Friday, Jun 11, 2010
House prices fell in May for a third month
Businessweek: U.K. House Prices Fall for Third Month in May as Supply Climbs
Previously reported house-price gains for March and April were revised to declines as more transaction data became available.
Posted by mken @ 09:07 AM (2789 views) Add Comment
24 Comments
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1. mystie010 said...
At the height of the 2008 crash our local estate agent had 132 properties on it's books. (I know it's sad, but yes I did count them) As the "recovery" began the numbers fell quite dramatically to below a 100 properties at any one time and never ever made it back up to the original number of 132. However over the last couple of weeks this has all changed. Last week the number of properties on their books rose to 138 which has surpassed the supply that there was at the height of the mini crash in 2008 that we saw. Could this be significant of more price falls to come?? recapticha: threat problem (You bet!!)
2. happy mondays said...
You just keep counting mystie010, yes it is a bit sad, but not as sad as stupid houseprices & the stupid people that pay for them !
vented slovic
3. doomwatch said...
mystie010, this is not sad at all, it is an excellent prudent practice, as when one does come to buy a place and start sticking in
below asking price offers, one will need all the concrete, factual proof one can get ones hands on to negotiate a realistic
price against the head wind of bull sh1t lies estate agents use to try to get you to bid up. I have experienced a raft of these over the last couple of months, from "full viewing book" to "three other interested parties" and "the vendor won't go below £X". Well £X was well over the
price I was willing to pay, and I know £X is well above what other sensible buyers will pay, and there is no more silly money flying
around to give the vendor £X. As I wasn't willing to participate in generational wealth transfer, I pulled out, and 2 months later the
property hasn't sold. It is only a matter of 1 or 2 more bad index announcements over the rest of the summer until the vendor [baby boomer, surprise, surprise] will be forced to sell at what the market dictates, not what the WANT. The EA is to blame in this too, as they were the ones in the 1st place to over-value the property[to get the vendors business].
4. hpwatcher said...
It's hard to see what could possibly keep house prices so high.....
5. str 2007 said...
Interesting how these various surveys show up different figures.
Academetrics shows 3 months of falls but with an average of £220k ish.
Halifax shows this year 3 months out of 5 prices have fallen with an o/a -0.3% this year (from Jan)
Nationwide shows only falls in 1 month out of 5 this year with an overall +2.4% since Jan.
I think the Nationwide figures come more from the South, so could be why they are showing more of an increase.
I haven't been monitoring closely but sense more supply down here.
Having said that for each one sold those people need to buy another. So equally could be showing a growth in confidence.
Yesterdays figures of Chinese exports having grown 50% from a year ago are also quite encouraging.
Speaking to a friend who works in banking raising finance for business, apparently it's very tough getting hold of money. This also might indicate banks putting all available funds in the direction of the housing market, which again will tend to be a self fulfilling prophecy.
But unless forced through redundancy (and there are alot of safety nets) or a large increase in interest rates, I'd be surprised to see sellers accepting very low figures with better news coming from the economy.
I think it will be easier to draw a clearer picture in the weeks following the budget on 20th of this month.
6. Hpwatcher said...
Speaking to a friend who works in banking raising finance for business, apparently it's very tough getting hold of money. This also might indicate banks putting all available funds in the direction of the housing market, which again will tend to be a self fulfilling prophecy.
It's amazing that there is so much belief in the idea of ever rising house prices.
But unless forced through redundancy (and there are alot of safety nets) or a large increase in interest rates, I'd be surprised to see sellers accepting very low figures with better news coming from the economy.
I think the figures coming from the economy will improve slightly, but the key thing will be public sector job cuts.
7. uncle tom said...
hpwatcher,
"It's hard to see what could possibly keep house prices so high....."
I agree, but there is one worrying possibility.
Last weekend I went to a house clearance auction in pursuit of some interesting old bottles, and while queueing to pay for my goodies got chatting to a guy who turned out to be an EA.
He himself rents, wants to buy, and is hacked off that prices are taking so long to correct. He was very much 'off duty'
He told me that there really is a shortage of decent property on the market.
