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Sybil13

Still This Q Of 30% Falls From Peak And Average Asking Vs Average Selling

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Posted quite a few times on this subject but it still seems to be cropping up time and time and time again.

RM - Savills - and others have been indicating since the start of the year that property has found a new floor at around 25 - 30% off peak. ( Which I assume is why lenders are only happy to give 75% or lower LTV they don't mind the buyer shouldering the much needed future HP falls).

Much quoted I know but Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors said in March 2009:

Most of the house price indices suggest prices have fallen by up to 20pc from the peak. However, many of our members [surveyors and estate agents] cast doubt on this and calculate independently that the scale of price falls has been even greater − 30pc or more already. They suspect the Nationwide and Halifax figures are underestimating scale of the peak-to-trough fall to date.

Looking at the surveys you have to come to the conclusion that we aren't at the bottom by any stretch yet. Our members are still expecting further falls in prices, according to our survey, and if there's anyone you might expect to be talking up the market it is them

In relation to the June 2009 HPI from RM many papers ran with:

The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation. Until this bizarre artificial gap 'crunches' the housing market will continue to stagante and deteriorate.

Rinoa kindly explained that the reason for the "disparity" :

" Sybil, The reason for the disparity is that Rightmove use mean averaging and Halifax/Nationwide use median.

Mean averaging is simply all the prices added up and an average price calculated. Median is the middle price in a list of prices. It is where half the prices are above this figure and half below.

Either works OK on its own to show rises and falls, but it looks odd when compared with other indices using another type of calculation.

Forget about the huge disparity, it's only a mathmatical oddity, not house prices selling at 40% off asking prices "

This morning on Estate Agent Today website :

Up and down – asking prices soar ahead of reality

Friday 10th July 2009

Prices fell by 0.5% in June, with the average price of a property now standing at £157,713 – 15% down on this time a year ago.

According to the Halifax, house prices have fallen every month of this year apart from January and May.

This is roughly in line with Nationwide, which reported a 0.9% rise in May. But although Nationwide’s average house price – at £156,442 – is very close to Halifax’s, Nationwide says that average house prices are now only 9.3% lower than a year ago. Nationwide has also reported house price rises in three of the last four months.

However, completely out of sync with both is the average asking price of property on Rightmove, which now stands at £226,436 – a 0.4% fall on May’s figure, down just 5.5% year on year, and far higher than either Halifax’s or Nationwide’s selling prices.

RICS chief economist Simon Rubinsohn said of the latest Halifax figures: “It is far from clear that prices have bottomed.â€

Propertyfinder director Nicholas Leeming said: “The short-sighted mortgage rate hikes by lenders in June dented public confidence and set back house prices, a blot on the housing market landscape after the positive indications of recent weeks.

“This doesn’t mean the housing market revival has ground to a halt at the first sign of trouble, but it serves as a reminder that the property market is still in intensive care.â€

So OK the "disparity" is caused through mean and median averaging, but with Halifax showing 21% from peak and RM showing just over 6% its little wonder sellers are putting prices up rather than down is it? But who benefits in the long run from EA's keeping asking prices artificially high when RM's director, Miles Shipside was saying in March 2009 :

"Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak. We are seeing a big jump in enquires, looking for those best buys. However, it is disappointingly predictable that the banking sector is still in the early stages of coming clean about its levels of toxic debt, limiting funding for one of the few bright spots of consumer demand in the economy.

"Until banks get their own houses in order, the active minority of sellers and agents who have drastically adjusted pricing will remain frustrated by the limited functioning of the financial services sector."

So, after its initial optimism the Rightmove index enforces the realisation that the UK property market recovery hinges on two things: vendor realism and mortgage availability. The latter more than likely hinged on a recovery to the wider UK economy, which in my opinion is also necessary to increase buyer numbers sufficiently to bring vendor realism.

Bloo Loo posted yesterday to say he has just heard on "Working Lunch" :

Henry Prior, a "housing expert" say that an NAEA member reports that they have 47 sales backed up waiting for mortgage approvals.

There have been a few reports about chains breaking due to realistic valuations:

Surveyors Realistic Valuations Breaking Chains

And yesterday in Reuters:

"But mortgage availability remains a headache for the sector. The most significant concern to the industry remains the chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders" .

