Monday, Sep 21, 2009
Times spin on Rightmove latest
Times: Homeowners avoid selling up amid dwindling supplies of houses available to buy
Fewer homeowners are putting their properties on the market, despite a reported rise in average houses prices, as they struggle to find decent alternative homes to buy. Rightmove, the property search website, reports that, for every eight homes now put up for sale, the equivalent of ten are being sold, or are being withdrawn by sellers who are unable to secure the few good homes they could buy. The website reveals today that average asking prices are now just 1.5 per cent lower than a year ago, at £223,996, after jumping 0.6 per cent in the month to September 12.
Posted by jack c @ 10:02 AM (2394 views) Add Comment
43 Comments
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1. tyrellcorporation said...
LOL, we have to take great pleasure in the fact that EAs will be dropping like flies over winter. Even though I'm a decent chap and unemployment is a grim consequence of recession I don't give a flying duck about these vermin!
2. smugdog said...
Housing stock, as with any commodity on the planet, if drip fed at such low volume, to a willing and eager (dare I say ‘pent up’) market, will always cause a rise in value. The question is; what, if anything will trigger a potential mass unload and result in an accelerated price fall Tsunami?
I see absolutely nothing on the near horizon that may cause this to happen, can you?
3. Yakbite said...
Sadly neither can I. As long as the government continue to bail out people who are struggling with magical money.
4. mark wadsworth said...
1. How on earth do they reconcile £223,996 with Haliwide averages £160,000? (see top right hand corner of this site).
2. What shortage of supply? As Uncle Tom (and many others) have pointed out, "time on market" is well over a year in most areas.
5. tudorian said...
I too see an over supply of properties ....... one and two bed rabbit-hutch type properties in my area sadly.
As far as opening the floodgate of distressed vendors slumdog, surely that will be unemployment, food / fuel inflation kicking off, rising costs of existing borrowing (maybe caused by so little new borrowing income for the lenders ) . Brown's finger is starting to look a little loose in the dyke (not Greg this time)
6. luckyjim said...
Only an incease in long term unemployment has any impact on house prices. An increase in short term unemployment (or average time between employment) has no effect.
Also, interest rates will only rise when the economy is starting to grow and the government needs to cool things down a bit (i.e. when the recession is over) so sellers are unlikely to drop their prices then.
I can't see prices falling significantly now without a much longer, deeper recession. This may happen when the government raises taxes and makes cuts in public spending next year.
So yes, Smugdog, I agree there is nothing on the near horizon. The 'horizon' is May 2010.
7. techieman said...
Hi Smugdog
You actually don’t need a lot of transactions to affect the indices. Prices are agreed at the margins. A fall in confidence means that buyers withdraw their bids and a minimal amount of forced sellers can result in lower prices. A tsunami of supply is not needed. Similarly - as we have seen - a minimal amount of buyers can result in higher prices.
Now what would cause (and will there be) a fall in confidence? That’s the question and of course everyone can have their own view on that.
The problem for the bulls is that if confidence does evaporate it becomes a downward spiral. The first leg down of this move was met with support because historically a fall of 20% off the top is unheard of in the UK property market, so naturally at some level there will be buyers, who think get in quick before they rise again as “they always do”. The problem is what happens if we see some negative monthly numbers? There will be some WTFs!! all around.
Will it happen? That’s the $64Bn question, and you can make your own mind up either way. I have no problems with the bulls, or property ownership or even BTL (to some extent) – and, lets face it, most of the time the Bulls will be on solid ground - but even Vesuvius will erupt one day, maybe you are right its not today or maybe it will be. Either way continued over-gearing will ultimately kill “one”!
Keep posting though. Thanks.
8. techieman said...
LJ - you are missing one thing in your analysis and thats a run on £, with the markets forcing the UK to raise rates. As to when / if that might happen, again thats up to what you believe. You are making an assumption that the authorities can control rates. I made that assumption in 1992 - and was farquaharsend by Norman. http://news.bbc.co.uk/onthisday/hi/dates/stories/september/16/newsid_2519000/2519013.stm
Again i would agree that that not happening is the percentage play but you never know ;-).
9. honest valuer said...
Smugdog.
No such thing as 'pent up demand' - only effective demand at any given supply. Higher prices=lower effective demand, tighter credit availability=lower effective demand at all price levels.
10. uncle tom said...
"I see absolutely nothing on the near horizon that may cause this to happen, can you?
Smugdog,
The market cannot rally for long without key participants.
First time buyers are not only having to save huge deposits (only a minority have parents who can stump up) but are also faced with high interest rates, and in many cases, impossible income multiples.
Housing is not just a rich man's plaything - only about 20% of households get their housing subsidised, which means that housing needs to be affordable to people who have very low household incomes.
