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Speed of UK House price decline - what is it NOW?

Speed of UK House price declines  

33 members have voted

  1. 1. How are you experiencing house price declines in your area of the UK

    • Property price falls are speeding up
      5
    • Crash cruise speed - prices are falling at a fairly steady rate
      14
    • The rate of decline has slowed noticeably
      2
    • Prices seem to be stable - have stopped falling
      1
    • Prices are now showing a slight uptrend
      2
    • Prices are rising in a healthy way
      0
    • The picture is very mixed. No conclusion is possible
      6
    • No comment
      3
  2. 2. My belief about a bounce, or sign of stability

    • There will be no bounce this year
      15
    • What I am seeing, will be nothing but a Spring bounce
      12
    • The stability could eventually lead to a recovery
      2
    • This is THE LOW in the cycle
      0
    • No comment
      4
  3. 3. Availability of finance

    • It is virtually impossible to borrow to buy a home where I am
      0
    • Loans can be obtained by those who have a 40-50% deposit, and sufficient income
      3
    • Mortgage loans of 70-75% LTV are available
      13
    • 80-85% loans are available (tell us more)
      7
    • Loans of 90-100% can be obtained
      0
    • No comments
      10


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CONFUSING ARTICLES in the Press

 

1/ FALLING FASTER

House price decline accelerates

 

The collapse of house prices is speeding up

House prices are falling even faster than before in England and Wales, according to the Land Registry.

 

forsale_1298032c.jpg

 

Prices dropped by another 2% in February, pushing the annual rate of decline from 15.1% to 16.5%.

 

It means the average property is now worth £153,862, down by £30,361 in the past year, and back to the level last seen in September 2004.

 

The Latest chart from Nationwide, showing the peak in October 2007

aa3.gif

 

House price inflation has fallen for 18 months, due to the impact of the recession and the mortgage drought.

 

The Land Registry's figures confirm the downward trend indicated by other surveys, such as those from the Halifax and the Nationwide. Hand-in-hand with the fall in prices has gone a slump in sales. This week the HM Revenue & Customs (HMRC) published figures showing that property sales in the UK hit a new low this year.

 

There were just 42,000 completed transactions in February, only slightly higher than in January but still half the level seen a year ago.

 

Earlier this month figures from the Bank of England suggested that the number of mortgages being approved, but not yet lent, had bottomed out at an average of 31,000 for each of the past six months.

 

But despite surveyors and estate agents reporting a pick-up in enquiries from would-be buyers, there is little evidence so far that this is translating into higher sales.

 

/more: http://newsvote.bbc.co.uk/2/hi/business/7967715.stm

== ==

 

 

2/ STABLE "CRASH CRUISE SPEED"

Barratt Developements Plc (BDEV.L) ... Log-Update : 1year-NonLog

aa2b.gif

 

== ==

 

 

3/ REBOUNDING

New mortgage lending hits 10-month high

 

By Daniel Pimlott ... March 24 2009

 

New mortgage lending jumped to its highest level in 10 months in February, the British Bankers’ Association reported on Tuesday, in the latest sign that the housing market may be stabilising.

 

But mortgage approvals remain barely above the record lows of last autumn and economists warned that it was too early to predict a recovery.

 

New mortgages rose by 16 per cent last month to a seasonally adjusted 28,179 from 24,278 in January. That was the highest level since April of last year and is up 58 per cent from the record low in November.

 

However, it was still 31 per cent lower than in February 2008 and nearly two-thirds lower than the peak levels of lending at the end of 2006.

 

Ben Broadbent, an economist at Goldman Sachs, said that the data were encouraging for the economy, but that they were not enough to mark a turnround.

 

“Activity in the housing market is a better correlation for spending than house prices and is a leading indicator,” said Mr Broadbent. “But for demand to recover lending has to be freer. It is not sufficient on its own, but it’s a relief to have the necessary conditions there.”

 

The figures showed a rising number of loans for the third month in a row, and follow data from the Royal Institution of Chartered Surveyors on the rising numbers of inquiries about house purchases in the past four months.

 

The National Association of Estate Agents reported last week that sales of homes rose to the same level they were at a year ago in February.

 

The data, however, do not include building societies and other non-bank lenders, which have been harder hit by the shrinking of wholesale funding markets. More complete data from the Bank of England, which will be made public next week, have tended to show sharper declines in lending.

