Mortgage Lending Rising Again

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I'm starting to see why you people are baffled when the land registry reports rises.

Jason74

Bubble_and_Squeak wrote: »

a colleague of mine recently bought an overpriced flat in tottenham. when i suggested that he is buying at the peak he stated "i will make money on it". would you say that puts him in the spec category, despite the fact that he intends to live in it?

Depends on context for me. If he wants to live in that flat, then no. If you'd said something like that to me about peak, my response would have probably been something like "quite possibly, but I think it will still go up in the long term" (or possibly "I don't really care as I want to stay there for a long time"). That's not speculation, it's just responding to a statement.

But if he doesn't really want to live there, and his main reason for buying is his expectation of price rises, then yes, there's clearly an element of speculation at work. It's not always clear cut imho, albeit it often is.

Bubble_and_Squeak

Jason74 wrote: »

Depends on context for me. If he wants to live in that flat, then no. If you'd said something like that to me about peak, my response would have probably been something like "quite possibly, but I think it will still go up in the long term" (or possibly "I don't really care as I want to stay there for a long time"). That's not speculation, it's just responding to a statement.

But if he doesn't really want to live there, and his main reason for buying is his expectation of price rises, then yes, there's clearly an element of speculation at work. It's not always clear cut imho, albeit it often is.

he really wanted to live in a house but, like me kept getting outbid.
he decided to buy a flat as he thought prices would keep rising and he'd get left behind. i believe the logic was that he'd sell the flat once it was worth several million pounds and buy outside london.
since then supply has increased and prices have fallen.

Bubble_and_Squeak

Joeskeppi wrote: »

I'm starting to see why you people are baffled when the land registry reports rises.

as ellis from die hard once said "get with the program!"
land registry is yesterdays news
what matters is whats happening on the ground TODAY!

AndyGuil

Bubble_and_Squeak wrote: »

as ellis from die hard once said "get with the program!"
land registry is yesterdays news
what matters is whats happening on the ground TODAY!

Land registry is best because it is whole of market and it is the least volatile. The house market isn't the stock market, it doesn't move that fast. No, supply has not increased, there is a huge shortfall in building.

Jason74

AndyGuil wrote: »

Land registry is best because it is whole of market and it is the least volatile. The house market isn't the stock market, it doesn't move that fast. No, supply has not increased, there is a huge shortfall in building.

True. Land registry provides the most comprehensive picture of what has happened, nobody with any understanding of the market would argue with that. But, Bubble does have a point (albeit perhaps made in an unhelpful way) when he points out that it is a backward looking indicator.g a Land registry tells us whatwas being agreed typically 3-6 Months ago, and in a fast paced market, that can far enough out of date to be of little relevance. Certainly, anyone looking at Land Registry stats in March (reflecting SSTC prices of sept - Oct last year) would have found them of little help because prices had risen so much.

As for supply, well of course in big picture terms we still have a housing shortage, but ibn terms of supply in the marketplace, it is a simple statememnt of fact (in my area at least) that there has been a dramatic increase. In one postcode I watch , there were 34 3 bedroom houses available in May. Now there are 82. From a practical point of view, that is an increase in supply of over 150% for anyone looking to actually transact in the marketplace.

Hamish has often talked about prices rising until a balancde between supply and demand was reachedh, and in my part of the world, it appears that (for now at least) that's exactly what has happened. Indeed, there are strong signs that prices have actually overshot a tad, albeit this is a long way from saying that we're about to get a crash.

AndyGuil

Jason74 wrote: »

True. Land registry provides the most comprehensive picture of what has happened, nobody with any understanding of the market would argue with that. But, Bubble does have a point (albeit perhaps made in an unhelpful way) when he points out that it is a backward looking indicator.g a Land registry tells us whatwas being agreed typically 3-6 Months ago, and in a fast paced market, that can far enough out of date to be of little relevance. Certainly, anyone looking at Land Registry stats in March (reflecting SSTC prices of sept - Oct last year) would have found them of little help because prices had risen so much.

