UK house price gauge hits 14-year low as interest rates weigh - RICS

[henry the king]

This is the best leading indicator of house prices.

It has crashed again. 

The HPC has been going for a year+ already. Down 13% vs earnings already in just 12 months. More before that. 

Looks like it will continue. 

We won.

[Society of fools]

33 minutes ago, henry the king said:

We won.

I don’t think the psychology of would-be sellers or of the real estate agents that advise would-be sellers has changed in the slightest in the last 12+ months

I am still encountering active hostility when I suggest what I would actually like to pay for a property, which is some cases is more than £100 K less than the advertised selling price

Until that conversation changes, I’m not going to feel like much of a winner…..

[fellow]

2 hours ago, henry the king said:

This is the best leading indicator of house prices.

It has crashed again. 

The HPC has been going for a year+ already. Down 13% vs earnings already in just 12 months. More before that. 

Looks like it will continue. 

We won.

https://propertyindustryeye.com/uk-house-prices-drop-again-as-buyer-demand-and-sales-fall-sharply/

"The outlook for house prices continues to looks bleak as high mortgage rates weigh on the property market, the latest Royal Institution of Chartered Surveyors (RICS) survey shows.

The RICS Residential Market Survey, which measures the percentage of surveyors that are reporting house price increases versus declines, shows a reading of -68% in August from -55% in July – its lowest level since the financial crisis.

Additionally -47% of respondents noted a decline in agreed sales last month, up from -45% in July, with new sale instructions following a similar trend, dropping from -17 in July to -26 this time round.

Looking ahead, near-term sales expectations remain subdued, although the net balance has turned marginally less negative, at -38%, compared to last month’s reading of -45%. On a 12-month view, the trend in home sales is anticipated to flatten out, evidenced by the net balance moving from -25% in July to -5% in August".

Edited September 14, 2023 by fellow

[Timm]

From the report:

Quote

the survey’s headline price growth gauge posted a net balance of -68% in August (falling from -55% in July), thereby marking the most negative reading since February 2009...

Going forward, near-term price expectations are signalling further falls to come over the next few months, with the net balance slipping a little deeper into negative territory at -67% compared to 60% last time around."

 

Edited September 14, 2023 by Timm

[dpg50000]

8 minutes ago, Timm said:

From the report:

< removed >

@Timm Suggest a quick edit as this reveals some personal details

Edited September 14, 2023 by dpg50000

[Timm]

1 minute ago, dpg50000 said:

@Timm Suggest a quick edit as this reveals some personal details

Many thanks - done!

Can you edit too please?

😎

Edited September 14, 2023 by Timm

[fellow]

https://www.rics.org/news-insights/market-surveys/uk-residential-market-survey

 

 

[dpg50000]

7 minutes ago, Timm said:

Many thanks - done!

Can you edit too please?

😎

Done 🙂

[fellow]

What's @mynamehere's take on this data? You must admit this is looking pretty crashy now?

[Frankie Teardrop]

Expectations were for it remaining at -55%.
The spring dead cat bounce is definitely over.
We are now surpassing levels seen in the early 1990s crash.
Not quite at the sheer fear of -95% seen during the GFC (thats to come)

 

[Timm]

37 minutes ago, dpg50000 said:

Done 🙂

Thanks!

😄

[Blobsy]

 

[abbot26]

2 hours ago, Society of fools said:

I don’t think the psychology of would-be sellers or of the real estate agents that advise would-be sellers has changed in the slightest in the last 12+ months

I am still encountering active hostility when I suggest what I would actually like to pay for a property, which is some cases is more than £100 K less than the advertised selling price

Until that conversation changes, I’m not going to feel like much of a winner…..

Agree 100%, asking prices in my area are still crazy, until the reality of the base rates hit home I don’t see that changing

[mynamehere]

1 hour ago, fellow said:

What's @mynamehere's take on this data? You must admit this is looking pretty crashy now?

