Rics: U.k. Housing Market Shows First Gains Since 2007

[Joey Buttafueco Jr]

http://www.bloomberg.com/apps/news?pid=206...id=a1rUJ5NWiUkE

[Bloo Loo]

mixed reports in the article

usually signs of a change occuring....down again?

[Sybil13]

Jeremy Leaf, a RICS spokesman, said: Although it is clear that house prices are now rising, it continues to be the lack of supply that is underpinning the recovery in most parts of the country.

“The more positive news flow will gradually encourage vendors to start putting property back on the market.â€

But he added: This development should enable more potential purchasers to find desirable properties to buy but it could also present a challenge to the firmer trend in prices particularly when interest rates finally begin to move upwards.€

RICS said the average number of sales per estate agent during the past three months also increased to 17, the highest level since May last year.

UK house prices (asking) have stopped their recent 'dead cat bounce' according to Miles Shipside and his team at Rightmove. Estate agents now have on average seventy properties each on their books, and are only selling ten per month according to RICS...

However, this RICS contention is not supported by recorded data. With only 35,000 property sales a month, according to Land Registry, and the head count of agents being circa the same this would suggest that agents are in fact only selling on average one property per mont

However, the most worrying news for those who need house prices to recover is the abysmal levels of sales transactions. In August 2007 transaction levels were at 120,000, they now flounder at 35,000 per month - equal to one per estate agent, or less if you take into account those properties sold direct by the house builders. House sale records are not available for the 1960's, however I'm reliably informed that even at the depths of the recession in the 1970's house sales volumes were greater than they currently are

Edited September 15, 2009 by Sybil13

[interestrateripoff]

It's the jobless recovery supporting house prices.

The economists know what they are talking about.

[Realistbear]

At the same time, the U.K. economy shrank 0.7 percent in the second quarter and unemployment rose to the highest since 1995. Banks are curbing lending even after the Bank of England reduced its key rate to a record low 0.5 percent and pumped cash into the banking system with cash by buying billions of pounds of assets with newly created money.

Ernst & Young LLC’s Item Club said in a report yesterday that the U.K. housing market slump will resume next year

TBH, I doubt prices are rising at all. Just fewer, more expensive homes selling to skew the data.

[Sybil13]

At the same time, the U.K. economy shrank 0.7 percent in the second quarter and unemployment rose to the highest since 1995. Banks are curbing lending even after the Bank of England reduced its key rate to a record low 0.5 percent and pumped cash into the banking system with cash by buying billions of pounds of assets with newly created money.

Ernst & Young LLC’s Item Club said in a report yesterday that the U.K. housing market slump will resume next year

TBH, I doubt prices are rising at all. Just fewer, more expensive homes selling to skew the data.

And keep sentiment high.....yet something doesn't ring true ......completed transactions are lower than the 1970's and driven by cash rich buyers . Getting a transaction past SSTC seems to be very difficult with half the market missing (that is FTB's etc). And the CML's prediction of £145 billion for lending this year has not gone up despite all the hype and ramping.

Even Ernst & Young's report didn't add up with property prices going back up to 2007 levels by 2014, can you see the Rmbs market being open let alone operating at levels seen in 2007 by 2014 (or ever)? FTB's had been priced out of the market in 2007 (bubble driven by BTL market) , and wages are not going up , couple that with :

UK Lenders Ought to Cut Lending by £500billion

...it hard to see how the market will return to 2007 levels by 2014, and it is to be hoped the market NEVER returns to levels that were clearly irresponsible and not sustainable.

[Timm]

This is the inflection point.

Sales are up, prices are up, but demand has been utterly dependent on sentiment and low yields on deposits driving cash rich buyers into the market, whilst supply has been limited by state support and lender manipulation (holding repos back from the market).

Now, enquiries are down, inventory is rising, and the main drivers of sentiment are all turing back to the bear side. As seasonal effects further limit the market, at least some of the hoarded forced sales (pent up supply?) are going to try and catch the peak, whilst the cash rich buyers are going to hesitate.

As higher market rates start to impact the structural market next year just as seasonal effects should be lifting it, I think we could be looking at a repeat of the last 24 months.

[spline]

RICS Housing Market Survey, Aug/09

House price balance: +10.7%, first positive since Jul/07

Sales to stock ratio: 26.9%

Link to report [PDF, 383KB]

http://www.rics.org/site/download_feed.asp...leExtension=PDF

[Dead Spider]

Can the sample size matter in this case ?

From around 25,000 RICS members this survey uses only 266 contributors .

Just seems a bit of a small sample for such a manipulative survey .

[kagiso]

I see no reason to change my predictions of last month, I would be interested in Spline or others' thoughts on the origins of the two year cycle:

http://www.housepricecrash.co.uk/forum/ind...amp;pid=2071903

Not sure if you, or indeed Spline, where hinting at the following rough and ready analysis:

(apologies for quality)

The Rics data shows a very pronounced cycle in the region of 2 to 2.5 years.

If the data is going to continue this pattern then the next 3-6 months are likely to be painful to bears as the Rics figures move into a new peak somewhere around +25%, to full media fanfare.

After that the fun kicks off again, where I am predicting a full 100% negative figure from Rics somewhere around November 2010.

Note that, if there really is a full scale recovery happening, then the Rics figures will need to continue up well up above +50% to come into line with previous peaks.

This would need an up swing of about 150% trough to peak.

While possible, this seems unlikely given that the largest previous upswing was about 100% (-50% to +50%) during the last phase of London/South-East silliness in 2005-2007.

While I think the current rebound is quite silly indeed, I don't think it will quite reach summer 07 levels of hyper-silliness.

I would be very interested if Spline or anybody else out there has any knowledge on where the two year cycle comes from? I can't think of any obvious reason. Possibly an interesting bit of behavioural economics research.

[AndyAndy]

There is a lot of pent up sales pressure in the system. On the estate near where I rent (but I'd like to buy) there are 50 really good houses. I think two are rented out and the remainder owner occupied. There is slack in the rental market and rents are very very soft coming of £200pm from £1k pm to £800pm in the last year so probably no more will go rental route.

From 2000, year on year 4 houses a year have sold on the estate - some times its 3 and then 5 the next but there was no big burst of loads selling and then nothing - its consistant at around 4 per annum. People upsizing, downsizing, moving with work, moving closer to offspring (thats children not the LA punk band for you younger HPCers) death etc.

In the past two years none have sold. There are two on the market at just shy of £400k each. One has been on for two years and has reduced from £425k to £400k (oh whoopee). I think the owner is broke and needs to sell at £400k to have any money for retirement - tough pal you shouldn't have bought all those big cars you could not afford. The other has been on for 6 months and is stuck.

If one follows the trend thats another 6 ((4*2) - 2) houses on that estate waiting to come on the market. 50 houses on the estate, about 5000 households in the town per the 2001 census (and if anything the town has grown in the past 8 years). 5000/50 * 6 means 600 houses waiting to come on the market in addition to the 250 houses on the market.

So Andy - how many houses have sold in your town since the beginning of the year. Well according to Rightmove, so far its 14 for the postcode that includes all of my town and some other villages too.

Any thoughts from any Bulls on how the 850 (250 existing + 600 waiting) are going to be sold? Most don't have to sell but that points surely going to come - in the form of redundancy, severe old age or some bloke with a black cloak and a scythe.