So When Did The Crash Start

[kagiso]

FT Acadametrics house price index was published today, full details at:

http://www.acadametrics.co.uk/FTHPI%20Pres...bruary%2008.pdf

The FT index is probably the best combination for reliability and being up to date. It uses the Land Registry data as a base, but seasonaly adjusts the LR figures.

It also adds an adjustment based on the latest Nationwide and Halifax data (which I guess is why it is nearly always published the day after the Halifax's latest data).

You can get full price data from the Acadametrics website back to 1995, however this is not adjusted for inflation.

So I have also taken the inflation series from the UK Statistics office website, and used RPI (CHAW) series, and used that to deflate the historic house prices. That is to say, bump them up to the equivalent of Feb 2008 sterling purchasing power.

The results are shown below:

~~~~~ Peak ~~~~Fall ~Months ~Approx

Peak ~~Price ~ ~~From ~From ~Annualised

month ~(indexed) ~Peak ~Peak ~Fall ~Region

Jan-07 £157,059.04 2.3% 12 2.3% North

Jan-07 £187,720.09 2.2% 12 2.2% West Midlands

Sep-07 £211,444.41 1.7% 4 5.0% East Anglia

Sep-07 £178,416.16 1.7% 4 5.2% East Midlands

Sep-07 £169,588.39 1.0% 4 3.0% North West

Oct-07 £373,475.95 0.0% 3 0.1% Greater London

Oct-07 £273,981.06 0.0% 3 0.1% South East

Oct-07 £239,793.89 0.1% 3 0.3% South West

Oct-07 £170,992.91 2.2% 3 8.9% Wales

Oct-07 £170,547.83 0.5% 3 1.8% Yorks & Humber

Oct-07 £231,473.93 0.5% 3 1.9% ALL REGIONS

I have taken the liberty of annualising the falls as has been the habit of various spokesmen through the boom.

It confirms that the crash started in the North and Midlands over a year ago.

The following graphs show how things have been changing:

Looking at the detail, the South and East only peaked recently, and London appears to be making another wild break upwards.

The North West, Yorks and Wales were also struggling upwards until recently.

The Midlands however have been plateauing for a long time.

I decided to look at this in more detail; anecdotal evidence suggests that Nottingham is the epicentre of the crash, so here are the results for city and county.

~~~~~ Peak ~~~~Fall ~Months ~Approx

Peak ~~Price ~ ~~From ~From ~Annualised

month ~(indexed) ~Peak ~Peak ~Fall ~Region

Nov-05 £145,222.84 12.6% 26 5.8% City of Nottingham

Feb-05 £173,725.79 3.1% 35 1.1% Nottinghamshire

Yes folks, the crash did actually start in 2005.

In real terms Nottingham has never recovered from the slowdown of 2005.

The BoE's decision to slacken off interest rates in 2005 looks more and more foolish in hindsight, all it did was encourage another few million people into negative equity in an overextended asset bubble.

So take your pick: HPC4: Q1 2007 or Q1 2005

[Injin]

That's a fantastic post.

The only flaw seems to be that's it's actually on topic.

[Converted Lurker]

That's a fantastic post.

The only flaw seems to be that's it's actually on topic.

and even a northern monkey like meself can understand his reasoning Always said it was 2005, when rates reached 5% it was, iirc the time when BTL finally couldn't 'wash its face' (based on average mortgage SVR, v average rent, on average priced property)

Edited March 7, 2008 by Converted Lurker

[Guest grumpy-old-man]

FT Acadametrics house price index was published today, full details at:

http://www.acadametrics.co.uk/FTHPI%20Pres...bruary%2008.pdf

So take your pick: HPC4: Q1 2007 or Q1 2005

couldn't possibly comment.

nice post Kagiso.

edited - 2005 would do for me, we sold in June 05.

so it's a win-win situation for GOM.

Edited March 7, 2008 by grumpy-old-man

[DataMonkey]

Good post.

This bears out what I've seen on the ground in Nottingham. Nominal prices for houses are a tad below where they were 18 months ago, flat prices are nowhere, you'd probably struggle to find a buyer, particularly in a hurry. I'm astonished Nottinghamshire peaked earlier than the city though.

My main concern for Nottingham at the mo is whether Boots can cope with the mountain of PE debt from the take over, much of which they haven't been able to shift of the banks' books IIRC. Any problems there would be devastating.

Having said that, I love living here!

[Sonic the Hedge Fund]

couldn't possibly comment.

I couldn't comment either, but I just can't stop myself from pointing out we STR West Mids Dec 06

Is that the highest point on the whole graph?

Smug mode: Off

Edited March 7, 2008 by Sonic the Hedge Fund

[Guest grumpy-old-man]

I couldn't comment either, but I just can't stop myself from pointing out we STR West Mids Dec 06

Is that the highest point on the whole graph?

