"Lies, damned lies, and statistics" is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments, and the tendency of people to disparage statistics that do not support their positions. It is also sometimes colloquially used to doubt statistics used to prove an opponent's point.Now, let's see the magic of statistics, when applied to UK home prices and also the magic of brainwashing, when it comes to reporting. Just look for the journalist parroting the fact that the government trying cut its deficit will make the housing market collapse. The typical sentence is "during the biggest government budget squeeze since World War II hurts demand for housing". I have highlighted them in yellow to make your life easier.
The term was popularised in the United States by Mark Twain (among others), who attributed it to the 19th-century British Prime Minister Benjamin Disraeli (1804–1881): "There are three kinds of lies: lies, damned lies, and statistics." However, the phrase is not found in any of Disraeli's works and the earliest known appearances were years after his death. Other coiners have therefore been proposed. The most plausible, given current evidence, is Englishman Sir Charles Wentworth Dilke (1843–1911).
This post should give you a good understanding of the different players in UK's housing market, and also about the state of the housing market itself. It's not in any way exhaustive, though I spent a lot of time gathering the information. I hope you will find it useful nonetheless.
Aug. 10 (Bloomberg) -- A U.K. housing-market gauge showed the first decline in prices for a year in July as demand for homes fell and more people put their properties on the market, the Royal Institution of Chartered Surveyors said.One week later:
The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 8 percentage points, compared with a positive reading of 8 in June, the London-based group said in an e-mailed report today. A third more real-estate agents reported an increase rather than a drop in the number of properties they had for sale.
The housing market is starting to falter as Britons brace for the deepest spending cuts in a generation and banks curb lending. Bank of England officials may cut their forecasts for economic growth tomorrow after they kept up their emergency stimulus last week to aid the recovery, economists say.
“Since the election and budget, confidence and interest in property seems to have declined,” Murray Wills, an estate agent at Page and Wells in Maidstone, Kent, southern England, said in the report. “Mortgages are not easy to secure and the threat of redundancy may be an underlying factor.”
U.K. banks approved fewer mortgages in June and Nationwide Building Society and Hometrack Ltd. both also reported falling home values in July. RICS said 28 percent more estate agents expected prices to fall in coming months, compared with 6 percent in June.
“The forward-looking price expectations numbers suggest that this softer trend will continue through the second half,” Ian Perry, a spokesman for RICS, said in a statement.
A separate report by the National Association of Estate Agents today showed the number of people looking for a home rose in July. The total of house hunters registered per branch of estate agent increased on average to 292 in July from 279 the previous month, the NAEA said in an e-mailed statement today.
[...]
Aug. 16 (Bloomberg) -- London home sellers cut 17,000 pounds ($26,500) off their asking prices on average in August, wiping out gains recorded in the first half of the year, Rightmove Plc said.Two weeks later, prices are still falling:
Asking prices in the capital fell 4.1 percent on the month to an average 405,058 pounds, the operator of the nation’s biggest property website said in a report today. The drop is the biggest in two years and returns values to levels seen in January. Prices across England and Wales fell 1.7 percent.
Reports from Nationwide Building Society and Halifax also signal that the U.K.’s housing recovery is faltering, while Rightmove said a squeeze in the availability of credit may limit price gains. [...]
Rightmove’s data show the London boroughs of Wandsworth and Brent led declines in the capital, falling 6.2 percent. Newham was the best performer, slipping 1.2 percent, while the Kensington and Chelsea district fell 1.7 percent.
[...]
The average stock of unsold property per real-estate agent rose to 79, the highest since July 2008, from 77 in July, Rightmove said. Properties now spend an average of 95 days on the market, the most since January 2009.
The monthly drop in asking prices in England and Wales is the biggest since December, and the second this year. Seven of 10 regions tracked by Rightmove showed declines, led by a 4.4 percent drop in the west Midlands. From a year earlier, national prices rose 4.3 percent in August.
