Wednesday, February 6, 2008

Oppsss, my landlord is losing £471 a month!

Poor lookout for homeowners losing £470 a month

"Since house prices peaked in August, the average home has fallen in value from £199,600 to £197,244. It sounds a modest decline, and the penny may not have yet dropped among the millions who see their homes as places to live in rather than their main retirement fund. Once homeowners start to realise they are getting poorer at the rate of £471 a month, the residual heat in the British economy will very quickly fade."

Posted by confused76 @ 09:19 AM (816 views)
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9 thoughts on “Oppsss, my landlord is losing £471 a month!

  • I guess that’s on top of the £600 a month subsidy my landlord pays towards my rent …. (the gap between what I give him and what he pays for the privilege of BTL landlord status).

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  • theboltonfury says:

    bring it on! all of a sudden my £850 pcm rent is looking anything but ‘dead’ money

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  • If you see your house as a place to live, you will not be concerned about a drop in supposed value, any more than you may be interested in a supposed increase. I will not feel any poorer if my house price falls to 25% of what it was, as all things are relative. I will still have the same small mortgage, but I can still afford it. The last line in the article sums it up. They can afford to cut interest rates. They cannot and should not.

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  • Sold My Soul To The Never Never Never says:

    I wouldn’t mind seeing my property fall by 50% – almost back to where it was in 2001 – at least we may be able to move somewhere slightly larger for the children. (Fat chance of that happening though).

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  • mark wadsworth says:

    Ooops!? My landlady must be losing £1,500 a month.

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  • Totally agree with Yorkshireman. I have no idea what my house is worth. Sold previous house at a ridiculous price and bought this one likewise for a silly price. That was four years ago, so I guess the price will be even sillier now. If house prices halved, I don’t think it would be undervalued, and I wouldn’t lose any sleep. It’s a nice spot and in a few weeks hopefully I will have paid off the mortgage.

    I am far more concerned about inflation. We don’t need interest rate cuts until inflation is down to 0%. What would help would be tax cuts and a determined effort to cut the size of the bloated public sector.

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  • House price averages based on things like asking prices should give some indication of where the market is going, because they reflect the sentiment of sellers/estate agents and sentiment certainly has a strong part to play in the housing market. These could therefore be defined as leading indicators.

    Averages based on sales recorded by the Land Registry really only tell you where the market was a few months prior, because it takes about three months from an initial offer being accepted to the sale being completed and finally registered. Much could happen to the housing market in those intervening three months! So these are lagging indicators.

    Averages based on mortgage approvals tell you where the market is “now” (or at least in the recent past anyway), because approvals should go through soon after an offer is accepted and certainly before that Land Registry is notified, and also because the mortgage companies are quite quick to release their figures. So these are kind of neutral indicators in terms of leading or lagging.

    So, if the market had recently turned bear (say in August/September time, when the credit crunch hit the mainstream news), you would expect that the lagging indicators might only now be showing some small signs of it, but that the neutral indicators would already be showing drops, and that the leading indicators would be showing still larger drops.

    I’ve looked at 10 of the major house price indices since August, and guess what – the lagging indicators are just turning, the neutral indicators are negative already, and the leading indicators are more negative still! See below:

    August 2007 Most Recent £ change % change

    Leading Indicators

    Home.co.uk

    £258,531 £259,338 (January) +£807 +0.3%

    Hometrack

    £176,300 £174,718* (January) -£1,582 -0.9%

    Prime Country

    £538,946 £502,905 (December) -£36,041 -6.7%

    Prime London

    £1,172,130 £1,088,377 (December) -£83,753 -7.1%

    Rightmove

    £241,474 £230,428 (January) -£11,046 -4.6%

    .

    Neutral Indicators

    DCLG

    £219,369 £218,330 (November) -£1,039 -0.5%

    Halifax

    £199,600 £197,244 (January) -£2,356 -1.2%

    Nationwide

    £183,898 £180,473 (January) -£3,425 -1.9%

    .

    Lagging Indicators

    FT Index

    £227,068 £230,392 (December) +£3,324 +1.5%

    Land Registry

    £183,127 £184,469 (December) +£1,342 +0.7%

    Both the lagging indicators (which show sales that will have been actually agreed in about September) are still positive over the five months, but the December-only change for those two is 0.1% (FT) and –0.4% (Land Registry).

    Of course the market could turn back up again, but my opinion is it won’t for some time yet!

    * (interesting that Hometrack have not reported the actual average in £’s since August, only the % change! Had to calculate January figure by applying each monthly change in turn to the August figure)

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  • Despite the assurances of mortgage lenders etc. there’s no reason for the market to pick up.

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  • Notaneconomicsguru says:

    I do not for the life of me understand this guys logic. Its seems complete b****s.

    My disposable income has just gone up quite signficantly, so I feel richer not poorer. I actually have more hard cash to spend. I have no desire or need to sell or move. Even if I do move, chances are the home I buy will be cheaper than it was before. I therefore don’t give a flying toss what my current house is worth – I can’t spend bricks and mortar on anything, but I need a house to live in. I will still spend money to improve my house, because it makes it nicer for me to live in. If it also makes it worth more, then that’s good but not essential. Even if prices fall so much that I have an equity problem I still wouldn’t give a toss. I already have been through that once before. So long as I can keep paying the mortgage I will continue to have a nice comfortable home to live in. It most probably wouldn’t change the way I spend – I’d only need to to do that if I had negative equity AND thought that I may have to move in the foreseeable future. I’d then start to overpay on the mortgage or alternatively save more. Hardly a catastrophe is it? I can’t but help thinking that I am in the same position as the majority of people.

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