Thursday, Jun 01, 2017

Crashy crashy

BBC Business: House prices fell again in May, Nationwide says

Annual growth 2.1% . Weakest pace for almost four years

Posted by magnifico @ 08:23 AM (6857 views) Add Comment


1. quiet guy said...

I'd have said flaccid rather than crashy. But it's all good.

This bit caught my attention: "The number of people in work has continued to rise at a healthy pace. Indeed, the unemployment rate fell to a 42-year low in the three months to March."

Long time readers will recall previous discussion here about the relationship between unemployment and house prices. How much lower can unemployment rates fall?

Thursday, June 1, 2017 09:55AM Report Comment

2. icarus said...

The increase in the working poor (throughout Europe) has helped to attenuate or obliterate that relationship.

Thursday, June 1, 2017 05:41PM Report Comment

3. libertas said...

Quiet Guy. Regarding employment rates, the next shoe to drop is rising wages once we reach full employment and immigration controls commence. When unemployment cannot fall any further, wages begin to rise and about time too.

Alongside this, house prices will rise and interest rates will drift upwards in response. I will be fixing my mortgage some time between the Autum and Brexit on a 10yr fix, if rates do not fall below zero very soon.

Friday, June 2, 2017 08:15PM Report Comment

4. reticent said...

Now that BTL has died down, the link between house prices and wages will surely be much stronger (as it was when FM was bandying around that 2.74m figure, because BTL was a non-event during 2008-2010).

I hate to be the perennial partypooper, but the NSA is still rising. It will be interesting to see the regional figures next month. A stagnant spring in London likely heralds falls over the summer and portent a wider, nationwide correction. Prices rose 1% in London over Q1, so even a repeat of that over spring, suggests falls could be likely by EOY. But there were quite a few false dawns around springtime in the wake of the gfc, so until the Nationwide NSA numbers fall over a 3 month rolling average, I'm not convinced.

It seems with more and more reports and articles like these that word is getting out there however, and the perception of a crash having already begun, when it hasn't quite, could prove a self-fulfilling prophecy.

In any case, the possibility of a hung parliament has risen significantly (albeit from infinitesimally small) and that is likely to have all sorts of perverse effects on the economic outlook.

Saturday, June 3, 2017 10:22AM Report Comment

5. britishblue said...

I'd pay a very close look at the figures coming out in the next three to four month. A couple of weeks ago one of my clients purchased a house for £2.4 million.The asking price had been 3 million and a year ago offers of £2.8 million and several at £2.7 million had been turned down. As the house had not sold for 25 years and was bought for cash, it will make zero different to the house price indices and in the Land registry may even show as an increase. I had another client who had a buyer for a £400,000 flat last year that fell through and eventually sold for £350,000 and another client where up to £100000 was taken of during the chain. These are just the customers who are sharing with me. I don't understand your logic Libertas. When unemployment decreases by 1% it is the people at the edges and on low pay that get the jobs. This wont make any difference to house prices in areas like London, where you have to have both a high income and financial assets to get a house. Likewise rising interest rates will put many people under water. The average salary in the UK is within 2% of that of France, yet the average house price is double and that includes Wales and Scotland. The key drive in house prices have been speculation that it is a one way ticket.When that sentiment reverses the buying pool dries up. I suspect that in the next three months we will start to see more drops. The vested interests will change their tunes and blame it on Brexit and the election and spin it as a soft market that will recover towards the end of the year and promote it as a good time to buy. At the end of the year the hous price indices may only show a few points down, but the reality will be much greater.

Saturday, June 3, 2017 01:14PM Report Comment

6. techieman said...

Anecdote : A relative of mine has around 300k in cash going spare. The house is paid for , pension fully funded as are premium bonds and a portfolio of gilts and fixed interest which will be maturing in the next couple of years (purchased when rates were relatively high between 5 and 7 % ).

In any case was looking at being a BTL with the cash. I said nothing. They did the sums and the gross yield after ground rent and insurance (including non payment tennant insurance ) ex maintenance was under 4%.

Granted this is bigger than what they could get with say NSI but the point is most people would have to borrow to buy the property .... and those BTL mortgage rates ? And then the maintenance and potential tennant aggro.

I said there's likely to be more sellers as the section 24 tax issues are realised and then who is left to buy these places ? Only actual buyers and then where do they get the deposit ?

Saturday, June 3, 2017 02:21PM Report Comment

7. britishblue said...

I don't know whether this has been posted before but if it hasn't here it is . Here again, this is another metric that is worth following, especially in London.

Saturday, June 3, 2017 03:17PM Report Comment

8. sneaker said...

Generation Rent must be doing freaking cartwheels.

Now, prices: please get down AND STAY DOWN.

Because we are all exhausted by this never ending series of booms and busts.

Why can't we have a STABLE housing market?

Sunday, June 4, 2017 10:42AM Report Comment

9. cyril said...

Agree with techieman @6
Also you hear that rents are going down, people are leaving the country etc. so looking bad for BTL generally.The market has been seriously skewed by BTL for the last 10 years (and also foreign investors buying to not let in London).
The question for me is will the market ever go back to how it was in the recent past (i.e. post war) or will it become a permanent divide where some families own property and pass it on to children and other families permanently rent - more like it was in the 1920s?

Sunday, June 4, 2017 11:23AM Report Comment

10. techieman said...

Sneaker you sound like gorgeous George in snatch. Let's just hope house prices don't get up again like Irish Mickey.

I m sure there's a pun with "Brick top" somewhere but struggling to find it !

Sunday, June 4, 2017 03:20PM Report Comment

11. jack c said...

@techieman - Anecdote: a friend of mine who's in his late 40's recently started pulling out of BTL having been involved since his early 20's and he cites the Tax changes as being the main trigger to sell. It is quite some time since Mark Wadsworth was a regular poster on here but even when he was around the numbers didn't really add up (bearing in mind MW is a qualified accountant).

Essence of the tale if my friend is pulling out of BTL then the property party must surely be over !

Tuesday, June 6, 2017 11:46AM Report Comment

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