The key thing about this metric is it measures consensus not magnitude.  Meaning, what percentage of surveyors are seeing falls of any magnitude at all.  A record percentage of surveyors are seeing falls is obviously positive. But the falls are very modest. A crash  requires a sharp sustained drop across the whole market.

So no I wouldn't say it's looking 'crashy'. It's looking 'gradual fallsy'. 

It's also a measure of regionality? Until quite recently some regions were still seeing rises, Scotland in particular is only just starting to turn. The scotland comments confirm what I'm seeing, that demand continues to exceed supply for most part. With lots of cash buyers about.  So maybe I'm biased.

In terms of forward indicators, I'd disagree with esteemed OP that surveyors are much better placed than anyone to judge future prices. (They typically just ask agents for current pricing, which is very different to future pricing) So i'd disagree it's the best  'forward indicator'. The best forward indicator in my mind remains 5 yr swap rates. As for the real terms gymnastics, it's obviously total copium nonsense. In CPI terms, prices have been flat for 25 years. Is it just as easy to buy a house today?

 

Edited September 14, 2023 by mynamehere

[ftb_fml]

Great news and as always I admire your insights @henry the king however I think this whole 25yr economic atrocity will have few winners, other than those who've hoovered up multiple properties and profited off the captial growth / exploitation of unwilling renters.

Price falls are modest so far and nowhere near back to anywhere sensible yet, while I don't consider the still-distant-hope of being able to actually buy somewhere to live at a sensible price after 10-15 years of my life being on hold through living at home / being rent-gouged to be winning..

 

[Eddie_George]

It's election year next year. Expect a taxpayer-funded scheme to put a floor under prices to be announced soon.

[Aidan Ap Word]

1 minute ago, Eddie_George said:

It's election year next year. Expect a taxpayer-funded scheme to put a floor under prices to be announced soon.

Obviously we all hope not. But that really should spark a Truss/Kwarteng-like rout in the markets.

The cynic in me thinks they will try this and somehow be able to pull this off without tanking the GBP.

Really don't see how they could.

And it wouldn't chime well with their promises to "halve inflation" ... but then politican's promises are worth absolutely zero.

(and yes, I know, Sunak promising to halve inflation is promising to do stuff in a realm over which he has 0 control too)

[Aidan Ap Word]

Got a surprise email from RM today for the query I have a notification on ... the local builder has dropped their prices across all 7 "models" of houses in their "recently" built estate.

Yes, a developer dropping headline price of properties. All 7 models (where they have stock of > 1 of most of those) ...

Perhaps a sprinkling of sugar on the bear food of today's RICS review?

[staintunerider]

2 hours ago, Society of fools said:

I don’t think the psychology of would-be sellers or of the real estate agents that advise would-be sellers has changed in the slightest in the last 12+ months

I am still encountering active hostility when I suggest what I would actually like to pay for a property, which is some cases is more than £100 K less than the advertised selling price

Until that conversation changes, I’m not going to feel like much of a winner…..

This is still early on in the final battle....let's face it house prices at current/likely future rates regardless of wage inflation adjustments are easily twice as expensive as they should be....some **** holes much more than 2 times....they have to go back imo prior to 2007...2003-07....whether you agree or not is one thing, remember things usually overshoot....

We'll see...one thing is for sure this is the final battle either there is a crash or there isn't....I cannot see how it how it can limp along on a plateau as things stand....i certainly (without some conjuring trick) can't see how it can rise....all the fundamentals are squarely lined upagainst the market for a crash,  a crash that a lot of people don;t want......but don't seem to be able to do anything about....including those in power....but seems the market is pulling the strings now and they have to pull the levers that keep Mr Market on side.....or the Pound is going to get it good and hard....

If the pound ever drops below parity with either the dollar or the Euro....I think that would be a very frightening thing....sentiment is a strange thing....and once that level is broken tbh I don;t even want to think about and i bet they don't either.

We're all probably familiar with when a share price drops below a certain level of it's support, it usually gets worse from there due to the panic....

