Wednesday, October 28, 2009

BBC version of MW’s earlier post

'Continued rise' in house prices

House prices in England and Wales rose by 0.9% in September compared with August and sales also picked up over the summer, the Land Registry has said. The average home in England and Wales cost £158,337, the figures showed. This was 5.6% cheaper than the same month a year earlier, but September was the fifth consecutive month when the year-on-year price fall has slowed. Sales were higher in July compared with July 2008, after months of lower annual sales figures, the registry said.

Posted by jack c @ 11:44 AM (3031 views)
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46 thoughts on “BBC version of MW’s earlier post

  • Looking at the Land Registry info there has been a definate upswing in transactions in September – and, contrary to a popular view on this site, the action is taking place at the cheaper end of the market. I would like to know if it is families or speculators doing the buying.

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  • And those trying to short the market get squeeezed ever harder!

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  • tyrellcorporation says:

    Houses really are turning out to be the ultimate investment.

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  • mark wadsworth says:

    Re what Nomad says, I’ve notice that if you look at houses for sale in an area on Rightmove, and then click “include sold STC”, the ones that are “sold STC” tend to be more concentrated among the ones with the lowest prices.

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  • 2. tyrellcorporation said…Houses really are turning out to be the ultimate investment.

    For whom remains to be seen. The financial system has sucked up the main course and desert, will they leave the cheese and biscuits?

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  • House is an ultimate investment based on a banks bailout at every 5 years. Sellers prepare for inflation by putting prices up, one zillion for a house please.

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  • The governments finger prints are all over this.

    As I have said many times before, house prices are the only economic measurement this (labour) government are interested in.

    In a pre election year, the real effects of the recession are still very limited and have yet to be fully played out.

    Labour clearly views the inability to maintain high house prices, as a massive mistake of the Conservative government in the early 90’s, and they are absolutely determined to see that it doesn’t happen again. Up till now the plan has worked, but it cannot be kept up forever, as currency collapse or worse will be the outcome.

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  • Anecdotal. I know several people with healthy savings accounts who are considering getting back into property. The driver seems to be poor interest rate returns, and worry over the value of the £.

    Most people are not that savvy on investments. Many retired people have lost out on shares (which they previously regarded as a one way bet) and now seem to primarily think of savings accounts, fixed rate savings bonds or property as a secure home for their retirement stash.

    These are the ‘no deposit required’ people who FTBs will be up against in the months/years ahead.

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  • mark wadsworth says:

    @ HPW “As I have said many times before, house prices are the only economic measurement this (labour) government are interested in.”

    Quite right, but they only do it because it is also the only economic measure that most voters care about. It’s called Home-Owner-Ism.

    @ P.Doff, tell your friends that NS&I are now paying 4% interest for one year fixed.

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  • brownsters_billions says:

    I’ve just bought a house in London, and was sucked into a bidding war to secure the house above asking price.

    Stupid?

    Maybe, but it’s without doubt the best place we saw (out of about 20 viewings), and I need somewhere to settle down with roots for the next 5 years at least. I think sometimes people on here forget that some people need to move for somewhere to ‘live’, not ‘invest’.

    I’ll let government induced inflation take care of the rest 😉

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  • I’m very glad I purchased my investment property 10 years ago. Dread to think what the equivlent would be worth in a pension fund now.. prices are definately going up in my area (SE)

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  • I agree with [email protected]

    @9 brownster: I personally think that 5 years is a very short term view insofar as a property purchase is concerned. I am selling in this market and putting my money into other investments which I expect will perform as well as inflation. In my opinion, waiting another 12-15 months before committing to a 25 year deal isn’t really a long time to wait in the grand scheme of things. If property is only going to go up from here then it should make no difference when I buy, does it? With any investment, it isn’t about picking the top or bottom, it is about being right!!

    I would rather wait until well after the general election. It just makes more sense to me.

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  • brickormortis says:

    Can I ask everyone a question/ How do the land registry calculate price increases? Do they take the same house an dcompare it to what it previously sold for? If so, how do they account for houses which have been refurbished and sold on? PResumably the best houses sell in difficult times and one might think that these are the ones that have been done up and had lots of money spent on them. Could this skew the perspective on house price rises?

    I am speaking anecdotally here when I say that in Salop, house prices are not rising. They are falling and houses that are over priced are not selling but good houses in good areas at sensible prices will sell (mostly to people relocating) but first time buyers don’t seem to be about much (alhtough they clearly are in action!)

