Tuesday, September 15, 2009

Prices rise in RICS’ survey

More surveyors report price rises

"More surveyors said UK house prices were rising in the three months to September than those reporting falling property values.The proportion turned positive for the first time for two years, the Royal Institution of Chartered Surveyors' (Rics) survey found. The change was driven primarily by price rises in London and the South East of England."

Posted by phdinbubbles @ 07:58 AM (1707 views)
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29 thoughts on “Prices rise in RICS’ survey

  • The BBC really is going hell for leather to restart the housing boom.

    They featured nothing of the other anecdotal surveys such as rightmove’s particularly gloomy last report (the BBC does usually report on the rightmove surveys though):

    Sellers drop asking price as competition for house buyers heats up

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  • Anyway, just tell me again when this double dip is going to kick in? The air is getting a little thin up at these dizy heights!

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  • @ 2, yes smugdog be steady on your feet, there’s along fall to look forward too ! Hope you invested well before 2000 ? if so nice future investment, if not, up the payments on your debts asap.. & goodluck

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  • Hi smugdog
    I cannot tell you when the next downleg will start, but I am sure that it will and it will be soon.
    I stood outside an estate agent this morning and was looking at an ordinary 3 bedroom terraced house, four miles outside Bristol, located in an area infamous for its crime. It was advertised for £220,000. This place needed many thousands spent modernising, no off street parking, p***-poor schools nearby, nestled amongst council tower blocks.
    I still believe that we will get 50% falls, certainly in the grotty urban areas

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  • Nice find there tudorian, I’m surprised you didn’t snap up a pair at that price, they’ll be worth a quarter of a million by this time next year you know…

    Houses only ever go up, innit…

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  • “Jeremy Leaf, a RICS spokesman, said: Although it is clear that house prices are now rising, it continues to be the lack of supply that is underpinning the recovery in most parts of the country.

    “The more positive news flow will gradually encourage vendors to start putting property back on the market.”

    But he added: “This development should enable more potential purchasers to find desirable properties to buy but it could also present a challenge to the firmer trend in prices particularly when interest rates finally begin to move upwards”.”

    Confirming that ultimately property has to fall back in line with sensible and sustainable lending levels. Current historically low transactions being driven by cash rich buyers.

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  • There will always be property on the ‘wrong’ side of the street and obviously, priced for mugs. However, use your head and local knowledge, and there are still some good buys out there. Tudorian, 50% falls!, surely you still live in the dark ages dear sir.

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  • “50% falls!, surely you still live in the dark ages dear sir.”

    A 50% fall in house prices relative to wage inflation is quite likely and represents about the most sensible guess one can make based on previous trends imho – a lot of this could be inflationary and over many years, so not so much a crash as a long-drawn out slump with lots of false dawns – or maybe it’ll be an armageddon type thing and happen quite quickly over the next couple of years once the masses realise they’ve been had. Doomed, doomed, doomed, I tell ye, doomed.

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  • Walking round Basildon (Essex) last Saturday, I saw a few of the independent shops closing down. People were out in the sun, but not carrying many bags. Just looking. I can’t see this is encouraging. Small businesses are also closing. Not a climate which supports house price rises.

    I know someone who is firming up on buying. As they went to the mortgage broker, they were advised that rates had moved up a bit since they last checked. Again, not an encouraging sign for price rises.

    People from time to time decide to set up home together etc. I suspect there is a build up of potential housebuyers out there waiting for prices to stabilise or go up as a “buy” signal. The BBC is giving it out loud and clear.

    I think the BoE rate has to move up from 0.5% in the next 3 or 4 months. This possibility seems absent from BBC rosy articles.

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  • Cheekie Charlie says:

    “50% falls!, surely you still live in the dark ages dear sir.”
    Smugdog how can the house price to earnings ratio be forever broken? No it doesn’t make any sense does it! The credit bubble has burst and house prices will fall (one way or another) back to their historic average which WILL result in a 50% drop.

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  • It’s all just more ramping, ramping, ramping.

    Most of the media have been doing this for years, and there is a broad coalition of home-owners, politicians, bankers, construction companies, NIMBYs and newspapers (who need the advertising from EAs) who want to make this true. But if it always worked all of the time, we’d never have house price crashes and houses really would cost ten times income or something. We’re currently heading steadily but surely back to three (which is how things should be) and that is the end of that.

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  • Rising unemployment, rising bankruptcies, stifling of credit, destruction of manufacturing, public sector cuts …. and eventually interest rate rises. Not really rosy at all out here !

    Gravity is acting against house prices. I believe that it’s only the affordability of existing mortgages that is keeping the housing market inflated at the moment, and I think that we’re in for a couple of years of the “armageddon type” correction that phdinBubbles mentions ( @8 )

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  • The RICS data is compatible with my theory published a couple of days ago.

    This is the first month the surveyors have indicated a price rise, yet the house price indices have been showing this for several months now. But the surveyors should be ahead of the game, not lagging it.

    Why the discrepancy?

    Because the small number of homes that have been changing hands have been the better ones, not an average mix. This has distorted the house price indices, and boosted confidence in the market to the extent that a majority of surveyors are at last seeing an actual increase in perceived value.

    Can it last?

    No. Those struggling to sell less attractive homes are going to get impatient, and the mix of property sold will gradually revert to norm. This will push the indices back down. I believe that confidence in the market is extremely fragile, and that a single month of falling indices will quickly turn the tide of opinion.

    – Nature will then take it’s course!

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  • it continues to be the lack of supply that is underpinning the recovery

    It is simply too early to start using the word ”recovery”.