 

/more: http://www.ft.com/cms/s/2/3578204c-18ca-11...00779fd2ac.html

 

= = = = =

Clones : HPC : GHPC

Poll : After the "Housing Ladder"

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So far...

CRASH CRUISE SPEED RULES !

 

"Crash Cruise speed" in the UK ............................ : "Crash Cruise speed" in the US .............

1238312625047619700.gif...1238313850014864400.jpg...

UK prices are -20.5% from peak (Nationwide) ...... : US prices are -29.1% (Case-Schiller, Jan.2009)

Pds.147,746 / Pds.186,044 = -20.5% in 17 mos..... : $146.40 / $206.52 = -29.1% in 31 mos.

 

Many of those who bought during the "Winner's Curse period" (the last two years or so leading into the peak) are now into negative equity. Defaults are rising, and bank balance sheets are being undermined.

 

== == ==

 

 

THIS ARTICLE

Housing market could have 'hit the bottom', mortgage figures suggest

 

The housing market, suffering its worst crash since the 1930s, could have hit the bottom, mortgage figures suggest.

 

Starts off by being encouraging...

 

"For the third month in a row, the number of loans extended to home buyers has increased, climbing from a low of 17,900 in November last year to 28,179 in February.

 

The statistics from the British Bankers' Association are the latest evidence that the moribund housing market is showing some sings of life. Estate agents have reported that more people are coming in through their doors in recent weeks, as rock-bottom interest rates start to slowly trickle through to some lower mortgage deals."

 

But the last part sounds rather ominous:

 

"Most believe that too much should not be read into the BBA data. Seema Shah, property expert at the think tank Capital Economics, said: "Mortgage approvals for new house purchase are still extraordinarily weak, being 31 per cent lower than a year earlier and some 65 per cent below the late 2006 peak."

 

The BBA figures also show that savers continued to withdraw money from their savings accounts during February, fed up with record low interest rates.

 

After a net £2 billion being taken out in January, a further £100 million was withdrawn in February. Most are using their money to either pay off their debts or – in the case of people losing their jobs – fund everyday expenses"

 

/see: http://www.telegraph.co.uk/property/proper...es-suggest.html

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LOW RATES... an act of desperation ?

 

base_rate_0809.gif

 

Here's why:

 

aa1q.gif

 

The drop in property prices is destroying the solvency of the UK banking system, and the authorities are desperate to stop the rot. (They should have acted years ago when the ingredients - the excessive mortgages - were getting "baked into the cake." The horse has bolted.)

 

The same game, of lower rates, is being played out in the US:

 

abit.png

 

Brown and Obama are asking for the whole world to play this game, so their currencies will not get trashed.

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INFLATION RISING, despite the UK downturn...

 

Inflation surprises with jump to 3.2%

 

By Daniel Pimlott, Economics Reporter ... March 24 2009

 

Fears Britain might enter a deflationary spiral receded on Tuesday after inflation rose in defiance of expectations last month.

 

As the sharp fall in the value of the pound fed through in the form of higher prices for shoppers, the consumer price index increased from 3 per cent in January to 3.2 per cent in the year to February, confounding economists’ forecasts of a further fall to 2.6 per cent. Inflation has fallen from a peak of 5.2 per cent in September.

 

The rise in inflation forced Mervyn King, the governor of the Bank of England, to write to Alistair Darling, the chancellor, to explain why prices were still rising more than one percentage point above the Bank’s 2 per cent target.

 

The data appear embarrassing for the Bank. It has cut interest rates to the lowest level in its 315-year history and begun an unprecedented programme to create money and to buy assets.

 

But Mr King said the rise in inflation reflected retailers’ decisions to pass on the fall in sterling to consumers – although he was optimistic about the medium-term implications. “Even if we see significant pass-through of the depreciation of sterling, it may mean inflation is close to the target rather than below it. I don’t see a large risk of inflation being significantly above it,” the governor told the Treasury committee on Tuesday.

 

In order to use this player, please download the latest Adobe Flash player.

The effect of higher import prices – reflecting sterling’s near-28 per cent drop in value since the summer of 2007 – seemed to be evident in some categories that made the biggest contribution to the inflation rate.

