Tuesday, 14 July 2009

The housing hype starts again

I have a fear that something bad might be cooking in the housing market. From today's Times...

Property values are set to rise in the next three months as a lack of homes props up prices, estate agents believe.

The number of agents expecting house prices to increase in the coming months outnumber those predicting further falls for the first time since May 2007, according to figures published today by the Royal Institution of Chartered Surveyors (RICS).

There are also signs that activity in the market is picking up, with the average number of sales completed by each estate agent branch rising to 12.7 in the three months to June, up from 11.7 in May. Interest from buyers rose at a record rate in June, agents said.

In a further boost for the economy, high street retailers have reported a bumper June as the heatwave boosted demand for summer food, shoes and clothes. Like-for-like sales rose by 1.4 per cent in the year to June, figures from the British Retail Consortium show.

Lets assume that this story is true and the housing market is, in fact, beginning to recover. Think through the next few steps of the story. Interest rates are at a four-hundred year low, the fiscal deficit is at an historically unprecedented high, and asset prices are beginning to increase.

This is like watching a car speeding towards a brick wall.


Anonymous said...


Slagella said...

Why on earth would you believe anything in The Times? It must represent the most tragic decline in journalism anywhere.

mike said...

Housing activity might increase, but there's little money to pay for them. It's the availability of funds to banks and building societies that control the house prices and not the estate agents or investors. Anyone noticed that instant access savings rates are on the increase? Now above 3% which isn't bad for a base rate of 0.5%. This is a clear sign that banks are short of funds.

Mitch said...

Most estate agents believe they are professionals with a respected career and I have fairies at the bottom of my garden.
This is gordons lot painting some withered stems green, ignore it.

Jo said...

Important to distinguish between data and opinion:
'..........estate agents believe.'

deepian said...

yep - either it won't happen, or if it does it will be a very short lived "suckers rally"...

Sureseam said...

A great many folk believe this is "the bottom" and do so on the basis of the hype from the cabal including the Times (and to some extent the BBC). Enough of them running with this idea creates a mini-surge based on spin.

The sad(?) truth of the fundamentals is that this is spin and hope. The excellent graphs here make it pretty clear.

Merryn Somerset Webb made a comment to the effect that every crash offers punters one last opportunity to get badly burned. A sobering explanation of current events.

Anonymous said...

Do like I am doing: go to Berlin (or Switzerland). But get out while you can, while the pound still has worth. Because it is going to up in flames come October.

Anonymous said...

None of you "house price crash porn" voyeurs consider the fundamental factors underpinning the rise in demand for houses & apartments:

1. Continued net immigration
2. Land supply capacity constraints - green belts and building restrictions
3. The average family size falling (more divorces, and people living in single person households for longer)
4. Chronic and persistent under-building over the past 50 years

These are real, and not going away any time soon. When you throw in historically low interest rates, is it any surprise the decline is slowing and even reversing?

Sure, there are temporary headwinds - the recession, unemployment and tighter lending standards by banks.

The key difference is the headwinds are temporary and can reasonably be expected to dissipate over the next 12-24 months, while the structural problems underpinning house price appreciation will take generations to fix.

Anonymous said...

You are missing the point: everything you say about propping up house prices represents epic community and social decline. Nobody who cares about their quality of life and happiness would want to live in a place like that. So, go ahead, be a slum lord if you want, and enjoy living in over-crowded communities, over-run with crime. But smart people will leave.

Anonymous said...

What colour is the sky in your world?
Do you come from a long line of EA'S where the first word you can speak is "Fundamental"?
I was going to pick off each point(three of them amount to same thing)but the voyeurs here can do that for themselves. Twat.

Anonymous said...

Yawn - this is for grown-ups, please stop posting before your Mummy finds you on her PC again and spanks your bottom for being naughty.

Jo said...

That's jazza.

Anonymous said...

"1. Continued net immigration
2. Land supply capacity constraints - green belts and building restrictions
3. The average family size falling (more divorces, and people living in single person households for longer)
4. Chronic and persistent under-building over the past 50 years"

Did these factors treble between 1997 and 2007? No

Did securitised lending, political intervention in interest rates, equity withdrawal, consumer spending, speculation and BTL investment more than treble? Yes

You're missing the key, truly temporary factors. I wonder if you have a vested interest preventing you seeing this objectively obvious reality?

House prices will appreciate over time but from a realistic base and at a non-hysterical, predatory, voracious pace.

"Tw@t" is harsh, but you are almost certainly a compromised, vested, misinforming shill to a discredited, tediously repetitive economic evil that cyclically blights society and enriches the few via "it's different this time".

It's not. There's the greedy, mendacious few and the naive busted masses as ever.

Anonymous said...

That reminds me of the joke,quite a long drawn out one,about the"Master of quick wit and repartee"