Thursday, January 31, 2008

Prices barely changed, they say

Little movement in house prices during January

House prices fell by a modest 0.1% in January, the third consecutive monthly decline

Posted by alan @ 08:41 AM (1003 views)
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19 thoughts on “Prices barely changed, they say

  • Hmmm, according to those figures the average price fell by approx £1600 between Dec and Jan (about a 0.8% difference) . Miraculously this has been transmuted into a 0.1% fall – after so called seasonal adjustment. I am not really sure how or why a seasonal adjustment figure is applied to such a simple comparison between an average in one month and the next – can someone advise? So by how many thousands has the average now declined since the peak price was recorded in October?

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  • The monthly index (seaonally adjusted) has dropped by 0.1% but the average price has dropped by a less modest 0.9%. That’s £50 per day!

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  • To answer my own question according to Nationwide the peak of just over 186K in October has now fallen by 5.57K to 180K in January – a total fall of about 3% in 3 months – if you ignore this very odd concept of a seasonal adjustment when applied to simple averages of house prices.

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  • Statistics are hard to read. I suspect the top end of the market, wealthy people, bigger deposits good credit history, is less affected than the lower end of the market. Average sale price would go up if this was the case. However, at least where I live in Manchester, even in the sub £100k cheaper housing prices are not falling. I think “frozen” describes the market better than “falling”.

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  • This is NOT good news for HPC’ers.

    It is a very slow time of year, so I would have expected a much bigger fall than a measly 0.1%. Though, in part, this could be put down to a absolute determination for those selling their houses not to drop their prices.

    It isn’t a good day………..

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  • tyrellcorporation says:

    Paul, is that the 0.1% again?!? LOL! 😉

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  • it_is_going_with_a_bang says:

    So the average house is worth £1,600 less now than in December. That is the key factor for buyers.
    Alot of buying especially BTL and FTB has been based upon the assumption that prices always go up by around 1.5%+ a month forever.
    It is going to be a hard sell for an estate agent when something is seen to be reducing in price by at least £1,600 a month. for the last few months.
    Talking about EA’s – listened to one on SCR this morning whining about ‘bad press’ etc causing them to have a bad January. How sales had fallen through etc ‘only’ because of bad publicity.

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  • nopensionnohouse says:

    Well I for one have realised this week that statistics mean nothing. I’m still waiting for my reply to my letter to the people who do the land registry figures, Calnea.

    http://www.housepricecrash.co.uk/newsblog/2008/01/blog-this-months-report-10037.php

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  • Until you have forced sellers there will be no crash…! Forced sellers only happen when people lose their jobs are just cant afford the repayments. In US lower middle classes ( sub prime ) saw mortgages double in repayments hence forced sellers. Lack of buyers and no willing sellers just leads to stagnation and maybe moderate declines to accommodate the few forced sellers. BTL is still the unknown element… IF they suddenly bail out then a sharper correction could be on the cards. All BTL people I know are certainly not looking to bail out. In fact one couple I know just bought 200k flat before christmas and rented it in 2 weeks.

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  • Yes, I’m also confused by this seasonal adjustment that allows them to represent a 0.9% fall as 0.1% (a 9-fold difference!). No doubt when we see small falls in the spring and summer they will be amplified by the seasonal adjustment so that the actual falls over the year are correctly represented by the statistics.

    HPCwatcher – prices have dropped £50 today – these days are good days. Incidentally, we have plenty of investment/sitting tenant properties now available in the area (Welsh Borders) – you just would not see these 12 months ago.

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  • hpcwatch… don t panic: it IS a great glorious bright day for HPC!

    Nationwide reported a MASSIVE 0.9% crash of average house price (or 11.3 freaking percent annualized) that IS massive.
    Then, since “it is a very slow time of year” like you said, they “seasonally-adjusted” the price change to a muted, VI complacent 0.1%

    As I said before, the credit crunch and NR collapse are extraordinary factors that should prompt any serious analyst (but not the slave minds like Fiaonaoaluiallaulaulalualial of Nationwide) to avoid seasonal adjustments because the normal cycle has been totally upset by the events.

    plus, it is the third month in a row that Nationwide and all the other indicators have shown drops (even the backward looking Land Registry turned south)

    so it is a great day!!

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  • The magic 0.1% – when in doubt, post 0.1%!

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  • Maddison
    No need to shed jobs… we have the BTLrs here (the UK version of the jungle big apes).
    They are losing money on rentals, they pay stamp duty, service charges, CGT and they will be hit by regulations to favour tenants. For such risky investments, without 10% capital appreciation per annum the game is over.

    We do not even need to see BTLs selling, just stop buying suffices. And with so easy access to credit, that is not even THEIR choice
    Housing market is living on borrowed time

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  • As well as seasonal, it would be nice to see some ‘spatial’ adjustment (ie price per square foot)

    A look towards the bottom (page 13, unlucky for some) of the latest land registry report shows that although the sales volumes fell overall by 21%, there were significant rises in the numbers of properties sold at prices over £500k. Even though the numbers of expensive properties are low compared to smaller or cheaper properties, their growth in numbers might have a disproportionate effect when simply averaging….

    All I see from local agents is a lot of properties have been sat there for many months, asking prices edging down, very few going under offer and a increasing proportion of the very big, very expensive ones on the market

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  • A lot of posters are working on the curious basis that these figures are honest and accurate. Didn’t you see attack dog Flint out for lunch with Fionnuala last week?

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  • Good point Andyh – the ‘monthly change’ figures that are usually quoted show falls since the October peak of 0.9%, 0.40% and 0.1% = 1.4% (ignoring compounding, which would make no difference), yet the raw figures show a total fall of 3.3%. Interesting that the peak was in October – a good two months after many (and several months after the astute) became aware of the problems that lay ahead. This seems to demonstrate the lags involved (time between agreeing and finalising purchases, chains – you’re selling your house, you’re moving so you don’t pull out of your purchase even though you suspect that if you waited prices would fall). These lags will soon be working their way out of the system. Nevertheless I still find it hard to see how the falls can be so small given the difference in mindset between June & July (“prices will go up 10% next year, must buy even if it means paying a premium”) and now (“no hurry to buy, prices are coming down”). Is it that it is transaction volumes rather than prices that have taken the hit? Is it that buyers are listening to the Fionnualas out there rather than reading the blogs on this site?

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  • Lets see what the BTLers do. I await with interest especially after 6 April when capital gain is reduced from 40% to 18%

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  • Prices will be sticky for some while I think but will tick downwards over time, despite the VIs puffing about a bottom reached (they were doing that in 1990). When someone sells a house presumably they want to move. Sooner or later they will have to accept a lower price or stay put, unless buyers are still able to borrow the enormous amounts of money necessary, which as we know will be harder to do now.

    The national belief that house prices always rise, the absurd faith the people in them as a pension fund – this will take some breaking. But sooner or later it will break. If it doesn’t it will be because of extreme intervention by the Govt/Bank, which will have serious implications for our economy and society.

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  • crash bandicoot says:

    It makes relatively little difference if current BTL owners carry on making a profit (because they bought a long time ago) or subsidising their tennants (because they bought recently). What does matter is that you cannot buy a house now and expect the rent that the rent that you charge will cover your mortgage. Added to that you cannot expect gains from rising prices for a few years. If you really are in it for the long term you would better off keeping your money in the bank for a couple of years rather than making a loss in the short term. This should remove any remaining support from the bottom end of the market.

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