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Auctions Point To Falls In House Prices

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Hot money and savings/investment money has run out, or is running away.

http://www.ft.com/cms/s/d80e588a-9d63-11de...;nclick_check=1

Auctions point to falls in house prices

By Chris Giles, Economics Editor

Published: September 9 2009 23:35 | Last updated: September 9 2009 23:35

A recent recovery in the housing market is likely to have been built on unstable foundations, a group of economists claims on Thursday, after a fall in demand and prices at property auctions over the summer.

The average property sold at auction in August achieved a price of only 70 per cent of the amount that the same home could be expected to achieve in the conventional market, where homes are bought and sold through estate agents.

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A recent recovery in the housing market is likely to have been built on unstable foundations, a group of economists claims on Thursday, after a fall in demand and prices at property auctions over the summer.

The average property sold at auction in August achieved a price of only 70 per cent of the amount that the same home could be expected to achieve in the conventional market, where homes are bought and sold through estate agents.

The next paragraph:

This 30 per cent discount has grown from only 10 per cent three months ago, Fathom Consulting said, indicating that demand for homes sold at auctions fell away dramatically after recovering earlier this year.

Advantage bull-trappers then...

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A recent recovery in the housing market is likely to have been built on unstable foundations

'Ahh Watson, I am afraid your laxatives have failed to alleviate my symptoms'

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I am not a bull in housing far from it but the trend is your friend so to speak and HPI is on the up and the blip on unstable foundations is clearly built on government market interventions which are showing no signs of stopping soon so I expect this blip in rising HPI to continue upto the next election or the market in bonds make them stop.

Regarding property auctions in which I have no experiance I assume will usually sell properties much lower than retail sales regardles of market conditions.

I am guessing here but I would assume 20% discount would be an average one.

This report is worth thought but for me expect 10% or more upside before the tide turns down or worse collapse in GBP resulting in massive inflation.

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I am not a bull in housing far from it but the trend is your friend so to speak and HPI is on the up and the blip on unstable foundations is clearly built on government market interventions which are showing no signs of stopping soon so I expect this blip in rising HPI to continue upto the next election or the market in bonds make them stop.

Regarding property auctions in which I have no experiance I assume will usually sell properties much lower than retail sales regardles of market conditions.

I am guessing here but I would assume 20% discount would be an average one.

This report is worth thought but for me expect 10% or more upside before the tide turns down or worse collapse in GBP resulting in massive inflation.

read the report again. 4 months ago the difference was 10%. now it is 30%. so something changed the market in last 4 months .... we do not talk about the absolute level, but about the relative level change in last 4 months

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Good article, especially the graph showing a pretty dramatic dead cat bounce which now seems to be ending...

Could be worth investigating further as a leading indicator for the "mainstream" indices - certainly seems to me to have a more logical link to future prices than things like the price of builders' shares.

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I am guessing here but I would assume 20% discount would be an average one.

Fairly recently, auction prices were higher!

Interesting to watch property auction TV programmes such as Homes Under Hammer. Many who were asked why they were buying, renovating/BTL stated 'because I've been watching the programme and though how hard could it be?'

ie gold rush mentality, bubble forming and hence auction prices went above estate agent prices.

Not any more....

I'm still hoping to pick up a plot of land, maybe 1-5 houses, possibly re-do planning to reduce number of properties and make them larger with more garden, 1 for myself, others for friends who share interest and 1 or 2 for profit.

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Hot money and savings/investment money has run out, or is running away.

http://www.ft.com/cms/s/d80e588a-9d63-11de...;nclick_check=1

Auctions point to falls in house prices

-{SNIP}-

Good find OnlyMe... it will be interesting to follow this over the coming months

BTW follow the link at the top of this Google page if the one above asks you to register:

http://news.google.co.uk/news?source=ig&am...le&resnum=1

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Danny Gabay, director of Fathom, said the increasing discounts available in property auctions were a harbinger of declines to come in house prices.

“We would expect auction prices to react more quickly to changing market conditions than conventional measures, which suggests that we may see house prices falling again in coming months,†he said.

Let's hope he's right.

It would be nice to see this as a regularly published index. As a poster above notes - it could be more useful than a lot of other forward indicators.

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ah finally, some bear food!! :lol:

That's actually a pretty good article and nicely balanced. I wonder how the daily express would spin that ... "auction prices up 10% on a year ago" or what ever suits there headlines. I Loath that paper

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I was following auctions pretty closely for a couple of years but haven't the past quarter. Will be interesting to see if the auction houses' predictions of a lot of repossessions coming in during the Autumn materialises. Are TommyBoy/M21ers great auction threads still going?

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Possibly people have decided to jump into stocks rather than property.

Perhaps, and perhaps that is a good sign that the bull trap is nearing its conclusion.....

A Rightmove survey at the end of August gave the "encouraging" signal that 78% of respondents reckoned UK house prices won't fall any further this year. And also that "the UK property industry is now seeing a virtuous circle of confidence building upon confidence".

Why's this another worry? Well, as Fidelity's Anthony Bolton explained in the weekend's FT about the stock market, "if everyone is positioned for the market to rise, it means these bullish expectations are already discounted" – i.e. factored into the price. As a result, "the market often moves to make the majority wrong and does the unexpected… so at turning points especially, the correct is the minority view".

And while there are plenty of differences between shares and houses, the principles of crowd behaviour are the same for every asset class. When almost everyone is bullish, get ready for a price fall. The near-8.5% bounce in property prices within the last six months (using Nationwide's figures at least) now looks ripe for a reversal.

Insiders Sell Like there is no Tomorrow

Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now?

NEW YORK (Fortune) -- Can hundreds of stock-selling insiders be wrong?

The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized.

But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.

While a wave of insider selling doesn't necessarily foretell a stock market downturn, it suggests that those with the first read on business trends don't believe current stock prices are justified by economic fundamentals.

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