Monday, Aug 21, 2006

Music to my ears

Guardian: After the mini-boom, property prices are dropping at their fastest rate in two years

House prices "now falling at their fastest rate for almost two years"

Mr Shipside added: "Activity in the property market virtually stopped dead after two successive rate rises in 2004 and took a year to recover. Prices are now cooling off and require no further intervention from the Bank."

But then he would, wouldn't he.

Posted by inbreda @ 10:06 AM (553 views)
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22 Comments

1. paul said...

Not a peep from the BBC on this.

Monday, August 21, 2006 10:28AM Report Comment
 

2. uncle chris said...

Oh I see, they are trying to blame the interest rate rise to cover up for their (Rightmove) over-the-top increase last month - sneeky. Still think it will take a few months of similar headlines to soften seller sentiment to the idea that their houses aren't the cashpot they thought they were. I do feel sorry for those recent FTBs conned into buying at the top of the market by the numerous VIs. They will have to live in negative equity for many years to come .... I just hope they take Krusty and Phil off their christmas card list.

Monday, August 21, 2006 10:34AM Report Comment
 

3. Thesqueeze said...

Is was only two weeks ago! Jeez, and look at the effect it is having. I personally find it hard to believe that the rate change would have such a dramatic effect in two weeks, but if it has then that is good. Perhaps change this site to HousePriceSeriousCorrectionInRealValueOfBricksAndMorterOrForWantOfABetterWordACrash.com. Probably already been taken.

Monday, August 21, 2006 10:55AM Report Comment
 

4. Tinecu said...

Ah so at last we see a turn around from Miles Shipside. Interesting to note that Home.co.uk has been telling us this for over a year! If you were an investor, which House Price Index would you listen to?

Monday, August 21, 2006 11:03AM Report Comment
 

5. uncle tom said...

For a web orientated company, you'd think Rightmove would keep their website up to date.

This month's report is not available yet - presumably they gave embargoed copies to the press in advance.

- Sloppy!

Monday, August 21, 2006 11:20AM Report Comment
 

6. Malcolm said...

I have an additional thought, about which I read very little in the media. Much is made of the numbers of immigrants from Europe into the UK and the resulting increase in demand for housing and implied price/rent increases. But only UK, Sweden and Ireland (I think) had agreed at the outset not to place barriers on immigration from the new EU countries when enlargement was agreed a few years back. However on 1 January 2007, all other countries (I think) of the EU have to lower their barriers on immigration - the time limit they had negotiated runs out. I wonder whether this means that the tide of will at least be diluted by immigrants choosing to go to other countries of the EU (where living costs are lower and yet apparently the economy is improving). Maybe even recent immigrants into the UK may choose to move to countries nearer their origin (i.e. Poles to Germany, Cypriots to Greece, Slovenians/Hungarians to Austria ?). Just a thought - but if it proved to be true, wouldn't that reduce demand and at a time of worries about interest rates etc. exacerbate a fall in prices/rents ? Would value an expert opinion.

Monday, August 21, 2006 11:21AM Report Comment
 

7. Geed said...

"Activity in the property market virtually stopped dead after two successive rate rises in 2004 and took a year to recover. Prices are now cooling off and require no further intervention from the Bank."

It would seem Rightmove believe the BoE adjusts interest rates purely the state of the housing market. If maintaining realistic housing inflation was at the BoE's core agenda it would have acted years ago (up) and with 0.5% increments (minimum).

The pattern is there though, sale price reductions followed by asking price reductions.

A 3.6% slide in asking price over one month in the SE? If, in theory, that rate of decline is maintained over the next 6 months, a 300K house will be worth around 240K by mid winter. HPC anyone?

Monday, August 21, 2006 11:22AM Report Comment
 

8. markd said...

Excellent news. This survey it appears covers the 4 weeks to 12th August, so only just over 1 week of that post dates the interest rate rise. Interest rate rises, we are always told, take a long time to work their way through the system and so hopefully these figures demonstrate a change in sentiment that occured prior to the rise. More to follow we hope but as ever we need several months figures before a trend is apparent.

Monday, August 21, 2006 12:08PM Report Comment
 

9. Ticktock said...

But unfortunately we've seen this after every mention of rising rates. The VI's suddenly switch to bearish news in an attempt influence the BOE MPC, towards not raising further.

This whole thing is a circus. VI propaganda will attempt to dampen enthusiasm for the market in order lower IR expectations, and the BOE will then be able to continue its destruction of our currency by allowing the rampant inflation it desires for growth.

It won't just be house prices that seem to have dramaticly slowed 'as a result of the unexpected rate hike' in VI propaganda, it will be retail spending, and rising unemployment too.

Merv. is not stupid, but i sometimes believe he thinks that we are. Inflation is EVERYWHERE and 0.25% will not even begin to address the problem. Even my local bacon sandwich caffe has today raised its prices by 10% in order to cover the recent rise in input costs!

Get a grip,raise rates fast, and put an end to the social cancer of BTL before Britain fragments into social chaos, and before every capitalist on the planet 'shorts' our currency.

Monday, August 21, 2006 01:16PM Report Comment
 

10. Superruss said...

On the basis that the likes of rightmove's stats are at best "highly contestable", I would summise that this is just an attempt to get some negative press out there to influence the BOE to keep interest rates where they are. I wouldnt be surprised if they were simultaneously releasing good news direct mail to potential ftbs.

Monday, August 21, 2006 01:48PM Report Comment
 

11. inbreda said...

