Monday, March 2, 2009

Hometrack: -0.8%MoM, -10%YoY

Suddenly there are signs of life in the housing market

The average sale price is now 88% of original asking price, according to the latest survey from Hometrack. This reinforces the message coming from all parts of the property market that househunters are demanding bargains amid forecasts of further price subsidence. However, Hometrack's numbers do present evidence of signs of life in a previously becalmed market, with new buyer registrations rising by 17% and agreed sales up by 36%. A few agents are reporting multiple bids for some properties, with correctly priced homes going under offer relatively quickly.

Posted by little professor @ 12:56 AM (2648 views)
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28 thoughts on “Hometrack: -0.8%MoM, -10%YoY

  • Ok, this is NOT what I need to read…. can one of the many folks on here that has more of an insight than I do please reassure me that this is some sort of ‘dead cat bounce’ (or whatever you would call it)??? I had both in laws harping on at the weekend about how their estate agent friend had suddenly sold five houses that week after months of nothing. I swear I am starting to sound like a loon with my repetitive chanting… nope, it won’t recover yet. It has a long way to fall yet. Its not a true recovery. Look at America… bla bla bla!!

    If one more person tells me I am going to miss the boat, I swear I’m gonnae lamp them!!!

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  • little professor says:

    It’s no bounce at all, dead cat or otherwise. Hometrack is a pretty worthless survey of asking prices, and in any case it showed prices are still falling. The headline is pure spin from Anne Ashworth – the housing market is still tanking.

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  • little professor says:

    LONDON (Reuters) – House prices in England and Wales fell by 0.8 percent in February to stand 10.0 percent lower than a year ago, the biggest annual fall since property data company Hometrack started its monthly survey in 2000.

    Hometrack’s survey, which is based on estate agents’ and surveyors’ estimates of selling prices, has persistently shown lower price falls than data from mortgage lenders such as Nationwide, which reported a 17.6 percent annual February fall.

    Hometrack said on Monday that the number of sales agreed was 60 percent down on a year ago.

    Fear of unemployment as the country suffers a sharp recession and a severe shortage of mortgages, especially for borrowers with small deposits, has put many people off

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  • happyrenter says:

    this ship has barely passed the iceberg, the holds are filling, but the Times band is still playing

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  • matt_the_hat says:

    1. vindicated.. I wouldn’t worry if you are going to miss the boat, I would worry if you are going to be able to feed your family. Ask your in-laws who they think will pay their pension at the moment approx 1 person supports 2 and the boomers have yet to retire!

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  • matt_the_hat says:

    Also while I’m at it ask them about losing 30% of their savings (sterling devaluation), 40% of any pension (FTSE assuming they have not retired) and 20%+ on their house. I hate these smug bl00dy in-laws!!

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  • The FSA said last week, echoeing what the BOE and Gordon Brown already said regarding regulation and said that regulation on loan to income was a better way to ensure sensible lending than LTV ratios. The median I believe is 3.25 one income and something like 2.5 two incomes, I keep trying to find out what the Rock is going to lend at but a simple search on the internet shows mortgage lenders returning to 3.5 income, so how can the market recover if the UK is returning to sensible lending, and I can’t honestly see how we cannot. From figures seen on the internet I believe the UK borrowed something like 6 billion from overseas to finance the mortgage market in 2000 and 750 billion from overseas to finance the mortgage market in 2007, it broke the banks and has left 5 million people facing negative equity. The blog on todays news blogs about UK (?) subprimes said they are defaulting at the rate of 25% or something (I am only a simple housewife struggling to keep up with all of this). I know that not all people in negative equity are going to default or are even what is classified as subprime, but anyone taking a 125% LTV at 6 x’s income in 2007 on a fixed 2 year rate is going to be up for the svr this year. how many are going to be able to afford it will be another question, but chances are they are not going to be able to move FOR A LONG LONG TIME. US prices I beleive only went up 75% and have falled nearly 45%. UK house prices went up 190% in 10 years, a rise that would have taken 40 years in line with wages if loan to income ratios had not been increased increased increased with BTL’s and foreign investment in futures house prices etc.. IT WAS MADNESS, that madness is still with us, a posting last week of mine regarding all the above saw people saying “if house prices fall to fit in with 3.5 income all the houses will be bought by landlords seeking a return of 7% through rent”. The thing is rents and building costs and council tax and home insurance ALL FALL in line with house prices, that is a a lot of adjustment but only a 10 year one , that is the point, the madness was only with us a very short time and I can’t see how we can’t now learn the lessons, allow the market to go back to not only individual affordability BUT economic affordability without the need to raise bonds that become worthless when people say ENOUGH we want homes we can afford to buy and not homes that have become HUGE investment opportunities for people gambling on future prices. There was an article again on the News Blog yesterday about the Zimbabwee papers encouraging investment in the UK housing market as house prices fall. And another article about a US auctioneer coming here to sell off all the repossesed homes for a song! Obviously ALL OF THIS IS AS IMPORTANT IF NOT MORE IMPORTANT for the government to get addressed along with Bankers incomes and pensions etc.. Currently the average house owner / or bank building soc saver is nothing more than a pawn in a profits / investment game that is not based in what is good for each and every one of us, let alone the communities we live in or the UK as a whole, but hopefull lessons are being learnt, or is it learned(?)

