In October the index stands at 329 unadjusted(U) and 414 adjusted(A)
This gives a guide that house prices are around 32% over valued and that market sentiment pushes that to 41% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices have fallen this month which has reduced the index. Residential rates and buy to let rates have remained level for new borrowers despite rate cuts.
The price to average earnings ratio has also fallen this month and is still indicating house prices are 20% above trend on this indicator.
Many buy to let deals have been withdrawn this month as well as last month and those that remain have seen a lowering of the Loan to Value needed. Credit remains tight.
The unadjusted index is now down from it's peak of 645 in July 2007
PREDICTION
House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending criteria has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level.
The end of irresponsible lending means that lenders will never be returning to the days of lending with no deposit or waiving income checks.
House prices are still suspended about 20% above the level of finance that the banks are willing to give out.
Buy to let as one of the key drivers of house prices still does not makes economic sense at current rates. This sector will most likely never return to the heady days of 2007 as the age of irresponsible lending is over.
First time buyers are the main driver of the bottom of the housing market. First time buyers have rightly taken the view that it is best to wait out this drop before entering the market.
Showing posts with label time to buy. Show all posts
Showing posts with label time to buy. Show all posts
Thursday, 6 November 2008
Sunday, 12 October 2008
Time to buy index for September 2008
In September the index stands at 361 unadjusted(U) and 457 adjusted(A)
This gives a guide that house prices are around 36% over valued and that market sentiment pushes that to 45% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices have fallen this month which initially reduced the index. But residential fixed rates increased and buy to let rates increased significantly, which pushed the index up for the first time since June 2008.
With many buy to let deals being withdrawn this month and those that remain seeing large increases to the rates, the demand for property from this market is dropping fast.
The unadjusted index is now down from it's peak of 645 in July 2007
PREDICTION
House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending criteria has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level.
The ongoing financial crisis may lead to a collapse of the banking system and society as we know it. Assuming this does not happen, then lenders will never be returning to the days of lending with no deposit or income checks.
House prices are still suspended about 20% above the level of finance that the banks are willing to give out.
Buy to let as one of the key drivers of house prices still does not makes economic sense at current rates. This sector will most likely never return to the heady days of 2007 as the age of irresponsible lending is over.
This gives a guide that house prices are around 36% over valued and that market sentiment pushes that to 45% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices have fallen this month which initially reduced the index. But residential fixed rates increased and buy to let rates increased significantly, which pushed the index up for the first time since June 2008.
With many buy to let deals being withdrawn this month and those that remain seeing large increases to the rates, the demand for property from this market is dropping fast.
The unadjusted index is now down from it's peak of 645 in July 2007
PREDICTION
House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending criteria has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level.
The ongoing financial crisis may lead to a collapse of the banking system and society as we know it. Assuming this does not happen, then lenders will never be returning to the days of lending with no deposit or income checks.
House prices are still suspended about 20% above the level of finance that the banks are willing to give out.
Buy to let as one of the key drivers of house prices still does not makes economic sense at current rates. This sector will most likely never return to the heady days of 2007 as the age of irresponsible lending is over.
Thursday, 4 September 2008
Time to buy index for August 2008
In August the index stands at 286 unadjusted(U) and 356 adjusted(A)
This gives a guide that house prices are around 28% over valued and that market sentiment pushes that to 35% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices and mortgage rates have fallen this month which has reduced the index this month. The biggest contributor to the index fall this month was the falls in fixed rate deals for buy to let mortgages.
The unadjusted index is now down from it's peak of 645 in July 2007
The adjusted index has also dropped last month as swap rates are now seen as falling further. This currently suggests that mortgage rates will be lower in the future.
PREDICTION
House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level. This has meant that buy to let as one of the key drivers of house prices still does not makes economic sense at current rates.
A vague explanation here
This gives a guide that house prices are around 28% over valued and that market sentiment pushes that to 35% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices and mortgage rates have fallen this month which has reduced the index this month. The biggest contributor to the index fall this month was the falls in fixed rate deals for buy to let mortgages.
The unadjusted index is now down from it's peak of 645 in July 2007
The adjusted index has also dropped last month as swap rates are now seen as falling further. This currently suggests that mortgage rates will be lower in the future.
PREDICTION
House prices to continue falling with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level. This has meant that buy to let as one of the key drivers of house prices still does not makes economic sense at current rates.
A vague explanation here
Monday, 14 July 2008
Time to buy index for june 2008
May index here
This month index
In June the index stands at 496 unadjusted(U) and 694 adjusted(A)
This gives a guide that house prices are around 49% over valued and that market sentiment pushes that to 69% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices have fallen this month which would have improved the index if it was not for the fact that mortgage rates were raised since last month.
It is pretty clear that house prices are not 69% over valued, however they may as well be as nobody in their right mind is currently buying.
PREDICTION
House prices to drop another 20% with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level. This has meant that buy to let as one of the key drivers of house prices is not makes economic sense at current rates.