    The only thing that will bring house prices down is a rise in interest rates and I think we all know that. Imagine a guy runs from a lion and climbs a tree to escape. He might think he is safe but if the lion takes refuge at the base of the tree then he will be gobbled when he is so hungry that he comes down or falls out! THis is about the best analogy I can think of. What I am saying is that there are a lot of fooked people out there but they have climbed a tree (got a reduction in mortgage payments) and so they can easily survive. However, when they rise, they are fooooked.

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  • 9. brownsters_billions

    Just make sure you can pay the mortgage. It would be a shame to have another bidding war over the price of the properties rent.

    Good luck.

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  • brownsters_billions says:

    Thanks Crunchy.

    I’ve factored in a rise in rates and even a bail-out from the IMF wouldn’t present too much of a hurdle in the short-term, provided (and it’s a big provided), we both stay in jobs. On one job we’d probably scrape by with interest rates increasing 3-4%, but as the missus is a (very good) doctor, I’m assuming we’ll always have that.

    The trouble has been putting together 25% deposit, which I’m surprised enough people are able to do to cause prices to “rise” recently.

    I’ve been an avid HPC reader for some time, closely watching the market, but sometimes you’ve just got to get on with life. If the wind gets knocked out of us, to be honest, we’re young enough to pick ourselves up and then leave this stupid country!

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  • Side issue here:

    Did anyone watch “you’ve been framed” on saturday at 7pm? If you did you may have noticed that the commercial break in the middle had NO adverts in it. Prime time TV, saturday night and NO ADVERTS in the middle of one of ITV’s top shows. All there was were station adverts for two of it’s other programmes. Interesting.

    No recession there then!

    And house prices are going up!

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  • 13. brownsters_billions

    Keep an eye on that 25% deposit if things get tough and don’t spend too much on the place for now is my advise.

    Have a good life. Smugdog just got the good luck! ; )

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  • Bricomortis, you asked “How do the land registry calculate price increases?”; They simply average all sales in the month regardless of where and what.

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  • brownsters_billions is right. And its not as if you can sit and wait while the interest on your 25pct deposit goes a long way to paying your rent. That is why those who have STRd feel they need to buy, the one year bonds they bought with Northern Rock or whoever have expired and now they are getting a miserable interest rate, while the mortgage rate is 2.5pct. It now costs more to rent than to buy. The danger is that interest rates go up. Which screws the buyer with higher costs and of course the fragile market will sink again, a double whammy.

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  • @bleakhouse – “The danger is that interest rates go up” – best read Uncle Tom’s comments on the other thread in conjuction with my Interest Rate update

    Now is definitely not the time to buy unless people view the purchase (a) purely as a home (b) take a 10 year plus view

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  • mark wadsworth says:

    @ Brickor, HMLR do “repeat sales regression”, i.e. they record it when the same house is sold a second time – in the ten years that they have been recording/publishing selling prices, they have covered ten million sales, of which maybe a third will be repeat sales, which is one heck of a sample.

    As HMLR, Nationwide and Halifax move in line (HMLR with two months delay) there is no reason to assume that any of the three are artificially skewed upward or downwards (N and H use agreed selling prices and can’t include cash purchases, obviously).

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  • like brownsters_billions i have also had enough.

    I should be completing on a house in 2 weeks time.

    My decision was based on my own change of circumstances rather than a change in my beliefs.
    I still think 100% that houses will continue to fall for the next 2 to 3 years and the current rises are only due to low IR and QE.
    So why have i bought again?
    The simple reason is that after the death of my mum, we sold her bungalow in Sept and i now have enough cash to add to the equity from the sale of my house in 2006 to buy outright and be morgage free.
    Waiting for 3 years till prices hit rock bottom but continueing to pay rent at £9600.00 per annum is no longer an option for me.
    I will get a minimum return on my money if i keep it in savings and am obviously worried about inflation.
    Another reason was that my business is looking a bit rocky at the moment, so i could be out of work in 2010.
    If i continue to rent with a big chunk of savings and lose my income, i am on my own as far as help from the state is concerned.
    I just need a stable home for my wife and son.

    I would have loved to have held on for longer but its not to be.
    I still think i have done well out of HPC, sold at near the peak and with the funds i have managed to build a nice little house in Thailand for my retirement and have gone from a 2 bed terrace to a 3 bed semi det in the uk.