 

Life becomes cheaper for many richer families

 

 

The poorest and oldest people in society are experiencing much higher rates of inflation than other citizens, writes Chris Giles.

 

The items with the largest falls in price in Tuesday’s figures – mortgage interest payments and petrol prices – matter much more to the rich than the poor. Consequently, life is getting cheaper for most richer families, according to research by the Institute for Fiscal Studies. Food prices, by contrast, are up by 11.3 per cent over the past year, while electricity and gas for cooking, light and heating are up 22.3 per cent. So poor and elderly people, for whom these are big budget items, are much harder hit than the headline inflation rate would suggest.

 

The Office for National Statistics calculates the retail and the consumer price indices by monitoring thousands of price changes and weighting the results by the amount the nation spends on each item. The rich spend a lot more than the poor, giving the wealthy a much bigger weighting in the overall RPI or CPI than a household with average income.

 

This is not usually an issue because price changes are similar across goods and services consumed disproportionately by the rich and poor. “The differences tend to even out over time – it is not true to say the poor always do worse [on inflation],” says Zoë Oldfield, of the IFS.

 

But this is not the case at present, with price rises on the essentials of life far outstripping those on relative luxuries. As a result, there are huge differences in the inflation rates experienced by households of different ages, incomes and housing tenure.

 

If you average all households’ inflation rates, you get 1.6 per cent, the IFS says – significantly higher than the zero RPI inflation which is the average for all expenditure.

 

But analysis of household inflation by the IFS also reveals that, as in so many things in life, the rich count for more than the poor when it comes to the cost of living.

 

Continued sharp rises in food prices were responsible for faster-than-expected increases overall. Food inflation stood at 12.5 per cent in February, compared with 11.1 per cent in January. Within that, prices for fresh vegetables were up by 18.6 per cent, partly due to cucumbers and courgette prices rising after a poor Spanish harvest.

 

The cost of meat was up by 15.2 per cent

 

/more: http://www.ft.com/cms/s/0/1b146446-185b-11...00779fd2ac.html

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I voted three "no Comments" so my votes (from Hong Kong) would not contaminate the results.

 

I am very curious what people think, since I wil, be talking about the "current state of Uk property prices" in the Conference Call on Friday morning (UK time)

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I think prices are set for further steady declines with the possibility of a short lived bull trap. On an affordability basis we are currently still at a higher multiple than the peak of the 1989, despite 18 months of fairly steady falls in house prices. The government / VI talk of "getting banks lending" "getting the mortgage market moving" coupled with the record low interest rates appear to be the required ingredients for a mini bounce perhaps lasting three or four months.

 

I don't think that the full impact of the recession will be felt for some time yet, leaving a window of opportunity for those who seek to pounce on any nugget of postitve news and spin it as the signs of green shoots. At least another 3/4 years of 10-15% per annum falls is my gut feeling. Continued inflation hitting the cost of basic goods and services, coupled with stagnant or declining wages. Then the possibility of high inflation / hyperinflation ending the falls in house prices in sterling.

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I think the headline should be:

 

Inflation surprises with jump to 7.2%

 

;)

 

Add that to the quoted house price fall and you're closer to the real fall in value.

 

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In my area (southern UK - hampshire/dorset) the price falls are mostly painfully slow. The larger family houses, particularly in nicer areas are, for the most part, still *massively* overpriced, advertised at or around 2007 prices (typically 10x local salary for a 3 bed). It's very frustrating to see so much denial still out there.

 

That said, the rougher areas where people are being more affected by unemployment and where there is more debt generally (and typically less of a "wealth cushion" of savings and equity) are starting to show modest falls in asking prices (around 15% from peak).

 

Re a bounce - I'm sure it's possible we'll see some bounce this year, but IMO it may happen at the end of the year rather than the spring - prices are still too high for any sustained bounce I think. Maybe later in the year when more properties start getting marketed at 25-30% off peak, we may see volumes pick up and get a bounce for 2-3 months.

