Nationwide +1.6% August

[bateman]

On a monthly rolling contract I can.

WHy would a happy-as-larry homeowner frequent a site about a Hose Price Crash?

Ah, well that is the landlords fault - he should enforce his control over your life and demand that you sign a 6 by 8 AST.

This is an interesting site for financial news and it is always good to get a contrary view and perspective - the key is not to let yourself get too bearish or you will end up like many - too scared to take any risks and miss the potential rewards as a result.

I personally like being a home owner - get to decorate etc to your own tastes.

If you worked a bit harder maybe you could afford one? Nice studio or something?

[Guest pioneer31]

An AST most definately does not give you the freedom to move at the drop of a hat.

Why would NE give anyone sleepless nights unless they were about to be repossessed?

dunno, perhaps you are a city worker with a 500k mortgage, who bought in 2006??

The biggest drops are on the big properties

Sleep tight.

[Flat Bear]

I posted yesterday in the prediction thread that prices would smash through 160K

I have updated my signature (which i started in May) with August figures.

We set a floor in Feb 09, I dont think we are going back below 148K.

Nationwide average monthly house prices:

Feb-09 £147,746 <- Low in Feb-09 will mark the bottom in house prices for this cycle

Mar-09 £150,946

Apr-09 £151,861

May-09 £154,016

Jun-09 £156,442

Jul-09 £158,871

Aug-09 £160,224

You have been quite accurate with your predictions and your maths and logic stand up well although I have noted a tendancy for you to always lean towards a bullish outlook where I would suggest you want the direction to be, and neglect many bearish factors

I am trying to work out which direction prices will go although I admit to wanting prices to drop.

CURRENT FACTORS uk house prices

Upward pressure

#Current upward momentum

#Current historical low interest rates

#Governmental money supporting bank lending/mortgage availability QE

#Record rises in population

#Poor (non existant) safe options for wealth storage

#Pent up demand from the growing population of renters

#Governmental support for mortgagees

#Governmental support for housing benifits

#Lack of new supply coming to market

#Unsatisfactory rental terms and conditions (AST agreements)

Downward pressure

#Increasing unemployment

#Relative difficulty in getting mortgage

#Relatively low LTV

OK that is the relatively simple bit and it could be said that the increase in population and house/population ratio would mean the average salary going to higher and higher ratios so from a x3.5 average to x7 without affecting affordability at same interest rate and at low rates house prices will rise even faster. But what about future dynamics?

How sure are you that we will see longer term low interest rates?

How sure are you that unemployment doesnt go to levels that will affect prices? Is 6million possible?

How sure are you that current governmental levels of support for banks is sustainable?

How sure are you of continued population growth? could there be a backlash?

How sure are you that the banks are safe? Will they survive?

How sure are you that prices are not being overly affected by unsustainable levels of cash deposits entering the market place?

How sure of you that the people of this country doesnt throw out the current socialist policies?

I Honestly do not know the answers and would be interested in your take of the situation with as much reasoning as possible.

[Bloo Loo]

one thing missing from the report...how many mortgages did they actually do. was it 1000, or 5000?

they talk about, how long, how it works....its not about completions...its about deals on the table after survey...which is surprising as just a few weeks ago the press were highlighting the number of failures at survey...

and this, from the report itself:

“While low interest rates have clearly played a part in reversing the downward pressure on house prices, they

are unlikely to stay at the current level forever. It is important to keep this in mind when interpreting recent

price trends.

“If the various monetary and fiscal stimulus measures that have been introduced over the last year are

successful in reviving growth on a sustained basis, then inflationary pressures will eventually re-emerge and

necessitate an increase in interest rates to more normal levels."

lets hope they have been lending sensibly with the future they see in mind

and they recognised, as I beleived, that the government stimulii have had an effect too...100% homebuy mortgage sir?

the stimulii are at an end.

people are returning to work after the holidays.

banks are turning down business loan rollovers.

things are about to get worse.

