Tuesday, July 1, 2008

The slide continues

Pace of house price falls slows in June

The 3-month figure continues to deteriorate, in contradiction to the press release headline. Just heard the chap on the Today programme on Radio 4, wriggling and bleating. This time the attempt is to cling to the volatile monthly figue to claim that things are getting better. An exasperated Evan Davis flatly contradicted him before quietly leaving him to it.

Posted by dohousescrashinthewoods @ 07:17 AM (2122 views)
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31 thoughts on “The slide continues

  • cornishman says:

    Yes, Evan Davis made his point very well, I thought.

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  • mark wadsworth says:

    Nice. Prices down 7.3% since last October.

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  • A rather transparent attempt to extract a good angle from more bad news…

    With such a small number of transactions, and a volatile market, there is no way that Nationwide can generate a month to month stat that has an accuracy of less than +/- 2%; so trying to trying to draw conclusions from a single month’s figures is a fool’s game.

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  • Transaction level will get worse from now. From June 15th (normally) noone really walks into an estate agents any more – that being the normal expectation in the good times. That means mid July and mortgage take up does a similar flop. So expect to see huge drops in transaction level and far, far lower mortgage approvals over the next 2-3 months. The question the VIs will raise is if it will pick up after the traditional summer hole. The only reason people will want to sell (unless for work or other professional reason) is if they really are going down the plughole. With unemployment due to increase and the credit cards all close to bursting, we have another row of defaults coming.

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  • Transaction level will get worse from now. From June 15th (normally) noone really walks into an estate agents any more – that being the normal expectation in the good times. That means mid July and mortgage take up does a similar flop. So expect to see huge drops in transaction level and far, far lower mortgage approvals over the next 2-3 months. The question the VIs will raise is if it will pick up after the traditional summer hole. The only reason people will want to sell (unless for work or other professional reason) is if they really are going down the plughole. With unemployment due to increase and the credit cards all close to bursting, we have another row of defaults coming.

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  • george monsoon says:

    Its getting so I would rather invest my cash in a new car.. it will depreciate slower than property… lol

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  • Transaction level will get worse from now. From June 15th (normally) noone really walks into an estate agents any more – that being the normal expectation in the good times

    A very interesting point, from now on the market usually starts to slow.

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  • ps – many people of all ages in the UK have been, are, will be masking poverty with debt, my children included.

    our civilization has failed ? (that’s a question mark) it has certainly failed many.

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  • voiceofreason says:

    We hit trend price in about 10 months according to my extrapolation of the 3 month on 3 month % change graph on page 4.

    Spring 2009 for trend line.

    Looking at the early 90s crash, the fall from peak to trend line was equally as rapid.
    Then we will see a 4 year continued fall by another 20% or so.

    Levelling out by 2013.

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  • gardeniadotnet says:

    9. malct said…
    >many people of all ages in the UK have been, are, will be masking poverty with debt

    A number of commentators have started to suggest that ALL debt may have to be written off by the banks. Am I too late to remortgage?

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  • VoR,

    What is the trend price?

    The price trend line (as shown in the graph at the top of this site’s homepage) presumes that prices rise by 2.8% in real terms every year.

    I don’t know who originally came up with this 2.8% figure, but I know I don’t agree..

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  • ana lytics says:

    I love the fact that Nationwide are now clinging to the 2 year number as being +ve. If you extrapolate the monthly numbers out to the end of 2008, using -0.5% per month (a very conservative estimate I think) then the 2 year number goes negative at end of September. At end of 2008, the 2 year will be -4.7%. Anyone coming up for mortgage renewal in Q4 will need to repay some capital sharpish to get a “good” deal (assuming the -0.5% per month, it could well be sooner).

    Nationwide will then start harping on about the 3 year number. Using -0.5% per month again, the 3 year number goes negative in May 2009.

    This (as we all have known for ages) is a house of cards. Confidence low, prices falling, no FTBs, mortgage rates higher, inflation growing, 2 and then 3 year fixed rate renewals costing more per month, higher mortgage fees, carnage.

    Some anecdotal to finish with, I was speaking to my neighbour yesterday……. he’s had their place on the market for 1 year. started out at 275K, now on at 250K (since march I think). He said he won’t drop any lower, as it’s “not worth any less” and “he’s put in loads of work and added a nice extension on the back”. I just kept on nodding, saying “yes” and “OK” in the right places. He’s now planning on renting to rent another place for his family (!!). Madness. He’s one of many millions of people still in denial. If only we had better maths skills in this country – these people could do the sums for themselves as opposed to following their mates or TV programs for investment advice. I despair…….

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  • ana lytics

    I was at a barberque at the weekend and was very good as promissed on here last week. Despite the fact everyone knows we’re renting and they’ve got huge mortgages (all young families moved into their ‘last’ house in the past 2 years). The subject of when we’re going to get a place of our own was brought up by them. Talk about lining yourself up for it.

