Tuesday, May 8, 2018

House prices see biggest monthly fall since 2010, Halifax says

House prices see biggest monthly fall since 2010, Halifax says

Halifax said prices fell by 3.1% between March and April. Few good battles on HYS between the haves and have-nots.

Posted by magnifico @ 07:06 PM (4971 views)
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16 thoughts on “House prices see biggest monthly fall since 2010, Halifax says

  • But not Enfield though.

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  • britishblue says:

    As someone who works in a related business, all I can say is, ‘you’ve seen nothing yet’. The crash in house prices is going to depend on the people who have to sell ( probate, financial, divorce) as the market is frozen with people who were quite happy to bank 15% a year rises, now amazed that prices are going the other way. We are now headed for a bigger crash than the 90’s, but with interest rates on the floor, no new forms of foreign buyers, a closing of buy to let loopholes and Brexit around the corner, there will be little that the government can do to prevent this. I expect in a few months the site traffic here will go up several hundred percent. Its happening now, this is only the start and the crash is going to be brutal.

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  • @2 we can only hope. Fewer than 50% of adults are home owners, much less than that amongst the working age population and much, much lower than those in London. Add in those aspiring to move to a better home and it’s a handful of beneficiaries vs tens of millions of losers. Who is the country run for?

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  • stillthinking says:

    @britishblue, I doubt there will be a huge crash myself, for exactly the reasons there wasn’t last time. A crash impacts on the solvency of the retail banks, and also the main source of credit expansion. A buyers strike will end up with eternal QE.
    Also I don’t know if anybody has been following David Stockman recently but he seems reasonably convincing about a yield shock for dollar debt because of excess bond issuance. The BoE won’t counter ensuing sterling weakness without domestic inflation. So it may be again, that there -is- a crash, just not in sterling.
    There has been, in West London anyway, a massive amount of construction it seems everywhere. But you only have to walk down the access roads and see the flat numbers on former garages to see how overloaded existing properties are.

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  • britishblue says:

    [email protected] I run a removal company. Moves for sales are 70% down on two years ago and there has been a massive drop this year. I have been running this business or well over a decade. One of the estate agents i deal with has seen sales go down from 5 to 6 houses a week to 3 to 4 a month. People that I am moving have accepted offers of 15% less. Some have accepted 20% less. Other removal companies I know are in the same position. The companies who sell packaging material are saying the same. I don’t know where the figures of 3% comes from as the drops i am seeing are much greater. April was the worst month in history for all the removal companies I speak too. This is normally a peak time of the year. This is much worse than what happened after the 2008 crash. I have wanted prices to come down, but I am now the Turkey looking forward to Christmas. People are only sellling if they have too. There is much, much worse news to come for those thatt want prices to remain high. Save my post and look at it in 3 to 4 months and I am sure you will agree.

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  • tenyearstogetmymoneyback says:

    In the past any so called crash happened around the very edges of the home owning population with Divorces, Reposesions etc.
    I actually spent 2008 to 2011 renting waiting for the crash that never happened. What is far more likely is a multi year stagnation of the market.
    Looking further back prices slowly slid between the joint MIRAS fiasco of 1988 and Labour being elected in 1997. People like myself ended up just sitting things out, spending the minimum on house maintenance and at one point gloating about my 11% fixed rate mortgage. One professional couple I knew made the smartest move despite having to pay 2/3rds of their joint salary on their mortgage at one point. At about the point when prices hit the bottom they moved to much more upmarket house.

    Of course things might be different this time. An increase to mortgage rates to 6% might be more of a shock than an increase from 10% to 15% back in the 90s.

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  • stillthinking says:

    @britishblue, yes I remember and I believe you. How many forced sellers cannot wait three years though and there is an expectation of government support.

    http://www.cityam.com/assets/uploads/content/2017/04/annual-house-price-rates-of-change-january-2006-to-february-2017-62-chartbuilder-58ec983ec6e81.png

    There has been dramatic drops before and over a three year period the government basically shoves prices up again. Perhaps if the rest of the UK shows moderate growth then a London correction can be overlooked. So mortgage debt, mort-gage, is not until death for most forced sales. Once you sell your negative equity house any shortfall would be discharged in bankruptcy, and given the figures for London housing nobody I would think would want to honour any losses. So the losses would have to be covered by other borrowers and then mortgage rates rise and other defaults spiral etc. In the case of London with foreign ownership and EU owners, people would walk away and just leave. Nobody wants to be in the UK if that means covering 30k of losses. As soon as a few start dropping the hot potato probably everybody will.

    imo, because of the role of mortgages in credit creation, because of the problems of cascading defaults, and even because of the role of perceived wealth in terms of consumer confidence, the government willl do anything to avoid a crash and that situation is still the same. A good question is how could the government in the late 80s allow that housing crash to proceed and I think because the numbers were smaller and more manageable, and probably also because the majority were British who needed a roof and couldn’t walk away i.e. the debtors were different.

    Anyway as you say we will see shortly enough.