Miles Shipside said in April 2009:

The report admits that agent's are being forced to up initial advertising prices to win new instructions, amid the fierce competition for the few quality properties that are currently being put onto the market.

That makes the asking price rise, for me, more like bad news than good news. I understand that agent's are trying to survive in a difficult market, but we need to firm out the price drops that we have had, before we can ascertain if they are enough to bring the market to bottom, and accelerate any further drop that may be necessary

In short, by humouring unrealistic vendors over asking prices, agents may be doing nothing more than prolonging their own misery.

Even with the huge difference between RM's average asking and the average selling Nationwide and Halifax indexes are based on pre-valuation approvals.

A lot of property I have been watching has recently gone Under Offer and STC after months and months of nothing happening at all so it will be interesting to see how many sell, given the lack of mortgages available and given that the NAEA said in their June report :

the the vast majority of buyers also had a property to sell, which they had not yet put on the market, and in time, this would help to reduce the shortfall.

Gary Smith, president of the NAEA, said: "NAEA members are showing that there are buyers a-plenty out there. More often than not these are also potential sellers who are at the beginning of the process - so there is bound to be a lag which creates a shortage of properties in the short term."

Yet Natiowide / Rics etc have all said that an increase in supply will see prices fall further and I read this last week in relation to the negative equity threat :

As the FT points out this morning, all these people stuck in their homes are creating a ‘glut of hidden property’, which in turn is likely to depress house prices further. Even a short term rise in prices, Fitch argues, is likely to make things worse in the longer term, by encouraging trapped sellers to put their homes in the market, which in turn will push prices down again. It sounds like a vicious circle with no way out, for the immediate future at least.

Recently the Times MPC warned of false hope over economy saying that :

...the Bank must also be alert to dangers that an emerging recovery could quickly founder, or even prove illusory.

Amid burgeoning market hopes of economic resurgence in Britain and across the developed world, the starkest warning from The Times MPC over the threat of “false dawns†came from Professor Charles Goodhart, a founding member of the Bank’s own MPC.

“We are currently in a Potemkin recovery — more appearance than reality,†he said, in a reference to fake “Potemkin villages†constructed in eighteenth century Russia to deceive the country’s then ruler, Empress Catherine II. “.....

I know there is the opinion that it benefits the banks / lenders that the falls occur slowly over time but currently we have an impossible market surely with the vast majority of buyers wanting at least 30% from peak given that there is still the potential for further 20% falls, and most sellers want peak + whilst lenders are more in favour of 30% from peak reflected in their LTV's and survey valuations.

How much longer is it going to be , especially if they do not extend QE, for people to realise that there is not going to be a return to 2007 lending levels for a long long time to come and that the market now has to adjust to this reality ?

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... found a new floor at around 25 - 30% off peak. ( Which I assume is why lenders are only happy to give 75% or lower LTV they don't mind the buyer shouldering the much needed future HP falls).

Just a small point;

"... found a new floor at around 25 - 30% off peak." - relates to the past.

"... is why lenders are only happy to give 75% or lower LTV... " - relates to assumptions of future performance.

There is no direct link between these two figures.

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The answer to this is in the land reg results.. not their won methodology which uses samples... but the FT version which uses the whole data set..... using every recorded price in the land reg..average prices have fallen 14%..... the reason being these figures do not include repos and auction results not included in land reg.

This happened last time around as well... the total fall reported was around 25% but land reg figures in their totality only showed under 17%.....

This is what I suspect is happening again... the figures people are basing their views on are firstly not reliable becasue of the low sample size and secondly they are expecting the total figures (which include all sales for repos and auctions) to be reflected in normal market agent sales.... this hasn't happened and perhaps like last time won't happen.

The reason RCIS report a larger figure then the totality of the land reg data is that they see the full mix of sales.

Whilst I have no real confidence in any of the figures being truly reflective of the market the difference between the FT data and the way its worked out does indicate a two seed market , and it is quite likely that thise two speeds will remain and so that the headline falls will never work their fully into the main market.

Its interessting to note that the FT data is the only major set of data which is not produced by a body with a vested interest in housing.

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The most startling omission from the RM report and commentary is the lack of explanation for the disparity between the average asking price of £226K and the recorded average selling price of circa £160K. This suggests, with some certainty, that delusional vendors are still asking for prices 40% above the true market valuation.

