Friday, October 2, 2009

Indubitably!!

House prices: Too good to be true?

The average price of a house in the UK is now the same as it was a year ago – or so says the Nationwide. But even estate agents are wary of calling the turn of the cycle. And for good reason

Posted by paranoia blue @ 10:00 AM (1448 views)
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6 thoughts on “Indubitably!!

  • The more fundamental reason why prices might start falling again is that, by most measures, they are still significantly over-valued.

    How dare she say sure a thing, it is perfectly reasonable that the average house now costs 3.5x the average salary. With both parents at work we can busy ourselves raising a generation of latch key kids. Deposits are not a problem as they can be raised by the selling of a kidney, if need be, two kidneys, yours and the wife’s.

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  • Sorry I screwed that up…

    How dare she say such a thing, it is perfectly reasonable that the average house now costs 3.5x the average joint salary. With both parents at work we can busy ourselves raising a generation of latch key kids. Deposits are not a problem as they can be raised by the selling of a kidney, if need be, two kidneys, yours and the wife’s.

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  • brickormortis says:

    Unemployment rising massively, lowest interest rates ever, massive debt, biggest housing bubble in history, biggest recession in living memory, largest government debt levels ever, shrinking economy and house prices on the rise! Only the people of the UK (and sky news today!) could say this is “good news”. Now, where is my Soma? Anynbody?

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  • need-a-crash says:

    “From an economic standpoint, the rise in house prices since the early 1990s has been a massive transfer of wealth from young wannabe home-owners to the older generations who bought when the going was good. It’s worked like a tax on young people -and a windfall to large numbers of the middle-aged and old.”

    She says what we’ve always been saying.

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  • The prices were supposed to have been falling this time last year so this means they are the same price!

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  • tenyearstogetmymoneyback says:

    Its well worth looking at the comments on this blog.

    I thought number 23 expalins the situation really well

    “23. At 10:56am on 02 Oct 2009, complianceofficer wrote:
    There is one fatal flaw with these Nationwide and similar lenders statistics, which state they are based on an AVERAGE of prices of dwellings that have actually changed ownership with the help of a mortgage from that lender. That flaw will also affect even the Land Registry data on completed transactions registered, with a slight delay.

    What is conveniently overlooked in lenders’ vested interests in showing the housing market to have already bottomed and begun to recover, is that the substantial deposits now required by the vast majority of lenders are tilting the samples of completed transactions away from first time and low end buyers, many of whom typically have insufficient cash or equity in an existing property to meet the 10% to 25% minimum deposits so many lenders now stipulate.

    Whereas those buyers among those with middle priced and higher priced homes are far more likely to have either built up equity in their homes, enabling them to upsize or downsize in the mid to high price market segment using a mortgage, or are wholly cash purchasers or sellers exiting the housing market.

    In turn that mid to upper segment now forms a higher than usual proportion of the houses traded and relative to the housing stock.

    So, when comparing the average prices of the houses they recently financed with those in the past, Nationwide’s current average price figures are distorted upwards, and will not reflect the reality of the wider market including the lower end when or if lower priced dwellings can begin selling in numbers proportionate to the housing stock once again.”

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