Monday, February 18, 2013

A fools measurement of a healthy economy

House prices 'hit five-year high'

Prices jumped by 2.8pc month-on-month to reach £235,741 on average, with big monthly leaps of around 5pc recorded in the North West of England and Wales, Rightmove said. Prices are 1.1pc higher than a year ago and are just £2,115 shy of a February record set in 2008, showing the market is making a "slow but steady recovery," the study said.

Posted by hpwatcher @ 09:34 AM (4773 views)
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33 thoughts on “A fools measurement of a healthy economy

  • Yep, amazing isn’t it?

    A wrecked and zombie economy, with little prospects short to medium term prospects, and yet, property continues to do well – thanks to the government life support system and cheap money for the banks.

    All in all, UK housing is now a fools measurement of the state of the underlying economy.

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  • “The housing market has made a “sprightly” start to 2013, with asking prices reaching their highest levels for February since 2008, a property search website said on Monday”

    Lets keep this in context they are talking about “asking prices” and the information comes from vested interest Right-move. The people in the Telegraph comments section are hardly taken in.

    I had a conversation with a relative at the weekend who is (in conjunction with a solicitor) winding up his late parents estate. He has been given what I consider to be an accurate if not somewhat generous valuation in the current market for what was the family home – immediate reaction is “no way are we selling at that price, it’s definitely worth more than that”

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  • yes jack, but it’s sentiment.

    there is nothing i have more than speaking to an estate agent who is pushing the view that all is wonderful…and many of them do think that.

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  • Higher house prices with stagnant wages? Last ditched spin from the VI’s before their world implodes? They need all the succours they can get.

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  • the big problem is this

    the fundamentals are not there, hike prices to whatever they may just never sell. this is just total crap

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  • Checking out property over last weekend, amazing what people think their property is worth or they need to sell for that price.. Just being patient!

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  • Problem is that there are an awful lot of people with an awful lot of equity still. So owners are able to take advantage of the current cheap money and move up the ladder. At the bottom end, I guess there are still a lot of BTLers with enough equity to buy up properties aimed at FTB’s. As far as I can see one of only two things need to happen: we end this ridiculous government intervention and let IR’s rise (can’t see it anytime soon), or we have some change in legislation (or tax) which hits BTL and second-home owners (and I can’t see that anytime soon either). We are in the same boat as Europe – the way this plays out will be determined by politics, not by economics.

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  • I’m sorry but this is exactly what I’m seeing, eg place came on in east Berks last weds, we arranged to view on Sat, got a call Sat morning from the agent to say ours and five other viewings that day were being cancelled as someone viewed on Fri and made an offer that morning at the asking. £399k – last sale £340k in 2005. Seen quite a bit of that since the start of the year.

    Yes there are lots of overpriced dogs still hanging around from last year but fresh stuff moderately sensibly priced are selling at a premium over what they were going for in the autumn.

    It’s a pain in the erse quite frankly and with economic fundamentals so bad we are looking at holding off again till at least the autumn pending events in the bond markets, but barring a car crash, people with funding available seem just to have decided to get on with it and I can’t see that slowing.

    Feels like 2004-5 all over again when we all thought prices could NOT keep going up from those levels. May just be a south-east phenomenon (this village has a rail connection, 55 minutes to Paddington) with London madhouse spreading out but that’s how all UK property booms start.

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  • Jack C: “no way are we selling at that price, it’s definitely worth more than that”

    This will be much more fun when we replace a load of taxes with LVT, exactly the same Homeys will be bleating:

    “no way could we rent it out for the assessed value, it’s definitely worth less than that”

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  • It’s a pain in the erse quite frankly and with economic fundamentals so bad we are looking at holding off again till at least the autumn pending events in the bond markets, but barring a car crash, people with funding available seem just to have decided to get on with it and I can’t see that slowing.

    Yes, property has become a manipulated measure, at least as manipulated as the inflation measure; votes now depend upon it.

    Unless events seriously screw things up, sadly, I don’t really see the present trend continuing.

    UK people now put house price measures above all economic measures. The fact remains that UK housing is on life support, might continue well beyond my life time, unless something happens soon.

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  • I don’t really see the present trend continuing.

    I mean, I see the present trend continuing.

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  • I guess its the ‘things are so bad that they must continue being propped up’

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  • The £ is going down.