The buy-to-let boom priced out many of the lower income people, using an economic model that didn't work unless house prices rose at well above the rate of inflation. That is history now - we are at the reality stage now.
Large numbers of houses are still being built, and liberated by the deceased; in total a far greater number than the number of FTB's who can afford to buy at current prices.
The market is already awash with property for sale, and the supply side is well ahead of current demand.
There is lots of misleading hype out there about a 'shortage' - but if you take the trouble to look, you'll find it isn't true.
11. cynicalsoothsayer said...
The previous source of cheap mortgage finance has dried up, and many of the recent purchases have been by cash buyers. Vendors of bog standard houses are going to have to drop their price expectations if their going to sell, regardless of the unemployment numbers. High unemployment will only make it happen faster and further.
12. luckyjim said...
Techiman,
I'm assuming this government isn't too concerned about the value of the pound - unlike Lamont who was trying to keep it within a certain band. I also think they'll be happy to let inflation rise to 5% or more before they try to put a brake on it. But these are all things that will not happen for a good few months yet.
UT - "Large numbers of houses are still being built, and liberated by the deceased; in total a far greater number than the number of FTB's who can afford to buy at current prices."
I'm not sure if thats true at all. Builders are only building in at a rate they are confident of selling on quickly. And I don't think the 'death, divorce and debt' enforced sales are enough to make a significant impact. Something needs to compel ordinary sellers to drop their prices and sell rather than stay put and wait. As Smugdogs says, there isn't anything on the horizon likely to do that.
13. mark wadsworth said...
LJ, "Something needs to compel ordinary sellers to drop their prices and sell rather than stay put and wait."
Agreed. But the flipside is that normal people can't get mortgages (so are prevented from making a huge mistake) so there will be a stand off for the time being (weeks? months? years even?) between asking prices (pegged at 2007 levels minus ten per cent) and offer prices (2007 levels minus about fifty per cent).
14. techieman said...
LJ - yes as i said the run and support is a minority view, but i can assure you most bets (in 92) were on the government supporting the pound at that time, for a long time - remember the IR rises, until they had to let go.
I suppose the point is a week is a long time in politics but even longer in the financial markets!! - I was trying to emulate Le Crunch with my wink - maybe it meant something or maybe not!!
15. luckyjim said...
MW -
Yes, 10% seems to be as low as 'normal' sellers will go. I was asking the 'how long' question back in February -
"family homes in my area have dropped by no more than 10%. They aren't shifting but sellers just won't drop their prices and (unlike developers) are under no pressure to sell. How long will I have to carry on renting waiting for those sellers to come down by another 20% or more ?" LJ - 5 Feb 2009
16. alan_540 said...
There are three kinds of lies: lies, damned lies, and Estate Agents.
17. timmy t said...
I reckon this DCB is going to run out of steam quite soon, and when it does, the sellers will return in droves hoping to sell at the new peak. The actual supply of houses for sale doesn't matter. It's only the relationship between between supply and demand which affects prices. There are only a few houses local to me for sale, but they have all been on the market for ages
18. uncle tom said...
LJ,
Do the sums - the best number I can find for new build this year is 130k, for properties liberated by the deceased 320k
Total 450k or 37.5K per month
Total mortgage approvals currently close to 50k per month. Stats for for FTB's do not seem to have been published by the CML for over a year now, but they are at most 40% of the total, and probably less than that.
So FTB's entering the market 20k per month, supply of vacant property 37.5k per month
Put another way, the number of empty properties is growing by nearly 600 every day.
19. dgj said...
Well when people find that they are struggling to pay their mortgages then people will list their houses, the more houses up for sale the less people will pay and will drive the prices down down down....
20. luckyjim said...
UT
Those figures are interesting. The 320k for properties liberated by the deceased sounds very high though. Where did you get that figure from ?
21. uncle tom said...
LJ,
620,000 are expected to die this year - that frees up a lot of houses..
22. mark wadsworth said...
@ LJ, I'd trust UT on the number crunching (although I would also like to know where 320,000 comes from).
My fag packet says 15 million people over pension age, 80% are homeowners, average life expectancy in retirement 18 years, so about 70,000 deaths a year (many of whom will leave widow or widower). Alternatively, about 500,000 deaths a year in UK, of whom two thirds die of old age x 80% are home-owners = 270,000 (again, many of whom leave a widow or widower).
23. jack c said...
@techie - picking up on your latest point regarding Sterling I noticed the BBC business section is currently carrying the following story
"Pound plumbs five-month euro low" - The pound has fallen to its lowest level since April against the euro after a warning that UK public debt levels may not be sustainable. The Bank of England cautioned that foreign investors may not be as willing to purchase UK assets, thus hurting the pound's long-term exchange rate.