[...]
Aug. 30 (Bloomberg) -- U.K. home values dropped in August by the most in 16 months as the housing market endured a “modest re-pricing” that is likely to last as long as a year, Hometrack Ltd. said.The following day:
The average cost of a home fell 0.3 percent from the previous month to 158,200 pounds ($246,000), the London-based property researcher said in an e-mailed statement today. That was the biggest drop since April 2009. Hometrack’s index is based on a survey of 5,100 real-estate agents and surveyors.
The report adds to mounting evidence that the housing market is weakening, and economists predict data tomorrow may show that banks granted the fewest mortgages in more than a year last month.
[...]
From a year earlier, prices rose 1.5 percent, the least in five months, Hometrack said. Demand for homes, measured by the change in new buyers registering with real-estate agents, fell for a second month, dropping by 2.2 percent.
[...]
U.K. banks probably approved 46,500 mortgages in July, the least in 14 months, according to the median forecast of 19 economists in a Bloomberg News survey. The Bank of England will release that data tomorrow.
Aug. 31 (Bloomberg) -- U.K. mortgage approvals were little changed in July, signalling that the housing market remains sluggish as the government implements the biggest budget squeeze since World War II.About 1 month later:
Lenders granted 48,722 loans to buy homes, compared with a revised 48,562 in June, the Bank of England said today in London. Net lending for homes dropped to 86 million pounds ($133 million) from 518 million pounds, the lowest since March.
[...]
Economists forecast that July approvals would decrease to 46,500 from an initially reported 47,600 in June, based on the median forecast of 19 economists in Bloomberg News survey. The July figure compares with 53,126 a year earlier and is less than half the level at the peak of the housing boom in 2007.
[...]
Today’s data also showed credit card lending rose a net 213 million pounds, the most since February. Households repaid a net 41 million pounds of personal loans and overdrafts.
Oct. 8 (Bloomberg) -- U.K. house prices rose to a two-year high in September as demand picked up in London and the property market showed signs of peaking, research company Acadametrics Ltd. and LSL Property Services Plc said.Another week later:
The average price of a home in England and Wales rose 0.2 percent from August to 223,965 pounds ($357,000), the highest since July 2008, the companies said in an e-mailed statement in London today. Values were up 7 percent from a year earlier.
[...] Lloyds Banking Group Plc’s Halifax unit said yesterday that home values dropped the most since at least 1983 last month. Analysts in today’s report predicted that their index will show annual declines in most of England and Wales by December.
[...]
The increase in house prices last month came as the number of transactions rose 3.4 percent from August to about 66,000, according to the report. That’s an increase of 11 percent from a year earlier, Acadametrics and LSL said.
[...]
Acadametrics uses methodology employed by the U.S. S&P/Case-Shiller price index, combining initial housing transaction data from the Land Registry and results from other price measures to produce an estimate for the most recent month. That number is then revised in following months.
Oct. 15 (Bloomberg) -- A gauge of U.K. residential rents climbed for an eighth month in September as a lack of mortgages and affordable housing for sale drove letting fees in London to a record high, LSL Property Services Plc said.Two weeks later:
The average monthly rent for a home in England and Wales rose 0.5 percent to 689 pounds ($1,106) from 685.70 in August, the Newcastle, England-based company said in an e-mailed statement today. That’s the highest since LSL started compiling the index in June 2007. The average fee in London gained 1.1 percent to 972 pounds, also a record.
Potential homebuyers are putting off purchases due to concerns about the impact of the government’s biggest budget squeeze since World War II and a dearth of affordable finance, LSL said. Landlords are benefitting from a lack of properties to let as banks curtail mortgages for buy-to-let transactions, reducing the number of rentals entering the market.
[...]
Unpaid rent in the U.K. totaled 230 million pounds in September, compared with 266.3 million pounds the previous month, LSL said. That’s the equivalent of 10 percent of all rent across the country, it said.
