Thursday, Sep 30, 2010
Oh dear.
BBC: House prices rose slightly in September, says Nationwide
House prices saw little change during September, according to the Nationwide building society.
Prices rose by just 0.1% last month, following a 0.8% decline in August, Nationwide said, adding that "buyers appear to have a slightly better hand than sellers at the moment".
The average house price now stands at just over £166,757, up from £166,507 a month earlier.
Nationwide said September "proved to be an uneventful month for house prices".
Posted by mark wadsworth @ 07:22 AM (2001 views) Add Comment
45 Comments
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1. phdinbubbles said...
Oh well.
Last month's nominal fall from the Nationwide was -1.7% and this month's increase is +0.15%, just to put it into perspective. The 3 month thing's gone negative and the annual thing's got a bit smaller.
I'll put the kettle on.
2. mr messy said...
time for this site to give up , there isn't going to be a house price crash
3. doomwatch said...
Given their uncompetitive rates, I'm suprised they got any business last month to form an index point ! Or is it completed data rather than new mortgages ( so about 8-12 weeks behind the Market) ?
4. smugdog said...
"Just watch the Nationwide price line" I'm told.
"Clearest and most dependable indicator". It certainly is MW.
Now tell me that again......... and the fish get all the profit.
5. smugdog said...
Time for this site to give up , there isn't going to be a house price crash
6. quiet guy said...
Disappointing? Yes, a bit.
Give up? You gotta be kidding! The UK property market has plenty of problems yet.
7. Crunchy said...
Time for this site to give up , there isn't going to be a house price crash.
'Delusions Mr Wordsworth, just delusions.'
8. phdinbubbles said...
Here's the Nationwide nominal series with a 3-month average (and including this months figures):
9. bystander said...
phdinbubbles@7 - that chart looks a lot like the bubble chart that keeps being posted on this site - interesting moves ahead methinks.
10. hpwatcher said...
5. smugdog said...Time for this site to give up , there isn't going to be a house price crash
Look at the chart above smugdog. What is it saying to you?
11. smugdog said...
I merely stated what Mr. g had said previously. Perhaps you just look for a mutt to kick when things aren’t going your way.
Bystander, 2010-2011 looks identical to the 2004-2005 portion of the graph to me? One can take any instant of a statistical analysis
and present it to back any argument you please.
Predictions are not exactly the strong point of the HPC "expert" think-tank I guess. (Excluding Techie of course).
12. smugdog said...
Sorry Mr g, I meant Mr messy (Too early for the infirm to be out of bed I guess)
13. mrflibble said...
You hear that Mr Anderson? That is the sound of a you being slid further toward the lions mouth...
14. Markc said...
smugdog is right. there simply isn't enough properties in the UK to deal with the population. This website has been going far too long, people are bored of this now.
15. estrader said...
"Bystander, 2010-2011 looks identical to the 2004-2005 portion of the graph to me?"
That is correct, but there is one major and very important difference which the graph doesn't display.
From the Nationwide Report:
"The current turnover rate is around one third of the level at the peak of the purchase activity in 2004. Excluding cash purchases, currently only 2% of UK houses are changing hands each year compared with 6% in 2004."
16. bystander said...
.....in addition to what estrader wrote @ 13, the banks, in 2004-2007, then went on a monumental lending spree with incredible leverage, borrowing at low rates on the money markets. That isn't happening now, so even if interest in purchases rose it will be a long time before that sort of exuberant (idiotic) confidence returns, so to coin a phrase used many times , by many people..."it is different this time". How different no-one knows, as this sort of enormous bailout has never been done before on such huge global scale. We shall see.
17. hpwatcher said...
Predictions are not exactly the strong point of the HPC "expert" think-tank I guess. (Excluding Techie of course).
Well, techie has yet to be right about the great deflation, which we would all like to see, though he may well argue otherwise - but that's another story.
GC has been right about gold too - he may be a single issue kind of guy - but that doesn't make him wrong......
18. J-hi said...
All the economic fundamentals, the scarcity of credit, the unwilligness of banks to lend, the new FSA rules which will restrict mortgage availability further, government austerity measures, historic levels of unaffordability and lack of first time buyers, lead to only one sensible and logical conclusion.
A number of these factors will only fully feed through over the next 2 years.
Stay patient and keep the faith!
19. sureseam said...
It would be kind of interesting to see the British and American experiences on the same graph since I suspect we follow a similar trajectory but offset by a year or so.
20. alan_540 said...
A little disappointing but you'd be mad to be bullish about the state of the market, even smuggy knows that deep down in his canine brain.
21. smugdog said...
And why should we follow the States? Our planning laws and BOE directives are there to maintain the illusion and preserve the 'family silver'.
Explain why the yanks can walk away from a property without too much onward pain, yet here, we can be pursued beyond the grave?
22. alan_540 said...
What goes up comes down.
23. sureseam said...
hpw @ 15: "the great deflation: which we would all like to see"
Deflation on any significant scale will be very unfunny. Deflation isn't so much negative inflation as a whole different psychology.