Perhaps this disparity is explained by RM's flawed methodology. :rolleyes:

How much longer is it going to be , especially if they do not extend QE, for people to realise that there is not going to be a return to 2007 lending levels for a long long time to come and that the market now has to adjust to this reality ?

The problem is the vast majority of vendors do not need to sell. They are not forced sellers. You rent out the house and take a hit on any shotrfall between the rent and mortgage. Instead of 3 foreign trips this year you stay in the UK. Provided there's no divorce, death or unemployment not achieving 2007 peak prices is not a problem-you wait and wait and wait for the next boom. I get the impression most vendors will not be moved on price and they will sit it out for the long term.

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Just a small point;

"... found a new floor at around 25 - 30% off peak." - relates to the past.

"... is why lenders are only happy to give 75% or lower LTV... " - relates to assumptions of future performance.

There is no direct link between these two figures.

I know many of this website but be so frustrated by my lack of logical thinking however, I am the bear of little brain, and it is helpful when people help me put these things in perspective and I can see your point.

The problem is establishing if the 25 - 30% does relate to the past is it not because we are not seeing 25 % from peak let alone 30% reflected in the indices despite RICS saying in March that they thought property had already fallen 30% and they suspected Nationwide and Halifax were underestimating scale of peak -to -trough falls. And despite RM saying this was the new floor from the start of the year it certainly is not reflected in RM's HPI.

So what is being said, that either the lender is willing to lend at peak values if the buyer puts down a 25- 30% deposit to take into account falls, or the lender is only

prepared to lend no matter what 25 - 30% off peak because of what is likely to happen in the future?

I am wondering if their is a link therefore in what I am saying in as much as :

Marjan Riggi of Moody’s said: “What’s different is the loss expectation is higher than it was three or four months ago looking at the economic forecasts on housing.

“Last year we were looking at mortgage lenders and stress-testing a 25 per cent fall in house prices. In the past three or four months that assumption has changed to a 40 per cent fall, which is a considerable difference.â€

On Wednesday Adrian Coles, director-general of the Building Societies Association, said Moody’s had included an extreme stress test of a 60 per cent fall in house prices

Are the lenders valuing 25 - 30% off peak even with a big deposit because the "loss expectation is higher"?

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You raise a good question, why are asking prices going up while selling prices are coming down? Incidentally, you can see this being played out area by area on this excellent web site,

http://www.home.co.uk/guides/house_prices_by_town.htm

Which shows for example that over the last year selling prices for the detached house I'm searching for in Lymington have fallen by 33% while asking prices have risen by 4%.

I've got two possible explanations.

1. The simple explanation is that so few properties are coming onto the market that estate agents are effectively "bidding" to sell them, they're talking up selling prices to prospective vendors. Being only human the vendors find it easy to believe the EA's optimistic patter rather than the hard evidence of economic disaster they see each day in the news. When I'm out viewing properties the EA's (especially when they find I'm a cash buyer and therefore my purchase might actually go through and deliver them some commission) invariably take me to one side and conspiritorially whisper that the vendor might well be open to an offer. I take this as evidence that the EA's game plan is to talk up the price to the vendor to secure a sole listing, and then furiously try and talk the price back down after the event.

2. The more complicated explanation has to do with the "quality" of different properties. I saw this first hand during the 1989-95 crash and now I'm seeing it again. Similar properties on the same road will normally sell for about the same price, but there can be significant differences between those properties. The most obvious example is half will have a south facing garden, but the other half will have a much less desirable north facing garden. During a boom they all sell and sell quickly for similar prices. During a bust buyers become extremely picky and will only consider the south facing gardens. So half the property in Britain becomes effectively blighted. EA's still price according to the old model, a simple matrix of post code and number of bedrooms, but the blighted properties (north or east facing gardens, badly built extensions, galley kitchen, attic bedroom conversions that swelter in the summer and freeze in the winter, etc) are getting hammered on price, therefore driving a disparity between asking prices and selling prices.

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Perhaps this disparity is explained by RM's flawed methodology. :rolleyes:

The problem is the vast majority of vendors do not need to sell. They are not forced sellers. You rent out the house and take a hit on any shotrfall between the rent and mortgage. Instead of 3 foreign trips this year you stay in the UK. Provided there's no divorce, death or unemployment not achieving 2007 peak prices is not a problem-you wait and wait and wait for the next boom. I get the impression most vendors will not be moved on price and they will sit it out for the long term.

