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kagiso

The Crash Has Started......

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Land Registry

The latest Land Registry monthly report came out on the 30th May.

It showed the following monthly changes in house prices:

Region - Monthly Change

London 2.3

Wales 1.1

South East 1.0

East 0.7

East Midlands 0.5

West Midlands 0.0

North East -0.2

South West -0.3

North West -0.5

Yorkshire & The Humber -1.1

So the North East, South West, North West and Yorks dropped in nominal terms MoM.

The West Midlands was unchanged in nominal terms. Inflation is approximately 3%, ie a little over 0.2% per month.

So the West Mids dropped 0.2% in real terms (NE dropped 0.4% in real terms, etc).

So the LR figures say that four out of ten areas are falling in nominal terms, and five out of ten are falling in real term MoM. So prices are dropping in half the country.

FT House Price Index

The Financial Times House Price Index was released on the 8th June. Full FT report from Acadametrics is available online at:

http://www.acadametrics.co.uk/FTHPI%20Pres...52110fa29b9e530

Highlights of the report include:

Three out of ten regions showing nominal monthly falls; North, West Midlands and Wales.

East Midlands and Yorks at 0% growth. As discussed above this means there were real house price falls in these regions.

So that gives five out of ten regions showing real monthly falls.

If you look closer at the data it gets much more interesting:

W Mids and North have both had nominal monthly falls two months running.

E Mids and Yorks have both had real monthly falls two months running; giving four out of ten regions with real monthly falls two months in a row.

One region; the West Midlands, has had real monthly falls three months running. (So it would appear the crash started in Feb 2007).

Look at the monthly changes from autumn last year to April, and it is clear that the North, E & W Mids, Wales and Yorks are falling off a cliff.

So the FT figures also say that prices are dropping in real terms in half the country. The FT figures also show that the drops are persistent over a number of months, and they are growing in size and geographical coverage.

Both the LR and FT indices are widely held to be some of the most reliable housing data available. Both are showing house prices dropping almost everywhere North and West of Oxford.

The collapse of the housing market in the North, Midlands and West is happening in the middle of the spring house buying season. These figures are from when we had pretty much continuous full on bull news in the early spring.

Given the recent IR increase, and general sentiment change, expect June's figures to be far worse.

If each of the regional LR figures was to be just 0.5% worse (London 1.8%, E Mids 0%, Yorks -1.6%, etc) then the national MoM figure would go negative.

Probably won't happen in June; but could be close. Probably will happen by July / August when everybody goes on holiday.

And what happens when we get into the miserable wet cold non-house-buying autumn?

This is not a blip, it is a gathering trend.

By the end of the year London will be seen as an irrelevant island of madness in the middle of a country wide crash.

HPC4 2007 Q1

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Guest portwinestain

I'm interested in the scottish figures. I see the BBC is still having technical problems with the LR data <_<

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I have been following my former home of San Diego which some regard as the genesis of Great Crash 1 and 2. Believe it or not, there are Realtors there that call it like it is. The view among the realists is that the median drops that are being reported in the press (6% down for San Diego YoY) is not representative of the true picture. In a downturn lower priced and middle priced homes tend to drop faster than higher priced homes in wealthier areas. Further, the more expensive houses tend to sell more. Thus, the averages are skewed and the extent of the crash is kept masked.

The LR data, though pleasant, does not reflect what is really happening in the market due to the skewing effect. THis is why crashes seem mild in the early days.

http://realtytimes.com/rtmcrcond/Californi...go~bobcasagrand

So why are US Realtors apparently more willing to "tell it like it is?" One word: Lawyers.

Edited by Realistbear

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Land Registry

The latest Land Registry monthly report came out on the 30th May.

It showed the following monthly changes in house prices:

Region - Monthly Change

London 2.3

Wales 1.1

South East 1.0

East 0.7

East Midlands 0.5

West Midlands 0.0

North East -0.2

South West -0.3

North West -0.5

Yorkshire & The Humber -1.1

So the North East, South West, North West and Yorks dropped in nominal terms MoM.

Its early days yet to call the top, didn't the same thing happen in the spring of 2005. <_<<_<

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Re: San Diego

Just did a very quick search to find a brief chronology.

Strike 1 : Aug 05, one RE agent lets on about a fall in demand.

http://calculatedrisk.blogspot.com/2005/08...ket-update.html

Strike 2: Oct 06, a year later and a year of price falls have been recorded

http://housingpanic.blogspot.com/2006/10/s...-pops-only.html

Strike 3: Jun 07, all the posion in the mud seeps out.

http://real-estate.sandiego-mls.com/

So as a very rough chronology price falls start, only a year later is it generally accepted that the market is falling and another year for all the trash to be fully exposed. Ties in with implodometer - that didn't start till late last year. The mortgabe backed securities market, that only went early this year. Amazing how long people (even the investorsd who have $100bn's at stake) take to smell the coffee.

