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thedebtisreal

Ok, Lagging And Leading Indicators

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If there are any journalists reading this, headlines such as 'Housing Market Shakes off Credit Woes' because of a August Land Registry report are just not accurate, because these are house sales that have been in the pipeline for a few months well before the credit crunch. So below, I've compiled a list of housing market indicators in order of leading to lagging. Thoughts welcome.

1, Buyer Survey Confidence Reports (ie. CML, Estate Agencies buyer interest) and anecdotal evidence.

2, Mortgage Approvals for Home Purchase

3, Rightmove (not necessary the actual monthly figure, but I believe it's the first heads up if the housing market is about to turn)

4, Halifax/Nationwide

5, FT House Price Index

6, Land Registry

7, Front Page of the Sun

I think the crash has registered now on the first two indicators, I think a second success negative rightmove report would be the next step and will show that HIPs effect is not a one off.

IMO, it will be a few months before we start to see falls reflected in the remaining four. By the time the sun cotton on, it will be all too late.

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The RICS survey, which surveys surveyors'/estate agents' confidence, is reckoned to be a good early indicator

Rightmove is based on asking prices and seems a bit crude - eg the average being affected by fewer higher-priced houses being marketed. Also, there is a stickiness to asking prices, it will take time before some sellers drop prices to make a sale.

The FT index uses computer modelling that in effect predicts what the Land Registry figures should be for the month preceding publication. So the FT stats don't have the lag of the LR figures - in some ways the FT index is a more leading indicator perhaps than the NW/Halifax indices.

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Rightmove is based on asking prices and seems a bit crude - eg the average being affected by fewer higher-priced houses being marketed. Also, there is a stickiness to asking prices, it will take time before some sellers drop prices to make a sale.

Hmmm - I wonder how the rightmove index is calculated...

If it is the average advertised price, not only is it skewed by the proportion of expensive to cheap houses offered, but it has another bias... wildly over priced properties at all price points will lend a distinctly optimistic slant. Even if the index only considers prices once if they are newly received this month, this will give a falsely high reading - reflecting the number of properties which are marketed at a speculatively inflated price.

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Hmmm - I wonder how the rightmove index is calculated...

If it is the average advertised price, not only is it skewed by the proportion of expensive to cheap houses offered, but it has another bias... wildly over priced properties at all price points will lend a distinctly optimistic slant. Even if the index only considers prices once if they are newly received this month, this will give a falsely high reading - reflecting the number of properties which are marketed at a speculatively inflated price.

There used to be some figures saying how close to asking prices the final selling prices were. This usually gave a good idea of how frenzied the market was.

Do these figures still get published? It would go some way to telling that the market has "softened", along with the time taken to sell a property.

I think the inventory figures are probably there already as I am sure RB or someone was talking about those a while back, but we have noticed "New Instruction" on houses that have been on for a while. Some of those are with new EAs but some on Findaproperty are just where the EA has teken it off and put it back on presumably to market it to people who only look at houses put on in the last month/week.

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There used to be some figures saying how close to asking prices the final selling prices were. This usually gave a good idea of how frenzied the market was.

Do these figures still get published? It would go some way to telling that the market has "softened", along with the time taken to sell a property.

I think the inventory figures are probably there already as I am sure RB or someone was talking about those a while back, but we have noticed "New Instruction" on houses that have been on for a while. Some of those are with new EAs but some on Findaproperty are just where the EA has teken it off and put it back on presumably to market it to people who only look at houses put on in the last month/week.

If you go to http://www.hometrack.co.uk/ and wang in your postcode you'll see stats on views to sales ratio and sale to asking price ratio. Not sure if this is available all together as a report for the whole country though.

Whilst I was looking around I found this very bearish looking article for a VI!

http://www.hometrack.co.uk/news/lowest-rat...r-20-months.cfm

DM

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