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House Price Uncertainty Not Over Yet

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http://www.independent.co.uk/news/business...et-1764655.html

Outlook First the stock market and now property is going on a bit of a run too. It's difficult to remember when we had two such bullish reports on housing – yesterday's mortgage approval figures and Tuesday's house price rises from the Land Registry – in the space of just two days.

Crisis over then? Well, yes, if you mean we can finally say with some certainty that the month-by-month collapse in house prices we have seen over the past 18 months is now levelling out. But don't make the mistake of thinking that anything like normal service is resuming or that the house price falls we have seen – about 14 per cent on average according to the Land Registry – will be recouped in the near future.

Just look at those mortgage approval figures, optimistically seized on for the fact that lenders agreed more home loans in June than in any month since April 2008. True enough, but the total number of approvals last month, at 47,500 or so, was still only half the average monthly figure seen since 1993. And most housing analysts believe a figure of 70,000 is necessary for house prices to start rising.

All the evidence is that demand remains muted, partly as potential buyers are not yet convinced that bottom of the market has been reached, but also because unemployment – the reality or the fear of it – is making people more cautious.

Moreover, buyers who do want to make a purchase can't necessarily get the credit they need to do so. The increase in approvals partly reflects the huge pressure mortgage providers have come under to lend more, but the Royal Institute of Chartered Surveyors warns that even once sales have been agreed, 10 per cent are falling through because the buyer can't get a home loan.

For those who do get the go-ahead, meanwhile, mortgage costs are now beginning to rise. The price of fixed-rate deals, in particular, has spiked upwards over the past month, with the wholesale money markets now pricing in expectations of higher interest rates in the future. Variable rates are cheaper, but not so many borrowers want this type of mortgage these uncertain times.

Mortgage affordability, in other words, is set to rise from its current low level, which is unfortunate given that wage inflation is now so low for so many. And remember that mortgage affordability is not the same thing as housing affordability – we may have seen a dip in prices, but the bull market lasted so long that property is still valued at many times most people's salaries.

To put all this another way, a V-shaped recovery for housing is even less likely than for the economy as a whole. The plunge may be over – and that is definitely good news for consumer confidence and the economic outlook – but there will be more rises and falls in house prices to come.

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I think the Indy article sums the situation up nicely shame it's not

in the Mail or Express but it's not what the sheeple want to hear

Interesting how the mainstream media are reporting these new figures

the beeb business website is leading with the headline

House prices to could rise by end of 2009

http://news.bbc.co.uk/1/hi/business/8175479.stm

which is total bolloc ks in any recession in the last 100 years

prices have always had little rises on the way down why should this

one be any different?

The BBC is the mouthpiece of NuLabour , the sooner we get this shower of sh1t

of office the better.

THIS BUBBLE CANNOT BE RE-INFLATED ,DON'T BELIEVE THE HYPE!

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The BBC is the mouthpiece of NuLabour , the sooner we get this shower of sh1t

of office the better.

THIS BUBBLE CANNOT BE RE-INFLATED ,DON'T BELIEVE THE HYPE!

Agree 100%.

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http://www.independent.co.uk/news/business...et-1764655.html

Outlook First the stock market and now property is going on a bit of a run too. It's difficult to remember when we had two such bullish reports on housing – yesterday's mortgage approval figures and Tuesday's house price rises from the Land Registry – in the space of just two days.

Crisis over then? Well, yes, if you mean we can finally say with some certainty that the month-by-month collapse in house prices we have seen over the past 18 months is now levelling out. But don't make the mistake of thinking that anything like normal service is resuming or that the house price falls we have seen – about 14 per cent on average according to the Land Registry – will be recouped in the near future.

Just look at those mortgage approval figures, optimistically seized on for the fact that lenders agreed more home loans in June than in any month since April 2008. True enough, but the total number of approvals last month, at 47,500 or so, was still only half the average monthly figure seen since 1993. And most housing analysts believe a figure of 70,000 is necessary for house prices to start rising.

All the evidence is that demand remains muted, partly as potential buyers are not yet convinced that bottom of the market has been reached, but also because unemployment – the reality or the fear of it – is making people more cautious.

Moreover, buyers who do want to make a purchase can't necessarily get the credit they need to do so. The increase in approvals partly reflects the huge pressure mortgage providers have come under to lend more, but the Royal Institute of Chartered Surveyors warns that even once sales have been agreed, 10 per cent are falling through because the buyer can't get a home loan.

For those who do get the go-ahead, meanwhile, mortgage costs are now beginning to rise. The price of fixed-rate deals, in particular, has spiked upwards over the past month, with the wholesale money markets now pricing in expectations of higher interest rates in the future. Variable rates are cheaper, but not so many borrowers want this type of mortgage these uncertain times.

Mortgage affordability, in other words, is set to rise from its current low level, which is unfortunate given that wage inflation is now so low for so many. And remember that mortgage affordability is not the same thing as housing affordability – we may have seen a dip in prices, but the bull market lasted so long that property is still valued at many times most people's salaries.

To put all this another way, a V-shaped recovery for housing is even less likely than for the economy as a whole. The plunge may be over – and that is definitely good news for consumer confidence and the economic outlook – but there will be more rises and falls in house prices to come.