    Can I finish by saying how much I understand your current predicament, we too are hoping to buy in the near future but don’t want to buy and find our home worth 40% less by next year. Savills and Rightmove have said about the 25% tipping point but a search of Rightmove at the weekend confirmed via the aboutmyproperty map that shows previous sold house prices that many are being marketed at 2007 prices OR HIGHER!! I have not seen any significant reduction in house prices and am also under pressure all the time from family and friends about missing out etc ……it is exhausting and worrying and the news is so contradictory with the government doing all they can to talk the market up because they don’t want to say “your homes are worth less, about 35% less if not more, sorry, we should have made sure the lenders never gave mortgages higher than 3.5 income”. Offering someone 25% less than the 2007 price is NOT getting a bargain when it is almost certainly going to end up being at least 35% less than the 2007 prices or even 50% , the sooner we all we wake up to this reality and get out of the denial phase and put capital gains tax on houses to stop investment and HUGE profits, the better. I wish you much luck in the apparent gamble we are taking waiting but hopefully it will pay off.

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  • sold 2 rent 1 says:

    vindicated,

    The Martin Armstrong high is on 19 April 2009; expect better news on the economy as we head into late March and April.
    For me this high is likely to mean the switch over from fear of deflation to fear of inflation.

    Here are some graphs. The USD seems to be tracking the Armstrong PI cycle closely; with a low last March and maybe a high this April?

    But the one to watch is the 10 year T-bill which has had fallings yields for 27 years. Are things about to change from deflation to inflation?



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  • mark wadsworth says:

    @ Vindicated, the VIs have been saying the same thing for years. It wasn’t true then and it isn’t true now. The 1995 – 2007 house price boom was twice as big as its predecessor peaks in 1973 or 1989, so will probably take twice as long to deflate – after the 1989 peak, it took between three and five years for prices to bottom out – don’t forget the average home price was £60,000 or so in the mid 1990s, so as a rough target we ought to be looking at £120,000 at the bottom in 2010 ot 2011, which is at least another twenty per cent lower than where we are now.

    Even Hometrack admit that sellers are only achieving 88% of asking prices, so that’s another 12% fall waiting to happen.

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  • sold 2 rent 1 says:

    IMHO house prices will continue to fall at 20-25pc per year for the next 2 years.
    But here is a warning, from the summer onwards your hard earned savings will be destroyed at an alarming rate if your hold them GBP cash or government bonds

    So, in summary, if you haven’t got the bottle to buy oil, gold, silver and other commodities to protect yourself from the great currency crash of late 2009 and 2010 then buy a house now, and lock into the low IRs.

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  • vindicated –
    You could always just make a bet with anyone telling you we are at the bottom; see if they are willing to put their money where their mouth is. Or just agree to disagree and quietly wait to be proven correct (I had it for a couple of years from family telling me I should buy whilst I could still get on the ladder). You don’t have to keep chanting 🙂 and if you do you don’t need much more than a combination of affordability for the buyers, attractiveness for the lenders and the dependency of the market on purchases on credit (I imagine that if you start banging on about Elliot waves or chart patterns, even if they are true your in-laws may well think you have crossed into madness).

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  • Vindicated – one bit of data which you never see (probably because it would be so hard to get), is who is buying these houses, and what did they sell in order to buy. Think about it, if house prices are going to fall another 25%, would you rather own a £300K house and lose £75K, or sell it, buy a £150K house (While the stamp duty holiday is on) and halve your losses. I have no evidence to back this up, but it makes sense that just as people invest every penny they can get their hands on when the market is rising, in order to maximise their gain, why wouldn’t they downsize to mitigate their losses as the market is tanking? Lots of people need to downsize – what better time to do it?

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  • To all of you… thank you for the reassuring and very interesting comments. They are much appreciated. Don’t get me wrong though, there’s no way I’ll be buying. I for one believe this whole thing has a LONG way to crash yet, I’m just sick to the back teeth of smart @rsed well intentioned family members and friends trying to convince us that we are mad and alone in our ‘waiting game’. I guess after the mental battering I took at the weekend, I needed some faith restoration…. and some good ammo to go back at them with!

    As a previous owner of a house in Florida (sold in 2007), I am pretty confident of what is happening over here (we’re just a bit behind them). We saw our house price soar from $154k to $265k at the peak. We didn’t get out quick enough and sold at $212k. The same house could now be picked up for around $120k and there is no sign of the downward spiral stopping (although there do seem to be a lot less houses available). Speaks volumes to me.

    Anyway, thanks again. All very interesting and I feel a renewed energy to battle on!

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  • S2r1 said:
    “But here is a warning, from the summer onwards your hard earned savings will be destroyed at an alarming rate if your hold them GBP cash or government bonds”

    Can you elaborate please? I’m taking it you don’t buy into deflation.

    There are many talking about severe deflation. Those with savings will benefit.
    Interesting comment too about those who are risk averse should consider buying a house.

