Nationwide: prices down 1.4% in October, down 14.6% since last year

WTF?_2

dopester wrote: »

Geez ISTL... don't you understand how markets work?

I doubt there were major number of sales to account for the huge HPI you love back in 2006 and 2007. This is why I have been stressing to you that your Aberdeen market that saw huge HPI not long ago, which up to now both you and Mitchaa have been happy to accept Nationwide's stats about, is volatile to the same effects on the way down.

But house prices only ever go up, innit?

IveSeenTheLight

dopester wrote: »

Geez ISTL... don't you understand how markets work?

I doubt there were major number of sales to account for the huge HPI you love back in 2006 and 2007. This is why I have been stressing to you that your Aberdeen market that saw huge HPI not long ago, which up to now both you and Mitchaa have been happy to accept Nationwide's stats about, is volatile to the same effects on the way down.

I've always thought of you as a wee lap dog, not a wriggly worm trying to baint me.
But then again, I'm no fish, so I'm not biting.

I could of course argue that when prices were on they way up, the numbers of sales weren't low, but I would have thought that was obvious, even to you

dopester

IveSeenTheLight wrote: »

I've always thought of you as a wee lap dog, not a wriggly worm trying to baint me.
But then again, I'm no fish, so I'm not biting.

I could of course argue that when prices were on they way up, the numbers of sales weren't low, but I would have thought that was obvious, even to you

Well I have tried to explain how your small local market is subject to incredible volatility.

You accept the huge HPI gains on a relative small number of transactions in 2006 and 2007, but then try and pass-off that small numbers of transactions somehow don't have the same reverse effect.... the fact it only takes one seller and one buyer to agree former prices were too high and do a deal to reverse prices.

Between 2006 and 2007, the average house price in the Aberdeen Housing Market Area has increased from £159,634 to £202,479, an increase of 26%.

In 2006, 6,783 properties were sold compared to 7,248 in 2007.

Source: Aberdeen City Council
http://www.aberdeencity.gov.uk/ACCI/nmsruntime/saveasdialog.asp?lID=13760&sID=332

baby_boomer

I just love Fionnuala's jargon

She could have said - There will be more forced sellers in a recession which will further drive down prices

Instead she said:
"As the economy weakens further there is likely to be more movement on asking prices as sellers adjust to the prevailing conditions and reassess their own needs. Some may choose not to sell after all, thus reducing supply, but others will adjust their prices accordingly," said Fionnuala Earley, Nationwide's chief economist. "While there will always be a rump of sellers who will need to move in order to accommodate job or family changes there will be others who are affected by economic conditions more acutely. So we should expect a moderation of price expectations on the part of sellers in a weaker economic environment."

And:
“A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices,” Fionnuala Earley, the Nationwide’s chief economist, said.

## - Yes dear, but we'll ask you about the "recovery" this time next year What about the next twelve months?

And the understatement of the year?
""The latest data shows there are about 55% fewer [first-time buyers] than at the same time last year," Ms Earley said. "A return of these borrowers would help :rotfl:

## - Whatever could they be waiting for ?

IveSeenTheLight

dopester wrote: »

You accept the huge HPI gains on a relative small number of transactions in 2006 and 2007, but then try and pass-off that small numbers of transactions somehow don't have the same reverse effect.... the fact it only takes one seller and one buyer to agree former prices were too high and do a deal to reverse prices.

When have I ever said I accept huge HPI on a relative small number of transactions in 2006 / 2007?

Once again you misquote me and once again I ask you, if your going to quote me, link the quote of me. Not once have you done this

I fully agree a small number of transactions can affect the figures both going up and down.

If I was to be pedantic about it, I guestimated the number of transactions being 27 in one month. This works out to be 324 annually. A fraction (just under 1/20th) of the 6,783 or 7,248 you quoted for 2006 & 2007

dopester

IveSeenTheLight wrote: »

When have I ever said I accept huge HPI on a relative small number of transactions in 2006 / 2007?

Once again you misquote me and once again I ask you, if your going to quote me, link the quote of me. Not once have you done this

I fully agree a small number of transactions can affect the figures both going up and down.

If I was to be pedantic about it, I guestimated the number of transactions being 27 in one month. This works out to be 324 annually. A fraction (just under 1/20th) of the 6,783 or 7,248 you quoted for 2006 & 2007

Well only a few posts up (and to cover the "Last Warning" private message received), you wrote this:

IveSeenTheLight wrote: »

I could of course argue that when prices were on they way up, the numbers of sales weren't low, but I would have thought that was obvious, even to you

You accept it by way of your previous posts. Revelling in your tenants paying off your mortgages, and your general attitude and outlook for Aberdeen with your AFFORDABILITY MEASURES and REGIONAL DIFFERENCES, arguing that falls are unlikely to be as severe as other areas.

6,783 properties sold in 2006, and 7,248 sold in 2007, is not, for me, a great deal of transactions. Although I accept that level of transactions might be somewhat appropriate for Aberdeen. It does not convince me of a new paradigm of property prices at these levels for Aberdeen.

It was only because the buyers/sellers of those 6,783 properties in 2006, and 7,248 properties in 2007 agreed that prices should be higher, did prices rise, not just for the properties bought and sold, but for all residential properties in the Aberdeen area... backed by easier credit for borrowers and higher multiples of lending.

Asset prices rise not because of "buying" per se, because indeed for every buyer, there is a seller. They rise because those transacting agree that their prices should be higher. All that everyone else - including those who own some of that asset and those who do not - need do is nothing.

Conversely, for prices of assets to fall, it takes only one seller and one buyer who agree that the former value of an asset was too high. If no other bids are competing with that buyer's, then the value of the asset falls, and it falls for everyone who owns it. If a million other people own it, then their net worth goes down even though they did nothing. Two investors made it happen by transacting, and the rest of the investors made it happen by choosing not to disagree with their price.