 

IME the credit availability thing is a myth. Anyone with a 25% deposit and a decent income (even a self-employed contractor such as myself) can secure a mortgage (or at least on offer of one in my case). What have disappeared are the high LTV deals, which seems perfectly understandable in a falling market. I for one cannot understand the idiotic government "get banks lending" rhetoric - surely lax lending landed us in this mess. :angry:

 

<rant>

Personally I just want all the retiring baby-boomer "my house is my pension" types, deluded "no offers" vendors and all the other myopic denial-affected people to wake up, look around, realise this is the worst HPC for at least a generation, and start dropping their overpriced family homes down to prices that the actual families who need them can afford.

</rant>

 

Sigh.

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In my area (southern UK - hampshire/dorset) the price falls are mostly painfully slow. The larger family houses, particularly in nicer areas are, for the most part, still *massively* overpriced, advertised at or around 2007 prices (typically 10x local salary for a 3 bed). It's very frustrating to see so much denial still out there.

 

<rant>

Personally I just want all the retiring baby-boomer "my house is my pension" types, deluded "no offers" vendors and all the other myopic denial-affected people to wake up, look around, realise this is the worst HPC for at least a generation, and start dropping their overpriced family homes down to prices that the actual families who need them can afford.

</rant>

 

I have heard this kind of comment from people who live around Cambridge.

The failure of prices to slide seems like a form of Denial on a Mass basis.

It's a pity there's no way to go short such foolishness.

 

But the may be "saved" for a while longer, if the UK can engineer a Dead Cat bounce / "Bull Trap".

I think that is likely, but it is hard to say exactly when it will start, I am expecting it to start in the USA, and to be signalled by a blip up in the US builder stocks.

 

But after a multi-month rally, I think we will have a deeper and more destructive slide, as interest rates rise.

 

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I have heard this kind of comment from people who live around Cambridge.

The failure of prices to slide seems like a form of Denial on a Mass basis.

It's a pity there's no way to go short such foolishness.

 

But the may be "saved" for a while longer, if the UK can engineer a Dead Cat bounce / "Bull Trap".

I think that is likely, but it is hard to say exactly when it will start, I am expecting it to start in the USA, and to be signalled by a blip up in the US builder stocks.

 

But after a multi-month rally, I think we will have a deeper and more destructive slide, as interest rates rise.

 

That sounds very likely, but the problem is many of the older couples who are sitting on their unrealised "pension" gains after their children have left home are also sitting on big pots of cash. Rising interest rates will certainly lead to a second, more savage wave of reposessions, but IMO there will still be a "hard core" of those sitting in houses far bigger than they require, in the deluded belief that "house prices only go up in the long run" and that "things will pick up next year"

 

They will ultimately lose since they will be forced to sell eventually (say in the 5-7 year time horizon as they get older and need to downsize to release capital), but in the mean time those of us who actually *need* family size accommodation are being denied it, essentially by our parents generation.

 

I feel very bitter and cheated by it all, particularly after this latest round of government manipulation. They're trying to prop up the prices at the expense of *everything* else - the value of our currency, shafting all the savers, indebting the entire nation for a generation .... all so young families can fund their parents retirements.

 

I think people are being effectively forced from cash into other asset classes (shares, PMs, eventually property), even those who would traditionally not have considered such (in their eyes) "high risk" investments. Its criminally irresponsible, and sends out a terribly destructive message ("don't bother saving, there's not point, gamble on housing or the stock market, you know it makes sense!")

 

Ho Hum.

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Interesting post, 6v6.

 

Your emotions are understandable. All I can advise is to try to swallow you bitterness, and learn to live happily with a bit less space than you would like to have ideally. It will be good practice for the tougher times ahead- as many will learn late in the game.

 

Being in "cramped space" is not the end of the world, as my GF and I learned when we moved from 1200sf to 750sf, in oder to live at a "better address." We are actually happier where we are now.

 

= =

 

Here's a discussion from HPC that arose when I asked why someone ticked the answer: "It's impossible to borrow money where I am":

 

Over zealous bears I think, a quick search on money supermarket shows that most lenders offer a LTV of up to 75% on fixed rate deals, and 60-75% on trackers. You can even get 90% LTV if you're prepared to pay 6-7% interest.

 

Yes, that is what I wss thinking, too.

If someone really wants to borrow, they can find the money. But they will need to come up with a sizeable downpayment - like 20-30%. That's enough that the bank providing the mortgage will feel like they are booking "good business." The crazy thing was that people deviated from this sensible standard.

