Tuesday, June 7, 2011

Surprise early release

Halifax House Price Index

Annual change -4.2% Quarterly change -1.2% Monthly change 0.1% Average Price £160,519

Posted by dill @ 08:22 AM (3671 views)
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31 thoughts on “Surprise early release

  • Well spotted! I checked that just 15 mins ago…

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  • little professor says:

    Prices actually slightly up in May compared to April, but the Halifax use a 3-monthly smoothing to calculate the month-on-month rate, hence the 0.1% decline reported.

    Having said that, the month on month rate has been negative for 7 of the last 12 months, and the overall trend is inexorably downards. The annual rate of decline makes pleasing reasing.

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  • little professor says:

    *reading*

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  • ‘pleasing reasing.’ I’ll have one of those lp. Sounds like some HPC ‘fun’.

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  • “Overall, we expect a moderate improvement in the economy during the remainder of 2011, which
    combined with continuing low interest rates, is likely to support housing demand. This should prevent a
    further marked fall in prices and help to stabilise property values later in the year.”

    “we expect a moderate improvement in the economy during the remainder of 2011” – WHY?

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  • phdinbubbles says:

    The NSA is up from £162303 in April to £162344 in May, (or 0.03%). Not much for this time of the year.

    (All NSA, LR shifetd back to account for lag)

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  • khards,

    Both the govt and IMF are forecasting growth of about 0.5% per quarter for the rest of the year, so the Halifax are taking their lead.

    Personally, I am more skeptical. I believe the forecasts are still assuming that the underlying historical trend growth is still constant, whereas my analysis tends to the view that it has been slowing since the turn of the millennium.

    Zero growth would be a more prudent expectation, and a small contraction would not surprise me.

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  • So now all we need to do is educate the estate agents and vendors. They still are not dropping in line with the bank indexes, but I am sure that the banks will apply their own valuations when considering mortgage lending and prices will eventually trend lower. Vendors selling at 2007 high valuations will stay unsold for many years in denial.

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  • mark wadsworth says:

    Ah well, the annual figure looks pretty reliable, at least.

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  • Exeter is experiencing a mini boom in asking prices, I guess an Oligarch has just bought a house in London and we are feeling the ripple effect.

    New listings at the top end, but strangely many are empty. Repos or over-confident vendors?

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  • sibley's b'stard child says:

    The force is strong in this spring bounce.

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  • @phd

    Why has the land registry +0.8% figure for April been left off your nice shiny graph?

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  • I think over the coming months we’ll see more going to auction as:

    1. buyers are sick with over-inflated asking prices [based of EA over-egged valuation to get instructions]
    2. vendors are sick of their property flapping round in the market for 6 months+ at said over-egged valuation
    and then when they do get a concrete offer, this has to be re-negotiated because the lenders surveyors are
    valuing down.

    I predict a lot of smaller EAs going to the wall by Xmas.

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  • “Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances.

    Just *relatively* high inflation, then? But definitely not high enough to justify any kind of MPC response. No, no, no!

    This language demonstrates what a sticky corner the mortgage providers have painted themselves into.
    Threatened by bad debt, desperate to ramp property prices – but they are left with very few ways to spin this data..

    And the overwhelming costs of accomodation?.. might that be putting pressure on household finances?

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  • mark wadsworth says:

    SBC, which Spring Bounce exactly? From Halifax figures, average SA price was about £164k from October to January (the top of the DCB, dunno why December says £162k) and now it’s drifted back down to £160k.

    The rather less reliable nationwide shows average price since January 2011as follows:

    £161,211
    £161,183
    £164,751
    £165,609
    £167,208

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  • The apparent stability is completely artificial – if market forces were really at play the picture would be very, very different.

    Things will only change if the government and BOE come under extreme pressure due to a declining economy – which will happen, but it will take time.

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  • Quite interesting that despite the regime literally throwing the kitchen sink at the housing market, prices are still static at best.

    Sooner or later, as other economic problems begin to pile up, they will be forced to let go.

    And that will be interesting.

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  • sibley's b'stard child says:

    I dunno MW, if I recall the bullish commentators around the new year were trumpeting a much-antipated spring bounce to put all these silly notions of a HPC to bed. Unless, of course, ‘crash’ is the new ‘bounce’. I must admit, I don’t have my finger on the pulse of this economy malarkey.