They may well be trying to influence the BoE, but if the BoE DO raise rates at the next meeting, the VIs little propoganda war will have backfired...2 weeks of negative press combinde with a rate rise will SURELY have a big effect on sentiment.

It's all well and good saying that another rise will damage the market so long as the rise doesn't happen and you can use the inaction to justify why the housing market is stable, but it's a dangerous game. Get it wrong and there coul dbe egg on your face.

Monday, August 21, 2006 02:53PM Report Comment
 

12. devil's advocate said...

Everyone on here seem to think its christmas, it's only one report from a website that is notorious for getting things wrong. Prices have been rising all year, doubt if a single 0.25 rate rise will cause a crash or indeed have much impact. It will take a good few months weak data and a big reduction in registered buyers to really show an impact.

Monday, August 21, 2006 03:41PM Report Comment
 

13. Randomkevlar said...

devil's advocate said...
Everyone on here seem to think its christmas, it's only one report from a website that is notorious for getting things wrong. Prices have been rising all year....
Prices have only been rising all year if you accept RightMoves figure which by your own admission is 'notorious for getting things wrong' if you looks at Home website figures its been falling in the last year.
So you point is what? that you believe RightMove when its good for you, but not when its bad for you..interesting lack of logic

Monday, August 21, 2006 03:52PM Report Comment
 

14. uncle chris said...

DA, I understand your caution but there's plenty more evidence. Here's just one quick example, but the are others -

http://www.houseprices.co.uk/e.php?q=83%2C+Hillcrest%2C+Ellesmere%2C+Shropshire&n=10

I've been watching the area, so I know this was a sale rather than a remortgage.

Monday, August 21, 2006 04:00PM Report Comment
 

15. paul said...

DA is right though. This needs to be sustained for a HPC. The VIs are winning a losing game though, because they can't shill the market anymore with rising interest rates.

Monday, August 21, 2006 04:05PM Report Comment
 

16. devil's advocate said...

Interesting stat on the remortgage.

I have to admit that I am sceptical about prices falling mainly becuase I have seen house prices go static and remain on the market then at the start of the year saw the same houses go up 20k-30k and sell. I now see similar house on the market for 425k when they were on the market for 375k and a lot of them are selling. I certainly hope this is the start because the longer I hold out the smaller a potential home becomes.

Monday, August 21, 2006 04:47PM Report Comment
 

17. devil's advocate said...

Interesting stat on the remortgage.

I have to admit that I am sceptical about prices falling mainly becuase I have seen house prices go static and remain on the market then at the start of the year saw the same houses go up 20k-30k and sell. I now see similar house on the market for 425k when they were on the market for 375k and a lot of them are selling. I certainly hope this is the start because the longer I hold out the smaller a potential home becomes.

Monday, August 21, 2006 04:57PM Report Comment
 

18. Little Ol' Wine Drinker Me said...

First post for me on this informative site, although I have been a regular visitor.

Devil's Advocate (D.A), I must congratulate you on keeping everyones feet planted firmly planted on the ground.
D.A could also stand for Double Agent.

"Smaller a potential home becomes"?!

Not much of a gamble this year then :o)

Monday, August 21, 2006 05:16PM Report Comment
 

19. uncle tom said...

The key moment will be when the BTL brigade run out of confidence and stop increasing the size of their portfolios - without further major aquisitions from this sector, the market will be holed below the waterline.

However, I do wonder how well tuned our Gordon is to this - the prospect of him giving the BTLers tax breaks to keep them on side for a little while longer is depressing, - but all too possible...

Monday, August 21, 2006 05:57PM Report Comment
 

20. Cstanhope said...

Oh now I know why we had the Daily Express propoganda piece on the weekend about more House Price Increases, all OK etc.

But this Crash is going to be nasty, couple of points:

1) In the last HPC in the early 90's we did not have amatures buying multiple houses on this stupid BTL craze. Trust me I know nobody who is paying Rent anything near to a mortgage payment, unless the house was brought in the 80's.

2) In the last HPC mortgages were still around 3.5 times earnings, not 6, hence the negative equity trap whilst bad still many people survived and kept their homes, this time forget it.

3) Banks were far more strict on loaning money.

4) Interest Rates were not 4 to 5 % more like 8 to 10.

Monday, August 21, 2006 06:07PM Report Comment
 

21. bidin'matime said...

I can't see GB giving BTLers tax breaks - it's too New Labour... The only tax break that would be remotely likely would be to allow losses on rental property to be set against other income. At the moment they can only be set against other rental income (ie from other properties owned by the tax-payer) or carried forward to be set against future profits from the same property. I suppose he might argue that it was a public duty to provide rental accommodation, so we must do what we can to support these poor unfortunate landlords. This might even do us a favour, by drawing attention to the fact that BTL is a loss-making activity However, having backed down on the SIPP plan with regard to residential property, I can't see him now introducing an alternative tax break for the market.

Monday, August 21, 2006 07:01PM Report Comment
 

22. European-bear said...

Bidin'matime Offsetting rental losses against earned income would be a disaster and stoke more inflation in the housing market. It would effectively subsidise landlords mortgages by 40% and every tax payer in this bracket would jump on the bandwagon. It could indeed avert a crash, but at much greater social consequences than a crash would cause with an ever greater landlord crash and even fewer owner occupiers and less hope for young people.....I do not believe Gordan is THAT stupid (but then Labour invaded Iraq so who knows!). Also Gordan is running a budget deficit so he couild not afford to do it!

Tuesday, August 22, 2006 07:13AM Report Comment
 

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