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House Price Crash Forum
rantnrave

Nationwide January 2015 +0.3

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YoY down to 6.8%

NSA figure MoM pretty much close to flat

Annual house price growth continued to soften at the start of 2015, slowing from 7.2% in December to 6.8% in January. This is the fifth month in a row in which annual growth has moderated, despite house prices increasing by 0.3% month on month in January. After taking account of seasonal factors, UK house prices are currently 2.4% above their pre-crisis peak.

The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months. The number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries.

The reasons for the slowdown in activity remain unclear. Unemployment has continued to decline and wage growth has started to outstrip increases in the cost of living for the first time since the financial crisis. Surveys suggest that consumer confidence remains elevated a view corroborated by healthy gains in retail sales over recent months.

Although house price growth continues to outpace income growth by a significant margin, affordability does not appear stretched at a national level. The cost of servicing a typical mortgage remains close to the long run average as a share of take home pay, in part thanks to the ultra-low level of mortgage rates.

Supply side developments are crucial in determining the pace of price growth. Surveyors continue to report a dearth of new homes coming on to the market, which may help to explain why house price growth has remained fairly robust, despite a more noticeable decline in housing demand since the summer.

If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead. It is encouraging that the number of new homes built in England was up 8% in the year to Q3 2014. However, this is still 34% below pre-crisis levels and little over half the expected rate of household formation in the years ahead.

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I reckon YoY will be negative by June :)

That'll mean ive only waited 12 years for a crash.

Unless its minus 10% i couldn't really care less about poxy decimal point drops

Prices are selling for way above 2013 prices in the South, if they start selling for 1 percent lower than summer 2014 this June it makes absolutely no difference to my chances of buying something vaguely affordable.

All these events have come along such as oil crisis, Greece election, MMR,ending of FFL, Chinese property crash and they've made no difference whatsoever.

Im English and see myself as a capitalist yet i'm kind of pinning my hopes on the SNP getting into power and forcing a land value tax on to a weak Labour government this May. Backed by Plaid Cymru and any other financially illiterate socialist parties out there.

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That'll mean ive only waited 12 years for a crash.

If prices fall in the region of 10-15% this year (ie almost as fast as '08-'09, the fastest house price falls this country has ever seen), the national indices may return to where they were at the start of 2013.

:(

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That'll mean ive only waited 12 years for a crash.

Unless its minus 10% i couldn't really care less about poxy decimal point drops

Prices are selling for way above 2013 prices in the South, if they start selling for 1 percent lower than summer 2014 this June it makes absolutely no difference to my chances of buying something vaguely affordable.

All these events have come along such as oil crisis, Greece election, MMR,ending of FFL, Chinese property crash and they've made no difference whatsoever.

Im English and see myself as a capitalist yet i'm kind of pinning my hopes on the SNP getting into power and forcing a land value tax on to a weak Labour government this May. Backed by Plaid Cymru and any other financially illiterate socialist parties out there.

I don't see a good outcome for UK plc whoever gets in. Your scenario might actually cause less of a crash than a Tory majority. The uncertainty of a 2017 in out referendum seen as the biggest geopolitical risk in the world going forward......nothing like destabilising the biggest trading block in the world by its second largest member. So all party leaders are financial terrorists possibly barring Miliband and Clegg who do not inspire any economic confidence either.

Edited by crashmonitor

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Wow that is some spin! I suspect there would be an internal version release of that report.

Edit: prices staying high due to a 'dearth' of new properties is not great news if the bulk of your business is erm making loans against properties.

Edited by Ash4781

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Wow that is some spin! I suspect there would be an internal version release of that report.

Edit: prices staying high due to a 'dearth' of new properties is not great news if the bulk of your business is erm making loans against properties.

NAEA (National Assoc of Estate Agents) says number of buyers who registered in December, following the Stamp Duty changes, is the highest in ten years. There has not been a corresponding match in properties for sale:

http://www.propertyindustryeye.com/lots-buyers-wheres-property/

Edited by rantnrave

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Love this bit:

The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months. The number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries.
The reasons for the slowdown in activity remain unclear.

Unclear to who, exactly?

Just how stupid do you need to be to fail to draw a correlation between falling mortgage demand and subdued new buyer inquiries, and the fact that houses are just too ****ing expensive?