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  • Is this release out early (following on from yesterdays Telegraph “credibility” article) so that the BOE can further justify on Thursday 9th June keeping rates on hold again at 0.5%?

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  • mark wadsworth says:

    SBC, personally, I have given up hope of a short sharp crash, and I expect a slow gentle decline in real terms for five or ten years. In any event, it’s not time to buy yet.

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  • I don’t know enough about their mix adjustment process to know how accurate it really is, but there are some things we know about the current market which are absolute fact:
    1. Volumes are way down on what they were
    2. Lenders currently require higher deposits so more transactions are being done by movers rather than FTB’s
    3. The top end of the market has been less affected and in many cases prices are still rising
    All of these things mean that the number of more expensive houses changing hands is higher as a proportion of the total. Will their mix adjusting really account for all of these factors and still be reliable, bearing in mind they are all making the “average” look more expensive rather than any of them cancelling each other out?

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  • 16. sibley’s b’stard child

    Sounds like you know too much about current economics already.

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  • @MW I’ve got 2018 pencilled in as bottom of the market, glad to see you’re thinking along my lines now.

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  • Like you I was hopeful for a sharp correction but gave up on that towards the end of last year when it was clear the ConDems were backpeddling on it.

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  • mark wadsworth says:

    Alan 540, the bad news is that the Lib-Cons have taken a leaf out of the 1973 – 75 house price crash book and decided to try and have inflation approx. equal to the amount by which house prices are falling in real terms (so that they stay flat in nominal terms). I don’t think they’ll succeed, but that might just be wishful thinking on my part.

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  • sibley's b'stard child says:

    MW @ 18

    I guess I must begrudgingly agree. Certainly Osbourne, Cameron and Shapps were making all the right noises initially but then they were obviously reading from the wrong auto-cue. That particular glitch was soon patched-up, mind. What I don’t ‘get’ is that they had no reason to pander to the FTB tranche once they gained power so why bother in the first place?

    In any event, the Localism Bill, MMR debacle and FTB Summit soon put paid to any silly notions that they might favour a crash and recovery in time for the next GE.

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  • will,

    Too many people trying to sell their house have a minimum they have to ask – either to clear their NE, or to give them the required equity percentage for the mortgage on the place they want to move to.

    The EAs have quite a vested interest in lowering prices now, just to get transactions on the books.

    When the banks run out of patience with those in arrears, forced sales will spur the fall..

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  • UT,

    ‘Too many people trying to sell their house have a minimum they have to ask – either to clear their NE, or to give them the required equity percentage for the mortgage on the place they want to move to.’

    Add in their pensions of course, for the luxury retirement they have promised themselves.

    With transactions and mortgage applications running at about half of 2007, I think we still have the upper hand.

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  • mark wadsworth says:

    The theory that people can’t sell because of NE is an interesting one, but it doesn’t really stack up.

    According to HM Treasury, about half of homes are mortgage free, a few per cent are in NE and the rest is a straight-ish line, i.e. a tenth of homes have LTV of ten per cent or less, ten per cent have LTV between ten and twenty per cent and so on.

    Assuming that “a decent deposit” is thirty per cent to get the low interest rate (and ignoring down- and upsizers), that means that eight-five per cent of home owners could sell their house, clear their mortgage and still have (at least) a thirty per cent deposit for the new place.

    Transactions are down by more than fifteen per cent, ergo this may be one factor but certainly not all of it.

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  • MW – the situation you describe will likely be made worse by the fact that people tend to move more when they are younger because they get married, need space for a family, get promoted and earn more etc. whereas a higher proportion of older people have lived in the same house for years. It will be the former who likely bought at or near peak so more likely to have less/no/negative equity. So those who can move don’t want to and those who need to can’t.

    I would ask if you had any suggestions for an alternative tax system that might sort that out but that would just annoy Uncle Tom…

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  • mark wadsworth says:

    TT: “So those who can move don’t want to and those who need to can’t.”

    Yes that is very true, so my guess that only 15% of homeowners are adversely affected is probably an understatement.

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