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No Hpi Here Despite Halifax Average House Price Jumping By 19.15%

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• North East.

• 2-bed semi-detached with front and back garden.

• Quiet neigbourhood.

• Equidistant between regional capital and very large out-of-town shopping area.

• Local primary school OFTSED highest rating

• Lower-than-average crime

I bought my house for £120k in Q1 2006. A virtually identical house on the same estate (with smaller gardens) sold one month ago for £106k.

So it appears that, in my part of the world, the nominal price has fallen by more than 10%. The inflation-adjusted fall will be much steeper (although I'm not clever enough to work out how to do that)

Yet, according to the Halifax property price index, the nominal house price has risen across the UK from £158,573 to £188,949 in the very same timescale.

Am I missing something? Or can someone smarter than me explain how there's been a nominal 19.15% rise in prices that time whilst my little place has fallen by 11.67% at the same time.

TIA

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The stats must be skwewed by the volume and types of houses being sold? Or do they somehow massage it to give an "accurate" stat?

For instance:

May 2014 - only one property sold, it's a one bed flat, and goes for £100k.

Jun 2014 - two properites sold, both 3 bed semis, average of the two is £180k

July 2014 - one property sold, it's a lovely 18 bed mansion, £1,000,000

Would the stats show that prices have risen £100k > £180k > £1,000,000?

Or do they look at the volume/size of properties and extraploate from that?

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Am I missing something? Or can someone smarter than me explain how there's been a nominal 19.15% rise in prices that time whilst my little place has fallen by 11.67% at the same time.

TIA

Hamish will be along in a minute....

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West Yorkshire.

The house next-door to the one we sold in Oct 2007, sold last month for 23% less (nominal). It was a little bit bigger than ours. When we sold ours the next-door neighbour who has just sold, told me we weren't asking enough for it and said we were giving it away.

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Yet, according to the Halifax property price index, the nominal house price has risen across the UK from £158,573 to £188,949 in the very same timescale.

Am I missing something? Or can someone smarter than me explain how there's been a nominal 19.15% rise in prices that time whilst my little place has fallen by 11.67% at the same time.

Many parts of London have had 50% increases in that time. You are 30% points below national average increase and they are 30% points above. That is why London/Provinces multiple is the highest ever.

Is Newcastle(?) going to go towards London valuations or in London going to move towards Newcastle valuations or do we just sit in the twilight zone forever?

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I bought my house for £120k in Q1 2006. A virtually identical house on the same estate (with smaller gardens) sold one month ago for £106k.

So it appears that, in my part of the world, the nominal price has fallen by more than 10%. The inflation-adjusted fall will be much steeper (although I'm not clever enough to work out how to do that)

120k in 2006 is roughly equivalent to 150k today in 2014 (using official inflation figures over that time span), so that is a loss of ~50k with transaction costs, not to mention mortgage interest and any maintenance costs in the last 8 years etc. Ouch!

But you got to live somewhere, £500/month rent for 8 years = 48k

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In gnereral sub-prime and deprived areas of the country have not risen

it is not just sub-prime and deprived areas as you call them (I prefer the term outside the golden triangle that is London and the south east)

where I live which is neither deprived nor subprime but house prices have been more or less static for the last 4/5 years (and never really recovered from the 2008/2009 mini crash).

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I think it is because so many people live in the SE that it skews the figures upwards.

I am in W Mids in good area with 3 bed semi, nice garden and garage, three minutes from mainline station. motorway 5 minutes away

2006 prices 180

2014 prices 190 if you're lucky.

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to add - LLL last night exemplified the 'must buy now or lose out' mentality in the London commuter belt -

sorry must stop watching that program as KA annoys me (and the other bloke) - she made a guest 'appearance/voice-over' on the Archers :o

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120k in 2006 is roughly equivalent to 150k today in 2014 (using official inflation figures over that time span), so that is a loss of ~50k with transaction costs, not to mention mortgage interest and any maintenance costs in the last 8 years etc. Ouch!

But you got to live somewhere, £500/month rent for 8 years = 48k

Can't compare nominal with real. You have used, real house price, implied nominal mortgage and nominal rents -> very squiffy maths.

Firstly cash is king and he hasn't lost that extra 30k from the real calculation.

What about the deposit of 36k (70% LTV) that he put into his house that if he rented, according to your inflation figures, would now be worth 28k sat in the bank? So in fact renting has cost 55k not 48k in real.

Think how much smaller that mortgage has got in real terms! Six years ago he had 84k mortgage (70% LTV) and even if it's interest only (like renting) then now it's only worth 67k in todays money! Magic :-)

If this guy was on a variable mortgage in 2006 then he will still be way better off having bought this house, would be doing massive capital repayments with that £500 per month he would of paid on renting.

I'm jealous that this guy lives in such a functioning housing market, where I live prices are 25% ahead of 2006.

