Thursday, August 30, 2007

BBC reports some bearish news.

'Clear signs' of housing slowdown

There are now "clearer signs" that demand in the housing market has slowed, according to the latest property survey from the Nationwide. Average UK house prices rose 0.6% in August from July, just above market expectations of a 0.5% gain, it found. But taken on an annual basis, the Nationwide said house price inflation fell to 9.6% from 9.9% in July, the slowest annual rate since March. The Nationwide added that it still expected house price growth for 2007 as a whole to slow to between 5% and 8%. Earlier this month, the Halifax also said that the housing market appeared to be slowing, as did the Land Registry on Wednesday.

Posted by little professor @ 09:33 AM (2058 views)
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35 thoughts on “BBC reports some bearish news.

  • Nationawide: “Collapse in new buyer enquiries” Oops!!! 🙂

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  • dohousescrashinthewoods says:

    Right, time to turn the people. Open the gates. Kirsty, Phil, we no longer require your services. Thank you for your work, you will now be reassigned. Good work, team.

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  • David2004. I hope you’re reading this news. This is more than a blip. Looks like we’ll be able to buy a house at last!

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  • Oops! That sounds bad! I mean we’ll both be able to buy a house EACH at last!

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  • Mark Wadsworth says:

    We still need Phil and Kirsty to present the follow up series “Reposession, reposession, reposession”.

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  • su back at the time of the last crash you could buy whole streets in the north.

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  • Possibly…if we weren’t at school or college at the time!

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  • But I thought that house prices were being driven by under-supply (nudge, nudge, wink, wink); so what has caused the slowdown – UK population falling?!? Perhaps not.

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  • A friend in the capital told me that they’re having to close schools there because the number of children are falling, yet property prices are still rising there, although not quite at the same rate as before.

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  • …..no, really, it will all be fine, no honestly, really, just keep buying houses and it will all be fine……

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  • tyrellcorporation says:

    Don’t get too excited people! I saw this happen in the summer of 2004 when I sold my house. In Exeter we then had a year of price reductions and EAs playing with their Newton’s Cradles and looking a bit bored. then, in August 2005 the MPC decided, in their infinite wisdom, to cut rates by just 1/4% and the merry-go-round whirred into life and we saw another 2 years of HPI boom. That stupid and unnecessary cut in rates was undoubtedly due to pressure from TB and the Labour government in the run-up to the General Election. Brown will probably call an election very soon so don’t expect him to sit by and watch house prices fall in the run-up to his coronation either.

    I’m sceptically optimistic that we are on the cusp again right now. A friend of mine admitted to me at the weekend that his mortgage was about to reset to about 2% higher stinging him with an extra £100 a month. With an estimated 2 million house-holders in the same situation I can see mass belt-tighteneing all over the UK from now on – the party is ending!

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  • You are right TC, Brown won’t want to see the feel good factor of housing wealth disappear before an election. I am just worried for anyone who gets caught, either me with my savings whittled away with inflation and low rates, or anyone who has bought in the last 2 years with a big mortgage- depends entirely on how Brown influences the MPC

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  • The key to this is the speculative side of the market – the BTL brigade are having to pay a lot more for their money than a year ago, and there’s plenty of news about prices going south in other countries.

    Are they still so keen to increase their portfolios – or will some hang fire while others start to offlload?

    The market needs them to keep buying – and buying heavily – to stay afloat.

    We can only wait and see!

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  • Nationwide said today that they are sticking to their forecast of 5 to 8% HPI in 2008.

    I’m intrigued to know what interest rates were used to predict this figure. At present the Fed is under pressure to drop 0.5%, which will probably cause UK rates to drop in sympathy. However, if the UK wants to stamp hard on inflation, the UK rate should go up to 6%. IRs are the fairly central to what happens short term, I think.

    So are rates set to go up or down by Christmas? The £ trades at $2.01 currently.

