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737

Nationwide Aug Hpi

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House prices continue to cool

House prices fell by 0.2% in August

The annual rate of growth remained positive, but slowed to 2.3%

Activity remains fairly stable but with signs of increased buyer interest

Expectations of house prices are consistent with a continued controlled slowdown

Commenting on the figures Fionnuala Earley, Nationwide's Group Economist, said:

“House prices increased in eight out of the last twelve months, but the general path of house

price inflation continues to be soft. Prices fell by 0.2% in August, reversing July’s increase

and continuing the gentle slowdown seen since the start of the year. Prices in the three months

to August increased by 0.3% and the annual rate of house price inflation is now 2.3%,

compared to 2.6% last month and 18.9% at this time last year. This is the slowest rate of

annual growth since May 1996. The price of a typical house in the UK is now £157,310

compared to £153,743 this time last year.

“In spite of a fair deal of bearish comment, the housing market has remained quite resilient

this year following last year’s interest rate hikes. Price inflation has slowed gradually, but is

still positive, and activity has been creeping up since the end of 2004. The current levels of

monthly house purchase approvals, estimated at 97,000 in August, are now higher than at this

time last year. Expectations of house

prices are an important factor in

transaction decisions and current data

shows that consumers expect a continued

controlled slowdown, with some modest

falls in house prices next year1. These

expectations are now feeding into the

market as estate agents report sellers

adjusting their asking prices. This, along

with the cut in interest rates, has made it

more of a buyers’ market which has led to

increased numbers of buyer enquiries and

increased optimism about sales from

estate agents.

“However, while market activity seems to have stabilised, this does not signal the start of a

further period of sustained growth in house prices. Even though wage inflation is almost

twice the rate of house price inflation, affordability is still an issue, particularly for first-time

buyers, and it will take some time for the balance to be redressed.

“The first-time buyer house price to earnings ratio is significantly higher now than at the last

peak. Even with lower mortgage rates, mortgage repayments absorb about one third of take

home pay and the average first time buyer now needs to raise a deposit of almost £17,000

compared to around £11,000 in 2003 – more than a 50% increase in two years. In terms of a

proportion of gross annual income,

a first time buyer’s deposit now

accounts for 62% of gross annual

pay compared to 20% sixteen years

ago. However, this reflects that

first-time buyers now borrow a

smaller proportion of the purchase

price than they did in 1989. This

shows how ability to pay criteria,

such as income multiples, constrain

the amount that they can borrow.

Because of these higher deposits, it

would now take a first time buyer

almost three and a half years to

save a deposit compared to just

over one year in 1989.2

“Such comparisons of affordability between these two high points in the cycle at first seem

startling. But on the other hand, given that nominal interest rates are significantly lower, the

debt burden is not as fierce. Mortgage payments account for 31% of take home pay now,

compared to 35% then. In cash terms the average first time buyer now pays £518 per month,

compared to £261 then. In today’s money this equates to £436 - about 20% less in real terms

than now. But this is ignoring the impact of tax relief which was still available in 1989.

Without this subsidy the equivalent figure in today’s prices would be £552. To put this in

context, average first time buyer house prices have increased by 161% in the same period and

the average mortgage size by 138%.

“Having breached the £1 trillion threshold in the Spring of last year, household debt in real

terms is now more than twice the level than at the last housing market peak. This makes

households more vulnerable to changes in the economy.

“In the short term, the main macroeconomic drivers remain robust. The decision of the MPC

to reduce rates was widely predicted, but the closeness of the vote was not. While

consumption demand has been weak, the recent data suggests that overall economic

performance may not have been so bad. Inflation, retail sales and employment data were all

more buoyant than market predictions – a very different picture to the gloomy commentary around at the start of the month. In addition, confidence indicators have held up well.

Nationwide’s own consumer confidence indicator showed a return to stronger levels as the

gloomy scenarios predicted earlier this year did not materialise. But even though these

indicators look quite positive, there is still downside risk should consumer spending not

recover.

“In the housing market the current background suggests that the market will continue to cool

in a contained fashion, but it will be some time before we can expect prices and activity to

return to the growth rates seen in the last two years. Lower interest rates are a reflection of

lower inflation and while lower rates mean that borrowers can afford to service higher levels

of debt, lower inflation means that it takes longer for the real value of that debt to erode. We

can therefore expect a sustained period of unexciting movements in house prices before

consumers’ financial balance sheets are restored to more comfortable levels.”

Edited by 737

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I skipped the middle of the article and did a double take. It's like the second half is an entirely different article. Note the acknowledgement of the rise of equivilent debt burden to near '89 levels and the "in the short term" qualifier on economic indicators

T&T

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Guest Time 2 raise Interest Rates

Nationwide Aug 05.

The ave house price is down £1,000 from £158,348 in July to £157,310 in Aug

or £250 per week. The annual rate is down to 2.3% and is the slowest since May

1996. :o

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Nationwide Aug 05.