The reason, he believed, is that the figures for immigration over the last few years, legal or otherwise; are totally wrong.
There's a possibility he's right..
8. tenant super said...
Until recently, our local Council (Southwark) claimed that the Labour government's estimates of the Boroughs population were out by around 50,000 around 15%. The borough has high numbers of immigrants. The primary schools are running out of places and the wait for social housing in the highest priority band has almost trebled in the last three years (partly due as well to regeneration projects).
People argue that many immigrants from less developed countries don't buy houses and illegal immigrants can't get housing benefit but they still occupy housing. There are stories of people who bought their council flats renting them to illegals, one family to a room. People who are not here legally are in no position to complain about their landlord.
However, there is still an argument that prices can fall even when supply is strained as prices are more reliant on supply of credit. There is also the old argument rises caused by shortage should see a corresponding increase in rent levels. Rents have risen far above inflation but not as much as prices and based on that I would expect average UK house prices to fall to about £125-130k.
However, high density areas with large immigrant populations like Southwark may well hold their prices.
Another friend of mine set sail for saner shores last week
9. G00d£rs said...
I am not sure who is to blame anymore is it the estate agents or vendors,
I STR in 2007 (not by choice i split up with my g/f who bought me out of th mortgage)
At the time the price the property was valued at 225K for a three bed detached house nr brighton sussex.
The ex has just put it on the market at 239K
I called the estate agent who told me the vendor would not accept less than 230K, I said either your vendor is in fantasy land or you are!
I offered 184K the price i originally paid in 2005 :0)
10. inbreda said...
"Another friend of mine set sail for saner shores last week"
quite. and good on them. no matter what is supporting prices it isnt sustainable. If there are no jobs and the illegals cant get benefits they will have to leave (or steal). If they can claim benefits, then the country will get to the point that it cannotsupport them.
There's lots to explain why prices are supported (like criminally low IRs at a atime when even the banks are desperate for money i.e. the demand is greater than the supply - clearly a fundamental that applies to houses and not money) but it cannot last forever. I have been looking at houses for a while now and noticed lots of divorce cases where under normal circumstances they would be desperate to offload, but with IRs so low they can afford to both move out and get on with their lives and leave the house empty for as long as it takes to sell at their absurdly high expectations. It simply is not a normal market and wont be until IRs go up. I hate the fact that my hard earned deposit is sitting in teh bank to the benefit of a) the bank and b) all the property speculators and c) the glubberment.
11. growler said...
@ str2007
I think more houses are coming on for sure. We've been tracking the new instructions. We also know plenty of people in the market for various reasons. One with 11 viewings yet no offers. Others with unaccepted offers. Others were they've "lost" the next house. And I'm in South Bucks.
I'm looking forward to stats for the next 3-5 months. I'm pretty sure that this will have us back to the falls seen this time last year. By the end of the year the BofE will have to start increasing the interest rate.
12. Notyethomeless said...
TS@7 - I doubt very much that areas with high levels of immigrants will hold their prices. In the past, immigrants have concentrated in East End London and the Gorbals in Glasgow. These areas became characterised by very low value housing, and I can't imagine in my wildest dreams that high levels of immigration will lead to sustained high house prices this time round.
13. tenant super said...
I couldn't stand the thought of my money sitting with a bank for the same reasons. I have a bit in cash overseas but I bought some low to mid range art with a fair bit of my savings. That way I can enjoy my savings. In the last ten years, I have never made a bum purchase with values increasing by at least double inflation and some far far higher. Trouble is, if you need to convert it back into cash quickly you might not get the best price and if you don't understand the market there's a good chance you'll get your paws burnt.
14. str 2007 said...
growler
I do actually expect further falls, but am beginning to wonder by how much.
tenant super
Your tale says it all. You need to know what you're doing. It's very easy in hindsight but right now, to me anyway, nothing looks particularly cheap.
If anything should have got cheap over the last 2 years it should have been 4x4's and that hasn't even happened.
Even last March when the stock market was on its knees there were plenty of commontators expecting further falls.
