Property Transactions

[since the beginning]

What are peoples honest opinions on the level of property transactions? With Q3 and Q4 of this year basically level if not higher than in same periods in 2001, 2002 & 2003 do you think this is ominous.

Transactions

When HPC website first started (old design it was grey I think) there was a link to an article by a professor of economics that said that if transactions (and maybe mortgage approvals) fell then that is when a HPC would occur. This hasn't happened and while not wishing to be full of doom & gloom does this mean a crash will not occur in the short to medium term?

Edited January 25, 2006 by since the beginning

[?...!]

I'm not sure transactions are higher. Or even the same.

With more BTL's than in the past the market has slightly more liquiditiy than usual.

This does tend to more fluidity in price and an exodus could flood the market, but houses take time to sell and with everyone now quoting monthly and quarterly figures it is difficult to feel a crash.

It's more like a prolonged deflation.

If you look year on year houses are over priced.

[Jason]

What impact will this have on the Land Reg HPI index?

The last report showed a higher ratio of expensive houses being sold than normal, hence it pushed up the mean average - which of course was the headline figure.

If this up turn was pent up demand from FTBs surely and maybe BTL before SIPPs, the ratio of properties would revert to the norm, if this happens we would see a more see realistic headline figure. But would this show a fall?

Personally I doubt it, as Q4 2004 was very weak.

Edited January 25, 2006 by Jason

[since the beginning]

It looks like from the link I attached though that Q4 transactions are the highest since 1988 Q4. Also Transaction levels in 91,92 were about half what they are now.

[zorn]

What impact will this have on the Land Reg HPI index?

The Land Registry don't do a house price index. They report average transaction values, but they don't do any mix adjustment to make that represent an average property value, and you should never assume that the average transaction value is the same as the value of the average property.

[Jason]

The Land Registry don't do a house price index. They report average transaction values, but they don't do any mix adjustment to make that represent an average property value, and you should never assume that the average transaction value is the same as the value of the average property.

Ok, I should have said the Land Registry's "Residential Property Price Report".

Either way it doens't stop the media jumping of the band wagon if it is up.

[underpressuretobuy]

When HPC website first started (old design it was grey I think) there was a link to an article by a professor of economics that said that if transactions (and maybe mortgage approvals) fell then that is when a HPC would occur. This hasn't happened and while not wishing to be full of doom & gloom does this mean a crash will not occur in the short to medium term?

Wouldn't the number of transactions as a percentage of properties on the market have an impact though?

For example if 100 property transactions took place in a given time period when there were only 100 houses on the market in that time period that would surely describe a very different market than if 100 property transactions were made in the same area and time period but where there were 100,000 properties for sale at that time.

How useful is it to look at property transactions in terms of sheer numbers without reference to area, type of properties selling and number of properties on the market?

[?...!]

Wouldn't the number of transactions as a percentage of properties on the market have an impact though?

For example if 100 property transactions took place in a given time period when there were only 100 houses on the market in that time period that would surely describe a very different market than if 100 property transactions were made in the same area and time period but where there were 100,000 properties for sale at that time.

How useful is it to look at property transactions in terms of sheer numbers without reference to area, type of properties selling and number of properties on the market?

Probably not very useful, expect an exodus as prices crash. High volumes do not mean rising prices. You can see how active markets can get during crashes and booms alike.

I do not feel I need much more information to support a falling price. I think smaller FTB type houses are no longer selling, and recent rises are due to a greater portion of larger houses in transactions.

It's a case now of when will they wake up and smell the coffee?

[since the beginning]

Wouldn't the number of transactions as a percentage of properties on the market have an impact though?

For example if 100 property transactions took place in a given time period when there were only 100 houses on the market in that time period that would surely describe a very different market than if 100 property transactions were made in the same area and time period but where there were 100,000 properties for sale at that time.

How useful is it to look at property transactions in terms of sheer numbers without reference to area, type of properties selling and number of properties on the market?

Wouldn't the sheer number of properties in the UK iron out most of those statitics though. I mean even though there will be local conditions - on a national scale there are say 25,000,000 properties and of these 500,000 are selling in a quarter (for example) i.e. big numbers.

