DrBubb's Property Diary : tinyurl.com/GPC-Diary

[Meralti]

Hometrack reports continued falls in UK prices and demand as reported on yahoo

 

prices slipped 0.5 percent on the month, slightly more than December's 0.4 percent decline. That took the average house price down to 153,600 pounds.

 

Hometrack said the sluggish start to 2011 was likely to continue, given the uncertainty over the economic recovery and worries about the effect of government cuts.

 

...

 

Over the last six months, Hometrack's survey has recorded a 26 percent fall in demand, with a drop of 9.5 percent in January alone, suggesting the housing market faces more fundamental problems than the usual post-Christmas slowdown.

[drbubb]

AGREED - as posted elsewhere:

 

The Telegraph reporter mentioned a "Reluctance to Sell"? - Wait until the panic sets in !

(Might the weather had something to do with the reported drop in "supply" that the Telegraph cited?)

I missed something important, which the Telegraph article did not make clear.

This item was only clear in Hometrack's own release :

 

The DROP in Supply was much less than the HUGE DROP IN HOME BUYING DEMAND in January:

 

+ 2011 began with a sluggish start. The latest survey of over 5,000 agents and surveyors showed a slowdown in both supply (-5.4%) - the largest monthly fall for 4 years - and demand (-9.5%). Falling demand in particular is likely to impact on pricing levels over the first half of 2011.

 

+ In January 2010 demand stood at -2.7%, a sharp contrast to today’s figure of -9.5%. This suggests that the housing market is facing more fundamental underlying issues than the usual post-Christmas slowdown.

 

+ With recent rises in the cost of living, household budgets will only come under further strain if concerns over rising inflation translate into higher interest rates. Mounting concern over a possible interest rate rise will act as a further dampener on demand.

 

+ A considerable number of households will not be directly affected by interest rate rises. Two-fifths of house sales are driven by cash buyers and Hometrack estimate that over 45% of households who own their home do not have a mortgage. This said all owner occupiers will feel the impact of weaker consumer sentiment.

 

/source: http://www.hometrack.co.uk/commentary-and-...ey/20110127.cfm

 

This does not bode well for UK home prices.

Meantime, this key Builder bellwether stock looks set for a possible steep drop:

 

BDEV.L / Barratt Development ... update

[Meralti]

Today the land registry are reporting that house prices in England and Wales fell 0.2 percent in December, leaving the YoY figure at 1.5%.

as reported on yahoo

 

The revisions to previous months are interesting. The fall from September to December was 1.7%. or -0.425% a month, close to crash cruise speed. This is somewhat more than previously reported.

 

In real terms both Landreg and Haliwide are back to the levels of May 2003, which looks significant as this level has been reached by both indices at pretty much the same time.

 

Considering the interest rate rises occurring in the mortgage market we should expect the steady decline to continue. Mr King of the BoE has already publicly admitted that incomes have fallen back to 2005 levels, so in real terms the house prices falls are greater than the fall in incomes.

 

Grant Shapps, minister for housing, stated that he wanted to see HPI at a level that is a little under that of the standand-of-living inflation - which is what we're seeing, albeit through the mechanism of falls in both.

[drbubb]

CRASH CRUISE SPEED CONTINUES - while Nationwide spins like mad:

 

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist,

said:

 

“The property market entered 2011 with a whimper rather than a bang, with house prices edging down slightly in January. Prices fell by 0.1% month-on-month, leaving prices 1.1% lower than January 2010.

 

“January’s data does little to alter the picture of a sluggish market that has been evident since the summer. Indeed, the three month on three month measure of house prices, which is a better measure of the underlying trend, showed a fall of 0.5%, consistent with the gradual moderation in prices that has been in place since the summer of 2010."

 

However, the actual Nationwide data shows:

Dec.10 : £162,763

Jan. 11 : £161,602

============== : - 0.71%

 

That's -0.71% in the last month, continuing the recent fast-falling trend.

 

Here are the H&N-index monthly moves since August:

-0.68%, -1.49%, -0.02%, -0.91%, -0.74% (that's an average drop of: -0.77%,

which is right near the mid-point of -0.5 to -1.0%, which I call "crash cruise speed."

 

/more: http://www.nationwide.co.uk/hpi/historical/Jan_2011.pdf

 

Why does anyone listen to these hard-spinning ciphers?

