Thursday, July 8, 2010

June Index

-0.6% MoM +6.3% YoY

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Posted by phdinbubbles @ 09:12 AM (3985 views)
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49 thoughts on “June Index

  • sibley's love child says:

    Thank you, that’s put a distinct spring in my gait.

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  • happy mondays says:

    If the economy is only just chugging along ( with fiscal stimulas), & with the cut backs, unemployment rising, the laws of gravity, averages should come into play & prices should fall, whether a crash or long duration is anyones guess! But we do not play the game of gravity & averages, the vi’s can spin more garbage & print more monopoly money to keep it all going, but for how long? We shall see!

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  • brickormortis says:

    I can tell you that house prices are not rising and have not been rising in my area of shropshire for years (despite the media telling is about rising house prices and a 6-7% increase in prices YoY – utter crap!). There are spells of steady prices and refusal to budge and then the odd place her and there knowcking off a few %. There is oneagent in particular in one area of Shropshire (Harwoods) who seem to have loads of properties “reduced for quick sale” and the like. It seems like they are being honest with their clients to a greater extent than the rest! I would say that prices in this area of Shropshire are down about 12-15% from peak with no sign of rising. Houses are still selling in places but higher priced houses are not. It appears that London prices and the South are skeing reality and the cheap money that is there for those with big deposits keeping a sinking ship afloat a little longer.

    Houses listed at 15-20% below peak sell very quickly!

    Once again, without a rise in interest rates, house prices here will not fall much more than about 4% from here.

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  • Last year we saw a lot of people buying a new home without selling their old one, because they were not prepared to drop their price expectations, and borrowing was cheap. Many said they would rent out their old home, but my own observations suggest that most left them empty.

    This took a lot of supply out of the market.

    A more normal market is now prevailing again, however a lot of younger people who should be entering the market cannot do so, because they can’t afford the deposit or don’t have the income multiples; and don’t have a BOMAD option. They can only be taking up the slack in the rental market.

    With prices now on the slide, and no serious prospect of high capital growth, I doubt that the number of rental properties will increase, so expect a steady increase in rents over the coming months (especially in the mid market) as demand outstrips supply.

    Rents need to rise a great deal to provide an adequate return against a price stable market (let alone a falling one); and this will force many lower income earners to remain living with their parents.

    The bottom line is that the high price of property will cause a demand contraction, leading to falling prices, and an offload of property bought as an investment, especially when BTLers look at what has happened in the US, Ireland & Spain

    As interest rates are likely to rise before long, the British love affair with property may well be about to turn sour – with predictable consequences..

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  • brickormortis says:

    anyone else see the British Airways Credit card advert on the bottom of this page? 46.0% APR!!!!!…Variable!

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  • There isn’t enough sales volume going through for price indices to be reliable. What houses sell for is determined by the buyers and vendors circumstances more than market conditions. The crash that we need though will only really start to happen when rates start to rise. Unfortunately I don’t share Uncle Tom’s optimism on the timing of this happening though.

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  • happy mondays says:

    ut – As interest rates are likely to rise before long, the British love affair with property may well be about to turn sour – with predictable consequences..
    Can you elaborate on that please, can they not keep interest rates low for as long as they like? I know it may devalue the pound but that seems to be what they want, a cheap £..

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  • Thecountofnowhere says:

    Just looked on the BBC to see the news of the continued (real) recovery…but I can see no mention of this…it’s like it didnt happen

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  • 0.1% down April
    0.4 % down May
    0.6% down June

    See a pattern emerging and this in the prime selling months.

    In South Hampshire things in our boom town seem to have ground to a halt.

    Alot more properties on the market, mainly due to the fact that asking prices are peak 2007 + 10%. However not selling much atall now.

    Agents will get starved into realistic valuations in the end. Assuming of course people ‘need’ to move.

    I think there are alot that would move if they can achieve current levels but won’t sell below as ‘house prices always go up – eventually’.

    This I think will be a long slow drawn out process.

    The first stage of which will be to see ALL indexes go negative for 2-3 months. That will kill the ‘but land registry went up last month’ arguement.