[Guest pioneer31]

Ah, well that is the landlords fault - he should enforce his control over your life and demand that you sign a 6 by 8 AST.

This is an interesting site for financial news and it is always good to get a contrary view and perspective - the key is not to let yourself get too bearish or you will end up like many - too scared to take any risks and miss the potential rewards as a result.

I personally like being a home owner - get to decorate etc to your own tastes.

If you worked a bit harder maybe you could afford one? Nice studio or something?

What, like a city worker for example?

The decorators can be round my house like a dose of salts to tart the place up, paid for by all the money I didn't waste on inflated fantasy prices

[bateman]

What, like a city worker for example?

At dead of night, when strangers roam

The streets in search of anyone wholl take them home

I lie alone, the clock strikes three

And anyone who wanted to could contact me

At dead of night, till break of day

Endless thoughts and questions keep me awake

Its much too late

Whereve you been?

Whove you seen?

You didnt phone when you said you would!

Do you lie?

Do you try

To keep in touch? you know you could

Ive tried to see your point of view

But could not hear or see

For jealousy

[Hip to be bear]

On a monthly rolling contract I can.

WHy would a happy-as-larry homeowner frequent a site about a Hose Price Crash?

Maybe his mortgage is so expensive that he cannot afford to replace his old watering can?

[Sonic the Hedge Fund]

they talk about, how long, how it works....its not about completions...its about deals on the table after survey...which is surprising as just a few weeks ago the press were highlighting the number of failures at survey...

I think this is the key point BL, how many of these deals will actually complete? Haliwide approvals show purchase offers, not sales.

We have recently viewed several overpriced houses with onward chain and been told that the vendor cannot take a low offers as they need to sell at a good price to finance their onward purchase. The onward chain 'purchases' will already show up in the current Haliwide approvals, but in reality will these chains ever complete?

As a further anecdotal more than one EA has told me that ATM many buyers seem to to be 'purchasing' before putting their own house on the market.

[Brave New World]

I think this is the key point BL, how many of these deals will actually complete? Haliwide approvals show purchase offers, not sales.

We have recently viewed several overpriced houses with onward chain and been told that the vendor cannot take a low offers as they need to sell at a good price to finance their onward purchase. The onward chain 'purchases' will already show up in the current Haliwide approvals, but in reality will these chains ever complete?

As a further anecdotal more than one EA has told me that ATM many buyers seem to to be 'purchasing' before putting their own house on the market.

Sorry i have come in lat eon this thread but does this mean the monthly figures are not based entirely on actual completions>

[Sonic the Hedge Fund]

Sorry i have come in lat eon this thread but does this mean the monthly figures are not based entirely on actual completions>

Yes exactly that,

Haliwide indices show deals that have been approved for mortgage purposes but not (necessarily) complete

Historically approvals were a useful forward indicator of the direction of prices, but in a market where a large percentage of deals fall through it does not provide much insight.

[silver lining]

Yes exactly that,

Haliwide indices show deals that have been approved for mortgage purposes but not (necessarily) complete

Historically approvals were a useful forward indicator of the direction of prices, but in a market where a large percentage of deals fall through it does not provide much insight.

Nationwide revise their figures up or down after they have analysed them more thoroughly. No doubt taking into account the deals that didn't complete.

Interestingly they revised July upwards from 1.3% to 1.4%.

[dothemaths]

I have been monitoring my local market (SW England) and I am seeing most sales at the upper end of the market (cash rish buyers with big deposits) and very few sales (with big discounts - thanks property bee) at the lower end (i.e. first timers) even with the supposed help from bank of mum and dad.

Plus there has been an increase of cheaper properties on the market over the last couple of weeks - so I'm looking forward to further falls.

I think the expensive properties are skewing the indices.

[ralphmalph]

one thing missing from the report...how many mortgages did they actually do. was it 1000, or 5000?

they talk about, how long, how it works....its not about completions...its about deals on the table after survey...which is surprising as just a few weeks ago the press were highlighting the number of failures at survey...

and this, from the report itself:

“While low interest rates have clearly played a part in reversing the downward pressure on house prices, they

are unlikely to stay at the current level forever. It is important to keep this in mind when interpreting recent

price trends.