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  • The market at present is not a normal market. We’re operating in unstable conditions where those that have cash and MUST move are giving globulins to what is still a sick patient.

    limited stock –> limited buyers –> limited loans –> more cash on table secures deal (probably supported by company moves) –> even less stock –> same level of “natural movers” in market –> price firms –> even more cash required to seal deal –> where does this end?

    As they say, we’re running on the last drips of fuel vapour in the system. Debt is fuel – as we all know.

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  • With CPi under shooting its target, Merv may have another giddy turn and go negative, and not upwards as Alan predicts. That may well open the floodgates in lending.

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  • EAs and BTLs are usually represented as separate entities, not so, they were in prime position to take advantage of the “prices will always go up” boom. Sole owners and directors of estate agencies, I guess, to a man/woman own a portfolio of residential and holiday properties. This leaves them in a difficult situation – wanting reduced prices and, therefore, more transactions for the business, but rising or at least holding prices for their own properties. Tough!

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  • tc,

    You probably haven’t touched a drop of Absinthe since..

    ..I remember getting seriously drunk on cider when I was 14, and have hated the smell ever since.

    In June this year I was at a dinner party at Quinta do Noval in Portugal. Very civilised, a dozen friends present, including the managing director of Noval

    By the end of the evening we’d downed nearly £10k’s worth of port, with vintages going back to 1896..

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  • I would guess the current rally is largely a case of people thinking such low interest rates are too good to miss, people simply having had enough of waiting and thinking 20% down is enough and I’m sure there’s quite a lot of people getting out of the major cities and cashing in. London is (arguably) a great place to live while the good times are rolling but with the shock the economy has had over the past couple of years I’m sure many people have re-evaluated and realised how much better life can be outside the capital in terms of housing/peace of mind.

    In any market you’re going to have people getting in and out at all levels but I do think the VIs are making a major mountain out of this particular molehill. It’s not surprising when you consider the last couple of years they’ve had! At least some of them are being honest about the fact this rally is extremely fragile.

    Sustainable? I very much doubt it though as ever, only time will tell.

    Floodgates opening? I doubt it. I have NEVER considered emigration but if they do open the floodgates then I would consider it because I guarantee you this smugdog, if the current situation isn’t arrested very soon this country will burn (and I mean literally).

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  • “…I love port….but not the hangover that accompanies it…..”

    Need to stick to the good stuff, and drink a little water as well if you are vulnerable to a hangover.

    Jancis reckons it’s a good hangover cure BTW..

    Port is my specialty, and my cellar has quite a reputation.

    I keep a decanter on the go all the time, and get through about five dozen bottles of vintage each year at home. I will finish the Rebello Valente 1970 by the end of the day, and will follow that with a youngster that I havn’t tried before – an Eira Velha 1982..

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  • @UT
    “By the end of the evening we’d downed nearly £10k’s worth of port, with vintages going back to 1896..”………sorry, but seething with boredom.

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  • I don’t really watch house prices that closely because long term they are down or long term our currency is down but I am actually begining to suspect the later.

    Anyway my point is didn’t realise that the idiot (a) provided that the state will pay the interest (and in some cases the capital) on the mortgage of someone who becomes unemployed and has a house worth > £200,000. This sweet if you can get it relief runs for 2 years at present but I’m sure that will be extended to keep house prices up.

    Also at the same time (Jan 09) it was made more difficult for repossesions to happen with creditors having to first offer the homeowner all sorts of things like payment holidays and reductions.

    It is repos we need to correct the market and they are not happening and it looks as if they aren’t going to be happening.

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  • Citywire are running the following in response to TICS report – “Housing market optimism could drag prices lower” for the full story check out http://www.citywire.co.uk/adviser/-/news/property-and-mortgages/content.aspx?ID=357278&re=6832&ea=118560&Page=1

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  • No worries Wiltshire – totally off topic, I agree..

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  • @smugdog

    “Anyway, just tell me again when this double dip is going to kick in?”

    In the past, the property price bears have been criticized for calling the crash too soon (and with good reason.) Quite a few property market commentators thought that 2005 was going to be the tipping point (me too) but the prices took another two years to start correcting.

    What I’m trying to say is that calling the top or bottom of a market is hard. We got it wrong in the past and we could easily get it wrong again. However, the fundamental reasons why property is priced at unsustainable levels have not gone away. My best guess is that we won’t see much happen until late 2010 i.e. after the election.

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  • bellwether said, “Also at the same time (Jan 09) it was made more difficult for repossesions to happen with creditors having to first offer the homeowner all sorts of things like payment holidays and reductions.”
    – No wonder the basis on mortgage products is stubbornly high*, pricing in the extra risk. Stupid distortions. Hang the politicians; free the markets.
    * the basis remains huge, whilst the underlying market rates have more or less returned to pre-crisis levels.

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  • Quiet Guy,

    Good points, but with so much property on the market, mortgage rates running high, and little confidence that our economic problems are being effectively addressed; I would be surprised if the current level of confidence in the property market lasted into the new year.

    While much is made of ‘BOMAD’ buyers, the reality is that most potential FTB’s don’t have that source of funds available to them, and are therefore not feeding demand into the market while they strive to save a deposit.

    I sense that the current crop of twenty-somethings are in no hurry to set up home at the moment, and that their parents are generally content to see them stay at home and save, until such time as the outlook is a little rosier.

    Although construction is depressed, it has not gone away; and the combination of new build and the liberation of property by the deceased looks well in excess of current FTB demand.

    With time on market calculations already running very long, and set to get longer; it seems very improbable that the current euphoria can last..

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  • @UT, no worries here either. Considering the amount of sage advice you’ve added here over the years (certainly tons more than me) I should allow you the occasional indulgence! And by the sound of things you enjoy an occasional one!!!

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