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Realistbear

It May Have Escaped Most People's Attention But

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http://investing.reuters.co.uk/news/newsAr...IN-PROPERTY.xml

LONDON (Reuters) -
The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005
when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year.

The VIs (Rightmove and probably Nationwide this week) have been telling us that properties have been "flying of the shelves" with more buyers than ever. But the government figures suggest that the reverse is true.

January was the worst month for sales since August 2005--seasonally adjusted. This says one thing: there has not been a New Year bounce.

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http://investing.reuters.co.uk/news/newsAr...IN-PROPERTY.xml

LONDON (Reuters) -
The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005
when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year.

The VIs (Rightmove and probably Nationwide this week) have been telling us that properties have been "flying of the shelves" with more buyers than ever. But the government figures suggest that the reverse is true.

January was the worst month for sales since August 2005--seasonally adjusted. This says one thing: there has not been a New Year bounce.

check the YoY figures, Jan06 is around 1.4% higher than Jan05

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check the YoY figures, Jan06 is around 1.4% higher than Jan05

YoY data is less helpful than more recent data showing the trend. The real point of the post was to show that there was no January bounce as claimed by the VIs. Also interesting is the fact that the BBC failed to pick the story up and yet reported Rightmove's data as if it was an accurate source of information (Rightmove use hypothetical "asking prices" not actual sales figures as used in the government figures).

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[minor rant, apologies in advance :D ]

Point of the post was obviously to obfuscate the data in support the spinning of a pro-crash message – fine, and partly what this site is about, but what we really need is clarity, not barrel loads of yet more clever spinning. And with data like transaction volumes, as it takes time to collate the paperwork the “last” few months are always under reported, and consequently show lower transaction volumes – spinning this systemic bias as “evidence” of a market collapse because a “spring bounce” has failed to materialise, while at the same time deliberately hiding the fact that prices have actually risen YoY, puts the post firmly in the “VI-lies” category along with all those from the EAs, lenders, and house builders. Surely this site should focus on exposing and dissecting spin and *not* just wall papering the place with more of it!

[end rant]

Edited by spline

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[minor rant, apologies in advance :D ]

Point of the post was obviously to obfuscate the data in support the spinning of a pro-crash message – fine, and partly what this site is about, but what we really need is clarity, not barrel loads of yet more clever spinning. And with data like transaction volumes, as it takes time to collate the paperwork the “last” few months are always under reported, and consequently show lower transaction volumes – spinning this systemic bias as “evidence” of a market collapse because a “spring bounce” has failed to materialise, while at the same time deliberately hiding the fact that prices have actually risen YoY, puts the post firmly in the “VI-lies” category along with all those from the EAs, lenders, and house builders. Surely this site should focus on exposing and dissecting spin and *not* just wall papering the place with more of it!

[end rant]

Minor rant in reply:

The government report on slowing transactions was not spun--HM Customs and Excise simply reported numbers of completed transactions and discovered that they were at their lowest level since August and well down on December. I do agree with you that Rightmove and other VIs have tried to show the opposite has been the case but they are not guilty of spinning the figures from the Government. They simply ignore government statistics if they show the market is not hotting up. But surely we have to allow the VIs to spin so that the Bears can pick it apart and use hard evidence (H M Government figures) to refute their exaggerations.

YoY is okay to a point but most people want to know current trends in property transactions however scary they may be to those who believe house prices never go down.

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I think we should be critical, investigate and expose spin, and not just trowel our own all over the place (excepting, of course, externally B) ) and we need to narrow the gap between the reality and the reporting, not widen it. I simply question whether spinning to ourselves us either useful or helpful?

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I think we should be critical, investigate and expose spin, and not just trowel our own all over the place (excepting, of course, externally B) ) and we need to narrow the gap between the reality and the reporting, not widen it. I simply question whether spinning to ourselves us either useful or helpful?

The dividing line between "spin" and opinion is a difficult one to draw. IMHO it is a positive thing to post useful articles and then comment on them as a matter of opinion. Maybe preface everything with an "IMHO?" :)

It just amazes me that the BBC and other VIs did not pick up on the HM Customs figures and let everyone know that the number of transactions slowed in January and that properties weren't really flying off the shelves as they said.