This month index
In June the index stands at 496 unadjusted(U) and 694 adjusted(A)
This gives a guide that house prices are around 49% over valued and that market sentiment pushes that to 69% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
House prices have fallen this month which would have improved the index if it was not for the fact that mortgage rates were raised since last month.
It is pretty clear that house prices are not 69% over valued, however they may as well be as nobody in their right mind is currently buying.
PREDICTION
House prices to drop another 20% with the Halifax index bottoming at £140,000 in Q4 2009.
In my opinion mortgage lending has pretty much returned to normal even though lenders are still lending above average multipliers and mortgage rates have again returned to a longer term normal level. This has meant that buy to let as one of the key drivers of house prices is not makes economic sense at current rates.
Monday, 9 June 2008
Time to buy index
1st post on this so let me explain. After many years of advising clients on the housing market I developed an index to help me see what is going on in the market.
The index is designed so that in a perfectly valued market with house price increase flat the index will be at 0.
If property is undervalued the Time to Buy unadjusted will be negative and if it is overvalued the Time to Buy unadjusted will be positive.
The index will then be adjusted to produce a final index. The adjustments are based on a number of factors including direction of mortgage rate predictions, house price rises or falls and credit supply.
So I reckon that even though property may be overvalued at any particular time, the market sentiment may still drive the property upwards for many years. Obviously the opposite is also true. Hopefully the index will allow me to determine months in advance the time to advise clients to buy or sell.
So as of May the index stands at 465 unadjusted(U) and 680 adjusted(A)
This gives a guide that house prices are around 46% over valued and that market sentiment pushes that to 68% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
Back testing produces the following
January 2008 476U 571A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
September 2007 575U 689U (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
July 2007 645U 710A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
January 2007 420U 439A (house prices overvalued and sentiment says about right so the direction is predicted level ish) DO NOT BUY
January 2005 269U 219A (house prices overvalued and sentiment says not so over valued, so the direction is predicted up) BUY
January 2002 -194U -230A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1997 -78U -92A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1995 -128U -102A (house prices undervalued and sentiment says not so undervalued so the direction is predicted level ish) BUY
July 1989 292U 389A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
see also
http://thecrownblogspot.blogspot.com/2008/06/time-to-buy-or-not-index.html
The index is designed so that in a perfectly valued market with house price increase flat the index will be at 0.
If property is undervalued the Time to Buy unadjusted will be negative and if it is overvalued the Time to Buy unadjusted will be positive.
The index will then be adjusted to produce a final index. The adjustments are based on a number of factors including direction of mortgage rate predictions, house price rises or falls and credit supply.
So I reckon that even though property may be overvalued at any particular time, the market sentiment may still drive the property upwards for many years. Obviously the opposite is also true. Hopefully the index will allow me to determine months in advance the time to advise clients to buy or sell.
So as of May the index stands at 465 unadjusted(U) and 680 adjusted(A)
This gives a guide that house prices are around 46% over valued and that market sentiment pushes that to 68% over valued. DO NOT BUY
That is not to say that house prices will fall by either, but it gives an idea of the direction.
Back testing produces the following
January 2008 476U 571A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
September 2007 575U 689U (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
July 2007 645U 710A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
January 2007 420U 439A (house prices overvalued and sentiment says about right so the direction is predicted level ish) DO NOT BUY
January 2005 269U 219A (house prices overvalued and sentiment says not so over valued, so the direction is predicted up) BUY
January 2002 -194U -230A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1997 -78U -92A (house prices undervalued and sentiment says even more undervalued so the direction is predicted upwards) BUY
January 1995 -128U -102A (house prices undervalued and sentiment says not so undervalued so the direction is predicted level ish) BUY
July 1989 292U 389A (house prices overvalued and sentiment says even more overvalued so the direction is predicted down) DO NOT BUY
see also
http://thecrownblogspot.blogspot.com/2008/06/time-to-buy-or-not-index.html
Time to buy or not index
I have been working for a few months on some kind of index to give an idea of when is a good time to buy a property.
For many years I have been advising my clients on my take on the housing market. I feel my views on the market go deeper than the lender surveys as my views are based on a number of additional factors.
1 - lenders lending practices that are not understood by lenders! (lie to buy, liar loans, fast track)
2 - buyer sentiment. You can't beat sitting down face to face with someone and talking to them about their feelings.
3 - forums. Many different angles an data are presented in a range of internet forums.
So my Time to Buy index is based on the following
The over or under value of property based on price, mortgage rates available for buying and letting and rental income.
Market sentiment and direction of sentiment.
For many years I have been advising my clients on my take on the housing market. I feel my views on the market go deeper than the lender surveys as my views are based on a number of additional factors.
1 - lenders lending practices that are not understood by lenders! (lie to buy, liar loans, fast track)
2 - buyer sentiment. You can't beat sitting down face to face with someone and talking to them about their feelings.
3 - forums. Many different angles an data are presented in a range of internet forums.
So my Time to Buy index is based on the following
The over or under value of property based on price, mortgage rates available for buying and letting and rental income.
Market sentiment and direction of sentiment.
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