London HPI falling at fastest rate since 2009

Graham_Devon

London house prices are falling at the fastest pace since the depths of the recession almost a decade ago, with the capital’s most expensive areas seeing the biggest declines.

Average prices fell to £593,396 in January, an annual decline of 2.6 per cent, according to a report published by Acadata on Monday. That’s the most since August 2009.

Weakness in prime property in the UK capital in recent years – partly due to tax changes – is rippling out to other locations in the city and around the South-east. London prices fell 0.8 per cent in January alone, according to Acadata, which publishes detailed regional data with a one-month lag. That shows the weakness that was present for much of last year continued into 2018.

House prices fell 15% in one borough. Some of the media simply blames "brexit". The others look at interest rates and a bubble.

http://www.independent.co.uk/news/business/news/london-house-prices-fastest-pace-recession-2009-acadata-housing-market-report-a8251681.html

John-K_3

Lies, damned lies, and statistics.

And those that understand the last of those tend to end up in the Nice houses...

Are you familiar with Simpson!!!8217;s paradox? It could well apply here. In the past, more expensive houses had one turnover rate, cheaper ones had another. Maybe they were the same, maybe they differed, but there existed some ratio between them.

A change happened a while back, and stamp duty went up massively on the more expensive properties. The turnover rate therefore dropped. I am one of those affected, I would like to move to a similar price home to my current one, but it will cost hundreds of thousands, so I am probably staying put.

Anyway, imagine that before the 1.5 million pound house and the 500k flat each changed hands on average once every three years. Average price would be one million., as one third of each of the stock of each would sell

The next year, prices are ten percent higher, but let us say that the higher price properties stop selling entirely. Now the average house price is £550k, a drop of 45%

Disaster!

And let us now assume that lower price houses see a stamp duty drop. What would we see there? Regions with cheaper housing possibly seeing more people now able,to move at the higher end than before, giving the opposite effect, and price rises.

Exactly as the latest results show, strangely...

Graham_Devon

So the statistics are lying? Because they show a drop?

Are they lying with they show an increase?

GreatApe

John-K. Good points well made and I'm sure most estate agents wouldn't pick up on it

I like the Land registry index it is done on the exact same property selling so the effect you highly wouldn't apply to that index.

Also just to note most homes transact infrequently its roughly once every 25 years.

GreatApe

Graham_Devon wrote: »

So the statistics are lying? Because they show a drop?

Are they lying with they show an increase?

Use Land registry. London shows

Dec 2017 = £484k
Dec 2016 = £472k

So up £12k on the year. And for contect prices are up £170k vs five years ago

AnotherJoe

Graham_Devon wrote: »

So the statistics are lying? Because they show a drop?

Are they lying with they show an increase?

Yes,they may be, that's exactly what John-K pointed out.

ukcarper

Graham_Devon wrote: »

House prices fell 15% in one borough. Some of the media simply blames "brexit". The others look at interest rates and a bubble.

http://www.independent.co.uk/news/business/news/london-house-prices-fastest-pace-recession-2009-acadata-housing-market-report-a8251681.html

This is from one source Land Registry does not agree, admittedly Land Registry lags but I doubt they fell 15% in a few months.

John-K_3

Graham_Devon wrote: »

So the statistics are lying? Because they show a drop?

Are they lying with they show an increase?

No, not because they show a drop. Come on, this is not hard, I explained pretty clearly what could be another reason for those numbers. Did you even look up Simpson’s paradox?

We had a major change in taxation, and I have pointed out the possible effects. The point is that you cannot tell from what you posted whether it is the tax change shifting the ratio or from prices dropping.

John-K_3

And, to add...

I borrowed some money against my flat to buy a house elsewhere last year. The flat was valued as having gone up 50% in seven years. I am now wondering about moving, and suspect that it has dropped back about 10%, which I would put down in decent part to the stamp duty. It is up in the 12% range, so that puts a lot of buyers off.

The point I was making above is to think carefully about what statistics are really telling you.

noddynoo

Friend in London just had an agent round to do a valuation. She was expecting 725-750 as a conservative figure as she knows the market is tricky but she lives in nice street and near very good schools. Agent said even a year ago he would have marketed at 795 to get 775 plus but now has advised her to put it on at 699,950 and to consider anything over 640

economic

noddynoo wrote: »

Friend in London just had an agent round to do a valuation. She was expecting 725-750 as a conservative figure as she knows the market is tricky but she lives in nice street and near very good schools. Agent said even a year ago he would have marketed at 795 to get 775 plus but now has advised her to put it on at 699,950 and to consider anything over 640

Which area in London?

I also see a very stagnant market in zone 2/3 north/nw london where desperate sellers are dropping asking prices and still not getting sold. Sellers not so desperate are not dropping prices and are just wasting their time. Clearly the market has changed quite a lot.