Edited by Realistbear

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I accept that it’s convenient and relatively easy to portray “spin” as mere “opinion”, but it rather ignores the very clear distinction that “spinning” is usually done with a purpose; so we have the EAs and lenders spinning the market *up*, and STRs and BMV operators spinning it *down*. But why muddy the water and spin to a converted audience here on HPC? I know one or two posters have expressed a minor house buying heresy, but surely you're not worried that the rest of us are about to rush off and buy a house. :)

Edited by spline

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I accept that it’s convenient and relatively easy to portray “spin” as mere “opinion”, but it rather ignores the very clear distinction that “spinning” is usually done with a purpose; so we have the EAs and lenders spinning the market *up*, and STRs and BMV operators spinning it *down*. But why muddy the water and spin to a converted audience here on HPC? I know one or two posters have expressed a minor house buying heresy, but surely you're not worried that the rest of us are about to rush off and buy a house. :)

You never know who reads the threads on HPC.co.uk. Since the Rightmove thing blew up the VIs may be taking notes. There are also a few bulls around that may need convincing with some good HPC links and "IMHO" stuff. It would be sad to see all good news about the crash gone from the forum? Even sadder in we all kept our opinions to ourselves. One person's "spin" may be another person's salvation from a bad purchase.

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I probably worry that if the HPC spin becomes too blatant, or descends into an “alternative reality”, then it opens us up to ridicule and makes it more difficult to counter the VI spin used against HPC. :unsure:

Edited by spline

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http://investing.reuters.co.uk/news/newsAr...IN-PROPERTY.xml

LONDON (Reuters) -
The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005
when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year.

The VIs (Rightmove and probably Nationwide this week) have been telling us that properties have been "flying of the shelves" with more buyers than ever. But the government figures suggest that the reverse is true.

January was the worst month for sales since August 2005--seasonally adjusted. This says one thing: there has not been a New Year bounce.

The YOY figures for January 2006 show an increase of nearly 30% from January 2005.

January 2006 was supposed to be the best January EVER for mortgage lending.

Why didn't you show the figures for last year? (could it be that they indicate property is now "flying off the shelves" wrt last year?)

What bit about +30% YOY do you find so bearish?

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I probably worry that if the HPC spin becomes too blatant, or descends into an “alternative reality”, then it opens us up to ridicule and makes it more difficult to counter the VI spin used against HPC. :unsure:

I thought you were thinking it was the Customs and Excise statistics that were spun? Namely the part that said:

LONDON (Reuters) - The number of property transactions in England and Wales slipped to its lowest in five months in January, tax authority data showed on Tuesday.
HM Revenue and Customs said the number of property transactions fell to 133,000 in January in seasonally-adjusted terms from 154,000 in December, revised from an originally reported 153,000.
That was the lowest level since August 2005 when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year.

IMHO the news is pretty dry without any spin that I could detect. Although I will grant the terminology "slipped to its lowest in five months" was a little bearish. That the transactions were at "the lowest level since August 2005" also adds a tiny amount of spin as they could have simply given the numbers without any comment or use of adjectives.

Or, perhaps my opinion that the government figures refuted Rightmove was a little too descriptive? Or was it the bit about the absense of a New Year bounce?

The Government figures do not paint such a rosy picture as Rightmove and the jury is still out on their "asking price" data as the pinned thread demonstrates.

All, of course, IMHO :lol:

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The YOY figures for January 2006 show an increase of nearly 30% from January 2005.

January 2006 was supposed to be the best January EVER for mortgage lending.

Why didn't you show the figures for last year? (could it be that they indicate property is now "flying off the shelves" wrt last year?)

What bit about +30% YOY do you find so bearish?

The article refers to declining transactions since August 2005. The article was not dealing with YoY spin. Better to have data on current trends in any event. YoY data is not helpful as it may be comparing a previously hot market giving people the impression that prices are still rising rapidly when the opposite may be true.

The government stats have certainly drawn out a few bulls? I am sad that BBC didin't refer to them when they highlighted the Rightmove data based on "asking prices" which are not very helpful.

