Monday, November 7, 2011

+1.2% MoM, -1.8% YoY

October Index

Commenting, Martin Ellis, housing economist, said: "House prices in the three months to October were 0.3% lower than in the preceding three months. There was a 1.2% increase between September and October, according to the more volatile monthly figures, continuing the highly mixed monthly picture. Whilst there have been five monthly price rises, four falls and one month of no change, there has been little change in prices during 2011 overall."

Posted by phdinbubbles @ 08:10 AM (5588 views)
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22 thoughts on “+1.2% MoM, -1.8% YoY

  • 🙁

    At least the QoQ and YoY are still looking reliable!

    (Haliwide NSA, LR SA and shifted back)

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  • Well, I am genuinely surprised.

    I believe the average is being pushed up due to the London and the mix of properties outside of London. Where I live there are very few people who can afford to sell terrace and 2/3 bed semis. Most of the stock that is moving is detached 2/4 bed houses that are selling at less than 2007 prices. When this lot is averaged the value comes to more than the 2007 mix of flats, terrace and the odd detached property.

    I guess it is the low volume effect.

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  • I am deeply shocked – this should not be happening.

    Although, a few houses in my road have sold, but I still think this should not be happening! This time of year things should be quiet.

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  • Just to back this up with some FACTS.

    In this random postcode.

    You will see that 307 flats were sold in this postcode in 7 years. Average of 44 flats per year at a average of £92,568.
    See here

    You will see that in the last year only 14 sold at an average of £68,232
    See here

    Detached last year = 24 @ £223,375 here
    Detached 7 year average = 28 @ £223,511 here

    So you can see that the price and quantity of detached property is quite stable whilst the sales of flats has fallen to 1/3rd thus skewing the average price.

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  • Is QE working its magic?

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  • Is QE working its magic?

    Good point. There will be a mini-boom due to QE. The problem is when the economy starts going again (if it ever does…), as there will be loads of inflation, so much so that interest rates will need to rise quickly to keep it under some kind of control – which could well snuff growth out….

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  • mark wadsworth says:

    As PhD says, at least the QOQ and YOY are looking reliable. I’ve never laid much store by the monthly figures. Unless of course they show a big fall.

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  • mark wadsworth says:

    Khards, thanks for pointing out that house price reporter thingy on Rightmove, that is awesome, you can narrow it down to postcode sectors, so we can use this for doing valuations when we replace all existing taxes with LVT 🙂

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  • khards (Monday, November 7, 2011 09:05AM)

    Most useful

    North of England is definitely on downward path

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  • MW, Seems to me that the rich with equity can buy and sell houses between themselves at >250k.

    Poorer people can’t afford to move because of the costs involved and low levels of equity. I have family on both sides who have large amounts of equity who can’t afford to drop their prices because they want to pay back debt with their paper profit. #(Both in late 50’s and mid 60)

    Flats are just not selling at current prices along with people can’t afford afford to move for one reason or another. This does not affect the affluent sections of society >250k and London. Hence figures are skewed.

    If I get time I may try another 3D house price graph using volume and property type.

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  • @phdinbubbles thanks for the graph update – very useful. I have been thinking about the UK housing bubble and listening to people’s views (in person, which are very different to on here) and I am not sure we have even seen the bubble pop yet like in the USA or Japan. I gather it is a mixture of psychology and available money that drives bubbles and although the money is not there, I still believe the psychology is. What are your views on this?

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  • ontheotherhand says:

    I’m trying to figure out if slashed interest rates disproportionately help those with the biggest mortgages in relation to their total pay. What I’m thinking here is that the number people spend on food, heating, petrol etc. is more or less the same around the nation, and that people used what was left over for mortgages. So if my mortgages is going down faster than my necessities are going up, I’m fine. Does this help to explain why London and SE prices are holding up? The extra London salary was mostly used up until 2007 paying for much bigger mortgages – slash that cost of a mortgage and even though petrol costs more, you have money to spare again to throw at property?

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  • Numbers of transactions are still down by around 60% since 2007, first time buyers are still priced out, and the house price indexes are manipulated. (Commercial properties are now listed on Rightmove, in my area, amongst the houses, and many sold houses are not listed on the Land Registry website)

    IMHO the banks simply cannot let this housing market die, and they are being assisted by the Government.

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  • IMHO the banks simply cannot let this housing market die, and they are being assisted by the Government.

    Given that the UK boom over the last 12 years was essentially based on rising house prices – they simply can’t do anything else. But of course, high house prices are going to stop UK competing with the rest of the works – because the UK worker will need a larger wage to pay their massive mortgage.

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  • mark wadsworth says:

    OTOH: “the [amount which] people spend on food, heating, petrol etc. is more or less the same around the nation, and that people used what was left over for mortgages.”

    Oh yes, completely and absolutely, it’s one way of looking at Ricardo’s Law of Rent. Clearly, there are large regional variations in average wages but houses look pretty much the same wherever you are. You can plot house prices or rents (Y axis) against wages (X Axis) and you’ll find that house prices/rents are equal to [wages – cost of basic living] x a constant.

    So it basic cost of living for a household is £10,000 a year and the constant for rents is 2/3, then

    If wages in Area A are £20,000, then rents in Area A are £6,667
    If wages in Area B are £30,000, then rents in Area B are £13,333

    and so on.

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  • ontheotherhand says:

    Thanks MW at 14. So do you think that’s why London/SE prices have held up? Let’s say inflation has raised the cost of living for every family by £2k. In much of the UK the saving on the repayments to the average mortgage is less than that. In London/SE the mortgages are much bigger, and so tiny interest rates more than compensate leaving them able to stay put, remortgage, but in a big bid on the next place.

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  • sibley's b'stard child says:

    I think what disappoints me most is that Halifax seems to be following NW’s lead in losing its reliability. That’s a hefty MoM which leads me to believe the data is in some way skewed or, worse, totally falsified.

    Disgusted of Dagenham.

    BTW Jack, cheers for the e-mail i’ll get back to you when I get a moment.

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  • I have to say the figures (IMO) once again “defy gravity”

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  • mark wadsworth says:

    OTOH at 15, that’s a good point re London prices, I hadn’t thought about it that way but it does make sense. But it is also true that the Lonond/SE economy has not suffered as much as other parts of the country.

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  • Could we soon arrive at the point where we all have to pay higher interest rates because of Italy?

    Would that change the stats a bit?

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  • little professor says:

    HOUSE PRICE CRASH CANCELLED!

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  • All you need to know about the HHPI is that Lloyds mortgaging lending is currently decreasing at the rate of £5bn per annum. This makes me wonder on just how small a sample is their index currently based? In addition average LTV on new lending is only 60%! Therefore there can only be very minimal FTB and lower end finance going on. Month by month the HHPI represents a decreasing volume of higher end mortgage finance. This explains why the month on month data swings so wildly and why they are not seeing the same declines as the land reg.
    Time everyone started ignoring this data. The land reg figures may lag 2-3 months behind mortgage figures but they are definitive and include cash purchasers in a market seeing increasing auction sales.
    All I can say if the land reg is showing regions seeing 8.4% falls (NE) the crash is coming. All the big banks will be tightening mortgage policy at the moment as they need to watch their balance sheets incase greece/italy/spain goes pop.

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