[drbubb]

So-called Second Steppers - Many are Trapped already

 

"the meek shall inherit the earth"

- while the dumb-and-reckless get fried

 

(from a Hailfax report):

 

+ "Second steppers" are people still living in their first home, looking to take the next step up on the ladder

 

+ 84% of Second Steppers expect a First Time Buyer to buy their home

 

+ 43% of Second Stepper haven't increased their savings since buying their first home

 

+ The average house price paid by a first time buyer has reduced by Pds.28,041 since the typical Second Steppers bought their first home

 

Yet Denial reigns:

+ Only 13% of Second Steppers will reduce their asking price if they can't sell. More than a quarter are willing to rent out their home instead

 

/more: http://www.lloydsbankinggroup.com/media/pd...ppersReport.pdf

 

I reckon they will be broken "little rotten timbers" by continued house price falls

[tallim]

So-called Second Steppers - Many are Trapped already

 

"the meek shall inherit the earth"

- while the dumb-and-reckless get fried

 

(from a Hailfax report):

 

+ "Second steppers" are people still living in their first home, looking to take the next step up on the ladder

 

+ 84% of Second Steppers expect a First Time Buyer to buy their home

 

+ 43% of Second Stepper haven't increased their savings since buying their first home

 

+ The average house price paid by a first time buyer has reduced by Pds.28,041 since the typical Second Steppers bought their first home

 

Yet Denial reigns:

+ Only 13% of Second Steppers will reduce their asking price if they can't sell. More than a quarter are willing to rent out their home instead

 

/more: http://www.lloydsbankinggroup.com/media/pd...ppersReport.pdf

 

I reckon they will be broken "little rotten timbers" by continued house price falls

 

That's an interesting link, my own highlights;

 

- The eroded equity hasn't quite sunk in yet, they have the same problems as First Time Buyers which is not enough cash to pay a deposit on their next house, the figures in there estimate that 18% of second-steppers don't have enough equity and savings to put down a 10% deposit on their next home

I would be unable to buy a bigger house with my girlfriend which would be frustrating for both of us as we can afford somewhere bigger, closer to work and more suitable for both of us.

- What he means is that he could afford the interest payments, but can't find a buyer at a price that would provide enough equity to move, so actually he can't afford somewhere bigger

- 17% of current second-steppers get help paying their monthly mortgage

- Those trying to sell have on average been on the market for 7 months and had just 4 viewings!!

- Of these, 44% have turned down offers

Prices are therefore unlikely to reduce to a level that First Time Buyers can more easily afford whilst second steppers are in their current equity position

 

- Lloyds is offering some products that allow house moves while borrowers are in negative equity, will they really do this? I suppose the LTV% risk may stay the same at e.g. 110%, but does the risk reduce if the borrowers get to move closer to work, so expenses are less and they are more committed to staying in the new house? Do Lloyds get to move them off interest only deals and onto repayment to also reduce their ongoing risk?

 

- First Time Buyers may well step over these potential second-steppers and buy the houses the second-steppers were hoping to move into

[drbubb]

- What he means is that he could afford the interest payments, but can't find a buyer at a price that would provide enough equity to move, so actually he can't afford somewhere bigger

- 17% of current second-steppers get help paying their monthly mortgage

- Those trying to sell have on average been on the market for 7 months and had just 4 viewings!!

- Of these, 44% have turned down offers

Now banks want to support such delusional thinking by talking about "negative equity loans."

 

Who ever came up with this concept, should be treated like the evil bankers who caused a crash 600-700 years ago.

Part of their bodies were cut off and thrown into a sack with them, which was lined with rocks, sewn up, and then thrown into the sea.

 

This should be done NOW before more irrepairable damage is done to the UK's financial system, since it would discourage banks from nmore innovations that encourage recklessness.

 

But I doubt taht anything wikll be done until AFTER the inevitable crash. Many will then like to copy this old idea, but it will be too late.

[drbubb]

Well, this accurately reflects my experience of London.

No HPC here:

http://www.thisislondon.co.uk/standard/art...ow-in-hendon.do

The average detached family home hits the £1m mark -

Agents say the family home market has been far stronger than that for flats and apartments because of demand from "equity rich" professionals and, in central London, from wealthy foreigners. Smaller properties favoured by first-time buyers have been more badly hit by the mortgage funding drought with prices rising just eight per cent between the last quarter of 2009 and the end of last year.

 

Peter Rollings of agents Marsh & Parsons said that family homes in Battersea were the single fastest rising property category in London last year.

 

I don't buy it. You are too close to the center of the madness to see it properly.

 

Incomes in London are not rising so fast, and indeed - may be set to fall off a cliff - as multiple cataclysms hit the UK economy in 2011 and beyond.

