Its official UK house prices are on the slide - Trevor MacDonald says so

Anyone see Trevor MacDonalds programme last night on ITV ?

He started off saying that house prices have been falling for the past

12 months, sales are drying up, and house sellers are having to slash prices to stand any chance of selling. The programme highlighted the huge amount of debt in Britain and the increasing numbers of mortgage repossessions. Parallels were drawn with the early days of the last house price crash in 89/90 and opinion was expressed that house prices still have a long way to fall and that many over-indebted people will be hurt in the fall-out.

What was it Gordon "prudence" Brown promised us ?... NO MORE BOOM AND BUST

Well we've had the boom and now we're gonna get the bust.

This article in todays Guardian adds more fuel to the fire....

City says homeowners should be braced for period of falling prices

· Official figures challenged by analysts · Warning that market is already in retreat

Larry Elliott and Charlotte Moore Tuesday September 13, 2005 The Guardian

The City was last night warning homeowners to brace themselves for a period of falling house prices after the latest figures from the government showed the value of property rising at its slowest rate since the year before Tony Blair entered Downing Street. Analysts cast doubt on data from the Office of the Deputy Prime Minister and two of Britain's biggest mortgage lenders indicating that prices were still rising modestly and said the real picture was of a market already in retreat.

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The ODPM said yesterday prices in the year to July rose by 4%, down on

5% in June and considerably lower than the double-digit increases racked up last summer - the point at which the governor of the Bank of England, Mervyn King, stepped in to prick the property bubble. House price inflation began to wane almost as soon as Mr King stressed that the market was teetering on the brink of a fall, and the past year has seen the plethora of indicators for the health of the property market all registering marked declines.

According to the ODPM, all regions bar Northern Ireland have seen a sharp decline in house price inflation over the past past year. In London, the south-east and the south-west, annual price inflation has fallen to 1.5% or less.

Ed Stansfield, of Capital Economics, said: "Where house prices in London and particularly in the south-east go, the rest of the regions will tend to follow."

Since February 2002, when the ODPM started measuring house prices on a monthly basis, the north-east has seen the value of an average house rising by 96.8% to £134,034. House price inflation has been the most subdued in London, rising by a mere 36.8% over the same period.

The ODPM, however, presents a more upbeat picture than some competing studies. Hometrack, a property research company, says prices are 3.7% down on a year ago. The variations have prompted debate not just about which set of figures gives the best guide to the trend, but to whether the market is now over the worst.

The ODPM view of the market is in line with the picture painted by the Halifax and the Nationwide - both of which say house price inflation is between 2% and 3%. However, it is at odds with the survey by Hometrack, which says prices are 4% down year on year, and at variance with what estate agents are reporting.

City economists say the difference comes down to the way the various bodies collect and assess the data. The ODPM, the Halifax and the Nationwide base their snapshots on actual transactions, weighting the findings to take account of regional variations and the mix of properties sold.

Hometrack and the Royal Institution of Chartered Surveyors - the body that represents estate agents - conduct a survey of what is happening to all properties on the market, so that they take account both of houses sold and those unsold.

Hardly surprisingly, each organisation believes its method of looking at the market is the best one. Tim Crawford, group economist at the Halifax, said: "The best guide to the housing market is to look at the actual prices of homes sold. Our data gives the best comparison over time."

But Milan Khatri, head of economics at RICS, disagreed: "The transaction-based indices don't reflect which parts of the markets are selling or not."

Capital Economics' Mr Stansfield said: "We believe the transaction-based data may be slower to detect a turning point in prices than the surveys and may be overstating house price inflation. We expect that the divergent signals from the house price data will be resolved by a weakening in the transaction-based indices, rather than a rise in survey-based measures."

George Buckley, an economist at Deutsche Bank, agreed: "The ODPM measure is playing catch up with other surveys. It is only a matter of time before price inflation on this measure is broadly zero." This, the bearish school, believes that an already weak market is getting weaker, and that this will prompt further cuts in interest rates from the Bank of England over the next 12 months.

The economists at Lombard Street Research believe the Nationwide, the Halifax and the ODPM are broadly accurate, and reflect the fact that the Bank has succeeded in finessing a soft landing for the market. Mr King's warning and five increases in interest rates between November

2003 and August 2004 were enough to take the sting out of the market without prompting the sort of crash witnessed in the early 1990s. Lombard Street believes the Bank's decision to cut rates last month was misguided and merely risks re-inflating the bubble.

On one thing, all analysts are agreed: the weakening of the housing market has already had an impact on the wider economy, with consumers less willing to borrow to spend now the feel-good factor of the rising property market has vanished.

Bovis Homes said yesterday its interim profits before tax fell 32%, blaming the fall on lower sales of four- to five-bedroom houses because of weak consumer confidence. Chief executive Malcolm Harris said: "It's cheaper to buy than to rent in most parts of the country. Affordability is not the issue. It is really confidence and the ability of people to sell their homes into the second-hand market."

The next few months will prove crucial. Overall economic growth looks like falling short of Gordon Brown's 3%-3.5% forecast this year, but there have been tentative signs in recent months that the decline in mortgage approvals may have flattened out. In the City there is scepticism about whether this trend would be sustained when - as seems likely - house price inflation on all measures falls to zero over the next few months.