“If the various monetary and fiscal stimulus measures that have been introduced over the last year are

successful in reviving growth on a sustained basis, then inflationary pressures will eventually re-emerge and

necessitate an increase in interest rates to more normal levels."

lets hope they have been lending sensibly with the future they see in mind

and they recognised, as I beleived, that the government stimulii have had an effect too...100% homebuy mortgage sir?

the stimulii are at an end.

people are returning to work after the holidays.

banks are turning down business loan rollovers.

things are about to get worse.

I just heard the stats for actual sales on Radio 5 Live.

They said August 2007 at the peak of the boom 5,000 houses were sold (legal completion not SSTC) a week. This august it was 2600 per week and the low was Jan 09 which was 1000 per week. This is actual completions not mortgage offers or sstc but actual exchange of contracts.

[Bloo Loo]

Sorry i have come in lat eon this thread but does this mean the monthly figures are not based entirely on actual completions>

not only that, but most lending has been by banks. Nationwide is not a bank.

how many is in their sample?

are they turning away bad risks and therefore their clientelle are going for more pricey homes?

how much are prices being renegotiated following survey?

how many are they pulling after survey?

we just dont know. we do know the index has a marketing purpose.

[Sonic the Hedge Fund]

Nationwide revise their figures up or down after they have analysed them more thoroughly. No doubt taking into account the deals that didn't complete.

Interestingly they revised July upwards from 1.3% to 1.4%.

NW use mix adjustment, seasonal adjustment and 'cleaning' of statistical anomalies. They do not remove deals that do not complete - and indeed they cannot since many will complete later than the monthly publication of the statistics.

Please read the following and explain where it says that NW adjust out sales that do not complete:

Nationwide Methodology

[MississippiJohnHurt]

If you worked a bit harder maybe you could afford one? Nice studio or something?

Although I suspect you're just being a tiresome internet argument seeker (I think they call it a troll), this attitude really is indicative of some homeowners - if you don't own your own house, it must be because you're poor, or workshy, or both. Hopefully you're just looking to wind people up on the internet, that would be better than being a lazy minded myth swallower.

[BrickandMortar]

not only that, but most lending has been by banks. Nationwide is not a bank.

how many is in their sample?

are they turning away bad risks and therefore their clientelle are going for more pricey homes?

how much are prices being renegotiated following survey?

how many are they pulling after survey?

we just dont know. we do know the index has a marketing purpose.

Not trying to be funny, but why were these questions not being asked during 2008?

It makes some posters look rather foolish by questioning the rationale behing NW numbers.

I mean, if on the way down it's all hunky dory why all of the sudden on the way up it has become questionable?

Does not make sense - It is either you beleive it on the way up and down or you don't at all.

[Bloo Loo]

NW use mix adjustment, seasonal adjustment and 'cleaning' of statistical anomalies. They do not remove deals that do not complete - and indeed they cannot since many will complete later than the monthly publication of the statistics.

Please read the following and explain where it says that NW adjust out sales that do not complete:

Nationwide Methodology

seems to me they can adjust whatever they want.

the say a type of house must be a minimum square footage, but they dont show a mximum.

my house is very large 4 bed detached. the one next door is a lot newer and a lot smaller.

sell mine as opposed to the one next door and the index will go up.

[Bloo Loo]

Not trying to be funny, but why were these questions not being asked during 2008?

It makes some posters look rather foolish by questioning the rationale behing NW numbers.

I mean, if on the way down it's all hunky dory why all of the sudden on the way up it has become questionable?

Does not make sense - It is either you beleive it on the way up and down or you don't at all.

these questions have always been asked. in the rising market, the numbers were far greater and it was hard not to see prices were rising accross the board.

today, we have less than half the transactions, banks lend most and the market is flat...this would exacerbate any errors in their criteria and adjustment.

for example: in the US it is being trumpeted that house sales are up....sure, its true, but prices are also down and foreclosures are also up..

