Tuesday, Dec 01, 2009

+0.5% MoM +2.7% YoY

Nationwide: November Index

Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:
“The monthly rate of house price inflation was unchanged in November at a seasonally adjusted 0.5%,
leaving the average price of a typical property 2.7% higher than a year earlier. At £162,764, the average
house price is at a similar level to where it was in early 2006. The 3 month on 3 month rate of change –
generally a smoother indicator of the near term trend – dropped to 2.8% from 3.5% in October and 3.8%
in September. This suggests that house prices are now rising at a more moderate pace than in the spring
and summer months, when they experienced a very strong bounce from the early 2009 lows."

Posted by phdinbubbles @ 07:25 AM (5303 views)
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46 Comments

1. phdinbubbles said...

"Prices have also held up owing to few properties being put on the market." cries the BBC, without bothering to take two minutes and two brain cells to check if they're reporting a falsehood as fact and acting as estate agents' pimps.

Tuesday, December 1, 2009 07:56AM Report Comment
 

2. alan said...

Prices are firm. Could it be possible that some temporary restructuring is going on in the market?

Suppose that instead of selling the house to retire, Mr & Mrs X decide to buy their home in Devon outright and let out the house in Greater London/Essex borders. They have both left work with redundancy pay plus index linked pension from "the old days" and are flush with cash at the moment. There is no benefit in putting it into their building society as the return is around 1%.

They leave the house with their kids, just back from Uni and paying the parents a less than market rate. The intention of Mr & Mrs X is to sell sometime in the future because in the longer term house prices only go up.

Meanwhile, EAs in my High St have signs in the window inviting vendors to sell. Fewer repossessions are coming through.

Tuesday, December 1, 2009 08:42AM Report Comment
 

3. mrflibble said...

I see this news is taking pride of place as the first article in the BBC Business section.

Thatcher once said, "You can't buck the market." Brown has shown he can, at least for a while.

But as Newtons Law points out, "Every action has an equal and opposite reaction."

Instead of housing being down the 40% it should be, housing is down 10% and our currency is down 30%.

We got the fall, just not in our own currency, which is useless to 99% of us!

Tuesday, December 1, 2009 08:59AM Report Comment
 

4. Steve said...

Last month it said 0.4% gain in October. This month it reports a 0.5% gain in October (as well as November). Can we trust these numbers? We must remember that since sterling has fallen off a cliff over the last year, due to the decision of the government to prop up house prices rather than sterling and screw all us savers, house values have actually gone down compared to the euro, dollar & yen. It's just that sterling is doing worse than the housing market.

Tuesday, December 1, 2009 09:05AM Report Comment
 

5. luckyjim said...

"Prices have also held up owing to few properties being put on the market."

PHD - Which part of the statement don't you agree with ?

Tuesday, December 1, 2009 09:33AM Report Comment
 

6. phdinbubbles said...

LJ
The few properties being put on the market bit. When I put postcodes into www.home.co.uk it gives the number of properties on the market in that area going back to Jan 2007. In most areas I look at the number of properties on the market is about the same level as 3 years ago.

Tuesday, December 1, 2009 09:55AM Report Comment
 

7. matt_the_hat said...

I think house prices are like wages, never go down in nominal terms. Only Very few of us with the ability to understand inflation tax will see the drop. The rest will just see higher interest rates with the comfort of marginal rises in house prices.

Tuesday, December 1, 2009 10:01AM Report Comment
 

8. smugdog said...

Just so that I can keep up with the spin you guys put out, at what point do you see us on the "bubbles" graph now?

Tuesday, December 1, 2009 10:14AM Report Comment
 

9. luckyjim said...

PHD

I see. But if the number of houses on the market is steady, the number of houses coming onto the market must be no greater than the number of houses coming off the market.

Tuesday, December 1, 2009 10:23AM Report Comment
 

10. str 2007 said...

Also if there are the same amount of houses on the market as 3 years ago, that also blows the theory of 'when lots of houses come to the market, prices will drop' doesn't it ?

Tuesday, December 1, 2009 10:26AM Report Comment
 

11. timmy t said...

luckyjim - that sounds about right to me... I've lived in my current house for 11 months and there are about 6 houses within half a mile for sale, 4 of which were for sale when we moved in.

Tuesday, December 1, 2009 10:29AM Report Comment
 

12. mrflibble said...

Just so that I can keep up with the spin you guys put out, at what point do you see us on the "bubbles" graph now?

We have just left the bear trap and are now on our way up the Mania Phase, fill ya boots people...