Amongst the 18,000 properties surveyed by LSL for the gauge, monthly rents ranged from 4,117 pounds for an apartment in London’s Kensington area to 250 pounds for a terraced house in Huddersfield in northern England.
[...]
Oct. 28 (Bloomberg) -- U.K. house prices fell in October to the lowest level in eight months as the deepest government spending cuts since World War II sapped confidence, a report by Nationwide Building Society showed.Another two weeks later:
The average cost of a home dropped by 0.7 percent from September to 164,381 pounds ($259,000), the lowest since February, Britain’s biggest customer-owned lender said in an e-mailed statement today. From a year earlier, prices increased 1.4 percent, the least since September 2009.
[...]
House prices fell 1.5 percent in the three months through October, the fastest quarterly pace of decline since April 2009, Nationwide’s report showed.
Recent housing data have been mixed. While a measure by Halifax, a division of Lloyds Banking Group Plc, showed a 3.6 percent drop in September, the Land Registry said today that values fell just 0.2 percent that month. Rightmove Plc, operator of the U.K.’s biggest property website, said last week that home sellers raised asking prices by 3.1 percent in October.
[...]
Nov. 9 (Bloomberg) -- A U.K. housing-market gauge dropped more than economists forecast to an 18-month low in October as homebuyers became “cautious” on prospects for prices, the Royal Institution of Chartered Surveyors said.Another week later:
The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 49 percentage points, compared with minus 36 points in September, the London- based group said in an e-mailed report today. Economists forecast a decline to minus 39 points, according to the median of 20 predictions in a Bloomberg News survey.
The housing market has weakened after more homeowners put their properties on sale and the government unveiled a budget squeeze that will wipe out almost half a million public-sector jobs. While the Bank of England kept its benchmark interest rate at a record low of 0.5 percent last week, banks are still rationing credit, RICS said.
[...]
A measure showing the number of new property listings fell for the first time since January to minus 4 from 22 the previous month, RICS said. A gauge of new buyer enquiries dropped to minus 12 from minus 2.
[...]
Nov. 15 (Bloomberg) -- U.K. home sellers cut asking prices by the most since 2007 this month as they endured a record wait to shift their properties because of a lack of demand, Rightmove Plc said.Just a few days later:
Average asking prices in England and Wales fell 3.2 percent from October to 229,379 pounds ($371,000), the operator of Britain’s biggest property website said in a report published in London today. That’s the biggest monthly drop since December 2007. Values rose 1.3 percent from a year earlier.
[...]
The average time a property stays on the market before being sold climbed to 101.6 days in November from 94.5 the previous month. That’s the highest level since Rightmove began keeping the data in September 2001. The average number of unsold properties per real-estate agent held close to a record high at 77, the report showed.
Nine out of 10 regions in England and Wales tracked by Rightmove showed falling asking prices, led by a 6 percent drop in East Anglia. Values in London fell 0.4 percent.
[...]
In London, 10 areas out of 32 showed gains, led by Hammersmith and Fulham and Westminster. Merton and Newham showed the biggest price drops, Rightmove said.
Recent data on the housing market have been mixed. While Lloyds Banking Group Plc’s mortgage-lending Halifax unit said on Nov. 4 that home values climbed 1.8 percent last month, erasing almost half a record drop posted in September, Nationwide Building Society said that they fell to an eight-month low.
[...]
Gauges of business sentiment and output indicate that the economy may contract in the first quarter of next year and could start shrinking as early as next month, BDO LLP said today. Its optimism index and output index are both at levels that would indicate a contraction in the economy, the accountancy company said in an e-mailed statement.
BDO’s indexes are calculated using previously released survey data by other organizations covering 11,000 companies employing 5 million people.