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• North East.

• 2-bed semi-detached with front and back garden.

• Quiet neigbourhood.

• Equidistant between regional capital and very large out-of-town shopping area.

• Local primary school OFTSED highest rating

• Lower-than-average crime

I bought my house for £120k in Q1 2006. A virtually identical house on the same estate (with smaller gardens) sold one month ago for £106k.

So it appears that, in my part of the world, the nominal price has fallen by more than 10%. The inflation-adjusted fall will be much steeper (although I'm not clever enough to work out how to do that)

Yet, according to the Halifax property price index, the nominal house price has risen across the UK from £158,573 to £188,949 in the very same timescale.

Am I missing something? Or can someone smarter than me explain how there's been a nominal 19.15% rise in prices that time whilst my little place has fallen by 11.67% at the same time.

TIA

Well done for posting this......basically you are not alone you are in the middle of a huge swathe of the country which runs from Nottingham north with a bit of Cheshire and Manchester excepted. Unfortunately we get more posts from the hot spots.

Meanwhile your real loss is 199.2/ 256.3 = 0.777 (RPI adjustment June 2006 to 2014) and 106/120 = 0.883...............0.777 x 0.883 = 0..686 or -31.4%

Just loving this boom baby with property down nearly a third still. don't worry Nottingham isn't far behind and Bradford, Rochdale, Stoke, Burnley, Sheffield, Leeds, Hull, Glasgow, Edinburgh....just about half the country really...who would have funk it.

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it is not just sub-prime and deprived areas as you call them (I prefer the term outside the golden triangle that is London and the south east)

where I live which is neither deprived nor subprime but house prices have been more or less static for the last 4/5 years (and never really recovered from the 2008/2009 mini crash).

Price 'recovery'.

I think it is because so many people live in the SE that it skews the figures upwards.

I am in W Mids in good area with 3 bed semi, nice garden and garage, three minutes from mainline station. motorway 5 minutes away

2006 prices 180

2014 prices 190 if you're lucky.

Is that good value? Holding at peak 2006/07 prices?

What were they 'worth' in 2001? In 1989? I guess rates slashed - younger people who've been able to borrow more on 'affordability'. QE/FLS/HTB2 maintaining the 'value'. £10K is a chunk more to save/repay. I guess falling unemployment, to be welcomed, although unsure about any wage growth.

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Re these are all shit areas. Well Derbyshire Dales is the seventh wealthiest local authority area in the country per household wealth excluding property. The peak here was in 2004, I follow the area closely, I lived there most of my life.

Curbar, Hathersage, Baslow, Bakewell....shit? Yet prices are sub 2004.

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Well done for posting this......basically you are not alone you are in the middle of a huge swathe of the country which runs from Nottingham north with a bit of Cheshire and Manchester excepted. Unfortunately we get more posts from the hot spots.

Meanwhile your real loss is 199.2/ 256.3 = 0.777 (RPI adjustment June 2006 to 2014) and 106/120 = 0.883...............0.777 x 0.883 = 0..686 or -31.4%

Just loving this boom baby with property down nearly a third still. don't worry Nottingham isn't far behind and Bradford, Rochdale, Stoke, Burnley, Sheffield, Leeds, Hull, Glasgow, Edinburgh....just about half the country really...who would have funk it.

Did that crashed-value bunglaw at £350,000 sell near you yet? I was in shock looking at high asking prices of Rochdale/Bamford area we used to live in recently - hardly anything in it from South Manchester/Cheshire prime.

Oh, but yes, crummy terraces in dogs areas have lost £10k-£30K on silly high former prices. Same for Oldham... £100,000 peak, asking/selling £75/£80K now, vs £40K-£50K in 2003/04. Need to use the 2007 base level for recovery/non-crash.

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Did that crashed-value bunglaw at £350,000 sell near you yet? I was in shock looking at high asking prices of Rochdale/Bamford area we used to live in recently - hardly anything in it from South Manchester/Cheshire prime.

Oh, but yes, crummy terraces in dogs areas have lost £10k-£30K on silly high former prices. Same for Oldham... £100,000 peak, asking/selling £75/£80K now, vs £40K-£50K in 2003/04. Need to use the 2007 base level for recovery/non-crash.

It did sell and I was surprised....which is precisely why I'm not that interested in having all my eggs in property. It would take many more years to undo the damage done during the madness of 1999-2004 in the north of England. Whether we ever get there is another matter, the MPC don't like market discovery with destruction and reset.

Edited by crashmonitor

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I think it is because so many people live in the SE that it skews the figures upwards.

I am in W Mids in good area with 3 bed semi, nice garden and garage, three minutes from mainline station. motorway 5 minutes away

2006 prices 180

2014 prices 190 if you're lucky.