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  • tyrellcorporation says:

    The big question is also, will the Fed start cutting rates and try to re-inflate?

    If they do, I feel we can all go home (rented or otherwise!).

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  • One interesting aspect of this report is that it is actually reporting a monthly fall; it only becomes a 0.6% rise having been seasonally-adjusted. When this was reported on Five Live this morning they led with the angle that UK house prices were now falling, and then added the fact that the survey showed a seasonally-adjusted rise as an afterthought.

    Tyrell, the major difference between this and 2005 is the looming threat of inflation, plus the broad-based agreement that the 05 rate cut was a disastrous, panicky mistake.

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  • Tyrell –

    There’s virtually no doubt that the Fed will cut rates; I’m just back from the US and the panic over there is absolutely palpable. Switch on any financial disucssion programme on the TV and the chat is all “Why the hell haven’t the Fed cut rates already”, not “should they cut them”. The only real question is timing.

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  • C'mon Correction says:

    With regards to credit tightening. In the Metro paper yesterday there was an advert for Northern Rock Mortgages – 7.9% interest with a £1995 arrangement fee. If you switch your mortgage or repay early then they will charge a fee of 4% of the original loan.

    Is it me, or is credit getting more expensive? This is the early phase of the credit tightening cycle/spiral too !

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  • tyrell if the Fed try to drop rates you’ll be bartering for your next house.

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  • Tyrell, the Fed and BoE will do what it’s told by the wealth driven illuminati that call the shots and own them.

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  • doomwatch. Who do own them?

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  • sold 2 rent 1 says:

    Had a big BBQ at the weekend.

    A BTL landlady friend told me she has just added 2 more properties to her portfolio – without even looking at them first.

    She rarely watches the news. Has no idea that other countries are crashing (Ireland, Spain and USA) even though one of her properties is in Florida.

    All she needs to know has been told to her by “Inside Track” – that is property only goes up in the long run.
    Any small dips in prices are buying opportunities. Demand will always massively outstrip supply

    Mind you – she did disappear to the toilet sharpish when I said property prices are a function of IRs and the era of cheap available credit is over.

    She earns over 100K a year and will be subsidising her cash flow losses for a good while yet. I think it will take the loss of her job (which she lost in the 2001 downturn) or a full 10% drop in land registry house prices before she realises her mistake.

    Just like day traders who made losses well into 2000 and 2001 before they threw in the towel so the amateur BTL landlord will. These guys are absolutely convinced they are right and have staked all their money on it.

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  • £100k sounds a big number, but with her lending commitments she won’t be that rich.
    Take a 40% income tax rate, 17.5% VAT, National Insurance etc…etc…..Tax home pay may seem large but no doubt her lending commitments are high also.

    I live in Switzerland. I pay 12% effective rate tax. Once the crash comes I will swoop down on the UK to pick over the bones of people’s misery. And I will take pleasure in it also.

    You cannot feel sorry for people who are too stupid to defend themselves.

    As I always say…buying a house is like making love to a beautiful woman. You have to ensure that you lay on solid foundations

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  • i have a friend (yes you may be surprised) who works in bear stearns in london, (my friend) says that there is signs of a property crash developing and a big one, however they have been told to keep their mouths shuts to keep the market high…

    now what does that tell you?

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  • little professor says:

    To be honest, I think this is misreporting by the BBC. The figures still shoe house prices rising, and by an annualised rate of 9.6%, which is above the long-term average. 9% is a good return on any investment.

    I do think we are in the dying days of the housing bubble, but this news certainly doesn’t herald the end.