    Many are borrowing big, hoping inflation will get rid of future problems.

    Some professional investors & pundits suggest “buying THINGS”. Ideally, a store of value, not another pair of high heels, girls!

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  • sibley's b'stard child says:

    I’ve given up to be honest; it’s clear they are winning, backed by State mandate.

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  • Me too Sibs – I first posted a comment on this site the day that Lehmans collapsed, but was reading it for at least a couple of years before that. If I live to average age, that’ll be 10% of my life waiting for a HPC!!

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  • I suspect when the last hpc regular has thrown in the towel then prices will drop ! Looks like the ever bullish greenbay (remember him) was right in so much as the UK Government will go to almost any length to prop up prices.

    I’m still recommending to my children that they continue to build up a deposit and keep their powder dry but at this rate they will by making their first purchase in their 30’s not 20’s !

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  • the UK Government will go to almost any length to prop up prices.

    the primary mechanism of which any uk government now retains office.

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  • mark wadsworth says:

    In my darker moments I also think about throwing in the towel, but i still hope to put off the fateful day for another two years or so.

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  • Here we go ..
    Desperation, I would suggest, is driving up the asking prices measured in the Rightmove index. Desperation (or, of you prefer, realism) is then forcing agents/ sellers to cut those prices (as can be seen in the Home.co.uk index).

    http://www.planetpropertyblog.co.uk/2011/10/18/what-rightmove%E2%80%99s-3-price-rise-is-really-saying-about-the-housing-market/

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  • ‘when the last bear becomes a bull the market drops’

    stock analysts were bullish in october 2007

    in march 2009 just 3% of investors polled were bullish…which was the market bottom

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  • Dear HousePriceCrash Users,

    I’m afraid it’s goodbye from one of your keen readers. Having waited so many years for a market correction I am now convinced the correction will be drawn out over many years even the next decade. The government has made it clear it will prop up house prices what-ever the cost and will do so with our money.

    Having now saved up a decent deposit and watched the saving rates almost disappear, I have bought a house with a 5 year fixed rate mortgage of 3 percent. Such a rate several years ago would have been unthinkable and effectively means that the ‘price’ of purchase for the next 5 years anyway, is approx 25% lower than before the financial crash. Also considering the actual price I have paid was less than the purchase price 8 years ago then I figure this is as good as it gets.

    The FLS have obliterated saving rates but created fixed rate mortgages never seen before so I think I’m best moving to the other side of the fence now.

    So good luck to all, what do I hope for well I’d just be happy if prices stagnated for many years.

    So a last question to you all, if you now have a decent deposit maybe this is ‘as good as it gets’ as the only other option is paying over-inflated rent for many years to come…

    All the best JDL

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  • Jazzi_jdl,
    My very best wishes, and the best of luck with your purchase.

    The FLS have obliterated saving rates but created fixed rate mortgages never seen before so I think I’m best moving to the other side of the fence now.

    UK government clearly aren’t interested in putting money into the economy, the best way would have been through tax cuts and a good return on savings. But, UK government is simply going to inflate and inflate until everyone has been completely robbed of their wealth. UK government are bust, and need to get access to money from somewhere to fund their daft initiatives, their own expenses and their wages.

    Successive governments will *try* and keep house prices high, because it’s an obvious vote winner.

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  • I wonder this is rather the sign of high inflation that is about to happen. Each culture has different psyche when reacting to inflation.

    In Africa, when a hyperinflation starts, people tend to pile into foods. The price sky rockets, currencies devalued, and famine follows.

    In Asia, when a hyperinflation starts, people tend to pile into gold/silver and gems. The price sky rockets, currencies devalued, and civil war follows.

    In Britain, when a hyperinflation starts, people tend to pile into properties. The price sky rockets, currencies devalued, and homelessness follows.

    I said this a few times, people are not buying properties; they simply don’t want to hold Sterling Pounds.

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  • In Britain, when a hyperinflation starts, people tend to pile into properties. The price sky rockets, currencies devalued, and homelessness follows.

    Yes, but the funny thing is that people have been piling into property for the past 15 years. Prices are at all time high.

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  • When house prices peaked in the regions (I can’t speak to the position in London which appears freakish) they were probably 30% over valued.

