Saturday, 23 June 2012

UK house prices in May



It has been two months since I last posted a chart illustrating UK house prices. Actually, there has been no substantive change - just two more months of flatlining.

11 comments:

Sackerson said...

What goes up can't for some reason, come down.

Vodka drinker said...

I wonder what is keeping prices up. QE?

Anonymous said...

Great time to buy?

Anonymous said...

@VD .Probably hot money from places in even deeper kaka than us.

Vodka drinker said...

But QE did something don't you think.

Electro-Kevin said...

What about London ?

It seems to be in a global market.

Electro-Kevin said...

Sackerson - Economics is not physics.

I don't understand why people talk of prices having to come down as though they are like a ball thrown into the air with gravity acting upon it.

Clifford dupont said...

Kevin - prices have come down in the terms. (Alice any chance of a chart?)

Sackerson said...

EK, I think there are several mechanisms affecting house prices. Some offset the others (e.g. the encouragement of immigration, and foreigners buying property in London to get it away from their own jurisdictions) but the insolvency of banks and the greatly resisted but seemingly inevitable coming economic depression mean that the pressure from lenders and borrowers to maintain house prices (which are largely composed of debt) is reducing sharply.

Factors disguising the degree of price fall include the reluctance of banks to foreclose because it will expose their own losses, and the reluctance of owners to sell because they refuse to get less than they paid, or are hoping for an upturn, or will be stuck in negative equity and simply can't afford to move.

Another factor is the increase in financial inequality in the US and UK. There must be many cash-holders who are waiting to snap up properties from distressed owners, when they think the lower price will make the potential rent look like a decent return on capital. Some of these will get it wrong - as inflation in living costs continues, there will be less money left over from income to service debts, so house prices will continue to drop (jagged line, as per bear markets generally) and eventually rents as a proportion of income will also decline, - I think.

So yes, it's not as simple as a ball thrown up and falling back; but there are causative factors and overall I think the arrow points down.

Scott Davidson said...
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Electro-Kevin said...

Thank you Sackerson.