Thursday, Nov 30, 2006

Reaching the Apex.

BBC News: House price growth gathers pace

Average UK house 172,185 - rising by 41 per day. Up 9.6% from 8% in October.

Posted by nearly30 @ 08:06 AM (490 views)
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1. nearly30 said...

Ok - bit of a short article - but interestingly Nationwide says:

"the supply of homes for sale was at a two-year low and that the market was 'fairly firm'".

Glorious Sunshine & Co will probably bank that one as evidence for their - 'see house prices will always go up!' file.

I can see their point - but I still think supply is less of an issue as compared to affordability.

Like any auction - he who can offer the highest price buys.

Yes - houses become luxury items for the rich - but then other factors kick in to correct this situation.

Some quotes for the day:

[1] "The best qualification of a prophet is to have a good memory" Marquis of Halifax (how ironic)
[2] "An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination"
[3] "The herd instinct among forecasters makes sheep look like independent thinkers"
[4] "Forecasting future events is often like searching for a black cat in an unlit room, that may not even be there"

Thursday, November 30, 2006 08:18AM Report Comment

2. nearly30 said...

Clarification (before I get hounded) - supply is still a massive issue!!

Thursday, November 30, 2006 08:24AM Report Comment

3. Swftnick said...

nhpc and gs will have a field day with this, only my instincts tell me it will crash, in 1990 I moved to Newbury, a 1 bed flat was 70,000, my salery was 9K, thats it, I thaught, I will never own a place. 12 months later after a decent pay rise I bought a 2 bed house for 54,000,
keep the faith, prices are a function of the ability to pay IR rises will reduce that and so prices should drop only a potential colapse in the financial system keeps me from STRing

Thursday, November 30, 2006 08:53AM Report Comment

4. Nohpc said...

I have to say. I never expected a fall but I certainly didn't expect the huge gains still being seen. Also, a lot of the recent predicions on next years property market have made me feel very safe. Especially capitol economics. If you are thinking about buying it would seem that London is the place to be for the big money but smaller gains elsewhere to be made.

Just out of interest, how long has this site being predicting a house price crash for now?

Thursday, November 30, 2006 08:54AM Report Comment

5. Urine Trouble said...

suckers rally !!!

Thursday, November 30, 2006 09:21AM Report Comment

6. kpjcomp said...

>> Clarification (before I get hounded) - supply is still a massive issue!!

I find that one rather strange!!,. I sold my house about 6 months ago, and houses that were for sale when I sold, are still there on RightMove, if supply was so bad why aint they selling???..

Thursday, November 30, 2006 10:50AM Report Comment

7. magnifico said...

Supply is low because houses have been bought not as places to live in but as Portfolio commodities. I watched one of these Property programs yesterday where someone had a portfolio of 15(!) properties. The bloke did not look or sound like a classic entrepreneur and only a small percentage of those houses were in line to be sold at a profit, most of them were been rented out, providing him not only with enough to cover the mortages on them but also making a very comfortable living out of them.

Many have pointed out the increasing gulf between the haves and have-nots of this society and I can see us moving towards a mediaeval system of landlords and peasants, each firmly rooted in their respective position without risk of sliding down or climbing up the ladder; so much for NL classless society.

I'd like to see higher taxes on second properties and these taxes increasing exponentially with third, fourth and so on. That's all it would take to curb this greed.

Thursday, November 30, 2006 11:13AM Report Comment

8. Dave Ros said...

Again too much emphasis is being put on one months figures. You can't project 2 months figures forward and claim we arn't going to get a slowdown in the housing market. This is pure spin.

Taken year by year, there is a definate slowing, regardless of month by month variability.

Thursday, November 30, 2006 11:17AM Report Comment

9. C'mon Correction said...

I see what kpjcomp posted here in South Wales; there are houses I've been watching that are still on the market from a year ago. My boss has just sold after 14 months on the market and took 13 below the asking price(159k).

