Housing Transactions Lowest In 40 Years

[rantnrave]

Contained in the latest Hometrack report:

Monday 28th November 2011

This year looks set to have the lowest number of housing transactions in 40 years.

A total of 840,000 transactions are predicted, almost 50% lower than in 2007, and the equivalent of the average home changing hands just once every 26 years.

House prices are also heading slowly but surely down, Hometrack reported this morning.

The survey says that asking prices tiptoed down just 0.2% this month – but after similar tiny falls every month for the last 16 months.

The small size of the falls means that average national house prices are down by just 2.3% compared with a year ago. Consumer confidence, says Hometrack, is down by a lot more.

Only in London have house prices remained unchanged over the last two months, but Hometrack warns that London is unlikely to escape the continued turmoil in the economic markets, and that when prices start to fall in the capital, the scale of headline price falls will start to accelerate.

Nor is the drop in national asking prices boosting sales. Hometrack says that while it expects a four-decade low in transactions this year, it does not think sales will pick up next year.

Demand from buyers has continued to drop off, by 2.2% in the last month. Hometrack also observes that only ‘committed sellers’ are putting their homes on the market and are having to ‘align’ their prices to meet what buyers are prepared to pay.

Richard Donnell, director of research at Hometrack, which bases its findings on responses from estate agents, said: “Demand is likely to continue to fall in the run-up to Christmas, keeping the supply/demand balance in negative territory.

“As a result, Hometrack expects to see an acceleration in price falls in the months ahead.”

Sourced from EA Today

[Simon Brown]

“As a result, Hometrack expects to see an acceleration in price falls in the months ahead.”

Excellent, as a cash buyer in 2012 Hometrack is my new best friend.

[Pent Up]

Hopefully some more EAs will go bust soon.

[Giordano Bruno]

As I recall from the last bubble, very low number of transactions preceded serious falls in prices. But we didn't have a gov't trying to prop up prices then.

[aa3]

What I am seeing is in the lower class and middling areas nothing ever sells, but only very rarely do you find a seller who takes a hint and lowers their prices.

In the upper end areas things still sell at boom highs, there is relatively little inventory, its still a healthy market.

The bottom 70 or 80% of the housing market is essentially dead, until there is a price correction.

[SarahBell]

In the upper end areas things still sell at boom highs, there is relatively little inventory, its still a healthy market.

Foreign money maybe?

Some report says London has more property sold to non-uk peeps than any other capital in the world.

[TheCountOfNowhere]

Yet prices remain high !!!

I was looking at Rightmove yesterday and the asking prices of most houses are a joke, 20% above what the land registry say they are and set at 2007+ levels.

I had the same depressed feeling I had in 2007 looking at these houses thinking....these prices are a joke and who is mad enough to pay buy them....no one it would seem

The low interest rate policy is killing the market....some idiots can afford to pay more at these rates and they are giving false hope to the few that really need to sell at 2007 prices...no one is willing to budge.

The real solution is up the interest rates, down the house prices, stop government interference and let the recovery start.

Edited November 28, 2011 by TheCountOfNowhere

[OnlyMe]

Foreign money maybe?

Some report says London has more property sold to non-uk peeps than any other capital in the world.

Lot of locust activity in relation to the Olympics as well as open door investment / capital plundering incentives from the government. Won;t help London one bit in the long run - it will drive business and staff abroad.

[Bruce Banner]

Yet prices remain high !!!

I was looking at Rightmove yesterday and the asking prices of most houses are a joke, 20% above what the land registry say they are and set at 2007+ levels.

I had the same depressed feeling I had in 2007 looking at these houses thinking....these prices are a joke and who is mad enough to pay buy them....no one it would seem

The low interest rate policy is killing the market....some idiots can afford to pay more at these rates and they are giving false hope to the few that really need to sell at 2007 prices...no one is willing to budge.

The real solution is up the interest rates, down the house prices, stop government interference and let the recovery start.