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Forgot to mention regarding median prices.

In a hot market everything tends to sell, no matter how bad. Thus the median prices cover properties of all ages and conditions. When more supply comes on stream compared to demand the rubbish tends to get left on the shelves, nobody is desperate to want it unless it is really, really cheap, the risk of flipping is up and the risk of development is up as resale values are unknown. This even occurs for repos, the lenders are likely to get stung for so much that they won't let them go low enough to clear at auction as the figures would look far too messy for their books, so they keep hold and hope - there is only so much that they can absorb though and as proprty continues to languish and deteriorate they have to bite the bullet and clear the decks, cue the real big downward surge in pricing.

So a 5% fall in pricing can quite mask say a 20% change in quality of house being purchased for that price.

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Absoloutley not chance of cutting again, in fact I don't think we are at the top now I think the top was 6 months ago, it's all downhill from here. Even the bond market's have had enough and the builder shares are following suit.

That aside with over inflated property markets taking a hiding worldwide we are nicely positioned for a serious much needed correction.

Yeah but...... you don't really think they're about to cut interest rates again do you? ;)

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Yeah but...... you don't really think they're about to cut interest rates again do you? ;)

Who really knows these days, the folks who are paid to control inflation and make sure we have a stable economy seem to be the same folks with all their fingers and toes in every pie going, just look how easy the CML stopped HIPs from being introduced, look how the high street spending figures rise and all like barmaids knickers whenever a rate rise is likely, it all smells a little banana republicly to me.

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So a 5% fall in pricing can quite mask say a 20% change in quality of house being purchased for that price.

Absolutely agree,you just know that the indicies are lying in my area(Nottingham,which shows flat-lining)because the falls are tangible on like for like property.I similarly conclude that quality selling and dogs sitting on the shelf are skewing these indicies,the outcome of a slow market.

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Who really knows these days, the folks who are paid to control inflation and make sure we have a stable economy seem to be the same folks with all their fingers and toes in every pie going, just look how easy the CML stopped HIPs from being introduced, look how the high street spending figures rise and all like barmaids knickers whenever a rate rise is likely, it all smells a little banana republicly to me.

Many aspects of the way the country is being run by New Labour and their stooges are certainly redolent of a banana republic, but I think that cutting rates again and risking hyperinflation and the debauching of sterling would be a step too far even for the Muppetry Policy Committee.

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Guest pioneer31

Have you noticed how many of the bulls (perhaps all of them) haven't been members of this site for very long.

They must be trolls. Surely nobody is so thick as to be a bull at this stage of the game <_<

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So your saying "Yorkshire & The Humber -1.1" = Crash? :blink:

The topic is ,has the crash started not what constitutes a crash.With no data proving a crash in July 1989 you could have said the same, but boy it had started and would last for seven years.Not that I have predicted a crash,nationwide,this soon;even though I would be happy if it had started.(I actually predicted 8% growth for 2007 in the autumn)

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Forgot to mention regarding median prices.

In a hot market everything tends to sell, no matter how bad. Thus the median prices cover properties of all ages and conditions. When more supply comes on stream compared to demand the rubbish tends to get left on the shelves, nobody is desperate to want it unless it is really, really cheap, the risk of flipping is up and the risk of development is up as resale values are unknown. This even occurs for repos, the lenders are likely to get stung for so much that they won't let them go low enough to clear at auction as the figures would look far too messy for their books, so they keep hold and hope - there is only so much that they can absorb though and as proprty continues to languish and deteriorate they have to bite the bullet and clear the decks, cue the real big downward surge in pricing.

So a 5% fall in pricing can quite mask say a 20% change in quality of house being purchased for that price.

The repos are particularly interesting. They will appear in the Land Registry data and so also in the FT price index. But they won't appear in any of the other indeces, as most of them won't appear on Rightmove / Home databases, and most are bought cash rather than mortgaged (or certainly will be once the crash gets going and the FTB's other OO's take fright and the auctions are left to the non-BTL professional landlords). So the LR and FT indeces are likely to be a lot lower than other indices.

I can seriously see both the LR and FT indices going MoM -ve during the summer, and YoY -ve in the winter, possibly late this year, probably early next year.