    Let’s see if we achieve that first.

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  • UT
    Yes re: interest rates going up.

    The pound is pretty close to ‘normal’ levels against the dollar now.

    A move up in interest rates would makethe pound much stronger (unless Euro and dollar increase theirs) so IMO I really expect to see interest rates very low for a vey long time.

    Bear this in mind also.

    They used to move interest rates by whole % points (when they were much higher), then they started moving them in 1/2 point moves when they were around the 5% level.

    What’s to say they won’t start moving them in 1/4 or even 1/8 point moves. Just to shown direction without actually having any effect atall.

    I personally wouldn’t expect to see base rates anymore than 2% by the end of this parliament (4-5 years).

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  • mark wadsworth says:

    Sweet 🙂

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  • mark wadsworth says:

    The BBC’s rehash of this press release is title “House prices wilting in summer”. I blame the recent hot weather for the fact that prices aren’t rocketing.

    But now it’s cooled down a bit and the football is nearly over, surely prices will start rocketing again and we’ll all be rich beyond our wildest dreams?

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  • Timmy t, happy mondays, str 2007..

    There are several reasons why we will see IR’s start to rise..

    1) The BoE has a remit to control inflation using interest rates. Inflation is above target, and the theory that spare capacity in the economy would pull them back down has not delivered.

    2) Although the BoE is nominally independant, there is a lot of communication with Govt. It seems fairly clear that there is a desire to stress test the property market, so that if it is to fall over, it does so now and not just before the next election.

    3) The Conservative party is ideologically supportive of savers. Robbing them by having interest rates that are lower than inflation is seriously at odds with Tory core principles. DC frequently expresses his support for people who “do the right thing”

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  • mark wadsworth says:

    @ Uncle Tom, re your point 3), the Tory party adopts the usual Home-Owner-Ist line that “my house is my savings” so they are in a bit of a dilemma here – help savers and hurt house prices or vice versa?

    I think they’ll contineu Labour’s policy of “keep house prices up at all costs, even at the expense of savers”. Psychologically and in the short term, they are probably right, if IR went up 1%, then people might earn an extra few hundred quid on their savings but house prices would drop by (say) £10,000. They remember what happened to John Major.

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  • cat and canary says:

    Uncle Tom & Mark W, 12&13,

    Just to add one more opinion to the mix, I actually reckon the climb down on CGT from the leaked(?) 40% initial proposal to 28% shows a party that is wanting to slowly cool but not kill off the housing market. Whether they are successful at this remains to be seen.

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  • Last year we saw a lot of people buying a new home without selling their old one, because they were not prepared to drop their price expectations,

    And will they be paying CGT? Very, very doubtful.

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  • Think we are going to get a reverse of recession here. As per the BBC2 programme on Tuesday (how to beat the tough time) – most people who manage to keep a job are having better than ever with the sharp drop in mortgage/interest payment. I do not know how much of these extra cash was translated into lifestyle enhancement but history tells us that consumers are very good at upgrading their lifestyle but very bad at cutting back.

    So the recover and the CPI inflation will make recovery feels more like recession to many and the fun is just starting…

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  • MW,

    I actually think the notion of ‘my home is my pension/savings’ is much more a Nu Labour theme – ‘champagne socialist’ – than Tory.

    What did for John Major was the in-fighting in his own party, and the rather petulant way he addressed it.

    Interest rates are currently set at crisis levels – this is not normality, nor can it become so.

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  • I wouldnt worry too much about the BoE raising rates or not. The thing to look at is LIBOR and the short sterling contract. The market determines the rates not vice versa.

    Its does (technically) look toppy (ie IRs look bottomy). First time i have looked for a while actually, for obvious reasons. I definitely wouldnt bother staking anything on it – but the short sterling contract will discount the rate rises.

    I am not really sure we need an increase i n IRs anyway as a catalyst to any falls in HPs, but if we do then it will be the psychological fact that IRs have turned the corner that will be the issue. In other words the fact that there is only 25 basis rise wont be the issue, it will be the fact there is any rise, that will get people thinking.

