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Bland Unsight

ONS HPI May 2018 - London YoY negative

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From the report:

image.png.5a34724acec3a2d4de1ea6872a7067a4.png

May 2018 report published yesterday. Lagging indication but probably one of the best data sets available. Full report here. Usual health warning on the transaction volumes as per Neal Hudson (link); the apparent collapse of transactions is purely methodological and has shown up every month even though the longer run fuller data shows that transaction volumes are relatively stable.

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I would have thought there would be more (some) responses on the back of this. 

Perhaps posters are weary after your latest performance? 

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21 minutes ago, adarmo said:

I would have thought there would be more (some) responses on the back of this. 

Perhaps posters are weary after your latest performance

Not really sure what this means but it’s probably because some people already talked about it a little in another thread because I lazily brought it up in there instead of starting a new one.

Personally I like the graph because it looks like a middle finger when you turn it on it’s side. I also like hearing about house prices falling.

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20 minutes ago, Lavalas said:

Personally I like the graph because it looks like a middle finger when you turn it on it’s side. I also like hearing about house prices falling.

+ 1

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What we want is a graph of changes in the typical range of price paid for a home for normal working residents.... not the whole spectrum of prices including the prices most will always be priced out of.....it rather skew's the picture somewhat. ;)

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15 hours ago, longgone said:

Another useless pretty graph 

Pretty weird that the ONS include graphs in the key statistical release given that the sharpest minds, people like your good self, regard them as useless, but nevertheless they do.

Of course some graphs are almost useless and not even very pretty, like this one from the report:

2003550594_Figure3_AnnualhousepriceratesofchangeUKbypropertytypefromJanuary2006toMay2018(1).png.0ec02be1481b83a9b3679d1632fdd28d.png

However, as the ONS provide the underlying numbers as a .csv file we can put that to work and produce this:

image.png.cd71883e495473aa9d9e705c0fa9ea70.png

 

If I was a possible first-time buyer looking to buy a flat being off-loaded by a witless over-leveraged buy-to-let landlord then I might decide that the graph was not useless after all.

It's perfectly possible that the orange line is about to make a sharp turn to the east, but it might be worth hanging on for six months to see if it's going to keep heading south. Sometimes the trend is your friend and the steady fall in the level of house price inflation since the additional rate on Stamp Duty Land Tax arrived in April 2016 is now two years old and looks to be accelerating.

 

Edited by Jurassic Bland
Updated the chart to make the legend font larger

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20 minutes ago, Jurassic Bland said:

Pretty weird that the ONS include graphs in the key statistical release given that the sharpest minds, people like your good self, regard them as useless, but nevertheless they do.

Of course some graphs are almost useless and not even very pretty, like this one from the report:

2003550594_Figure3_AnnualhousepriceratesofchangeUKbypropertytypefromJanuary2006toMay2018(1).png.0ec02be1481b83a9b3679d1632fdd28d.png

However, as the ONS provide the underlying numbers as a .csv file we can put that to work and produce this:

image.png.cd71883e495473aa9d9e705c0fa9ea70.png

 

If I was a possible first-time buyer looking to buy a flat being off-loaded by a witless over-leveraged buy-to-let landlord then I might decide that the graph was not useless after all.

It's perfectly possible that the orange line is about to make a sharp turn to the east, but it might be worth hanging on for six months to see if it's going to keep heading south. Sometimes the trend is your friend and the steady fall in the level of house price inflation since the additional rate on Stamp Duty Land Tax arrived in April 2016 is now two years old and looks to be accelerating.

 

useless when i see asking prices still a good 60% up on pre HTB prices. 

The orange line heading eastwards would indicate that there is 0 chance of HPI profits for potential new landlords and of course new buyers looking to generate their imaginary wealth off the back of HPI so why buy now ? 

see then we have a stale mate of buyers knowing they have all the time in the world and the unknown world of what state the sellers finances are in.

At the end of the day the "gamemaster" is only interested in keeping players in the same game not who the players are. i would of thought the pressure on our games masters are how to keep the same game at a slower pace while allowing new entrants to play the game. i wonder who is stupid enough or has the required entrance fee to join the game. 

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2 hours ago, Jurassic Bland said:

However, as the ONS provide the underlying numbers as a .csv file we can put that to work and produce this:

image.png.cd71883e495473aa9d9e705c0fa9ea70.png

 

If I was a possible first-time buyer looking to buy a flat being off-loaded by a witless over-leveraged buy-to-let landlord then I might decide that the graph was not useless after all.

It's perfectly possible that the orange line is about to make a sharp turn to the east, but it might be worth hanging on for six months to see if it's going to keep heading south. Sometimes the trend is your friend and the steady fall in the level of house price inflation since the additional rate on Stamp Duty Land Tax arrived in April 2016 is now two years old and looks to be accelerating.

Now that is a pretty chart ;)

Posted elsewhere already but this seems like something which will be helping that line southwards:

Quote

Luxury London homes being sold in bulk as demand drops

Almost 40 per cent of London new-build sales in the second quarter of 2018 were to bulk buyers, who generally purchase at a steep discount with the aim of setting up portfolios of rented homes for large-scale investors.

 

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5 minutes ago, Neverwhere said:

Now that is a pretty chart ;)

Apologies for the infaltion [sic] on the vertical axis. Typing rotated text always reveals the gap between my confidence in my touch typing and the extent of the accuracy actually achieved, but a rose by any other name and all that...