I agree with parts of the Indy atricle... eg further falls to come... I think something perhaps a little larger than the same again eg another 14%..... or so....... the reason of course that we won't have a V shaped recovery is that despite how overvalued the market was it looks like we haven't had the rapid collapse many were expecting.... a lot of pundits were forecasting huge steep falls and a truly massive overcorrection some were even going for crazy numbers like 50% or more.... its pretty clear it won't go that far now, and it won't be as steep as some waiting on the sidelines for the bottom would have wanted... in my view we may not actually see the bottom for perhaps two years during which times we'll see an overall fall interersperced with a few rises as we have seen recently.

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http://www.independent.co.uk/news/business...et-1764655.html

Outlook First the stock market and now property is going on a bit of a run too. It's difficult to remember when we had two such bullish reports on housing – yesterday's mortgage approval figures and Tuesday's house price rises from the Land Registry – in the space of just two days.

Crisis over then? Well, yes, if you mean we can finally say with some certainty that the month-by-month collapse in house prices we have seen over the past 18 months is now levelling out. But don't make the mistake of thinking that anything like normal service is resuming or that the house price falls we have seen – about 14 per cent on average according to the Land Registry – will be recouped in the near future.

Just look at those mortgage approval figures, optimistically seized on for the fact that lenders agreed more home loans in June than in any month since April 2008. True enough, but the total number of approvals last month, at 47,500 or so, was still only half the average monthly figure seen since 1993. And most housing analysts believe a figure of 70,000 is necessary for house prices to start rising.

All the evidence is that demand remains muted, partly as potential buyers are not yet convinced that bottom of the market has been reached, but also because unemployment – the reality or the fear of it – is making people more cautious.

Moreover, buyers who do want to make a purchase can't necessarily get the credit they need to do so. The increase in approvals partly reflects the huge pressure mortgage providers have come under to lend more, but the Royal Institute of Chartered Surveyors warns that even once sales have been agreed, 10 per cent are falling through because the buyer can't get a home loan.

For those who do get the go-ahead, meanwhile, mortgage costs are now beginning to rise. The price of fixed-rate deals, in particular, has spiked upwards over the past month, with the wholesale money markets now pricing in expectations of higher interest rates in the future. Variable rates are cheaper, but not so many borrowers want this type of mortgage these uncertain times.

Mortgage affordability, in other words, is set to rise from its current low level, which is unfortunate given that wage inflation is now so low for so many. And remember that mortgage affordability is not the same thing as housing affordability – we may have seen a dip in prices, but the bull market lasted so long that property is still valued at many times most people's salaries.

To put all this another way, a V-shaped recovery for housing is even less likely than for the economy as a whole. The plunge may be over – and that is definitely good news for consumer confidence and the economic outlook – but there will be more rises and falls in house prices to come.

I agree. The uncertainty is not over.

Nationwide reckon House Prices could end up higher at the end of 2009 than they were at the beginning.

Now that's uncertainty.

Funny too.

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I agree with parts of the Indy atricle... eg further falls to come... I think something perhaps a little larger than the same again eg another 14%..... or so....... the reason of course that we won't have a V shaped recovery is that despite how overvalued the market was it looks like we haven't had the rapid collapse many were expecting.... a lot of pundits were forecasting huge steep falls and a truly massive overcorrection some were even going for crazy numbers like 50% or more.... its pretty clear it won't go that far now, and it won't be as steep as some waiting on the sidelines for the bottom would have wanted... in my view we may not actually see the bottom for perhaps two years during which times we'll see an overall fall interersperced with a few rises as we have seen recently.

Taking it from someone actually in the know I'd say we saw a very rapid collapse that nobody was expecting. This comment from Stuart Law of Assetz, well known for his property ramping, taken from Moneyweek property roundtable;

Ed: But at what percentage off the price that they would have sold at two years ago?

Stuart: 50% off. Silly prices.

James Ferguson: So when you told us at the 2007 property roundtable that house prices weren't going to fall, what you meant was they were going to halve.

Stuart: We have to be very clear here. You've got the retail house-price indices, which are down about 17% on average. Then you've got distressed prices, which are down far more. In December it was 40% off at auction. We were able to buy at about 50% off peak pricing. But that's not the normal housebuyers' market. And on retail prices, Nationwide's data, for example, are bouncing strongly. The whole last quarter is up 4.6%.

Buying at 50% off peak prices in under 18 months of property price falls and you say we didn't have a rapid collapse!

It's only the muppets with cash and low interest rates that has kept the 'retail' side of prices up. These muppets will be flushed out soon enough and then 50% won't look so crazy - we already got there in the 'trade' side of the property market in just 18 months.

Edited by munimula

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And from the same roundtable, this comment from Ed Mead, Director, Douglas & Gordon Estate Agents;

Ed: At D&G we've had five months of solid growth. There are twice as many buyers and half as many properties. But they are all the same type – if they're not foreigners, they're people with good jobs and 40% deposits. Everybody else is out of the game. So that has to run out of steam – I think in September/October.

Many people are now reading in the press that it's a good time to sell. Combine that with people now losing their jobs and there's going to be a lot more people selling. So I think prices are going to fall from this little blip. I think we're in a 1989-94 period – a very long period of not really doing anything much. How long that will last, I don't know.

Seems to confirm the beliefs of many on this site, myself included. Muppets with cash proping house prices up on very small sales volumes....for a limited time only!

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