The ave house price is down £1,000 from £158,348 in July to £157,310 in Aug

or £250 per week. The annual rate is down to 2.3% and is the slowest since May

1996.  :o

I'm sure it said on Sky news (though I can't find it on their website, that prices were actually up something along the lines of 0.2% seasonally adjusted.

By 'Seasonally adjusted', do they mean, 'we massaged the figures in our favour'?

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Guest Time 2 raise Interest Rates
I'm sure it said on Sky news (though I can't find it on their website, that prices were actually up something along the lines of 0.2% seasonally adjusted.

By 'Seasonally adjusted', do they mean, 'we massaged the figures in our favour'?

Sky News. House prices fell 0.2% on the month in Aug taking the annual rate of

increase to its weakest in more than NINE YEARS, the Nationwide said.

The annual rate of just 2.3% was the slowest since May 1996 and took the price

of the ave home to £157,310 DOWN FROM £158,348 on the month before. ;)

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Sky News. House prices fell 0.2% on the month in Aug taking the annual rate of

increase to its weakest in more than NINE YEARS, the Nationwide said.

The annual rate of just 2.3% was the slowest since May 1996 and took the price

of the ave home to £157,310 DOWN FROM £158,348 on the month before.    ;)

I just went back downstairs and looked at Sky active again. They were on about July when they said they'd risen.

My excuse is that I'd just got up. :D

Anyway, what do they mean by 'seasonally adjusted'? They seem to be that every month.

Are they massaging the figures in their favour?

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Guest Riser

Next month we should start to see the June increases of 10.5% and 24.8% in Scotland and Northern Ireland start to slow and stop distorting the Nationwide National figures.

Nationwide would probably be showing a similar figure to Hometrack -3.7% if Scotland and Northern Ireland were excluded in the same way.

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they definitely spin the numbers

they are quoting a 0.2% monthly reduction.

this is not in house prices, but in their index.

the drop on the month was £1000 or 0.65 % of the previous months price.

their index now stands at 311.0

this is the growth sonce 1993 ie prices are 311% higher today than in 1993.

the reduction last month is measued against this huge increase and therefore appears to be a paltry 0. 2%

why dont they tell it like it is.

the average house is dropping at £1000 / month.

at this rate the average house will be down 10% in 12 months

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Guest Time 2 raise Interest Rates

So according to the Nationwide figures, if you have a buy-to-let portfolio of five properties you're down nearly £5,000 on the month. It's getting a bit scary.

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When is YoY expected to go negative? Is there still one big +ve month from last year to come out of the figures?

I can't find the old figures, but I think I remember Dr B saying that there were a couple of high growth months this time last year, which are just working there way out at the moment.

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here is an email i have just sent to fionnuala early.

i will post any reply

Dear Fionnuala

I have just read your latest house price inflation press release( 1st Sept 2005) and I am unhappy with the way you are spinning the figures.

Your headline says : " House prices fall by 0. 2% in August..

This is not correct.

The 0.2 % reduction refers to your index of prices ( based on 1993).

The actual reduction in average house prices, month on month is from £158348 to £157310.

This is £1038 and according to my mathematics is 0.66 %.

Would you be so kind as to present the facts more honestly.

The sooner the current housing bubble bursts, the better it will be for most UK citizens.

By spinning the numbers, it is possible that some people will make a rash housing investment based on the mistaken belief that prices are gently softening.

Your Bank, which is in general a good independent, has a responsibilty to be straight and not mislead the public.

Regards

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Here is the FT on today's Nationwide report:

http://news.ft.com/cms/s/3893a8f8-1ace-11d...000e2511c8.html

There's an interesting aside near the end:

Meanwhile, a survey among purchasing managers in the manufacturing industry signalled a surprise rebound in confidence due to rising orders and the first increase in factory gate prices in four months.

Wonder when this will filter into CPI?

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_40750770_house_010905_gra2203.gif

Nice graph, like the way it just tips at the end :lol::lol::lol: , its almost like the figures are being manipulated to create a soft landing, everyones knows markets that fall so steeply don't just stop, they keep falling into negative numbers. Someone should tell the Natiowide the its looking a bit dodgy. I wonder if the Halifax are going to do the same next week.

Edited by Dicky

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A quick question re the land registry figures:

People have mentioned that they lag the current state etc.

What does this mean?

I would've thought if I sold a house and it completed on June 1st 2005 then it would be included in the Apr - Jun 2005 fugures. Is this not the case?

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Nice graph, like the way it just tips at the end  :lol:  :lol:  :lol: , its almost like the figures are being manipulated to create a soft landing, everyones knows markets that fall so steeply don't just stop, they keep falling into negative numbers. Someone should tell the Natiowide the its looking a bit dodgy. I wonder if the Halifax are going to do the same next week.

Yes, Nice graph, but do please learn to read it properly! :) - This is the YoY difference and NOT the actual prices! The flat bit at the end is real because the index prices have hardly fallen yet …

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  • 302 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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