Wednesday, August 4, 2010
House Price Crash Cancelled
UK house prices post surprise rise - Halifax
House prices rose 0.6% month on month in July, according to Halifax. Economists had predicted a 0.3% drop. Compared to a year ago, prices are up 4.9%. Halifax said that the mixed pattern of prices rises and falls so far this year was "consistent with a slowing market" and reiterated its view that prices would be "broadly unchanged" over 2010 as a whole.
Posted by little professor @ 08:32 AM (3994 views)
24 thoughts on “House Price Crash Cancelled”
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little professor says:
Full press release here:
http://www.lloydsbankinggroup.com/media/pdfs/research/2010/HousePriceIndexJuly2010.pdf
timmy t says:
If they are releasing research about the total value of the housing stock, why don’t they also do some research on the total value of earnings to give a true reflection of the price/earnings ratio, rather than base it on the average for full-time male employees? Doing it the way they do, you could have massive unemployment but houses would still look affordable – it’s so blatantly flawed, I’m amazed this never gets challenged.
mrflibble says:
British people continue to make rod for their own back…
sibley's love child says:
Ho-hum, I won’t be forwarding this to the wife then…
brickormortis says:
YOUR LOCAL MARKET IS MORE IMPORTANT THAN A BROAD OVERVIEW. how can we package a whole country into one sweeping decimal percentage? It is utterly meaningless when the numbers are so small and neglects totally regional variatoins which are all that matters to Joe Bloggs. And let’s face it, the bankers in london are back in business and gettnig big fat bonuses so of courses they will be throwing it all into property.
uncle tom says:
Thanks prof,
Have a look back in time at the early 90’s slump and you’ll also see quite frequent up-ticks between the falls
http://www.lloydsbankinggroup.com/media/excel/2010/04_08_10_historic_data.xls
– look at the sheet titled AllMon(SA)
The Halifax doesn’t get enough data to smooth out the lumps and bumps in transaction patterns – if their house price stats were smoother, they would be suspect..
monty032 says:
Dividing £167,425 by 4.75, the Halifax thinks that the average full-time male worker earns £35,427. That seems remarkably high to me.
Lloyd says:
The propogander machine is being rolled out to support the house of cards!
tom101 says:
Monty032, your certainly right there!!!! Perhaps a dual income….
I’ll not buy until i can purchase at a maximum of 3x me and the missus’s income. And certainly not during these uncertain times, i’d rather have the cash even though it’s fast becoming worthless!
doomwatch says:
2 words: median average
Only bigger places are selling at the moment, so the pyramid has turned on it’s head. Hence skew up of median.
timmy t says:
This is quite enlightening: http://www.statistics.gov.uk/pdfdir/ashe1109.pdf
Basically, the segment of the working population the Halifax use are the highest paid segment but represent less than half of the total workforce. I wonder why they do that?
sibley's love child says:
Just had a look at the article itself; they just couldn’t help but spin it somehow – quite how four drops out of the last six equates to:
“The Halifax figures confirm that what we are seeing is a stabilisation in the property market rather than, as some have suggested, the beginnings of a sharp correction,” said David Smith of property consultancy Carter Jonas.
I went into my overdraft slightly less this month than last therefore my personal finances have stabilised.
monty032 says:
Thanks for that Timmy T. Median male full-time weekly earnings are £531. Multiplied by 52 this gives £27,612 per year, which sounds much more reasonable. The mean earnings figure that the Halifax uses is right-skewed by a tiny number of (overwhelmingly male) FTSE-100 directors, sportsmen etc. But since they report mean (not median) house prices, which may be equally right-skewed, they are quite right to use a mean earnings figure.
However a more meaningful figure would be mean household income, including employed, self-employed and unemployed. Looking only at males working full-time is quite unrepresentative since they now make up less than half the workforce. About 1/3 of the workforce is women working full-time.
Guest says:
#12 “Mean household income” – why not use Median Household Income? In fact, if these average figures behaved themselves, as Halifax have assumed, mean average = median average = modal average (most frequently occurring income). The fact that these figures are so wide appart shows what a sham any aspiration to capture the average wage, or, for that matter, household income is!
uncle tom says:
I’ve posted this link before, but it’s the chart that tells it as it really is..
http://www.statistics.gov.uk/cci/nugget.asp?id=334
..and the reality is that more than half the households in this country would be overstretching themselves if they took out a £100k mortgage.
techieman says:
“Activity remains significantly lower than a few years ago with approvals 56% lower in 2010 Quarter 2 compared with 2007 Quarter 2.”
so this means that the numbers are more easily skewed.