Tuesday, December 1, 2009 10:32AM Report Comment
 

13. luckyjim said...

smugdog

I've never worshipped the chart but I'll give you my view.

Houses are still overpriced and will fall at some point in the future. But not for many many months and possibly years. This future fall in prices cannot be regarded as part of the same event. Even if it happens in late 2010 I think you would have to see it as a 'new' crash. The HPC of 2008 is over.

The question is, what does the potential buyer do about it ? If you are renting, do you carry on renting and wait for the new crash ? Or do you buy and plan to get out again just before the new crash happens ?

Tuesday, December 1, 2009 10:48AM Report Comment
 

14. timmy t said...

The bubble chart is great but too simplistic. mrfibble hit the nail on the head when he said we have had 40% falls, just not in Sterling. The pain could have materialised as a HPC or in some other way, and it's been engineered to happen elsewhere to keep homeowners (Voters) happy. Mark Wadsworth is right about Home-ownerism - whatever it takes. Our pain will come in the form of inflation and a drop in standard of living.

To answer your question smugdog, I genuinely think we are at the "return to normal" phase, but I don't think actual prices will tank, the price of everything else will rise - hence the chart being too simplistic.

Tuesday, December 1, 2009 11:01AM Report Comment
 

15. mark wadsworth said...

LuckyJim "The question is, what does the potential buyer do about it ?" Keep hanging on renting, is the answer.

MTH, maybe houseprices never do go down in nominal terms - except in Northern Ireland and Ireland, down twenty or thirty per cent so far.

Timmy T, thanks, the problem is you can never find anybody who admits to being a Home-Owner-Ist, they all talk about "protecting hard working families from the spectre of repossession" or "protecting the countryside for future generations" and "once confidence is back in the housing market the economy will pick up again" and so on, making it all sound very worthy and noble, and they all hotly dispute that they are ruining the economy for everybody, including themselves.

Tuesday, December 1, 2009 11:21AM Report Comment
 

16. smugdog said...

A watched kettle never boils.

Tuesday, December 1, 2009 11:25AM Report Comment
 

17. timmy t said...

Smuggy - yes it does. I put the kettle on this morning, watched it, and sure enough, it boiled.

Tuesday, December 1, 2009 11:56AM Report Comment
 

18. bellwether said...

The unreconstructed House Price Crashers will keep this site going but only at the expense of their never learning.

The "value" of land and house prices will fall hard and for a long time. If this was easy to see in 06/07 when everything was rosy it is so plain now at to be almost uninteresting.

The only question worth asking is whether this long term loss in value will be expressed by a fall in the prices of houses, a fall in the relative value of our currency, or a bit of both.

At present it is impossible to say but I'm afraid short term movements of actual house prices are beside the point and indicative of nothing.

Tuesday, December 1, 2009 11:58AM Report Comment
 

19. watching with amusement said...

I was chatting to a mate of mine the other night, who certainly isn't a housing bull. He had just re mortgaged, and, due to the current low interest rates had managed to secure a very good deal. His reaction was to suggest that I should buy - after all, I wouldn't be paying very much on my mortgage. Not bad reasoning, until you ask what's going to happen in four or five years time to repayments when interest rates will have risen!

So, whilst there are plenty of people about thinking that buying at the moment is cheap, house prices will certainly not fall. The irony is that whilst low interest rates make house buying seem cheap, the effect is actually the opposite. Whilst my parents were hit for something astronomical such as 16% in the early eighties their debt was soon inflated away. However, if you buy when interest rates, and hence inflation, are low, your debt won't be inflated away. Should inflation raise it's ugly head, then interest rates will have to go up. And if you have based what you can afford around when interest rates are incredibly low, then it's going to get very messy and very painful for you.

So - it looks good to buy at the moment, but it couldn't be worse...

Tuesday, December 1, 2009 11:58AM Report Comment
 

20. cat and canary said...

...I absolutely don't believe the notion that a trashed currency can support house prices indefinately. Garbage

I take a good look at where we are, stimulus levels etc, and consider that the half of the banking losses so far have been dumped on the public, are things getting better or worse for the public?

I can't remember his name, but 6 months ago I watched an interview with some big cheese from the IMF mock and scoff at the newcaster for even suggesting "Britain lose its AAA rating"... and now look, warnings are being sounded everywhere you read.

There isn't a definitive study (IMO) of how much cuts are required after next election. I wonder why...

IMO a debt crisis is coming.

Furthermore, if you try to inflate away the problem, then either then companies have to rapidly raise wages (which they wont) as the world recovers and the UK is still limping along. Or houses become more and more expensive compared to disposable income.

