We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
UK housing data underpins recession fears
doire_2
Posts: 2,280 Forumite
Weak housing data has stoked concerns that the UK may be dragged back into recession.
Separate figures on house prices from Nationwide and the construction industry have raised fresh fears that a weakening housing market could halt the recovery.
Construction has picked up strongly this year, accounting for the largest proportion of economic growth. However, the Markit/CIPS construction PMI survey found the sector grew far more slowly in August than July – falling short economists expectations.
The main reason for the fall was a “marked slowdown in the residential sector”, where “much of the recent sector growth has come from”, David Noble, CIPS chief executive said.
Housebuilders have been increasing their build in response to rising house prices but, for the second month running, Nationwide reported that house prices fell – suggesting that the decline is becoming a trend.
House prices fell 0.9pc in August, nationwide said, following a 0.5pc slide in July. It is the first time house prices have dropped for two consecutive months since February 2009. The data will add to rising expectations that the housing market is heading for a double dip. Even the more optimistic economists now expect house prices to fall in real terms, once inflation is included, over the next few years.
“The housing sector was the first to return to growth last year and its sudden weakening will heighten fears that the housing market is entering a period of stagnation, if not outright contraction,” said Simon Hayes, UK economist at Barclays.
A weak housing market, though, may hit the economy in both consumer spending, where it traditionally strikes, and the construction sector, which has been spearheading the recovery. However, the PMI figures showed that the construction industry is still growing, just at a reduced pace.
PMI fell from 54.1 to 52.1, more than six points below peaks scaled in May. Any reading above 50 is growth. Economists’ consensus forecast was 53.2. The house-building index, a uinit int he construction PMI, fell to a 10-month low in August, suggesting it is being affected by a weakening price outlook.
Official data last month showed British construction output jumped 8.5pc between April and June, its best showing since 1982, but the more forward-looking PMI survey suggest this pace of growth will not be maintained. UK GDP for the quarter rose at 1.2pc – the fastest in nine years – driven by the strong construction performance. Construction activity accounts for just over 6 percent of Britain’s national output.
“Those who are looking for signs of a slowdown will find plenty to worry about in this month’s construction PMI,” said Mr Noble.
“The most disturbing is the marked slowdown in the residential sector as this is where much of the recent sector growth has come from. The slight increase in public sector activity disguises continuing uncertainty about the scale of spending cuts which we have yet to experience.”
The survey showed that civil engineering, where public sector spending is typically focused, registered the strongest growth, although this could be hit by a deficit crackdown.
Mr Hayes said: “On the face of it, this sectoral configuration does not bode well for future construction output, in our view. Cuts in public investment seem likely to drive the civil engineering index lower over the coming months and we see few reasons to be upbeat about housing market prospects.”
Building contractors are more confident the gradually improving economic outlook will boost workloads, although the survey also showed new order growth slowing for the third month in a row.
Mr Noble added: “For the more optimistic amongst us, however, it still looks like we are entering a period of low growth rather than another recession but the jury’s still out. Though this month’s figures are disappointing, we should remember that overall the sector is still growing.
“The housing market is key to recovery in the longer term but now appears to be in a transition phase. There is still a job to be done in balancing stricter criteria for mortgage lending with demand for new homes, if new projects are to get off the ground and reverse the slump in the residential sub-sector.”
http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/7977376/UK-housing-data-underpins-recession-fears.html
Separate figures on house prices from Nationwide and the construction industry have raised fresh fears that a weakening housing market could halt the recovery.
Construction has picked up strongly this year, accounting for the largest proportion of economic growth. However, the Markit/CIPS construction PMI survey found the sector grew far more slowly in August than July – falling short economists expectations.
The main reason for the fall was a “marked slowdown in the residential sector”, where “much of the recent sector growth has come from”, David Noble, CIPS chief executive said.
Housebuilders have been increasing their build in response to rising house prices but, for the second month running, Nationwide reported that house prices fell – suggesting that the decline is becoming a trend.
House prices fell 0.9pc in August, nationwide said, following a 0.5pc slide in July. It is the first time house prices have dropped for two consecutive months since February 2009. The data will add to rising expectations that the housing market is heading for a double dip. Even the more optimistic economists now expect house prices to fall in real terms, once inflation is included, over the next few years.
“The housing sector was the first to return to growth last year and its sudden weakening will heighten fears that the housing market is entering a period of stagnation, if not outright contraction,” said Simon Hayes, UK economist at Barclays.
A weak housing market, though, may hit the economy in both consumer spending, where it traditionally strikes, and the construction sector, which has been spearheading the recovery. However, the PMI figures showed that the construction industry is still growing, just at a reduced pace.
PMI fell from 54.1 to 52.1, more than six points below peaks scaled in May. Any reading above 50 is growth. Economists’ consensus forecast was 53.2. The house-building index, a uinit int he construction PMI, fell to a 10-month low in August, suggesting it is being affected by a weakening price outlook.