    Thanks everyone who posts on here ( except for you know who), i don’t think i would have STR in Dec 2006 had it not been for this site.
    Still going to keep looking on here as this site has evolved into more than just hpc.
    good luck everyone ( except for you know who)

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  • Hey, can anyone on here tell me what is right, or has been.

    We need to give people that want to get on with it a break, because nothing has been or will be right for a long time to come yet.

    Time for a cup of tea!

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  • brickormortis – The Land Registry just record all house pirce sales, so it is the average prices of properties sold over that period. There is no direct comparison on specific properties.

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  • sold out – best of luck (hope the business/job also holds up)

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  • Sold Out
    – From your situation it sounds like you have made a very good decision to me: mainly security over prosperity.

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  • To repeat a wise old quote I’ve used before:

    “Bubbles don’t burst when sane rational people think they should. They burst when sane rational people no longer believe there is a bubble”

    In other words, just as the hitherto wary are deciding it’s safe to enter the market, it’s going to go pear-shaped on them..

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  • 24. uncle tom….. You would have said the same thing years ago.

    Some people just want to get on with it. Can you really put a price tag on peace of mind? I think they are well HPCed by now and ready

    for most things. Look up fair play!

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  • Crunchy,

    My advice is simple –

    – with so much obvious risk attendant to buying, and such good value (in most areas) when renting – why on earth would anyone want to buy right now?

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  • .. and the last you’ll get with a millstone mortgage is peace of mind!

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  • 26. Ask them!

    27. Ask them!

    I think you are missing the point, but feel free to ask them anyway.

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  • greenshootsandleaves says:

    brownster @ 9 and soldout @20

    Good luck to both of you. You sound as though you’re going into this with your eyes open. If more people had done that in recent years and had been prepared to accept that they could not afford the whole package (i.e. not just the borrowing bit), then (Understatement Warning Lights switched ON!) the market, the economy, the country might now all be in a better shape. The ‘It’ll be all right on the night, or rather, every night for the next five to 25 years’ approach is just a recipe for misery. I’ve always felt that the right property to buy is the one which you still like even if its value takes a knock. Seeing it as a place to live and not just as a short-term investment helps. Plenty of houses & flats on Rightmove & fap whose appeal must have been enhanced by the prospect of a fast and easy profit or at any rate the expectation that the deal would be self-financing!

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  • brownsters_billions says:

    uncle tom @26

    I’m buying as I’ve already delayed by a couple of years and I don’t want to delay any longer. We’re not getting any younger, and you never know how long you might be around.

    So i might get the same house 10% cheaper in 1/2 years; big deal. I’ve done the sums, we can take a fair increase in rates, and I’m getting a much bigger and better slice of london than I would have done 2 years ago. It’s the right time in my life to settle down and have a family.

    In 5-7 years, looking at trends in previous crashes, I’d expect the property to be fairly level with where it is now – I’m not buying expecting an increase, will be happy if I don’t lose anything, but know the risks of it going down in value.

    The only scenario which doesn’t work out is if some of the more catastrophic claims that people make on this site come true – and to be honest it sounds like I’ll have more to worry about from hungry gun-toting tin-foil hat wearers than the bank manager in that case.

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  • sold out
    Best wishes to you. I expect I would have done the same in your position.

    (Who’s “you know who”? – I like a bit of gossip)

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  • 30. brownsters_billions said…”and to be honest it sounds like I’ll have more to worry about from hungry gun-toting tin-foil hat wearers than the bank manager in that case”

    The tin foil hat wearers aka Crunchy & Co will have very full stomachs and some will be living abroad. It is the doubters you need to worry

    about brownsters_billions. The unprepared!

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  • brownsters_billions says:

    @32

    Apologies crunchy. I should have said angry chavs with baseball bats!

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  • 33. Just don’t wear a suit and walk with a swagger if it all goes pear shaped.

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  • Thanks everyone.

    I will still be cheering along when i see the Halifax/nationwide figures going negative again, i havn’t sold out.

    I may well soon be a 100% homeowner (for the first time in my life) but i still feel that this countries bizarre obsession with house prices is dangerous and unhealthy and only benefits the bankers and their chums.For the sake of future generations i hope this HPC is the last and we can have a stable economy based on something other than a giant Ponzi scheme.

    letthemfall

    “good luck everyone ( except for you know who)”

    I was referring to glorious sunshine, greenbay, slumdogs etc and any others of their ilk who have posted on here.

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  • Brownster,

    This is not the same as previous price slumps – this is the big one, the bust – the end of a fifty year cycle of increasingly extreme price oscillations, one that has left most property hopelessly unaffordable to most people, and a market that is therefore wholly unsustainable.