While the mortgage data was not referred to in the government report it is possible that the record borrowing that happened in January was remortgaging in the face of higher IR? Does anyone know if the record borrowing was new purchases?

Edited by Realistbear

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The article refers to declining transactions since August 2005. The article was not dealing with YoY spin. Better to have data on current trends in any event. YoY data is not helpful as it may be comparing a previously hot market giving people the impression that prices are still rising rapidly when the opposite may be true.

Declining since August 2005?

Look at the data again and tell me a month since August 2005 that shows fewer transactions than August 2005.

That was the lowest level since August 2005 when the Bank of England cut interest rates to 4.5 percent, a move that many analysts said gave a boost to the housing market at the end of last year.

Transactions are often low during the Summer (Holidays in August?) and during the Winter (xmas + New Year)

August 2005 was the last LOW POINT. (Summer) and January is NEARLY as low (Winter)

Why the surprise at this?

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From the article:

======

Property transactions data are widely viewed as a lagging indicator of Britain's housing market as they reflect residential stamp duty payments on purchase completion.

======

Essentially, it gives an early indication of the volumes we'll see in the next land registry report.

Hence it can indicate low volume for January even while houses

are 'flying of the shelves' according to Rightmove.

Pent

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Declining since August 2005?

Look at the data again and tell me a month since August 2005 that shows fewer transactions than August 2005.

Transactions are often low during the Summer (Holidays in August?) and during the Winter (xmas + New Year)

August 2005 was the last LOW POINT. (Summer) and January is NEARLY as low (Winter)

Why the surprise at this?

January normally sees a pick up after the December lull due to Christmas etc. The government data simply points out that January's figures were the lowest SINCE August. That probably means the worst of the 5 months following their baseline of the 8th month of the year. Its possible to try to parse the simple statement to the point that its simple meaning is lost. All it says is that transactions are down--not up. And that the trend is down given that January was worse than December when the opposite might have been expected. The government article implies that the lower IR in August did nothing to reverse this trend. Overall, its a bearish statement.

Edited by Realistbear

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The dividing line between "spin" and opinion is a difficult one to draw. IMHO it is a positive thing to post useful articles and then comment on them as a matter of opinion. Maybe preface everything with an "IMHO?" :)

It just amazes me that the BBC and other VIs did not pick up on the HM Customs figures and let everyone know that the number of transactions slowed in January and that properties weren't really flying off the shelves as they said.

I have posted several times about the sexing up and spin of some of your posts. Must admit they are often excellent articles that we would otherwise perhaps not see. But why the need for ANY spin from you? on this forum of all places? - i.e you often miss out a key word when you quote from an article. Any members who regularly read your posts will recognize what i am saying - think it would be great for you to mark IMO against your comments and leave the rest of us to read the articles for ourselves and draw our own conclusion. this forum is 95% bear and it does not help the credibility of this site to complain of blatant VI spin and then churn it out ourselves, or cut and paste facts/figures to make then fit your own agenda. If we can see it, then what do you think outsiders are thinking?? Journalist at a Sunday broadsheet i used to work on laughed out loud when i mentioned this site.....because they question its credibility.

Most of us see the whole picture, b/c we are interested enough to spend time on this site reading the articles and most likely study/read other sites/sources as well. Just IMHO!!

Edited by beenhearingthisforyears

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Rather than rely on the media to tell us what’s going on, we should look at the original sources – so let’s look at the HM Revenue & Customs survey of property transactions in England and Wales