Nov. 19 (Bloomberg) -- Northacre Plc, an unprofitable London developer, became the second-best performing real-estate stock in Europe this year thanks to just one project that’s still in progress.Two weeks later, prices are still falling, for a fifth month:
Sales at The Lancasters redevelopment, a city block of 1850s townhouses overlooking Hyde Park, have probably been sufficient to entitle the company to a 50 percent share in the profits under an agreement with partner Minerva Plc. The shares have climbed to 122.5 pence from 24 pence this year, more than a fivefold gain, compared with 4.3 percent average decline for the 50 members of the FTSE AIM Real Estate Index.
One shareholder “hugged and kissed me” at the company’s Aug. 3 annual meeting, Chief Executive Officer Klas Nilsson, 69, said in an interview in The Lancasters’ model apartment. The grateful investor bought 10,000 pounds ($16,000) of Northacre stock when it languished at 2 pence, an investment that was worth 612,500 pounds at yesterday’s closing price.
Apartments in the 77-unit Lancasters went on sale amid increased demand from wealthy overseas investors, who are using the pound’s weakness as an opportunity to buy homes in central London. A shortage of properties for sale for more than 1 million pounds pushed prices higher, making luxury homes in London outpace the rest of the U.K. housing market.
[...]
The company reported losses totaling 4 million pounds for the two years through February. Aside from property sales, the company gets income from its Intarya interior design arm and its Nilsson architecture unit.
Northacre is focusing on selling the remaining apartments, priced from 900,000 pounds to 16.5 million pounds for the 5,385 square-foot (500-square-meter) show apartment that opened in June.
Refurbishment of the 192,000-square-foot former hotel began in 2008, with the heritage-protected façade retained as the interior was gutted. The front gardens were excavated and will be covered over again for two underground stories of garages and a third-story swimming pool, gymnasium and leisure facility.
“There’s a lot of foreign money seeking to invest in London residential property,” Nilsson said. While London luxury home sales have slowed in the final quarter as the end of the year approaches, he expects all the units to have sold by the time work at The Lancasters is completed.
Nov. 29 (Bloomberg) -- U.K. house prices fell for a fifth month in November as demand for property dropped the most in almost two years, Hometrack Ltd. said.A couple days later, prices fell to a nine-month low while rents are going a lot higher as people seem to be selling properties and renting... But, when you sell property, doesn't it mean that somebody else is buying? Here, the supply of properties to sell is raising, implying a drop in price. It's all consistent. What is completely silly, is that the residential rents increase is based on a survey of 152 individuals or companies. So the numbers are completely random. This is "statistics" for you.
The average cost of a home fell 0.8 percent from October to 155,000 pounds ($242,900), the London-based property researcher said in an e-mailed statement today. Demand for homes, measured by the change in new buyers registering with real-estate agents, fell 4.3 percent, the biggest decline since January 2009.
The report adds to evidence of a weakening property market after Rightmove Plc said on Nov. 15 that home sellers cut asking prices by the most since 2007 this month and U.K. banks approved the smallest number of mortgage since 2009 in October. The government has announced the biggest budget squeeze since World War II and officials have warned the cuts may harm the recovery.
[...]
Price declines were led by London, Wales, as well as England’s south east, West Midlands and north east regions, which all posted a fall of 0.9 percent, Hometrack said. Values in southern England, which posted the strongest recovery after the recession, are under the greatest pressure, it said.
The average time a property stays on the market before being sold climbed to 9.8 weeks in November, the longest since May 2009. Sellers in Wales and England’s East Midlands and north west regions have to wait more than three months.
Dec. 1 (Bloomberg) -- U.K. house prices fell to a nine-month low in November as more people tried to sell their homes, a report by Nationwide Building Society showed.
The average cost of a home dropped by 0.3 percent from October to 163,398 pounds ($255,000), the lowest since February, Britain’s biggest customer-owned lender said in an e-mailed statement today. From a year earlier, prices increased 0.4 percent, the least since September 2009.
[...]