Tax rises, higher inflation and inflation spikes, public sector job cuts, credit card write-offs, AAA rating downgrade, the second wave is coming and fast.

Tuesday, December 1, 2009 12:00PM Report Comment
 

21. Rimmer said...

Smugdog

I was semi bearish on the house price thing i expected a fall but wasnt sure how much or when, i do think the chances of a sizable house price crash are greater now than the last 3 years, the reason for that is the fundamental that has dogged ( a pun there ) the UK economics for a while and is coming to a head, by that i mean debt..

Currently personal debt has been absorbed by national debt and by that what i mean is interest rates for all laons have been kept artifically low by UK PLC taking the pain on its back, well ever wondered Who has lent the UK PLC the £ 3 Trillion pounds it current owes, more importantly how do you think those countries or institutions feel about UK PLC printing itslef some more/.

Either taxes will rocket and we will all be poorer and not able to extend / take mortgages or interest rates will rise and we will be poorer and not able to extend /take mortgages..........My bet is on a bit of each

Tuesday, December 1, 2009 12:10PM Report Comment
 

22. jack c said...

At this juncture it is probably worth re-visting the following:- www.lovemoney.com/news/manage-your-finances/were-all-living-on-fantasy-island-2889.aspx

Fantasy Island (published in May 2007) was written by two influential pundits, Larry Elliott and Dan Atkinson. Elliott is economics editor of the Guardian and Atkinson is his opposite number at the Mail on Sunday. Interesting to see how much of their Cassandra-like warnings from 2007 are playing out

Tuesday, December 1, 2009 12:20PM Report Comment
 

23. smugdog said...

I'm disappointed, most here seem to be giving up the ghost, or perhaps finding other ways to explain that a massive fall has occurred but in a way that we just cannot seen! Yeah, right!

Tuesday, December 1, 2009 12:23PM Report Comment
 

24. mrflibble said...

19. cat and canary: ...I absolutely don't believe the notion that a trashed currency can support house prices indefinitely. Garbage

I agree, and if Brown keep pushing the market we will end up with a cataclysmic crash in both currency and property, followed by 10-20 years of austerity no doubt. If the currency goes pop then the housing market is toast as we will be forced to raise rates to double digits to support the currency. The markets are not going to be very forgiving if we try the inflation trick either.

Brown has wasted two years and £200 billion so far and we are in a worse state now then we were in in 2007. We cannot recover because we haven't yet crashed, but if we had what would we be recovering to? Another debt fuelled housing boom? I fear our recession is yet to come...

Tuesday, December 1, 2009 12:33PM Report Comment
 

25. jack c said...

@smugdog - unfortunately your input to the debate is of no value as typified by your earlier post

"15. smugdog said...A watched kettle never boils. Tuesday, December 1, 2009 11:25AM"

No problem with a Bull on the board but the input has to be constructive and stand up to debate.

Tuesday, December 1, 2009 12:36PM Report Comment
 

26. phdinbubbles said...

LJ
"I see. But if the number of houses on the market is steady, the number of houses coming onto the market must be no greater than the number of houses coming off the market."

Yes, but there are various reasons for people taking their houses off the market. A big reason at the moment is that people can't get the price they want so they're taking them off the market to sell at a later date when prices will be supposedly higher. The time on the market is well above average for most areas indicating that the quantity demanded at today's price is bellow the quantity supplied - i.e. a surplus - the opposite of a shortage.

That suprplus keeps getting bigger. This is the age of the house hoarder; enabled by low interest rates and sentiment that hpi will return. Can that go on indefinitely? Maybe, but it's not wot I reckon.

Tuesday, December 1, 2009 12:38PM Report Comment
 

27. jack c said...

phdinbubbles - a couple of months ago Uncle Tom and Mark W carried out some serious number crunching which backs up the point you are driving at - a search on the site will throw up the thread and numbers.

Tuesday, December 1, 2009 12:47PM Report Comment
 

28. phdinbubbles said...

@jack c
You've caught me plagiarising the methodology of people that know what they're talking about!

Tuesday, December 1, 2009 12:50PM Report Comment
 

29. alan said...

@phd,
Yes, a house hoarder (interesting term). Waiting till prices improve before recovering the windfall profit which will become a pension pot or repay a MEW. I know loads of them! Its part of our national home owning culture, too!

Would their money be better invested if they sold out and re-invested elesewhere? "What is safe?", I hear them say.

We, the population, are being fed a mantra of "things are getting better", "soon be back to normal", "nearly out of recession". It's not hard to see things from the house hoarder's perspective through those rose tinted glasses.