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Reply to
Crowley
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In message , Crowley writes

Snip Snip

Lies, Damned Lies and Statistics

The fact that it is the rate of inflation which is falling, means that the actual prices are still rising, albeit at a slower rate.

All of these articles could equally have been headed:

"UK House Prices Continue To Rise."

Reply to
Richard Faulkner

Are you an estate agent?

1) Inflation is rising.

2) The crux of the article is that with such low sales volumes, traditional pricing surveys have no relevance > the real picture is much much worse. So says "the city", Guardian, ITV etc etc ...

Reply to
jameshamilton777

Dream on. Year on year is still slightly in positive territory because prices were still rising a year ago (particularly in the outer fringes) However prices in most areas (with the exception of NI) have been on the slide for months and YOY will soon be going negative on most if not all indices.

The house price crash is underway to be followed by recession and Gordon Brown is now desperately looking for scapegoats for his reckless boom and bust policies. He's trying to blame OPEC today.

Some excellent stuff on the HPC forum on house prices, recession, politics etc.....

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Reply to
Crowley

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That's despite the fact the CPI falls well within your Lies, Damned Lies and Statistics adage.

The cost of music admissions has fallen apparently, so that's good news all round then! However the hedonics mean that U2 have be substituted for Genesis, don't you just love artificial supply and demand models.

<

Or it means last year's rises haven't dropped out of the YoY index yet. There are a plethora of surveys with a huge variance between them, people will just have to wait to see what the Land Registry figures say in November, that's hard numbers not a model.

Az.

Reply to
Aztech

Bitstring , from the wonderful person Crowley said

wishful thinking.

Cr&p!

Alarmists and exaggeration on all sides. Prices have stopped going up (most places). (silly) asking prices are not being met. Prices may even have come down some, although you'd have to find a few houses which sold in 2004 and sold again in 2005 to be sure. Valuations have come down some, but then valuations and prices are not closely correlated much of the time.

'CRASH' is a whole different category, and there is no sign of it happening yet. Crash is what Wall street did in 193x, or what technology stocks did in 200x .. NOT what house prices are currently doing.

Reply to
GSV Three Minds in a Can

Trevor "should-work-in" McDonald(s)?!.

I don't think he even knows what he's saying!

Reply to
<nospam

In message , snipped-for-privacy@hotmail.com writes

Not any more!

And ????

ISTR that, at its max, annual sales are around 1.3 million, and at its worst, they are around 750,000. If you cant get a realistic picture from

750,000 sales per annum, you're not doing it right.
Reply to
Richard Faulkner

In message , Crowley writes

I dont need to dream - as I've said before, I'm not bothered if they rise or fall. In fact, if they fall, I will be able to snap a few up near the bottom .

I know that things have slowed, but i cant help laughing when prices continue to rise, yet the media call it a crash. But.... BRING IT ON!!

Reply to
Richard Faulkner

In message , Aztech writes

Agreed. And if they dont show the crash, we can wait until February, and so on.......

Reply to
Richard Faulkner

...your dealer must be providing some mighty fine smoking....

Reply to
curiosity

'Not doing it rignt' sums it up.

Arguably, when the market is mixed and transitional it can't be done right.

Reply to
curiosity

The 'crash' advocates would be happy with the UK housing market circa

1990 - the Wall Street fiasco is surplus to requirements.
Reply to
curiosity

So you wish for prices rises? Why?

Reply to
curiosity

Prices aren't rising. Apart from a relatively feeble 'spring blip' house prices have been falling in most areas since their peak last summer. As for the 'crash' we haven't had it yet but the signs are that its underway and programmes like Trevor MacDonalds shown at peak time will help to change sentiment.

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Reply to
Crowley

The Land Registry figures are empirical, we've already seen this in terms of the drop off in transaction values in previous reports, this has already impacted the "value of the market" (sale prices * volumes). Though it should be noted that the LR figures do not include the incentives given on new builds, this can distort the price somewhat.

But this isn't the FTSE, you don't "see" a crash, it's a drip drip thing over many years, the same was true in '89, there was a 0.4% a drop here,

0.7% drop there, a rebound for a couple of months then further falls, then rebounds etc.

I certainly wouldn't like to call the call bottom of such a market, if you look at some of the headlines from '90, '91 calling the bottom of the market they ended up looking pretty daft when it turned out to be a dead cat bounce.

Az.

Reply to
Aztech

In message , Aztech writes

In Manchester, prices didnt stop rising until about 1993, then they crashed. The bottom was around 1998, and it was fairly clear that the rise was beginning in early 1999.

Reply to
Richard Faulkner

In message , curiosity writes

You seem to have a thing about smoking

Reply to
Richard Faulkner

Bitstring , from the wonderful person curiosity said

No, I didn't say that .. learn to read .. don't they even teach comprehension in school any more?

Reply to
GSV Three Minds in a Can

Its heading in that direction. In the next 2 to 3 years I expect to be seeing prices around 30/40% down from current levels (and even more in some of the more depressed areas)as forecast by The Economist magazine, Dye Asset Management, American Express' chief economist, Durlacher, and Invesco Perpetual amongst others

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Reply to
Crowley

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