What rightmove figures really say about the housing market.

geneer

http://www.planetpropertyblog.co.uk/2011/10/18/what-rightmove%E2%80%99s-3-price-rise-is-really-saying-about-the-housing-market/

A rather good analysis of the situation.
It appears to be spot on.

Rightmove’s Miles Shipside put the increase down to a rise in mortgage lending: “Wider access to mortgages and rising asking prices are early signs of increasing demand, giving home owners some grounds for hope of a market recovery.”
This, though, may seem odd given that all of the other indices (CLG, Hometrack, Land Registry, Halifax) are showing price falls. So why the disparity?
Well, one reason, as I’ve noted before in these pages, is that a) this index is based on asking prices and b) it’s also based on a very selective segment of asking prices: the new properties advertised over the previous month.
Other asking price indices, which measure all properties for sale and which therefore capture changes in asking price over the month, tell a different tale.
Home.co.uk, for example, says that “home asking prices were cut, on average, by £15,968 between September and October, the highest figure since November 2010.
“Sellers are already finding it even harder to sell, as indicated by a rise in both the number of reduced properties, which was 87,511 in September (up by around 15,000 since August) and the average size of the price reductions (£15,968), which is the largest figure since Nov 2010.”
Put these two asking price indices together, then, and the picture becomes clearer: estate agents, caught between the rock of intransigent sellers and hard place of financially constrained buyers, are getting desperate.
To get business they have to value in ways that flatter sellers; but to sell, they have to then work on these sellers to face reality and cut the asking price.
But some agents, at least, say reductions are not happening quickly enough to get the market moving. In a revealing recent assessment of market conditions, Douglas & Gordon complain that:

Great swathes of the country are living in cloud cuckoo land when it comes to selling. Given we’re four years into this new paradigm there will soon be a new generation of budding property owners who will have only ever been aware of prices going down.
But at the moment we’re stuck with the previous generation for whom downward prices are an affront. It’s clear ego can get in the way of selling for less than you paid, and I’m not stupid enough to ignore those in negative equity for whom there’s no easy way out.
So why aren’t people selling at prices people are offering, because don’t get too negative here, people ARE offering, it’s just that sellers are not accepting.
It can’t be stated often enough but there are many more winners than losers in a falling market. If you’re looking to buy a bigger property you may lose £50k on your sale but save £100k on your onward purchase. So who wins there?
I’m afraid the blockage here is caused by the agents. Estate Agency has moved from downsizing three/four years ago to survival mode.
Appalling transactional volumes have bought the industry in some parts of the country to its knees, and for an agent to survive they must have stock. Facing closure, is it any wonder that agents are telling sellers what they want to hear.

Desperation, I would suggest, is driving up the asking prices measured in the Rightmove index. Desperation (or, of you prefer, realism) is then forcing them to cut those prices (as can be seen in the Home index).
What a 3% rise in October tells us is not, therefore, that a recovery is close, but that further price falls (and yes, I know there will be regional exceptions) are inevitably on the cards.

useless_git_requires_wife

Whack a big price on so it appears that a lot is knocked off later.

HAMISH_MCTAVISH

Some blog by a random HPC member features a post that's pessimistic about the housing market.

Shocker.

geneer

HAMISH_MCTAVISH wrote: »

Some blog by a random HPC member features a post that's pessimistic about the housing market.

Shocker.

Hamish simply dismisses an inconvenient analysis that he clearly has no legitimate counter argument for.

Shocker.

michaels

I think there is an interesting psychology at work here.

Supermarkets, many goods are priced to take in to account that most sales will take place at 50% off or bogof promotions.

New car prices have long been wishful thinking by dealers allowing them to offer buyers a discount.

And now houses - somehow it is not how Adam Smith would have imagined it.