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Tired of Waiting

Sales Volumes Collapsing At The Bottom, But Rocketing At The Top.

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Sales volumes collapsing at the bottom, but rocketing at the top.

I think this deserves its own thread. It is a very striking set of data. (Thanks to Fawkandles and exiges for pointing it out.)

Source, Land Registry report, page 13: Link to PDF

(London sales volumes is there, on page 13 also, and shows a similar pattern.)

The sales volumes for the bottom rungs of the ladder are very encouraging. :)

FAO FTBs - Don't buy yet please!

The chart I find most interesting is this one.

FTB (typically those under £200k) are sh1t out of luck whereas those who already have 50% equity by virtue of the HPI have been able to buy without problem. It also suggests those higher priced houses are skewing the average house price figures.

houses.gif

Edited by Tired of Waiting

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Yep.

The question is: Is this sustainable, or will the market collapse from the bottom up?

sandcastle-m.jpg?300:300

Edited by Tired of Waiting

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Yep.

The question is: Is this sustainable, or will the market collapsing from the bottom up?

sandcastle-m.jpg?300:300

Love the castle!

I assume it's some of the big lottery winners buying places ... there've been a couple recently...

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I'm no statistician, but IMHO I think you're in danger of reading something into the numbers that isn't there.

You say "collapsing at the bottom" which I'd certainly agree with from both the raw numbers and the percentages.

But "rocketing" at the top? In percentage terms you may be right, but just look at the actual numbers involved, relatively speaking....

Any ponzi needs big numbers at the bottom end to support the top - hence the alternative term "Pyramid scheme."

Although you'd expect the numbers higher up to be smaller, here they are VERY small compared with the rest of the iceberg (percentages from a small base notwithstanding,) and the bottom of that iceberg appears to be melting at an alarming rate. (Well, alarming or delicious depending on your point of view :))

This looks like a mightily unstable pyramid to me, and as has been observed before, once the bottom and lower middle dries up, the rest comes tumbling down sooner or later.

B

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I'm no statistician, but IMHO I think you're in danger of reading something into the numbers that isn't there.

You say "collapsing at the bottom" which I'd certainly agree with from both the raw numbers and the percentages.

But "rocketing" at the top? In percentage terms you may be right, but just look at the actual numbers involved, relatively speaking....

Any ponzi needs big numbers at the bottom end to support the top - hence the alternative term "Pyramid scheme."

Although you'd expect the numbers higher up to be smaller, here they are VERY small compared with the rest of the iceberg (percentages from a small base notwithstanding,) and the bottom of that iceberg appears to be melting at an alarming rate. (Well, alarming or delicious depending on your point of view :))

This looks like a mightily unstable pyramid to me, and as has been observed before, once the bottom and lower middle dries up, the rest comes tumbling down sooner or later.

B

I agree with most of your post. The main point is that the info we have there is incomplete. Mainly we don't know what are the "normal" levels, as that table is comparing just 2 months. But from this partial glimpse we had there, it looks like the market is schizophrenic right now. But I agree that we do need more info to get a better picture.

Perhaps someone around here has more info about it?

Actually this was one of the reasons I started this thread.

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I am not that up to speed on all of the details of the SMI scheme but doesn't it make sense that houses under say 200 to 250k are being withheld from the market due to the SMI scheme? This could account for some of the anomolies in the data.

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I'm no statistician, but IMHO I think you're in danger of reading something into the numbers that isn't there.

You say "collapsing at the bottom" which I'd certainly agree with from both the raw numbers and the percentages.

But "rocketing" at the top? In percentage terms you may be right, but just look at the actual numbers involved, relatively speaking....

Any ponzi needs big numbers at the bottom end to support the top - hence the alternative term "Pyramid scheme."

Although you'd expect the numbers higher up to be smaller, here they are VERY small compared with the rest of the iceberg (percentages from a small base notwithstanding,) and the bottom of that iceberg appears to be melting at an alarming rate. (Well, alarming or delicious depending on your point of view :))

This looks like a mightily unstable pyramid to me, and as has been observed before, once the bottom and lower middle dries up, the rest comes tumbling down sooner or later.

B

Flats round my way really sticking (N London). 4 converted flats on my road have been for sale for months. The few family houses on the market are just about moving if right price - just a tad under peak ! Can someone explain where this is all leading? Plus a developer has just made an application to split a 4 bed into 2 flats. Must be rental income hes after because no one is interested in these typical ftb places.

