House price cuts helped sales surge by nearly 10pc last month

joguest

http://blogs.telegraph.co.uk/finance/ianmcowie/100012622/house-price-cuts-helped-sales-surge-by-nearly-10pc-last-month/

HAMISH_MCTAVISH

Property sales increased by 9.5pc last month as prices continued to drift 2.3pc lower over the last year, according to analysis of Land Registry figures by LSL.

And just 0.6% lower on the Nationwide index.

But I somehow doubt that a 0.6% to 2.3% fall on average has resulted in a near 10% increase in transactions.

And if it has, the bears should be very worried indeed. As based on those results, a further fall of just 6% or so would get transactions back to all time peak levels.

Rinoa

HAMISH_MCTAVISH wrote: »

And just 0.6% lower on the Nationwide index.

But I somehow doubt that a 0.6% to 2.3% fall on average has resulted in a near 10% increase in transactions.

And if it has, the bears should be very worried indeed. As based on those results, a further fall of just 6% or so would get transactions back to all time peak levels.

Indeed. Prices this month are the same as 6/7 months ago.

There is therefore no correlation between prices falling and sales increasing.

Maybe Jo should be looking at lenders increased willingness to lend and lower mortgage rates.

Pimperne1

HAMISH_MCTAVISH wrote: »

And just 0.6% lower on the Nationwide index.

But I somehow doubt that a 0.6% to 2.3% fall on average has resulted in a near 10% increase in transactions.

And if it has, the bears should be very worried indeed. As based on those results, a further fall of just 6% or so would get transactions back to all time peak levels.

And if the increase in transactions weren't worrying enough for the 70% brigade then:

"strong rental demand has pushed rents up to a level where rental yields are close to underpinning property values.”".

joguest

Back to all time peak levels! Even by your standards, McSpammish, that's absurd.

Higher volumes/lower prices = increase in supply.

Sellers are capitulating because they fear further price falls ahead.

HAMISH_MCTAVISH

joguest wrote: »

Sellers are capitulating because they fear further price falls ahead.

Absolute nonsense.

This has far more to do with the easing of mortgage rationing.

“Improved availability of higher loan to value deals is starting to help engender some movement in the housing market, and this may be making sellers feel that now is the time to strike a deal.

“Although the main high street lenders may still be restricting lending to those with larger deposits, a range of smaller building societies and specialist lenders have become active over the last few months.”

Pimperne1

joguest wrote: »

Back to all time peak levels! Even by your standards, McSpammish, that's absurd.

Higher volumes/lower prices = increase in supply.

Sellers are capitulating because they fear further price falls ahead.

Or buyers are capitulating because they realise that rental yield has now reached tipping level and BtLers will otherwise be taking what is available,

joguest

HAMISH_MCTAVISH wrote: »

Absolute nonsense.

This has far more to do with the easing of mortgage rationing.

I respectfully have to disagree.

If mortgage rationing was easing and that was the dominant factor then the market should be dominated by increased demand, i.e. prices and volumes would be rising.

In reality, a small annual price drop is accompanied by a larger increase in volumes. The discrepancy is to be expected given the very elastic nature of the supply curve since 2007 but, nevertheless, supply is increasing. The market is either becoming more dominated by forced selling and/or a change in sentiment regarding the long-term trajectory of house prices.

HAMISH_MCTAVISH

Pimperne1 wrote: »

buyers are capitulating ,

Actually, the article in the OP states exactly that.

David Newnes, a director of LSL, claimed: “It’s certainly not all doom and gloom for homeowners. Buyer activity is picking up as transactions have been much higher than we would normally expect at this time of the year.

“Increasing activity means buyers currently feel properties represent good value and that shows there is still plenty of confidence among both buyers and mortgage lenders that prices won’t plummet in the coming months.

Add to that the fact that mortgage finance is currently cheaper than ever before, and there are plenty of positives to focus on when assessing the market.”

Pimperne1

joguest wrote: »

I respectfully have to disagree.

If mortgage rationing was easing and that was the dominant factor then the market should be dominated by increased demand, i.e. prices and volumes would be rising.

In reality, a small annual price drop is accompanied by a larger increase in volumes. The discrepancy is to be expected given the very elastic nature of the supply curve since 2007, but, nevertheless supply is increasing. The market is either becomming more dominated by forced selling and/or a change in sentiment regarding the long-term trajectory of house prices.

Or the market is impossible to read or predict due to its diversity.

joguest

Pimperne1 wrote: »

Or buyers are capitulating because they realise that rental yield has now reached tipping level and BtLers will otherwise be taking what is available,

Prices are going down because buyers are capitulating! You heard it here first.