So are you saying that many sellers rent the house and go and buy another? How possible is that in todays market?

I get very confused by stats but there must be a LOT of vendors who bought pre-peak and have enough equity to move is there not?

If the market fell 30% now plenty could afford to move if they were buying 30% below could they not?

Indeed house prices falls make it cheaper for those who want to trade up don't they?

2007 want to trade up from £250000 to £300000 property it would cost £50000.

2009 want to trade up from £175000 property (30% off peak ) to £210000 property (30% off peak) cost £35000.

Really it is only a % of those who bought between 2003 (?) - 2007 that will have problems moving, for the others surely it really doesn't matter does it, they might have lost out on not selling at peak and STR but they can buy and equal property or trade up can't they?

I have no idea what % of the total mortgage market we are talking about who bought between 2003 - 2007 but it can't be that large can it that the rest are not going to sell because they can't make 147% profit ?

Surely what IS putting the vast majority of people off selling now is the uncertainty and trying to find a property that is equal in value to the one you can afford to drop 30% if everyone else is playing the same game and in the same market.

I assume this is why Miles Shipside and others have said that we need to ascertain if 30% is the floor and "accelerate further falls" so that the market can start moving and people know where they are , instead of foolishly believing that 2010 will see a return to 2007 values.

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The answer to this is in the land reg results.. not their won methodology which uses samples... but the FT version which uses the whole data set..... using every recorded price in the land reg..average prices have fallen 14%..... the reason being these figures do not include repos and auction results not included in land reg.

This happened last time around as well... the total fall reported was around 25% but land reg figures in their totality only showed under 17%.....

I think you have to allow for the condition of Repo and auction properties. They generally aren't anything like the standard of those in the EA's window.

Even if they were included in any indices, it would only affect the percentage MoM for the first month they were included. After that you'd simply be comparing repos from one month to the next and the percentage falls shouldn't diverge from those of normal transactions to any perceptible degree.

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Posted quite a few times on this subject but it still seems to be cropping up time and time and time again.

RM - Savills - and others have been indicating since the start of the year that property has found a new floor at around 25 - 30% off peak. ( Which I assume is why lenders are only happy to give 75% or lower LTV they don't mind the buyer shouldering the much needed future HP falls).

Much quoted I know but Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors said in March 2009:

In relation to the June 2009 HPI from RM many papers ran with:

Rinoa kindly explained that the reason for the "disparity" :

" Sybil, The reason for the disparity is that Rightmove use mean averaging and Halifax/Nationwide use median.

Mean averaging is simply all the prices added up and an average price calculated. Median is the middle price in a list of prices. It is where half the prices are above this figure and half below.

Either works OK on its own to show rises and falls, but it looks odd when compared with other indices using another type of calculation.

Forget about the huge disparity, it's only a mathmatical oddity, not house prices selling at 40% off asking prices "

This morning on Estate Agent Today website :

Up and down …quot; asking prices soar ahead of reality

Friday 10th July 2009

So OK the "disparity" is caused through mean and median averaging, but with Halifax showing 21% from peak and RM showing just over 6% its little wonder sellers are putting prices up rather than down is it? But who benefits in the long run from EA's keeping asking prices artificially high when RM's director, Miles Shipside was saying in March 2009 :

"Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak. We are seeing a big jump in enquires, looking for those best buys. However, it is disappointingly predictable that the banking sector is still in the early stages of coming clean about its levels of toxic debt, limiting funding for one of the few bright spots of consumer demand in the economy.

"Until banks get their own houses in order, the active minority of sellers and agents who have drastically adjusted pricing will remain frustrated by the limited functioning of the financial services sector."

So, after its initial optimism the Rightmove index enforces the realisation that the UK property market recovery hinges on two things: vendor realism and mortgage availability. The latter more than likely hinged on a recovery to the wider UK economy, which in my opinion is also necessary to increase buyer numbers sufficiently to bring vendor realism.

Bloo Loo posted yesterday to say he has just heard on "Working Lunch" :

Henry Prior, a "housing expert" say that an NAEA member reports that they have 47 sales backed up waiting for mortgage approvals.