It's the idiots who pay as much as they can borrow for a house that are the cause of the problem. Would they pay £100K for a bag of crisps?

[The Knimbies who say No]

Contained in the latest Hometrack report:

Sourced from EA Today

I wonder if any of the more strident types at EA today will still try and claim that price levels have nothing to do with sales numbers.

[Democorruptcy]

Contained in the latest Hometrack report:

A total of 840,000 transactions are predicted, almost 50% lower than in 2007

Sourced from EA Today

It's always this comparison to 2007! That was a abnormal liar loans boom figure. The B of E, government etc should not be decrying transactions that are below a boom number as if that is a normal figure we should again strive to reach. What were the average number of transactions 1993 to 2003?

Bank of England report last week did exactly the same as if we need ponzi schemes to get back to an abnormal figure

The housing market in the UK is going through an extraordinary period of adjustment – perhaps it would be

better to call it a transformation. The volume of transactions has halved since mid-2007

http://www.bankofengland.co.uk/publications/speeches/2011/speech531.pdf

Stuff like turning houses into red or black on a roulette wheel with equity loan gambles

Consider the following example. An investor provides an equity loan of £10,000 for a house worth £100,000.

In exchange for paying no annual return on this loan the homeowner agrees to give up 20% of any gain in

the value of the home and the loan provider agrees to take 10% of any loss in the value of the house. Five

years later the homeowner decides to sell the house. If the house at that point is worth £135,000, they repay

the investor the initial £10,000 plus 20% of the £35,000 gain in the value of his house, that is, £17,000 in

total. If, instead, the house is worth only £80,000, they repay the investor the initial £10,000 less 10% of the

£20,000 loss in the value of his house, a total repayment of £8,000. Were both price movements equally

likely, the investor would expect to receive ½*(£17,000) + ½*(£8,000) = £12,500 on an initial investment of

£10,000. This is an expected return of 25% over five years.

Edited November 28, 2011 by Democorruptcy

[TheCountOfNowhere]

It's the idiots who pay as much as they can borrow for a house that are the cause of the problem. Would they pay £100K for a bag of crisps?

Probably, if Krusty told them they were a good investment and the slat and vinegar ones were better than the cheese and onions.

[crashmonitor]

Contained in the latest Hometrack report:

Sourced from EA Today

The EAs read this from their trade jornals and then spin a much rosier picture to vendors. They deserve the level of business they are getting and they deserve to go bust.

You really can't believe how VIs are spinning this crash, from EAs to the media types such as *Ann Ashworth in the Times. No wonder new vendors are confused and going to market to high. Anybody would thing the market is functional, not at a forty year transaction low.

[TheCountOfNowhere]

You really can't believe how VIs are spinning this crash, from EAs to the media types such as *Ann Ashworth in the Times. No wonder new vendors are confused and going to market to high. Anybody would thing the market is functional, not at a forty year transaction low.

Spot on there. every house I see coming on the market now is 2007+ prices and 20% above what the land registry say the real selling prices are at.

I actually had an EA tell me they had to value high or they wouldnt get the business and they are happy to submit ANY offer. I pointed out the issue was their valuations and they were shooting themselves in the foot, he just didnt see it that way.

[Bloo Loo]

Probably, if Krusty told them they were a good investment and the slat and vinegar ones were better than the cheese and onions.

Consider the following example. An investor provides an equity loan of £10,000 for a house worth £100,000.

In exchange for paying no annual return on this loan the homeowner agrees to give up 20% of any gain in

the value of the home and the loan provider agrees to take 10% of any loss in the value of the house. Five

years later the homeowner decides to sell the house. If the house at that point is worth £135,000, they repay

the investor the initial £10,000 plus 20% of the £35,000 gain in the value of his house, that is, £17,000 in

total. If, instead, the house is worth only £80,000, they repay the investor the initial £10,000 less 10% of the

£20,000 loss in the value of his house, a total repayment of £8,000. Were both price movements equally

likely, the investor would expect to receive ½*(£17,000) + ½*(£8,000) = £12,500 on an initial investment of

£10,000. This is an expected return of 25% over five years.

lets rewrite that in english from the buyers point of view and reality

Consider the following example. A speculator provides a mortgage of £10,000 for a house bought for £100,000.

