Thursday, September 27, 2007

No more money to be made in housing!

House Prices

Despite the bullish press releases, and the rosy commentary, Nationwide's figures show a simple truth: house price inflation has more than halved over six months, and growth in the average price from June to September (4 months) is negligible. Read for yourselves.

Posted by confused76 @ 09:23 AM (1285 views)
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9 thoughts on “No more money to be made in housing!

  • Compare with the picture of a year ago (see page 3 at
    http://www.nationwide.co.uk/hpi/historical/Jan_2007.pdf

    Now the inflation trend looks down the cliff. If price growth continues to be negligible in October and November, momentum will be seriously dented. And I think the impact of the NR fiasco will be seen in the October and November figures.
    But if another lender gets in trouble, then the crash is unavoidable.

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  • There’s a time lag here – these are for home sales that were mostly agreed in July – before the crunch.

    Things have moved on now..

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  • exactly, i have been monitoring prices on rightmove and have seen may prices drop by 10% around Cheshire………….. Can anyone shed some light for their areas?

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  • Good point confused76. Average house prices are:
    June £184,070
    Jul £184,270
    Aug £183,898
    Sep £184,723
    Also, interesting how they change the format of the report between Jan and this one. Where is the “Mortgage approvals and buyer enquiries” graph in this edition? It seems to have been replaced by the one piece of good news they can find, namely about swap rates… which is clutching at straws.
    Also, how did they calculate that the price fall from Jul to Aug was a 0.6% month on month increase in the August report ?
    As they say, there’s damn lies and statistics.

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  • Good catch, VoR
    I think the “Mortgage approvals and buyer enquiries” graph has been replaced by the following commentary. It is clear that Ms Earley has got these data on future trends, but this information is deemed too dangerous to be released. However, she is covering her …. by publishing this warning. I wonder why the press ignored this part of the Nationwide release

    “Looking further ahead, the development of the wider economy and labour market will determine the
    trajectory of house prices. A slowdown in consumer demand now looks likely to pull economic growth
    below its trend rate in the coming quarters and take further froth out of the market. A worst case
    scenario is for the economy to stagnate or fall into recession, with large job losses forcing
    homeowners into unwanted sales. This is still very much an outside probability, but it would be
    complacent to claim that the odds have not increased recently. In light of these uncertainties,
    prospective buyers would be wise to think carefully about their financial position and the risks around
    it before entering into a house purchase decision.”

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  • Response to Mark. I have been monitoring my area Wanstead in East London. Four immaculate 4 bed houses have been on the market since May. Original was put on the market with asdking price of £480k and the asking is £445k.
    The market has difinately slowed even in London.

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  • also sold to rent says:

    I think the most interesting thing here is the Long Term Real House Price graph. It shows that the real price has been about on trend since mid 2004, especially now that there seems to be another real move down this month. So in real terms the boom probably ended in 2004 (when I sold ;o)) and we’ve since been following the long term growth average, just at inflated prices. Sounds like a top to me, just a pretty long one.

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  • AS2R,
    “and we’ve since been following the long term growth average, just at inflated prices”
    With the gap being accounted for by very low IRs (China + post dotcom effect) and easy credit (financial innovation, e.g. mortgage securitization ).
    The credit crunch has stopped the latter. China seems to be inflating its way out of the former.

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  • In my area in Horsham,West Sussex, it has definately started to show signs of slowing down,for the first time in 18 months houses are sitting on the market,reducing by 5-10k and so called refurbished houses are not selling.We have watched the market here very closely whilst in rental and we are even seeing previously sought after houses falling through.We think that by easter 2008 the market here will go back to having more genuine sellers than opportunists,by the end of 2008 we will start to see real price reductions in places like this because they mostly sell in london to come here,when that slows down too places like this will get affected greatly.

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