There have been a few reports about chains breaking due to realistic valuations:

Surveyors Realistic Valuations Breaking Chains

And yesterday in Reuters:

Miles Shipside said in April 2009:

Even with the huge difference between RM's average asking and the average selling Nationwide and Halifax indexes are based on pre-valuation approvals.

A lot of property I have been watching has recently gone Under Offer and STC after months and months of nothing happening at all so it will be interesting to see how many sell, given the lack of mortgages available and given that the NAEA said in their June report :

Yet Natiowide / Rics etc have all said that an increase in supply will see prices fall further and I read this last week in relation to the negative equity threat :

Recently the Times MPC warned of false hope over economy saying that :

I know there is the opinion that it benefits the banks / lenders that the falls occur slowly over time but currently we have an impossible market surely with the vast majority of buyers wanting at least 30% from peak given that there is still the potential for further 20% falls, and most sellers want peak + whilst lenders are more in favour of 30% from peak reflected in their LTV's and survey valuations.

How much longer is it going to be , especially if they do not extend QE, for people to realise that there is not going to be a return to 2007 lending levels for a long long time to come and that the market now has to adjust to this reality ?

Why do you want to know?

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I think you have to allow for the condition of Repo and auction properties. They generally aren't anything like the standard of those in the EA's window.

You clearly haven't viewed enough properties!

Edited by SarahBell

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The problem is the vast majority of vendors do not need to sell. They are not forced sellers. You rent out the house and take a hit on any shotrfall between the rent and mortgage. Instead of 3 foreign trips this year you stay in the UK. Provided there's no divorce, death or unemployment not achieving 2007 peak prices is not a problem-you wait and wait and wait for the next boom. I get the impression most vendors will not be moved on price and they will sit it out for the long term.

Unfortunately I'm seeing plenty of this. A process of attrition that could take years to resolve.

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In answer to your question in the OP, I think the factor is time.

we have recently had a nice spring bounce, a peak time for sales, the weather was nice, the banking crisis was quite mature and boring, so to cheer themselves up, people with cash went a house hunting.

time will sort it all out again.

as Dr Bubb says, a bubble always provides a further opportunity for people to lose money. This is that opportunity IMHO.

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The answer to this is in the land reg results.. not their won methodology which uses samples... but the FT version which uses the whole data set..... using every recorded price in the land reg..average prices have fallen 14%..... the reason being these figures do not include repos and auction results not included in land reg.

Its interessting to note that the FT data is the only major set of data which is not produced by a body with a vested interest in housing.

So if average prices have fallen 14% why would RM / Savills / Rics etc say such things as this quote from February 2009 :

Miles Shipside, commercial director of Rightmove, said: "While sellers have been more conservative in their New Year bullishness than last year, they may regret not pricing more aggressively to capitalise on the spring surge in buyer interest.

"Sales are being achieved at around 25% below peak prices, yet new sellers coming to the market are starting out asking an average of only 10% less He added that the group expected to report further falls in asking prices in the coming months, and is forecasting a 10% drop during the whole of 2009

Or this one recently on the Hometrack website :

The difficulty with the Halifax and Nationwide indices is that they are averages and cover the whole country,’ says Dominic Agace of estate agent, Winkworth. ‘But having said that if you talk to any of our offices they would tell you that prices are off anything up to 25% to 30% compared with the peak.

Why would EA's / RICS etc who spend their whole lives talking UP the market talk it down if property wasn't actually mostly being sold at 25 - 30% off peak ?

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The problem is establishing if the 25 - 30% does relate to the past is it not because we are not seeing 25 % from peak let alone 30% reflected in the indices despite RICS saying in March that they thought property had already fallen 30% and they suspected Nationwide and Halifax were underestimating scale of peak -to -trough falls. And despite RM saying this was the new floor from the start of the year it certainly is not reflected in RM's HPI.

So what is being said, that either the lender is willing to lend at peak values if the buyer puts down a 25- 30% deposit to take into account falls, or the lender is only

prepared to lend no matter what 25 - 30% off peak because of what is likely to happen in the future?

If someone would be kind enough to translate this into English for me, then there might be something to which to respond.

(Anyone remember Stanley Unwin? I don't, obviously! I'm much too young.)

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If someone would be kind enough to translate this into English for me, then there might be something to which to respond.

(Anyone remember Stanley Unwin? I don't, obviously! I'm much too young.)

