House prices..

Personally I feel that the land registry figures will be slightly lagged compared to the state of what actual current 'prices' are, since completed sales in May were likely based on deals originally arranged in March or earlier.

So it's possible that land registry data may not be fully affected by the HOUSE PRICE CRASH changes yet, e.g. the 2.5% decline reported by Nationwide for May will likely show up in the land registry data for future months.

Of course, land registry data is inherently 'better' in some aspects from a statistical point of view (if all we care about is what price houses can sell for) in that it is based on a bigger sample.
 
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HangTime said:
Personally I feel that the land registry figures will be slightly lagged compared to the state of what actual current 'prices' are, since completed sales in May were likely based on deals originally arranged in March or earlier.

So it's possible that land registry data may not be fully affected by the HOUSE PRICE CRASH changes yet, e.g. the 2.5% decline reported by Nationwide for May will likely show up in the land registry data for future months.

Of course, land registry data is inherently 'better' in some aspects from a statistical point of view (if all we care about is what price houses can sell for) in that it is based on a bigger sample.
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Exactly, I don't think that there can be any doubt that the Land Registry figures are the 'true' data as these are the actual sale prices.
There is a world of difference between sales that completed in June and mortgages that were approved in June though.

IMO it will be late 2008/early 2009 before the LR starts showing anything like the falls we're currently seeing in the Nationwide/Halifax data and it will be this time next year before we really see how the wider economy will be affected by this.
 
The BBC still trying furiously to put a positive spin on ANY negative news.

(prices go down) GOOD NEWS FOR FIRST TIME BUYERS!
(prices go up) GOOD NEWS FOR HOME OWNERS!

1% down a month is CRASH SPEED.
 
brid said:
1% down a month is CRASH SPEED.
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Indeed, this is what a lot of commentators don't seem to pick up on, 1% a month will deliver, over a year, the fastest fall the UK market has ever seen. Not a slow down, a correction or anything other euphemism. A Crash.
 
http://news.bbc.co.uk/1/hi/northern_ireland/7483027.stm

As is an 18% drop (on the same period last year) - 9% Quarter drop for Northern Ireland. As I expected. People still haven't referred to it as a crash here in N.Ireland yet, but I fail to see how it can't be.

It will most likely get very bad here, and I really do feel sorry for some of the people who purchased houses last year (one friend purchased in a typically bad area for £205,000 on a 90% mortgage) - now worth around £185K. He is having enough trouble just paying his mortgage with the bills going up all the time.

But - at the end of the day, he knew and understood the risks..... he just thought it would never be as bad as it's getting.
 
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Can't say I've seen much difference in house prices in Bristol, the flats in my street are still selling for roughly the same price I bought mine for 11 months ago
 
PaulStat said:
Can't say I've seen much difference in house prices in Bristol, the flats in my street are still selling for roughly the same price I bought mine for 11 months ago
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I'm sure a lot of these 'falls' are because a lot of traditionally cheap areas where you could pick up a house for £10,000 suddenly went up to £90,000. If it wasn't for this thread I wouldn't have noticed any difference in countrywide house prices as they haven't gone down around here at all.
 
Its worth noting that due to the illiquidy of the housing market (it takes a long time to sell a house... and even LONGER now), that really 'noticing' these drops takes some focus.

If your interested in how this is playing out, then tools like property bee, and sites like nethouseprices are invaluable .... BUT, what with the credit crunch preventing people from even entering the market (let alone buying/selling inside it for people with houses already), its going to be a while till established areas without a great deal of 'turnover' are going to show anything eyebrow raising.

The deadlock between buyers and sellers will keep things sticky for a while.
 
brid said:
The deadlock between buyers and sellers will keep things sticky for a while.
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Yes, this masks the true state of things. The data only applies to the houses that are actually bought and sold - it is not a random sample of the value of every house in the country.

Say two years ago there were 100 houses for sale in an area and within three months 50 of them would have sold. The average price data for that area would be calculated from those 50.

Say today the same area has 100 houses for sale but after three months only 20 had sold. The average price is calculated from those 20.

However, and this is the critical point, those two samples aren't comparable. The 20 sold today are the best 20, where two years ago they were only the best 50. To get a comparable figure today, you would have to reduce the prices until you did manage to sell 50 from 100 within 3 months.

The fact that only 20 are selling shows that today's data has a high bias when compared to the data from two years ago. We've seen that transaction volume is down by some 63% and price down by 7.3%. To get a truer understanding of the market we have to ask by how much would prices have to fall for the transaction volume to get back up to 100%? -10%? -15%? Who knows? Certainly a lot lower than today's average selling price though, indicating there are more falls to come.
 
clv101 said:
However, and this is the critical point, those two samples aren't comparable. The 20 sold today are the best 20, where two years ago they were only the best 50. To get a comparable figure today, you would have to reduce the prices until you did manage to sell 50 from 100 within 3 months.
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Maybe in a perfect market, but I have my doubts over whether in reality, the 20 houses that get sold today are actually the 20 'best houses'. Some sales fall through, most buyers don't visit every single property that's for sale, some make the wrong call, some get suckered in by valuations or fancy presentation yadayadayada.

It could well be that the 20 houses which sold just happened to be cheap ones, pushing the average house price down. Maybe the 30 'missing' houses were really nice ones which would have boosted up the average house price - even if they did need a slight reduction.