    Depending on where you live house prices have dropped 10 – 15% since 2008 although more interesting than that has been the appearance of the occasional bargain – which simply did not exist in 2008. In 2008 (and for the years up to that) there was literally a wall of prices. Now there are cracks in the wall, visible if one spends more time looking at the small picture rather than the big picture.

    I see perhaps another 10% down on average as we grind down over a period of years, and in amongst this bargains will continue to crop up, probably with increased frequency.

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  • @sibley’s b’stard child
    @timmy t
    @jack c
    @mark wadsworth
    @Jazzi_jdl

    There seems to be a rising consensus here that HPC has been stuffed by the banks/government. Having been on the mostly wrong side of the argument for a long time, I’ll refrain from offering any reassurance … except that this looks fascinating from a contrarian perspective.

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  • QG – what would the contrarian perspective be? That

    the government has NOT kept interest rates low, and that had NOT delayed a rush of forced sellers onto the market?
    the government has NOT opened the gates to foreign ownership of property in London and the UK, and that has NOT kept prices up?
    the government has NOT run down the QE route like smackheads towards an opium den, and that has NOT kicked the whole can down the road until after the next election?
    the government HAS started to make some real cuts which might rebalance the UK economy by reducing tax rates?

    I am confused…

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  • sibley's b'stard child says:

    Absolutely QG, the last bear and all that.

    I, like most, have been mooning about on here for years waiting for the second coming, unfortunately faith is a tenuous thing. I don’t have sufficient equity to ‘throw in the towel’ like others on here, small mercies I guess. Rather, I’ve given up the hope that houses will become genuinely affordable before I’m 40.

    Still, on the bright side my wife has given up arguing with me which at least makes for a quieter life.

    Adieu.

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  • Guy’s i feel like the HPC crowd are like Butch Cassidy & the Sundance kid, held up in the bank, surrounded by Mexican soldiers (EA’s) with an arson of property portfolios, zirp & the gatlin gun that is FFL, We are primed & ready for that doomed attack, out gunned & out maneuvered, but [email protected]@K it, nothing to lose now.. AGGGGGGGHHHHHHHHHH (& Silence)

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  • Guy’s i feel like the HPC crowd are like Butch Cassidy & the Sundance kid,

    Yeah, the FLS is giving it to us right where it hurts!

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  • mark wadsworth says:

    @ JDL, best of luck.

    @ QG, SBC, I shall also keep hanging on as long as poss. We’ll see who’s last to throw in the towel, but the fact is there are ten million people who are renting or hanging on or don’t want to or simply can’t afford to buy, not now, not for years. It’s not like we’re alone.

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  • Ross Morris (london) says:

    London anecdote. My landlady just sold our rented house from under us – which is par for the course – but the facts are scary.

    It’s a 2 bed place in E3 (fairly rough inner East End), EAs say “leasehold with share of freehold” (is this even a thing??)
    It is pretty, but small. The EAs reckon 844 sq ft across both floors, but I sized it up (using a non-magic tape measure), and it’s rather smaller than this.

    The price? …… £450k!!

    But wait, it gets worse. The place sold (STC) within one week of coming to market – after five viewings!

    I do not expect the sale to go through, as any decent surveyor should notice the house is riddled with damp, has rotten windows, leaks, occasional mice, amongst other problems! But if the buyers are dumb enough to stump up that sum for a tiny shed, who knows, maybe they’re dumb enough to go all the way.

    Is this healthy, really?? Because to me it looks anything but – it’s more like bubble-fuelled panic buying.

    I despair folks. Been a prudent bear for 10yrs and just feel like I’m getting slaughtered and having a miserable time, while delusional idiots around me are coining it and enjoying their lives.

    How great can these fools get before we reach the final one?

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  • quiet guy (Tuesday, February 19, 2013 12:07AM)

    As a bear (with a sore head) on property and that includes commercial property I’m sticking to my belief that prices cannot defy gravity indefinitely. I’m in a fortunate situation of having a house that is bought and paid for but I do have 2 twentysomethings at home who in the fullness of time would like a place of heir own. I’ve never been convinced that rapidly rising house prices are a good thing despite being a home-owner for almost 30 years.

    I suspect when the majority of hpc regulars move to the consensus opinion (and maybe we are reaching that tipping point) then prices will actually begin to fall. London area IMO is a totally separate market altogether.

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