OK sorry . The difference between us is that your user name is logical a+b+c+d.

Mine is "intuitive" not always easy to put things into words.

Can see the likeness to Stanley Unwin, and have to say that I was amused when someone recently said, "that the difference between Sibley and Sybil13 was a pair of horns and 10,000 words" or something like that! So you ask what this means?

The problem is establishing if the 25 - 30% does relate to the past is it not because we are not seeing 25 % from peak let alone 30% reflected in the indices despite RICS saying in March that they thought property had already fallen 30% and they suspected Nationwide and Halifax were underestimating scale of peak -to -trough falls. And despite RM saying this was the new floor from the start of the year it certainly is not reflected in RM's HPI.

So what is being said, that either the lender is willing to lend at peak values if the buyer puts down a 25- 30% deposit to take into account falls, or the lender is only

prepared to lend no matter what 25 - 30% off peak because of what is likely to happen in the future?

I am typing between tiny baby screaming constantly 24- 7 and young toddler saying "get up on your lap, give me juice, I want I want.....can't do it ......potty .....".

You said:

Just a small point;

"... found a new floor at around 25 - 30% off peak." - relates to the past.

"... is why lenders are only happy to give 75% or lower LTV... " - relates to assumptions of future performance.

There is no direct link between these two figures.

You said one set of figures relate to the past and one to the future. I know I frustrate people with my scattered thinking and confuse people because I am not stating BELIEFS just gathering threads and attempting to tie them together. So if I am Q'd I am not trying to defend a stance simply gain greater clarity.

I said:

The problem is establishing if the 25 - 30% does relate to the past is it not because we are not seeing 25 % from peak let alone 30% reflected in the indices despite RICS saying in March that they thought property had already fallen 30% and they suspected Nationwide and Halifax were underestimating scale of peak -to -trough falls. And despite RM saying this was the new floor from the start of the year it certainly is not reflected in RM's HPI.

I was simply questioning if the figure does relate to the past.

Certain sources seem to imply that property is being sold at 30% from peak, the Q as to why this is not reflected in the indices was the point of the OP.

Obviously you were correct to say that either lenders were lending 75% LTV on properties still valued at peak and allowing the buyer to take on a future loss (implying that property is not yet down 30%), or they were valuing 25% - 30% below peak in order not to have to accept the loss.

However, whilst being Q'd on past and future falls I simply asked is it possible that lenders were valuing 25% below peak AND reluctant to lend more than 75% because as Moodys said "the assumption now is 40% falls".

I am not sure that is any clearer, I try very hard to think these things through but am not educated like the rest of you and currently am existing on about 4 hours of disturbed sleep.

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snip

I am typing between tiny baby screaming constantly 24- 7 and young toddler saying "get up on your lap, give me juice, I want I want.....can't do it ......potty .....".

snip

do you live with Sibley?

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OK sorry . The difference between us is that your user name is logical a+b+c+d.

Mine is "intuitive" not always easy to put things into words.

Can see the likeness to Stanley Unwin, and have to say that I was amused when someone recently said, "that the difference between Sibley and Sybil13 was a pair of horns and 10,000 words" or something like that! So you ask what this means?

I am typing between tiny baby screaming constantly 24- 7 and young toddler saying "get up on your lap, give me juice, I want I want.....can't do it ......potty .....".

You said:

You said one set of figures relate to the past and one to the future. I know I frustrate people with my scattered thinking and confuse people because I am not stating BELIEFS just gathering threads and attempting to tie them together. So if I am Q'd I am not trying to defend a stance simply gain greater clarity.

I said:

I was simply questioning if the figure does relate to the past.

Certain sources seem to imply that property is being sold at 30% from peak, the Q as to why this is not reflected in the indices was the point of the OP.

Obviously you were correct to say that either lenders were lending 75% LTV on properties still valued at peak and allowing the buyer to take on a future loss (implying that property is not yet down 30%), or they were valuing 25% - 30% below peak in order not to have to accept the loss.

However, whilst being Q'd on past and future falls I simply asked is it possible that lenders were valuing 25% below peak AND reluctant to lend more than 75% because as Moodys said "the assumption now is 40% falls".

I am not sure that is any clearer, I try very hard to think these things through but am not educated like the rest of you and currently am existing on about 4 hours of disturbed sleep.