Recent reports suggest Britain’s housing market is faltering. Consumer confidence declined as the government detailed plans for the biggest fiscal squeeze since World War II, while mortgage approvals fell to an eight-month low in October.
[...] Other reports have also shown home values are declining. A report by Hometrack Ltd. this week showed that house prices fell for a fifth month in November. The Land Registry said last week prices dropped in October.
Dec. 1 (Bloomberg) -- U.K. residential rents rose for the third straight quarter as more people chose to become tenants rather than buying properties, according to a gauge published by the Royal Institution of Chartered Surveyors.What people seem to not understand from the previous report is that:
[...]
U.K. mortgage approvals fell to an eight-month low in October to about half the level they were at the beginning of 2007, according to the Bank of England. Lenders have restricted mortgages for buyers who purchase homes with the intention of renting them out, limiting the properties available to tenants.
“With both buy-to-let and traditional mortgages in short supply and now with concern about prices, people have come back” to the rental market, said Simon Rubinsohn, chief economist for RICS. “It’s simple supply and demand, and there is more uncertainty around with people losing jobs in the public sector.”
[...]
U.K. consumer confidence fell to a 19-month low in October as Britons faced the deepest budget cuts since World War II, Nationwide Building Society said on Nov. 12. House prices have fallen for five months in a row, according to Hometrack Ltd.
The survey was based on responses from 152 individuals or companies in the U.K. rentals industry.
Dec. 1 (Bloomberg) -- U.K. home prices may fall by as much as 5 percent next year as the government raises taxes and cuts jobs to reduce the record budget deficit, the country’s largest property broker said.
[...]
Prices are now about 10 percent lower than the market’s peak in 2007. In the second half of this year, home sales have slowed as the government cutbacks and borrowing restrictions imposed by debt-laden banks deterred buyers. Mortgage lending in October was the lowest for that month in the past decade, the Council of Mortgage Lenders said Nov. 18.
This year, property transactions will fall short of the 610,000 registered in 2009, Turner said in the interview at the Hamptons International office opposite the U.S. embassy in London’s Mayfair district. Hamptons is one of 46 brands owned by Countrywide, which is also the U.K.’s largest mortgage broker.
[...]
Mortgages have become unattractive for homebuyers with only a small amount of equity, Turner said. For a borrower with a 10 percent down payment, the initial interest rate for one of the most popular types of loan is about 7 percent, while someone with 40 percent of equity would pay 2.75 percent, he said. Borrowing costs for this mortgage are fixed for two years before reverting to a variable rate.
“Ten to 15 percent of the mortgage market has gone forever or at least for the foreseeable future,” he said. “Over the next 12 months, there will be a gradual increase in competition. We will see sensible lending, but not back to the heady days.”
[...]
“The U.K. hasn’t fallen out of love with property,” Turner said. “A lot of moves are on hold.”
- Falling prices is part of the solution solution
- Borrowing for 40 years on an interest-only mortgage is stupid.
- Raising lending standards is back to sanity
- Still being in love with property means that the property bubble has yet to pop in the UK
Dec. 13 (Bloomberg) -- U.K. home sellers cut asking prices for a second month in December to the lowest level in almost a year and may reduce them by a further 5 percent in 2011, Rightmove Plc said.
Average asking prices in England and Wales fell 3 percent to 222,410 pounds ($351,000) from November, when they dropped 3.2 percent, the operator of Britain’s biggest property website said in a report published in London today. That’s the biggest consecutive monthly drop since Rightmove’s index began in 2002.
The price drop adds to evidence from mortgage lenders of weakness in the housing market at a time when the economy is bracing for public-spending cuts that will inflict 330,000 job losses.
[...] All 10 regions in England and Wales tracked by Rightmove showed falling asking prices in December, led by a 5 percent drop in the West Midlands. This month’s national average asking price is the lowest since January.So is the housing-market gauge.