Dificult to know where to put money at the moment.
15. Fruitstick said...
We sold at bottom of market and have been outbid about 4 times in last 12 months. We were not prepared to get into silly bidding war.
However, just viewed a property recently which sold for asking price before it went onto the market. That fell through as they couldn't get the mortgage they thought they could. Exactly the same happened again but this time it fell through as couple buying couldn't sell their own house. We put in offer just over 10% below but it has been turned down as 'they are sure it will achieve asking price as has done twice already' Yes, by people who couldn't buy it.
My brother turned down an offer 5% below by renters as he wanted asking price. Not a sniff since.
People will wise up soon enough - the sticking point will be whether or not they need to move or not.
16. tenant super said...
You're right. The art market's over-cooked at the moment. The best purchases I made were around 2005-06 mainly in charity auctions . I've a friend who used to run these and let me in free. All the big boys were buying the really pricey stuff but there were some incredible bargains in the £1-6K range by established artists I really liked. Another problem of course is that some of my most astute purchases are precisely the ones I would find it incredibly difficult to part with. Merry S-W is right that art overall underperforms as an asset but only because the top end gets overheated and people vastly over-pay for pieces by unknown artists.
It is hard to know where to money but I'm looking at metropolitan cemetery plots but it depends on the law regarding transfer. In the US you can sell the plot yourself. In other countries you can only sell back to the cemetery owner! I fear we fall into the latter!
17. Anon said...
It does make me laugh when people make out that BTL'ers are greddy etc yet people like tenant super are doing exactly the same thing just in a different market, we all in general work for our money and want to make the most of it.
Saying that does anyone else find it strange that prices have dropped for so long, all the press had made me think they were very slightly going up, it seems the revised figures dont get any exposure so people like nationwide and halifax can make it look like property prices are strong when in fact they are not.
18. holyroller said...
@ts: Just build a tomb on it and rent it out :)
19. Cypher007 said...
@Uncle Tom,
the market here in Boston Lincs is overheated, back to 2007 asking prices. high eastern European population. i've seen one group renting a nice 4-5 bed detached not far from me. the rent must be £700 a month. i can always tell, apart from the LV LT PL plated cars in the drives, they usually put a huge 1.5+ metre satelite dish up. i always thought they weren't legal?
20. tenant super said...
he he.. it does seem a bit mean but I am serious. Prices in my local cemetery have quadrupled since 2003 and space is fast running out.
Reminds me of the time my 13 year old brother asked me to borrow £100, which, being a bit of a sucker, I gave him. A few weeks later my parents got a letter from the school complaining that he had bought up 35 lockers (which were given out for a £3 deposit for the key on a first come first served basis as there were only enough for about 80% of the students) convincing the school secretary that he was just helping his class mates. In fact, he'd created a 'shortage' and when there were no more lockers left, sold the keys for a tenner. He kept five lockers back for himself which he was renting out on a day rate. The whole enterprise was, according to the stern letter, "not in keeping with the spirit and ethos of a Catholic school" .
It was potentially a good idea but his only profit in the end was a week's detention and litter picking duty and this led to the introduction of the one key per student rule. Still, I felt a bit sorry for him and let him keep the £100. He should have become an estate agent.
21. str 2007 said...
Don't tell me he's a BTLer now.
22. tenant super said...
No, he knows we'd be forced into an 'honour killing' .
rC-spasms increase
23. bluebeach said...
amazing............
24. Arr Gee said...
RE: 15
Having this problem myself. Mortgage in Principle agreed, current house sold, and making offers with 5% of asking price, yet no joy. Sellers get asking price offers from fairytale buyers who don't have the necessary finances. They soon withdraw and the estate agents are back asking me if I still want it, and if so to offer more as they have had offers at asking price The fact that these offers are not bonafide seems to be irrelevant. Frankly, I will be offering less if they call me again.
We have looked at about 20 places since March and none have sold. 5 have gone under offer (4 after price reductions), some of them gone under offer two or three times. I suspect almost all the properties we have viewed will still be on sale come January.