You're telling me you construct these rambles with 2 kids in the house?

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So if average prices have fallen 14% why would RM / Savills / Rics etc say such things as this quote from February 2009 :

Or this one recently on the Hometrack website :

Why would EA's / RICS etc who spend their whole lives talking UP the market talk it down if property wasn't actually mostly being sold at 25 - 30% off peak ?

You didn't pick up the reason from my post.... if you read the academetrics stuff what they say is something along the lines of their data taking into account ALL the land reg data ( land reg themselves don't do this) ... what it shows is that last time around the total fall peak to trough was 17 % and this tome so far its just under 14%.

The reason RCIS etc report a higher figure is that they are exposed to a wider marekt including repos and repossessions etc some of which are not included in the land reg data.

The result is that while this shouldn't be news to anyone the larger drop figures are total market whereas if you are the sort to find your next property through an agent its likely that the relevant figures will be the lower ones.

Remember auction figures in good times and bad normally run at a significant discount to the market. Another factor in terms of agents is that sometimes they are unclear in terms of whether they are talking discount from asking or discount from previous peak achievement. Normally they talk discount from asking, otherwise whats the point of them "setting " a price in the first place. In any event the agent figures are all over the place anyway.

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Rinoa kindly explained that the reason for the "disparity" :

" Sybil, The reason for the disparity is that Rightmove use mean averaging and Halifax/Nationwide use median.

Mean averaging is simply all the prices added up and an average price calculated. Median is the middle price in a list of prices. It is where half the prices are above this figure and half below.

Either works OK on its own to show rises and falls, but it looks odd when compared with other indices using another type of calculation.

Forget about the huge disparity, it's only a mathmatical oddity, not house prices selling at 40% off asking prices "

I've been wondering about this disparity too.

Rinoa's explanation doesn't work. HF and NW may use median averaging, but LR uses mean averaging and gives a figure much closer to HF and NW's than to RM's. So how is the disparity between the RM and LR figures to be explained?

I think one factor is that RM includes house that are priced too high to sell and are eventually withdrawn from the market, whereas LR includes only houses that sell.

Another factor is the one that Rinoa wanted to play down: RM measures initial asking prices whereas LR measures completed sales prices, and houses are typically selling for less than their initial asking prices. However, looking at the historical data, even when houses were going to sealed bids the RM figure was much higher than the LR figure.

Something else that might be relevant is that Rightmove is to some extent a premium service, capturing the top of the market, so may yield a data set skewed towards more expensive properties.

Or perhaps they mix adjust in different ways; I'm not sure how much is known about the different mix adjustment methodologies.

Any other ideas? Why is the RM index so much higher than the others?

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I've been wondering about this disparity too.

Rinoa's explanation doesn't work. HF and NW may use median averaging, but LR uses mean averaging and gives a figure much closer to HF and NW's than to RM's. So how is the disparity between the RM and LR figures to be explained?

I think one factor is that RM includes house that are priced too high to sell and are eventually withdrawn from the market, whereas LR includes only houses that sell.

Another factor is the one that Rinoa wanted to play down: RM measures initial asking prices whereas LR measures completed sales prices, and houses are typically selling for less than their initial asking prices. However, looking at the historical data, even when houses were going to sealed bids the RM figure was much higher than the LR figure.

Something else that might be relevant is that Rightmove is to some extent a premium service, capturing the top of the market, so may yield a data set skewed towards more expensive properties.

Or perhaps they mix adjust in different ways; I'm not sure how much is known about the different mix adjustment methodologies.

Any other ideas? Why is the RM index so much higher than the others?

Thanks for your reply, I asked in several threads if Rinoa was correct and ALSO if LR was median or mean averaging , interesting to see it is mean the same as RM.

So can anyone else add any further ideas about why "RM index is so much higher than the others"?

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I think you have to allow for the condition of Repo and auction properties. They generally aren't anything like the standard of those in the EA's window.

Even if they were included in any indices, it would only affect the percentage MoM for the first month they were included. After that you'd simply be comparing repos from one month to the next and the percentage falls shouldn't diverge from those of normal transactions to any perceptible degree.

Funny, a chap called HAMISH MCTAVISH (capital letters intentional) was making a similar point over on MSE, and I do believe he was trolled on the same date you joined. Hmmmmmm.

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