Values in London dropped 2.7 percent as all but two of the 32 districts tracked by Rightmove showed losses, led by Tower Hamlets and Newham. The only two neighbourhoods to post gains were Camden, and Hammersmith and Fulham, the company said.
Dec. 14 (Bloomberg) -- A U.K. housing-market gauge stayed close to the lowest in 18 months in November as demand for homes waned, the Royal Institution of Chartered Surveyors said.Collapsing lending is part of the solution, yet home lending is at about 135 billion pounds a year, which is a completely crazy figure. This survey confirms that people are still in love with property. The survey is based on the answers from 2,047 adults. That's a tiny number, if you ask me.
[...]
Britain’s housing market is faltering as consumers prepare for the deepest government spending cuts since World War II, leading to the loss of 330,000 jobs.
[...]
“The housing market is only a shadow of itself in 2007,” Jeremy Dell, a real-estate agent at JJ Dell and Co. in Shropshire, England, said in the report. “The economics indicate a long downward spiral.”
Lenders granted 47,185 loans to buy homes in October, compared with 47,369 in September, the Bank of England said on Nov. 29. That’s less than half the level at the peak of the housing boom in 2007.
[...]
Dec. 15 (Bloomberg) -- U.K. net mortgage lending will shrink by a third next year as the housing market shows persisting weakness, the Council of Mortgage Lenders said.Two weeks later, prices are still falling:
Net mortgage lending will drop to 6 billion pounds ($9.5 billion) in 2011, the London-based lobby group said in an e- mailed statement today. That compares with an estimated 9 billion pounds this year and a total of 40 billion pounds in 2008. The number of housing transactions will slip by 30,000 to 860,000, the CML said.
[...]
Mortgage approvals fell to an eight month-low in October and demand for homes may suffer as the government implements the deepest spending cuts since World War II, leading to the loss of 330,000 jobs.
The amount of gross home lending will stay unchanged at 135 billion pounds in 2011, the CML said.
[...]
Forty-three percent of respondents in a quarterly survey said they tended to agree or agreed strongly that this is a good time to buy residential property, the organization representing customer-owned lenders said in an e-mailed report today in London. That compares with 58 percent a year earlier.
YouGov Plc questioned 2,047 adults for the BSA survey between Dec. 3 and Dec. 6.
Dec. 27 (Bloomberg) -- U.K. house prices fell for a sixth month in December and will extend their decline in 2011 on “weak” demand and tighter mortgage-lending conditions, Hometrack Ltd. said.Home prices will fall next year. That's the consensus. It's kind of worrisome for a contrarian like me to go with the consensus... but the consensus is a decline of 2.5%. I would say I expect 25%.
The average cost of a home fell 0.4 percent from last month, and prices will drop a further 2 percent in 2011, the London-based property researcher said in an e-mailed report today.
[...]
The Hometrack report also showed sellers had to wait the longest since April 2009 to shift their properties in December and adds to forecasts for a weaker housing market in 2011.
[...]
Sellers achieved on average 92.1 percent of the asking price during the month, the lowest proportion since August 2009, while the time taken to sell increased to 10 weeks, Hometrack said.
In 2010, average values fell 1.6 percent, Hometrack said. The supply of homes for sale rose 24 percent, while demand fell 7 percent. The latter dropped 18 percent in the second half.
[...]
Adding to uncertainty among prospective homebuyers, the government is implementing the biggest budget squeeze since World War II, which will lead to public-job losses and may slow the economic recovery.
Dec. 30 (Bloomberg) -- The median estimate of 23 banks, brokers and property forecasters that took part in the survey was for a decline of about 2.5 percent. Predictions ranged from a gain of 3 percent to a drop of 10 percent.But, wait a second, now UK house prices are rising? The following report explains in details why you can have contradicting directions, thanks to the power of statistics.
A 12-month home price rally ended after the government announced tax increases and the biggest budget reductions since World War II.
No more than 900,000 homes will be sold next year, according to the CML. That compares with 1.6 million transactions in 2007.