You don't spend because nominal prices are dropping gradually. This leads to lower consumption, higher inventories and then lower production. This leads to more unemployment and companies in liquidation. This leads to lower nominal prices. And so on until it hits rock bottom.
The recent daft noises from Charlie Bean reflect a similar fear of deflation coupled with a patronising "don't scare the masses" attitude.
The whole "helicopter Ben" trick may be tried but even he knows that companies going bankrupt like dominoes can destroy apparent money faster than it can be meaningfully printed.
The problem is the mess we are now in. A deflationary spiral or a burst of hyper inflation will brutally bring things back towards a sane stability.
Like democracy: mild inflation really is the least worst option.
24. sureseam said...
smugdog @ 21 "Why should we follow the states?"
Am not prescribing that we SHOULD follow the states. Rather I am ponder a hypothesis that this might appear to be the case.
smugdog @ 21 Explain why the yanks can walk away from a property without too much onward pain, yet here, we can be pursued beyond the grave?
This is because, the damned colonials have had the outrageous temerity to start writing their own laws. String 'em all up I say.
More seriously: there are variations from state to state in the USA and besides, even here, people do bounce back from bankruptcy.
Just now the whole American reposessions scene is looking like a total shambles; but that is by the by.
25. mark wadsworth said...
Mark C: "there simply isn't enough properties in the UK to deal with the population"
That is a downright and bare faced lie, as well as being grammatically incorrect.
1. We have plenty of housing (and plenty of vacant or derelict housing, second homes etc), it is just distributed really unevenly - from widowed pensioners in three bed family homes to young couples with a baby in a one-bed flat.
2.There are different ways of tackling this - Land Value Tax (to encourage 'right sizing') or liberalising planning laws (or preferably both).
3. Of the UK, only ten per cent by surface area is developed, and of that ten per cent, only half is houses and gardens. Building a half way decent three bed semi costs about £75,000 all in, which any young couple could easily afford.
4. The Stalinist policies imposed by the NIMBYs, i.e. refusing to let supply meet demand has to be opposed most vehemently.
5. Anybody who says "if you liberalise planning laws they will concrete over the South East" needs his head examining. There is nowehere near enough demand and nowhere near enough people in the UK to make this necessary (let alone desirable).
26. alan_540 said...
House prices are tightly coupled to the general economy in the UK to a larger extent than in most other developed countries which is why so much effort has been made to stop prices crashing. In a healthier economy house prices would not have been ramped in the first place to stimulate it in response to a decline in manufacturing.
27. dill said...
@25 mw
Well said.
28. str 2007 said...
Yes thank you MW
I particularly like items 3 and 4 and wish these could be brought to more peoples attention.
29. hpwatcher said...
Deflation on any significant scale will be very unfunny. Deflation isn't so much negative inflation as a whole different psychology.
You don't spend because nominal prices are dropping gradually. This leads to lower consumption, higher inventories and then lower production. This leads to more unemployment and companies in liquidation. This leads to lower nominal prices. And so on until it hits rock bottom.
My personal circumstances are such that deflation is more preferable. But, I don't think deflation is much of a possibility, here's why:-
Governments hate deflation because they are habitual borrowers, and the last thing they want to do is spend a larger part of their declining tax revenues on paying interest. Those with mortgages should be similarly fearful. However, although inflation is disliked, it is seen as the better of two evils - not least because inflation lightens the underlying weight of outstanding debts
30. alan_540 said...
Only if wages keep pace with inflation.
31. phdinbubbles said...
@Mark C
"smugdog is right. there simply isn't enough properties in the UK to deal with the population. This website has been going far too long, people are bored of this now."
Can you please explain why the nominal rental incomes for the houses in my street are almost exactly the same as 10 years ago, whilst house prices increased by just under 200% during the same period? If there was a shortage of houses then surely the rental values would have risen as well? So how do you explain the 200% ???
Can you please explain why houses in my area are on the market for over 20% less than the peak selling price in 2007?
Can you please explain why the fact that you are bored of thinking about house prices should have any bearing on house prices? Why would you get so worked up rather than just ignoring the site if you thought there was nothing to it? Worried are we?
32. timmy t said...
MW - agree with most of what you say but I seriously question the need for significantly more housing if there is already enough. personally I'd rather we didn't over-develop the country but changed the tax system so people would finally agree that they really only need one house, and it makes a lot of sense for that house to be the right size for your needs.
33. alan_540 said...
phd, spot on. However, I think that we're all going to be disappointed with house price falls until interest rates are increased and people are forced to sell. Today's Nationwide report was quite surprising!
34. mark wadsworth said...
Timmy T, nobody wants to "over develop" let alone me. I'm just pointing out that there is nothing major to worry about yet in terms of the amount of land we have available. If I were in charge we'd try it with LVT first and see what happens, if no new house is required to be built for ten years, then so what?
35. phils said...
Look, everyone has been predicting a crash for over 2 years and it hasn't happened because the government has supported house prices with low IR's and QE, etc.
