an uptick in a downward trend. Sadly the market is fooling people, the EA's are fooling people, the government and it's crooked HomeBuy schemes are fooling people, and worst of all, the media are blowing the uptick out of all proportions.
The last of the suckers are being milked right now, they don't know it yet, but come Aug/Sep I'm 99% sure they will know it.
As is always the case, the saddest thing about this will be the innocent victims who get sucked in. The young families just looking for a home, having saved for years, petrified by finally getting to the point of being able to 'afford' and not wanting to miss the boat.
3. mystie010 said...
mrflibble I think that you are absolutely right. I think that Crash Gordon and Co will try their best to keep prices high. I really do hope that come Aug/Sep that they fall as I've been waiting for five years now and I'm starting to loose a bit of faith
4. paul said...
As I said on Nick Drew's Capitalists@Work blog, this is the ruling baby-boomer generation attempting to staunch their haemorraging wealth by hook and crook - a desperate inter-generational kleptocracy.
If you think about it, falling house prices should be lauded as good news because in subdued economic times such as now, it frees up disposable income. However it is perversely portrayed as a very bad thing for the cost of living to go down because as property prices fall, so does the rentier wealth of an older generation.
Looking further ahead, on the bright side, unless there is a substantial transfer of earning potential between generations, the market pressure cannot be forestalled indefinitely. Sooner or later, house prices will have to come down so that average people on average salaries can afford them.
In the long term, the Bank of England and government's strategy therefore is simply to put off the day of reckoning on the zero-sum game. By dampening the market pressure now, they are letting the housing market deflate for many many years to come - gently declining. Just like in Japan.
5. Mohc said...
It's a dangerous balancing act.
The government will try to inflate the economy, QE will keep interest rates artificially low. If they can keep house prices from falling until inflation kicks in then they may be able to prevent the correction in prices continuing to its logical conclusion.
6. luckyjim said...
"The media is now behind the bounce and cannot pump out enough stories about 'the bottom' and 'rising house prices."
Eh ? The bbc is just reporting the CML figures - there's no hype, no conspiracy.
7. mark wadsworth said...
OK, up 17% m-o-m,
BUT
Down 48% since June 2008.
Down 35% since June 2007
Down x% since June 2006 (if anybody can be bothered to find out)
Down 52% since June 2005 (see link above).
OK, those are just CML figures, don't include BBA, but the overall picture will be the same.
8. mark wadsworth said...
OOOPS!!!
That's supposed to say "Down 65% since June 2007"
My bad.
9. george monsoon said...
Just wait until the Govt have no choice but to raise the interest rates.. its going to happen .. and soon.
10. bluebeach said...
But George..... I don't think it will happen soon...their survival depends on keeping prices on the up...they will keep rates at this level for a long long time.. me thinks
11. drk said...
mystie010@3
agree with your sentiment about losing faith! Been renting over 3 years now and where I am prices are the same as 2007....and selling. How long do you hang on for?
12. paul said...
@luckyjim
Eh ? The bbc is just reporting the CML figures - there's no hype, no conspiracy.
If there's neither, then why does the BBC omit to mention that the CML's figures are DOWN 48% YoY?
13. mark wadsworth said...
@ drk, mystie.
To be fair, if you sold to rent back in 2005 or 2006, you probably jumped ship a bit early. But as I said above, lending is down 65% on 2007 and even compared to 2005, it's down 52%.
I doubt we'll see any more spectacular house price crashes of 10%-plus a year, it will be a long slow grind of 5% to 10% a year for the next few years - all you have to do is compare your rent with the amount that your target type of house is falling in value (seeing as we can ignore interest either way).
Yes, the government has been very successful in slowing down the rate at which the property price/credit bubbles are bursting (and there's no reason to assume that the Blue Wing of the Home-Owners' party will be any different when they get in) but they cannot reverse it, only slow it down.
14. luckyjim said...
"why does the BBC omit to mention that the CML's figures are DOWN 48% YoY?"
In fact, the article mentions the YoY fall and gives an explanation for the MoM rise. Third paragraph -
"However, the rise was mainly the result of the common seasonal increase in moving home and the figure was still 48% lower than in June 2008."
Hardly BBC hype is it ?
15. mrflibble said...