I posted a month or two back about a street of new builds, where almost half were for sale (they were build complete 3 years ago), guess what - not one has sold since then. Plus there is approx 1500 units in development within a 2 mile radius! They are building like crazy around here whilst completed stock is sat around unsold for 12+ months and counting...

Huge OVER- supply here.

Thursday, November 30, 2006 11:35AM Report Comment

10. David20040_0 said...

Prices will rocket by 15% next year as new migration from Romania and Bulgaria kicks in.

41 a day! Most people can't save that so every day we are further and further away from getting our own homes.

Thursday, November 30, 2006 11:38AM Report Comment

11. monty said...

Supply is low because of all those HPCers out there propping up that oh so evil and unsustainable BTL market. What could be more selfish than selling up and waiting for a crash thereby driving up rents when you can afford to buy? At the same time squatting on a mountain of cash and claiming to be a "saver".

It's Always Someone Else's Fault, isn't it?

I forget the numbers, of course, but recent stats have shown that your 15 flat landlord is in the minority. By far the majority of BTLers have only 1 or 2. I dispute that this is a reversion to Victorian times. No more so than pre-Thatcher levels of home ownership were considered Victorian. Were they?

Thursday, November 30, 2006 12:01PM Report Comment

12. Rubberneck said...


Everything boils down to self interest in the end - one mans terrorist is another man's freedom fighter etc etc

Thursday, November 30, 2006 12:06PM Report Comment

13. Maggot said...

thank you for showing me the error of my ways monty.with 2 dollars to rhe pound,rising intrest rates and probable rising taxes i will rush out and buy a property which will be significantly less in two years. thank god i will support a buy to let landlord and his family this christmas by buying at the top of the market

Thursday, November 30, 2006 12:22PM Report Comment

14. Larry Pickleman said...

SO I've been lurking here for about a year now and I guess it's time to start joining in. I'm a self employed animator/programmer, I never owed a penny untill I went to University in 1994. When I left and didn't automatically get a job my Bank defaulted my overdraught and loan and I was screwed. SO 10 years later I'm kinda doing well, but hate paying a landlord so I got offered a 200k self cert mortgage in the summer, just enough to get a 3 bedroom semi down here in Brighton. The mortgage would have been 1100 a month (not interest only) whereas my rent is 850 a month for a slightly bigger property than I could buy for 1100. But in the end I decided against it for one simple reason. Although work is going well for me at the moment, if the Sh*t came down and the wife and I had to get normal jobs at the pub or asda or whatever it wouldn't cover us, wheras renting always allows you to fall back on housing benefit when things go wrong. Yes, Ideally there should be huge Tax burdens on anyone who owns more property than they need to live in, but I'm sure their are plenty of arguments against that too. Oh balls, I've gone on a procrastinating rant...bottom line is, I'm gonna just hang in and wait for HPC. If it hasn't happened in 2 years then I'm out of here.

Thursday, November 30, 2006 12:34PM Report Comment

15. harold said...

"The average UK house is now worth 172,185, and is rising in value at the equivalent of 41 a day."BBC

If ever there was a statistic designed to encourage MEWing this is it. Well done BBC for encouraging debt. Of course houses are not rising by 41 a day - some Chelsea home might be rising by a lot more, but to give the impression that your home is printing money for you is just plain stupid and irresponsible.

Thursday, November 30, 2006 12:34PM Report Comment

16. rich said...

Magnifico, I totally agree that the current stamp duty and council tax discounts for second properties should be scrapped. I'm not sure of the implications of taxes on additional properties though, I'd be interested to know what scale of penalty you'd like to see.

Thursday, November 30, 2006 12:47PM Report Comment

17. autopilotengage said...

Ladies and gentlemen, i think you'll find that it's the dawn of a "new paradigm".

Thursday, November 30, 2006 12:56PM Report Comment

18. Ticktack said...

Monty raises a valid point. There is a question around the morality of our position. We are lucky that we have the foresight to see the weakness in the current economic situation but we should look at ourselves and ask how appropriate it is to wait for calamity to unfold so we can benefit. It is rather like knowing a tsunami is coming whilst all others are in denial and running to the top of a tall building. I am as guilty of this as anyone. Maybe we have no choice but it does make me feel queasy we will watch the wave come in and devastate.

