Saturday, April 14, 2007

Long road ahead

House prices up 8.1% year on year 0.7% in March - Acadametrics/FT Index

The latest FT House Price Index, updated with the most recent monthly data from the Land Registry, shows that house prices rose by 0.7% in March and by 8.1% over the past 12 months We calculate the FT House Price Index, on a seasonally and mix adjusted basis, as follows: Average house price £217,076 Monthly change 0.7%+ Annual change 8.1%+..

Posted by converted lurker @ 11:56 AM (630 views)
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13 thoughts on “Long road ahead

  • japanese uncle says:

    What an excellent news! The higher the houseprice reaches, the severer the momentum of its inevitable crash in most probably within a year. Those who wish to take advantage of this excessive price correction, which given the current lunatic pace might well be over 80% in some areas, this is not a bad news at all. For those who for some reason are in urgent need of buying house, the only word is that’s too bad.

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  • I look forward to the crash but I disagree with japanese uncle’s 80%. 40% is pushing it, based on property crashes in history both in the UK and abroad. At least a lot of people are starting to question “by how much” rather than “if”.

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  • Completely agree with JU!
    In addition, this makes renting cheaper and cheaper vs buying… and the decision to rent much easier to defend in discussions at the local pub

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  • Long road ahead, ok, but eventually, we will get there. The HP inflation could be compare with a man climbing to the top of a tall tree. How far up on the tree is it possible to go before it is too dangerous and the inevitable fall? Or, How tall can a skyscraper be before it collapses on itself? Well, every intelligent being involved in those cases will know the limits and stop before it’s too late. (I said every intelligent being exception made of BoE of course.) Therefore, as a mater of fact, the higher HP goes up the more likely is the fall, and faster it goes up, the sooner it will come down too.

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  • Strange how these year on year figures are getting lower and whilst most commentators (London based) always quote their gloriuosly high year on year figures for the SE whilst the rest of the country from the midlands northwards are between 4.7 to 5.7% which is probably around about the real level of inflation.

    Where will the biggest effects of a correction be felt, probably the SE where all its inhabitants have the most wallet busting mortgages!

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  • The Capitalist says:

    Watch the Dollar…lacking support now and dire economic news stateside will hit the markets soon.

    BTW It’s the over worked souls in the SE of England that carry UK plc..the rest is subsidised by Gordo. And SE least represented in parliament per capita…

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  • JU said:
    “What an excellent news! ”

    What utter nonsense. This is not good news at all and is little more than a smokescreen to attempt to nonchalantly brush off what is really bad news for those wanting to buy their first property.
    Many people on here have been touting the “excellent news” and every successive piece of bullish news HPI for the last two years while prices have risen somewhere between 10%-30% during that period.
    The only excellent bit is probably the fact that the likelyhood of there being an HPC if prices keep rising at nearly 10% YoY increases. So if prices rise another 10% over the next year and then crash 20% then we will be where we were twelve months ago whoopedoo. Property would still be significantly over valued. Perhaps there is strong belief that we will see a crash 50%+.

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  • Historically, London always seems to lead the way for the UK property boom-bust cycle (see http://arxiv.org/ftp/physics/papers/0606/0606064.pdf ).

    However, I think this time it will be different. The main cause of the current boom is too much easy credit. But one business that does extremely well out of a credit expansion is financial services. Business in London seems to have become more and more concentrated around the finance business – the City has expanded to include Canary Wharf to the East, the Hedge Fund Industry has set up in the West End and all major investment banks seem to have their European HQ in London. (I would love to see some actual revenue number for this, but I haven’t got any).

    So, unfortunately for HPC watchers in the South East, I think the sheer amount of money around means that London can hold out and continue to bloat for quite a while yet. That said, all asset markets are about sentiment – even Investment Bankers don’t like watching their assets steadily drop by several grand a month. A collapse in the London BTL Ponzi scheme may be enough to turn sentiment – I call the London BTL market a Ponzi scheme, because like a Ponzi scheme, it is the last wave of entrant that will be scr#wed – those who got in early enough will have a big cushion to protect them. Anyway, when the London market blows – and she surely will – stand well clear!

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  • speculatorone says:

    The market around my way have already stagnated for more expensive houses but anything around 100 to 130K is selling like hot cakes. I also think that all of a sudden there is a lot of talk about a crash, in mainstream newspaper and bbc etc. Surely HPI can not keep rising like it is?

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  • Confused76 is a genius. Why did we not do this before? We should be reading what distant foreigner analysts are saying about the UK as they are bound to be more objective. Even if they do have vested interests, it is likely to be only 5% of their entire portfolio so they won’t mind saying things like “stay away from the UK”. We should stop reading reports written by wealthy UK home owners. Nice one confused76.

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  • Big deal. My (non-property) portfolio is up far more than that percentage wise. But then the absolute amount is less as I have not leveraged up with a mortgage equivalent – like leverage sounds like a good idea right now! And I can quickly sell at low cost if it goes bad, and sit on a beach awhile with my credit score intact if it goes really bad – cash may be trash but liquidity thrashes all!

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  • Dohousescrashinthewoods says:

    Very interesting comment @confused76, that seems significant.
    @speculatorone – do you think people may be downsizing in your area?

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