Wednesday, Aug 12, 2020

Prices in July 2020 are back at September 2019 levels

LSL Acadata: Wales and South West continue to benefit from lockdown lifestyle reappraisal

Average England and Wales house price has been falling since March. In Reading where I live prices are now down over 8% year on year. However, you wouldn't think so on a skim read of the report. The VIs behind the house price stats are laid bare by the headlines they choose. LSL Acadata series is based on LR data, like the ONS one. Ignore also the results from July, which are based on a pathetic 1,300 reported sales, things only become clear at 2-3 months distance, since that's when most of the data are in. Probably it will have ticked up when the dust has cleared due to stamp duty holiday, but that's a one-off.

Posted by nickb @ 12:40 PM (1406 views)
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1. deepak said...

Love to see the average earnings line against the house price chart. 160,000 for the cheapest place in England. If average UK income is £23-25K, in those areas it would be below, hence the average.

So the ratio between Gross salary and housing would be 8-10 times
After Council tax, Car tax etc and other indirect taxes like VAT and fuel duty, i.e income available for housing to house price would be over 15-20 times.
If you have children, it would be even higher.

You can see how the whole economy is sitting on a knife edge and anything requires bailouts

Thursday, August 13, 2020 11:43AM Report Comment

2. tenyearstogetmymoneyback said...

Yes, but when you have an interest only mortgage at 1.4% and no intention of paying any money back it is quite cheap. £186 a month by my calculation. People who do this, retirement plans are probably to take equity release on their even more inflated property once they reach 65.

Maybe that is where I have gone wrong all my life; worrying about the future :-)

Thursday, August 13, 2020 09:25PM Report Comment

3. crash bandicoot said...

I discussed this with my wife today. She asked me why there had been a recent rise in prices when there is such a dire outlook for the economy. I told her that for the past twenty years, people who had made choices that we deem risky have been rewarded by a growth in the value of their asset.

With hindsight you can see that the best choice would have been to take the maximum mortgage you could have signed up for and relied on the country's leaders to keep your payments relatively affordable. And then boost your income by buying up starter homes with further mortgages and then renting them back to others who place value in the concept of owning their home and are trying to raise a deposit rather than doing what has turned out to be the sensible thing and just renttheir property from the bank instead of from a landlord who just adds their profit to the monthly payment.

There are a few times over the past decades that the above choices have been the correct ones to make. Undisputedly the last twenty years has been one of those times. But this can't continue forever. The Covid problems with furlough and redundancy is a new world that none of us have seen before.

I return to my wife's question, why the rise in prices? It surely is because buying whatever you can, whenever you can has been the right choice for twenty years. So far bad choices have remained unpunished, even 2008's problems have been masked by historical low rates and QE. Absolving those who have taken too much risk from the consequences of their choices. Now we are going to be exposed to circumstances unseen for thirty five years there will be a re-evaluation of risk and commitment.

Thursday, August 13, 2020 11:23PM Report Comment

4. nickb said...

>why there had been a recent rise in prices when there is such a dire outlook for the economy.

The answer to your wife's question is that there hasn't. The correct headline is the Acadata 3rd one: Prices in July 2020 are back at September 2019 levels.
It seems spin is somehow powerful, doesn't it?

Friday, August 14, 2020 08:48PM Report Comment

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