@ 5. luckyjim
Sorry I was generalising, as you say, this report was just quoting CML figures.
@10. drk
And now you will have to wait for the uptick price to unwind back to the level we were at around the start of the year. The crash should then resume from where it left off. I've seen some crazy asking prices over the last three months, cocky increases of £10k a month have become all too common. 2-beds that were fetching £115-125k in January are now listed and selling for £145-165k.
16. bluebeach said...
Its looking like we have all missed the boat again.... I still think that prices are way too high.. but the fear of missing out is too much for many....Mrflibble... I like your outlook but fear that this could be the end of our fight... HAS BROWN BEATEN US!!! Will this upsurge take him on to another term?.... If it carries on like it is doing, it's a cert!!!
17. hpwatcher said...
HAS BROWN BEATEN US!!!
I think for the time being, the game is probably his. But the question is, how much longer can this madness go on for?
I am hoping that once the QE money has run out & we have seen a change of government, then we will see greater falls. But I admit, I totally underestimated, the degree to which BOE and the Government would support high house prices. It seems to have become a national share price, in which all else is judged by it...
18. house said...
@15 I think you may be right. It appears that many have missed the boat. GB may have beaten the system for now. No doubt his party will be elected again.
19. drk said...
MW @12
Agreed I may have sold too early although it wasn't a planned decision to sell to rent. In 2006, we were relocating and our house purchase fell through but I got my son in a local school so rented to secure the place. Prices then went up about another 10% until late 2007, however, the average National losses (10-12%) seen in 2008 were not seen here, mostly because very few people sold their houses. Now houses are selling very quickly and prices are at or slightly above 2007 levels. My head tells me it must all end soon but it is becoming so frustrating waiting for it to occur. If this current trend continues around here, it will not be long before house prices are 5-10% higher than 2007! Where/what is the tipping point? I cannot believe any Party will raise interest rates because of the consequences so I am hoping the broader markets will do it for them. How long that will take? I do not now but I am convinced it will not be before next election.
mrfibble @14
My concern is, if price rises are occurring again in some areas and (based on the some sold prices from March - June around our parts) they are, it justs puts house prices further out of reach.
20. letthemfall said...
Price falls seem to be very uneven, though that is to be expected to some extent. I know that they've fallen 20% where I live, an area which might be expected to hold up thanks to all the money some of these people earn/can borrow. No doubt the EAs are now talking in upbeat rhythms but I doubt anyone has missed the boat, except those sellers still holding out for some huge price. There are really only two things that can happen now. Either prices continue to fall (in jerks perhaps) back to and perhaps below trend level; or somehow the bubble is reinflated, with a bigger crash down the line. I know which I think is the most likely.
21. Rayvonyo said...
The media have such an influence on the housing market in regard to consumer confidence thats for sure.
Hype hype hype. Its all overplayed. If this recession really that bad? Let me use an example if I may?
The other day the BBC reported 65% of people know someone who has lost their job. Sounds terrible but then in reality only 3% of people are likely to lose thier jobs from the start to end of recession.
I read a story in the paper today Teabags to soar in price due to a drought in India. Initially I was concerned being a big tea drinker but then reading on it became apparant that instead of costing me 98p a week it could cost me £1.37. How will I sleep tonight.
Another example would be the so called 25% drop in house prices. I bought June last year and a house just sold up the road for roughly the same price.
I for one really hope we have turned the corner now. It doesnt effect me as im not looking to buy or sell a house and I have a safe secure job. The only reason I hope we have turned a corner is for all the people losing their jobs and houses. My heart goes out to them all.
22. mrflibble said...
@15. bluebeach
I do not believe the boat has been missed. When each of us look at the crash we tend to see it relative to our own position in it. If you reset that position to someone starting out in life, say a potential career person who has just finished University, has no savings and a pile of debts, how can he/she buy at the current levels? If these people are not the FTB's then who are?
The housing pyramid in 2007 got so big and so greedy that fresh meat was struggling to join in. Even with the liar loans it was starting to wobble under the weight of it's own greed. Now after the Spring bounce, 2007 prices are being asked for all over again. If we couldn't sustain the prices in 2007, I'm sure as hell we cannot sustain them now, especially given the difference in economic circumstances.
