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Land Registery Mystery Explained

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Continued slump in sales volume in bottom half of the market

I know it's a couple of days old but the below is a good explanation of the mysterious land registry figures that caused an outbreak of depression amongst my fellow bears. It's what we all said, but someone, with a bit of time on their hands has started up excel and turned it into fact. It cheered me up anyway.

by Alex Grey 10 Nov 2005 11:31 PM

The Land Registry figures reveal that between July-Sept. 2004 and the same period in 2005, the number of properties sold valued at

<150,000 sterling (roughly the mid-point (median) of properties sold)fell by 18.2% while the number sold valued at greater than that amount fell by 13.0%. This is one of the main reasons the Land Registry figures show a year over year gain in the average price of properties sold. Given that this was a period when the average selling price stagnated, it is less subject to the the problem of price escalation leading to a decline in the numbers of lower-priced houses.

It looks like the lower half of the market may have been weakening for some time. Between July-Sept. 2003 and the same period in 2004, even if I assume that all of the sales decline in the lower price group (<150,000) was due to price escalation to the higher group and I subtract these from the total increase in the higher price group (>150,000), sales in the higher group still rose by 15.5%, while according to these assumptions sales in the lower-priced group changed by 0%.

So the lower half of the market (150,000 sterling has been weakening for some time and has shown no sign of a turnaround based on the most recent figures. Given that the housing market works as a chain, sales weakness at the bottom will gradually extend up the housing ladder leading to further declines in volume of sales.

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So wouldn't that mean that surveys based on the asking price should show prices falling due to the larger number of <150k houses on the market, or is this effect negated when they mix adjust the figures.

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It looks like the lower half of the market may have been weakening for some time. Between July-Sept. 2003 and the same period in 2004, even if I assume that all of the sales decline in the lower price group (<150,000) was due to price escalation to the higher group and I subtract these from the total increase in the higher price group (>150,000), sales in the higher group still rose by 15.5%, while according to these assumptions sales in the lower-priced group changed by 0%.

I got as far as this bit but couldn't follow.

  • assume all sales decline in <150K range is an addition to =>150K range.

  • So add whatever it take to bring this point to 0 for the <150K.

  • Sales change in <150K range =0

  • Sales change that were added to <150K range must then be deducted from the higher price group.

  • the change was already a fall of 13%

  • Now it is a rise of 15.5% but with a reduction in numbers???

I'm lost!

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I got as far as this bit but couldn't follow.

  • assume all sales decline in <150K range is an addition to =>150K range.

  • So add whatever it take to bring this point to 0 for the <150K.

  • Sales change in <150K range =0

  • Sales change that were added to <150K range must then be deducted from the higher price group.

  • the change was already a fall of 13%

  • Now it is a rise of 15.5% but with a reduction in numbers???

I'm lost!

Elizabeth,

Try to imagine it as a set of scales.

A house <150,000 is left and >150,000 right.

HOUSE PRICE

LAST YEAR THIS YEAR

£140K £155K

£150K £165K

£170K £180K

£200K £170K

So what has happened is all the prices of last years stock have moved over to the right coz they are now >150K. So look at the scalles and you will see that there is nothing counter-balancing the average.

The 200K house has dropped 30K but not enough to tip the scales the other way. SO whilst house prices will drop SUBSTANCIALLY for the foreseeale future it needs a LOT of the >150K property to go into the <150K category.

In the same way that all the reductions in the <150K category do not affect the balance of the scale. As they are not moving sides (from right to left). They do in theory, but not a lot.

MAKE SENSE?

The point being - the average price will remain 'positive for some time. The reality is, if they done an average on sub £250K properties you will find that it will be negative in 'real terms'. I will do a comparison a little later tonight.

TB

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Agree that it’s both confusing and inaccurate, sheds almost no light on the subject, and certainly should not be confused with fact - but as it's written by a journalist it must be true ;) . On the other hand, median prices are closer to £140k, there was a big increase in the proportion of sales at just below £120k with a corresponding (but small) drop just above £120k (stamp duty distortion), and almost no change (or ever so slightly positive) from about £180k and upwards. The big change was the significant drop in the proportion of sub-£60k transactions and in consequence the non-mix-adjusted mean was lifted by about 3.5%.

See this thread [Nov 8th] - apologies for the gory details, but the graph tells a clear story:

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=229977

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Agree that it’s both confusing and inaccurate, sheds almost no light on the subject, and certainly should not be confused with fact - but as it's written by a journalist it must be true ;) . On the other hand, median prices are closer to £140k, there was a big increase in the proportion of sales at just below £120k with a corresponding (but small) drop just above £120k (stamp duty distortion), and almost no change (or ever so slightly positive) from about £180k and upwards. The big change was the significant drop in the proportion of sub-£60k transactions and in consequence the non-mix-adjusted mean was lifted by about 3.5%.

See this thread [Nov 8th] - apologies for the gory details, but the graph tells a clear story:

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=229977

Thanks spline, I like the graph! Makes total sense.

Whoops - can you please stop giving this malignant government ideas mate!

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Added new post with excel file and other data.

http://www.housepricecrash.co.uk/forum/ind...showtopic=18995

You can see the trend - Just concentrate on your area of potential purchase and try and work out whether the your target purchase price has actually gone up at all. You may find they are coming down in real terms. I also agree that £140K for semi is about the REAL WORLD price for my area of Liverpool.

Good luck

TB

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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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