 

(Here's Barry Ridholz, talking about how the US data has been consistently misinterpreted by mediua sources and EA's):

 

"As the Census Department itself notes, “the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease.”

 

The data does however, tell us that the year-over-year sales fell 41.1% plus or minus 7.9% gives us a range of -49% to -33.2%. The entire range is negative, therefore we can conclude sales fell year-over-year.

 

These are facts. This is data. This is how you interpret it. Most of the MSM reports (WSJ, Marketwatch, Bloomberg) were simply wrong.

 

Not nuanced, not shaded, but 2+2=5 wrong.

 

Let me remind that many of these folks incorrectly misinformed you that Housing wasn’t getting worse in 2006, 2007 and 2008 — just as Home sales and prices went into an historic freefall. Now, these same folks are misinforming you that Housing has turned around and is improving. That is simply unsupported by the data.

 

(And don’t even ask about television — they simply read the wrong news. Here is a life lesson for you: Never believe news people who read teleprompters. They have no idea what they are doing, they are reading what someone else wrote. When it comes to data interpretation, they are quite literally clueless. Rely on news readers to your personal financial detriment)."

 

/see: http://washedit.com/?p=153

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Obama’s mortgage relief and housing Plan - Does Brown have something similar up his sleeve?

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

 

The details on the new mortgage relief plan are out. The key parts are the following:

 

+ Mortgage must be a conventional, conforming loan (i.e. up to the new $729,00 level - No jumbos)

+ Homes must be owner-occupied (no vacant or invesment homes qualify)

+ No minimum or maximum LTV (does that mean 110% loans qualify? I do not know yet, but you can be in negative equity)

 

+ Will bring debt to income ratio down to 38% by the lender

+ The governemnt will kick in the rest to get homeowners down to 31%.

+ Borrowers in bakruptcy are not automatically rejected

+ If you default, you do not re-qualify

 

/see: http://www.creditwritedowns.com/2009/03/ob...using-plan.html

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Dr Bubb, you have previously considered shares in housebuilders to be an important bellweather for the future direction of HPI.

They have risen significantly this past 2/3 months.

 

Not yet. A BUY signal hasnt been flashed yet. But it could happen soon. I am particularly watching Barratt, and comparing its price action to the 1 year (252day) MovingAverage :

 

Barratt Dev'l (BDEV.L) ... update

big.gif

 

A move above key resistance near BDEV-120p / the 252d.MA /

would be a sign that the "Bull Trap" move may be about to begin.

 

Here are the historical BUY and SELL signals for Centex/CTX representing US property, and Barratt/BDEV, representing UK property:

 

aa4.gif

 

What I find very interesting is that Berkeley / BKG shares have recently flashed a "BUY", by exceeding their 252d.MA and that Tony Pidgley, BKG's chairman (who is well-known for his timing prowess) has recently said that UK property is near a cyclical Low.

 

aa6.gif

 

Fundamentally, I cannot see this as THE LOW, but I think that a nice Bull Trap is about to be set, and for a while Property buyers will think they "caught the low", only to find themselves trapped in a losing investment when interest rates go back up.

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I can't see there being any temporary pause in the decline in UK house prices - RPI is now 0% and this has never happened in previous crashes. What it means is that the percentage nominal falls are going to be the biggest we've ever seen since high RPI helps cushion house price falls, so this is the very worse kind of housing bust you can have much like Japan in the 1990's.

 

The more I think about Kondratieff waves, the more I start to appreciate the inflation aspect when you compare it to plants growing outside and the different kind of housing crashes that we have seen.

 

Spring phase - slow growth and very low inflation (1949-1966)

Summer phase - bigger growth and leading to high inflation (1966-1982)

Autumn phase - slowing growth and falling inflation (1982-2000)

Winter phase - very little growth and deflation (2000-2017?)

 

kondcycle.gif

 

 

The mid-70's crash was a 'summer phase' crash where we had no nominal falls due to high inflation, everything else just went up like wages, food and fuel.

 

The early 90's crash was an 'autumn phase' crash where we had inflation that was lower but still higher than what we have seen in recent years

 

The late 00's crash is a 'winter phase' crash and in a lot of ways is the polar opposite to a 70's style summer phase crash

 

 

Interestingly, the UK house price peaks have come 7 years after the beginning of the seasonal phase, ie. 1973, 1989 and 2007 so there seems to be a pattern here. There might have been a peak in 1956 were it not for all the post war rebuilding of bombed out Britain and a shortage immediately after the war which caused a boom that peaked in 1948 after which prices fell.