In exchange for paying no annual return on this loan the homeowner agrees to give up 20% of his equity ie, another £18000.

Five years later the part homeowner decides to sell the house.

He gets permission from the other owner to do so.

If the house at that point is sold £135,000, the speculator gets, from the sale, the initial £10,000 plus £7000, £17,000 in

total.

If, instead, the house is worth only £80,000, they repay the investor the initial £10,000 and eat the £20K loss themselves.

[Bruce Banner]

Spot on there. every house I see coming on the market now is 2007+ prices and 20% above what the land registry say the real selling prices are at.

I actually had an EA tell me they had to value high or they wouldnt get the business and they are happy to submit ANY offer. I pointed out the issue was their valuations and they were shooting themselves in the foot, he just didnt see it that way.

House worth £150K... EA values at £200K to get the business... vendor instructs EA on that basis.

Prospective purchaser offers £150K, is the average vendor likely to accept that after an EA has valued it at £150K?

[juvenal]

House worth £150K... EA values at £200K to get the business... vendor instructs EA on that basis.

Prospective purchaser offers £150K, is the average vendor likely to accept that after an EA has valued it at £150K?

Do you mean £200K?

If so, I agree with the point wholeheartedly.

EA valuations are at the heart of the whole HPI problem. They put a 'value' on houses, not vendors.

[MrFlibble]

What I am seeing is in the lower class and middling areas nothing ever sells, but only very rarely do you find a seller who takes a hint and lowers their prices.

In the upper end areas things still sell at boom highs, there is relatively little inventory, its still a healthy market.

The bottom 70 or 80% of the housing market is essentially dead, until there is a price correction.

Story of two halves. Some people are still partying like it's 1999, some are not able to.

Some of my work colleagues who were struggling pre-2007 are now enjoying the housing party. Despite having bought around the peak, they are on trackers so are rolling in money and feel good too thanks to TPTB propping up the market.

Same cannot be said for some of our family friends who bought at roughly the same time in N.I. Although they are getting by thanks to low mortgage rates they have a very bitter taste in their mouths with regards to the housing crash.

It's naive for the English to believe that what's happened in N.I. cannot happen in the mainland, although most I speak to seem to think it's different here. The 'owners' of expensive houses probably believe it's different for them too, just like it's different in London. It's not different though, if the low end of the market is dropping out then it will float up to the top end eventually.

[TheCountOfNowhere]

most I speak to seem to think it's different here. The 'owners' of expensive houses probably believe it's different for them too, just like it's different in London. .

I can smell the denial these days

They are right about it being different for them...they probably borrowed so much they are more ****ed than everyone else.

Edited November 28, 2011 by TheCountOfNowhere

[19 year mortgage 8itch]

Some of my work colleagues who were struggling pre-2007 are now enjoying the housing party. Despite having bought around the peak, they are on trackers so are rolling in money and feel good too thanks to TPTB propping up the market.

Perhaps my biggest WTF moment in all of this is that it was so many people who stretched themselves financially on the trackers as that was the only way they could afford it. They then got rewarded with the lowest rates in history.

I've got past the stage of wanting to see them suffer but where is the slap in the face that says, that was a silly thing to do, don't do it again? What is going to stop the creation of the moral hazard that you shouldn't necessarily borrow everything you can get your hands on?

I asked Scepticus this once and my understanding of his reply is that all that will happen is that they won't be able to do it again becasue we're at the stage where not much more personal debt can be added. But that just seems to make everyone suffer and I'm not sure that these people are aware of why we are where we are today.

So I'm just bemused by it all.