Friday, Aug 07, 2020

No job No income got a make money somehow

BBC: Mini house-buying boom leads to highest ever monthly price

The old Government policy of providing money to people via asset appreciation. This has been going on for 20 years plus at least.
The first thing I my stats teacher taught me was, if there is not enough transactions, the data is meaningless. So here as well is the transactions are half as usual and and coming from a point of closure. They do not matter.
The housing index calculating companies will not tell you that, there is a bank behind them to run this as a business. There is a conflict of interest on the biggest purchase you make in your life and this should be separated.

Posted by deepak @ 03:20 PM (1776 views)
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6 Comments

1. britishblue said...

The date to put in your diary is the 1st April 2021. That is the day the housing market drops like a stone. Check out what happened when the government withdrew joint Mirus in 1988, 33 years later history will repeat itself. I own a removal company and have never had as many enquiries in 12 years. I can't cope with the enquiries, let alone the work, it is frenetic. But just a minute, we are in a pandemic. GDP is set to drop by 9.8% which is now a good thing because it is only the worst in 100, rather than 300 years. Once furlough is removed we could have 5 million on the dole. So, by all means, celebrate that house price sales are booming and prices are on the up. But this is just the latest magic money trick along with zero interest rates and quantitative easing. What we don't know is whether there are any other magic money tricks in the bag. If not, come March 31st, with several more million on the dole and the stamp duty holiday over, does any sane person believe that the housing market will roar and roar? I have been wrong many times, but before Covid, prices were going down.

Friday, August 7, 2020 06:16PM Report Comment
 

2. deepak said...

@britishblue
I get what you are saying, this is future demand squeezed into a small space of time, hence artificially inflating the prices and in low volumes.

What I do not get is the following. Out of the total 60-65 million people in the UK, lets say 40% are working 26 million. That would be a very high number, if you take into account children and older people.

Of this 26 million:
Furlough scheme: 9.5 million
Self employed scheme: 2.5 million.
Universal credit: 5.5 million (See https://www.bbc.co.uk/news/uk-53697256)
= 17.5 million so far.

Surely, there are other benefits people could/would be on and not all person living is able to work. And people can't work due to caring duties. add a few million on top.
Rough guess 2.5 million.

Of the rest, 6 million how many are seeing income increases to pay for the higher house prices?

Saturday, August 8, 2020 12:54PM Report Comment
 

3. tenyearstogetmymoneyback said...

deepak: I would like to see some figures breaking the housing market down into smaller categories.
Actually I found some https://www.finder.com/uk/mortgage-statistics
Where I live, on the South Coast, there are a high proportion of people who have retired.
A lot come from London with the attitude "my goodness, It's only £400K. At that price we can knock it down and get the house we always wanted built. On my walk tonight I passed a plot that probably cost £1 million before they knocked the house down.
I would be very surprised if such people have mortgages. The person buying their townhouse in London almost certainly does.

Summary. It only takes one person taking out a large mortgage to create a whole housing chain.

Saturday, August 8, 2020 09:38PM Report Comment
 

4. deepak said...

@tenyearstogetmymoneyback

You are right, the people who are actually setting the prices are few and far in-between. The number of transactions do not validate the price or trend as stated by these HPI.
If just one person who is moving from London can afford to over-pay does not mean the price of every house in the area has gone up. But that is how it is recorded.
Note that person from London has probably not earn't that money, its due to asset appreciation.

Compared to that, a local in your area would not be able to earn that money. So after the first over priced sale, what happens to the market when there are no further transactions? Do you call the last sale price as valid and reflective of the market? As there are no transactions there is no data collected to say the trend is downwards.

That is a completely wrong mechanism of looking at price equilibrium. Something I read in economics for years and now needed unlearn how the economy does not work.
More importantly, the data has been fluffed and bluffed due to government/BoE policies and cannot be relied on.

Sunday, August 9, 2020 07:33PM Report Comment
 

5. nickb said...

In other news based on LR data, prices are back at Sept 2019 levels. I will post separately. Halifax is based on a smaller sample, just Halifax mortgaged properties, so tiny with transactions volumes low as they are.

Wednesday, August 12, 2020 01:32PM Report Comment
 

6. libertas said...

From what I am hearing, houses are shifting like hot cakes. Could it be the 3 million Hong Kong residents offered residency plus hundreds of thousands and possibly millions from Continental Europe attempting to get a foot in the door before the end of the transition period?

This could be the money tree that is funding the fleeing of Londoners into the countryside.

Of course, those sources of incoming investment will be replaced by USA, Australia, NZ, etc. once trade deals are announced.

Thursday, September 17, 2020 12:56AM Report Comment
 

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