Thursday, October 30, 2008

The Full Gory Details

October press release

Even Fionnula can't think of any way of spinning this.

Posted by mark wadsworth @ 07:47 AM (2498 views)
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22 thoughts on “The Full Gory Details

  • Thanks Mark – she spins me round round baby right round….
    “but lower than the monthly falls recorded in each of the previous three months. [which is bullish? – silly me course it is]. The price of a typical house is now £158,872, ……………. to put in context, still almost £30,000 more than five years ago.”

    Actually to be fair momentum divergence from price is a well known as a technical indicator for a POTENTIAL low…its just not probably enough divergence and as you say im a bit too sensitive to that kind of stuff anyway!

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  • little professor says:

    She is still trying her best to spin this:

    “to put it in context, prices are still £30,000 higher than five years ago.”

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  • crash bandicoot says:

    For the past few years house prices have been a mythical beast which obeyed no known laws of the universe. They took on magical powers and bestowed great wealth on a select few. Now it turns out that it was just hype and your ability to buy is linked to your ability to pay. The wizards of old are having a hard time adapting to the real world.

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  • It is very difficult to take anything from this report.

    It has been based on such a small amount of data which has been smoothed, weighted and seasonally adjusted.

    My ultimate conclusion must be that the report pretty much says what the authors of the report want it to.

    I really do believe these figures are “their best guess”.

    Capitulation is far from with us.

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  • “to put it in context, prices are still £30,000 higher than five years ago.”

    Well they need to come down another 30k then don’t they love!

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  • “The path of house prices is closely related to movements in the number of transactions”

    Such brilliant in-depth knowledge there Ms Earley, I seriously doubt anyone else has made this link before and it requires someone of her talent and salary to point it out to us. Well done.

    I wonder how her predicted increase in house prices for 2008 is going? lol!

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  • I have a feeling this is happening – banks want to cushion themselves from any crash so they look at some statistic (i.e. YOY change) then increase LTV ratios accordingly risking mortgage holders equity. People can’t afford the deposit to put in low asking prices, house prices fall banks increase LTV’s etc etc.

    Also the YOY change graph doesn’t appear to be flattening out like the MOM, so techieman I think your momentum change is just seasonally adjusted.

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  • Thank goodness for seasonal adjustment, without it October 2008 would have been a 1.8% fall

    incidently does anyone know why the seasonal adjustment is significantly greater in October 2008 than in October 2005 – are Nationwide’s figures being enlarged by global warming, or just simply fiddling the numbers??

    I’m sure someone can check my maths, but the Oct2005 press release shows a smaller % seasonal fudge factor than 2008….oh, and today’s average price is pretty close to the July 2004 peak, so expect the ‘higher than X years ago’ statements to go into double figures next year…..

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  • The £30K figure is important but not the one they choose to highlight – the £30K drop in average price over 1 year surely must represent a crash? historically there has never been a reversal as quick as this one.

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  • I can’t resist………………………………

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  • Matt yep – ive always said this market would not really be tradeable because the underlying commodity – is not homogeneous, and the indexes are compiled subject to various interpretations. So yes i take your point. Still the trend is unmistakeable.

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  • mark wadsworth says:

    Crutchley, nice one.

    Techie – would you be brave enough to sell housing short (if that is possible)

    LP, I didn’t spot that. Good to see that Fionnuala’s Time Travel Machine is still functioning smoothly.

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  • @ 9

    Makes me want to dust the snowboard off! This would indicate to me that a trend is perhaps forming? hehehe

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  • Mark – I’m fairly sure one could place bets at one of the bookies or make a market at one of the betting marketplaces to get exposure to falling house prices.

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  • mark wadsworth says:

    In the interests of squeezing the last drop of joy out of the stat’s at the back of the press release, house prices are down 11% in the last six months alone. At a compound rate of 11% every six six six months, we’ll reach our target average 42% fall from peak in 2010 sometime.

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  • Further to 51ck etc 30 oct 10.59
    Perhaps HPC could open a book (just for fun)….

    HPC contributors could make our own predictions as to the average house price (Nationwide’s figures) in October 2009. HPC could set up a section in the home page and our predictions could be listed. My prediction (?) £120000 down 35% from peak of £185500

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  • planning4acrash says:

    Blimy. It’ll be tough to keep employment and wealth intact if we have untill 2010. I heard that hemlines fall, haircuts become conservative and suit and tattoo removal companies do well during recession. Damn it, I hate austerity.

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  • yes – its true – IG for instance do a HPI both nationally and for London. I think we have discussed before. No i wouldnt trade it – either if i owned a place to so as to Hedge or to punt the index. And the reason is corealation (or lack of it) i mean the Halifax lack of corelation to the real market, the spread on the accounts and the liquidity. In otherwords even if you are right you might be wrong!

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  • Ho ho ho, never saw this coming and the HPI graph looks awesome. Still more crap out there though so don’t worry Fionula we’ll soon see those prices of 5 years ago (at this rate next March)

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  • Mark Wadsworth says:

    Symo, inflation adjusted we’re already back to 2003. So one year’s losses have wiped out four year’s gains. Another two years of this and prices will be back to mid 1990s levels, i.e. dirt cheap. I am absolutely convinced that residual land values were negative in many areas in the mid 1990s, i.e. total price minus rebuild costs was a negative figure. So you were getting a discount off the bricks and mortar value just for buying the house.

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  • Actually, in this part of North Wales 14+% price falls are just not happening. Granted, there are some cases (usually at the lower end of the market) where some valuation loss has occurred, and BTL speculative off-plan flats have suffered drastically, but this is by no means a general trend.
    What has happened (obviously) is a substantial reduction in sales volume, and industry related job losses among surveyors and estate agents are on the increase. But asking prices still seem to be crazy as agents compete to get the instructions. Some still seem to be factoring in price increases from the last comparable sale.

    It is generally accepted that this area lags behind the national trend due to ‘ripple effect’ but I suppose that price falls must eventually follow. There are insufficient forced sales at the moment though and casual vendors just choose to stay put if they cannot get their price.

    Some agents claim that by the time the ripple reaches this area, it’s effect has diminished, thus cushioning against the worst of the peaks and troughs. Based on my own observation of HPI I would disagree, and I anticipate that when price inertia is overcome, we will see a greater magnitude of collapse than elsewhere.

    I could however be wrong. Also, who knows what tinkering GB and AD will try in an attempt to kick the problem further down the road, possibly with the belief that a hard enough kick could send it to infinity.

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  • She says in the report; “In some ways this lack of activity is puzzling given that the last time turnover rates approached this level was in the early 1990s when market conditions appeared more hostile. In 1991 interest rates were at more than twice the level of today and general macroeconomic conditions were much worse. The economy was in deep recession and unemployment was well over two million.”

    Well I can help her with her puzzlement! Once current general macroeconomic conditions have deteriorated further and unemployment has passed 2m on its way up, things should be looking much more reassuringly hostile toexplain events. Logic will be restored, won’t she be happy! Except of course … if turnover levels are already so bad … uhm …. oh dear …. “we’re in the …….”

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