23. bluebeach said...
letthemfall @ 19..... expand on which direction, in your opinion, is most likely please.
24. letthemfall said...
The former, for reasons stated by other posts above.
25. mark wadsworth said...
@ DRK and other waverers, re my comment number 6, I have compiled the June gross lending figures since 2004 over on my blog. To prove I'm not shamelessly link-wh*ring, I'll reproduce it here:
Gross mortgage lending June 2009: £12.3 billion
Gross mortgage lending June 2008: £25 billion
Gross mortgage lending June 2007: £34.2 billion
Gross mortgage lending July 2006: £30.4 billion
Gross mortgage lending June 2005: £25.7 billion
Gross mortgage lending June 2004: £28.2 billion
Remember also that house prices barely rose during 2005, which you can easily correlate with the relatively low figure for lending in that year. OK, we can argue that correlation does not mean causation, but seeing as house price rises and easy credit are both themselves symptoms of confidence in borrower's future earnings capacity ...
No doubt some clever chap (like Techieman) has done a correlation between price rises/falls and gross lending, it appears that to get price rises, we need gross lending of at least £30 billion, anything less than that and prices are flat or falling. Maybe GB has won the battle for now, but as LTF says, he has merely staved off the inevitable.
Where's Japanese Uncle when you need a bit of doom-mongering..?
26. inbreda said...
@15 bluebeach
currently the markets are not persecuting the uk on the assumption that the tories will get in and will implement the necessary cuts to get uk back inot shape. If browns popularity gains you will see it in a market crash. Any indication that spendspendspend brown is likely to get in and the bond market will collapse.
In fact, I hope that browns popularity soars, as this will surely be the quickest route to IMF handouts and double digit interest rates.
27. str 2007 said...
Is it not possible that a 'double top' (the pattern created before a big fall) in chart terms could be created in the housing market. Afterall it's quite common in other 'speculative' markets, an area the housing market has now entered.
As far as I can see the weak pound will ultimately import inflation, it would help us export, but aren't most of our customers abroad also in recession.
Really can't see myself how things can rise much above 2007 prices until all is fixed with ours and other economies and there's ALOT of debt to clear down first.
28. drk said...
MW@23
Thanks for the info. Not really wavering, more frustrated. Current rental is too small (alot of carry-over from previous home) and am loathe to change rental (lack of "better" rental in terms of rent price etc.). I was hoping to have been able to buy now, but in one respect, if you out-priced, it doesn't matter whether it is by 10% or 50% I suppose. Will have to sit it out unless I can find a vendor who will consider 15% off current asking price!
Out of interest, from your figures above, what level of mortgage lending do think we would have to reach to see price rises?
29. drk said...
MW@23
Ooops!! You already answered my question about ledning levels in your original post.
30. techieman said...
mw - not me sir, fraid i aint that clever. All i can do is repeat what i said - when everyone gets sucked in thats when it will be all over. STR 2007 - a double top? Well a sharp countertrend rise was always on the cards but i doubt it will be that sharp - between a 50% and 66% retracement might happen though. That sounds a possibility because then the bears would be getting killed! :-).
Brown thinks he has beaten the cycle - but i'm sorry to say this is just a stay of execution. I really cant see what he can do. Either he tries to buy more votes by maintaining a perpetual and false boom via some reflationary tactics that will eventually destroy the Gilt market, or he just gives up and thinks he's done enough. The problem for him is either way this will blow up in his face. His pitch will be - well we did something while those tories would have undertaken a bit of laissez faire.
Could it already be all over - well we are all entitled to our opinions. I thought the S&Ps would fall to at least 810 so a sale at 913 and 925 looked good until the thing ramped up, so no one is infallible. I think after LJim dipped his size 9s back in the water he would prefer to think he did buy at the bottom. Good luck!!
The real question is this. If someone predicts the bear then predicts the counter trend rally (both in advance and both against the general consensus) then would it not be a good idea to give them a little bit of credibility? When will the bear resume? When GB think hes got it licked and starts smiling again - when he says we have 2 qtrs of reducing negative GDP and then it looks like we are going positive and then - whoops how the f*ck did that happen!
31. This comment has been removed as it was found to be in breach of our Blog Policies.