    If you think the limit of the risk you are taking is no more than 10%, then you are way too optimistic. Just to bring the speculative market back to a sustainable one demands a real terms correction of at least a third from where we are today, and to provoke a further price oscillation the market would then need to further over-correct to a substantial degree.

    This is absolutely NOT the time to buy…

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  • Been following this site and posting since 2006, Goodluck Sold out…life is about lving after all. I am in Canada now..Sterling is shot. I need a drop in HP to cover my savings losses. Interest rates are uo 0.25% in Norway this morning…its beginning to get interesting as the tide is coming in….

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  • cynicalsoothsayer says:

    I’m with UT on this, this is the BIG ONE, the BUST.

    Sold Out: being mortgage free means there really isn’t any risk, though you might have a wee regret in future.

    My partner is desperate to move out of a 2 bed flat to a 3 bed house to accommodate the growing family. Up here in Edinburgh not a lot is affordable but not a lot sells. It is at checkmate until something forces the sellers. I believe it will be unemployment, possibly caused by higher interest rates that will break the logjam.

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  • letsgetreadytotumble says:

    People buy for different reasons. To keep their sanity intact, kids schooling, etc. Mine is purely financial, and as such, will be buying when prices bottom. I believe this is the overture of the economic collapse. After the main opera has played out, prices will drop another 30%. Give it 2 or 3 years.

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  • cynicalsoothsayer says:

    I saw houses sell for half their previous transaction value in 92-94, I expect to see it again.

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  • cynicalsoothsayer

    “though you might have a wee regret in future”

    I agree this decision has been a difficult one to make, and the times i have asked myself am i doing the right thing are numerous.

    The main clincher for me was not being in a position where my job is 100% safe, ie i am not in the public sector and if my business goes down the pan, i would probably struggle to find another job.
    The two extreme scenarios i see for myself are
    A/ I lose my job and have to fork out £10k a year rent out of my money
    B/ i keep my job and am able to save 10k a year.
    in the first scenario houses would need to fall in excess of 15% over the next 3 years for me to benefit,
    in the second scenario they need to fall in excess of 30% over the next 3 years for me to benefit.

    The place i bought was priced to sell approx 10% below similar in the area and i also managed to knock a further 10% off, because i am a cash buyer, so i don’t think i have done too bad, their was no way i was going to get into a bidding war or pay above asking price.

    letthemfall
    are you sure slumdog is flashman? No way, flashman is ok.
    good luck flashman.
    You are such a little gossip letthemfall 😉

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  • Waiting. Too. Long says:

    Why do people contiune to talk/think about imminent interest rate increases?
    To paraphrase Jenson “This is zirp, baby”, and the magnitudes of the debts being racked up by governments, such as our own shower, leaves the Central Bankers no options whatsoever on interest rates.
    However, there is only one way out, and that’s default. The only question is who blinks first.

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  • To alleviate your misery, and for those who are waiting for that 30-50% drop in the house price, I’ll help you with some analysis and point out some facts important facts for you to decide:

    1. The UK house price has had a fall of approx. 50% in April 2009. You would have thought that I’m just joking. It’s actually quite simple. House price fell approx 20% + pounds fell 30% remember? So you may have got your predictions right and may well be missing the boat as well.

    2. UK cannot escape the globalisation effects of the world. None of the countries in the world managed to do that. Even China, Russia. And that’s why unemployment in UK hasn’t been such an impact to the House price. To the rest of the world, UK house price was at a discount of 50%! At current market price, it is still significantly cheaper than before.

    3. Your Cash is just going to loose it’s value very quickly, and I do mean very quickly. You don’t have to look at the inflation report to know this. BOE have told you that they’ve printed tonnes of money and have you not listen? Well they call it ‘Quantitative Easing’. All can tell you is that the printing press has been running on full speed like never before. 175bn pounds! That’s about 25k per working UK citizen if they were to distribute it evenly. Cash or Asset? You make the pick!

    4. The projected number of new homes built this year is about 75000-95000. I cannot recall a year, over the passed few years, that the government has met the target of 250000 new houses. Demand and Supply?

    5. At this moment in time, I would advice you to safe guard your wealth (And I don’t mean Cash). If you don’t want a house, then use your money to clear your debts. You know that you’re doing well if you’re not loosing. Winning is a tall order. Minimising your loss is the key.

    Hope this helps.

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