Full story @ news.bbc.co.uk/1/hi/business/8266266.stm
I am more convinced as the days go by that interest rates will be forced up sooner than many anticipate
24. mark wadsworth said...
Or we could go with the 2001 census.
"Almost a quarter of households in England and Wales consist of pensioners only ... Of all-pensioner households 61 per cent are single person..."
So that's 6.5 million households x 61 per cent x 80% owner-occupiers, presumably these are older people (already widowed) so life expectancy maybe ten years = 320,000 deaths per year, so UT was probably right.
25. mark wadsworth said...
Re my comment 22, for "70,000" read "700,000". Oops. my bad.
26. uncle tom said...
My calculation used the CIA figure of 10.2 deaths per thousand in the UK, then assumed that while most people dying have been living as a couple, some are lifelong singletons. I then throttled back the figure to allow for those who die young in a family environment rather than a pensioner environment.
27. 51ck-6-51x said...
So a have we returned to "normal"?
28. uncle tom said...
666,
Pretty much!
29. stillthinking said...
I think houses are going to plummet for many different reasons but shouldn't these estimates include net immigration, which isn't much shy of 250,000 /year.
30. mark wadsworth said...
Developing this theme, there are 320,000 homes left by single people plus 130,000 new builds plus 40,000 properties actually repossessed = 490,000.
There are (as a matter of fact) about 200,000 first time buyers every year (at present = June figure x 12). This last figure seems very high - that's what you'd expect in normal conditions. i.e. in age bands 25 to 34 there are about 600,000 for each year, let's assume 75% can afford to buy (as is historically the case) and most of them buy as a couple (married or otherwise) that gives us 225,000 FTB couples each year.
Heck knows who's buying the other 265,000 properties up for sale each year (minus the heirs who let it out "until the market improves").
31. timmy t said...
666, my 20 month old daughter does this really cute thing where she puts her hands together, pulls them apart slowly, and whispers bubble, bubble, bubble, bubble... and then claps her hands and shouts pop.
Reckon we're on the 4th bubble now - just waiting for the pop!
32. waitingfor hpc said...
i have been listed for property in my area (Kent), I have seen loads of property go up for sale, and some quick reductions starting to happen now......I think the market is turning!
33. luckyjim said...
Okay,
rom ONS stats there were 509 deaths in E&W 2008.
Even if we assume 61% of these were in single households that would leave just 310k vacated households. If 80% of those households were owner occupied that would leave 248k houses as a maximum.
Using realistic percentages I would say the figure is nearer 150k.
34. Mark Wadsworth said...
@ LJ, see my comment 24. If there's a flaw in my logic, then tell me. Maybe we can compromise at "about 300,000"?
35. mystie010 said...
This thread is really making me laugh today. I can't believe we have been reduced to working out how many people in the UK are going to die this year as to whether or not house prices will become affordable. Just think, and I am joking here; if that new suicide bill comes in we could go and persuade a few of them to go and do the honourable thing so we can all get an affordable house. I'm chuckling when I wrote this by the way.
36. uncle tom said...
LJ,
Why are you leaving out Scotland and NI?
If everyone set up home as a couple, and no-one died before setting up home, then the number of homes vacated through death would be exactly half the number of deaths.
However, some people set up home on their own and never have a partner, which increases the number of homes liberated through death, while others die young without ever setting up home.
As there are more people who always live alone than there are people who die young, the percentage of homes liberated is approximately 52% of the number of deaths.
52% of 620k is 322k
37. mrflibble said...
@34. mystie010
I totally agree with the making me laugh part. The average house is again over 6x the average salary, but yet unemployment is rising, salaries are falling and mortgage money is hard to come by. Deaths aside, who are the FTB's that are going to keep the current prices afloat?
UK house prices measured in anything other than Sterling are falling, the only reason they are not falling in Sterling is because Sterling is becoming a joke currency.
38. Jackas said...
36. MR flibble
"At any cost"
39. techieman said...
LJ @ 33 - 509 deaths, blimey if thats right i take it all back im off to the local EA!
Oh you missed a bit - 509,090 - phew that was lucky Jim!
Sometimes Jim.... you kill me! :-).
-sorry only messin.
40. luckyjim said...
LOL
Mind you Techieman, if I'd said 248 houses would made available I'd still only be 149752 off the true figure - about 100000 nearer than UTs estimate!
41. techieman said...
LJ ; Well im not getting in between you two heavyweight number crunchers. Its always good to hear well argued and divergent views.... No one has a monopoly on wisdom..
mrfibble - heard the one about the fiver and the tenner....?
42. Smiling said...
Hey techie and wadsworth, go and do some work rather than sitting there all day thinking of how to crash the market. You guys make me laugh :)
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