Thursday 10 July 2008

House prices down 2 percent in June

It was late, but worth the wait; the Halifax house price index fell 2 percent in June. Since the peak of last summer, nominal house prices are down around 9.6 percent. Year-on-year, prices are down 6 percent. Prices are now down to their August 2006 level, wiping out almost two years of bubble appreciation.

There is no easy way to spin these numbers, but Martin Ellis, Halifax chief economist gave it a go:

"House prices have declined by 6.1% over the past year. Nonetheless, the average UK price remains slightly higher than two years' ago and is appreciably stronger than three or four years ago. House prices fell by 2.0% in June compared to 2.5% in May, a slight moderation in the recent rate of decline.

A strong labour market, low interest rates and a shortage of new houses underpin housing valuations. Our research shows that the labour market is the key driver of the housing market. Employment is at a record high."


I particularly liked the "slight moderation in the recent rate of decline". The comments about the strong labour market, low interest rates and shortage of new housing underpinning housing valuations was also quite funny. The poor man is desperately clinging onto the housing bubble, but it is time to let go. It is over Martin, the mother of all housing crashes is now upon us.

11 comments:

Mark Wadsworth said...

Alice, from the survey:

"The Bank of England recently reported that 70% of mortgage
holders have at least 50% equity in their homes"

This does not tie in with the figures you used for your negative-equity-o-meter, which suggested 70% would have only 'at least 30%'.

Can you tell me where you got your figures from?

Alice Cook said...

Mark,

The Bank of England Financial Stability report.

Alice

Anonymous said...

Alice - looking back yesterday at your real house prices piece it looked to me as if the real rise from the 1982 trough to the 1989 peak was a little over 80%, but the real rise from the Jan 1996 trough to the 2007 peak was a little over 160%.

That being the case, your phrase 'Mother of All Housing Crashes" really does sum it up!

As the way up the bubbles seems always to take about the same time as the way down after, I reckon we have to count at least eight years for the bottom to come in London and the south-east (2015), with the national average hitting the bottom maybe eighteen month after that as the down-ripple finishes c. 2016/2017.

B. in C.

Budgie Inspace said...

Alice,

How did you get 9.6%?
I worked it out to be 10% using their indices.

Just curious, no point squabbling over 0.4%!

Maybe my calculator rounded it up.

Andy

Mark Wadsworth said...

Alice, thanks, I can find the FSR but I can't find the data for the life of me. I think if we can catch them out in a BIG FAT LIE then it must be worth doing. Can you give me a more specific link?

Alice Cook said...

Mark,

Give me a day or so, and I will post the link for you.

Of course, it is possible that I made the mistake.

alice

Anonymous said...

Alice,

I don't suppose you can create a dynamically updating template for Mr Ellis to save him the trouble of picking up his pen each month. Something like:

""House prices have declined by [link to Excel] over the past year. Nonetheless, the average UK price remains slightly higher than [last month's number 0.5] years' ago and is appreciably stronger than [last month's number +1] years ago. House prices fell by [link to Excel] in June compared to [link to Excel] in [Worst month so far], a [synonym of 'slight'] moderation in the recent rate of decline.

A strong labour market, low interest rates and a shortage of new houses underpin housing valuations. Our research shows that the labour market is the key driver of the housing market. Employment is at a record high."

Nick

Anonymous said...

Nick,

His statement did look like a cut and paste job.

VADO

Anonymous said...

Dear Alice,

Could you also add inflation correction + decrease of value against the Euro to this data and make a new chart?

Thank you in advance.

Mark Wadsworth said...

Alice, I look forward to it.

Nick, you missed off 'high demand' and 'immigration' (although that last one would have to come out again once we have net immigration of workers).

Anonymous said...

"The fundamentals are strong....blah...blah.....slight temporary blip.....blah....blah....not Gordon Brown's fault....blah...blah...Bank of England needs to cut rates...resume upward trend...blah...blah...let's not talk ourselves into recession...blah...blah...nobody could have expected....blah blah...looks poised to bounce..."

There we go. No need to listen to speeches by economists, bankers or politicians.

Nick