The likelyhood is of a long slow path downwards with a fairly modest nominal drop but a significant one in real terms. For example, if prices drop 10% by 2014, the overall drop from peak 2007 prices will be approx 30%, but more like 40% in real terms. If you had stated in 2007 that house prices would be 40% lower by 2014 most people would have been very pleased with this sort of price drop.
36. sureseam said...
hpw @ 29:Governments hate deflation because they are habitual borrowers, and the last thing they want to do is spend a larger part of their declining tax revenues on ...
Without disputing your remark we may still see marked deflation.
One of my current ranting theses is that governments are run by those who think that markets can be managed, manipulated and spun for their political convenience. My view is that whilst there is government influence, there is also a lot of unintended consequence, and when a lot more has been said than done: the markets are much like the weather - and this is hurricane season.
37. hpwatcher said...
phd, spot on. However, I think that we're all going to be disappointed with house price falls until interest rates are increased and people are forced to sell. Today's Nationwide report was quite surprising!
There would just be more QE to keep interest rates low. BOE don't want high interest rates.
38. hpwatcher said...
Without disputing your remark we may still see marked deflation.
Yes - in some areas.
39. mark wadsworth said...
Here's my chart comparing inflation adjusted quarterly price changes from Q1 1989 onwards and Q1 2007 onwards. Looks like the pattern is reasserting itself after a year and a half of New Labour desperately swimming against the tide:
40. techieman said...
Without getting into a personal slanging match - for a change, and without a “marathon rant” - whatever that means., let me say the following.
I would be the first to agree with HPW that I am not right all the time (apparently only he has a monopoly on wisdom – I don’t really understand how he owns commodities and yet wants deflation but still…..) , and have in fact said so. I do think that we are now in a HP downtrend, but will have some volatility in the stats and probably many false dawns.
As for the “great deflation” I cant remember saying there will be a “great deflation” in fact I don’t even know what that actually means. I did say there would be deflation. And I don’t want to get technical but yes we have actually had some, particularly in the US. That really is unarguable.
Ok so the next question is will we get any more deflation, or has the work done (and it’s a ton or work) been enough? Lets find some common ground, as Merv said output is 10% below what would be expected had there been no crises. So had we not had the work done by central banks / gov stimulus things would be a whole lot worse. Does any one want to argue that?
I basically think they are walking a tightrope – as HPW has said the banks are sitting on money in reserves rather than lending it, but its really not that surprising why they have not. HPws point now is when the banks release the money that’s when we will have inflation (a change of tune after a couple of years of we must have inflation because the government are printing). In contrast some of us have said the banks wont lend until they see conditions exist whereby they are very confident that they will get their money back. After all why would they?
So has the gov / BoE put in place the structure whereby the economy can avoid deflation? (of course they don’t want deflation which makes the deflationists argument in the minority – severity and frequency folks). We all know that they will do what they can to avoid it, but they have been doing all they can for the past 2 years, the question now is can they carry on doing that i.e. has the economy been given the leg up it needs before it carries on climbing the wall / mountain, will they perceive they need to do more and if so will them doing more be effective. These are questions that each of us must wrestle with to determine what we do in terms of investments / how we live.
Whatever happens we may be right or wrong, but having said that whatever happens it will be interesting going forward.
41. nickb said...
@ Mark
if you liberalise planning laws they will concrete over the South East.
In fact it is already horribly overdeveloped. That's why just about any remaining patch of countryside or farmland is triple protected. Quite right too. I have yet to hear anyone here make a convincing case that there is a physical housing shortage after accounting for your 1.
N
42. mark wadsworth said...
Nick B, these are two entirely separate topics, but let's agree on the facts first:
1. Ninety per cent of the UK by surface area is farmland, forests, lakes, rivers, mountains, beaches or otherwise undeveloped. Even if you abandoned all planning rules, no more than 1% of the South East would be built on (that's enough for about two million homes or some such humungous figure). To suggest that there only a "few remaining patches of countryside or farmland" is not true, not true, not true. In fact, it's Home-Owner-Ist/NIMBY propaganda (they use it as evidence to support the theory that 'house prices can only go up').
2. We have plenty enough housing, it is just very badly allocated (as I said before). Whether and how people should be 'encouraged' to right-size is a different topic. The Home-Owner-Ists say "Tough sh*t to young people", I don't.
What conclusion we draw from this is an entirely separate.
43. alan_540 said...
hpw, yes if there's QE2 then that will delay HPC again as with QE1. Presumably QE cannot be continued indefinately?
44. Markc said...
mark wadsworth:
Ageing population
+
Massive immigration problem
+
The Government has put a stop to so called 'Garden Grabbing'
+
The Government cannot increase interest rates substantially. If they did it would be economic suicide.
=
House prices increase
Historical charts don't mean anything as the UK is a very different place to what it was pre 1990.
45. Rich Best said...
Good news - but the upcoming Govt cuts and MMR could see a large drop in house prices moving into 2011. Lets hope we can get the feel good factor back soon.