Link here: http://www.hmrc.gov.uk/stats/survey_of_prop/menu.htm

Transactions, SA, England and Wales

2004

Jan (1) 155

Feb (1) 172

Mar (1) 150

Apr (1) 156

May (1) 155

June (1) 159

July (1) 158

Aug (1) 144

Sep (1,R) 145

Oct (1,R) 144

Nov (1,R) 123

Dec (1,R) 132

2005

Jan (1,R) 103

Feb (1,R) 118

Mar (1,R) 116

Apr (1,R) 114

May (1,R) 117

June (1,R) 126

July (1,R) 124

Aug (1,R) 133

Sep (1,R) 147

Oct (1,R) 134

Nov (1,R) 145

Dec (1,R) 154

2006

Jan (1,P) 133

So the transaction figures *are* down in Jan/06 from Dec/05, as pointed out by the OP, but as this mirrors the behaviour from the year before, it is not, in itself, unusual or indicative of a new trend. The figures also contradict the suggestion of a recent developing trend of collapsing transactions; Jan/06 is up +33% on Jan/05, and the monthly trend since July/05 is one of consistent increases, apart from an isolated “blip” in Oct/05. One could even make the case that the trend over the whole year is one of overall increases, albeit with small and isolated wiggles. As transaction volumes correlate with HPI and we are expecting to see prices start to fall back at some point, we would expect to see some evidence in the transaction data – but the recent figures do not appear to support this view, at least not yet.

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Hi,

Just a point, it's been investigated a few times here before. The UK housing market is far from the model of perfect demand and supply economics, transactions in particular can mean one thing or another according to the market conditions. Comparing the behaviour of the previous two crashes and crashes around other nations in the past, rising transactions can be consistent with a falling market. It has in the past, BoE published a paper on it. Eventually, when many sellers are not selling, a nice price low develops and pulls in some new buyers, showing up as an increase in transactions and a fall in prices. That is to say, a fall in prices stimulates an increase in demand, as you might expect. This is what happened pretty much between 1991-1995 when transaction volumes were "flying off the shelf" but prices were freefalling, upwards of 30-50%. The more interesting bit is the preceding high before this stage. If you check the figures of CML, land registry, you see in each instance that the initial high of transactions and prices reach the market top before transactions plummet but prices hardly react initally (1989-1990 last time, 2004-2005 this time?). The "sticky downwards" nature of house valuations until market realisation and ensuing credit and liquidity crunches getting to work. Gazumping on the way up, gazundering on the way down. Unfortunately, these take some time to filter down to the land registry and CML when approvals and valuations are recorded as a final sale.

So in the two "transactions" relevant stages of the downward cycle of typical crashes, prices initally continue to increase at a time demand (transactions) fall markedly and then, after a period of stability, prices fall markedly while demand (volume transactions) increase rapidly. Question being ; Where are we now if this identifiable relationship holds as it always has in the UK market? Could be we are in the stability bit, maybe about to enter the falling bit if transactions are rising and regional price falls continue to filter in and increase some months later in the land registry. Transactions have been rising of late, albeit at/from a low level. Either way, the point is that I would not jump at a single batch of figures until the corresponding relationship to transactions-approvals-sales can be identified the few months later, the relationship is just not a straightforward supply-demand situation according the position in the cycle it occurs. At the peak of the market, rising transactions and approvals will likely be realised as increased prices but in the past, on the downswing of a property cycle, those rising transactions have been accompanied with price falls after a lag. Of course, it could all be different this time and we are entering a new paradigm. ;) I guess it's down to your own indiviual reading of the market fundamentals of the uk housing market.

Boomer

Edited by boom_and_bust

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I have posted several times about the sexing up and spin of some of your posts. Must admit they are often excellent articles that we would otherwise perhaps not see. But why the need for ANY spin from you? on this forum of all places? - i.e you often miss out a key word when you quote from an article. Any members who regularly read your posts will recognize what i am saying - think it would be great for you to mark IMO against your comments and leave the rest of us to read the articles for ourselves and draw our own conclusion. this forum is 95% bear and it does not help the credibility of this site to complain of blatant VI spin and then churn it out ourselves, or cut and paste facts/figures to make then fit your own agenda. If we can see it, then what do you think outsiders are thinking?? Journalist at a Sunday broadsheet i used to work on laughed out loud when i mentioned this site.....because they question its credibility.

Most of us see the whole picture, b/c we are interested enough to spend time on this site reading the articles and most likely study/read other sites/sources as well. Just IMHO!!

Which part of my comments do you think was blatant spin? What missing word?

The Sunday Broadsheet may laugh at this site because most of the press are in the pockets of the VIs or have a political agenda. The Telegraph seems to be the exception because they also have an agenda. Bulls have an agenda so do Bears. Agenda's are often why we wake up in the morning. To be without opinion is boring--IMHO of course.