Smug mode: Off

hey that reminds me, wheres dogbox ?

[The Masked Tulip]

The Causes of WWI

Baldrick: The thing is: The way I see it, these days there's a war on, right? and, ages ago, there wasn't a war on, right? So, there must have been a moment when there not being a war on went away, right? and there being a war on came along. So, what I want to know is: How did we get from the one case of affairs to the other case of affairs?

Edmund: Do you mean "Why did the war start?"

Baldrick: Yeah.

George: The war started because of the vile Hun and his villainous empire-building.

Edmund: George, the British Empire at present covers a quarter of the globe, while the German Empire consists of a small sausage factory in Tanganyika. I hardly think that we can be entirely absolved of blame on the imperialistic front.

George: Oh, no, sir, absolutely not. [aside, to Baldick] Mad as a bicycle!

Baldrick: I heard that it started when a bloke called Archie Duke shot an ostrich 'cause he was hungry.

Edmund: I think you mean it started when the Archduke of Austro-Hungary got shot.

Baldrick: Nah, there was definitely an ostrich involved, sir.

Edmund: Well, possibly. But the real reason for the whole thing was that it was too much effort not to have a war.

George: By Golly, this is interesting; I always loved history...

Edmund: You see, Baldrick, in order to prevent war in Europe, two superblocs developed: us, the French and the Russians on one side, and the Germans and Austro-Hungary on the other. The idea was to have two vast opposing armies, each acting as the other's deterrent. That way there could never be a war.

Baldrick: But this is a sort of a war, isn't it, sir?

Edmund: Yes, that's right. You see, there was a tiny flaw in the plan.

George: What was that, sir?

Edmund: It was ********.

Baldrick: So the poor old ostrich died for nothing.

With a little modification this could be so apt for today's credit crunch!

[christhpc]

hey that reminds me, wheres dogbox ?

Maybe on the place that shall not be named. Just visited for the first time in a while, it's like going back to HPC forum circa 2006 with TTRTR and other bulls present and STILL going at it.

[Griptool]

hey that reminds me, wheres dogbox ?

Just a glimpse into the world of an optimist

Dogbo(llo)x -22 Jan 2008 -

New funding from the BRICS and other economies will soon start to find it's way to the UK lending markets and once again the City will find it's way through the current set back to begin a new party. The balance of economic power has most certainly tipped a little further Eastwards. Sub prime funding tratitionaly came from the US, but this flow will largely be replaced by Eastern (and Brazilian) funding.

As those that created exotic slice and dice derivatives have been handed thier P45s, important lessons have been learned, not least of which is 'look before you buy', but that does not diminish the appetite to lend on sub prime terms to the UK retail markets.

The losses that will continue to be revealed for a little while yet, are none the less coming to final resting places which means the City can pause for breath happy in the knowledge the losses have been put into quarantine, isolated and identified. Trust will seap back in.

Whilst the US economy is important, the new power houses will significantly offsett any adverse effects, meaning a global recession is out of the question. Many people are so hooked into the old world order that they cant envisage one with a less prominent America, but they will soon see that this will come to pass.

REGULATION

I doubt very much the City will come under much pressure from the Government to up the regulatory framework. After the dot com, Enron and other events it was New York not London that lurched toward further regulation. Indeed London will prosper as New York once again seeks to up the regulatory burden.

ARE THERE ANY UK SUB PRIME RETAIL FINANCE PROVIDERS STILL LENDING?

There most certainly is, as follows;

BM Solutions

First National

I Group

Platform

Preferred

Future

Mortgages plc

Coventry

Scarborough

SALT

Amber

UCB

Wave

Welcome Finance

First Plus

Endeavour

Swift

Nemo

Edeus

Advantage

And other small providers to numerous to mention here

Now watch as new funding lines begin to open up, and national base rates fall.

My predicition last year was for price falls averaging about 5% accross the UK, and that these would be reversed in the second half. Perhaps I under estimated the falls, however even if they fall 15%, this will very quickly be reversed with the new credit bonanza.

[Guest grumpy-old-man]

Maybe on the place that shall not be named. Just visited for the first time in a while, it's like going back to HPC forum circa 2006 with TTRTR and other bulls present and STILL going at it.

perhaps dogbox has teamed up with CO, bull sh1t partners.

Just a glimpse into the world of an optimist

new credit bonanza...........my ar$e

Edited March 7, 2008 by grumpy-old-man

[bobthe~]

couldn't possibly comment.

nice post Kagiso.

edited - 2005 would do for me, we sold in June 05.

so it's a win-win situation for GOM.

This is obviously rubbish. In the channel 4 fantasy homes competition we got a 0.2% bonus for the North West because Manchester is becoming vibrant.