In most parts of the SE outside London, prices have increased by 35%. The same houses that sold for £210K in 2006 now sell for £285K. In London itself, HPI has been larger. As above, the large numbers living there have a large impact on the national figures. Even if there has been little increase in the rest of the country, the numbers for the SE skew the average upward. Sellers outside of the SE often mistakenly think the average figures apply to them too which is why they "can't sell". I know of several people in Lincs who have tried to sell at inflated prices and don't understand why they have had no success after a year!

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In most parts of the SE outside London, prices have increased by 35%. The same houses that sold for £210K in 2006 now sell for £285K. In London itself, HPI has been larger. As above, the large numbers living there have a large impact on the national figures. Even if there has been little increase in the rest of the country, the numbers for the SE skew the average upward. Sellers outside of the SE often mistakenly think the average figures apply to them too which is why they "can't sell". I know of several people in Lincs who have tried to sell at inflated prices and don't understand why they have had no success after a year!

yes, its 1988 all over again.

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In most parts of the SE outside London, prices have increased by 35%. The same houses that sold for £210K in 2006 now sell for £285K. In London itself, HPI has been larger. As above, the large numbers living there have a large impact on the national figures. Even if there has been little increase in the rest of the country, the numbers for the SE skew the average upward. Sellers outside of the SE often mistakenly think the average figures apply to them too which is why they "can't sell". I know of several people in Lincs who have tried to sell at inflated prices and don't understand why they have had no success after a year!

Lincolnshires a funny one...lovely place like Louth and property camped on the market for years. I fancy retiring there.....I even assume some of the properties I follow will still be on offer in years to come.

Edited by crashmonitor

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1988, I remember it well....London had had its 50% increase and property in the provinces had been stuck since 1983. The property I owned by Q2 1988 was then worth only 30k but was to gain 60% over the next year to Q2 1989.

The bust came in July 1989 and lasted until 1995, when all the paper profits evaporated and we hit a post war house price nadir. Of course, we got the next bust in July 2007...precisely on time according to the Harrisonian 18 year cycle.

If we are to have a repeat on 1988 then the provinces would be about to get one hell of an aftershock from the London boom. The West Midlands recorded a 60% annual increase to Q2 1989 (I believe), still a record increase for any region and any given year. Somehow I doubt it this time....but anyone wanting 1988 shouldn't, at least in the provinces.

Edited by crashmonitor

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Can't compare nominal with real. You have used, real house price, implied nominal mortgage and nominal rents -> very squiffy maths.

Ok, we could inflation adjust the value of a static £500pm across the time period, £650pm(with 2006-14 RPI) to £500pm 2014

= (650*12)+(630*12)+(605*12)+(580*12)+(585*12)+(560*12)+(532*12)+(500*12)

= ~55.7k rent

Firstly cash is king and he hasn't lost that extra 30k from the real calculation.

If he bought an asset for 120k in 2006 then sold it mid 2014 for 106k, minus transaction/maintenance then he have lost at least 50k. To break even, the sale would need to be above 150k in todays money (under the best case conditions).

What about the deposit of 36k (70% LTV)

He still lost 25% to 30% of any sized deposit invested.

...according to your inflation figures, would now be worth 28k sat in the bank?

Who knows where he would have invested it? ISAs were ~5% for half that period.

Not my figures, Google for a UK inflation calculator, enter 120 in 2006, approximately with official indexes CPI=147k, RPI=156k (both under reported IMO)

Think how much smaller that mortgage has got in real terms! Six years ago he had 84k mortgage (70% LTV) and even if it's interest only (like renting) then now it's only worth 67k in todays money! Magic :-)

No if Interest Only it would not have changed size from 2006, 120k, not to mention the interest paid for the privilege (though 120k today is worth less now than it was then). We just don't know the rates or capital repayment strategy.

Assuming IO, then he'd still have owed 14k if he used the sale price (106k) to pay off the IO mortgage. Note that borrowing 120k Interest Only at 5% interest = 500pm, for 8 years = 48k, then add the 14k shortfall (cause he sold) plus transaction and maintenance costs = 48+14+costs. An even bigger loss.

If this guy was on a variable mortgage in 2006 then he will still be way better off having bought this house, would be doing massive capital repayments with that £500 per month he would of paid on renting.

No, he'd lost at least 50k (if the example house price changes were realised today), about the same as renting for 8 years (at an estimated £500pm, just a ballpark example).

Although the OP purchased in 2006 at 120k, he hasn't sold anything, so it's all just on paper calculations.

...I'm jealous that this guy lives in such a functioning housing market, where I live prices are 25% ahead of 2006.

Yes, I am very sorry and very angry about this also having wasted many years buying a slave box for my family, not to mention many other things that have been done to us and our country in the last few decades.

Edited: for jibba jabba factor

Edited by DarkHorseWaits-NoMore

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