Tuesday, April 14, 2009

Telegraph and Lombard Street Research say all is well

Housing slump will end by Christmas, predict economists

"In a forecast that will reassure homeowners, Lombard Street Research (LSR) has declared that house prices are now affordable, and forecast that the worst of the property crisis is over. Its affordability index, produced in conjunction with The Daily Telegraph, shows that for the first time in five years house prices throughout the UK are better value than their long-term average." Time to buy? I'll just watch and wait, thanks!

Posted by quiet guy @ 01:23 AM (2299 views)
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14 thoughts on “Telegraph and Lombard Street Research say all is well

  • gone-to-colombia says:

    Phew, that’s ok then, we can all start buying houses, invest in flats and start making lots of money. I’m so relieved!

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  • And only a day after they ran this headline:

    Quarter of houses unsold after six months

    More than a quarter of houses up for sale have been on the market for more than six months, research showed today.

    saying below:

    “Daniel Lee, chief executive of Globrix, said: “On the surface these figures make pretty grim reading and provide few positive signs that the property market will recover any time soon.

    “However, on the ground there is far more optimism. Estate agents are reporting that buyer interest has picked up over the last couple of months, and we have tracked motivated sellers price cutting across the board to attract buyers.

    “The problem is that this activity in the market isn’t yet converting into tangible sales, or at least not at the levels to clear the gridlock in the market.””

    That’s a pretty good turnaround in one day!

    db

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  • Aussiekoala says:

    Well, Well, i’m so glad that everything is ok in the british property market once more…

    Who do these people think they are?

    Sadly, so many people are clueless that they may even believe it. This bust has at least 4-5 years to run, and the social consequences will be dire for a generation. There is quite literally half a generation of priced out adults in their thirties who were simply too astute or poorly paid to try to get in on the act. Time has passed, these people are aging and, in my opinion, the british govt is doing everything it can to lock in speculative gains in the hands of banks and borrowers. Let no-one ever suggest again that britain is a champion of laissez-faire capitalism – it simply beggars belief.

    My remedy is simple – every brit without a home over thirty should simply leave the country and let the incumbent govt stare at the consequences of its economic foibles with the inter-generational debt contract straight in the whites of the eyes.

    You see – that’s called taxpayer sovereignty in a global economy. It’s a perfectly legal form of tax revolt.

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  • sold 2 rent 1 says:

    Here are 2 LSR Housing affordability index graph. Sorry about the thumb of the long term (1955-present)

    As I said last year we will be seeing the 3-trough-pattern that happened between 1970 and 1992 play out again but 20 times faster. We are now at the same point as 1977 where the index hit 107 (and had risen sharply from 80 in 1973). Expect the next leg down to plunge affordability to below 70 by spring/summer 2010 as oil soars to $400 by April 2010.

    The next leg down in HP will be driven by cronic inflation of food and energy



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  • Another of those occasional vacuous pieces on house prices. There is something of a tautological argument here:

    “There is no doubt that for people who have good credit histories and plenty in the way of a deposit, current average house prices are affordable,” said Jamie Dannhauser, senior economist at LSR.”

    If you have plenty of money you can afford a house, or anything else presumably. So much for economic insights. Two Oxford economists were arguing that houses were affordable and fairly priced at the peak of the boom on similar arguments. As soon as interest rates rise again these flimsy arguments will crumple. Goes to show, though, that the housing obsession still survives in this country.

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  • Lombard Street Research (LSR) did not consider the fact that banks would have gone bankrupt without the government help and that is because of loses related to property and also the fact that a failed bank will need 5 years to recover if ever. So how would some bank return to making loses lending to less credit worthy people and at current house price levels ? It does not make sense!

    We understand that some people have invested in property and now are talking up the market but the last thing we need is to get more people into negative equity.

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  • sold 2 rent 1 says:

    The LSR housing affordability index is spot on. Just ask anyone with a SVR mortgage and how their monthly payments have tumbled.

    The error with the article is in the assumption that affordable housing means prices will go back up.
    They won’t because of the massive inflation that lies ahead.

    I always suspected that the Armstrong high on 19 April 2009 would tie in with an LSR high in its index too.

    It is amazing how different models are now synchronizing with each other.

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  • george monsoon says:

    This article carries as much credibility as a guarantee of authenticity from the “looky looky” man in Spain.

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  • yep, as much as i grew up in this place, what the govt. is doing with my taxes, i’m planning the great escape overseas.

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  • Colin Gleeson says:

    This is the same Lombard Street Research whose representative, Diana Choyleva, was absolutely certain on an episode of Newsnight before house prices started to fall that there would be no contagion from the US, the ‘fundamentals’ (whatever that means) of the Uk were sound. It was ridiculous at the time and exposed these guys as charlatans, buy on their advice at your peril

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  • Lombard Street Research – -Wouldn’t be part of a Bank would they? Money Money Money. Debt Debt Debt.

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  • This is a somewhat narrow measure of affordability, and because of that risky for anyone to base their borrowing on. As interest rates are so low then they must most likely go up, perhaps quite a bit. This apparent cheapness may only draw more people into the trap.

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  • new user 2007 says:

    “There is no doubt that for people who have good credit histories and plenty in the way of a deposit, current average house prices are affordable,” said Jamie Dannhauser, senior economist at LSR”

    Just so I am clear on this. Are they saying their model is a good guide, while at the same time ignoring the fact that it does not incorporate properly once-in-a-70-year-life-time credit cycle collapse that is occuring?

    At the same time, it assumes that affordability (a main determinant of the model) will remain in a scenario that involves official rates remaining at less than 1% WHILE also I am guessing that the economy will be back on track by 2010.

    Talk about inconsistencies.

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