I doubt anyone is following this and it’s not financial advice anyway but I just dumped pretty much all of my Taylor Wimpey stock after reading this thread on twitter
This is scary. 😬
KB Homes, a large home builder, just reported a 68% CANCEL RATE.
Meaning that over 2/3 of Homebuyers walked away from their contracts in the quarter. Leaving KB Homes with a massive pile-up of inventory.
The Folks at Property 118 went for spinning some thin broth to declare that “Positive Start to 2023 for property” Wait for the This time its different chorus in coming months.
Outlook
Recent increases in interest rates, and the removal of mortgage products from the market, has affected sales. The decline in order books is significant and ranges between 24% and 38%.
During 2022, private net sales for Persimmon averaged 0.69 per outlet per week. This fell to 0.19 during the last seven weeks of the year. The biggest reductions were observed in those sites where the government’s Help to Buy Scheme, which is now closed for new applications, was most popular.
Barratt Developments saw reservations fall to 0.30 per outlet between 10 October and 31 December 2022. Taylor Wimpey’s sales rate was 0.48 for the second half of 2022, compared to 0.85 for the previous year.
In 2023, the emphasis for Persimmon is on delivering quality returns rather than volume. As with Taylor Wimpey, no indication of expected completions for 2023 has been provided.
The directors of Barratt Developments are forecasting a range of 16,000 to 17,475 new home completions this year, depending on economic conditions.
Historically, sales rates increase in spring, so how the three builders will fare in 2023 will become clearer during the early part of the year.
We can all draw our own conclusions, if one takes the In the long run we are all dead view then a good old-fashioned 1929 swan dive off a tall building might be in order.
Whichever way one cuts it the outlook is poor on both sides of the pond and there are wider financial system obstacles pulling in a negative direction some say we have been in an everything bubble, with an everything bubble does one get the “What goes up must come down ” Everything Bust”
Towards the end of last year mortgage and interest rates increased and we are starting to see the impacts of those changes within these statistics. Both seasonally and non-seasonally adjusted residential property transactions appear to be depressed, indicating a possible slowing of the housing market.
Headline statistics
Headline statistics from the latest transactions data include:
the provisional non-seasonally adjusted estimate of the number of UK residential transactions in January 2023 is 77,390, 7% lower than January 2022 and 27% lower than December 2022
the provisional seasonally adjusted estimate of the number of UK residential transactions in January 2023 is 96,650, 11% lower than January 2022 and 3% lower than December 2022
the provisional non-seasonally adjusted estimate of the number of UK non-residential transactions in January 2023 is 8,500, 1% lower than January 2022 and 18% lower than December 2022
the provisional seasonally adjusted estimate of the number of UK non-residential transactions in January 2023 is 9,790, 6% lower than January 2022 and 3% higher than December 2022
The average property price in Yorkshire region is £223k, the median price is £180k. The average price
increased by £6.1k (3%) over the last twelve months. The price of an established property is £222k. The
price of a newly built property is £261k. There were 64.7k property sales and sales dropped by 32.6%
(-33.8k transactions). Most properties were sold in the £100k-£150k price range with 14394 (22.3%)
properties sold, followed by £150k-£200k price range with 13350 (20.6%) properties sold.
February 2022 – January 2023
West Midlands property prices
The average property price in West Midlands region is £270k, the median price is £225k. The average
price increased by £11.5k (4%) over the last twelve months. The price of an established property is £269k.
The price of a newly built property is £296k. There were 61.7k property sales and sales dropped by 34.1%
(-34.4k transactions). Most properties were sold in the £150k-£200k price range with 12906 (20.9%)
properties sold, followed by £200k-£250k price range with 11180 (18.1%) properties sold.
February 2022 – January 2023
Wales property prices
The average property price in Wales region is £231k, the median price is £190k. The average price
increased by £14.1k (6%) over the last twelve months. The price of an established property is £230k. The
price of a newly built property is £296k. There were 36.1k property sales and sales dropped by 30.4%
(-17.0k transactions). Most properties were sold in the £100k-£150k price range with 7953 (22.0%)
properties sold, followed by £150k-£200k price range with 7858 (21.8%) properties sold.
February 2022 – January 2023
South West property prices
The average property price in South West region is £364k, the median price is £301k. The average price
increased by £25.5k (8%) over the last twelve months. The price of an established property is £364k. The
price of a newly built property is £368k. There were 71.0k property sales and sales dropped by 37.8%
(-46.5k transactions). Most properties were sold in the £300k-£400k price range with 15682 (22.1%)
properties sold, followed by £250k-£300k price range with 11142 (15.7%) properties sold.