BUT having said all that i think we have to take this on the chin a bit – i for one am surprised by this, because i honestly thought we had turned the corner!! Im not sure we can celebrate monthly falls (without analysis) and then analysis the number to death when they go against us….. can we?
str 2007 says:
Quite
As I’ve said before you really need to see all the indexes negative for 2-3 months to confirm things.
However if it was negative again next month there would be more downs than ups at Halifax.
str 2007 says:
In fact looking at Little Profs chart above.
We’re still 1.2% lower than January. So how’s that for a trend through what should be the best months of the year.
Those estate agents must curse elections and world cups.
Let’s hope they don’t have an Autumn like last year.
jack c says:
str 2007 – I have the Pope’s visit mid September as one of the EA excuses for the market being “flat” during Autumn 2010.
In the meantime some interesting stats on why Halifax (part of lloyds) like to see that index of theirs heading North
Lloyds Banking Group has maintained its 23% share of the gross mortgage market and reported a pre-tax profit of £1.6bn for the first six months of the year, compared with a loss of £4bn in the same period a year earlier.
The money the bank has set aside to cover bad loans fell from £13.4bn to £6.5bn.
It says whilst lending markets have remained generally subdued throughout the industry, the group has maintained a 23% share of gross mortgage lending.
The group extended £14.9bn of gross new mortgages to UK homeowners and £23.7bn of committed gross lending to UK businesses.
Group income was primarily driven by a strong performance in retail, which recorded a 24% increase in net interest income as a result of continued migration of mortgage business onto standard variable rate products and higher new business margins as assets are priced to more appropriately reflect risk, particularly in the mortgage portfolio.
As house prices have recovered the proportion of the mortgage portfolio with an indexed loan-to-value of greater than 100% has decreased and now accounts for 9.5%.
The value of the portfolio with an indexed LTV greater than 100% and more than three months in arrears has fallen nearly £1.5bn and is now £2.5bn, representing 0.7% of the portfolio, down from 1.1% in the first half of 2009.
The group says product, process and system harmonisation is underway with the first half of 2010 seeing deployment of the Lloyds TSB model of day time cash deliveries to Halifax and Bank of Scotland branches as well as the implementation of an improved online mortgage application process for mortgage brokers.
Average LTV on new mortgage lending stands at 60.3% in the first half of 2010. The average indexed LTV on the mortgage portfolio has improved to 53.7% from 54.8%.
Retail impaired loans decreased by £0.5bn to £10.5bn compared with 31 December 2009, and as a percentage of closing loans and advances to customers decreased to 2.8% from 2.9% at 31 December 2009.
The group says the reduction in the value of impaired loans is a result of continued affordability of mortgages and fewer unsecured loans entering collections. Impairment provisions as a percentage of impaired loans reduced slightly to 33.9% from 34.6% at 31 December 2009 largely driven by increases in house valuations in the mortgage book.
SOURCE http://www.mortgagestrategy.co.uk/lenders/lloyds-maintains-23-gross-mortgage-share/1016266.article
mander says:
It looks like the more media si trying to convince the public that house prices are rising the more will put off potential buyers. “Hurry hurry get on the property ladder now before house prices are rising even higher” era is gone. This is a victory for the young people as they have to go to school before they would need to worry about getting on the property ladder.
str 2007 says:
Hi jack
So even a 20 percent fall would leave them 20 percent equity on average.
jack c says:
Hi str 2007 – interestingly enough I organised a Halifax product transfer for someome a few years ago (basically the existing mortgage deal had come to an end and Halifax had a couple of fixed rates that the client could transfer onto). I could not get a deal anywhere else as the LTV would not allow it (negative equity in reality) however Halifax did not require a valuation and applied their own House price Index which boosted the value of the property way beyond what it would be on the open market. Essence of the tale I am rather sceptical about Halifax house prices figures.
Stevie Dee says:
@22. The figures do not match reality? It is a bit like zoopla, according to them my father’s semi bungalow is worth £469,000, although the estate agent’s who valued it a couple of months back, had it down for around £375,000 to £380,000. Marginal difference in value. Father is happy with his £469,000 on zoopla, it makes him feel happy lol.
str 2007 says:
Now that is an interesting tale Jack.
I take it this was back in pre2008 days and not recently.
I always thought it was in the banks interest to under value giving them greater margin.
Amazing what starts to happen when debt is sold on and you don’t need to recover it yourself.