As for supply, well of course in big picture terms we still have a housing shortage, but ibn terms of supply in the marketplace, it is a simple statememnt of fact (in my area at least) that there has been a dramatic increase. In one postcode I watch , there were 34 3 bedroom houses available in May. Now there are 82. From a practical point of view, that is an increase in supply of over 150% for anyone looking to actually transact in the marketplace.

Hamish has often talked about prices rising until a balancde between supply and demand was reachedh, and in my part of the world, it appears that (for now at least) that's exactly what has happened. Indeed, there are strong signs that prices have actually overshot a tad, albeit this is a long way from saying that we're about to get a crash.

The market just doesn't move fast enough to need anything more than a monthly tracker. It isn't the stock market. It follows trends and you can see that prices will always increase until either supply increases or there are 1 buyer for every seller. We are way off those and I doubt we will ever see it in our life times. Trying to look forward on such a short basis is just speculation and subject to huge errors. The prices will be higher in a years time and so on.

HAMISH_MCTAVISH

Jason74 wrote: »

In one postcode I watch , there were 34 3 bedroom houses available in May. Now there are 82. From a practical point of view, that is an increase in supply of over 150% for anyone looking to actually transact in the marketplace.

To be expected.

Rising prices have tempted some people to sell that otherwise wouldn't have, they have also enabled some people to sell that couldn't or wouldn't before, so you'd absolutely expect the number of houses on the market to increase now that prices have risen so high in some of these London areas.

That supply rises when prices do is a text book economic response and actually quite healthy for the market. After all it's not really practical for prices to rise 40% a year (as you noted had happened "round your way") for very long.

We've seen supply rise with new builds over the last year as prices have gone up, and we're now also seeing it with existing houses.

However the numbers of people swapping existing houses around doesn't address the housing shortage in any way.

So while local area prices can and do fluctuate as supply and demand ebbs and flows, it will have little or no meaningful impact on prices in aggregate.

The new build increase over the last year is very welcome, but also nowhere near enough to reverse the housing shortage, or to send prices crashing, as the shortage is the primary cause of high prices.

Nothing that we're seeing here looks like the early stages of a crash, but it does look like the balance between supply and demand is easing, down from 14 candidates for every house to 9 candidates for every house.

In London that effect will be even more pronounced, as prices have risen so much lately. There can be no doubt that when prices for a flat shoot up 100 grand or 200 grand in a year or two, significant numbers of potential buyers will have been priced out. Which is again the market working exactly as it should to ration scarce goods.

This should reduce the upwards momentum and let the rate of growth in prices ease as the market pauses for breath.

But it's nowhere near enough if what you want is prices to fall significantly and over the long term.

Only building millions more houses can achieve that.

Jason74

AndyGuil wrote: »

The market just doesn't move fast enough to need anything more than a monthly tracker. It isn't the stock market. It follows trends and you can see that prices will always increase until either supply increases or there are 1 buyer for every seller. We are way off those and I doubt we will ever see it in our life times. Trying to look forward on such a short basis is just speculation and subject to huge errors. The prices will be higher in a years time and so on.

We'll see. Taking a five - ten year view you are absolutely correct. The long term trend very much appears to be up for the exact reasons you mentioned (although other factors such as the price and availabiklity of Credit also come into play). I also agree with you that a Monthly snapshot is quite suffcicient to see where the market is.

However, none of that changes the facts that 1) Land registry is a backward looking indicator, 2) supply is markedly up in the marketplace in recent Months 3) a number of sources, from Hometrack to RICS, have explicitly stated that the London market has significantly shifted, and that this is more than normal seasonal fluctuations. In a market where prices are up 40% or so in little over a year, this is unsurprising, and it is perfectly reasonable to take a view that the market has in the short term peaked, or perhaps even overshot a little.

This doesn't chahnge the fact that prices are likely to be a lot higher than they are today, but in London at least (or my part of it) the next 6-12 Months are another matter entirely. Btw, you never did answer the question as to what you did for a living.

Bubble_and_Squeak

AndyGuil wrote: »

Land registry is best because it is whole of market and it is the least volatile. The house market isn't the stock market, it doesn't move that fast. No, supply has not increased, there is a huge shortfall in building.

jokes!
good jokes!