 

The next housing boom will take place in the spring phase which is a period like 1949 to 1966 - this is a period many of us have no understanding of because we were not alive then. I'm keen to understand what kind of housing cycle we will likely get next time because the expansion of credit has now ended - maybe the expansion of credit will only happen very slowly at the beginning of the spring phase, until then we could be facing yet further credit contraction.

 

My feeling is that UK house prices could fall to 3.0 to 3.5 times average earnings and remain there for a very long time until a new credit cycle is well underway in the summer phase - the cost of living will become increasingly expensive over the next few years so a bigger proportion of peoples earnings will be needed to pay taxes, food and fuel etc.

 

As the credit cycle has expanded, a bigger multiple of peoples earnings has been needed to pay for each sucessive peak in house prices from 1973 to 1989 to 2007 - the beginning of the next cycle should see the lowest house price earnings ratio of them all in the spring phase.

 

So I can only see less and less money that can go into the housing sector in terms of rents or house buying - taxation is going to rise to pay for the mess the UK economy is in and on top of that we also have an ageing population and declining birth rate just like Japan. Each person who is working will be supporting a growing number who are not working, therefor the tax take must rise.

 

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Fundamentally, I cannot see this as THE LOW, but I think that a nice Bull Trap is about to be set, and for a while Property buyers will think they "caught the low", only to find themselves trapped in a losing invetsment when interest rates go back up.

 

Here, here, the big red flag was the failure of the recent gilt auction IMO, but then a basic knowledge of economics is needed to understand that. There was a report on motley fool saying that lenders were already re-acting by increasing the rates on fixed rate mortgages. I wonder what the consensus of opinion is towards interest rates among the prospective FTBers. If the expectation is of rising rates then the increased rates on the fixed products may prevent them from getting onto the ladder from an affordibility perpective and hence scupper the bull trap. I do suspect that this may be partially negated by the positive sentiment that is being manufactured (as a result of the recent reports of price increases) by people with vested interests. I would imagine that in conversations with propective buyers, estate agents and mortgage advisers are alluding to low interest rates for some considerable time to come. Very cynical view I know, but reality IMHO.

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There appears to be increased activity in the market locally, so I would anticipate a bounce in transactions at the very least. Properties that are selling in the (admittedly) small sample I am looking at are well off the peak - I would estimate at least 30%. This leaves me rather confused as to what is actually going to happen in the short term.

 

Points I am currently pondering:

 

* Bearing in mind the major indices are debt-based (building society lending), will they register a rise? I could see bank lending, feasibly, increasing as a result of bailout cash, within the constraints of the UK government's somewhat puzzling 'lend more on overpriced assets, but be responsible' position.

 

* Gordon Brown appears to be intent on money pumping, but the comments by Mervyn King and the subsequent meeting with HRH may indicate that the 'establishment' are not happy with the current trajectory.

 

* Do the masses believe it's over? From here, will supply expand or contract?

 

 

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I can't see there being any temporary pause in the decline in UK house prices - RPI is now 0% and this has never happened in previous crashes. What it means is that the percentage nominal falls are going to be the biggest we've ever seen since high RPI helps cushion house price falls, so this is the very worse kind of housing bust you can have much like Japan in the 1990's.

 

The more I think about Kondratieff waves, the more I start to appreciate the inflation aspect when you compare it to plants growing outside and the different kind of housing crashes that we have seen.

 

Spring phase - slow growth and very low inflation (1949-1966)

Summer phase - bigger growth and leading to high inflation (1966-1982)

Autumn phase - slowing growth and falling inflation (1982-2000)

Winter phase - very little growth and deflation (2000-2017?)

....

 

the Kondratieff cycle makes sense and if we didnt have unbacked fiat money it would play out as expected - difference this time is we are in the winter phase with paper money and clueless governments - house prices will still fall in relation to gold but we may suffer a huge currency crises due to the steps being taken - if they manage to get inflation to reach wages then house prices will rise - not for the at least the next 12 months though methinks

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Very interesting post, Catflap. Thanks for that.