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I am not that up to speed on all of the details of the SMI scheme but doesn't it make sense that houses under say 200 to 250k are being withheld from the market due to the SMI scheme? This could account for some of the anomolies in the data.

I'm not familiar either, but it sounds plausible.

And at the top end, cheaper sterling attracting foreigners buying in London?

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August from last few years:

landreg1.gif

Great data but it would be even better if it were normalised for HPI (and no, I am not volunteering to do it) ....

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One important point to note about these Land Reg data is that the latest numbers are never complete, and therefore the Land Reg should either not publish them in the way that they do, or they should make clear that the figures will be revised upwards.

The August 2010 figures will be understated by roughly 10%. As an example, here’s what the August 2009 figures looked like when they first came out, and how they were subsequently revised:

landreg2.gif

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I'm not familiar either, but it sounds plausible.

And at the top end, cheaper sterling attracting foreigners buying in London?

Possibly.

And the inspiration for a different thread .....

http://www.housepricecrash.co.uk/forum/index.php?showtopic=155262

You wrote the post below in under 2 minutes?! :blink: Jeeez! what is your IQ?! "respec"! ;)

There has been quite a bit of chat here about how foreign investors, especially from trade surplus countries, are buying up London properties and propping up the market.

I have thought about what happened to Japanese investors in the 1980s and how things ended for them. I know that history doesn't repeat exactly but it often rhymes (I can't remember who said it first).

I think that we can take some comfort from what happened to the Japanese trade surplus in the 1980s :

1. A trade surplus builds.

2. The trade surplus is invested in the bonds of the deficit nation.

3. The surplus nation becomes uncomfortable with the paper assets it owns and begins to buy physical assets in the deficit nation from the local population.

4. This drives up the prices of physical assets in the deficit nation.

5. Eventually the buying frenzy ends, usually with a final orgy of large, massively over priced acquisitions and demand is sated.

6. Once the frenzy is over, asset prices collapse in the deficit nation.

7. The local population quietly buys back the physical assets in the deficit nation at much lower prices.

8. Part of the transfer of wealth caused by the trade imbalances are reversed as the locals sell high and buy low.

We are somewhere between stages 4 and 5 in my view.

The top will be reached when a lot of "trophy" assets are acquired by investors in surplus countries at ridiculous prices. In the 1980s, the assets were the Pebble Beach golf course and the Rockerfeller Centre.

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If you look at these figures for previous reports throughout this year you can see that sales have been up yoy for some time across all price ranges albeit less so at the lower ends. I think as the Market continues to deteriorate the sales levels will fall from the lower end up as currently FTBs can't buy sales drop for lower end properties then second time buyers can't move up as no FTBs and sales drop there and so on. So I think sales levels will cascade through the upper levels in the coming months. I don't think, as many 'experts'' suggest, that the we will see a two tier Market with the bottom falling in value while the top continues to rise. It's impossible IMO.

Also, this is a snap shot from several months ago. aren't these sales figures from two months behind the august or Septeber sales volumes IIRC and so more like May - July time?

Edited by Pent Up

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You need to drill down for the info

Number of Properties Sold in ex14

counts-ex14-200008-201008.gif

Aug 2000 Aug 2010 Change

Detached 24 9 -63%

Semi 20 14 -30%

Terraced 22 8 -64%

Flat 2 3 +50%

Average Property Selling Prices in EX14 (£000's)

rolling-mean-ex14-200008-201008.gif

3-month moving averages by property type in EX14

Due to the small amount of data available for this graph it may appear to be erratic. To gain a better picture of the Selling Prices in this area please see House Prices Report in Postal Area EX

Aug 2000 Aug 2010 Change

Detached £218,516 £453,556 +108%

Semi £74,627 £218,104 +192%

Terraced £71,992 £150,563 +109%

Flat £49,250 £137,333 +179%

All £123,812 £257,411 +108%

Or compare with more recent times... but the data is all there in the chart to see - and gives an idea of what's been going on

Edited by SarahBell

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One important point to note about these Land Reg data is that the latest numbers are never complete, and therefore the Land Reg should either not publish them in the way that they do, or they should make clear that the figures will be revised upwards.

