Indicator Digest - CMS Forex

Housing Prices

Prices of homes are important to understanding how the housing sector is doing.

Main Indicator: Rightmove House Price Index

Most Recent Release

April
20th, 2008

Actual

Forecast

Revised Form

-0.1%

0.8%

N/A

Monthly Change for April
Provided by: Rightmove
Official Release: PDF

Rightmove HPI y/y: 1.3%, pr. 5.0% (Mar), 5.8% (Feb)
Avg. Prices: £239,521, pr. £239,655

From the Release: "Rightmove’s April House Price Index finds that sellers have finally recognised that a decade of rising prices has come to an end. With average asking prices rising below the level of wage inflation and Bank of England interest rates of 5% compared to 5.75% a year ago, buyers with cash or reasonable deposits are now able to get more home for their money.

The annual rate of increase in asking prices has suffered a substantial fall from 5% to just 1.3% this month, the lowest year-on-year increase since July 2005, when price rises stalled to virtual standstill at +0.2%. Average unsold stock per estate agency branch has risen from 67 to 70, giving buyers the highest levels of choice we have measured at this time of year. Time on the market has risen as well, from 82 days to 85 days over the last month, by far the highest we have measured at this time of year. Sellers will thus need to set their initial competing price competitively, and also be prepared to negotiate. First time buyer affordability has been boosted by the prices of flats, terraces and semi-detached homes all falling over the last month."

Table of Past Data

	6/17	7/22	8/19	10/14	11/18	12/16	1/20	2/17	3/23	4/20

Actual	+0.8%	0.3%	0.6%	2.7%	-0.7%	-3.2%	-0.8%	3.2%	0.8%	-0.1%
Forecast		0.5%
Previous	+0.4%	0.8%	0.3%	-2.6%	2.7%	-0.7%	-3.2%	-0.8%	3.2%	0.8%
Revised From	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

Secondary Indicator: RICS House Price Balance

Most Recent Release

April
14th, 2008

Actual

Forecast

Revised Form

-78.5%

-67.0%

-64.1%

N/A

For March
Provided by: Royal Institute of Chartered Surveyors (RICS)

The number of surveyors reporting house prices falls increased to an historical low in March. The news depressed the Pound as falling housing prices are expected to exacerbate the slowdown in the economy. At the same time, consumer inflation was lower than expected, mitigating some of the worry of inflationary pressure from producer prices yesterday. The Pound hit a 6 week low vs the Dollar, and a new all time low vs the Euro.

From the Release:

"The balance of Chartered Surveyors reporting house prices falls increased to an historical low in March. However, a lack of new supply is still preventing significant price falls despite rising stock levels, says RICS. The RICS house price balance dropped for the eighth month in succession. 78.5% more Chartered Surveyors reported a fall than a rise in house prices, an increase from 65.7% in February. This figure has exceeded the historical low of June 1990, when 64.5% more Chartered Surveyors reported a fall in house prices and is now the lowest figure since the survey began in 1978."

Table of Past Data

	7/11	8/13	9/12	10/10	11/12	12/12	1/15	2/12	3/10	4/14

Actual	10.6%	12.6%	-1.8%	-14.6%	-22.2%	-40.6%	-49.1%	-54.7%	-64.1%	-78.5%
Forecast	21.0%	9.0%	10.0%	-2.8%	-19.0%	-28.5%	-45.0%	-52.0%	-55.0%	-67.0%
Previous	22.5%	10.6%	10.8%	-3.3%	-14.9%	-23.4%	-40.6%	-49.1%	-54.7%	-64.1%
Revised From	23.9%	N/A	12.6%	-1.8%	-14.6%	-22.2%	N/A	N/A	N/A	N/A

Past Releases

Rightmove House Price Index

March
23rd, 2008

Actual

Forecast

Revised Form

0.8%

3.2%

N/A

Monthly Change for March
Provided by Rightmove

Rightmove HPI y/y: 5.0%, pr. 5.8% (Feb), 3.4% (Jan), 4.8% (Dec)

In February, the Rightmove House Price Index registered a monthly change of 3.2%, a positive month of for housing prices after three straight declines (Nov, Dec and Jan). March showed another positive increase of 0.8%, though the annual rate, 5.0%, slowed compared to February's 5.8%.

