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What's been and is happening in housing?

Posted by jdavis on June 17, 2015

This chart is quite interesting:

It shows UK house price movements under Prime Ministers from the 1950s.  Of course, this is the period of the greatest boom in house prices in human history.

Blair brought the highest average annual - inflation adjusted - growth due to he and Brown allowing banks to lend whatveer they wanted.  Then, when it all hit the banking fan our children bailed out the bankers and the borrowers.

Curiously, since 2007, under Brown and Cameron, house prices have NOT KEPT UP WITH INFLATION.  Even with the lowest borrowing rates in history. 

An intellectual curiosity that data. 

Just today saw the following headline in Introducer Today - the house journal of those working in property:

Sharp falls in lending and house price growth Not our headline.

It relates to yesterday's publication of the monthly ONS housing market analysis.

What it didn't say (all too predictably) was average prices in the UK fell 1.3% in the month.

It also showed some interesting charts of what has been happening:

The annual rate of house price growth slowed sharply in the year to April 2015.  And to remind, prices fell, nationally, in 2008 and 2011.  Isn't it fascinating that prices aren't soaring with the lowest borrowing rates in human history?

 

Prices in Wales and Scotland are flat since 2007/08.  In Northern Ireland, they are still down heavily, though recently rising.

In England - due to the growth in London and the South East, prices are up a little on 2008.   Which means outside L and SE prices are down either a little or a lot.

NB.  The ONS methodology is as upward-biased as you can imagine.

Then let us note the Land Registry data.  The LR takes prices from ALL sales in England and Wales.  All sales.

This was released on 1 June 2015.

I don't suppose you heard much about it on the news and especially not on the BBC (it was there in a corner...).

The number of sales in E and W fell 17% year on year.

The number of sales in London fell 24% year on year.

The number of London sales above £2m is down 34% year on year and 30% in E and W.

We have already seen a few Prime Central London agencies close down this year.  Consider again what you have just read.

These are huge falls in the market.  No question about it.  Isn't it interesting the media did not highlight these numbers?  Why?  Unadulterated bias that's why.

And yet we have seen the asking price surveys (eg Rightmove) show ever higher and higher levels.  In case you are not aware, Rightmove - the most quoted - only shows the first asking price on marketing.  It does not show the reduced price subsequently, if unsold.  So, it never reflects the true asking prices at any time.  Never.  Try getting that from a news reporter.

[We know that some 30% of asking prices are reduced.  If you wish to see the history of APs on a particular property to buy or rent use Property Bee in the Firefox browser.  Google it and follow the instructions.]

And all this reversal in the market with the lowest borrowing rates in human history.  And with all the "demand greater than supply" reports we keep hearing about.  And with Help To Buy.  And low housebuilding apparently.  And economic growth.  And all the positives we hear and read about property in the news, papers, property programmes wall-to-wall etc etc

In other words whenever you hear all the noises supporting property just consider why.  It's not because the market is strong and its not because house prices are rising strongly.  Barely.

 

No doubt, we will learn over the next few months if the change in the market from buoyant to reversing has been because of fears of what might be after the General Election or because of the national and global economy.

In any case, we remind you to bear in mind the following fact about the future:

The next time there is a Recession in the West the Central Bankers will not be able to slash the Base Rate.  We have said this often.  They're already at or near rock bottom.

Thus, the next Recession, as far as we can tell, will turn Depressionary.

What will that do to property prices?

 

If you do not agree, please tell us what the policymakers can do to restart the economy next time?

 

 

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