[canbuywontbuy]

For the good of society and younger generations, a group of people who bought (perhaps those who brought in the last 10 to 15 years or so) are going to have to feel pain.  It's a bit like the idea floating around at the moment of all those who've gained in the last 10 to 15 years simply sitting on bricks or stocks and not doing anything productive.  At some point, something has to give, a turning over of the soil so to speak.  Homeostasis, a return to the mean. To always want something to go your way - for actual decades, without a break - is actually perverse to the point of mental illness, particularly when you know others have to always suffer for your constant advantage.  It's a sickness that has a cure though: financial pain...followed, by humility and acceptance.  Other people get to live, and the cloistered, musty and dank feelings that the always-winning cohort will be strangely burdened with will be transmuted into a sense of feeling freer (unburdened by the constant holding onto an old system with its biases no matter what). 

Edited September 14, 2023 by canbuywontbuy

[wighty]

Being actively in the market and making offers I'm seeing prices of decent houses in better locations ridiculously going up 50%+ during COVID and now coming down about 10%. Making an offer with more than a token discount gets rejected and basically laughed at. South east coast area.

Don't call that much of a win.

[wighty]

7 minutes ago, staintunerider said:

This is still early on in the final battle....let's face it house prices at current/likely future rates regardless of wage inflation adjustments are easily twice as expensive as they should be....some **** holes much more than 2 times....they have to go back imo prior to 2007...2003-07....whether you agree or not is one thing, remember things usually overshoot....

We'll see...one thing is for sure this is the final battle either there is a crash or there isn't....I cannot see how it how it can limp along on a plateau as things stand....i certainly (without some conjuring trick) can't see how it can rise....all the fundamentals are squarely lined upagainst the market for a crash,  a crash that a lot of people don;t want......but don't seem to be able to do anything about....including those in power....but seems the market is pulling the strings now and they have to pull the levers that keep Mr Market on side.....or the Pound is going to get it good and hard....

If the pound ever drops below parity with either the dollar or the Euro....I think that would be a very frightening thing....sentiment is a strange thing....and once that level is broken tbh I don;t even want to think about and i bet they don't either.

We're all probably familiar with when a share price drops below a certain level of it's support, it usually gets worse from there due to the panic....

Pound has been really strong past few months. Supported by interest rate rises.

[Stewy]

19 minutes ago, Eddie_George said:

It's election year next year. Expect a taxpayer-funded scheme to put a floor under prices to be announced soon.

Yeah. It might be nearly time to buy my second house to get ahead of the curve/beat the policy announcement. 

[Aidan Ap Word]

3 minutes ago, wighty said:

Being actively in the market and making offers I'm seeing prices of decent houses in better locations ridiculously going up 50%+ during COVID and now coming down about 10%. Making an offer with more than a token discount gets rejected and basically laughed at. South east coast area.

Don't call that much of a win.

I am a bit north of you, I think ... midway between coast and London ... and yes, this is my experience too.

I am very fortunate that I may be active in the market but my rental situation has just started a new AST ... so I am not in a hurry for another 6 months (at least) ...

I hope you can hold out long enough for reality to hit round here. Becaus when it does it is going to hit hard.

Like I say - the across-the-board reductions by the new build in my local town is practically unheard of. But, to your point, the reductions are token reductions only.

Of course, in this town, the stock of houses on the market has more than doubled in the last 3 months ... so ... 

[staintunerider]

8 minutes ago, Aidan Ap Word said:

Obviously we all hope not. But that really should spark a Truss/Kwarteng-like rout in the markets.

The cynic in me thinks they will try this and somehow be able to pull this off without tanking the GBP.

Really don't see how they could.

 

My thoughts too....they (tories)are going to lose this election I think anway it's just a matter of how badly....the young have had enough of the tories and want a change at least just for changes sake is what I'm hearing....does  their vote hold enough sway  enough I ask myself ?

I have no particular hope for the other mob...

I have this feeling Sunak might not lead the tories into the election....he really doesn't seem all that into it....but we'll see...