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By contrast to last January the Market, like the weather, seems frozen. No stock, no sales.

I guess this will mask the parlous state of the Market, you only need one sale to up an index after all.

Probably a barometer of UK plc, deflating with activity falling off a cliff.

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Nationwide chief economist was just on BBC News.

He said that affordability, relative to earnings, is at about long term average because of record low interest rates.......... Exactly, and when rates return to a more normal figure?

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affordability, relative to earnings, is at about long term average because of record low interest rates.......... Exactly, and when rates return to a more normal figure?

Which is why house prices won't go up much if at all. Bad news for BTL and recent buyers.

But rates aren't going back to anything approaching normal for a decade or more. Which is why house prices won't go down by much either. Bad news for this forum.

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In the other thread Freetrader and others touched on transaction volumes that were holding up despite the mortgage approval drops. Maybe that is the balance that is holding up prices. Whether these are cash transactions or some complex foreign loans I don't know.

Edited by Ash4781

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Which is why house prices won't go up much if at all. Bad news for BTL and recent buyers.

But rates aren't going back to anything approaching normal for a decade or more. Which is why house prices won't go down by much either. Bad news for this forum.

Rate rises are one mechanism for bringing house prices down but falls are not reliant on this factor alone.

London could easily pop without rate rises and that in itself could be the factor to send the dominos tumbling.

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Some quick thoughts re noticeable peaks in this chart. Looks about right?

iY1ohbu.png

That's a pretty damning verdict on QE in terms of value for money.

Which is why house prices won't go up much if at all. Bad news for BTL and recent buyers.

But rates aren't going back to anything approaching normal for a decade or more. Which is why house prices won't go down by much either. Bad news for this forum.

Drop in demand will do the same as rate rises.Increase in supply too.

IR's are a factor in determining the price action and not necessarily the most dominant as that can vary depending on circumstances.

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Rate rises are one mechanism for bringing house prices down but falls are not reliant on this factor alone.

London could easily pop without rate rises and that in itself could be the factor to send the dominos tumbling.

I agree that the price of property is a function of many, many variables.

But take a few paces back and ask yourself, what are the really significant variables?

As a first approximation you could start with a simple model that has a large number of 20 and 30 somethings who would dearly love to become owner occupiers in any area with half decent jobs. They only ask themselves one question, "how big a mortgage can I afford", so for them the price and availability of credit is pretty much everything. Their decisions have a great effect on the next tier of the property market. And so it ripples out until you get to a few streets in Kensington where it has virtually zero affect.

That's a very crude model I agree, but isn't a crudely correct model likely to be more accurate than a sophisticated but incorrect model?

Which is why I don't believe house prices are likely to rise much higher versus incomes, but neither do I believe there will be any material price fall until we see higher mortgage rates. And looking right out to the far horizon I still can't see any credible expectation of higher mortgage rates.

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Nationwide chief economist was just on BBC News.

He said that affordability, relative to earnings, is at about long term average because of record low interest rates.......... Exactly, and when rates return to a more normal figure?

He also said the figures and mortgage approvals have dropped due to constrained supply. lololololololololol.

Stupid or a liar? You decide. My bet is on the latter.

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All this points to another Gov prop up just after/before the election.

They're ahead of the game here - freeing up of pension funds and Stamp Duty changes to the rescue. The eCB has done their bit too...

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Drop in demand will do the same as rate rises.Increase in supply too.

IR's are a factor in determining the price action and not necessarily the most dominant as that can vary depending on circumstances.

Do you sense any drop in demand? I don't.

An increase in supply would be a wonderful thing, there are about 250,000 new households being formed every year but only about 100,000 new properties, so in the longer term that's something this country badly needs to address. But how long do you think it will take to magic a million south east houses into existence?

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I don't see a good outcome for UK plc whoever gets in. Your scenario might actually cause less of a crash than a Tory majority. The uncertainty of a 2017 in out referendum seen as the biggest geopolitical risk in the world going forward......nothing like destabilising the biggest trading block in the world by its second largest member. So all party leaders are financial terrorists possibly barring Miliband and Clegg who do not inspire any economic confidence either.

But we'll still trade with those in the Eurozone exactly as we do today, and exactly as we did before the Euro came into fruition.

It just means we'll be making our own laws and governed by the politicians we elect.

Thus on the global scene it'll be an irrelevance.

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