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Has The World Cup Hit The Housing Market?

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http://www.lovemoney.com/blog/edbowsher/has-world-cup-hit-housing-market-3230.aspx?source=1000461

Has the World Cup hit the housing market?

Published 30 June 2010

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Ed Bowsher

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Every week hundreds of press releases arrive in my inbox and most of them are dull, wrong, or stating the obvious.

But one caught my eye this morning. It was headlined World Cup fever stalls UK house sales recovery and was released by a company called Agency Express. This company supplies ‘For Sale’ signs to estate agents.

The release says that the number of UK house sales fell in June by 5.3% compared to May and by 7% compared to a year earlier. Agency Express claims this fall has been caused by wall-to-wall coverage of the World Cup and other sporting events.

Agency Express’s numbers were consistent with Nationwide’s property price figures – also out today – which show that house prices rose by just 0.1% in June, the smallest monthly rise since February.

So has the World Cup affected house prices?

Possibly, although I would point out that many house sales completed in June will have started with viewings in April or May before the World Cup began. My suspicion is that an increasing awareness of our bleak economic situation also accounts for some of the sales decline.

What about the future?

I’ve said for some time that I expected house prices to fall this year and so far that hasn’t happened. In fact, Nationwide’s release this morning showed that UK prices are now less than 8% away from their all-time high in 2007. (In London, they’re only 4% off their all-time high!) So my track record as a soothsayer is less than perfect.

And you could argue that George Osborne’s emergency budget has reduced the chances of house price falls this year. That’s because the fiscal tightening (higher taxes, less government spending) could allow the Bank of England to keep interest rates lower for longer (a lax monetary policy.) And those lower interest rates could push prices higher.

However, I believe that house prices will fall sooner or later. If not in 2010, then 2011. There are lots of reasons for this, but I’m going to focus on three:

- a change of mood. My feeling is that the austerity budget has changed the mood in the country. Yes, it may have enabled the Bank of England to keep interest rates low for longer, but it’s also made me people realise that times are going to be tough for several years to come. Why would you want to buy property when prices aren’t far off their all time high even though no one’s job is safe and we’re all set to pay higher taxes.

- Banks are still fragile. Yes, it’s easier to get a mortgage now than it was a year ago but the banks are still very fragile. I’d be surprised if mortgage availability increased much over the next year.

- Mortgage market prop will be removed – When the crisis was at its peak the Bank of England and the government introduced schemes that would give the banks cash to lend out to homebuyers. Those schemes are due to start being wound down next year. If these schemes aren’t replaced at all, expect to see carnage in the housing market.

More likely, the schemes will be replaced by less generous support measures which will force the banks to be less generous when it comes to lending.

More: House prices heading for double-dip | House prices set to surge after the World Cup

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Has the World Cup hit the housing market?

Published 30 June 2010

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Ed Bowsher

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2 comments

More: House prices heading for double-dip | House prices set to surge after the World Cup

NO. The housing market is not affected by the Olympics, World Cup or any other sports events. If people have the confidence to buy homes they will go out and do so, even if it's between matches. No evidence of any such factor exists. The weather has nowt to do with it either. You only have to study the past to see nothing provable exists on these scenarios.

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It was always going to be used as an excuse. Along with snow, long periods of sunshine, Big Brother and other such nonsense.

Another excuse will come along for next month.

Edit: Probably worth noting that most of the games are already finished. If there was an effect it would be only for the first 2.5 weeks of the tournament when most of the games are completed.

Edited by catmandu

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well

did it affect house prices negatively in 2006???

well exactly. in 2002 the so-called 'golden generation' was close to its peak, we had a young beckham & owen, sol campbell and paul scholes were still good players, and we got to the QFs, and pwoperdee prices were galloping upwards throughout.

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They just need another excuse to explain away what they think is a blip.....

I am a seaside accommodation provider and can without hesitation state that the World Cup does affect trade in this sector. Soon as England were out last week the phone is as hot as it was before the tournament started.

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No it hasn't just like snow didn't, rain never has and not because easter fell on a waxing moon phase and the lesser spotted tit sucker was late in arriving to UK shores.

The reason nobody is buying houses is because they are too ******ing expensive versus the amount of credit on offer. Pretty fecking simple really.

Time for a payrise.........................

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No it hasn't just like snow didn't, rain never has and not because easter fell on a waxing moon phase and the lesser spotted tit sucker was late in arriving to UK shores.

The reason nobody is buying houses is because they are too ******ing expensive versus the amount of credit on offer. Pretty fecking simple really.

Time for a payrise.........................

I would just simply say too f***ing expensive. Still, some people will only see what they want to see. If they believe the falling volumes of ftbs is due to the size of deposits, the world cup, not getting their bin collected in winter, ash clouds etc then that is what they will want to believe.

Truth is they are too expensive. But we dont expect journalists to report the truth do we?

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  • 150 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
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