Anyway, I did some quick sums. I sold my own house, next door (which I rented out) and my late mother's house, all late 06 / early 07, all three in Yorkshire. Total raised £165k. The after tax interest from the BS accounts works out almost exacty the same as my current rent (a shade more).

According to the Land Registry houses in Yorks went down by 1.1% last month, so I am £1,800 up on the month. (Unlike the paper profits currently being accrued in London, these are real gains, I could go to an EAs tomorrow and buy back similar property to the ones I sold, for £1800 less than I sold them).

Renting is 'dead money' indeed.

And we have hardly started.

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The repos are particularly interesting. They will appear in the Land Registry data and so also in the FT price index. But they won't appear in any of the other indeces, as most of them won't appear on Rightmove / Home databases, and most are bought cash rather than mortgaged (or certainly will be once the crash gets going and the FTB's other OO's take fright and the auctions are left to the non-BTL professional landlords). So the LR and FT indeces are likely to be a lot lower than other indices.

Wait. Are you telling me that when I will look at the Nationwide or Halifax index in 7 years and I will see -50% inflation-adjusted then

in reality it would have been much more since repos are not accounted for in these indices?

Edited by Goldfinger

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Guest grumpy-old-man
Land Registry

The latest Land Registry monthly report came out on the 30th May.

It showed the following monthly changes in house prices:

Region - Monthly Change

London 2.3

Wales 1.1

South East 1.0

East 0.7

East Midlands 0.5

West Midlands 0.0

North East -0.2

South West -0.3

North West -0.5

Yorkshire & The Humber -1.1

So the North East, South West, North West and Yorks dropped in nominal terms MoM.

The West Midlands was unchanged in nominal terms. Inflation is approximately 3%, ie a little over 0.2% per month.

So the West Mids dropped 0.2% in real terms (NE dropped 0.4% in real terms, etc).

So the LR figures say that four out of ten areas are falling in nominal terms, and five out of ten are falling in real term MoM. So prices are dropping in half the country.

FT House Price Index

The Financial Times House Price Index was released on the 8th June. Full FT report from Acadametrics is available online at:

http://www.acadametrics.co.uk/FTHPI%20Pres...52110fa29b9e530

Highlights of the report include:

Three out of ten regions showing nominal monthly falls; North, West Midlands and Wales.

East Midlands and Yorks at 0% growth. As discussed above this means there were real house price falls in these regions.

So that gives five out of ten regions showing real monthly falls.

If you look closer at the data it gets much more interesting:

W Mids and North have both had nominal monthly falls two months running.

E Mids and Yorks have both had real monthly falls two months running; giving four out of ten regions with real monthly falls two months in a row.

One region; the West Midlands, has had real monthly falls three months running. (So it would appear the crash started in Feb 2007).

Look at the monthly changes from autumn last year to April, and it is clear that the North, E & W Mids, Wales and Yorks are falling off a cliff.

So the FT figures also say that prices are dropping in real terms in half the country. The FT figures also show that the drops are persistent over a number of months, and they are growing in size and geographical coverage.

Both the LR and FT indices are widely held to be some of the most reliable housing data available. Both are showing house prices dropping almost everywhere North and West of Oxford.

The collapse of the housing market in the North, Midlands and West is happening in the middle of the spring house buying season. These figures are from when we had pretty much continuous full on bull news in the early spring.

Given the recent IR increase, and general sentiment change, expect June's figures to be far worse.

If each of the regional LR figures was to be just 0.5% worse (London 1.8%, E Mids 0%, Yorks -1.6%, etc) then the national MoM figure would go negative.

Probably won't happen in June; but could be close. Probably will happen by July / August when everybody goes on holiday.

And what happens when we get into the miserable wet cold non-house-buying autumn?

This is not a blip, it is a gathering trend.

By the end of the year London will be seen as an irrelevant island of madness in the middle of a country wide crash.

HPC4 2007 Q1

Hi Kagiso,

great post. :)

there are a few of us banging the Q1 2007 drum, but I agree no-one else seems to have noticed. We already have negative MoM falls in some areas/regions, I just don't get it. I think in reflection, those who unfortunatly called it in 2005 just before the rate cut have been badly trolled since. :(

That BoE cut went against all logic & caught everyone off guard, only to be exposed for what it was by Eddie George, to stave off the recession, which will now be a lot, lot worse. :blink:

Give it another 2-3 months, another .25 or .5% IR rise & that will get the rest on here believing what we know already.

IR's will be at 6.25% by xmas imo, the media has turned, sentiment has changed but still not enough by Joe Public, they need another few months.

Q1 2007. :D

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