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Morgan Stanley Fears For Lloyds In 10% House Price Slump

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Morgan Stanley believes house prices could slump by as much as 10% over the next two years with Lloyds likely to take the biggest hit from the decline.

The view goes against consensus forecasts, which expect prices to decline 1.9% in 2011 and then rise 2.1% in 2012.

Morgan Stanley is predicting a drop of 3% this year followed by a further decrease of 7% by the end of 2012. It also see GDP growth to be 1.2% this year, compared to the consensus’ 1.6%.

Morgan Stanley analysts cited a host of reasons behind their predictions, primarily rising mortgage rates over the next year and a half, as well as weak real household disposable income growth, which will combine to dampen demand.

'We don’t expect any significant further increase in the availability of higher loan-to-value mortgages and expect only modest improvements in credit availability more broadly,' the bank said.

'Valuations continue to look stretched and affordability hasn’t improved much once higher required deposits are taken into account.’

It warned that Lloyds could take the biggest hit as it is the leader in the mortgage market, accounting for 28% of the market share as of December 2010.

Full article:

http://citywire.co.uk/wealth-manager/morgan-stanley-fears-for-lloyds-in-10-house-price-slump/a496156

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" 3% this year followed by a further decrease of 7% by the end of 2012 ".

Strange. How can people predict drops so small for this year. Only 3%?! All the charts are clearly pointing to faster falls than that. Even the CML predicts falls for this year. Very odd.

This autumn and winter should be carnage. I think prices will fall by around 10% between now and December 31st.

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Only 3%?! All the charts are clearly pointing to faster falls than that.

Are they ? We're 5/12ths through the year and these are the scores on the doors.

Nationwide: +1.75%

Halifax: -1.26%

Rightmove: +6.03%

Land registry: +1.3%

Edited by exiges

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Are they ? We're 5/12ths through the year and these are the scores on the doors.

Nationwide: +1.75%

Halifax: -1.26%

Rightmove: +6.03%

Land registry: +1.3%

This is not a chart.

Rightmove publishes asking, not selling, prices.

( And if you cut my quote please indicate it. The usual ways here are <snip> or (...). Cheers. )

________

Edit: I've found the chart i was thinking about. I think the trend here is clear. And we are in the "spring bounce".

_52110511_house_prices_mar2011_464.gif

Edited by Tired of Waiting

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I've found the chart i was thinking about. I think the trend here is clear. And we are in the "spring bounce".

The trend is far from clear. If anything it looks like a sine wave that is bottoming out before rising again.

True the Rightmove index is asking prices, but the others aren't and there's no arguing that YTD some are still in positive territory, even for this month alone, I don't see how it's going to go -3% by the end of the year, as much as you and I are willing it to.

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The trend is far from clear. If anything it looks like a sine wave that is bottoming out before rising again.

True the Rightmove index is asking prices, but the others aren't and there's no arguing that YTD some are still in positive territory, even for this month alone, I don't see how it's going to go -3% by the end of the year, as much as you and I are willing it to.

I am sure Nationwide, Halifax, and Land registry will show bigger falls than 3% between now and the end of the year, and also more than 3% between Jan and Dec 2011.

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I am sure Nationwide, Halifax, and Land registry will show bigger falls than 3% between now and the end of the year, and also more than 3% between Jan and Dec 2011.

That's your opinion and you're entitled to it, however the chart you're referring to does not substantiate your belief.

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That's your opinion and you're entitled to it, however the chart you're referring to does not substantiate your belief.

It does, if you remember that we are in the "spring bounce", as I wrote just above the chart.

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It does, if you remember that we are in the "spring bounce", as I wrote just above the chart.

I know, but you were substantiating your claim with a graph which actually points to the contrary.

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I know, but you were substantiating your claim with a graph which actually points to the contrary.

You can't read just 1 or 2 months in a chart exiges, and ignore the reasons for this 1 or 2 months behaviour, and ignore the overall trend.

Well, you can, but at your peril. I'm not going to buy now.

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The trend is far from clear. If anything it looks like a sine wave that is bottoming out before rising again.

