Thursday, September 2, 2010

August HP Index

-0.9% MoM +3.9% YoY

This plateau isn't very flat

Posted by phdinbubbles @ 07:06 AM (3721 views)
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52 thoughts on “August HP Index

  • £169,347 to £166,507 is a 0.9% fall? My maths isn’t the best, but I have a great calculator. I reckon that’s a 1.7% drop????

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  • I think this will frighten a lot of people – especially if confirmed by by similar drops by other organisations.

    Perhaps it’s time to just let the inevitable take it’s course…..

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  • The Bank of England will be shouting QE! QE! next month …

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  • I really think it’s important that anyone on the B o E rate decision board be made to publicly declare personal property interests.

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  • Lolling back at the charts August is often a bouyant month so to see a fall is excellent news for all / most !

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  • … into minus YoY by the end of 2010… hopefully… and then watch it fall throughout 2011…

    …hopefully

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  • The Bank of England will be shouting QE! QE! next month …

    Yes, it’s not that house prices are dropping, but a sign of insufficient QE.

    Think I’m joking?

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  • sibley's b'stard child says:

    0.9%? In the sage words of Marvin Gaye; Can I Get a Witness!

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  • So, the cash buyers have all but dried up, the Bank of Mum & Dad is broke & the Eurotrash keeping the London
    market off its knees are done for. The Baby Boomers will have to capitulate sooner than I’d hoped.

    Squaring up quite nicely for a Happy New Year guys.

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  • Where’s Smugdog?

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  • mark wadsworth says:

    There’s a lot of pent up crashing to be done…

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  • @9 Mark – how do you paste graphs in?

    The Nationwide report has a couple of interesting charts e.g. interest rates people are paying are gradually creeping up, and more people on variable rates. Could turn nasty if the base rate goes up?

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  • sibley's b'stard child says:

    @ 8

    Sat in a padded cell with copies of yesterday’s Express front page plastered all over the walls; secure in the knowledge that house prices never go down.

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  • Doomwatch,

    Most potential FTB’s don’t have the BOMAD option, but for those that do, there’s a common theme –

    – the money usually isn’t given to them – it’s loaned.

    As house prices dip, parental bankers will be acutely aware that their loaned deposit money is first in the firing line.

    Suppose a BOMAD lends a £20k deposit for a £100k flat, and prices then dip by 10%. Their investment has been cut in two.

    Sure, they could argue that the pain should be borne by their offspring; but most would reckon the money lost.

    So my guess is that as house prices are widely seen to be falling (even if only gradually) the willingness of parents to dig deep will nosedive, and that will add to the decline.

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  • @ uncle tom @ 12

    This is spot on – as a smokescreen for self-interest the ‘smart parental thing to do’ will suddenly be to encourage saving a deposit and waiting for the upturn.

    Could make for a bit of a white knuckle ride though as there could be a bit of a charge into the market from pent up demand at moments when the tide appears to turn.

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  • Non seasonally adjusted figure for Aug is -1.7%!

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  • mark wadsworth says:

    @ Cyril, you’ll have to ask other people how to paste graphs in as I can only get it to work if I put it on my blog first (which is easy) and then I just copy and paste the code wholesale from there.

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  • mark wadsworth says:

    I note that SLC is now SBC. Excellent.

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  • yes it looks – as many on here have said that we have reached the tipping point now. Confirmation will be increases in downside momentum. Banks then re-invoke stricter lending criteria. And the downward spiral commences in earnest as people finally realise the game is up.

    people having to sell creates more downward pressure on prices overall – since all prices are determined at the margins.

    MW did you see Andy Burnham on C4 news – he actually mentioned LVT…. :). i suppose that puts a nail in the coffin of his perceived “electableness” by the plp.

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  • I’ve been reading this site for well over 5 years, continually convincing myself that the 133% increase in 10 or so years was unsustainable. Anecdotal I know, but we finally capitulated last week and put an offer in, which was accepted. SWMBO has been desperate for a house for a long time, as have our 2 kids, but me thinks that our offer on a house that has risen in value from by £160k with nothing been done to it for 10 years is indicative of the folly of, as MW would say, the Home-Ownerist notion of perpetual HPI as ‘a good thing’.