Thursday, November 30, 2006 12:57PM Report Comment

19. bidin'matime said...

Dont forget that the market is not the housing stock, but those being bought and sold. The guy with his 15 houses is out of the equation - assuming that 15 families/households live in them, then they are not out of the supply chain, any more than their neighbours who may be owner occupiers with no desire to sell.

It's an acceleration in demand that has boosted prices and it will be the inevitable deceleration in demand that dampens them. Once people see that prices can fall, they will fall even more.

BTL is dead as a business prospect for the time being. The only people still buying in are fools, who are prepared to subsidise their tenants because they believe that prices will keep going up.

At the moment we have foolish people borrowing money to pay silly prices for property - take them out of the equation and what do you have? Answer (almost) no one. Take away the demand and what happens to prices? You dont need an economics degree to work that one out.

The only sure thing about these HPI stats is that they make a crash more likely, not less likely.

Thursday, November 30, 2006 01:30PM Report Comment

20. Housestag said...

Iv'e had my house for a month now so thats 2400 odd more equity for TAX FREE!!!!!!!!!!!!!!!!!!

Thursday, November 30, 2006 02:05PM Report Comment

21. rich said...

The other possibility seems to be that house prices continue to rise slowly, while while wages, energy, and consumer goods go through a period of inflation. I don't think we'll be able to avoid energy inflation as demand is growing and supply is not (oil production may actually start to decline).

Anyway, in either scenario buying property now seems like a big risk. I'm buying energy stocks instead.

Thursday, November 30, 2006 02:09PM Report Comment

22. magnifico said...

Rich, I won't pretend to be a financial expert, but I would like to see that owning more than 2 houses as a private ( exceptions to be made for business) is made so financially not viable that people wouldn't even consider it.
Monty, I'm not against the type of BTLer who buys a small house or flat as a little investment/ pension booster ( the government certainly will not look after them properly and a Maxwell would find it hard to escape with it).
Yes the new self made Property tycoon is only a small percentage, but they do hold a lot of properties, Socialism may not be perfect but runaway selfishness should not be encouraged.

On a different note, if a HPC occurs, the BTL barons will lose a considerable amount but will not find themselves on the breadline, that is not the case for the ignorant and gullible who took on enormous debts to chase the dream of easy wealth. And, yes, contrary to what some bloggers out there think, I do feel sorry for those.

Thursday, November 30, 2006 02:45PM Report Comment

23. tyrellcorporation said...

The pound is surging helped by rumours that the BoE will raise IRs in the New Year dues to booming house prices...

Thursday, November 30, 2006 03:14PM Report Comment

24. rich said...

I'm just trying to justify to myself why raising interest rates increases the value of the currency.

Would I be right in thinking that the rise is just due to inflation decreasing the relative value of a currency, and IR increases decreasing inflation?

Thursday, November 30, 2006 04:44PM Report Comment

25. monty said...

Raising interest rates means that people invested in your currency (foreigners esp.) are able to offset the effects of inflation through earned interest (at the very least.) IIRC South Africa has a target inflation rate of 6% and interest rates are around 11% to compensate.

The US is very concerned about inflation because of the large amounts of dollars and US treasuries owned by the Far East. If inflation is seen to be eroding the dollar's value with no corresponding IR rise, the dollars are sold and their value diminishes. Stability therefore demands an IR increase.

Thursday, November 30, 2006 05:35PM Report Comment

26. Dohousescrashinthewoods said...

Interesting that turnover is so low at the moment (houses being re-sold every 18 years on average or something)

Does this mean that the vast majority can't afford to trade up?
Or are wisely sitting out the madness?

Seems to me the best time to buy is in a crash, as is the best time to trade up.
I really admire those on this site who have been able to sell up and are effectively living rent-free on the interest. Brilliant.

Friday, December 1, 2006 02:46PM Report Comment

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