If you roll a dice 10 times it is more likely will get 5 sixes than rolling a dice a million times and getting 500,000 sixes.

[underpressuretobuy]

Wouldn't the sheer number of properties in the UK iron out most of those statitics though. I mean even though there will be local conditions - on a national scale there are say 25,000,000 properties and of these 500,000 are selling in a quarter (for example) i.e. big numbers.

If you roll a dice 10 times it is more likely will get 5 sixes than rolling a dice a million times and getting 500,000 sixes.

I take your point about the sheer number of properties across the UK cancelling out local conditions but in some ways I am thinking - how is it good to iron out local variations?

What I mean is - I do not expect house prices to fall at the same rate at the same time all across the country, some places will fall first (probably the South East) likewise the North of England will probably fall much later.

If you give a national figure for property transactions you have no idea whether transactions are falling off or picking up in the South East which is where economic trends for the rest of the country tend to start.

All of this simply brings me back to my point if you are told 100 properties sold but you know nothing more about these properties it doesn't give a clear indication of the state of the housing market if these numbers rise or fall.

A rise in property transactions in the North might indicate the last of the boom, but this might be cancelled out by a drop in transactions in the South where things have ground to a halt. In this example the overall national figure will tell you that property transactions have remained the same without telling you anything about the direction in which the market is moving.

If you see what I mean.

[boom_and_bust]

Ok, I should have said the Land Registry's "Residential Property Price Report".

Either way it doens't stop the media jumping of the band wagon if it is up.

Hi,

Herein lies the real quandry for me. On a local level, in my area of London, I have kept a spreadsheet of the sales properties in my postal area from rightmove, findaproperty and my local foxton's and independent. I do not see high transactions, I honestly just do not and I have kept the record going back two years. infact, there are still a number - maybe 20% of the list - that have been there the whole time, only slightly falling in valuation but not selling. Two of them I walk past everyday - a 4 bed house and a 2 bed flat have been unoccupied during that time. It just does not fit with the things I personally know and see on a daily basis. And then we hear about all these new build developments - particulalry in the Docklands - that are lying idle. And then we hear about a girl 'raffling' her property in the paper the other week because it will not sell. And the stinkin' pigs buying at BVM because forced sellers cannot sell in the current market. The expat forum is full of folks waiting a year or more and still not selling. It is not just me, I know as well, because other people mention similar things to me from time to time, so I know I am not a complete loon. Where is it happening then? How are these figures just so out of whack with my daily life? I remember well previous years of boom where 'sale' and 'sold' signs were up and down within a week. That is not what I see now.

Boomer

Edited January 25, 2006 by boom_and_bust

[since the beginning]

Hi,

Herein lies the real quandry for me. On a local level, in my area of London, I have kept a spreadsheet of the sales properties in my postal area from rightmove, findaproperty and my local foxton's and independent. I do not see high transactions, I honestly just do not and I have kept the record going back two years. infact, there are still a number - maybe 20% of the list - that have been there the whole time, only slightly falling in valuation but not selling. Two of them I walk past everyday - a 4 bed house and a 2 bed flat have been unoccupied during that time. It just does not fit with the things I personally know and see on a daily basis. And then we hear about all these new build developments - particulalry in the Docklands - that are lying idle. And then we hear about a girl 'raffling' her property in the paper the other week because it will not sell. And the stinkin' pigs buying at BVM because forced sellers cannot sell in the current market. The expat forum is full of folks waiting a year or more and still not selling. It is not just me, I know as well, because other people mention similar things to me from time to time, so I know I am not a complete loon. Where is it happening then? How are these figures just so out of whack with my daily life? I remember well previous years of boom where 'sale' and 'sold' signs were up and down within a week. That is not what I see now.

Boomer

Thats a good point. Hopefully these transactions are happening in the places which exprienced the boom later. It does however mean that it truly is 'different this time' because in previous crashes property transactions fell off a cliff.

[Smurf1976]

It's necessary to look at both price and volume. If volume is increasing then in general the price trend is gaining strength (either up or down). If volume is falling then the price trend is losing momentum.