    -0.9% this month, with the distinct possibility of the austerity measures kicking in in the New Year, led me to retract the offer – after numerous sleepless nights and ‘discussions’. Even generously allowing for a 5% HPI over the course of 10 years, the houses we see here are still 15%+ over where they should be.

    I also get the feeling that there are others who are suddenly realising that the market is indeed turning – even the Beeb – which, if this gets picked up on properly, will hopefully feed into the public consciousness. Elliott Wave fear/capitulation anyone???

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  • @cyrill,

    get the link for the picture, in this case marks picture

    http://4.bp.blogspot.com/_XQBlCxLE0vw/TCrlunJxRRI/AAAAAAAAB0c/4mE4bl1FII0/s1600/19892007.png

    Then place it inside the following tags I have used quotes so that you can see it. Do not include the quotes outside the angle brackets:

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  • sibley's b'stard child says:

    @ MW, I evidently have too much time on my hands; nevertheless, a homage to HPC’s ex-resident troll/bull (perhaps he and Smugdog are the same).

    @ Ana Lytics, larvely, i’m positively replete on all this bear-food.

    Will Halifax be out tomorrow, perchance?

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  • OK, I will try again,

    img src =”http://4.bp.blogspot.com/_XQBlCxLE0vw/TCrlunJxRRI/AAAAAAAAB0c/4mE4bl1FII0/s1600/19892007.png”

    Make sure you use an open angle bracket before the ‘img’ – ie/ after the last quote ie/ .png”>

    The link must be within quotes

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  • sibley's b'stard child says:

    @ 17 Techieman,

    “people having to sell creates more downward pressure on prices overall – since all prices are determined at the margins.”

    Anecdotally, I mentioned last week that I was viewing a place (couple splitting-up) was on the market for 148k (paid 131k in 2004, natch). While waiting for the EA to arrive, pleasant neighbour happened by so we got chatting. Admitted that he was unlucky and bought his place next door in Nov 2008 (poor b’stard); he blanched when I told him the asking price of his neighbour’s:

    “I paid almost 40k more than that….”

    My heart went out for him.

    As you say, the margins and all that.

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  • Wow, it is almost impossible writing HTML code without it displaying!

    all code must be opened with an ‘<' and closed with a '>‘

    Links should be enclosed with quotes ie/ “http://link”

    To display an image:

    img src =”http://4.bp.blogspot.com/_XQBlCxLE0vw/TCrlunJxRRI/AAAAAAAAB0c/4mE4bl1FII0/s1600/19892007.png”

    to change its size add height=”Y” width=”X” where X and Y are in pixels

    img width=”320″ height=”240″ src =”http://4.bp.blogspot.com/_XQBlCxLE0vw/TCrlunJxRRI/AAAAAAAAB0c/4mE4bl1FII0/s1600/19892007.png”

    Let’s see if it works:

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  • sbc – did his heart go out to you for renting during a period of hpi caused by loose money? did his heart go out to you for paying an over inflated rent underpinned by hb? perhaps he was a ftb – then i take back the last 2 comments. fear of not getting on the ladder is a powerful motive.

    btw where was this?

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  • More anecdotal re BOMAD. I have a mate who bought in 2007 with deposit from his old man. He is now desperately trying to sell for 10% less than he paid but can’t, despite doing the place up. The old man now faces a very poor retirement. I think BOMAD’s were happy to loan when the perception genuinely was that prices only go up. The perception now, at least for anyone with half a brain, is that the deposit required for a FTB is probably about the same as the likely price falls that are now inevitable, wiping their equity out. Nobody in their right mind would land their kids with that kind of debt.

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  • sibley's b'stard child says:

    Techie,

    In fairness he looked (if a one can ‘look’ like one) a FTB; family etc was renting in Upminster but couldn’t afford the prices there (this was Rainham, Essex).

    In this context, I think my sympathy was justified; although – yes – just another sucker. Plus ca change.

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  • SBC then i share your sympathy. – sadly though that is how bubbles work – most get sucked in at the top, look at the growth in BTL mortgages!

    As Butter says :

    “Law #7: The amount of wealth created by a bubble is always less than zero.

    Bubbles create no long-term economic value. Often they encourage people to borrow to spend money on luxuries, rather than investing in capability that might in the future create value that could be used to pay back a loan, for example an education, a technology, a franchise…etc. That “waste” is how bubbles often end up destroying economic value.

    The reality is that it’s impossible to create wealth from nothing, that’s just re-stating the Second Law of Thermodynamics.

