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Hot off the wire...

House prices fall for fifth month

http://news.ft.com/cms/s/07234096-0b18-11d...000e2511c8.html

House prices fell for the fifth month in a row in July, bringing price levels back to those last seen in December, according to the FT House Price Index, the most accurate guide to the real trends in residential property prices.

Average home prices were 0.4 per cent lower compared with June, bringing the annual rate of inflation to 4.2 per cent, the lowest since August 1996. The average property was worth £190,783, about as much as in December last year.

Gary Styles, chief economist of Acadametrics, the consultancy that calculates the index, said “Over the last five months house prices have continued to show modest falls. Although some regions showed signs of stabilising in the first quarter, prices are now beginning to ease further in most regions.”

“Lower transaction volumes and concern about the slowing economy has affected consumer confidence. Talk of an early recovery in the housing market seems very premature,” he added. The annual inflation rate was expected to fall further.

The FT House Price Index, which is based on data from the Land Registry, the most complete resource of property prices, is adjusted to take into account not only seasonal patterns but also the type and geographical region of each sold property.

This enables the index to give a better indication of the state of the overall property market rather than merely reflecting the sample of properties that happen to have been sold in a particular month.

Without adjustments for property type and region, the index’s annual rate of inflation would have been 2.6 per cent. A month earlier it was 4.2 per cent compared with 5.6 per cent on the mix-adjusted index.

The lower rate reflects the higher prevalence of cheaper homes in the mix of property that are currently selling well. Turnover in the housing market has fallen most sharply in the south of England, whereas activity has declined less in northern regions.

Overall, activity appears to have recovered from a trough last November. Mortgage approvals by banks and building societies reached 96,000 in June, which is in line with the monthly average over the past 20 years.

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Average home prices were 0.4 per cent lower compared with June, bringing the annual rate of inflation to 4.2 per cent, the lowest since August 1996. The average property was worth £190,783, about as much as in December last year.

...

Without adjustments for property type and region, the index’s annual rate of inflation would have been 2.6 per cent. A month earlier it was 4.2 per cent compared with 5.6 per cent on the mix-adjusted index.

The lower rate reflects the higher prevalence of cheaper homes in the mix of property that are currently selling well. Turnover in the housing market has fallen most sharply in the south of England, whereas activity has declined less in northern regions.

Interesting that mix adjustment results in a higher HPI figure. I remember recent posts here suggesting the opposite: that top-end houses were selling and FTB fodder was not. Now it seems that all the activity is at the bottom of the market, and it has an increasingly large positive effect on net HPI.

Edited by echapps

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Now it seems that all the activity is at the bottom of the market, and it has a large positive effect on net HPI.

Some people spend all their lives living at the bottom end of the market, and only a few get to the really-really big detacheds as their supply is small so their prices are high.

Irrespective of any booms/stagnations, I would expect activity biased to the bottom-to-middle end of the market.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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