Halifax Figures Due 9Am 5/6/14

[Democorruptcy]

Pedantic alert !!!!

It took a while for the sub-prime lending to gather steam. I estimate it was about 14 months ago it all started to go wrong.

You described FLS as F.... Little Savers... and I agree. It's been doing that for 2 years. I think it's worth pointing out that's it's 10 months extra on your 14.

Re the 40% to 58%, if you are going to try project how ridiculous the state of affairs have become you might as well do it properly, not miss 45% off.

Pedantic is correcting 5% or 10%.... not 45% and 70% misses with the ball hitting the corner flag

[Wurzel Of Highbridge]

The longer this goes on the more people buy in at insane level and the harder it will be to allow a correction. I think we have passed the point of no return in that the goverment will do anything to maintain the £ value of a house. I think we are going to see massive wage inflation as it seems the only way out. In ten years time, property might look like good value but I dont expect them to fall in actual asking price.

I think were going to see a massive 50% devaluation in the pound when this bubble pops and the international investors dump their property and the pound.

[TheCountOfNowhere]

No mention of this "good" news on Sky news front page.

They must be worried about having to do something about this.

[FreeTrader]

Is Halifax's mortgage book also increasingly skewed towards London?

(My initial typo was autocorrected to screwed by my iPhone. That might be the case...)

The latest available figures for Lloyds Banking Group (Q3 2013) show 24% of outstanding mortgage balances in London. This compares with 31% for Nationwide at 4 April 2014.

Lloyds has a greater proportionate share than Nationwide in the south-east, giving a London + SE share of 43.4% for Nationwide against 39.6% for Lloyds.

If anyone's thinking that London is currently biasing house price indices, it's a debatable point. The index compilers will argue that surging London prices don't, but there are underlying reasons why they might. This issue was discussed in a recent paper on house price indices published by the Institute of Fiscal Studies, and I'll quote from the section towards the end (my bold):

We started this briefing note with an overview of the observed differences between the various indices. We have discussed a range of reasons why these differences exist. Ideally, we would like to be able to link specific differences between indices to differences in their underlying data or methodology. In practice, this is well beyond the scope of this briefing note, both because of the wide range of factors that lead the indices to differ and because of a lack of sufficiently detailed data.

Nonetheless, we can offer some potential explanations of current patterns in the data. Of particular interest is the fact that the indices differ so substantially in terms of the extent to which prices have grown since late 2007 / early 2008 (see Figure 4).

The most likely explanation for these differences relates to the extent to which the indices are adjusted to reflect changing volumes of sales. In particular, we know that transactions in London have held up more strongly throughout the recession than transactions elsewhere in the UK, and that price growth in London has exceeded price growth elsewhere since 2008. As a result, we would expect those indices that are weighted to reflect current transaction volumes (ONS, Nationwide) to show faster growth in prices, as they give an increasingly large weight to London, than those based on fixed weights (Halifax, LSL Acad until December 2013). In practice, we do observe faster growth for the ONS and Nationwide indices than for the Halifax one. However, we also see strong growth for the LSL Acad index, which may reflect both the change of weights at the end of 2013 and, perhaps more tentatively, the fact that this index employs a less detailed form of mix adjustment.

It is not clear what we would expect to see in the Land Registry index. This index will be biased towards properties that sell more frequently. If the types of property that turn over more frequently experience slower price growth, the Land Registry index will have a downward bias compared with other measures of price growth, and vice versa. In fact, the index lies in the middle of the range of recent changes among the indices (Figure 4). In order to say anything more concrete about this index, we would need to undertake some analysis of turnover of property types and locations, which is beyond the scope of this paper.

http://www.ifs.org.uk/bns/bn146.pdf

[Bloo Loo]

The longer this goes on the more people buy in at insane level and the harder it will be to allow a correction. I think we have passed the point of no return in that the goverment will do anything to maintain the £ value of a house. I think we are going to see massive wage inflation as it seems the only way out. In ten years time, property might look like good value but I dont expect them to fall in actual asking price.

corrections arent allowed.

they occur.

[crashmonitor]

Saved from a complete rout because as retail deflation grips the world gold assumes parity with fiat...a zero yield.

Yep gold likes this, jumped $10.

[Riedquat]

BoE just held rates at 0.5%. This is great news.

The longer that the tension builds in the housing market the better.

I'm really looking forward to when things are so fubar that there is nothing that can be done to save it.

