prices still falling but activity increasing.

Really2

Personaly the only way I can see an improvement to this mess at the moment is to see more people buying as this should show some sign of better lending conditions.
Obviously if activitys increase but that does not convert to more sales it is a worry as that will be the biggest sign yet that it is lending that is the problem not buyers not wanting to buy.

BenL

I was worried then that Rightmove were going to use website clicks or something to say activity was on the increase.

MSE posters with property bee installed would easily skew those figures lol

WTF?_2

IveSeenTheLight wrote: »

Uk average house prices are almost at the long term trend (25 year +) according to Nationwide

Add to that figures released from HBOS which shows affordability and the properties would not appear to be as overpriced as some think.
http://www.hbosplc.com/economy/includes/15_01_09Affordability.xls

The real issue with getting properties moving again is about money being available for lending and potential buyers meeting the criteria to achieve the funds

That trend line has been boosted by the massive and sustained surge in prices over the last decade. It represents a 'moving average' and it will fall shallower as prices drop further. ie. the long term trend price will be lower 12 months down the line than it is now (assuming continued losses).

Additionally, the price will most likely undershoot the longer term trend before rising to converge again - prices don't just shoot above trend and then fall back a bit and wait for the trend to catch up, the graph shows clear oscillations around the trend.

WTF?_2

Really2 wrote: »

Personaly the only way I can see an improvement to this mess at the moment is to see more people buying as this should show some sign of better lending conditions.
Obviously if activitys increase but that does not convert to more sales it is a worry as that will be the biggest sign yet that it is lending that is the problem not buyers not wanting to buy.

The way out of the mess is to let house prices drop to a level that the market can sustain.

Once they stop falling, banks can start lending with confidence against property again because they know that they have a secure asset.

Additionally, when people aren't having to take on a debt millstone for the next few decades by buying their home (because of silly high prices requiring them to borrow eye watering amounts of money) they will have more spare cash to spend on goods and services, boosting the rest of the economy.

IveSeenTheLight

!!!!!!? wrote: »

That trend line has been boosted by the massive and sustained surge in prices over the last decade. It represents a 'moving average' and it will fall shallower as prices drop further. ie. the long term trend price will be lower 12 months down the line than it is now (assuming continued losses).

You are correct, the trend line will have been boosted by recent house price increases, but remember, this is a 25 year trend and incorporates the previous two "crashes", where it would have pulled down the trend line.

I think you wont see as large an adjustment down as you think there might be

!!!!!!? wrote: »

Additionally, the price will most likely undershoot the longer term trend before rising to converge again - prices don't just shoot above trend and then fall back a bit and wait for the trend to catch up, the graph shows clear oscillations around the trend.

Fully agree, historically prices have shot over and under the trend line and there is little to suggest this would not happen this time.
This is a different argument to the point I was making about house prices are almost at the long term trend.

I would suggest that with house prices on average having returned to 2004 levels, that this would suggest and is corroborated by the Halifax affordability link I posted, that the mortgages are affordable.

I therefore re-state my belief that the issue now is not about house prices, but about being able to secure lending for properties

abaxas

Maybe all this 'new interest' from from downsizers?

It's a state of emergency for the equity rich.

kennyboy66_2

!!!!!!? wrote: »

That trend line has been boosted by the massive and sustained surge in prices over the last decade. It represents a 'moving average' and it will fall shallower as prices drop further. ie. the long term trend price will be lower 12 months down the line than it is now (assuming continued losses).

Additionally, the price will most likely undershoot the longer term trend before rising to converge again - prices don't just shoot above trend and then fall back a bit and wait for the trend to catch up, the graph shows clear oscillations around the trend.

Whilst the trend line is boosted, the effect is not as much as you might think and the trend line is certainly not a moving average (as normally understood by time series data analysis).

The point about undershooting is right and whereas in past crashes the undershoot has been masked by inflation, it is more likely that the undershoot this time will be the result of continued nominal falls.

IveSeenTheLight

!!!!!!? wrote: »

The way out of the mess is to let house prices drop to a level that the market can sustain.

Once they stop falling, banks can start lending with confidence against property again because they know that they have a secure asset.

Slight flaw in your thinking.
How can house prices stop falling until lending resumes. There is only a very small fractional percentage of people that could buy properties without being able to secure a mortgage against it.

Lending needs to start in order for house prices to stop falling.

Lending will start when the banks achieve a risk they are prepared to lend against i.e. higher deposits

!!!!!!? wrote: »

Additionally, when people aren't having to take on a debt millstone for the next few decades by buying their home (because of silly high prices requiring them to borrow eye watering amounts of money) they will have more spare cash to spend on goods and services, boosting the rest of the economy.

Again, if you look at the affordability stats, mortgages are relatively affordable.

This following link shows that: -
House price - earnings is currently 4.62. Average over 25 years is 4.01
more importantly
Mortgage repayments as a percentage of income is 22.91%. Average over 25 years is 19.57%
Will a change of 3.34% of your take home pay make that big a difference to affordability?

http://www.hbosplc.com/economy/includes/15_01_09Affordability.xls

WTF?_2

IveSeenTheLight wrote: »

Slight flaw in your thinking.
How can house prices stop falling until lending resumes. There is only a very small fractional percentage of people that could buy properties without being able to secure a mortgage against it.

Lending needs to start in order for house prices to stop falling.

Lending hasn't stopped, it is severely restricted (compared to the madness of recent times) meaning that people generally can't borrow as much.

Asking prices however haven't fallen by nearly the same amount as lending has fallen and this is stymieing the whole process.

As soon as average transacted sale prices reach the level which can be supported by bank lending then prices should stabilise and start to recover towards the trend.

Lending will start when the banks achieve a risk they are prepared to lend against i.e. higher deposits

Deposits are getting higher (percentage wise) all by themselves as prices fall, leave the market to itself and people will be able to produce a decent deposit. Assuming they have the wherewithal to save, of course. People up to their necks in debt or with paltry amounts of savings have little hope of securing a mortgage loan any time soon, quite properly too.

IveSeenTheLight wrote: »

Again, if you look at the affordability stats, mortgages are relatively affordable.

This following link shows that: -
House price - earnings is currently 4.62. Average over 25 years is 4.01
more importantly
Mortgage repayments as a percentage of income is 22.91%. Average over 25 years is 19.57%
Will a change of 3.34% of your take home pay make that big a difference to affordability?

http://www.hbosplc.com/economy/includes/15_01_09Affordability.xls

How 'affordable' will servicing the mortgage required by those prices be when interest rates snap back from the crazy levels to which they have been hacked by a desperate and bankrupt government?

Really2

!!!!!!? wrote: »

The way out of the mess is to let house prices drop to a level that the market can sustain.

Once they stop falling, banks can start lending with confidence against property again because they know that they have a secure asset.

But is the problem not on that if banks don't lend (even if some one wants to buy and is a relative safe bet) property keeps dropping. Making more people in NE, banks then lend less, property falls more so on and so on untill bank goes bust?

People have to move sometime could anyone actualy say at the moment if the low volumes are actualy down to lending or price.
Personaly I think if you had to move you could find somwhere within your range you would also take a hit on your own so I can't see that is all based on price like some would have you belive.