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  • Tenyearstogetmymoneyback says:

    P.s BritishBlue you should be cheering on the BTL landlords. Thanks to their whims and fancies I had to move twice in my thre years rening. The second time, fed up and with pressures elsewhere my only contribution to the move was making the removers coffee and paying the bill. Finniest bit was when I unpacked and found all the jam jars that were supposed to go in the recycling carefully wrapped in tissue paper.

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  • Very few of the numbers quoted in the above thread check out. A ‘housepricecrash’ is unlikely. We have low unemployment, low interest rates and wages currently keeping pace with inflation. Anything is possible but with the current metrics it would be unprecedented. My best guess would be for low transaction volumes to continue and prices to come off a bit.

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  • @judgandury

    My experience is that there is little difference between mortgage costs and rental costs at the starter home price range. But trying to buy a starter home as a first time buyer can be quite hard – the starter homes were flying off the shelf to BTL buyers when I bought a few years ago. I had to offer 100% within hours to get on the “ladder.” Once you’re on, there is little incentive to get off. I wouldn’t go back to renting unless forced because it would cost me almost the same but with obvious drawbacks. So the “low transaction” stalemate seems quite plausible for the lower end of the market, at least.

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  • tenyearstogetmymoneyback says:

    Stillthinking wrote “A good question is how could the government in the late 80s allow that housing crash to proceed ”

    In the late 80s and early nineties the Governments main priorities were keeping us in the ERM in preparation for joining the Euro, and the Maastricht treaty,
    which is ironic given the current situation. It is still debatable whether 16th September 1992 was Black Wednesday or White Wednesday as that was the day Government policy failed but the economy could start to improve.

    With everything else going on I wonder how much time has been spent by the Cabinet discussing House Prices recently.

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  • I’ve sold my flat and gone back to renting, out in the commuter belt, partly because of the slow market making chain-free offers more viable, partly because prices might fall.

    But as yet, all I see is a slow market, which is obviously very unusual for this time of year, but not the precursor to a crash unless there are forced sellers. Prices are obviously falling in London, but not so much elsewhere. London is way above trend relative to the rest of the country. Perhaps that gap is narrowing again. I wouldn’t expect it to revert to its mean though as the population influx has made it more crowded than usual.

    Then again, all those luxury new builds no one can afford.

    @10 Your last sentence there is crucial. The 90s crash was unusual in the lack of policy response, owing to the ERM. Brexit and US growth may conspire to do the same to IRs this time.

    But i think policymakers realised long ago that they needed to do more than announce yet another scheme for FTBs and that the BTL reforms are working. They want to protect O-Os’ gains but increase access to homeownership for FTBs. Stagnation will be what they’re aiming for. I don’t expect more QE or anything else aimed at propping up housing. They have their hands full as you say, but also stoking the market isn’t a vote-winner anymore.

    FWIW, @6, on a 25 year mortgage, 2-6% is a 51% increase in repayments, 10-15% is a 41% increase. On a 30 year mortgage, 2-6 is a 61% increase. There weren’t many of those in the 90s.

    As ever, I think the obvious source of forced sellers is BTL,responding to the tax changes. Maybe one January, they’ll all suddenly realise how much they’re paying in tax and think about selling up.

    I’m hoping it’ll happen sooner than that. Note that 90% of borrowers are on fixed rate deals now, so any response to rates rising faster than expected (IF that happens) will be much less sudden than the rush of landlords towards the exits upon doing their tax returns.

    Where I’m looking to buy, half the properties on the market seem to be LLs selling up but it’s half of sod-all and prices are still at all time highs.

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  • stillthinking says:

    Now it seems like a good question, i think the reason why the house price was allowed to proceed was because absolutely necessary because of excess inflation, as you can see the base rate was at 8%.

    https://www.economicshelp.org/wp-content/uploads/2009/04/historical-interest-rate-1945-2011.png

    Currently we have a base rate at near zero so should the government allow a crash to proceed that is of sufficient size (and maybe London getting a correction at the high end isn’t so seriously large) then that leads to deflation. The late 80s one would not.

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  • crash bandicoot says:

    The wildcard this time round is the effect of “amateur” BTL landlords pulling out of their investment as the new tax rules cause drops in profit. These guys are hardcore believers in prices only going up so will probably stand a few months subsidising their tenants, but once they tire of that they will ditch their portfolio. Once enough of this selling takes place it will build its own momentum. We haven’t seen anything like this before.

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  • Crash @ Wednesday, May 16, 2018 10:32PM

    I have a friend who historically has always been in the “house prices only go up” camp and he’s now quietly selling off everything other than his main residence – I suspect this is very much an indication of what you have stated in your post. The buy it and flip it days are long gone !

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  • crash bandicoot says:

    Jack C, I saw a stat recently regarding the number of landlords who only had one rental property. It surprised me how many there were as a percentage but I’ve forgotten where it was so I can’t reference it. I would suggest that most of these guys traditionally would have sold that house and moved on in their life but are waiting for house prices to recover from the 2008 crash (in their minds).

    I don’t know much about these guys because I’ve not seen much reported but I suspect that in the good ol’ days they used to run with a residential mortgage and not declare too much to the tax man. As you say about your friend sentiments can change, and there’s nothing like losing a bit of money to change your sentiment!

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