February 2022 – January 2023
South East property prices
The average property price in South East region is £462k, the median price is £375k. The average price
increased by £29.7k (7%) over the last twelve months. The price of an established property is £463k. The
price of a newly built property is £424k. There were 112k property sales and sales dropped by 37.7% (-72.9k
transactions). Most properties were sold in the £300k-£400k price range with 26025 (23.3%) properties sold,
followed by £500k-£750k price range with 18875 (16.9%) properties sold.
February 2022 – January 2023
North West property prices
The average property price in North West region is £231k, the median price is £186k. The average price
increased by £7.4k (3%) over the last twelve months. The price of an established property is £230k. The
price of a newly built property is £272k. There were 90.1k property sales and sales dropped by 32.2%
(-46.3k transactions). Most properties were sold in the £100k-£150k price range with 19313 (21.4%)
properties sold, followed by £150k-£200k price range with 17870 (19.8%) properties sold.
February 2022 – January 2023
North East property prices
The average property price in North East region is £176k, the median price is £140k. The average price
increased by £98 (0%) over the last twelve months. The price of an established property is £174k. The price
of a newly built property is £258k. There were 30.3k property sales and sales dropped by 29.8% (-13.8k
transactions). Most properties were sold in the £50k-£100k price range with 7928 (26.2%) properties sold,
followed by £100k-£150k price range with 7441 (24.6%) properties sold.
February 2022 – January 2023
East of England property prices
The average property price in East of England region is £396k, the median price is £333k. The average
price increased by £23.5k (6%) over the last twelve months. The price of an established property is £396k.
The price of a newly built property is £397k. There were 74.8k property sales and sales dropped by 38.3%
(-50.0k transactions). Most properties were sold in the £300k-£400k price range with 17849 (23.9%)
properties sold, followed by £400k-£500k price range with 10612 (14.2%) properties sold.
February 2022 – January 2023
East Midlands property prices
The average property price in East Midlands region is £256k, the median price is £222k. The average price
increased by £12.4k (5%) over the last twelve months. The price of an established property is £255k. The
price of a newly built property is £301k. There were 62.6k property sales and sales dropped by 34.4%
(-35.4k transactions). Most properties were sold in the £150k-£200k price range with 13295 (21.3%)
properties sold, followed by £200k-£250k price range with 11568 (18.5%) properties sold.
February 2022 – January 2023
London property prices
The average property price in London region is £718k, the median price is £525k. The average price
increased by £50.9k (8%) over the last twelve months. The price of an established property is £716k. The
price of a newly built property is £761k. There were 76.4k property sales and sales dropped by 34.7%
(-43.7k transactions). Most properties were sold in the £500k-£750k price range with 20730 (27.1%)
properties sold, followed by £400k-£500k price range with 14383 (18.8%) properties sold.
First-time buyers still have it hard: even if house prices fell by 18%, nearly three-quarters of 25-to-34-year-old non-home-owning families would have neither the savings nor the earnings to be able to buy a house, according to the Resolution Foundation.
Off-market sales have become more popular, with one in ten homes now sold privately (one in five in London), according to Hamptons estate agency.
(Image credit: Getty Images)
The UK Housing Market Is at Risk of a Deep Freeze A stalemate between sellers and buyers is likely — until and unless desperation sets in. Error: Could not download required scripts. Please update your browser or turn off ad blocker to continue to watch. UK’s Falling House Prices Create Winners and Losers ByJohn Stepek December 12, 2022 at 1:27 PM GMT+1
I am not expecting to be seriously pursuing any deals this side of the summer, how things look at the end of summer 2023 is I think pretty uncertain, the outlook is too volatile and rates have remained too high for too long and all the damage from that is yet to feed through into the market, early symptoms are alarming. ( for volume levels, not necessarily prices, which will remain sticky going downwards unless Distressed sales kick in, I will be monitoring re-possession data very carefully.) The ONS figures for transaction volumes estimated for the last quarter of 2022 were way off beam ( That link is updated to Feb 2023 well into January the figures were still catching up with reality), the actual data will see substantial revisions to those estimates in both November ( See combined 1 doc attached) and December ( See combined Doc 64 attached) volumes declined by between 35% and 45% year on year. The Mortgage lending figures are similarly alarming as were all of the major housebuilders’ trading updates through January.
If mortgage rates or general interest rates rise further ( or remain at the current elevated levels ) there will be a rout rather than a correction, either way, I no longer foresee a soft landing unless there is a peaceful resolution to the conflict in Ukraine, which I am sadly pessimistic about.)
All of the key indicators point to a continuing level of low activity which will not be compensated for by the current Government policy which is basically pursuing the Austerity seen post-2010 under Osbourne by the coalition Government. ( Truss and Kwarteng were right in the Autumn, probably for the wrong reasons and with the wrong prescription but they were” less wrong ” than Rishi and Hunt are now.)
“As long as the Fed sticks with a policy of higher-for-longer, housing will be very weak. And if housing is weak, GDP will be weak as well.