    Regardless, I was very polite and advised it would propbably be in our best interest to wait a while siting my new business as a good reason to have cash available.

    Now they are either in denial or so devious they want to tempt me onto their sinking ship, I guess so I don’t get a 100k tax free advantage over them during the next year or so.

    I hate renting but now the falls are in progress it’s keeping me motivated.

    There definately is a situation out there where people assume it’s there God given right to demand for their house what the banks allowed other people to pay a year ago.

    What gets me even more is alot of houses in the 4-500k bracket (Marlow area) are complete shaks that could be built for about 100k and to a far higher standard. Rant over.

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  • voiceofreason says:

    ana lytics

    You are dead right about “most people” and maths and macroeconomics.
    Trouble is they cover up their lack of knowledge by following the crowd, rather than stepping back and thinking.

    This gives people like us a problem, do we grin and bear it and jump in, or sit it out on the sidelines ?

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  • Str 2007 @ 15 & VoR @ 17

    I’m with you all the way. In short, we wait on the sidelines for a couple of years and jump in when the numbers make sense or the outlook is acceptable (or we cannot tolerate renting anymore).

    I’m an investment performance analyst by trade, so numbers (not words/grammar!) are my game. Hence I’m easily frustrated by poor numerical skills (i.e. my missus! she does the words! i do the numbers!), but I cannot believe the lack of understanding in some of the simpler numerical information out there in the media domain. Some of my mates are MA’d up to the eyeballs, but wouldn’t know an inflation rate from an interest rate from a mortgage rate. It’s poor, very poor.

    One further comment I would make is that house prices have actually fallen -7.85% since their peak (31/10/07) if you geometrically chain-link the last 8 monthly numbers from Nationwide. If you take the arithmetic (or geometric) mean of the last 8 months you get -1.02% per month – i.e. my extrapolation assumptions of -0.5% per month above are VERY conservative. In my opinion, nationwide will be quoting the 5 year numbers at us this time next year.

    Hence, we have to keep on being polite and quiet at bbqs for a while until this whole process of equalisation (income Vs house price) works through……..

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  • gardeniadotnet says:

    James, the “reason” site you linked to seems to have a fixation on guns.

    How queer!

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  • vor – as you might guess, I prefer to challenge people on these things! However, the temptation to correct people when they’re following the crowd may be moderated in future; if there’s a crowd view that ‘house prices always fall’…!

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  • gardenia – not really – it’s just a hot issue for the yanks with the recent Supreme Court decision

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  • james if you could be bothered to read instead of puffing and panting so much you would have seen that I’ve already answered your question.

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  • 17. voiceofreason said…
    This gives people like us a problem, do we grin and bear it and jump in, or sit it out on the sidelines ?

    I’ve been sitting it out for over 5 years now. I’m not about to jump in now!!

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  • I reckon both James and malct are off on their own thing – like two Dungeons and Dragons enthusiasts fighting each other with silly magic spells. No relevance to house prices, economy, anything really.

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  • paul – I know it’s incredibly childish, but – he started it. Perfectly reasonable thread ’til he turned up, spouting his antisemitic garbage.

    And malct – no you haven’t. You disingenuously say that “some say these two texts are either fiction or a hoax “. Which is untrue – they have comprehensively been shown to be fiction. You also state that “they each claim has happened and is happening”, which is a matter of opinion. I, for one, do not believe a malevolent cabal of Jews plan to run the world, which is what the Protocols claim. Do you?

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  • need-a-crash says:

    @21. inbreda

    While I accept there’s no point in you jumping in now. You should have bought in 2003 if you could’ve afforded it then. Prices will (at best) fall back to 2003 levels but by then you’ll have being paying rent for 6/7years which could’ve made quite a dent in a mortgage.

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  • george monsoon says:

    Malct

    Thanks for the update.

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  • GM, you may also want to consider that many who are short of money are also short of time
    and of course money buys time and time buys money

    However, there’s also diversions and distractions, TV soaps, unreality TV, unreality sport, ‘popular’ magazines with red, pink, blue and black covers.

    and also there are several psychology types that reckon when we don’t get our emotional/pyschological needs met, we cease to function properly, and take longer to do things eg make decisions etc. (loosing time) It is also clear to some that our society as it is currently organised creates these very conditions.

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  • gardeniadotnet says:

    James, what DO you believe?

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  • Ahh, the benign dictator smiles upon the thread. Thankyou.

    gardenia – since you asked (not that it’s really relevant) if I had to classify myself, I’d say a commonsense-ist. If that were too vague, possibly a moderate objectivist.

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  • gardeniadotnet says:

    30. James said…
    >if I had to classify myself, I’d say a commonsense-ist. If that were too vague, possibly a moderate objectivist.

    Surely that describes your viewpoint, not your beliefs?

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  • The glib answer would be that I avoid ‘belief’ in favour of reason.

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