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1 hour ago, Neverwhere said:

Posted elsewhere already but this seems like something which will be helping that line southwards:

After a good few years on the forum I've become sceptical about causal explanations offered after the fact but my take is that London went up because of a sugar rush of cheap credit and speculative investment from investors domestic and foreign. Once it was going up the very fact it was going up drew in more cheap credit and more speculative investment. The inability of the developers to sell to punters at the expected prices speaks clearly to the idea that there is no longer a deep pool of prospective buyers desperate to get into London property. What I haven't seen much evidence of yet is a queue of existing investors looking to sell up and take profits. If we start to see really clear evidence of that and the current path of the year on year HPI continues into negative territory then I can't see any reason why an essentially speculative movement up between 2013 and 2018 might not back out quickly and entirely.

Edited by Jurassic Bland

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11 minutes ago, Jurassic Bland said:

After a good few years on the forum I've become sceptical about causal explanations offered after the fact but my take is that London went up because of a sugar rush of cheap credit and speculative investment form investors domestic and foreign. Once it was going up the very fact it was going up drew in more cheap credit and more speculative investment. The inability of the developers to sell to punters at the expected prices speaks clearly to the idea that there is no longer a deep pool of prospective buyers desperate to get into London property. What I haven't seen much evidence of yet is a queue of existing investors looking to sell up and take profits. If we start to see really clear evidence of that and the current path of the year on year HPI continues into negative territory then I can't see any reason why an essentially speculative movement up between 2013 and 2018 might not back out quickly and entirely.

That all sounds right to me.

HTB seems unlikely to step in and fill the void left by tax- and underwriting-constrained BTLers, as it's clearly not having as much take-up as would be needed to support current prices if 40% of London new-builds are having to be sold at discount to corporate buyers.

What we have at the moment is a fall off in effective demand, which can be a slow run thing when it comes to price falls, as it takes a while for the reality to filter through to all parties.

As the market starts to stall then, as Longgone outlines above, the incentives for speculators to jump in decreases, even where they can afford to do so, and that further reduces demand.

It might take a good long while to play out to the point where existing speculators start to panic - and that can be a long and boring wait, especially for those who've been paying attention from the beginning - but once they do things could start to move very quickly.

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5 hours ago, Jurassic Bland said:

Pretty weird that the ONS include graphs in the key statistical release given that the sharpest minds, people like your good self, regard them as useless, but nevertheless they do.

Of course some graphs are almost useless and not even very pretty, like this one from the report:

2003550594_Figure3_AnnualhousepriceratesofchangeUKbypropertytypefromJanuary2006toMay2018(1).png.0ec02be1481b83a9b3679d1632fdd28d.png

However, as the ONS provide the underlying numbers as a .csv file we can put that to work and produce this:

image.png.cd71883e495473aa9d9e705c0fa9ea70.png

 

If I was a possible first-time buyer looking to buy a flat being off-loaded by a witless over-leveraged buy-to-let landlord then I might decide that the graph was not useless after all.

It's perfectly possible that the orange line is about to make a sharp turn to the east, but it might be worth hanging on for six months to see if it's going to keep heading south. Sometimes the trend is your friend and the steady fall in the level of house price inflation since the additional rate on Stamp Duty Land Tax arrived in April 2016 is now two years old and looks to be accelerating.

 

Interesting chart. What level of support is there on the downside? The trend looks rather sharp for flats.

Edited by Ash4781

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2 hours ago, Jurassic Bland said:

After a good few years on the forum I've become sceptical about causal explanations offered after the fact but my take is that London went up because of a sugar rush of cheap credit and speculative investment from investors domestic and foreign. Once it was going up the very fact it was going up drew in more cheap credit and more speculative investment. The inability of the developers to sell to punters at the expected prices speaks clearly to the idea that there is no longer a deep pool of prospective buyers desperate to get into London property. What I haven't seen much evidence of yet is a queue of existing investors looking to sell up and take profits. If we start to see really clear evidence of that and the current path of the year on year HPI continues into negative territory then I can't see any reason why an essentially speculative movement up between 2013 and 2018 might not back out quickly and entirely.

Wow sounds like this post should be moved to the crypto forum

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4 hours ago, Jurassic Bland said:

After a good few years on the forum I've become sceptical about causal explanations offered after the fact but my take is that London went up because of a sugar rush of cheap credit and speculative investment from investors domestic and foreign. Once it was going up the very fact it was going up drew in more cheap credit and more speculative investment. The inability of the developers to sell to punters at the expected prices speaks clearly to the idea that there is no longer a deep pool of prospective buyers desperate to get into London property. What I haven't seen much evidence of yet is a queue of existing investors looking to sell up and take profits. If we start to see really clear evidence of that and the current path of the year on year HPI continues into negative territory then I can't see any reason why an essentially speculative movement up between 2013 and 2018 might not back out quickly and entirely.

You are right. It was no coincidence that QE started in the UK in December 2008, when the market was in freefall, and the market bottomed in March 2009, and no coincidence that after QE reached £375bn in July 2012 the bubble took off again.

The whole point of QE was to reflate the housing bubble that burst in 2007 and it worked (sadly), and now it's even bigger. There is no need to seek out alternate causal explanations.

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  • 331 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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