Monday, January 22, 2007

A few ‘positives’ to take from the latest Rightmove reoprt

Supply shortages push national average asking prices to a new record high of £222,859 - Rightmove

There's very few positives to take from the latest report from Rightmove for those waiting for that elusive first rung to come closer in reach. However, closer analysis of the Rightmove data reveals the following: The last six months have witnessed asking prices increase by only 2.3% This is a remarkable swing from the previous six months growth of 10.5% The average time on market has increased from 74 to 87 days in the past two months (roughly a 16% increase) The average properties for sale per agent has fallen from 61 to 54 (roughly a 13% decrease) The North West, Yorkshire and Humberside (-2.2%) and East Midlands all saw falls. The largest increase was Wales (2.9%) Greater London has finally slowed (0.3%)

Posted by converted lurker @ 11:36 AM (561 views)
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15 thoughts on “A few ‘positives’ to take from the latest Rightmove reoprt

  • Same old stuff about property shortage.

    As long as they can perpetuate the myth that no matter what you pay for a property, it’ll be worth more in 12 months time, then people will do whatever it takes to buy them.

    If they don’t meet expectations however, there will be no ‘property shortage’.

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  • little professor says:

    There are definite signs of a slowdown there – Firstrung is great for looking behind the headlines hype and analyzing the data properly.

    The effect of the three interest rises is yet to show itself, and with another rate rise all but certain by March, I’m increasingly confident that this could be the year things turn.

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  • Surely the average number of properties on EA books should rise in a slowdown, not fall??

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  • IF you believe the housing market is at it’s peak and IF you are willing to move out of your home and rent somewhere for a few years (only a small proportion of people are willing to do this in reality) OR you are a BTL owner, then yes you ought to be selling in the face of a downturn.

    BUT this hinges on “the masses” truly believing a down-turn is just around the corner, and at present the mainstream media/estate agents/mortgage companies continue to do a “good”(!) job of convincing everyone that things will just keep on going up (apart from some recent stories, as highlighted on this site, mainly appearing since the last interest rate rise – the tide could be turning).

    I would suggest that the main reason to put your house on the market is still, as ever, because it’s your home and your intention is to buy another home instead. More often than not, your reason to move will be to get something better – something bigger, or in a nicer area, or a bungalow instead of a house if you’re old – and better tends to mean more expensive. When house prices are high, it isn’t just more of a stretch to get on the housing ladder in the first place; the gaps between the rungs also get stretched (see http://www.housepricecrash.co.uk/wiki/Why_a_house_price_boom_is_not_good_for_homeowners for excellent explanation of this). So with prices as they are, and interest rates at their highest for ages, would you be looking to substantially increase your mortgage right now, by moving to a more expensive property (particularly if your current mortgage is on a low fixed rate)? The reduction in the number of properties on the market is, I believe, a strong indication that house prices coupled with interest rate levels have gone about as high as they can before it all collapses, as nobody can afford to move! This is backed up by the other figures in the quoted article, on lower asking prices and properties spending longer on the market – it’s not just about supply, the buyers aren’t there either.

    It seems strange that when the housing market is healthy, there are plenty of places to buy and yet prices still keep going up (the last 10 years), yet when the market is in trouble, there are less places to buy but the prices start to stagnate/reduce (now). It’s the opposite of the usual laws of supply and demand that we’re used to, a fact the estate agent/mortgage industry uses try to fool us (quite successfully, unfortunately) that low supply will keep prices up. But when you consider that the majority of SELLERS are also BUYERS, and therefore also influenced by higher prices and higher interest rates, the lie becomes apparent – the normal laws of supply and demand don’t work so well because a home is not just another commodity, it’s something people need in order to live comfortably.

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  • Cheekie Charlie says:

    Anybody know how these guys work out their averages? there seems to be nearly 60K difference between all these institutions!
    Ah now I remember – Rightmove – their unrealistic valuations – maybe they sold endowment policies in another life!

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  • I think there would be an intital reduction as owners who thinking about selling hold back to see what happens in the market. others will be moving up etc… and some have to sell as ever becuase of one of the three Ds.

    also we’ve not seen a down turn in employment so few people would be in the position of being forced to sell and despite borrowing to the hilt, they probably see it as a long term investment.

    I would guess that the problems last year would be down to the hike in energy crisis. this year the intrest rate hikes will add to their woes.

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  • dohousescrashinthewoods says:

    I wondered about that, inbreeda, there was a statistic saying that turnover in the market is really low. Could be that basically no-one except BTL can move at the moment?

    Perhaps it means things are grinding to a halt but people aren’t selling yet?

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  • japanese uncle says:

    This latest info reaffirms the necessity to have higher IR, what about 7.5%? Don’t worry housing market in UK is so strong, as Rightmove confidently says so. No problemo.

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  • It’s like an old wooden rollercoaster thats just creaking up to the highest point before plunging down the other side. The only people moving at the moment are the ones that need to, FTB’s don’t need to sell a house to buy one, and a lot of other people will only put their house on the market if they’ve seen one they like. Look at the later stats like ‘the average properties for sale per agent has fallen from 61 to 54’ and ‘the average time on market has increased from 74 to 87 days’ these are more revealing. Read into it what you like but IMHO it looks like people who have houses are becoming reluctant to move up and those who haven’t are holding off buying.

    There is no shortage of properties just an an increasing willingness to take on ever larger mortgages.

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  • Cheekie Charlie says:

    ‘the average properties for sale per agent has fallen from 61 to 54’
    Obvious – theres too many f****g estate agents!

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  • Grumpiest Old Man says:

    I am very heartened to see the couple in Ashford with 700 going on a thousand BTLs are now going to offer 5% bonds in BLTs enabling even the bitterest amoungst the forums to get a piece or two of the action.

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  • Grumpiest Old Man says:

    You know when the prices are too high people rent from me and if they are sliding they rent from me. Win win situation. Dont think that I shall sell them all while ex pat.

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  • Unfortuntaely all this means are that prices are going to rise again.

    As long as people expect hoyuse prices to rise 10% year on year they probably will just keep on increasing.

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  • What about double counting – maybe many of these estate agents have the same house on their books?

    Dugmug – i think what is more telling is the number of actual transactions – in good times, i imagine many people would want to advertise their properties at higher prices, so the number of available properties on book are higher, but in bad times, people want to hold onto their properties as they can’t expect to get a higher price for their place as the market it not moving up. Whether they can actually afford properties, is another issue.

    I imagine that when the majority of these people can’t afford their places anymore, we will start to see emergency selling or repossessions, and then the higher availability of properties will drive prices down and then it will start to look a little more like classical economics.

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  • Fair point charlie

    Although one estate agent is still one estate agent too many.

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