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  • hpwatcher @ 15

    Very good point – I doubt it ever crossed the minds of most of them..

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  • techieman – I suspect you are right, and this just highlights how dumb people are. There is only way that interest rates can go from here and that is north. People who have bought expecting tham to stay put indefinitely were clearly barmy. Whilst I am not optimistic about a rise any time soon, I’d be willing to bet that the next move will be upwards and if that genuinely surprises people then they deserve everything they get.

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  • “I’d be willing to bet that the next move will be upwards”

    You’re not taking many chances with that prediction tt 🙂

    I think there’s a good chance of a rate hike, albeit a small one, between now and September. As techie points out, there’s a psychological element to this – even a 0.25% hike sends an important signal..

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  • Well guys not this month I’ve just seen that interest rates are on hold again for the 16th consecutive month 🙁 depressing I feel!

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  • How can they claim that the year will be flat for house prices when the current level is about the same as September last year and prices are dropping? At about 0.5% decline a month for the rest of the year, 2010 will give a 5% price cut.

    Their own data gives the lie to their predictons.

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  • “House prices fell by 0.6% in June. This followed a 0.5% decline in May.”

    So 2 consecutive months of decline: “As i said the time to be bullish about being bearish is when we have 2 consecutive monthly falls.” – various posts.

    http://www.youtube.com/watch?v=usfiAsWR4qU ………………or is it!?!

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  • maybe this works – sorry chaps am not really “technically” minded

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  • I ‘d like to see at least another monthly drop before calling this a trend. But it’s a start 😀

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  • Off Topic: Hi Techie ,Notice that the ES is near the 1061 level…AGAIN? 😉 Now,lets see if all the bad NEWS last week ‘suddenly’ isn’t as bad as ‘they’ thunk.

    On Topic: Not much to say other than I noticed an earlier article about the general intelligence of the average property owner. I bet most think that an 0.6% fall followed by an 0.6% gain brings them back to where they started. Not many people understand %…trust me, I’ve asked many people and most get the answer wrong.

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  • est – yes did notice it -i was [email protected] and higher and liquidated most around 1040, then scale down. i had 10% left which were stopped @ 1040, all basis Sep.

    STR 2007 mentioned you were saying 1070 though, fair dues to that. I am back in toe dipping short side mode now, looking to short more scale up.

    As for a 0.6% fall – hopefully we arent going to have a 0.6% gain so they wont need to scratch their heads and take out the splinters anyway!

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  • shining wit says:

    Margaret Thatcher – “There is no way in which one can buck the market.”

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  • mark wadsworth says:

    @ UT 17, nope. What did for John Major was he allowed house prices to fall.

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  • shining wit says:

    @ MW 17, nope. What did for John Major was the electorate wanted any credible change, it had nothing to do with property prices whatsoever.

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  • holding out says:

    House prices did NOT do for John Major. The tories were re-elected in 92 after the bulk of the falls had already happened – at that time he was already PM and had been since 90.

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  • Thanks TC for your kind words in the article!

    Well lets hope we are now both right and the cat falls down the manhole cover! [by the way i ignored the 0.1% fall, because i dont think that 0.1% is significant either way].

    Talking of which – this might bring some relief – it made me smile!! Cat lovers turn away now!!!!

    http://www.27bslash6.com/missy.html

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  • by the way TC – this news is no doubt gonna give your mate JD some more coverage….. I doubt if he will milk it though ;-)!!!

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  • Fair comment TC – all the best!

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  • “@ UT 17, nope. What did for John Major was he allowed house prices to fall”

    No Mark, you’re completely wrong there.

    JM became PM in November ’90. Between then and the election of April ’92 – which he won, house prices fell by 7%

    Between April ’92 and the election of March ’97 – which he lost, house prices rose by 6.5%

    The horrors of the last housing downturn didn’t register with the electorate in ’97; everyone was out of negative equity by then..