Official data last month showed British construction output jumped 8.5pc between April and June, its best showing since 1982, but the more forward-looking PMI survey suggest this pace of growth will not be maintained. UK GDP for the quarter rose at 1.2pc – the fastest in nine years – driven by the strong construction performance. Construction activity accounts for just over 6 percent of Britain’s national output.
“Those who are looking for signs of a slowdown will find plenty to worry about in this month’s construction PMI,” said Mr Noble.
“The most disturbing is the marked slowdown in the residential sector as this is where much of the recent sector growth has come from. The slight increase in public sector activity disguises continuing uncertainty about the scale of spending cuts which we have yet to experience.”
The survey showed that civil engineering, where public sector spending is typically focused, registered the strongest growth, although this could be hit by a deficit crackdown.
Mr Hayes said: “On the face of it, this sectoral configuration does not bode well for future construction output, in our view. Cuts in public investment seem likely to drive the civil engineering index lower over the coming months and we see few reasons to be upbeat about housing market prospects.”
Building contractors are more confident the gradually improving economic outlook will boost workloads, although the survey also showed new order growth slowing for the third month in a row.
Mr Noble added: “For the more optimistic amongst us, however, it still looks like we are entering a period of low growth rather than another recession but the jury’s still out. Though this month’s figures are disappointing, we should remember that overall the sector is still growing.
“The housing market is key to recovery in the longer term but now appears to be in a transition phase. There is still a job to be done in balancing stricter criteria for mortgage lending with demand for new homes, if new projects are to get off the ground and reverse the slump in the residential sub-sector.”
http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/7977376/UK-housing-data-underpins-recession-fears.html
0
Comments
-
You're getting as bad as Hamish.0
-
I've a long way to go yet0
-
Weak housing data has stoked concerns that the UK may be dragged back into recession.
Concerns from everyone except doire.....
He's too busy celebrating at the prospect of renewed recession, more job losses, business failures and human misery.“The housing market is key to recovery in the longer term
Yes it is.
Which makes the position of housing bears so morally repugnant.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Concerns from everyone except doire.....
He's too busy celebrating at the prospect of renewed recession, more job losses, business failures and human misery.
Yes it is.
Which makes the position of housing bears so morally repugnant.
No less repugnant than the ardent bulls, who would rather price the lion's share of people out of ever owning a home of their own.Set your goals high, and don't stop till you get there.
Bo Jackson0 -
HAMISH_MCTAVISH wrote: »
He's too busy celebrating at the prospect of renewed recession, more job losses, business failures and human misery.
Wouldn't have happened without the excess you cheer on yourself.
Can't have a bust, without a boom. You are fine with a boom and cheer it on knowing the inevitable will happen, therefore, by proxy, cheer on a crash
0 -
This Hamish, is absolute unfair nonsense. One could equally say that 'celebrating' FTB's being priced out and generations homeless through high prices is morally repugnant. Personally I think the 'moral' argument is flawed on either side.HAMISH_MCTAVISH wrote: »Concerns from everyone except doire.....
He's too busy celebrating at the prospect of renewed recession, more job losses, business failures and human misery.
Yes it is.
Which makes the position of housing bears so morally repugnant.
Reporting does not have to be the same as celebrating. On either side of the fence.0 -
One could equally say that 'celebrating' FTB's being priced out and generations homeless through high prices is morally repugnant.
Havent we seen that there are more FTB'ers squeezed out as prices lowered due to tighter lending restriction sthan there were when house prices rose?
What's needed to help FTBers is better lending i.e. better 90% products:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Or lower prices. On balance I'd have thought lower prices would be better than a return to lax lending. Depends on your attitude to debt, and what you think might have caused the little hiccup in the world economies of course.IveSeenTheLight wrote: »Havent we seen that there are more FTB'ers squeezed out as prices lowered due to tighter lending restriction sthan there were when house prices rose?
What's needed to help FTBers is better lending i.e. better 90% products
There were all sorts of rules to stop the nonsense of the noughties, but they were thrown out in the rush to maximise profits. Personally I'd rather not be bailing out the banks gain in another few years if it's OK with you.0 -
It should be 'data have' not 'data has'. Data is plural, datum is the singular.
The Torygraph bangs on about how everyone that can't use an apostrophe is scum and they can't conjugate one of the most used verbs in the English language.0 -
Couple of threads on here at the moment pointing out the link between the economy and house prices. Further evidence that there won't be IR rises without a stable housing market imo.
Starting to think that the best possible thing for existing homeowners is what we're seeing now, these low rates are quite frankly awesome.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.4K Banking & Borrowing
- 254.4K Reduce Debt & Boost Income
- 455.4K Spending & Discounts
- 247.3K Work, Benefits & Business
- 604K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards