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London House Prices Fall In August

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Mods...please remove if already posted...couldnt see it so I thought i would.

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http://money.guardian.co.uk/houseprices/st...2152699,00.html

London house prices fall in August

Laura Howard

Monday August 20, 2007

Guardian Unlimited

The latest housing figures could be proof of what first-time buyers have been hoping for and homeowners have been dreading.

According to Rightmove's house price data for August, the average value of a London home fell by 0.1% during the month.

The rest of the country saw price increases of just 0.6% - the fourth month in a row in which figures have risen by less than 1%.

If this rate of inflation continues, annual house price growth would become more closely aligned with annual wage inflation, which is currently running at between 3% and 4%.

Article continues

Rightmove's commercial director, Miles Shipside, said: "This is the first time for more than a year-and-a-half that we have seen four consecutive months of such moderate increases.

"It finally paves the way for a return to a sustainable market without the need for further interest rate rises, though many buyers will still face affordability problems."

However, August's increase still added around £1,473 to the value of a UK home, pushing average house prices up to £241,474, while, despite "falls" in London, the annual rate of inflation for the capital is still running at a staggering 23.4%.

Furthermore, lending for homes actually reached a new record for the month of July, according to the latest figures from the Council of Mortgage Lenders (CML).

Gross mortgage lending totalled £34.4bn, which is 13% higher than the £30.6bn lent in the same month last year. This is in spite of five interest rate rises since August last year and evidence of a cooling housing market.

However, the CML said the country has yet to feel the full impact of a higher base rate, and that lending is currently fuelled by a large number of people remortgaging to better deals in case rates go any higher.

Gross lending was also still down by 1% on the previous month, and the CML is expecting lower levels still as the year progresses.

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Mods...please remove if already posted...couldnt see it so I thought i would.

------------------------

http://money.guardian.co.uk/houseprices/st...2152699,00.html

London house prices fall in August

Laura Howard

Monday August 20, 2007

Guardian Unlimited

The latest housing figures could be proof of what first-time buyers have been hoping for and homeowners have been dreading.

According to Rightmove's house price data for August, the average value of a London home fell by 0.1% during the month.

The rest of the country saw price increases of just 0.6% - the fourth month in a row in which figures have risen by less than 1%.

If this rate of inflation continues, annual house price growth would become more closely aligned with annual wage inflation, which is currently running at between 3% and 4%.

Article continues

Rightmove's commercial director, Miles Shipside, said: "This is the first time for more than a year-and-a-half that we have seen four consecutive months of such moderate increases.

"It finally paves the way for a return to a sustainable market without the need for further interest rate rises, though many buyers will still face affordability problems."

However, August's increase still added around £1,473 to the value of a UK home, pushing average house prices up to £241,474, while, despite "falls" in London, the annual rate of inflation for the capital is still running at a staggering 23.4%.

Furthermore, lending for homes actually reached a new record for the month of July, according to the latest figures from the Council of Mortgage Lenders (CML).

Gross mortgage lending totalled £34.4bn, which is 13% higher than the £30.6bn lent in the same month last year. This is in spite of five interest rate rises since August last year and evidence of a cooling housing market.

However, the CML said the country has yet to feel the full impact of a higher base rate, and that lending is currently fuelled by a large number of people remortgaging to better deals in case rates go any higher.

Gross lending was also still down by 1% on the previous month, and the CML is expecting lower levels still as the year progresses.

In one or two papers today. The overhaul HPI should start dropping sharply now.

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In one or two papers today. The overhaul HPI should start dropping sharply now.

Strangely it forgot to mention the NW rose 2% and the SE rose 1.8%

Only the rise in these regions is the same as the fall in London - fictional - as its asking prices and not realised prices. If reduced asking prices equal price falls then it follows that HPI is rocketing in the NW and SE.

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0.1% = statistically insignificant when compared with 25%. blip.

(and it's rightmove figures which we here on HPC disregard)

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0.1% = statistically insignificant when compared with 25%. blip.

(and it's rightmove figures which we here on HPC disregard)

I agree with it being a blip, but it won't be by the end of the year... eagerly anticipating mortgage approvals.

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I agree with it being a blip, but it won't be by the end of the year... eagerly anticipating mortgage approvals.

Agreed. At some point in the future prices will fall.

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In one or two papers today. The overhaul HPI should start dropping sharply now.

couldn't you "Add Reply" instead of pasting the previous post?

perhaps IR increases are begining to bite- what would happen if rates were left as they are now (5.75) or even reduced next month? after all the CPI figure is 1.9 :lol: below the 2.0 target

Edited by IDN

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Strangely it forgot to mention the NW rose 2% and the SE rose 1.8%

Only the rise in these regions is the same as the fall in London - fictional - as its asking prices and not realised prices.

True. Much as I'd love to see evidence of nominal falls, asking prices don't mean s**t.

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Just had an email from a mate in London :D

"on the tube on the way back from a job i happened to be travelling at rush hour, tried to take a photo but couldnt, loads of suits reading the free papers and the headline was " london house prices drop" ...........quite a sight"

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If HPI aligns with wage inflation, wouldn't this constitute a soft landing?

trouble is 3-4% is a long way down and once the wagon's in motion it's gonna be hard to hit the brakes!

this is good news imho, London will lead the way again (at least for SE), plot 0.1 decrease on a chart that has yoy 20%+ - I guess 2% gains a month roughly - thats a big shift albeit a blip

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One month's drop of a tiny 0.1% doesn't mean anything. If there was another drop reported for the next month, together with more areas in London falling, then there's some evidence of a change in trend. I doubt if there will be though...

Can i ask how much people think London house prices will drop if there is a bear market? In the last bear market, prices dropped around a third (from peak to trough). I have the impression that posters on this forum think prices will drop 90%!!!

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One month's drop of a tiny 0.1% doesn't mean anything. If there was another drop reported for the next month, together with more areas in London falling, then there's some evidence of a change in trend. I doubt if there will be though...

Can i ask how much people think London house prices will drop if there is a bear market? In the last bear market, prices dropped around a third (from peak to trough). I have the impression that posters on this forum think prices will drop 90%!!!

It's obvious the trend will be upwards because all the crap going down in the city of London has no effect on.......um London. Err?

Have you been hibernating or is this just a wind up? :lol:

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Guest d23
trouble is 3-4% is a long way down and once the wagon's in motion it's gonna be hard to hit the brakes!

this is good news imho, London will lead the way again (at least for SE), plot 0.1 decrease on a chart that has yoy 20%+ - I guess 2% gains a month roughly - thats a big shift albeit a blip

there was a drop of 1.5% in London last August, which you would have thought would have slammed the brakes on pretty hard but YoY increased to over 20% over the following 12 months so 0.1% is just noise imo

asking price indices are pretty meaningless, i think most on here agree that especially with no seasonal adjustment (unless they show drops in which case they are a hugely significant and reliable forward indicator )

Visaria: There have been predictions on here of 95% drops in London but I expect 15% - 20% nominal at the worst (altho this kind of radical soft landing thinking will no doubt get me crucified)

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Yes, good point d23 about the 1.5% drop last year.

I think the problem with price comparisons is that house prices are determined at the margin and if few houses are actually sold, this distorts price comparisons further. This ain't the stock market where millions of trades are happening every day.

ae59, were there many houses sold in Camden so that the 15% (m-o-m?) actually made sense?

For example say in Chelsea only one house was sold and it was sold by some Arab prince who didn't care what price he received, he just needed some spare cash. Suppose the average price was £1.5 m the previous month, but this guy sold his at £1m. Purely looking at the headline figures, average house prices in Chelsea would now be 33% down from last month!

Edited by visaria

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couldn't you "Add Reply" instead of pasting the previous post?

perhaps IR increases are begining to bite- what would happen if rates were left as they are now (5.75) or even reduced next month? after all the CPI figure is 1.9 :lol: below the 2.0 target

Interest Rates will have little do do with mortgage costs.

If you believe that the bedrock of the housing market has been made up of the lower paid taking on substantial amounts of debt then you now know that these people are going to struggle to achieve sufficent levels of borrowing regardless of Interest Rates...

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ae59, were there many houses sold in Camden so that the 15% (m-o-m?) actually made sense?

No idea - was being facetious. As I said earlier, I'm not putting too much stock in these figures (although thanks for picking them up, Evening Standard!). Expecting real results EOY.

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