Don't forget that the majority of houses have sellers as well as buyers - this idea that we can just reduce prices down to boost sales volume up to this alleged status quo of '100%' may not sit well with them. It may well be that some home owners value their properties at more than the price they would need to set in order to secure a quick/easy sale. It's easy to sit there and say that the value of a house is what someone is willing to pay for it, but equally the value of a house is what the owner is willing to sell it for.
 
It's a hypothetical situation, of course. No market's perfect and the points you raise stand. However so does mine about how there is an upwards bias on reported average house prices as rate of sales as a function of number of houses on the market falls.

It's easy to sit there and say that the value of a house is what someone is willing to pay for it, but equally the value of a house is what the owner is willing to sell it for.
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Dead wrong. Until a transaction is completed, there is no value assigned. I have a tatty old mouse mat here - As a seller I'm only willing to sell it for £100!! - Is it worth £100 to the general market? Not a chance.
 
Until a transaction is completed, there is no value assigned
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That's what I'm getting at - you were saying that to get a proper picture of the market, we need to reduce prices down to a level such that the sales volume is the same as it was during the boom period. But what I'm saying is that maybe that isn't possible if people value their home at more than the price they would need to market it at to achieve a swift sale.

In economic terms, what I'm getting at is that perhaps we've seen a downward shift of the Demand curve, whereas the Supply curve has remained relatively static. This means that the equilibrium point at which they intersect must be lower (hence lower transaction volume). If we lower the price to a point at which the level of demand is the same as the previous transaction volume, then we'll find that there isn't sufficient supply (people not wanting to sell their houses that cheap as discussed).

Obviously, in reality the supply curve won't remain static (especially since a lot of sellers will probably be looking to buy another property themselves, so if they can buy cheaper they will sell cheaper) either but I suspect that it is less affected by some of the recent 'credit crunch' conditions which have driven down demand. I read elsewhere that you've studied Economics a lot more recently than I have so I've probably over simplified things here but I guess the crux of my point is that the equilibrium level does not necessarily mean the same transaction level as before - if we experience a market shock then it may very well now fall at a lower point and we shouldn't try and track back up the demand curve to where it was before and declare that as the 'true' price.

In other news, apparently 1/8 of the 1.2 million people who took out mortgages since early 2007 may now be in negative equity: http://news.bbc.co.uk/1/hi/business/7491354.stm
 
Halifax report another massive fall in house prices in June. Down 2% month on month, on top of the 2.5% fall in May.

Since August 2007 (the Halifax series peak) prices have fallen 9.6% or £19,256. 9.6% in 10 months is a faster rate than the 1989-90 fall.

Press release: http://www.hbosplc.com/economy/includes/10_07_08HousePriceIndexJune2008.pdf

BBC chart:
_44820230_house_prices_10_07_08.gif

http://news.bbc.co.uk/1/hi/business/7492689.stm
 
And to further reinforce my oft-made point about those who wanted this to happen.

http://news.bbc.co.uk/1/hi/business/7498404.stm

A first-time buyer couple on low incomes must save a year's worth of their take-home pay to buy their first home, say surveyors.

A couple in the bottom quarter of earners in the UK needs £27,738 to pay the up-front fees, says the Royal Institution of Chartered Surveyors.

Affordability has improved for those able to get onto the housing ladder, the group says.

But the credit crunch has made it more difficult to climb onto the first rung.

"Access to the housing market has deteriorated as the credit crunch has taken hold of the mortgage lender sector," said Rics' senior economist David Stubbs.
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I'll still stick with the land registry figures to determine falls though, as they are more accurate and aren't influenced by the bank creating the figures altering their lending criteria and therefore affecting their mortgage approvals.
 
Dolph said:
I'll still stick with the land registry figures to determine falls though, as they are more accurate and aren't influenced by the bank creating the figures altering their lending criteria and therefore affecting their mortgage approvals.
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agree with this. even though its 'delayed'
 
The Land Registry series shows a peak January 2008 rather than August or October for Halifax and Nationwide. That give some indication of the delay.

This is really interesting though:
  • Land Registry report 1.3% in the 4 months (latest data) following their January peak (England & Wales).
  • Halifax report 1.2% in the 4 months from their August peak.

This is critical. The Land Registry data is lagged - the comparable falls they are reporting after the peak are FASTER than Halifax.

Dolph, there's no hiding place behind the Land Registry data. ;)
 
Stinky said:
interest rates staying the same wont help change anything either
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Stinks mate, if you're paying attention you'll know that the BoE is no longer in control of mortgage rates, so their decision is almost completely irrelevant.

The banks can't lower rates because they can't borrow enough money to lend out. Until we in the UK learn how to save again (which is how mortgages used to be funded), banks will continue to be reliant upon foreign money... and at the moment our interest rates are too low to attract that money in sufficient quantities, given the likelihood that the economy and house prices are likely to head south. It's just too risky for them.

Of course higher interest rates would make it harder for those paying a mortgage. Which is why house prices must and will fall considerably. There is no turning back now, and whether people realise it or not, it's the best thing to happen to this country for ages. Sanity is slowly returning.

If only the poxy Labour party would remove the tax relief from BTLers as well we'd be back to rational house prices before you knew it as investors rushed for the exits. In the next election I'll vote for any party that dumps that policy... or at least brings back MIRAS to level the playing field for those of us who just want a home, not a pension.

Andrew McP
 
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