Monday, Mar 18, 2019

In other news, LSL Acadata based on LR figures goes YoY negative. Now Sports ...

Bloomberg: London Leads Fall in Home Sales as Buyers Hold Breath for Brexit

apparently the first index to go year on year negative for England and Wales since 2012.

Posted by nickb @ 12:20 PM (2604 views)
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12 Comments

1. a saver said...

Well done for your posts today nickb, this blog has been so quiet the last year or so! Good to see articles like these, reminding everyone that house prices can fall as well as rise. The Brexit shambles could continue for months. My worry is that it may give BoE an excuse to lower interest rates again. Anyone have thoughts/posts on how the population numbers (and hence demand for housing) might be affected by our departure from EU?

Tuesday, March 19, 2019 12:44PM Report Comment
 

2. nickb said...

I am keeping the faith in a HPC, someone has to ;-)

Tuesday, March 19, 2019 01:48PM Report Comment
 

3. tenyearstogetmymoneyback said...

I think interest rate rates are only a small factor. Anyway how much lower can they go ?

The big factor is sentiment. If people see and hear about prices falling they will hold off buying causing further falls.
As early as 2002 we had to explain to a first time buyer that prices hadn't always gone up. In his experience to date they probably always have.
In contrast in 1996 I couldn't sell my place at a 20% loss. The only things selling then were repossesions at 30 to 40% off peak.

Wednesday, March 20, 2019 08:06AM Report Comment
 

4. taffee said...

@3

People simply can't contemplate a different scenario which is why all bubbles exist

The shock when the penny drops can trigger panic

People forget that interest rates and other props exist
Because things are really bad not booming

Thursday, March 21, 2019 05:40AM Report Comment
 

5. mombers said...

@3,4 it's so cheap to hold on to property now - tiny mortgage interest or opportunity cost from turning down other investments. Council tax has shrunk in real terms and is peanuts on more expensive homes. And stamp duty is a hefty penalty so you'd better make absolutely sure that you are doing a once in 20 year transaction else you'll lose your shirt. It's almost like the system is designed to be a terrible market...

Thursday, March 21, 2019 09:18AM Report Comment
 

6. nickb said...

one more post to get a flame going ...

Thursday, March 21, 2019 02:55PM Report Comment
 

7. stillthinking said...

and here it is
I am not so sure whats going to happen from now. I see 400,000 pounds for a small flat, and that seems expensive to -some- wages but the reason wages are down is due to a flood of people coming in who are prepared to work at the lower end of wages while sharing rooms. A lot of salaries have actually gone up in the same way housing has. There are a lot of people on 100K+ jobs that certainly would have been on 50 ten years ago.
For example, the 400K London pokey flat would be an absolute bargain in Tokyo or Manhattan. They aren't that much.And the out of reach prices for detached family homes, but these type of properties don't exist in other capital cities. All converted to apartments. I think given the amount of fiddling with prices, I am sure that something is now seriously out of whack, but whether its still housing or wages or yields how can you know? How for example can you assume the continuation of stamp duty when the Tories are reeling from a lack of support and in a collapsing transaction environment doesn't bring in that much i.e. the government can discount at the stroke of a pen.
I don't think London apartments are that expensive anymore. You can after all rent them out for 18K a year.

Saturday, March 23, 2019 01:59AM Report Comment
 

8. nickb said...

@6: don't know how you judge affordability in Manhattan or Tokyo, and based on what information, but I came across this report which you might find of interest: http://www.demographia.com/dhi.pdf. It rates London as in the top 10 of unaffordable housing markets on the basis of median prices: median earinings ratio (8 for London, 5.5 for New York). Tokyo does not feature in the table. On this basis almost every housing market in the UK is classed as either unaffordable or severely unaffordable, there are a handful that are "moderately affordable".
If that's not out of kilter, I don't know what is.
N

Wednesday, March 27, 2019 03:26PM Report Comment
 

9. mombers said...

@8 it's hard to compare NYC selling prices as they have much higher property tax that brings prices down (you can't borrow as much if you have to pay for local services). The median in NYC is $4738 vs Band D avg of £938 in Inner London. The maximum in Inner London is under £3000, vs theoretically unlimited in NYC. The hedge fund guy who bought a pad recently pays over $250k per year on his equivalent in NYC vs £1421 in Westminster. Such huge sums have a massive positive effect on keeping prices down...

Thursday, March 28, 2019 11:06AM Report Comment
 

10. britishblue said...

In the removal business, it isn't a recession, its a depression. Most of us are 70% down on 2015 early 2016. Despite what you may hear, prices in London are a good 15% down. I have heard of prices being accepted up to 25% less. But as I have said before a three bed house that has been extended and had 200k spent on it is still registered as the same house on the land registry and the indexes don't take into account home improvements or people that are not selling.

Thursday, March 28, 2019 06:22PM Report Comment
 

11. mombers said...

@10 I'd love to see an index that used sales of the same homes. The data would be very thin of course, with homes changing hands only once every few decades on average. Not sure how useful it would be as it would not take into account improvements of course. Most 'improvements' don't really change the value though. Redoing a kitchen for £20k depreciates to £0 after a few years. Adding an extension / loft / any increase in floor space does add lasting value.

Friday, March 29, 2019 09:46AM Report Comment
 

12. judgandury said...

Surely no one really believes that the people who make the various house price indexes haven't considered something as simple as the effect that extensions/home improvements would have on their house price index? Of course they have. Mix adjustment , hedonistic regression and batching etc are just some of the methods used to filter out anything that could distort the indexes. In very simple terms, houses with similar proportions, locations and characteristics are batched together so that price movements can be tracked. If a house extension adds an extra reception room and bedroom, the house moves into a different batch so the .

"I''d love to see an index that used sales of the same homes". Zoopla does that. It's quite interesting especially if you are familiar with the location.

Last time I was here, people were saying that cash sales weren't included in any of the indexes (not true). This time it's that home improvements aren't taken into account (also not true). A quick Google search would disavow people of these notions before they are presented here as fact

Tuesday, April 2, 2019 03:37PM Report Comment
 

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