Dec. 31 (Bloomberg) -- U.K. house prices unexpectedly posted their first gain in seven months in December as values rebounded from declines, a report by Nationwide Building Society showed.
The average cost of a home rose 0.4 percent from November to 162,763 pounds ($250,200), the first monthly increase since May, Britain’s biggest customer-owned lender said in an e-mailed report today.[...]
Nationwide’s report of a house-price gain contrasts with other data that show values are declining as the prospect of 330,000 public-sector job cuts during the biggest government budget squeeze since World War II hurts demand for housing. Hometrack Ltd. said earlier this week that prices fell for a sixth month in December and may decline 2 percent next year.Let's now try to understand this mess that is the UK's housing price reports:
[...]
House prices dropped 1.3 percent in the fourth quarter as they fell in 10 out of 13 U.K. regions, Nationwide said in a separate quarterly report. The declines were led by Northern Ireland with a 3.4 percent drop, while East Anglia was the best- performing area with a 1.6 percent gain. Values in London decreased 2 percent during the period.
Dec. 9 (Bloomberg) -- U.K. home prices are rising. Or they’re falling. It depends whom you ask.Still in love with property...
Property researcher Hometrack Ltd. reported a 0.9 percent monthly decline in October, the biggest since January 2009. Mortgage lender Halifax said prices rose 1.8 percent, rebounding from a 3.7 percent drop in September. Acadametrics Ltd. tracked a 0.3 percent gain, pushing prices to the highest since June 2008.
[...]
“It has been very difficult to define a residential property benchmark because there are so many different indices out there,” said Down, who plans to raise as much as 500 million pounds ($788 million) for a U.K. housing fund starting next year. “The appetite to invest in the sector is unquestionable, particularly with the retail investor.”
The seven indexes only agreed on the direction of the market in five of the 22 months through October, according to data compiled by Bloomberg. The last time was in January, when all indicated a price rise.Savill's expecting a drop of 1% in luxury property prices. Yes, that is 1.00% percent.
Today’s Numbers
Halifax said today that U.K. house prices slipped 0.1 percent in November as demand weakened and the government prepared to implement the biggest spending cuts since World War II to reduce a record budget deficit.
Indexes covering at least three months give a more accurate picture of the market, according to Steve Morgan, chairman of housebuilder Redrow Plc. Comparing longer periods helps “smooth out the volatility currently experienced,” he said. Of the seven most-used indexes, only those produced by Halifax and Nationwide provide quarterly data.
[...]
Acadametrics is a research company that combines housing transaction data from the U.K. Land Registry and other price measures to produce an estimate for the most recent month. The number is then revised in following months as more complete data becomes available. It doesn’t cover Scotland, which Hearthstone’s Down wants to include in his portfolio.
The last report from London-based Acadametrics, on Nov. 12, showed that home prices climbed 6.1 percent in October from a year earlier. That was the biggest increase indicated by any of the seven indexes. At the other end of the scale, Hometrack recorded a 0.1 percent decline.
[...]
About 600,000 residential properties changed hands in the U.K. in 2009, half the level of 2006, according to the Land Registry. About 69 percent of people in Britain own their homes.
The government’s Land Registry is the only source for the actual price paid in residential property transactions in England and Wales, including those made for cash. Indexes from lenders Nationwide and Halifax are based on mortgages that they offer. Rightmove Plc, which operates the U.K.’s largest residential property website, provides asking prices from a sample of properties offered on the site. Some measures are based on data from England and Wales only, while others look at the whole U.K.
The different measures also produce contrasting house price averages across the country. In November, Hometrack’s estimated price was about 155,000 pounds, while Rightmove’s asking price was close to 230,000 pounds.
Data from the Communities and Local Government department includes mortgages from the Council of Mortgage Lenders and excludes cash buyers, who account for 25 percent of all transactions. The Land Registry data consists of properties sold at least twice since it started in 1995, excluding about two- thirds of U.K. property and all new homes.