So if you want a crash then you're looking to rising volume on falling prices. If you want prices to rise then you're looking for rising volume on rising prices. If you're wanting the current trend to reverse then you want to see falling volumes.

Just in general since there's always some variation in the markets.

[zorn]

Herein lies the real quandry for me. On a local level, in my area of London, I have kept a spreadsheet of the sales properties in my postal area from rightmove, findaproperty and my local foxton's and independent. I do not see high transactions, I honestly just do not and I have kept the record going back two years. infact, there are still a number - maybe 20% of the list - that have been there the whole time, only slightly falling in valuation but not selling. Two of them I walk past everyday - a 4 bed house and a 2 bed flat have been unoccupied during that time. It just does not fit with the things I personally know and see on a daily basis. And then we hear about all these new build developments - particulalry in the Docklands - that are lying idle. And then we hear about a girl 'raffling' her property in the paper the other week because it will not sell. And the stinkin' pigs buying at BVM because forced sellers cannot sell in the current market. The expat forum is full of folks waiting a year or more and still not selling. It is not just me, I know as well, because other people mention similar things to me from time to time, so I know I am not a complete loon. Where is it happening then? How are these figures just so out of whack with my daily life? I remember well previous years of boom where 'sale' and 'sold' signs were up and down within a week. That is not what I see now.

You can't find transaction numbers from monitoring estate agent websites, because you don't know if a property comes off the market because it's sold or because it's been withdrawn unsold. Some sites have "Sold" flags, but they don't necessarily apply them uniformly.

[Randall Herbert]

Never underestimate the power of the incredibly corrupt Nu Labour regime and other VI's to twiddle the figures to suit their own ends.....as we have seen on numerous occasions.

Real inflation at 2.2%!!!!!!

[zorn]

Never underestimate the power of the incredibly corrupt Nu Labour regime and other VI's to twiddle the figures to suit their own ends.....as we have seen on numerous occasions.

Real inflation at 2.2%!!!!!!

If you don't agree with the RPI figure, then fine. What is your figure, and how is it derived? If you can't answer that question (both parts), then your criticism of the RPI is entirely pointless.

It would be preferable if you could answer the question in a similar level of detail to the information on the RPI available on the National Statistics website, in order to allow meaningful critiques of your figures.

[The Colour]

It's necessary to look at both price and volume. If volume is increasing then in general the price trend is gaining strength (either up or down). If volume is falling then the price trend is losing momentum.

So if you want a crash then you're looking to rising volume on falling prices. If you want prices to rise then you're looking for rising volume on rising prices. If you're wanting the current trend to reverse then you want to see falling volumes.

Just in general since there's always some variation in the markets.

Thanks smurf that is one of the clearest explainations of anything i ever heard.

[JBFTB]

I can't help thinking this is symptom territory, rather than cause, i.e. I don't think a drop in sales volumes (as in ones that actually go through) before a crash is a cause of the crash itself.

[Guest wrongmove]

I remember well previous years of boom where 'sale' and 'sold' signs were up and down within a week. That is not what I see now.

Boomer

Some very thourough research in this post, but I think that it contains a mistake that many bears make. Just because prices are not booming, it doesn't mean they are necessarily crashing.

Of course the market is slower than it was a year or two ago - HPI was well into double figures then. Now it is between -5% and +5% over most of the UK. So there is not a boom on now - no queues outside EAs, properties sticking for ages, having to reduce - this is just 'normal'. A crash is when the auction rooms are full of forced sellers, not just when it is "a bit quiet at the EAs".

Edited January 26, 2006 by wrongmove

[AteMoose]

yes...a drop in transactions is required its basic supply and demand... very interesting data as transactions are still going on, make me think more and more were in for the long term (or have 2/3 more years to wait).... just means im going to go into mega saving mode, im not buying at this level so im looking at other ways to get my hands on the green stuff, and leave the country....

Edited January 26, 2006 by moosetea

[MEtallic]

Well, if you look at the file here: http://www.housepricecrash.co.uk/forum/ind...showtopic=22542 it's clear that a drop in transactions has preceded a fairly significant drop in prices.