 

The UK's bubble economy, built on finance, borrowing and bullcr@p, may be set to fall apart, as rates go on rising, seeking a breakpoint:

 

UK- 10 year govt. rates ... update * : 12mos

 

Having said that, I may start a thread soon on the Bull argument for UK property, to put the bull arguments to the test.

== ==

 

*We are back at/near a possible "red box" moment:

 

Mo. : H&N-index

7.01 178,646

7.02 181,951 1.85%

7.03 185,131 1.75%

7.04 189,260 2.23%

7.05 190,424 0.62%

7.06 191,764 0.70%

7.07 192,424 0.34%

7.08 192,490 0.03%

7.09 192,446 -0.02%

7.10 191,930 -0.27%

7.11 189,178 -1.43%

7.12 188,706 -0.25%

8.01 185,874 -1.50%

8.02 186,403 0.28%

8.03 184,865 -0.83%

8.04 184,753 -0.06%

8.05 180,033 -2.56% "red box"

8.06 177,090 -1.63%

8.07 173,878 -1.81%

8.08 170,031 -2.21%

8.09 167,574 -1.45%

8.10 163,515 -2.42%

8.11 160,645 -1.76%

8.12 155,742 -3.05%

9.01 155,159 -0.37%

9.02 153,477 -1.08%

9.03 154,006 0.34%

9.04 154,508 0.33%

9.05 157,442 1.90%

9.06 157,624 0.12%

9.07 159,778 1.37%

9.08 161,077 0.81%

9.09 163,335 1.40%

9.10 163,734 0.24%

9.11 164,191 0.28%

9.12 164,681 0.30%

10.01 164,497 -0.11%

10.02 163,659 -0.51%

10.03 166,164 1.53%

10.04 169,287 1.88%

10.05 169,183 -0.06%

10.06 168,253 -0.55%

10.07 168,839 0.35%

10.08 167,698 -0.68%

10.09 165,198 -1.49%

10.10 164,828 -0.22%

10.11 163,333 -0.91%

10.12 162,131 -0.74%

11.01 161,536 -0.37% "red box" coming ??

[drbubb]

It is the MORNING AFTER - and this Hangover will be Nasty

http://www.moneyweek.com/investments/prope...or-a-fall-10707

nice bearish article from Moneyweek thats difficult to argue against

The housing market is heading for a fall By Bengt Saelensminde Feb 23, 2011

 

On Monday, Rightmove delivered news of its latest health check on the UK housing market. And boy was it ugly.

 

Rightmove spelled out the news in three grim statistics:

 

• 1.3m properties were put on market last year

• 884,000 properties were sold (HMRC data)

• 530,000 mortgages were granted

 

Those three facts all point to one thing: the UK housing market could soon be falling in a big way.

 

Let's break that down to see why.

 

The half a million property overhang

Rightmove represents 90% of the housing market in the UK. So its statistics are meaningful and shouldn't be ignored.

 

The story this time is a very worrying one for homeowners.

 

If 1.3m homes came to the market and 884,000 sold, that left a new overhang of just under half a million properties. But had it not been for rich cash-buyers, ferreting away investment property (no mortgage), this would have been much worse.

 

The other issue is credit. If buyers can't get mortgages, then there is very little chance that that massive overhang of property is going to get cleared anytime soon

. . .

Ultimately, the underlying imbalance in demand and supply of houses has been repressed by low rates. Existing homeowners have hung on in there and cash rich buyers have chased any old yield - together, they've kept the market in check.

 

As the imbalance continues to grow and rates start to let rip, things are about to change.

 

/more: http://www.moneyweek.com/investments/prope...or-a-fall-10707

[Meralti]

Land registry figures for January

 

• +0.2% MoM
• -0.9% YoY

The average price in England and Wales is now £163,177; down from the previous figure of £163,814.

However, the previous figure for December 2010 has been revised down to £162,897. Which is why we are seeing a MoM rise.

 

See Land Registry data

[Meralti]

Land reg regional breakdown:

 

London

- MoM 1.6 YoY 2.4

South West

- MoM 1.6 YoY -0.4

South East

- MoM 0.5 YoY -0.1

East

- Mom 0.4 YoY -0.2

West Midlands

- MoM -0.4 YoY -1.4

East Midlands

- MoM -0.5 YoY -1.9

North East

- MoM -0.6 YoY -2.5

Yorkshire & Humberside

- MoM -1.3 YoY -2.6

North West

- MoM -2.0 YoY -2.1

Wales

- MoM -4.2 YoY -6.1

 

Outside of London the falls are looking quite high.

[Columbo]

I see BDEV is up 50% since early December.

 

Is this an encouraging sign for UK property prices?