Tuesday, December 1, 2009 12:58PM Report Comment
 

30. jack c said...

phdinbubbles - from your earlier post - "there are various reasons for people taking their houses off the market. A big reason at the moment is that people can't get the price they want so they're taking them off the market to sell at a later date when prices will be supposedly higher" - I'm actually in the middle of carrying out some work for a couple who told me this (word for word) last week !

Tuesday, December 1, 2009 01:01PM Report Comment
 

31. shining wit said...

Smugdog...

What you or I or what anyone else syays is pointless. Gordon Brown has spent about £100 Billion pounds supporting the property market.

If anyone is stupid enough to think that you can actually buck the market then it's up to them. Anyone who can not see that the wool has been pulled over their eyes then they must be the same sad souls that think that our wars in Irag and Afghanistan are anything other than terrorism recruiters and generators.

We are in for a whole decade of lost economic growth because people still think that producing wealth has more to do with how much their house is worth than how much income we create by MAKING THINGS !

The very idea that house prices can rise with the economy in tatters and a former marxist supporter in charge of the treasury must surely have been smoking the finest northern lights.

Tuesday, December 1, 2009 01:08PM Report Comment
 

32. smugdog said...

Jack C, my, your little world is so bitter and cold (My, he's an angry elf).

Has it always been like this or is it since your predictions have all turned to dust?

Pehaps your fellow "number crunchers" can help you get over yourself and put an alternative spin on reality. LOL!

Tuesday, December 1, 2009 01:08PM Report Comment
 

33. The Baldman said...

The trap has truley been sprung. Buy quick before recession tax increases and government spending cuts reduce prices

Tuesday, December 1, 2009 01:20PM Report Comment
 

34. timmy t said...

smugdog - predictions haven't turned to dust, the problems have been bottled up and magnified for unleashing at some point down the road. Watching with amusement sums it up nicely @ 18

Tuesday, December 1, 2009 01:40PM Report Comment
 

35. Adskirockski said...

Sentinent on here is turning towards house prices stabalising in nominal terms.. Ripe time for a steep crash me thinks.

Tuesday, December 1, 2009 02:37PM Report Comment
 

36. the number cruncher said...

shining wit @ 29

Marx was a brilliant economist for his day and much of what he predicted has come to pass

Don't fall for the old cold war rhetoric that being a Marxist is bad - it is not - I am a Marxist - but I have read Marx and taken the time to understand his writings.

Gordon Brown's problem is that he is not a Marxist. If he was a Marxist he would not have allowed this bubble to occur - only a corporate capitalist would allow that.

Marx was a sponger and a bit of a git in his personal life and I doubt I would liked him.

Tuesday, December 1, 2009 03:00PM Report Comment
 

37. ontheotherhand said...

Do you believe that all the corporate loans and mortgage pools etc. on our banks' books have been marked down to reality fully? If only their good ones get sold on and we price the rest of their loans based on those prices, is that sensible accounting? Zombie Japan allowed its banks to hold their junk for a decade at cost price, but it fooled nobody.

Likewise, on a dribble of house sales far below the volume required for a functioning market, do we price all the rest of the stock? The reality is that if you HAVE to buy now, the prices are representative, but if you HAVE to sell, I don't think they should give much comfort.

When sales volume comes back to normal as well as the % of all purchases by first time buyers, I know the market is functioning and I'll take a view. If the price then shows some chance of tax free capital appreciation to offset maintenance obligation, and rental yields are back up at 8%, then I will probably buy something to live in for the next 10 years.

Tuesday, December 1, 2009 03:02PM Report Comment
 

38. the number cruncher said...

smugdog @ 32

Smugdog - as my monica suggests I am a bit of a number cruncher and once upon a time I did a lot of 'Crunching'.

One observation I would make is that steady states exist that are suddenly transformed, often quickly - so called chaos theory. Very common in my field of scientific study, which was population dynamics and gene flows through these events.

You would be surprised at how economics follows such natural ecological cycles

The other is that most humans are incapable of visualising events unfold over long periods and hate the idea that their lives are governed by such economic cycles and super-cycles. The human mind needs to feel it has some control over events and can 'buck the trend'. This is why we cannot take heed of the problems we face today.

While I enjoy your iconoclasm and think all ideas should be challenged, I would welcome your opinions, after some reflection, on the 2 issues I have outlined.

Tuesday, December 1, 2009 03:13PM Report Comment
 

39. shining wit said...

the number cruncher @ 36....