    Of course some people make money, but that’s just a redistribution of wealth, and in that regard, the recent Bubble and Pop in housing probably represents one of the greatest re-distributions of wealth in the history of mankind (mainly from poor people who got into the pyramid late only when lending standards dropped, to rich people who got in (and out) early and had the advantage of good credit scores).”

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  • Not to pour rain on the parade but I’m feeling a sense of deja vu. Do we all honestly think that the BoE will allow this decline in prices to continue? I don’t they we start with QE2 or even better they may shave 0.25 off the base rate. I really want this to be the tipping point but I feel like I can hardly dare to dream.

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  • What to park in your back yard, Wayne Newton parks his jet..

    Just testing this image posting lark

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  • bold text

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  • mimi – re EWave – according to the idealised theory. if we have started the next downleg we are looking at the c wave- which should itself be 5 waves. capitulation willl not happen until we have wave 3 of those 5 waves of c. therefore we could have a reasonable fall now for wave 1. another retracement that doesnt take out the high of the dcb, [and will probably be shallow – much shallower than the dcb from 2009], and then the 3rd.

    capitulation is then followed by a 4th wave to-ing and fro-ing (false dawn) then a 5th wave – despair phase. at some time between the 4th and 5th wave it will be worth buying because yields will be higher – even assuming falls in rents, and no one is going to pick the absolute bottom.

    thats the theory anyway! :).

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  • 33 techie

    any dates on this? I remember reading somewhere april 2011 is a big turning point

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  • @ 30. mystie010

    I too am scared to hope this is actually it – the one thing keeping me going now is the largescale coverage in the media of large price drops. If you book it, they will come.

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  • Mark – re April 2011 – that was probably S2R1 because it maps to Queen Victoria sneezing or something… 🙂
    In reality, there will be great bargains to be had based more on vendor and buyer circumstances than on what Nationwide or anyone else says is happening in the market. My advice would be to buy when you find a house you like for a price that’s reasonable and you can afford. That way you’ll be happy and your life can resume without fretting over house prices every day.

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  • mark april 2011 is the end of the special liquidity scheme – although i understand that some of the instruments can remain open untill October 2011 – but i think this is an area more for icarus / 666 / mark W. Also my understanding is that from January 2011, the BoE has the ABILITY to expand the sorts of assets it can buy from banks, but that ability is not a compulsion.

    thats why April 2011 is considered the big turning point – to the downside. Personally for the reasons i have just said i am not so sure. Jan 2011 might be the start of wave 2 and April 2011 the beginning of wave 3 (both with some lag) . All in all look at Butters work – i posted recently “seven immutable laws of bubbles” he gives a time period as does harrison in boom and bust. Prechter argues that the stock markets may bottom in 2016. so that would make sense too.

    However – i am a bit loathe to post this stuff because things can change, and counts can be modified (its just probabilities) and it i am the first to admit it does require some leaps of faith – but since mimi did ask , i thought it rude not to reply!!!

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  • Just saw this on the forum :

    http://www.housepricecrash.co.uk/forum/index.php?showtopic=147716&st=75

    “Unlike last time we have SLS/CGS running out and the Banks/mortgage lenders having to pay back £800bn by 2014 (1st installment due April 2011) and the associated massive mortgage funding shortfall, 600k public sector and 700k private sector jobs set to go, a turn from a policy of QE to fiscal tightening and the age of austerity, ongoing wage deflation (recent report found that the average income had fallen from about £28k to about £25,500 in the last 6 months alone), many of the cash rich have already spent their money, there is ongoing income erosion via rising taxes, general inflation, the cuts in housing benefits and the impact for BTL investing, etc., etc., etc. Not quite the same set of circumstances as last time. Also, this time the media are noticeably moving from denial (the phase they were in during the 07-09, 18% HPC) to a fear phase and are providing a daily diet of alarming news about the economy and property market. This time also people will rember that the last time house prices fell 18%-20% within 14 months everything turned very, very bad again – once bitten, twice shy, etc. ”

    they could extend it but i doubt they will.

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  • I knew I had seen something this chart shows it

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  • “This time also people will rember that the last time house prices fell 18%-20% within 14 months everything turned very, very bad again – once bitten, twice shy, etc.”