Funnily enough, my portfolio lost 6500k this month.

Couple more monhts and I expect 4homes will be phoning me with a margin call.

[Guest grumpy-old-man]

This is obviously rubbish. In the channel 4 fantasy homes competition we got a 0.2% bonus for the North West because Manchester is becoming vibrant.

Funnily enough, my portfolio lost 6500k this month.

Couple more monhts and I expect 4homes will be phoning me with a margin call.

definetly worth a bump.

I am surprised that this post hasn't had a lot more interest ??

[Injin]

definetly worth a bump.

I am surprised that this post hasn't had a lot more interest ??

The crash is in, now people are more worried about Cgnao being right, imo.

[Guest grumpy-old-man]

The crash is in, now people are more worried about Cgnao being right, imo.

not like you to be controversial Injin.

are you right, I couldn't possibly comment now could I.......

[Injin]

not like you to be controversial Injin.

are you right, I couldn't possibly comment now could I.......

Too much emotion around something which (if wrong) wouldn't merit a comment is always a clue, isn't it?

[conifer]

Locally, property prices faltered a bit around Sept 2006 and 'new price' or 'reduced' banners started appearing in the papers and even in estate agents' windows. But that was a false start as the market soon recovered and prices resumed their upward trend.

I'd say prices really stopped in their tracks this time round in December 2007.

[Bubble&Squeak]

I'd say prices really stopped in their tracks this time round in December 2007.

... but the facts say something quite different in many areas things have been wobbly for much longer

Edit: to be clearer

Edited March 8, 2008 by Bubble&Squeak

[kagiso]

... but the facts say something quite different in many areas things have been wobbly for much longer

Edit: to be clearer

I think the facts say different things in different places, that's why I posted the graphs.

I see it as follows:

The boom started in London and the South East.

It spread very quickly to the Midlands, but much more slowly to the North.

The whole country briefly stagnated during 2005.

In 2006, London and the South East kicked off again, rising rapidly, driven by city bonuses and the general finance industry (and not a little silliness).

In the Midlands because prices were already high, but the economy was struggling with the high pound, prices basically plateaued, some areas like Nottingham failing to get any more real gains (though of course they did go up nominally).

In the North, because the boom started later and prices were still low, the mini boom kicked off again.

Both the Midlands and North then stalled fully at the end of 2006 / beginning of 2007. (Hence me and Grumps repeated Q1 2007 )

Meanwhile London and the South East had six months of pure tulipomania, again fuelled by City bonuses (and a quite excessive amount of silliness) and their money dragged East Anglia and the South West along with them.

The remains of the party were brought to a shuddering halt by the credit crunch in August.

So when the crash started will be a matter of debate.

Because the media is controlled by people who believe Nottingham is a fictitious place from the far frozen north, history will erroneously record the crash as starting in August 2007 in London.

But it didn't.

The economic fundamentals had gone wrong long before that, normal people on normal salaries stopped buying houses Xmas 2006.

The top for the majority of the country was 2007 Q1 .

[mew too]

I like the backward looking statement 'strong fundamentals underpinning the market' , the hopeful will dismiss the article and only read and repeat this part...

yeah, with lenders tightening, liquidity on the up and over-priced property not selling as quickly, the pins are being pulled, it's a shame they don't have the foresight to mention the recent fundamentals underpinning the market, lol

[Guest grumpy-old-man]

I think the facts say different things in different places, that's why I posted the graphs.

I see it as follows:

The boom started in London and the South East.

It spread very quickly to the Midlands, but much more slowly to the North.

The whole country briefly stagnated during 2005.

In 2006, London and the South East kicked off again, rising rapidly, driven by city bonuses and the general finance industry (and not a little silliness).

In the Midlands because prices were already high, but the economy was struggling with the high pound, prices basically plateaued, some areas like Nottingham failing to get any more real gains (though of course they did go up nominally).

In the North, because the boom started later and prices were still low, the mini boom kicked off again.

Both the Midlands and North then stalled fully at the end of 2006 / beginning of 2007. (Hence me and Grumps repeated Q1 2007 )

Meanwhile London and the South East had six months of pure tulipomania, again fuelled by City bonuses (and a quite excessive amount of silliness) and their money dragged East Anglia and the South West along with them.

The remains of the party were brought to a shuddering halt by the credit crunch in August.

So when the crash started will be a matter of debate.

Because the media is controlled by people who believe Nottingham is a fictitious place from the far frozen north, history will erroneously record the crash as starting in August 2007 in London.

But it didn't.

The economic fundamentals had gone wrong long before that, normal people on normal salaries stopped buying houses Xmas 2006.

The top for the majority of the country was 2007 Q1 .

worthy bump imo

any more comments ??