Land Registry Falls From Peak Chart

[NEO72]

Thought this might be of interest - knocked up a chart of the Land Reg % falls from peak and lo and behold, we're on pretty much exactly the same trajectory as late '07/early '08 (so much for the 'it'll be a gradual decline over the next 10 years brigade' ).

The next month or two are crucial IMO as this is when the bigger falls began in '08, so some more 1%+ drops will confirm that we are following the same road down. Given that interest rates are already rock bottom and the government doesn't have an impending election to buy win, doesn't seem much anyone can do or will do to stop the falls this time

(p.s. hope this works ok - never tried the image uploading thing before)

[jfk]

[onesmallstep]

yep, good chart.

I just reviewed pBee after a bit of a lay off and looks like a crash to me. Reminds me of the early 90s, panic will set in but due to other factors, it will be a lot worse this time.

[Odakyu-sen]

If the latest decline tracks the old one, the rate of price declines should start to increase about now. In other words, the "roller coaster" of price falls may be just about to head down into the Big Dipper.

Get ready for the screams....

[rantnrave]

If the latest decline tracks the old one, the rate of price declines should start to increase about now. In other words, the "roller coaster" of price falls may be just about to head down into the Big Dipper.

Get ready for the screams....

Scream if you wanna go faster...

[rantnrave]

I hoped the Halifax were about to give us the next insight - that's not out until next week now :angry:

[rantnrave]

Dupe

Edited May 5, 2011 by rantnrave

[swissy_fit]

Guys, you're dreaming.

This won't accelerate until interest rates rise.

Or at least, houses you want to buy won't drop much, the rubbish is dropping fast.

It'll take rate rises to squeeze the middle classes enough - they'll sit tight while they can.

[Chuffy Chuffnell]

Guys, you're dreaming.

This won't accelerate until interest rates rise.

Or at least, houses you want to buy won't drop much, the rubbish is dropping fast.

It'll take rate rises to squeeze the middle classes enough - they'll sit tight while they can.

True, but it's good to see prices falling even before rates rise... which they will later this year, even if only by 0.25%!

[NEO72]

Guys, you're dreaming.

This won't accelerate until interest rates rise.

Or at least, houses you want to buy won't drop much, the rubbish is dropping fast.

It'll take rate rises to squeeze the middle classes enough - they'll sit tight while they can.

I don't know - tax rises, benefit cuts and inflation seem to be having as good if not better effect on squeezing household disposable income.

Funny, I'm watching 4 or 5 decent houses at the moment - 4 bed detached, good school, 'burbs, that type of thing - and so far three have been reduced with no takers (this is in somerset which is a bit of a bellwether since its pretty average stats-wise).

As an aside, I just looked at Greater London. We're only two months past the second peak (G. London peaked later the first time as well) and prices are down 1.7%. At the same point in 2008 (i.e. two months past the peak), prices were down 0.8% - so it would appear that G. London is off to a faster start than in 2008 (but I'm sure this won't continue because we all know it's special ).

[Fairies Wear Boots]

True, but it's good to see prices falling even before rates rise... which they will later this year, even if only by 0.25%!

Too true. I thought we needed rate rises but they're dropping again already. It'll be carnage if they ever have to lift them significantly.

edit: grammar

Edited May 5, 2011 by Fairies Wear Boots

[bulboy]

Thought this might be of interest - knocked up a chart of the Land Reg % falls from peak and lo and behold, we're on pretty much exactly the same trajectory as late '07/early '08 (so much for the 'it'll be a gradual decline over the next 10 years brigade' ).

The next month or two are crucial IMO as this is when the bigger falls began in '08, so some more 1%+ drops will confirm that we are following the same road down. Given that interest rates are already rock bottom and the government doesn't have an impending election to buy win, doesn't seem much anyone can do or will do to stop the falls this time

(p.s. hope this works ok - never tried the image uploading thing before)

Do I read at least 10 months to start looking around?

[scottbeard]

Guys, you're dreaming.

This won't accelerate until interest rates rise.

Or at least, houses you want to buy won't drop much, the rubbish is dropping fast.

It'll take rate rises to squeeze the middle classes enough - they'll sit tight while they can.

Prices tanked in 2008/9 against a backdrop of falling interest rates, and only stabilised when rates hit zero.

Now rates are still zero, and prices are falling again.