Now I'm entitled to interpretation and opinion - as you are yours. I notice on another thread you got worked up when someone suggested a 50% house price crash.... which is a permitted and fair statement when the poster is suggesting sweeping widespread falls of that possible magnitude in many or certain areas. Accept them for what they are - fair comment, and no reason to report.

a) "For the first time since 1999, the Aberdeen Housing Market area average has overtaken the UK figure."
(see blue track)



b) A late burst in 2006 and 2007 in Affordability Ratio for Aberdeen City to catch up near to rest of the UK. Supported and sustainable affordability ratios by the Aberdeen economy to fair value?


c)



d) Hello.


Source: Aberdeen City Council
http://www.aberdeencity.gov.uk/ACCI/nmsruntime/saveasdialog.asp?lID=13760&sID=332

dopester

IveSeenTheLight wrote: »

I fully agree a small number of transactions can affect the figures both going up and down.

If I was to be pedantic about it, I guestimated the number of transactions being 27 in one month. This works out to be 324 annually. A fraction (just under 1/20th) of the 6,783 or 7,248 you quoted for 2006 & 2007

Yes and that fraction still affects prices - just as few houses selling and new mortgage approvals at lower levels are having the same downward force on inflated prices for the rest of the UK.

Mortgage approvals for house purchases rose in September for the first time in more than a year, but remained near record lows, new figures from the Bank of England show. The Bank said mortgage approvals for new house purchases rose to 33,000 last month from a record low of 32,000 in August, the first rise since June 2007, but at the second lowest level recorded since the series began in 1993.

Economists said the slight upturn in approvals did not indicate a recovery. Howard Archer, of Global Insight, the economic consultancy, said: "This is another very weak set of Bank of England mortgage approvals and lending data that suggests that the downturn in housing market activity and prices still has a long way to run."

Vicky Redwood, of Capital Economics, said that the lack of activity in the market did not bode well for future house prices. "At this level, the figures are consistent with annual house price inflation of between -20 per cent and -25 per cent, compared with the current rate of -13 per cent or so."

http://business.timesonline.co.uk/tol/business/economics/article5036456.ece

Don't worry though, I'm not being drawn in any further and will allow you to take refuge in your regional variations protection theory for Aberdeen - and we will see how things unfold.

dopester

IveSeenTheLight wrote: »

If I was to be pedantic about it, I guestimated the number of transactions being 27 in one month. This works out to be 324 annually. A fraction (just under 1/20th) of the 6,783 or 7,248 you quoted for 2006 & 2007

I wouldn't know. 27 transactions though? Maybe.

The figures for the 3rd quarter this year put it at 1130 properties sold... can we say around 282 a month? I don't know how you arrive at 27 transactions guesstimate for the month just gone, but maybe you are correct.

Still, if they are sold at prices below previous values then that also affects values of the wider Aberdeen market. Just like if another house sold on my street at considerable less than what I considered the value of where I live to be worth, it would still bring down the value of this property. Like it or not, the market did not step in to offer the seller a higher price.

Big fall in Aberdeen house prices
Cost of average property down 8%

By Tim Pauling

Published:

HOUSE prices in the Aberdeen area have experienced their biggest fall in several years.

The average property in the Aberdeen housing market area (AHMA) was £192,909 in the third quarter of the year, down 8% from the previous three months.

The number of properties sold has also fallen over the quarter. Figures from the Aberdeen Solicitors’ Property Centre (ASPC) show 1,130 properties were sold in the last quarter, down nearly 29% from 1,584.

The total represents a 47% fall in the number sold at the same time last year when 2,124 properties changed hands.

The slump is blamed on the credit crisis with a reluctance to lend money depressing prices.

http://www.pressandjournal.co.uk/Article.aspx/880557?UserKey=

North-east could suffer as oil price slumps to $60 a barrel
Warnings of impact on jobs and housing market

By David Perry

Published:

THERE were warnings last night that the gloss could be about to come off the north-east economy as the price of oil teetered below the $60-a-barrel mark.

Economists warned of job cuts to come and a fall in house prices as the region loses the cushion of booming oil prices that has enabled it to avoid the savage downturn hitting the rest of the UK.

Press and Journal, UK - 28 Oct 2008
http://www.pressandjournal.co.uk/Article.aspx/908651?UserKey=

carolt

In ISTL's case, I will give him credit for genuinely believing in his theory that Aberdeen is 'different' - after all, he has put his money where his mouth is, and bought into the market in 2007.

There's a fine line between being a hypocrite and trying to drag/bully others into taking an unsuitable financial step for them eg those vested interests who try to talk the market up even as its blatantly obvious it's tanking, and those who argue that house prices will not fall (by much/in their area) because they genuinely believe it.

Wthout clear evidence to the contrary, I'll give ISTL the benefit of the doubt.

Not that I think he's right on Aberdeen's house prices - I think dopester's figures make it clear they are very overvalued (partcicularly so when presumably they've been affected by oil prices, which are now falling sharply?) - but that that may be down to naive optimism rather than Macchiavellian tactics. :rolleyes:

He's still very young - he'll learn....

Generali

There is a very simple reason why Aberdeen isn't immune from falls in house prices. It's what economics call the substitution effect.

If you work in Aberdeen it would be good to live in Aberdeen as you minimise the cost and hassle of commuting. However, if the cost of living in Aberdeen is very high compared to somewhere nearby you may choose to live there instead and put up with commuting. If the cost of living near Aberdeen is still high then you may decide to live further away or to pursue your career somewhere else entirely.

If house prices are falling everywhere else, house prices in Aberdeen will fall too eventually and probably by a similar amount.