Interestingly, the UK house price peaks have come 7 years after the beginning of the seasonal phase, ie. 1973, 1989 and 2007 so there seems to be a pattern here. There might have been a peak in 1956 were it not for all the post war rebuilding of bombed out Britain and a shortage immediately after the war which caused a boom that peaked in 1948 after which prices fell.

 

The next housing boom will take place in the spring phase which is a period like 1949 to 1966 - this is a period many of us have no understanding of because we were not alive then. I'm keen to understand what kind of housing cycle we will likely get next time because the expansion of credit has now ended - maybe the expansion of credit will only happen very slowly at the beginning of the spring phase, until then we could be facing yet further credit contraction.

 

Until recently, House prices never really dipped much. From 1954, we have only seen brief slowdowns

hpilogju1.jpg

 

Things were similar in the US, very brief corrections, where prices dipped at 0.5-1.0% per month for just a few months.

Until NOW!

 

HISTORICAL CYCLES (per Northern Trust)

Recession ===== : Peak of Median Price : Trough, Median Price : P-to-Tr.

=============== : -Date- : Price $ ... : -Date- : Price $ ... : Change

Dec.69 - Nov.70 : Jul-70 : $ 23,700 .. : Oct-70 : $ 22,700 .. : - 4.22%

Nov.73 - Mar.75 : Jul-74 : $ 33,000 .. : Oct-74 : $ 31,900 .. : - 3.33%

Jan.80 - Jul.80 : Jun-79 : $ 56,800 .. : Nov-79 : $ 55,600 .. : - 2.11%

Jul.81 - Nov.82 : Jun-82 : $ 69,400 .. : Oct-82 : $ 66,900 .. : - 3.60%

Jul.90 - Mar.91 : Jun-90 : $101,200 .. : Dec-90 : $ 94,200 .. : - 6.92%

Mar.01 - Nov.01 : Jun-01 : $160,800 .. : Oct-01 : $153,800 .. : - 4.35%

 

Current Cycle.. : Jul-06 : $230,900 .. : Oct-08 : $181,800 .. : -21.26%

Updated Cycle.. : Jul-06 : $230,900 .. : Dec-08 : $173,400Est : -24.90%Est

= = = =

*CS Index, 20.C : Jul-06 : CS206.52 .. : Oct-08 : CS158.16 .. : -23.42%

*CS Index, 20.C : Jul-06 : CS206.52 .. : Dec-08 : CS150.66 .. : -27.05%

*CS Index, 10.C : Jun-06 : CS226.29 .. : Dec-08 : CS162.17 .. : -28.34%

 

In the US: 30 months of 1% per month falls. And no signs (yet) of a turnaround.

Here's the really bad news: the UK had bigger gains, and so may have even bigger falls than the US.

 

My feeling is that UK house prices could fall to 3.0 to 3.5 times average earnings and remain there for a very long time until a new credit cycle is well underway in the summer phase - the cost of living will become increasingly expensive over the next few years so a bigger proportion of peoples earnings will be needed to pay taxes, food and fuel etc.

 

As the credit cycle has expanded, a bigger multiple of peoples earnings has been needed to pay for each sucessive peak in house prices from 1973 to 1989 to 2007 - the beginning of the next cycle should see the lowest house price earnings ratio of them all in the spring phase.

 

So I can only see less and less money that can go into the housing sector in terms of rents or house buying - taxation is going to rise to pay for the mess the UK economy is in and on top of that we also have an ageing population and declining birth rate just like Japan. Each person who is working will be supporting a growing number who are not working, therefor the tax take must rise.

 

Good points. And the really scary thing, would be if Incomes fall in the US.

This is what my lie ahead in a time where the UK is forced to raise rates.

 

The policies of Mr.Brown have brought, and will bring, so much misery to so many people!

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UPDATE

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

 

How are you experiencing house price declines in your area of the UK

Property price falls are speeding up ................................... [ 4 ] [16.00%]

Crash cruise speed - prices are falling at a fairly steady rate [ 10 ] [40.00%]

The rate of decline has slowed noticeably........................... [ 0 ] [0.00%]

Prices seem to be stable - have stopped falling................... [ 1 ] [4.00%]

Prices are now showing a slight uptrend............................. [ 1 ] [4.00%]

Prices are rising in a healthy way....................................... [ 0 ] [0.00%]

The picture is very mixed. No conclusion is possible............. [ 6 ] [24.00%]

No comment....................................................................... [ 3 ] [12.00%]

 

Total Votes: 25

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I havn't seen this posted......

