MSE News: House prices down 1.2% over year, says Halifax

ukcarper

The_Earl_of_Streatham wrote: »

If it is supply and demand, why have rents not increased in line with purchase prices? Could it be that rents can't be leveraged and purchases can?

I believe rents increased a similar amount to house prices over the last year.

The_Earl_of_Streatham

ukcarper wrote: »

This is an argument put forward a lot but in fact only a couple of boroughs have fallen either this month or this year even Tower Hamlets is up 4.1%.

Part of the argument indeed. Figures available here

http://www.landregistry.gov.uk/__data/assets/pdf_file/0018/23643/hpi-report-august.pdf .

The average is dragged up somewhat by areas like Westminster (average price £789K, Hammersmith and Fulham (£577K), Kensington and Chelsea (just over a million). Taking these outliers away the rise comes to about 3.9%. I'm surprised and clearly wrong in my estimates.

The rest of my argument still stands and is reinforced by the figures on page 13 of that report which shows sales volumes down between 44% for the cheapest properties and 3% for the range £250-300k. Above that we see increases in volumes rising as prices rise. These are wealthy people with a lot of equity essentially swapping houses.

People paying £2million for a house (87% increase in turnover yoy) are not part of the economy that most of us live in. These transactions are distorting the numbers and making London look like a haven for property speculators. If you've got £2 million to spend on a house perhaps it is.

I stand by my argument about distortions, having rises confined to one part of the country is possibly worse than a general house price inflation.

ukcarper

The Average is dragged up by Westminster etc but that doesn’t alter the fact that the only areas to fall over the year were Harrow and Greenwich and over 50% of the boroughs increased by more than 4%.

The_Earl_of_Streatham

ukcarper wrote: »

I believe rents increased a similar amount to house prices over the last year.

Nationally house prices have risen 0.7% over the last year, don't know what rents have done.

On this page there is a chart

http://blogs.independent.co.uk/2012/07/11/why-low-rents-are-compatible-with-a-housing-shortage/

which shows that since 1997, when the present housing boom started purchase prices have risen by a factor of three and rents by a factor of 1.5. If demand is the only factor, why have landlords been so generous?

MobileSaver

The_Earl_of_Streatham wrote: »

If it is supply and demand, why have rents not increased in line with purchase prices?

As ukcarper pointed out, they broadly have!

Of course it isn't only about supply and demand but I have never understood why those fixated on HPC cannot see the obvious. There simply are not enough houses to supply demand - what do you think that will inevitably do to prices?

MobileSaver

The_Earl_of_Streatham wrote: »

If demand is the only factor, why have landlords been so generous?

Who said demand was the only factor?

The_Earl_of_Streatham

ukcarper wrote: »

The Average is dragged up by Westminster etc but that doesn’t alter the fact that the only areas to fall over the year were Harrow and Greenwich and over 50% of the boroughs increased by more than 4%.

Yes, if you read my post you will see that I've conceded that, the words, "Taking these outliers away the rise comes to about 3.9%. I'm surprised and clearly wrong in my estimates" would have been the giveaway, did you read them?

I pulled out specific figures for wealthy boroughs to support my arguments about distortions and turnover, care to address those?

The_Earl_of_Streatham

Why, I believe it was you.

MobileSaver wrote: »

The supply and demand issue is very real. As a nation we have changed our attitude to home life with more and more people choosing to live on their own, meaning they need their own house.

ukcarper

The_Earl_of_Streatham wrote: »

Nationally house prices have risen 0.7% over the last year, don't know what rents have done.

On this page there is a chart

http://blogs.independent.co.uk/2012/07/11/why-low-rents-are-compatible-with-a-housing-shortage/

which shows that since 1997, when the present housing boom started purchase prices have risen by a factor of three and rents by a factor of 1.5. If demand is the only factor, why have landlords been so generous?

I believe rents have increased over 4% this year.http://www.guardian.co.uk/money/2012/aug/10/buy-to-let-landlords-profit-rents-rise

FTBFun

The_Earl_of_Streatham wrote: »

Doesn't matter what size typeface you use, that London figure is severely distorted by central London prices which are totally detached from the rest of the economy.

Take a look at real prices, in real areas of London where real people live. People are (eventually) reducing prices to get places shifted. This doesn't happen in a rising market.

I'm in Southwark and house prices are still rising YOY - this is the borough that contains Bermondsey and Peckham btw - hardly prime property areas.