Is it safe to buy a house right now ?

UK house prices slump 2.6 pct in Sept from Aug - Rightmove - sources UPDATE
AFX


(Updating with further details, analyst comment)

LONDON (Thomson Financial) - UK house prices fell sharply in September, the latest Rightmove survey has found, sources said.

The survey shows asking prices for houses slumped by 2.6 pct in September from August, taking the average price to 235,176 stg from 241,474 in August, the lowest September for new sellers since 2004. This brings annual growth down to 9.6 pct from 12.8 pct the previous month.

The details of the release were leaked in the market ahead of the official release scheduled for Monday.

Rightmove blamed the sharp falls on distortions caused by the implementation of Home Information Packs, but the news will spark fears of a housing market crash, particularly after today's news that Northern Rock has had to turn to the Bank of England for emergency funding.

Commenting on the figures, Howard Archer at Global Insight said he still expects house price growth slowdown to 'become more marked' over the coming months before prices settle down into 'an extended overall period of very modest rises'. However, there are clearly risks of a deeper slowdown, given the current credit crisis.

'Clearly ... if the current turmoil in global credit and financial markets is extended and increasingly feeds through to have a marked dampening impact on UK economic activity and employment, the risk will grow that the housing market could see a sharp slowdown,' he said.

The report comes after the Royal Institution of Chartered Surveyors earlier this week reported the first fall in house prices since October 2005.

You can short uk house prices on IG index either London area or UK as a whole, they told me it was based on the latest HBOS suvey. Might be good way of hedging if selling up is too risky or hassle

Further to my 30, asking prices may be bogus, but when those surveys start to indicate falls, it has already happened coz Joe Punter drops his asking price way after actual selling prices have begun to decline.

;-)))

In my area I can see that the estate agents are twiddling their thumbs and yawning...house price will be crashing next.

Greenspan says "painful correction ahead" for UK housing: http://www.telegraph.co.uk/money/main.jhtml;jsessionid=FSZEWDGW3IL4ZQFIQMFCFFOAVCBQYIV0?xml=/money/2007/09/17/cngrspan117.xml

UK inflation jumps to 4pc, double the target
British inflation surged to double the Bank of England's target in January, raising pressure on the central bank to seriously consider raising interest rates.

9:45AM GMT 15 Feb 2011


The Office for National Statistics said that the rate of consumer price inflation rose to 4pc in January, in line with economists' forecasts, from 3.7pc in December. It is the biggest increase in more than two years.

The rise, which was driven by higher oil prices and the increase in value added tax (VAT), means inflation has been at least a percentage point above the Bank of England's 2pc target for more than a year.

Mervyn King, the Governor of the Bank of England, will have to publish a letter to finance minister George Osborne later on Tuesday explaining why inflation remains so high.

Previously Mr King has blamed above-target inflation on a succession of one-off factors, including rises in value-added tax, the depreciation of sterling and spikes in commodity prices.

Economists expect the Bank of England to raise interest rates from their record low of 0.5pc later this year, and investors are betting a rise will come by May.


http://www.telegraph.co.uk/finance/economics/8325130/UK-inflation-jumps-to-4pc-double-the-target.html

Vince Cable says interest rate rise would be 'very difficult'

Vince Cable has been accused of creating difficulties for the Bank of England after branding a rise in interest rates as "potentially very difficult", ahead of figures today which are expected to show inflation running above 4pc


By Jonathan Sibun 6:11AM GMT 15 Feb 2011


The Business Secretary's comments come ahead of the release of economic data today which are expected to show UK inflation climbing to over 4pc, more than double the Bank of England's target level.

Mr Cable used an interview with Bloomberg Television to suggest the Bank of England retain its loose monetary policy.

"As an outsider looking in, I take the view of the doves," he said. "Although you have inflation, it's almost entirely imported. There's not very much evidence of British inflation taking place. It's virtually deflation."

Mr Cable said that with the Coalition's fiscal squeeze in full throw, tightening monetary policy was "potentially very difficult".

Mr Cable's views follow comments from David Cameron last month when the prime minister described inflation as "worrying". While Mr Cameron was careful to point out that he supported the independence of the Bank of England, he faced criticism from some quarters for involving himself in the debate.


http://www.telegraph.co.uk/finance/economics/8324233/Vince-Cable-says-interest-rate-rise-would-be-very-difficult.html

Is there any point in having the Bank of England?

http://www.rics.org/uk/news/news-insight/press-releases/uk-house-prices-to-increase-by-3-in-2015/

Liberum note today:
"Bellway remains a top pick in the sector as we find the valuation compelling. We believe that volume growth should be sustained, protecting profits if prices do fall a little as expected. The valuation is also compelling given the expected resilience of its return on equity.

We maintain our Buy on Berkeley in spite of the general caution around London, as the company has secured significant forward sales to protect prices and volumes, and has successfully added value to sites. By moving out of central London into more affordable parts of the city and the South East, place-making should succeed in generating value. Further, we believe the dividend is very secure, given the strength of forward orders and long landbank. With some of our earlier caution having proved unwarranted, and following strong interim results, we have upgraded our 2017E EPS estimate by 11 %.

Gleeson’s unique business model gives it industry leading margins and excellent growth prospects with limited competition. It also has the advantage of selling in housing markets that have yet to see any meaningful house price inflation. Valuation may be constrained by the sector, but growth is in its hands. Our 630p target price is based on a sum-of-the-parts analysis.
We like Persimmon for its high dividend at low risk, and are confident that the company will achieve the payments pledged because of management's incentive scheme. Additionally, its long landbank means it could cut land spending entirely to boost cash flows, and the strategic landbank may continue to boost margins too. Northern areas have much better affordability than the south, which may mean better pricing in a weaker environment.

We downgrade Barratt to Sell as its lower margins make it more exposed to downside risk, and its relatively short landbank and high land creditors mean that it has less scope to reduce cash outflows in support of the dividend than others in the sector.

While Bovis now looks very cheap, we have continued to resist the temptation to become more positive on the shares, as its margin profile makes its earnings most geared to downside risk. The business has suffered hiccups in better markets. We are also concerned that as the slowest builder, it may be most at risk from any “sticks” the government could bring out in its Housing White Paper in January.

We keep Redrow at Hold in spite of strong trading, as we believe that risk aversion among investors may now limit appetite for investing in a housebuilder with a degree (even though comfortable) of debt. We also think the portfolio concentration in London is a potential risk. We are perhaps still too cautious in leaving Taylor Wimpey as a HOLD, especially given the high level of dividend expected. For now however, we limit our choice among the "returners" to Persimmon.