Nonetheless, it’s likely the Fed will stick with higher-for longer out of fears of stirring up inflation.”
The UK is not the USA but both are no longer in Kansas.
The latest commentary and full statistical tables are available below. The commentary includes technical information on the MLAR as well as analysis of the findings.
An explanatory note detailing the relationship between this data and other mortgage statistics published by the Bank of England is available on their website.
Latest findings
The outstanding value of all residential mortgage loans was £1,667.1 billion at the end of 2022 Q3, 4.1% higher than a year earlier.
The value of gross mortgage advances in 2022 Q3 was £85.9 billion, which was £8.0 billion greater than the previous quarter, and 17.0% higher than in 2021 Q3.
The value of new mortgage commitments (lending agreed to be advanced in the coming months) in 2022 Q3 was 4.5% greater than the previous quarter and the highest value recorded since 2007 Q3.
UK Mortgage Approvals at Lowest Since Pandemic as Rate Rises Bite Error: Could not download required scripts. Please update your browser or turn off ad blocker to continue to watch. Nov. 2022: UK’s Falling House Prices Create Winners and Losers By Andrew Atkinson and Lucy White
Mortgages UK demand for mortgages slumps as interest rates deter buyers Bank of England figures also reveal many households are dipping into savings, rather than using credit cards Tue 31 Jan 2023
Excluding the turbulence at the start of the pandemic, it was the weakest month for house purchase approvals since January 2009, in the depth of the financial crisis, and was around 45% below pre-pandemic levels.
Weakening demand is feeding through to house prices, which are on course to fall this year after booming during the pandemic. Nationwide Building Society is predicting a 5% drop, while Halifax thinks 8%.
Across these seven decades we have seen different factors influence the market in different ways during different economic cycles. This article gives a brief history of what has happened and why.
Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. We offer information about investing and saving, but we do not offer any personal advice or recommendations. If you aren’t sure whether investing is right for you, or which investments are right for you, please consult an authorised financial adviser.
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What’s the latest information on house prices? We monitor the leading indicators to keep you updated about key movements in the property market
1 March: Nationwide Logs First Annual Fall Since June 2020
February prices down 1.1% on year ago
First annual fall since depths of pandemic
Prices 3.7% lower that peak in August 2022
Nationwide building society’s latest house price index for February records a 1.1% year-on-year decrease in values, with prices down 0.5% month-on-month.
This is the sixth monthly fall in a row, and it leaves prices 3.7% below their peak, recorded in August 2022, when the market was at its height following the pandemic slump.
According to Nationwide, the average property now costs £257,406, down from £258,296 logged in January.
28 February: Zoopla Expects Prices To Fall 5% In 2023
Annual house price growth slowed to 5.3% in January, according to property website Zoopla, prompting the property portal to forecast price falls for the year of around 5%, writes Jo Thornhill.
Last month’s year-on-year price increase is down from the 6.5% annual growth reported in December 2022, and the 8.6% year-on-year growth seen in January 2022. The average UK house price, by Zoopla’s reckoning, is now £260,800.
If the price fall prediction is accurate, this figure would come down to around £247,000.
The portal says buyer demand and sales volumes are 20% to 50% lower than a year ago, but slightly up on the levels of the pre-pandemic years 2017-19, with sellers accepting 4.5% less (£14,100), on average, than their asking price.
Higher mortgage rates and economic uncertainty are dampening the UK property market
Mortgage rates shot up after former Chancellor Kwasi Kwarteng’s mini-Budget last September. Though they have eased somewhat since, they still remain substantially higher than they have been in recent years – dampening sentiment in the property market.
The only part of the UK to see an increase in residential property transactions over the last year was Aberdeen, where sales were up by 4.1%. The sharpest decline in sales was recorded in London (-35.3%) followed by the East Midlands (-31.9%).
In the West Midlands, meanwhile, house sales were down by 30.8% over the last 12 months. The following parts of the UK all saw property transactions drop during the part year, according to eXp UK:
London: -35.3%
East Midlands: -31.9%
Yorkshire & Humber: -29.7%
North West: -23.6%
Northern Ireland: -22.5%
Wales: -19.6%
“The UK’s housing market has cooled slightly in the past year. Buyers have been cautious in the face of economic uncertainty, and this has understandably contributed to a decline in the number of homes sold,” said Adam Day, head of eXp UK.
Earlier this month, the Bank of England raised its base rate by 0.5%, increasing it to 4%. This is likely to mean more expensive borrowing costs for people looking to buy property and those who need to remortgage, while the ongoing cost of living crisis – including sky-high energy bills – continues to weigh heavily on the UK economy.
8 thoughts on “The Everything Bubble and the Everything Bust. Prospects for UK Housing and UK Housing Markets.”