Hometrack: UK house prices up 2.3% yr/yr in Jan

PasturesNew

http://www.guardian.co.uk/feedarticle?id=7260604

LONDON, Jan 28 (Reuters) - House prices in England and Wales rose at the slowest annual pace since mid-2006 this month as the average time it takes to sell a property reached a seven-year high, a survey showed on Monday.

Housing market research company Hometrack said house prices rose 2.3 percent on a year ago in January, down from 3 percent in December and the weakest rate since June 2006.

On the month, prices fell 0.3 percent, the fourth consecutive monthly fall. The figures are not adjusted to take seasonal factors into account.

The survey adds to a growing body of evidence showing the once red-hot housing market is cooling fast as past interest rate rises and the global credit crisis deter buyers.

"Weak confidence among would-be purchasers continues to put downward pressure on house prices although the scale of the recent falls is relatively small when put in the context of gains over the last few years," said Richard Donnell, Hometrack's Director of Research.

"The short term outlook for market activity hinges as much around the outlook for UK interest rates as it does the outlook for financial markets."

The Bank of England cut interest rates in December to 5.5 percent after a series of rate rises and is widely expected to lower borrowing costs again next month.
However, policymakers have warned inflation risks will make it tricky to judge just how to manage monetary policy as the economy slows.

Hometrack said the average time it takes to sell a home rose to 8.5 weeks from 8.3 weeks -- the longest period since the survey began in 2001.

Generali

So a fall in prices after inflation (RPI).

RHemmings

Who thinks that house prices might go year on year negative in the first half of this year. It has to look possible given recent movements.

adr0ck

Generali wrote: »

So a fall in prices after inflation (RPI).

we'll probably have 5-10 years or so of this IMO

house prices either falling slightly or rising slightly (so in real terms falling)

until prices become a bit more affordable

there may be a bigger fall in flats (but this will be depenedent on location etc etc)

IveSeenTheLight

adr0ck wrote: »

house prices either falling slightly or rising slightly (so in real terms falling)

until prices become a bit more affordable

I guess this would be stagflation.
Would you guys be happy to have 5 years where house prices slightly fall and slightly rise allowing time for wages to increase?

WTF?_2

Generali wrote: »

So a fall in prices after inflation (RPI).

The only reason they are up even a small bit is because of the strong growth in the early half of the year offsetting the later falls. I'd expect them to turn year-on-year negative from around June.

As you say, even then the yoy increase is less than inflation or indeed what you could get by putting the cash in savings account. Then again, if you lived in the house you have to take into account that you'd be paying rent otherwise (though rent would probably be cheaper than the mortgage) and factor that into the gain/loss equation.

However, it looks like the days of 'easy money' through buying a house and watching its value increase by a comfortable amount are long gone.

merlinthehappypig

Given the gap between house prices and wages you would have to have this stagflation effect for an awfully long time to make houses more affordable.

Personally I think the gradual decline in prices/increase in wages scenario over a long period is an unlikely one. History shows that we don't tend to for things in in half measures in this country and recent experiences in the US show the same.

Everyone followed like sheep when prices were rising and my guess is that we will see the reverse when the message finally hits home. I just don't think that the terrible economic mess that we (and most of the 'old' developed economies) are in has hit home yet and that much worse is to come.

It will hit home first with the second home owners and the buy-to-let investors. As they have to reduce prices to sell it will cause the rest of the market to stagnate. Whether this, in turn, will affect the whole housing market I don't know. I certainly wouldn't buy a house from someone who didn't have to sell if I could get a similar house from someone who did for 15% less.

We are seeing this clearly already in the houses that we have viewed in the last 6 months. Huge reductions from people who have to sell - little or no reduction from those who don't.

It's very carefully balanced at the moment IMO and the next month or two of economic news could tip things either way.

Many people have borrowed extensively against the 'value' in their homes. This is clear in the official figures which are bad enough, but these don't take into account all the unsecured loans/HP/credit card debt that people seem happy to have because their house is worth so much.

Take away that perception of wealth and things will go downhill very quickly.

WTF?_2

IveSeenTheLight wrote: »

I guess this would be stagflation.
Would you guys be happy to have 5 years where house prices slightly fall and slightly rise allowing time for wages to increase?

They'd have to fall quite markedly to come back to anything like 'normal' or else wages would have to increase substantially over the next five years, which I don't see happening.

I suspect we will get stagflation generally but things like houses and anything else you have to borrow money to buy will fall markedly (expect house prices to come into the CPI figures.... ). Because we now import so much stuff (including food) it won't be possible to simply inflate/devalue the currency like they did in the 70s.

Wages will see downward pressure from globalisation and the sheer amount of immigrant labour prepared to work at the lowest levels of pay - so don't expect to see them go up by anything like the cost of living.

People are going to have to get used to a substantially lower standard of living.

Sisyphus

adr0ck wrote: »

we'll probably have 5-10 years or so of this IMO

house prices either falling slightly or rising slightly (so in real terms falling)

until prices become a bit more affordable

there may be a bigger fall in flats (but this will be depenedent on location etc etc)

Sure, it will happen in a nice orderly manner without any panic selling whatsoever. We are British after all, what? :rotfl::rotfl::rotfl::rotfl::rotfl:

adr0ck

Sisyphus wrote: »

Sure, it will happen in a nice orderly manner without any panic selling whatsoever. We are British after all, what? :rotfl::rotfl::rotfl::rotfl::rotfl:

:rotfl::rotfl::rotfl:

WTF?_2

Sisyphus wrote: »

Sure, it will happen in a nice orderly manner without any panic selling whatsoever. We are British after all, what? :rotfl::rotfl::rotfl::rotfl::rotfl:

Absolutely, old boy. After all it's clear from a quick look around that the spirit of selflessness, 'you first old chap' and good citizenship is alive and well.

It wouldn't do to be seen to hurry to sell one's house to avoid penury - how vulgar! Far better to know one's place and suffer with an indomitable stoicism.