I\’m Still Not Convinced

By this talk of falling house prices in general.

Perhaps that\’s too strong: I can\’t see that any of the various indexes give us an accurate picture.

UK house prices are now falling year-on-year for the first time in more than a decade, the Nationwide Building Society warned today.

We\’ve all seen the stories that those purpose built buy to let developments have crashed in price by 30-50% in certain towns. Here\’s the full press release. As you can see there\’s no mention of the mix of housing that is used to calculate the measure.

There\’s a general sense that in recent years the flats market has been greatly overbuilt, while the house market hasn\’t been. So, the question is, how much of that average decline is actually made up of a large decline in hte value of those new flats and a small fall, or possibly even still a rise, in single occupancy houses?

Of course, I don\’t know, but I\’m wondering whether anybody else does either?

 

3 thoughts on “I\’m Still Not Convinced”

  1. The mix of housing used by the Nationwide and Halifax is ALL UK property – they adjust the data to match a hypothetical average.

    Nationwide do give data and there’s evidence, if not super-strong, to back up what you say. At end Q1 (I don’t see April out yet for that) prices of detached houses were up 2.9% y-on-y, terraced 2.2%, semi-detached 1.6%, and flats onl y 1.1%.

    The regional differences can and do affect this – flats in London were up 5% y-on-y, but flats in the worst region, the North West, already down by 6% year-on-year.

    So I’d say detached house prices might be up year-on-year still, but probably only by 0.5% or so. I think flats have less impact than you might think as they are a small proportion of the housing stock (and then probably biased towards London, where prices have been strong).

  2. In my area (North East coast), Persimmon is a major developer of single occupancy houses and apartments. They have too much unsold property on their hands at present, so new development plans are staying on the drawing board until things pick up.

  3. “so new development plans are staying on the drawing board until things pick up.”

    Ah, but then they crucified for holding onto land banks and artificially restricting supply in order to prop up the price.

    It’s amazing how short people’s memories are…

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