Nationwide dont report sales. they report potential sales...and apparently, according to some reports, 10% of deals at the stage of the nationwide Index, dont go on becuase of financial or other "difficulties".

[HPCbeliever]

Been feeling quite depressed all day. However Haliwide has said all along that the bounce is caused by a limited supply because of low interest rates and people not wanting to sell at bottom of the market. In relation to the latter then the bounce might persaude more to enter the market and thus increase the number of houses for sell. I also thinjk interest rates might have to go up soon. CPI must go up with petrol prices and food prices still rising.

[silver lining]

NW use mix adjustment, seasonal adjustment and 'cleaning' of statistical anomalies. They do not remove deals that do not complete - and indeed they cannot since many will complete later than the monthly publication of the statistics.

Please read the following and explain where it says that NW adjust out sales that do not complete:

Nationwide Methodology

It's important to note that they only include those approvals that have had a building survey. That removes those where the surveyors valuation is less than required to meet the terms of the loan.

It doesn't say that they remove those that fail to complete, but neither does it say that they don't.

However, we do know that they adjust previous months just as they did for July. I can only see one reason why they would do that.

[silver lining]

Not trying to be funny, but why were these questions not being asked during 2008?

It makes some posters look rather foolish by questioning the rationale behing NW numbers.

I mean, if on the way down it's all hunky dory why all of the sudden on the way up it has become questionable?

Does not make sense - It is either you beleive it on the way up and down or you don't at all.

+1.

[Ash4781]

As he says in KPMG's annual building society database, profits are under pressure and the only solution is to cut costs. In what must make depressing reading for mutual bosses, Mr Walker points out that "the narrowing of [profit] margins is... likely to remain significant for at least another year".

He identifies four principle areas of concern for the country's mutual mortgage lenders. First, low interest rates have reduced margins on current accounts "to almost nothing" and taken the income from tracker mortgages "well below the cost of funding", in other words loss-making. Second, regulatory demands that societies hold more and safer liquid assets have eaten into profits.

Third, "risk management and governance structures" need to be overhauled and will be "a significant financial burden for smaller societies". And fourth, "for some societies the margin pressures are structural, due to the legacy of past lending policy, which may take many years to unwind". The suggestion seems to be that those lenders can abandon all hope of independence.

If that's not bleak enough, there is the Financial Services Compensation Scheme levy, which has cost the top 17 societies £365m, and the prospect of declining "fee and commission income as sales of mortgage and investment products fall" for the next few years. "Although the days have gone when a society suffering a loss had to merge, long-term profitability is essential to survival," he says. "Without strong profitability a society cannot build capital and so support growth."

Most senior industry insiders agree with Mr Walker's assessment. The basket cases have been dealt with, they reckon, but several societies don't have a viable stand-alone future. Although Mr Walker did not name the likely merger candidates, insiders tend to point to Chelsea, Newcastle, Stroud & Swindon, Norwich & Peterborough, and Principality. The first four made losses and all, bar Stroud & Swindon, had their credit rating downgraded by Moody's earlier this year.

Chelsea underlined the issue with its half-year results last week, when it disclosed £41m of alleged buy-to-let mortgage fraud and a £26m loss. The profit margin shrank from 0.79pc to 0.59pc. Acting chief executive Stuart Bernau did not rule out consolidation.

There has already been action. Last year there were 59 societies, this year there are 53. Most of the mergers were down to survival but the sector is no longer looking after its own. Dunfermline went into administration and West Bromwich was saved by a new capital instrument, Profit Participating Deferred Shares (PPDS), dreamed up by the Financial Services Authority and the Treasury.

The one piece of good news, as a society executive pointed out, is that – despite its loss – Chelsea was declared a going concern last week. "The issue now is of core profitability. One way of addressing this is by reducing costs through a merger," the executive said.

