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RichM

House Prices Rise As Sales Fall

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House prices rise as sales fall

"Average" property now 195K. Great.

Ladies and gentlemen, the bubble has grown bigger. Not good news on the face of it.

But on second thoughts, does that mean that:

A - The bubble will keep on growing, and growing, etc etc?

OR

B - The bubble is even more likely to pop?

Interestingly, most growth from Wales. SW England static. Plus sales down, on already fairly low figures from Q3 2004?

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House prices rise as sales fall

"Average" property now 195K. Great.

Ladies and gentlemen, the bubble has grown bigger. Not good news on the face of it.

But on second thoughts, does that mean that:

A - The bubble will keep on growing, and growing, etc etc?

OR

B - The bubble is even more likely to pop?

Interestingly, most growth from Wales. SW England static. Plus sales down, on already fairly low figures from Q3 2004?

Its not more likely to pop as popping was always a foregone conclusion. By inflating even more, the pop will just be that much greater.

Edited by gone west

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The interesting thing is that volumes aren't down that much (-15%?). It just goes to prove how much money there is out there, and how you can never underestimate the benefit of being on the ladder already. For those stepping up or sideways the risks are relatively small. It's "only" FTBs that stand to lose their shirt in this market, and it may well be that they make up the majority of the missing volume, especially now there seem to be fewer BTLers to take up that slack.

It makes you wonder whether things might just tick over as they are until SIPPS kick in, and I'm beginning to think anything could happen then whether it makes any sense or not. Pension panic is rife after all, and previous mis-selling in a variety of fields shows that common sense and money rarely go together.

If I didn't believe that high house prices are fundamentally bad for the whole of society this whole house price game could be highly entertaining.

Andrew McP

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House prices are still rising according to these figures but at a slower rate. The house market is like a supertanker and will take a long time to stop forward momentum.

The key paragraph in the report:

The Land Registry said house prices rose just 3.52 percent in July-September on the same period a year ago. That was the slowest rate since 1996 and compared to 5.43 percent annual inflation in the second quarter .

http://uk.news.yahoo.com/08112005/325/engl...slows-govt.html

What was happening in 1996? It was the gateway year from the "Great Crash"TO HPI. We have returned to that point which must mean we are at the gateway moving FROM HPI to HPC.

IN other words we are simply seeing the repeat of the housing cycle. It must begin and end somewhere and we are now at the end of HPI and at the beginning of HPC.

Edited by Realistbear

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C'mon BoE - obviously more debt is being fuelled! Lets get them IR's back to 4.75%

More like it confirms they were wrong to cut them.

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WTF this goes against the laws of supply and demand.

The VI's have frightening power to be able to keep the lie going. The 'great SIPPs giveaway' has given people confidence despite the fact that it will cause barely a ripple. People are still in denial.

Don't worry gentleman the crash is still on. You can't fool economics for ever.

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At the moment alot of the largest builders are engaged in a practice where they buy their customers old house so that they can move into their new build.

I wouldnt be surprised to see an OFT investigation into these builders conduct in a few years time when the fall out of the HPC is being analysed. ;)

But what do the builders do with the house they have just bought/part exchanged?

Will they not become forced sellers? We would be in the situation of 'Overinflated Newbuild Price' and 'Forced Selling Of Part-Ex Property'. The net result may be stagnation (or even a bit of HPI, given the newbuild costs).

Is this what we are seeing/you are inferring?

CF.

Edited by Control Freak

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Yep we all know that. Even Merv knows that!!

At least Merv didn't want to cut them, the government guys ensured they were cut.

Boe, independent? don't make me laugh.

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Speaking of sleep, you know what they say about that dream people have about falling? If you should ever hit the ground in one of these dreams, it means you've died.

It does? Did someone come back from the dead to give us this interpretation? ;)

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To my mind these figures mean the bottom of the market has gone; the cheapest houses are no longer selling, so the mean price goes up but volume goes down. A 15% fall in volume is a lot, actually, whether it is measured by volume or number of transactions.

Unless that lower end of the market comes back, this absence of activity at the low end will drag the higher end down eventually. It will have to, because those stuck trying to sell their low end first properties will be unable to take the next step up the ladder.

As a famous, but unspeakable, man once said in another context: Geduld! Geduld! Er kommt! Er kommt!

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I cant believe they are still fiddling the figures. Just goes to show the only houses that are selling are the top of the ladder ones.

A lot of HPCers seem to be clinging tenaciously to the second point here. But is there any evidence at all to support it?

To the first point, does anyone really believe it? Especially in the case of the LR figures? If no-one believes it then why bother saying it?

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Durch,

Check out Spline's analysis of it on his own thread, very good indeed.

Combine this effect with full price sales that are nothig of the sort - newbuild with discounts/cashback/freebies and also part-exchange and I think there is some very credible evidence that what the LR figures purport to show as the bottom line relate very little to what you or I would call an average house price statistic.

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OK so why is it happening now. We have seen MoM decreases and suddenly the market is showing rude signs of life. Is it interest rates, SIPPs, seasonal factors or simply the downward slide taking a breather?

Does anyone have any ideas. If we can see what it is then we'll know when normal (downward) service will resume.

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To my mind these figures mean the bottom of the market has gone; the cheapest houses are no longer selling, so the mean price goes up but volume goes down. A 15% fall in volume is a lot, actually, whether it is measured by volume or number of transactions.

Unless that lower end of the market comes back, this absence of activity at the low end will drag the higher end down eventually. It will have to, because those stuck trying to sell their low end first properties will be unable to take the next step up the ladder.

As a famous, but unspeakable, man once said in another context: Geduld! Geduld! Er kommt! Er kommt!

A quick analysis in one London borough (at the cheaper end of the London market) supports this. Prices of flats are basically UNCHANGED from July-Sept2004 to July-Sept2005, with a variation of 3% over the period. (up down and sideways - I am not sure it means anything on quite low volumes).

BUT the ratio of flat sales to terraced sales (the majority of the 'upper' market here, with very few detached properties and semis) shows that the volume of flat sales has fallen by a far greater proportion than that of terraced:

In Sept 2004, the volume of terraced sales was 25% above that of flats. In Sept 2005, the volume of terraced sales is 80% higher than that of flats.

Maybe this methodology can be applied by others to analyse an area they know.

Edited by Key Worker

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The LR figures simply confirm what most of the other less lagging indices have been saying and are not a big surprise. They should not lead to a revision of the expectation that we are entering a period of price falls.

The last two years of LR YoY figures (rounded to one decimal) are:

July - Sept 2003 10.6

12.6

14.1

16.1

July - Sept 2004 17.2

11.8

10.3

5.4

July - Sept 2005 3.5

Obviously that 2005 has not seen a fall in prices is disappointing to many. BUT the celebration of the bullish is not justified either.

The trend is a continuing and sharp slow down in house price inflation during 2005. It is still quite possible that by the end of 2005 YoY price differences will be a small positive, flat or negative. What seems most unlikely is that high levels of HPI will start up again. Other things being equal there is room for interpretation about speed but not direction.

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  • 301 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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