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  • letthemfall says:

    vindicated: “family members and friends trying to convince us that we are mad and alone in our ‘waiting game'”

    Presumably they were previously saying you were mad not to “get on the housing ladder” (that revealing expression – the steps of tears). I recall someone telling me that “it’s not going to happen” with regard to price falls. Silence on the subject from that quarter now. Perhaps when everyone starts telling us we would be mad to buy a house will be the time when it becomes worthwhile.

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  • Higher sales now will drive the market lower, as buyers who have sold or have a chain will seek further discounts.

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  • mark wadsworth says:

    @ denzil, STR, there are three reasons not to buy UK government bonds, one valid, one silly and one is a judgement call.

    The valid reason not to do so is because interest rates are likely to increase – and increase from 3% to 4% equates to a ten per cent fall in capital value on a ten year bond. The silly reasons for not doing so is because GBP is going to tank – wrong, it already has done, it is now the turn of other currencies to tank – and because you fear hyperinflation. As it is hotly disputed whether we are likely to have inflation or deflation, you will have to make up your own mind on this point.

    @ Vindicated – see article I posted from the Metro above this – mortgage lending is down ninety per cent over a year, £690 million new lending divided by typical mortgage £100,000 = 6,900 houses sold in a month. That’s about five or ten per cent of normal turnover, so house prices are still a long way above their natural ‘market clearing price’.

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  • letthemfall says:

    s2r1:

    Sterling will only fall relative to other currencies. If you intend to buy a house in this country then the argument for investing all your money in housing or whatever only makes sense if you expect high inflation to raise the price of everything, including houses. In which case they will not fall at 20% pa.

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  • sold 2 rent 1 says:

    denzil,

    Just before any turning point there is almost a universal view that reaches maximum levels. Think of the saying “when every last bear becomes bull” as a signal of the top of the market has been set.

    The same will be true of the inflation/deflation debate. As a contrarian many will disagree with me, but that is the nature of the system we live in.

    Money supply is still exploding. See the graph

    Armstrong has a turning point on 19 April 2009. This, for me, is the turning point from deflation to inflation. The deflation will come, but not until we have had a final bow-off in inflation in spring 2010.

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  • matt_the_hat says:

    20. sold 2 rent 1 … just looking at this with the naked eye the correlation looks very strong, have you (or anyone else) done any analysis on this, i.e. correlation coeff range [1,-1] and lag for max correlation

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  • sold 2 rent 1 says:

    Looking at the graph we can see 5 Elliott waves from 1934, zooming into a final blow-off of money creation in 2010.

    Only then will we have the deflationary crash similar to what happened from 1920-1934.

    In case you haven’t noticed, change is happening 20 times faster now than in the period 1920-1934. So when the inflation peaks in April 2010 it should crash to a bottom in 8.4 months (14 years / 20) which is pretty close to Martin Armstrong’s 8.6 monthly internal cycle.

    Most will ignore my comments about getting out of cash and govt bonds. But that is fine. We need a revolution and people need to get angry. And losing ALL your savings is a sure way to get you marching on Westminster.

    Remember we all have a choice in what part of the system we want to play our role in.

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  • sold 2 rent 1 says:

    matt_the_hat said,

    “the correlation looks very strong”

    But only when you use Shadow Sats CPI data and not govt fiddled CPI data

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  • letthemfall says:

    s2r1

    I share your view on gilts, particularly long-dated ones, but not on cash. If cash isn’t safe then we are in unknown territory and nothing can be deemed safe. Of course one could argue we are already in unknown territory.

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  • sold 2 rent 1 says:

    letthemfall,

    “Of course one could argue we are already in unknown territory.”

    Remember the global system is stable. Once the financial system has collapsed (similar to Lombard banking system in the 1340’s) can we expect a century or war and famine?

    Nope. Because free/dark energy will save the day

    Expect some big break throughs in dark energy discovery this month or early next. The resonance with Calleman’s model is to 1959 when the silicon chip was invented. This was the backbone invention to the internet revolution 40 years later.

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  • Home To Roost says:

    Mortgage lending plunges more than 60% in January as house prices continue to plummet

    Mortgage lending dived by more than 60 per cent during January to just one 10th of its level 12 months ago, new figures revealed today.

    Net mortgage lending, which strips out redemptions and repayments, was £690 million during the month, down from £1.79 billion in December.

    This is the second lowest monthly total ever recorded by the Bank of England since it starting to keep statistics in this format in April 1993.

    It is also a steep dive from the £6.91billion lent in January last year.

    http://www.dailymail.co.uk/news/article-1158455/Mortgage-lending-plunges-60-January-house-prices-continue-plummet.html

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  • Forget about asking short sellers to disclose their position. We need to force all BTL journalists to disclose their position on probing up the bubble, by legislation if necessary. I WILL eat my hat, if Anne Ashworth is not a BLT!!

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  • 25. sold 2 rent 1 said…”Expect some big break throughs in dark energy discovery this month or early next”.

    Jeez!

    Take note James,………another falsifiable prediction.

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