[drbubb]

Why 2011 May Be the End of the Housing Crash

 

Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years' pay, although that varies nationally.

/more: http://online.wsj.com/article/SB1000142405...=googlenews_wsj

Let's compare that with the UK:

 

H&N index House Price : Pds.161,536 (Jan.2011) : Tinyurl.com/GPC-data

Average HH income--- : Pds . 3,129 (Jan.2011) : Tinyurl.com/GPC-incomes*

=========================

Ratio : Months to Pay- : 51.6 Months

 

*Note: that's Pds. 37,544 pa / 12 = Pds. 37,544 pa

 

== ==

 

As I have said before : The UK has not really "faced its house crash demon" yet.

The Brown regime wimped out in late 2008, when it was the first to move the QE and ZIRP.

 

The coalition (and the country) will bear a heavy cross for a long time for that decision.

But - to be fair - the crash is underway outside London. When will London face the demon ?

[drbubb]

I see BDEV is up 50% since early December.

 

Is this an encouraging sign for UK property prices?

BDEV has a base in London, and has been benefitting from sales to gullible foreigners.

I wonder how much longer they can "get away" with that?

[drbubb]

THE SPIN CONTINUES...

 

House prices increase by 0.3% in February

• House prices increased by 0.3% in February

• Prices 0.1% lower than one year ago

 

Headline says : +0.3%. But is it really?

 

Mortgage approvals have just "unexpectedly" jumped to their highest level for a year. BoE Figures.

 

Nationwide report MoM up 0.3% Crash cruise speed?

A rush to buy before rates rise perhaps. (?)

 

I will take a close look at the nationwide figures

 

(in edit):

Just as I thought... That "rise" is pure spin.

 

Actual figures are:

 

Average Price £161,183 £161,211 : the first number is Feb. NSA, compared with Jan.NSA

/source: http://www.nationwide.co.uk/hpi/historical/Feb_2011.pdf

 

Can you see any rise in these numbers ??

Looks like down 18 pounds in Feb. to me

[Columbo]

BDEV has a base in London, and has been benefitting from sales to gullible foreigners.

I wonder how much longer they can "get away" with that?

 

Here's a map of Barratt's UK developments Dr Bubb.

 

As you can see there aren't too many in London.

 

If BDEV truly is a Bellweather for house price trends, then the next leg down looks a long way off.

[drbubb]

I see BDEV is up 50% since early December.

 

Is this an encouraging sign for UK property prices?

Well spotted, Columbo !

 

Barratt/ BDEV is indeed at a critical level NOW! ... update : close-up/last12mos

 

I think BDEV will fall away from the key resistance level (near 110p-115p: 377d.MA is 113p) that it reached yesterday

 

Evidence of emerging weakness: Today's action BDEV-105.20p / Change: -2.20p / Percent Change: -2.05%

 

If not, and instead it breaks out above 115p on big volume, I will need to revisit my Bearish forecast.

[James]

Let's compare that with the UK:

 

H&N index House Price : Pds.161,536 (Jan.2011) : Tinyurl.com/GPC-data

Average HH income--- : Pds . 3,129 (Jan.2011) : Tinyurl.com/GPC-incomes*

=========================

Ratio : Months to Pay- : 51.6 Months

 

*Note: that's Pds. 37,544 pa / 12 = Pds. 37,544 pa

 

== ==

 

As I have said before : The UK has not really "faced its house crash demon" yet.

The Brown regime wimped out in late 2008, when it was the first to move the QE and ZIRP.

 

The coalition (and the country) will bear a heavy cross for a long time for that decision.

But - to be fair - the crash is underway outside London. When will London face the demon ?

 

Endeed, US starting to look less unaffordable.

 

Quote: "Housing affordability is critical to the welfare of families around the world. Since the highest single household expense is generally for housing, markets where housing costs form a greater portion of total expenditures means that households have less money to spend on other necessities. As well, housing affordability has changed in many markets around the world. House price escalation has outstripped household income in many areas of the world, making housing increasingly unaffordable in many markets in Australia, New Zealand and the United Kingdom".

 

Source:Demographia report

 

 

 

 

[James]

Biggest annual fall in house prices since Oct. 2009

 

More

 

I have also read that the number of homes being put up for sale in the UK jumped 7.5pc in Feb., the biggest monthly increase for three years.

[drbubb]

Halifax, down down down

http://uk.finance.yahoo.com/news/Halifax-U...954286.html?x=0

Now that's more like CCS.

Indeed.

A boost for those who were "faint of heart" !:

 

House prices fell at their fastest annual rate for 16 months during February as faltering demand continued to put downward pressure on the property market, mortgage lender Halifax said.