The August 2010 figures will be understated by roughly 10%. As an example, here’s what the August 2009 figures looked like when they first came out, and how they were subsequently revised:

landreg2.gif

Thanks FT ! That changes the whole thing. If they revise upwards, then volumes at the bottom are actually similar to 2009.

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Sales volumes collapsing at the bottom, but rocketing at the top.

Strikingly similar to the scenario I hypothesised at the beginning of HPC back in August 2008. Which sees headline (but not actual) rent rises as a corollary, but which didn't anticipate the extraordinary level of government/BoE interference that followed.

Can we superimpose my old thoughts onto HPC's favourite anatomy-of-a-bubble graph and correlate it to the actual statistics?

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You need to drill down for the info

Number of Properties Sold in ex14

counts-ex14-200008-201008.gif

Aug 2000 Aug 2010 Change

Detached 24 9 -63%

Semi 20 14 -30%

Terraced 22 8 -64%

Flat 2 3 +50%

Average Property Selling Prices in EX14 (£000's)

rolling-mean-ex14-200008-201008.gif

3-month moving averages by property type in EX14

Due to the small amount of data available for this graph it may appear to be erratic. To gain a better picture of the Selling Prices in this area please see House Prices Report in Postal Area EX

Aug 2000 Aug 2010 Change

Detached £218,516 £453,556 +108%

Semi £74,627 £218,104 +192%

Terraced £71,992 £150,563 +109%

Flat £49,250 £137,333 +179%

All £123,812 £257,411 +108%

Or compare with more recent times... but the data is all there in the chart to see - and gives an idea of what's been going on

Thanks Sarah

London, Postcode N1,

From the bottom up: flats, terraced, semis and detached:

counts-n1-200704-201003.gif

Though in that area, even flats cost more than £200k. That is the bottom there.

Edit: And aren't all these numbers too low?

I'm confused now. I'll just go out instead.

Edited by Tired of Waiting

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Sales volumes collapsing at the bottom, but rocketing at the top.

I think this supports the argument presented here some time ago, to explain why 'average' house prices were reported as rising when the market was stagnating.

If the spread of houses sold comprises of a greater number of 'top end' properties then the average price will appear to rise even though the individual property prices might be falling.

i.e.

If nine 'bottom end' houses are sold at 100K, and one 'top end' at 900K, the average selling price can be quoted as 180K.

If eight of the 'bottom end' houses resell for 80K, and two 'top end' houses sell for 800K, the average selling price can be quoted as 224K.

Is this an HPC or HPI?

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I am not that up to speed on all of the details of the SMI scheme but doesn't it make sense that houses under say 200 to 250k are being withheld from the market due to the SMI scheme? This could account for some of the anomolies in the data.

SMI covers any mortgage but only pays interest on the first £200,000 of debt.

The other schemes should get a boost soon, they were measured in the single digits until not long ago and SMI is moving down from overpaying to paying an average tracker.

From 1 October 2010 the standard interest rate is set at a level equal to the Bank of England’s published monthly average mortgage interest rate. The starting rate that applies from 1 October 2010 is 3.63 per cent (the rate published by the Bank of England on 31 August 2010).

Mortgage Rescue scheme

•your household earns less than £60,000 a year

•you don’t own a second home, including a home abroad

•The value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home

Shared equity loan

The RSL can provide an equity loan to reduce your monthly repayments. You’ll pay a low monthly interest-only charge on the loan. You’ll need to have at least 25 per cent equity in your property to qualify for the equity loan. This means your mortgage isn’t worth more than 75 per cent of the property’s value.

Government mortgage to rent

The RSL may suggest a Government mortgage to rent, which means the RSL will buy your home for 97 per cent of its market value. You’ll stay in your home and pay rent to the RSL as their tenant. The rent will be 20 per cent less than the market rate for your area.

Homeowners Mortgage Support

For example, if you:

•are relying on one income instead of two

•can no longer work overtime

•have had your hours cut

•had two part-time jobs, but have lost one

Who can’t get help

you are eligible for or are receiving Support for Mortgage Interest (SMI)

Going ahead with HMS

If you want to go ahead and your lender accepts you for HMS, you:

•will have to pay at least 30 per cent of the interest due on your mortgage each month

•can take advantage of the reduced repayments for up to two years

•will have to pay back this money, when you return to making full repayments

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