by The Investor on April 8, 2008
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In gloomy accord with Nationwide seeing UK house prices falling across every single region for the first time in 30 years, Halifax has now released monthly figures for March estimating UK house prices have dropped 2.5%. Some areas are down twice that.
House prices have now fallen year on year. In March 2007, Halifax had the average UK house price at £194,094. For March 2008 it’s down to £191, 556. (Halifax doesn’t highlight the fact, instead focusing on three month rolling averages to record a small year on year gain.)
Key data from the Halifax report
- House prices fell by 2.5% in March. Prices in Quarter 1 were 1.0% lower than in 2007 Quarter 4. House prices in March were 1.1% higher than a year earlier.
- The biggest rises were in Greater London (1.6%), East Anglia (1.4%) and East Midlands (2.2%).
- There were price falls in a number of regions, with the biggest falls in West Midlands (-5.0%) and Wales (-4.7%).
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by The Investor on April 4, 2008
More evidence that house prices are really falling comes from the Nationwide building society, in its latest official house price index.
While it tries to draw attention more to annual figures in the accompanying commentary, which are still very much up, the quarterly figures for January to March 2008 are dreadful. House prices haven’t fallen across every region of the UK like this since the early 1970s:
| Region |
Q1 08 |
| Scotland |
-0.1% |
| North |
-0.7% |
| East Midlands |
-0.8% |
| Outer South East |
-0.9% |
| Yorkshire and Humberside |
-0.9% |
| Outer Metropolitan |
-1.4% |
| East Anglia |
-1.4% |
| London |
-1.5% |
| Wales |
-1.8% |
| North West |
-2.3% |
| West Midlands |
-2.5% |
| South West |
-2.5% |
| Northern Ireland |
-10.0% |
| UK |
-1.7% |
A few points:
- The negative spin would be that just as the bubble had spread out across the whole of the UK (instead of it being only London and the South East that went crazed, as in previous years), this time it’s bursting everywhere.
- If you were more bullish, you might say the uniformity of the falls reflects the impact of lenders making mortgages more expensive, rather than any particular changes in demand…
- …but still, doesn’t that drop in Northern Ireland of 10% have all the hallmarks of a bubble bursting?
You can download the first quarter 2008 figures from Nationwide as a PDF, or just the figures for March.
by The Investor on February 22, 2008
While many people have made a fortune out of property in the UK over the past few years, some have lost a packet – even as prices continued to rise. These are the so-called ‘Sell-to-Rent’ brigade, who attempt to time the peaks and troughs of the house price cycle by selling their home at the top and then buying after the presumed house price crash.
With prices finally wobbling and the credit crunch making terrible headlines every day, now looks a great time to sell-to-rent. Flog your home for £350,000 and you might be able to buy it back in five years for £250,000!
Happy times? Perhaps, but remember:
- 2005 looked a good time, too (prices dipped slightly when interest rates began to rise)
- 2003 also looked a promising time to sell (the onset of the second Gulf War led to a plunging stock market and global gloom)
- 2001 saw the earliest sell-to-renters make themselves known (this was around the time that London property first passed through its long-term price-to-earnings average, which has historically been a good barometer as to the future direction of house prices. It’s proven very unreliable in this era of low interest rates)
Now London property blog The Rat and Mouse notes that the sell-to-renters are back, going on to warn that:
Few financial decisions are as risky, or real-world calculations as tricky… taking in the cost of storage, rents (which can go up and down), the costs of selling and buying, the value of time, inconvenience and risk, all multiplied by however long it might take for prices to start to drop and then assuming it’s possible to buy in just before everybody else does. The chances of getting all this right are low.
Too right. I’ve not sold-to-rent, but I hold my hands up as a would-be first-time buyer who has sat out the property market for several years now, most recently believing that property prices are unjustifiable if you compare mortgage costs with rent.
It’s been a costly error. You gamble with the Great British love of property at your peril.
by The Investor on February 13, 2008
by The Investor on September 3, 2007
“A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”
Robert Frost
Whether to buy your own home or not is a tricky question for anyone wanting financial freedom.
Now that might seem to some a mad statement; in most English speaking countries, buying a house to live in is a rite-of-passage, and while these days renting doesn’t quite conjure up visions of a harried mother washing tired clothes in a tin bath while four kids sleep head-to-toe in a single bed behind her, it’s still frowned upon.
Indeed – and ironically – the British love affair with property has blossomed into Buy-To-Let (BTL), where renting is perfectly acceptable as long as it’s not you doing the renting. These nouveau landlords had better hope the rental sector doesn’t return to its bad old image of multi-occupancy squalor and sordid bedsits. (When most people want to buy their own home, just like you, it’s a daydream to believe that sufficient millions of your peers will put this aspiration aside just to rent from hundreds of thousands of similar new BTL investors and make you all rich.)
But leaving aside for now being a landlord – which can certainly make great money if you buy at the right price – what are the pros and cons of owning your own home to live in?
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