 

Property values were 2.8pc lower than a year earlier, the biggest drop since October 2009 - based on average prices during the three months to the end of February and the same period a year earlier, according to the Halifax house price index for February .

 

Prices fell by 0.9pc during February itself, more than wiping out January's 0.8pc rise.

[drbubb]

Biggest annual fall in house prices since Oct. 2009

 

More

 

I have also read that the number of homes being put up for sale in the UK jumped 7.5pc in Feb., the biggest monthly increase for three years.

The Panic may be about to set in - if it hasn't already.

 

I was phoned today about "discounted London properties" being offered in Hong Kong this weekend.

Are they getting desperate ? This is only the second time I have been phoned like this, and the first time they volunteered discounts.

The property is in the Royal Docks area, I believe, and offered at about Pds.350 psf - cheaper than most coming thru here.

[drbubb]

I think many people on here, and on HPC, fail to understand the housing market. It is viewed as though it were a stock market and that the people who buy and sell are investors. Which might explain why, despite all the strongly held beliefs that, based on fundamentals, the market must crash (views held since 2003 by some people) it still hasn't really gone down much yet (those last 5 words must be seen in a regional context - I know in some places in the North, Midlands and Wales prices have come down a good bit but, as they had gone up by a factor of 5 to 6 over about 5 years, this is to be expected).

You don't get it do you?

 

The UK saved its property market from a crash by moving to a "Zero Interest Rate Policy" (ZIRP) in late 2008/ early 2009.

 

The crash underway then came over a year LATER than the one in the US, and the slide was picking up steam, when sharp interest rate cuts were implemented. (This was part of Gordon Brown's machivellian plan to "save the world.") Suddenly, many people who had Tracker mortgages linked to Base rates or Libor found they were paying almost nothing in interest on their mortgages. For these lucky folk, it was cheaper to stay put in owned accommodation, rather than selling out and renting, or moving somewhere else. SO THEY STOPPED SELLING. And the supply of homes for sale quickly dried up.

 

At the same time, the government started ramping up its generous housing benefits, matching market rents. This made it easy for BTL landlords to hold onto their property investments. And many began to bid for new properties, think the ZIRP might last for years.

[TKline]

Update from Australia. The Economist has declared Australian house prices almost 60% over valued. The bubble is already bursting and this cycle has peaked. Real estate agents are in panic mode and fudging clearance rate figures to falsely boost the Australian Property market. Fortunately it's not working and prices are already in freefall. Prices are down 25% on the Gold Coast and more in other places. The decades long Australian property boom is over. Dead. Gone. Spread the word. That's where we are in the cycle!

[drbubb]

Update from Australia.

Prices are down 25% on the Gold Coast and more in other places. The decades long Australian property boom is over. Dead. Gone. Spread the word. That's where we are in the cycle!

That is good news! Madness cannot go on forever.

Paul Thomasen agrees with you:

OZ PROPERTY - Crash Coming ?

 

So thinks Paul Thomasen...

 

Besides the big price declines there were some important developments today.

 

Several of our weekly trend signals changed today - these signals can last for any where from about 6 months to several years - so they are worth paying attention to - and here they are for today:

 

- Australia joined Japan today by triggering new bearish weekly trend signals - suggesting continue prices declines until at least late 2011. A troubling sign that may indicate the Australian housing boom may be about to implode - make a note.

 

- All other international markets moved to neutral, possibly setting up for major reversals.

 

- NYSE and NDX moved to neutral as well.

 

Don't be fooled by the media, this decline started well before the earthquake occurred in Japan - the decline was going to happen anyway.

 

As we've been saying for sometime, complacency and too much optimism is a bad set-up for the markets. So when our trend signal analytics told us the markets had already turned bearish back on the 8th of March while the indexes were rallying, it simply showed that we were wise to be patient to that point. But now we are expecting the 20+ open bearish positions added during last week should offer much more potential to come.

 

/ see: Green Button above

 

Despite that, or maybe because of it: the developers from Oz are pumping their properties furiously in HK right now.

[drbubb]

I have updated my charts for Hong Kong : Property versus the HSI / Stock index

 

The following chart compares the Centaline index (for HK property) with the Hang Seng Index / HSI.

 

 

Updates: Centaline index : HSI-to-12/2011 : HSI-w/MAs : HSI-wk-4yrs : HSI-D-2yrs

 

I think we may be within a topping region now for the Centaline index, especially if the HSI breaks down below 20,000 and/or within 2011 the HSI fails to exceed its 2010 highs.