I'm not sure interest rate rises are a necessary condition for house price falls.

[Pent Up]

Interesting chart. Let's hope it carries on the trend! Would be good if you could post an update every month.

[arrgee1991]

This won't accelerate until interest rates rise.

Or at least, houses you want to buy won't drop much, the rubbish is dropping fast.

It'll take rate rises to squeeze the middle classes enough - they'll sit tight while they can.

+1

I expect prices to tumble, and supply to be choked. So the house you want won't be for sale even if prices drop 25% plus. Low interest rates are allowing people to defer forced sales. This has gone on for about 3 years now, and will continue. The recent low volumes will diminish further and there will be almost no transactions occuring. Bad news for estate agents. Lower commissions and less sales.

Edited May 6, 2011 by arrgee1991

[arrgee1991]

I'm not sure interest rate rises are a necessary condition for house price falls.

No, but if they fall with stable rates, imagine what could happen if they revert to historical norms. 5% was typical prior to 2008. At that level, you are looking at mortgage rates of around 8-9% compared with the 4-5% typically been paid at present.

[Killer Bunny]

Brilliant analysis. Any chance I could have the chart for my work? Can't copy it too easily. If OK, would you kindly amail it / PM? Thx

[NEO72]

Brilliant analysis. Any chance I could have the chart for my work? Can't copy it too easily. If OK, would you kindly amail it / PM? Thx

No probs KB - will pm you the file this evening.

[Angela]

Great chart, thanks Neo.

I am seeing reductions and very few sales, finally in my area, FY8 which had been bucking the trend -so I'm a believer :-)

[libspero]

Was this inflation adjusted or raw data?

I didn't realise nominal drops were so large the first time around..

Edited May 7, 2011 by libspero

[onesmallstep]

I am seeing crash speed in my area, a pattern has definitely started to emerge, that is

put the house on the market wait a bit then a big drop then sell, next similar house goes on for 10k less.

lots of stcc then available, then under offer then stcc etc

others just sit on the market

this is a major crash, I know the headline numbers don't reflect this but it is exactly what happened in the late 80s 90s.

the banks, the economy, the govt are completely screwed, they will fight it tooth and nail until the very end.

by the way my area is fairly affluent with plenty of jobs.

[onesmallstep]

+1

I expect prices to tumble, and supply to be choked. So the house you want won't be for sale even if prices drop 25% plus. Low interest rates are allowing people to defer forced sales. This has gone on for about 3 years now, and will continue. The recent low volumes will diminish further and there will be almost no transactions occurring. Bad news for estate agents. Lower commissions and less sales.

inflation is the elephant in the room here, that and low pay rises. The panic starts as the specter of negative equity approaches.

Negative equity, inflation, low pay rises or job reductions followed by the other demon interest rate rises in the future. This could all become very scary for Mr Middle class aspirational. Bankruptcy or house repossession does not fit with new 3 series man on the move image.

[BlueRat]

Can't see it unless you log in, so for the benefit of any lurkers:

http://imageshack.us/photo/my-images/820/chartez.jpg/

(can't use img tags on here?)

[bomberbrown]

I don't know - tax rises, benefit cuts and inflation seem to be having as good if not better effect on squeezing household disposable income.

Funny, I'm watching 4 or 5 decent houses at the moment - 4 bed detached, good school, 'burbs, that type of thing - and so far three have been reduced with no takers (this is in somerset which is a bit of a bellwether since its pretty average stats-wise).

As an aside, I just looked at Greater London. We're only two months past the second peak (G. London peaked later the first time as well) and prices are down 1.7%. At the same point in 2008 (i.e. two months past the peak), prices were down 0.8% - so it would appear that G. London is off to a faster start than in 2008 (but I'm sure this won't continue because we all know it's special ).

Given that London was the mother of all bubbles, your analysis doesn't surprise me in the least. There's still a long long way to go yet. IMHO.

Edited May 8, 2011 by bomberbrown

[GordonBrownSpentMyFuture]

Interesting chart. Let's hope it carries on the trend! Would be good if you could post an update every month.

+1

Thanks for producing that. Interesting that the start of HPC part 2, the widely anticipated second-leg down, has commenced at a faster rate than the initial 2007/08 crash... and that's despite QE and ZIRP.

No where to go but down now.

The inevitable can only be postponed; not prevented.