With the emergence of PPDS, independence can be bought but the "permanent and non-redeemable leakage of profit is not attractive", as the holders of PPDS have a right to share the society's profits, undermining the ethos of the member-owned institution. Societies would rather find a better way of rebuilding capital, which means boosting profit. To that end, two important options are being considered.

Societies could save cost by outsourcing back office functions. Similarly, societies could reduce overheads by pooling their treasury functions and accessing the wholesale markets as a "club". Both ideas are being examined as part of the Government's White Paper, sources claim.

There are difficulties with both plans. In 2000, Bradford & Bingley tried to set up a business providing industry-wide mortgage processing and systems support with US technology group Alltel. The idea was to centralise costs. B&B abandoned the deal two years later at a loss of £10m.

Similarly, a centralised "club funding" model would allow smaller societies to access the wholesale markets more cheaply, but is fraught with complications. One proposal is that a group of societies create a "central bank" by investing capital and transferring across mortgages. That "central bank" would then issue covered bonds or securitisations. By increasing the size of the issuance, the funding would be made more affordable.

In the meantime, staff are being axed and loan books shrunk to boost capital ratios and prepare for years of lean trading. West Bromwich has virtually stopped lending and is even closing its final salary pension scheme to existing members to cut costs. Asset disposals are being considered by Skipton among others. Only as a last resort will PPDSs and mergers be looked at.

Mr Walker thinks the last resort is inevitable. While 2008 was a year of survival, this year and next will be a period of restructuring. As KPMG points out, societies will have to cope with higher regulatory costs, less risky and therefore less profitable models, low interest rates and fewer housing transactions.

In other words the only independent method societies have of replenishing capital, profit generation, will be thin on the ground. Although the sector's survival is not in doubt, without action it will shrink – an outcome the Government would like to avoid.

http://www.telegraph.co.uk/finance/newsbys...-societies.html

Article on the mutual sector from the other day. Interesting.

Won't know the volumes .... volumes variance for Nationwide. What's the market -50% off peak ?

Edited August 27, 2009 by Ash4781

[godless]

2009 Q1 £157,000

2008 Q4 £162,000

2008 Q3 £173,500

2008 Q2 £175,000

2008 Q1 £173,500

2007 Q4 £179,950

2007 Q3 £180,000

2007 Q2 £175,000

2007 Q1 £169,950

2006 Q4 £170,000

2006 Q3 £171,000

2006 Q2 £164,995

2006 Q1 £158,500

2005 Q4 £160,000

2005 Q3 £160,415

2005 Q2 £155,000

2005 Q1 £152,000

2004 Q4 £155,000

2004 Q3 £157,500

2004 Q2 £148,000

2004 Q1 £139,950

2003 Q4 £137,500

2003 Q3 £133,000

2003 Q2 £125,000

2003 Q1 £120,000

2002 Q4 £120,000

2002 Q3 £118,000

2002 Q2 £107,000

2002 Q1 £95,000

2001 Q4 £92,995

2001 Q3 £94,000

2001 Q2 £89,950

2001 Q1 £83,725

2000 Q4 £82,500

2000 Q3 £82,000

2000 Q2 £80,000

2000 Q1 £76,500

http://www.houseprices.uk.net/regional/

[Bloo Loo]

It's important to note that they only include those approvals that have had a building survey. That removes those where the surveyors valuation is less than required to meet the terms of the loan.

It doesn't say that they remove those that fail to complete, but neither does it say that they don't.

However, we do know that they adjust previous months just as they did for July. I can only see one reason why they would do that.

so a lot of guesswork and massage possible in a VI index.

In GC1, when we were trying to sell and prices were falling all around, the haliwide regularly showed increases.

they dont include possessions and right to buy, but they do include government sponsored purchases with homebuy.

and they dont say how many they are sampling...with all the items they remove, the sample set could be very small indeed.

this would NOT have been the case in the boom.

Edited August 27, 2009 by Bloo Loo