    Heaven knows, buyers might even start looking at what they’re getting for their money, how long it’s going to take to pay back the mortgage, the risk of defaulting due to loss of income, abillity to save at the same time as paying the mortgage, the return they’re getting from the rent on an investment property, etc, rather than just punting the family silver on houses because they’re a one-way bet.

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  • I did read somewhere, there will be several things happening during April 2011 which will drive confidence, property and many other things down.

    Lets see what we have

    there are the arm mortgages due to reset in april 2011 in the states
    Banks/mortgage lenders having to pay back £800bn by 2014 (1st installment due April 2011)
    Economic Confidence Model points to a downward trend
    other wave models do the same

    so there do seem to be many factors converging next year to start what?

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  • mark – i cant see what u have posted.. is it the armstrong cycle? [2011.45 low] it might be better to post a link – or is it just me??

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  • Mimi @ 20, it’s a very difficult call to make, even at the best of times and these certainly aren’t! On the one hand we all want a sense of security but how many people must be in the position of the neighbour in SBC’s post at 24? And potentially that neighbour will be blanching long and hard for years yet.

    We’re all victims of the mismanagement of the economy in one way or another. Ideally this country should have a stable housing market, especially as we Brits value home ownership so highly but sadly that stability has been sacrificed at the altar of high prices! I hope you manage to find the right place for you.

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  • techie must be the Dame Edna glasses..lol

    it is the Economic Confidence Model from princeton

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  • mystie010 “Not to pour rain on the parade but I’m feeling a sense of deja vu. Do we all honestly think that the BoE will allow this decline in prices to continue?”

    I agree we here have often derided the “it’ll be different this time” phrase for those who said the bubble would never pop. I wonder whether this fall in prices will be any different this time. Surely the BoE won’t /can’t afford to allow prices to fall now?

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  • I suspect that all the forward projected dates for ends to liquidity schemes, bank repayments, etc.. are pretty flexible, and will be revised if they look like creating a crisis.

    Once we have a steady price decline in place, market sentiment will propel it forward; much as it has done in the USA.

    I still think we are looking at a parabolic decline – steadily gathering pace until there’s a period of effective freefall..

    ..then the cash rich bargain hunters will pile in and blow their wealth, pushing the market back up until they run out of money..

    – And then comes the next correction..

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  • 44 need a crash

    I don’t think the BOE has the ability to stop a crash anymore, with the ratings agencies circling I don’t think the BOE can make any further mistakes by buying up whatever and pumping free cash into a dead system. At some stage the cuts will take place and interest rates will have to go up.

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  • Another point to remember is

    history has taught us governments always get it wrong, they react either too late, too soon, too softly, too hard, whatever they do they will get it wrong, the only difference this time is it is a global economy now rather than local level..

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  • mark -my computer just shows it as a broken pic. but the Economic Confidence Model from princeton IS the armstrong model.- introduced by str1 (so timmy has a point). but 2011.45 isnt april – its .45 of 365 days, so may something rather than april.

    unless things are very bad by next april – i dont think they will postpone the payment required. infact i think we should really hope they arent that bad, so they dont postpone it. if they do – then that will cause a blip up from wherever we are then.

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  • sibley's b'stard child says:

    @ 29 Techieman,

    “Of course some people make money, but that’s just a redistribution of wealth, and in that regard, the recent Bubble and Pop in housing probably represents one of the greatest re-distributions of wealth in the history of mankind (mainly from poor people who got into the pyramid late only when lending standards dropped, to rich people who got in (and out) early and had the advantage of good credit scores).”

    Nice summary; to be honest that’s why I have mixed feelings about the STR-crowd (of which there are many here); one hand, we all have a common vested interest, on the other…

    Still, that’s the why life is; so long as I can get a reasonably-priced home at the end of this f*cking mania, i’ll be happy.

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  • I’m like many others and have been renting for about 6 years….now i am at my wits end waiting for this bubble to burst only for it to be maintained!!! Now all this begins to happen and i’m in the middle of a move due to my landord wanting to sell, so not sure if to make the jump or wait another 12months!!!

    So sick of it all…..

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  • I don’t think it’s within the power of govt or central banks to prevent a crash in inflated asset prices, although they can sometimes postpone it. Most of us have been surprised how house prices have lurched back up, but the extreme financial policies were unprecedented. Whether prices can continue to be supported for much longer I don’t know, but it looks less likely every day.

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