I wasn't running marxism down. I happen to think that the chap was right about all manner of things, it's just this shoddy government and it's origins and how a pidgeon chested bunch of champagne solialists have spent £100 billion of money that hasn't even been made yet, on proping up the housing market.

I do think that quasi marxist economics (and I include Keynes here) is a ridiculous place to be. Marx well have been a 'brilliant' economist but the main thrust of his theories rely on the removal of the capitalist system. Attempting to manage the economy with larger and larger 'macro' economic stimuli just de-stablises the 'real' economy by simply knackering the level playing field.

Just spending 'capitalist' money in a hap-hazard way is not going to do anything other than feck the entire economy for years. I certainly swing well left of centre, and it's a very sad thing to have to say, but one more term of Gordon 'boom to bust' Brown and this country will be in a worse mess (and possibly already is) than when Jim "Dithering" Callahan and Dennis "stuff the economy" Healey were run out of town.

Tuesday, December 1, 2009 05:09PM Report Comment
 

40. smugdog said...

On reflection Number Cruncher, you appear to be an extremely clever chappy indeed, and on reflection, I’m probably not so.

I don’t study and scrutinize charts or data, I just watch and listen to a broad range of people and opinions. Perhaps if we paid a little less attention to the wisdom of charts, then we may not be in the mess that we are in.

Sometimes, it might be worth just putting your slide rules back in your blazer pockets for once and looking around you.

It’s a formula that has worked well for myself and my team and I will continue to abide by it thank you very much.

If it’s a condition of posting that I provide wise and wonderful analytical views and theories, then perhaps the people should vote me out of your select society - Smugdog out!

Until then, I will continue to antagonise you and the other ‘angry elves’ if that’s how you see it.

Please keep up the good work, you are so very entertaining.

Tuesday, December 1, 2009 06:34PM Report Comment
 

41. bluebeach said...

Smugdog........... they dont like it up em!!!!!!!!!!!!!!! Keep calm an carry on ya old mutt

Tuesday, December 1, 2009 06:41PM Report Comment
 

42. smugdog said...

Number Cruncher, my response @ 40 is a generalize one. Please do not take offence as its not aimed at you - on reflection.

Tuesday, December 1, 2009 06:47PM Report Comment
 

43. tenyearstogetmymoneyback said...

Interesting comments especially Watching with Amusement at 19

On this subject I have said before how my parents double glazing cost more than their house
(bought in 1967 for £5000). Reading Watchings comments made me think how many people
today will have paid off their mortgages before they retire ? Perhaps that will be the norm, stay
in a house until you retire when you have to drastically downsize because you haven't actually
paid off any money on it. When did interest only mortgages first start (JackC might know)

Tuesday, December 1, 2009 07:53PM Report Comment
 

44. the number cruncher said...

Smugdog

Thank you for your kind words

Do not be so hard on the chaps with slide rules - those chaps with slide rules where used by nasty bankers only interested in short term profit - the slide rule users are well aware what the nasty bankers where up to. What we need is more independent chaps with slide rules on the TV and advising politicians. But nobody ever listens to smart arses - I should know!

shining wit

Keynes get a bad press, I feel so sorry that his name is used to justify the actions of stupid politicians to disguise their short term political advantage - he really was a good economist. The trouble is everyone remembers when he said you should use stimulate the busts - but they all forget that to be able to do that you must have first reduced the boom and put aside the reserves for the stimulus.

I am not convinced that labour has been any worse than the Tories in economic policy since the second world war. Our economy has been increasingly governed by American policy

Tuesday, December 1, 2009 08:22PM Report Comment
 

45. jack c said...

tenyearstogetmymoneyback - interest only mortgages really took off about 25 years ago but in the early days they were backed by a repayment vehicle such as a full or low cost endowment and maybe later by PEP's/ISA's. I would say that interest only with no repayment vehicle started in the last 10 years and many see this as a ticking time bomb - the FSA have had major concerns since 2002 but have done little to remedy the situation.

For more info (and a nice little graph) see http://blogs.thisismoney.co.uk/this_is_money_blog/2009/10/the-interestonly-mortgage-timebomb.html

Tuesday, December 1, 2009 08:51PM Report Comment
 

46. tenyearstogetmymoneyback said...

Thanks for the reply jack c. I wasn't really thinking of endowment mortgages.
I actually took one out myself in 1986 and back then the Endowment had to be
lodged with the Building Society to prove it was being paid properly.

I also had to take out mortgage indemity insurance, although on the plus side
the only other "fee" was for getting the valuation checked (was this house really
worth £24000).

Wednesday, December 2, 2009 11:34PM Report Comment
 

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