Beenhearingthisforyears--I think you are one of the bulls right? The only complaints my article seems to have attracted comes from bulls. The government figures speak for themselves and my comment was to the effect that January was the lowest month since August and that the figures suggest that Rightmove's data was at odds with the facts. Simple, straightforward commentary.

Or, is opinion and commentary outside your rules? Just post the article and add nothing?

I resurrected this article because I believe it should get as much exposure as possible due to the VI spin that followed it. In particular, it conflicts directly with the spin from Rightmove which makes it all the more interesting. It is quite simply a very bearish article and one which I and fellow bears undoubtedly took much delight in. I am pleased it has attracted so much attention.

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January normally sees a pick up after the December lull due to Christmas etc. The government data simply points out that January's figures were the lowest SINCE August. That probably means the worst of the 5 months following their baseline of the 8th month of the year. Its possible to try to parse the simple statement to the point that its simple meaning is lost. All it says is that transactions are down--not up. And that the trend is down given that January was worse than December when the opposite might have been expected. The government article implies that the lower IR in August did nothing to reverse this trend. Overall, its a bearish statement.

The stats are not very bearish to me so we'll have to disagree on that one.

I can only agree with BHTFY comments earlier. This site needs people like you to put in the time and research to find these articles.

But you don't seem to be able to resist sexing things up a bit which is actually counter productive.

Have you ever considered working as a newspaper front page editor? (just kidding)

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Hi,

So in the two "transactions" relevant stages of the downward cycle of typical crashes, prices initally continue to increase at a time demand (transactions) fall markedly and then, after a period of stability, prices fall markedly while demand (volume transactions) increase rapidly. Question being ; Where are we now if this identifiable relationship holds as it always has in the UK market? Could be we are in the stability bit, maybe about to enter the falling bit if transactions are rising and regional price falls continue to filter in and increase some months later in the land registry. Transactions have been rising of late, albeit at/from a low level. Either way, the point is that I would not jump at a single batch of figures until the corresponding relationship to transactions-approvals-sales can be identified the few months later, the relationship is just not a straightforward supply-demand situation according the position in the cycle it occurs. At the peak of the market, rising transactions and approvals will likely be realised as increased prices but in the past, on the downswing of a property cycle, those rising transactions have been accompanied with price falls after a lag. Of course, it could all be different this time and we are entering a new paradigm. ;) I guess it's down to your own indiviual reading of the market fundamentals of the uk housing market.

Boomer

A good post but I have a couple of issues with it.

See the bits in bold.

I am only aware of one crash in the last few decades where nominal prices fell and that is the last one in 1990.

There were well documented c0ck ups in monetary policy by the Tories which exaggerated the fall in prices.

Eg Nigel Lawson's boom and bust economy with rollercoaster interest rates and then the farce with the ERM from 1990-1992 where our economy got strangled because Germany kept its interest rates high. (due to inflationary pressures wrt the merge with the old E.Germany)

The £ was tied to the German DM so we just sank DEEPER into recession until Norman Lamont finally pulled us out of the ERM in 1992 on Black Wednesday and the £ nose dived in value. The economy lost billions.

The previous economic downturns to this saw no decrease in nominal house prices. Instead we saw inflation and devaluation of the currency. Nominal prices did not fall in the 70s crash, they kept RISING.

It could happen like this again. The £ is free floating so why not devalue the £ and inflate away the debts?

The UK economy is quite fond of short bursts of inflation. I bet I can find more inflation bumps in the last 35years than I can falls in house prices.

Having the flexibility to stoke up inflation is one of the arguments against us joining the EU. A well timed devaluation in the currency has been well proven as a means of getting an economy out of difficulties.

Edited by Without_a_Paddle

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This graph complements ABB’s transaction plot [back to 1960, but missing 2005] and presents the different ODPM series on a single plot.

op8o4m.jpg

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I am only aware of one crash in the last few decades where nominal prices fell and that is the last one in 1990.

Mr Picky would like to point out that you forgot to add the qualifier "in the UK"

I can think of many house price crashes in the last few decades where nominal prices fell

HK

Singapore

Japan

Canada

California

Boston

Thailand

Indonesia

Best regards

Okunu (miyaki)

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  • 302 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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