It's really tempting to want to sit back and laugh when it happens but the bigger the pop the more it'll take out with it. Still might be worth it just to enjoy the squealing of those living off the bubbling though.

[Sheeple Splinter]

3.9% mom - could this be down to the rush to beat the introduction of the new MMR regs?

[frederico]

The rises are obviously because earnings are finally outstripping inflation.

[Billy Ray Valentine]

3.9% mom - could this be down to the rush to beat the introduction of the new MMR regs?

I wondered this as well.

[jasonpistol]

3.9% mom - could this be down to the rush to beat the introduction of the new MMR regs?

there must be something skewing the figures

its more like -3.9% in east london at the moment

[TheCountOfNowhere]

3.9% mom - could this be down to the rush to beat the introduction of the new MMR regs?

I know one bloke idiot who's has sold recently and he was rushed by the E.A. to move out !!!

He is now staying on someone's floor and the house he was trying to buy has now fallen through...his stuff is in storage.

The E.A. told them they would lose the sale if they didn't complete.

Now, I can see what they were doing.

[Venger]

He prints the currency, so that's not an issue is it.

But I agree that GDP is lower than it ought to be 'cause of his misguided austerity nonsense during private sector deleveraging which has wasted the bulk of this 5 yr administration.

Edit: Just had a look on rightmove at Greater Mcr, and there are 1,000s of properties < £100k. The error people are making I think is extrapolating London/SE torest of UK and concluding house prices are either expensive or unsustainable. You may be in the US so aren't aware of that.

You can't print capital, and it may strengthen the deflationary impulse anyway.

1000s of properties under £100K. And.... ? From my point of view some of them are tens of thousands over valued. Hairdresser girl I know bought a 2-bed terrace in 2011 for just under £100K just off the A6 in Stockport. That might be fine and value for her, but not for me. Some of these same homes £30K+ back in 1999, or less.

In any of the fair-to-decent areas you're looking at £200K+ to £300K+ basic family home, and so many larger family homes been bid up to crazy heights.

[Fully Detached]

Will the BBC and politicians now continue to say 'It's not a bubble because prices aren't at 2007 levels'?

The BBC appear to be brushing it under the carpet, and I haven't heard a peep from a politician all day. So I guess they're all in la-la-I'm-not-listening mode, a tactic learned from this man who used it to great effect every time he had a war to start.

[Wurzel Of Highbridge]

3.9% mom - could this be down to the rush to beat the introduction of the new MMR regs?

If you had a mortgage approved before the 28th April you'd be wanting to spend it before 28th July when it expires, so we could see a huge uplift - blow off top ocurring between April and July. August the collapse will begin in earnest (good thing for Max Keiser or he will have to eat his hat live on TV)

[Billy Ray Valentine]

Cash taken out from ISA's at a record high in April, usually the month for the biggest deposits, and this trend has apparently continued 'into recent months' according to the below article:

http://news.sky.com/story/1274709/isa-deposits-suffer-unprecedented-fall

Now we have an incredible 3.9% rise in Mortgages for May.

So it appears that a mad rush of BOMAD, FTB, second stepper money has been flowing out of ISA's which are 'earning nothing', into buying houses, some with the aid of HTB, in a fear/greed driven panic to avoid 'missing the boat', a panic possibly exacerbated by a determination to get in before the new MMR regulations came into force.

Am I over simplifying things?

[Guest]

Cash taken out from ISA's at a record high in April, usually the month for the biggest deposits,

Maybe people are pumping the money into well chosen stocks and shares to try and get a better return

[RentaBear]

Why is this thread so full of froth about a MoM figure when we normally decry the headlines about rising prices by pointing out that it is the 3-month moving averages that are more statistically significant? I suspect this month's number will be quietly 'revised' next month anyway...

[The Masked Tulip]

Cash taken out from ISA's at a record high in April, usually the month for the biggest deposits, and this trend has apparently continued 'into recent months' according to the below article:

http://news.sky.com/story/1274709/isa-deposits-suffer-unprecedented-fall

Now we have an incredible 3.9% rise in Mortgages for May.

So it appears that a mad rush of BOMAD, FTB, second stepper money has been flowing out of ISA's which are 'earning nothing', into buying houses, some with the aid of HTB, in a fear/greed driven panic to avoid 'missing the boat', a panic possibly exacerbated by a determination to get in before the new MMR regulations came into force.

Am I over simplifying things?

Probably not.