"Mortgage approvals leap by 19 per cent

The number of mortgages approved for house purchase jumped by 19 per cent during February in a further sign that buyers are returning to the market, figures have showed."

http://www.telegraph.co.uk/property/proper...9-per-cent.html

 

I am expecting a "dead cat" bounce soon, so this is no surprise

 

UK Mortgage Lending

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

"Almost doubled analysts forecasts, rising Pds 1.5 Billion"

 

A Modest Rise?..................... : + Jan.+ : + Feb.+

Approved for Home Purchase. : 31,791* : 37,937 : Was the highest since May 2008

As a Percentage of UK Homes : 0.xx % : 0.xx % : of X.x Million

 

*Only about 33 percent of what they were in 2007 (peak year)

"A long way to go before they get to levels which are no longer consistent with falling house prices."

- Vicky Redwood, Capital Economics

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UPDATE

The Second figure, and 2nd percentage, is from HPC

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

 

How are you experiencing house price declines in your area of the UK

Property price falls are speeding up ................................... [ 4 , 12 ] [15.38%, 16.90%]

Crash cruise speed - prices are falling at a fairly steady rate [ 11, 38 ] [42.31%, 53.52%]

The rate of decline has slowed noticeably.......................... [ 0, 09 ] [ 0.00%, 12.68%]

Prices seem to be stable - have stopped falling................ [ 1, 01 ] [ 3.85%, 01.41%]

Prices are now showing a slight uptrend............................ [ 1, 00 ] [ 3.85%, 00.00%]

Prices are rising in a healthy way.......................................... [ 0, 00 ] [ 0.00%, 00.00%]

The picture is very mixed. No conclusion is possible....... [ 6, 09 ] [23.08%, 12.68%]

No comment...................................................................... [ 3, 02 ] [11.54%, 02.82%]

 

My belief about a bounce, or sign of stability

There will be no bounce this year........................................ [ 12, 42] [46.15%, 59.15%]

What I am seeing, will be nothing but a Spring bounce.. [ 11, 22 ] [42.31%, 30.99%]

The stability could eventually lead to a recovery................. [ 0, 04 ] [ 0.00%, 05.63%]

This is THE LOW in the cycle................................................. [ 0, 01 ] [ 0.00%, 01.41%]

No comment....................................................................... [ 3 , 02] [11.54%, 02.82%]

 

Availability of finance

It is virtually impossible to borrow to buy a home where I am [ 0, 5 ] [0.00%, 7.04%]

Loans can be obtained by those who have a 40-50% deposit.. [ 3,15 ] [11.54%,21.13%]

Mortgage loans of 70-75% LTV are available....................... [ 9, 25 ] [34.62%,35.21%]

80-85% loans are available (tell us more)............................ [ 6, 06 ] [23.08%, 08.45%]

Loans of 90-100% can be obtained....................................... [ 0 , 01] [0.00%, 01.41%]

No comments........................................................................ [ 8, 19 ] [30.77%, 26.76%]

=======

Total Votes: ( 26, 71 )

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Dead Cat rebound? or the end of the low prices?

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

U.K. House Prices Unexpectedly Rose in March, Nationwide Says

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By Jennifer Ryan

 

April 2 (Bloomberg) -- U.K. house prices unexpectedly rose for the first time since October 2007 after the Bank of England’s interest-rate cuts attracted buyers to the property market, Nationwide Building Society said.

 

The average cost of a home jumped 0.9 percent in March from the previous month to 150,946 pounds ($218,000), the mortgage lender said in a statement today. All 13 economists in a Bloomberg News survey predicted a drop.

 

 

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Dead Cat rebound? or the end of the low prices?

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

A couple of my friends have bought in London recently (one after selling his flat for an eye watering amount IMO), neither of the buying prices make you think bargain either. I haven't given them the benefit of my opinion ;) . Though it would seem the man in the street is still a believer in bricks and mortar and that a 20% haircut is enough...

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