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  • Tyrell. I witnessed the same as you in 2004 just up the M5 in Somerset.
    I’ve not been down your way in a time but up here the market looks, and it pains me to say this, fairly robust and has done so oddly enough since rates started going up. As with yourself there is money in the South-West and its actually a nice place to live which is why people still migrate from London to this area to produce devilled pigs ears as you put it. They then create an economy within the local economy selling to other like-minded migrants from London.
    I noticed a sign up in a shop window the other day, “Baby Massage Workshop” followed by cheese and wine. The babies must love it, get really chilled out with the massage and then twa**ed on cheese and wine! I’m not far from Glastonbury and it is full of South-East selling homemade lavender chutney at £45 a jar and running chakra reallignment workshops.
    I’ve been toying with the idea of writing a script based on affluent people from the South-East moving to the very rural parts of Somerset as the interaction between yuppie types and their Tarquins and Somerset bumpkins wearing smocks called Denzil must have some mileage.

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  • S2R’s encounter is not atypical.

    There have been occasions over the last few years when the market should have peaked and retreated – IF the speculators had shown a reasonable degree of caution – but because they kept on buying – oblivious to the noises in the market place – the fall did not occur.

    This does not show a measure of wisdom on their part, but one of luck – as one who ambles into the line of fire, but doesn’t get hit..

    What might force their hand now is a scenario that could be written into ‘Little Britain’ –

    Decide to buy another house – go to your mortgage lender –

    “computer says no”

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  • denzil I’ve experienced the same thing in Bath where Londoners have moved in and bought up whole streets creating their own little londons. It’s funny watching them playing the spoons dressed up in their cockney garb but I am fed up with all the jellied eel stalls they keep on setting up.

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  • tyrellcorporation says:

    LOL!…it’d be a good read!

    Your observations are spot on.

    I’ve been on this forum for the best part of 3 years now. It’d be fun to have an annual ‘winge-athon’ somewhere and we could all meet up for Organic Wild Garlic Meade and Devilled Pigs Ears. Any thoughts on a HPC Winge-athon Webmaster? Heck I’d even travel to meet some of you guys!!! We could invite a few notorious bulls for some bull-baiting and the odd sly dead-leg! 😉

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  • sold 2 rent 1 says:

    tyrell,
    A meet up sounds good but lets wait for the first quarterly land reg price falls and really celebrate.

    denzil,
    I like the script idea.
    Best do it soon before the people have to get real (low paid) jobs when the economy turns sour.
    You have about 2 years before this light-hearted comedy turns into a depressing drama.

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  • You always hear a week before the BOE decision that the housing market is beginning to cool, it is getting really boring now. It is just heating up a little slower which is not the same thing at all!!!

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  • The Day Will Come says:

    a crash will definately happen in coming years. just a matter of when.
    a family relative shown me some interesting reads about how the goverment as we know it and the usa are linked but in more ways than you can imagine.
    they are very much into freemasonary and in future years its believed that the goverment will deliberately crash the uk and usa and they plan to have us all linked to each other with chips inserted into our arms through a needle.
    i know its sounds all mad but even i said that before i started looking into it.
    they will have you all linked to satelite with these chips inserted. anyone without one will starve as you need it to buy things and to go anywhere. it will contail all your details and they will know where every last person is. as i said it sounds all crazy and it is, but instead of laughing it off which im sure you will do so. either look into it yourselfs or remember whats been said for when then the pieces click into place in the close years to come.
    good news out of it is yes prices will drop but so will everyones lifestyles.
    there will also me a world goverment and no longer seperate goverments.

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  • doomwatch. I’ve just gone into that website you suggested. I’m still in shock. To be honest, I don’t understand economics much – in fact I didn’t understand it at all until I found out about HPC website a couple of months ago (approx) and started reading what you guys discussed. Since then I’ve had my eyes opened and my brain stretched. I don’t claim to fully comprehend what your fed website is saying, but the little I did understand is mind-boggling.

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  • doomwatch – you’re a loon.

    su – please ignore the crazed fantasists who inhabit these boards. Whilst there are very, very convincing reasons for an imminent house price reduction, they are undermined by loons. As to the fed, try this instead: http://www.straightdope.com/classics/a951124b.html

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