True the Rightmove index is asking prices, but the others aren't and there's no arguing that YTD some are still in positive territory, even for this month alone, I don't see how it's going to go -3% by the end of the year, as much as you and I are willing it to.

As always, you need to factor in London

However the trend in the capital city remains upwards, with London properties posting a small but significant average price increase of 0.2 per cent in May. In comparison, prices outside the capital fell 0.25 per cent in May, following a 0.2 per cent decline in April

As prices in London are far higher than anywhere else, even small increases can have an effect on the UK's average. I see 3%+ declines till the end of the year- I just don't see wages that can even support nominal price increases....

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It does, if you remember that we are in the "spring bounce", as I wrote just above the chart.

Don't some of the data releases take that into account though through seasonal adjusting? This particular chart is admiitedly the YoY figure.

Normally I'm into curves, but the curve on that graph aint pretty. It points out to a long protracted Japanese style decline. This isn't a replay of 2008/9, much as I would like it to be.

Countering my own points, the graph in 2007 looked like it had stabilised at around 5% in December, then tumbled big time. There's no doubt that in a low transaction environment, the 5% stamp duty on the most expensive properties has also given a temporary boost to the data. By my own admission, there are a couple of straws enclosed in my clammy fist right now.

Of course, if Halifax can come up with -1.5% in their May release, then things will look peachy once again.

Edited by rantnrave

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That's cruel taunting a visually impaired person like that.

I think he can afford laser eye surgery with all the billions he has made from his puzzles. He is probably lying by a pool right now surrounded by a bevy of bikini-clad beauties.

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Are they ? We're 5/12ths through the year and these are the scores on the doors.

Nationwide: +1.75%

Halifax: -1.26%

Rightmove: +6.03%

Land registry: +1.3%

Rightmove is aspiration, Nationwide is southern mortgage biased, Halifax is northern mortgage biased. The one semi-realistic one is LR and they exclude certain types of sale (new, auction etc.).

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Zoopla has a pretty handy tool for local market values, which gives a better idea of whats happening where it is relevant to you.

There may be a better tool out there, but Zoopla's isn't too bad and it uses sold prices, and works : http://www.zoopla.co.uk/market/gl/

Gloucestershire has fallen 8% over the past 6 months, so we are well on course for double digit falls by the end of the year.

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Zoopla has a pretty handy tool for local market values, which gives a better idea of whats happening where it is relevant to you.

There may be a better tool out there, but Zoopla's isn't too bad and it uses sold prices, and works : http://www.zoopla.co.uk/market/gl/'>http://www.zoopla.co.uk/market/gl/

Gloucestershire has fallen 8% over the past 6 months, so we are well on course for double digit falls by the end of the year.

Nice tool hpc.

It works per postcode too, if we change the part of the address:

http://www.zoopla.co.uk/market/nw1

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Zoopla has a pretty handy tool for local market values, which gives a better idea of whats happening where it is relevant to you.

There may be a better tool out there, but Zoopla's isn't too bad and it uses sold prices, and works : http://www.zoopla.co.uk/market/gl/

Gloucestershire has fallen 8% over the past 6 months, so we are well on course for double digit falls by the end of the year.

That is a heck of a find. Shame it's so buried on their site. Imagine if it was on the front page, inviting people to find out the price trends in their area. There would be a lot of stunned punters out there!

EDIT I just tried typing a town name in the link instead of the postcode and that works too.

Edited by rantnrave

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That is a heck of a find. Shame it's so buried on their site. Imagine if it was on the front page, inviting people to find out the price trends in their area. There would be a lot of stunned punters out there!

EDIT I just tried typing a town name in the link instead of the postcode and that works too.

Yes, it's a shame they don't make it more obvious. I just stumbled across it a few months ago when I was looking up a specific property.

The Town thing is a good tip, as many larger towns are spread over 3 or 4 postcode districts.

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<snip> The one semi-realistic one is LR and they exclude certain types of sale (new, auction etc.).

Except they don't exclude auctions at all, they exclude repossessions.

Is it an auction? Yes=included provided not a repossession

Is it a repossession? Yes=excluded (99.99% of the time)

Is it a repossession sold at auction? Yes= excluded

Most auctions are INCLUDED.

This has been done to death in other threads.

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