[...]
Halifax and Nationwide now rely on less data than they used three years ago because they’re offering fewer mortgages, Down said. That makes the results more volatile. Approximately 144 billion pounds of mortgages were granted last year, compared with 363 billion pounds in 2007, according to the Council of Mortgage Lenders.
The Land Registry doesn’t distinguish between property types or the number of rooms homes have, whereas the lenders weight their indexes according to property type, to avoid one kind of home dominating a certain month.
[...]
Dec. 10 (Bloomberg) -- London bankers and other financial- services employees will spend about 1 billion pounds ($1.6 billion) of their 2010 bonus money on homes in the U.K. capital, 17 percent less than last year, Savills Plc said.And yes, if you want to assess the value of a property, you have to factor in the fact that the pound has dropped by about 20% against other currencies, in some cases by far more than that, as much as 50% against the Yen. So in real terms, prices in the UK have already collapsed quite a bit.
The purchases may not stop prices of London luxury homes from falling next year, though the drop probably won’t exceed 1 percent, Savills said in a statement. Values rose about 2 percent this year, helped in part by approximately 1.2 billion pounds of 2009 bonus money, the broker estimates.
[...]
Bonus-earners typically account for half of the buyers of London homes costing more than 1 million pounds, according to Savills. Record payouts in 2006 and 2007 -- which the Centre for Economics and Business Research says totaled 11.5 billion pounds each year -- sent property values surging to all-time highs in neighborhoods such as Chelsea, Belgravia and Kensington.
The CEBR expects bonuses for the 300,000 financial-services workers in London to total 7 billion pounds before taxes in 2010, about 5 percent less than in 2009, according to Savills’s report.
[...]
Changes in bonus pools have the most effect on real estate in southwest London. Owner-occupiers employed in banking and financial services tend to favor neighborhoods such as Battersea, Wimbledon and Chiswick because of the relatively high proportion of family homes and good schools.
Prices in this part of London rose 12 percent in the third quarter from a year earlier, the biggest gain in Britain, Savills estimates. Prime property here costs an average of about 1.3 million pounds, less than the 2 million pounds or more needed to buy a similar home in central London.
Bonuses have been less of a driving force for prime residential property values in central London. Overseas buyers have been lured to those neighborhoods by the pound’s weakness and price declines during the height of the financial crisis.
Savills estimates that 60 percent of prime central London property purchases are made by people outside the U.K.
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Dec. 23 (Bloomberg) -- The number of properties in London and southeast England worth at least one million pounds ($1.5 million) rose more than 10 percent this year as foreign investors helped boost demand, property website Zoopla said.Just the fact that they call it "property millionaires" shows that people are still in love with property.
London homes worth a million pounds jumped 11.1 percent to 123,236 in 2010, the company said in a report today. That’s almost twice the 6 percent increase recorded nationally and the capital now accounts for more than half the U.K. total of 226,344. The number of “property millionaires” in the South East rose 11.9 percent to 56,026.
The south of the country has been affected “far less by the mortgage squeeze as a result of the inflow of foreign money and the strength in the City keeping demand for million-pound pads at peak levels,” Zoopla Commercial Director Nick Leeming said in the report. “But the rest of the market and particularly the North have seen a steep decline.”
Demand for homes has weakened as banks restrict lending and Britons brace for government spending cuts and tax increases aimed at narrowing the budget deficit. Still, a shortage of supply has helped underpin prices in some areas and the Royal Institution of Chartered Surveyors said this week that average declines in 2011 will be “negligible.”
The number of million-pound properties increased 14.9 percent in the East of England and 4.5 percent in the South West. Numbers fell in the rest of Britain, with Wales, and Yorkshire and Humber dropping by half.
Nine of the 10 areas in Britain that feature the most property millionaires were in London, led by Kensington, where more than half of homes are worth more than a million pounds.
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