    ..they just wanted a fresh team in No.10

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  • OFF TOPIC: Hi Techie, no doubt you did well with your positions, but watching I’ve been watching Bloomberg and miraculously the term ‘double-dip’ seems like a scene from a Seinfeld episode rather than where the economy is headed. We came perilously close to the 1000 level, so close that I was almost convinced the market had turned but that 1061-1063 level is back, again starring me in the face. And, if I remember rightly:

    http://www.housepricecrash.co.uk/newsblog/2010/06/blog-rent-v-buy-29370.php

    11. estrader said…
    Techie, “you cant live in a Euro and gain advantageous tax treatment for investing in it.”

    You are mixing up your arguments just like the home-ownerists always do. One is for financial gain and the other is for peace of mind, security and redecorating, you figure out which is which 🙂

    About the ES – I didn’t say it is definitely going up. I want the market to crash because I want to buy, but to be honest, I’ve seen this before and it looks like another fakeout. *If the market hits 1070* and the media start reporting good news then watch for the 1110 mark. If it breaks above that it will keep going.
    Wednesday, June 30, 2010 10:42AM

    RC:miracle the

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  • happy mondays says:

    House prices have fallen 3 months in a row, the bbc have not mentioned this? funny that as we only need a sniff of a rise & the station is lapping it up…

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  • mark wadsworth says:

    Re John Major, a proper Tory told me that the main reason people dislike the Tories was because of Nequity and so on, so I’ll take that at face value.

    We know for a fact that the voters are happy to overlook all sorts of sleaze (see Labour 1997 – 2008, who made John Major’s lot look like choirboys, frankly) as long as house prices are going up, once they start wobbling (2008 onwards) all of a sudden we get all these scandals (MPs expenses, none of which was news to anybody, really).

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  • We want this specific house and can afford to buy it and wish to before anyone else does….regardless of price.

    This is something we have never debated on here……..

    Glad to hear TC that you are looking forward to moving in.
    With regards to the above, this is what estate agents really bank on for a number of reasons. If you had been unfortunate enough to come up against someone like yourselves, it would not only have meant sealed bids – but it also would have set a new precident for prices in that area, pushing up prices for that type of house generally.

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  • …moreover, credit is so free that people don’t really care whether they can afford it or not – as long as they get what they want. This situation has been encouraged by the absolute wrecklessness of BOE and their loose monetary policy.

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  • EST Yes I did ok thanks. But I always did think I had to take profits on that position. (obviously I didn’t take profits at the optimum place, but did get out of some @ 1015 and 1023, and the some on the way down @ 1040 and the rest on the way back up to 1040.

    Anyhow. Was expecting (hoping) for this recovery to re-short. I actually do think that if we break to the downside this time, that will be that – big falls. Am watching for a loss of momentum on the FTSE – poss target of 5160 ish, but thats an ideal [not long] . Its all going quite well at the moment, but as you know a fickle mistress.

    Nice call thoiugh that 1070.. Good luck!

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  • Hi techieman

    Back again, yes I thought Estrader had said 1070 at some point and he’s been good enough to paste it above.

    When you guys (mainly Estrader) refer to ES I take it that’s short for S&P ?

    Just wondered why we hadn’t started talking about the FU and DE instead of going to lengths of FTSE and Dow.

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  • Oh STR – no ES is the symbol for the S&P mini futures. Its alot smaller than the S&P index future size thats all. I never use the symbols because they just confuse things. EST can give you more info no doubt,

    The minis allow you to be more flexible with less funds, but as you know nowadays you can spread bet for quite small sizes, so i just spread bet. I think the minis do trade a bit differently but i have no real interest in that and anyway, if there were that different there would be some sort of arb going on.

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  • TC

    Shouldn’t you be in the Lake District wading through daffodils or was that wandering lonely as a cloud, I forget.

    Get a grip of yourself – no not like that. 😉

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  • Thanks techieman

    Showing my total ignorance of the subject there.

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  • Tee See @50..
    The poet is too strong within me…..and I don’t think I can survive the winter without a real fire!#

    Poet? – I’d thought of you more as a philosopher….a bit of an Immanuel Kant

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  • Have patience awhile; slanders are not long-lived. Truth is the child of time; erelong she shall appear to vindicate thee, boyo
    ….

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