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Ash4781

Office For Budget Responsibility - Property Transaction Forecasts

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http://budgetresponsibility.org.uk/category/topics/economic-forecasts/

http://budgetresponsibility.org.uk/pubs/Property_transactions_March14.xls

The Office for Budget Responsibility seem to have released an update to the March 2014 housing transaction forecast data. It's a bit late in the evening to interpret this. My gut feeling is that there will be a hole in the forecast receipts on the stamp duty land tax.

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http://budgetresponsibility.org.uk/category/topics/economic-forecasts/

http://budgetresponsibility.org.uk/pubs/Property_transactions_March14.xls

The Office for Budget Responsibility seem to have released an update to the March 2014 housing transaction forecast data. It's a bit late in the evening to interpret this. My gut feeling is that there will be a hole in the forecast receipts on the stamp duty land tax.

Prime London demand / sales are down 50% for houses and 25% for flats ... price reductions every day in large numbers on RM

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Is this the number of transactions, not the value?

If so it's almost doubled from 2009, and if so what has happen to the previous years. Did they only start taking the stats from 2009? WTF!

How can we be selling/buying almost double the amount of houses to each other, I don't get it?

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Is this the number of transactions, not the value?

If so it's almost doubled from 2009, and if so what has happen to the previous years. Did they only start taking the stats from 2009? WTF!

How can we be selling/buying almost double the amount of houses to each other, I don't get it?

The OBR was only created in 2010.

The stats may well exist for earlier but there were no OBR forecasts prior to 2010. The 2009 forecasts in the spreadsheet are identical to the actual figures so are presumably based on existing data and are not forecasts at all. The evidence from those figures is housing transactions have been declining since Q4 2013, a sign of a contracting market.

Edited by stormymonday_2011

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Forecast missed by ~10%. Well done, lads. Bonuses all round as usual.

To be fair some of the things the OBR forecasts such as tax yield from North Sea oil are very difficult to get right as oil price fluctuations and field maintenance outages are very hard to predict accurately. A 10% miss on housing transactions though is big failure as this is something they should be able to get within a few percentage points. One wonders if it is these UK Housing transactions which triggered Cameron's comment about 'Red Lights Flashing' on the world economy because he is a British politician and presumably thinks UK domestic property is the beginning and end of world economic activity. I can't imagine either he or Osbourne has a clue about anything as mundane and vulgar as global trade and industry.

Edited by stormymonday_2011

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The OBR forecast chart saw MMR as simply moderating the pace of transaction rises rather than instigating a decrease.

The 10% miss has appeared in only 3 quarters, and crucially the predicted and actual trends are moving in opposite directions too. If transactions are headed back to the range seen pre-HTB and FLS, the OBR's predictions will be looking much worse than this.

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The OBR forecast chart saw MMR as simply moderating the pace of transaction rises rather than instigating a decrease.

The 10% miss has appeared in only 3 quarters, and crucially the predicted and actual trends are moving in opposite directions too. If transactions are headed back to the range seen pre-HTB and FLS, the OBR's predictions will be looking much worse than this.

Yes you right. My mistake. I should have stated decline in the growth of transactions against forecast

Still a big miss for something as slow to turn as the property market

Doubtless this will be interpreted thus

“Savvy buyers and sellers would be wise to run with the window of opportunity that this creates now.”

http://www.cityam.com/1416802337/london-housing-market-losing-its-momentum

Alternatively people might want to ponder the fact that the trend is your friend and as that the UK economy is stuttering it might be an idea to get the f*ck out of Dodge before the trouble really starts,

My feeling is the truly smart money already left the London property market a couple of years ago and that is only now starting to register on the wider UK housing market.

Edited by stormymonday_2011

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Yes you right. My mistake. I should have stated decline in the growth of transactions against forecast

Still a big miss for something as slow to turn as the property market

Doubtless this will be interpreted thus

http://www.cityam.com/1416802337/london-housing-market-losing-its-momentum

Alternatively people might want to ponder the fact that the trend is your friend and as that the UK economy is stuttering it might be an idea to get the f*ck out of Dodge before the trouble really starts,

My feeling is the truly smart money already left the London property market a couple of years ago and that is only now starting to register on the wider UK housing market.

I don't think you stated anything incorrect and I wasn't pulling you up, just adding my own take after seeing the chart in the spreadsheet- it is a marked divergence. Your London scenario seems pretty plausible to me.

Their 8% per annum increases in business investment predictions, necessary to generate the nominal GDP to keep a lid on the UK's debt:GDP ratio seem like potentially the most egregious errors we might get to see- maybe on Autumn Statement day we'll get an insight into this.

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In March 2014 the OBR increased it's property transaction and price forecast. I have not seen how they Iincluded the Mmr effect in the forecast. They could downwardly revise but I think that would mean more spending cuts in the Autumn statement. A rough calc I did gives £1bn hole in the 14/15 stamp duty land tax receipt forecast alone.I imagine there might be s problem on income tax receipts too ?

Edited by Ash4781

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I have updated the OBR property transaction forecasts for the various budgets, and autumn statements. Now the dashed line for current point in time may be slightly off. Apologies. The OBR were IMO quite a bit off in their forecast (they got the wrong direction - falling volumes).The OBR did mention that they thought it was due to MMR. I suppose they do not know future policy responses. I can't see the help to buy ISA staying at 3K very long.The OBR cost estimate is £1.5bn at £3K.

Freetrader does post an analysis on the HMRC property transactions that I think has the series going back pre-2009. The actuals should be in the chart upto the dashed (although as said I might be slightly off).

obr2.jpg

http://budgetresponsibility.org.uk/economic-fiscal-outlook-march-2015/

Edited by Ash4781

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I have updated the OBR property transaction forecasts for the various budgets, and autumn statements. Now the dashed line for current point in time may be slightly off. Apologies. The OBR were IMO quite a bit off in their forecast (they got the wrong direction - falling volumes).The OBR did mention that they thought it was due to MMR. I suppose they do not know future policy responses. I can't see the help to buy ISA staying at 3K very long.The OBR cost estimate is £1.5bn at £3K.

Freetrader does post an analysis on the HMRC property transactions that I think has the series going back pre-2009. The actuals should be in the chart upto the dashed (although as said I might be slightly off).

obr2.jpg

http://budgetresponsibility.org.uk/economic-fiscal-outlook-march-2015/

I would imagine stagnant or falling housing transaction volumes are having a dampening effect on many types of tax yield. Many major household purchases are tied to property moves. If they are not taking place then it won't be doing much for the VAT yield on such transactions since that is essentially a turnover tax. The impact of the rise of BTL on the DIY retailers has already been commented on here with regard to B&Q store closures but I think it goes much further than that. High house prices far from invigorating the economy are sucking the life out of it. The current government Help to Buy and FTB ISA band aids are not going to really change that situation and in fact look to make it worse.

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Capture.jpg

edit(outturn hasn't been updated by me)

source:

http://budgetresponsibility.org.uk/category/publications/

Following the OBR release. Not read the OBr report yet re the upward revision presumably around inheritance tax and previous pension changes. I am shocked that every budget seems to target housing transaction volumes. I didn't see anything today on housing supply !

Edited by Ash4781

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