RICS House Price Balance

March
10th, 2008

Actual

Forecast

Revised Form

-64.1%

-55.0%

-54.7%

N/A

For February
Release from Royal Institute of Chartered Surveyors (RICS)

This is the seventh month in a row where more Chartered Surveyors have reported a drop in house prices. New enquiries continue to fall, as weak demand due to the more cautious sentiments brought about by economic uncertainty has kept prices subdued. Home inventories surged 8.5% in February for the fifth straight month where stockpiles increased more than 8%. RICS spokesperson notes

"While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices."

It should be noted that Scotland's housing market is booming, a completely different picture than the rest of the UK. It has a positive 25% balance, up from 7% in January.

Rightmove House Price Index

February
17th, 2008

Actual

Forecast

Revised Form

3.2%

-0.8%

N/A

For February
Provided by Rightmove

Rightmove HPI y/y: 5.8%, pr. 3.4% (Jan), pr. 4.8% (Dec)

"Optimism remains robust amongst the fewer sellers who came to the market over the last month. The lowest February level of new listings since 2005 saw average asking prices jump by 3.2%, (£7,426). It is traditional for asking prices to be driven upwards at this time of year, with fresh sellers tempted to test the market at a higher price as they have fewer timescale pressures with the year ahead of them. This seasonal factor has been exacerbated this year with estate agents competing for only 132,000 properties, compared to 144,000 in February 2007 and 155,000 in February 2006."

RICS House Price Balance

February
12th, 2008

Actual

Forecast

Revised Form

-54.7%

-52.0%

-49.1%

N/A

For January

Release from Royal Institute of Chartered Surveyors (RICS)
Press Release: Overview
Official Release: PDF

"The balance of surveyors reporting house price falls increased again in January, says RICS’ UK housing market survey published today.

The RICS house price balance dropped for the sixth month in succession signalling half a year of negative market sentiment.

4.7 percent more Chartered Surveyors reported a fall than a rise in house prices an increase from 49.1 percent in December.

According to surveyors, the only part of the UK where prices continue to rise is Scotland with the net balance of surveyors in that country reporting price rises edging up from 3% to 7%.

The decline in demand picked up speed as new buyer enquiries fell at the fastest pace since October. Prior to October, the previous occasion when buyer enquiries reached this level was August 2004. 35 percent more chartered surveyors reported a fall than a rise in new buyer enquiries, down from 25 percent in December.

The fall out from credit crunch continues to prevent many would-be-buyers from entering the market and it is likely that demand will remain subdued while mortgage lending criteria is tight."

Rightmove House Price Index

January
20th, 2008

Actual

Forecast

Revised Form

-0.8%

-3.2%

N/A

For January
Rightmove HPI y/y: pr. 4.8%
Provided by Rightmove

UK house prices continued to fall in January to £230,428. Falling interest rates and lower prices have spurred buyer interests albeit prices further declining. The housing market is showing "signs of price stabilisation as majority of price drop is due to the rush of smaller properties to the market in mid December to beat their HIPs deadline" Only large properties have been previously included in the HIPs requirement.

RICS House Price Balance

January
15th, 2008

Actual

Forecast

Revised Form

-49.1%

-45.0%

-40.6%

N/A

For December
Release from Royal Institute of Chartered Surveyors (RICS)

With recent slump in retail sales, the housing market slowdown compels the BoE to reduce rates in Febuary. RICS noted supply is still restricted, and further and deeper price drops will occur if it loosens considerably.

Bloomberg:

Jan. 16 (Bloomberg) -- U.K. real-estate professionals said December was the worst month for the housing market since the aftermath of Britain's last recession in 1992.

The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 49.1 percentage points, the Royal Institution of Chartered Surveyors said today in London. That compares with 40.6 points the previous month. In the capital, confidence in prices fell to the lowest since 2003.

Rightmove House Price Index

December
16th, 2007

Actual

Forecast

Revised Form

-3.2%

-0.7%

N/A

For December
Release from Rightmove

Prices keep dropping for UK houses, which in December averaged an asking price of £232,396. Rightmove explains the sizable decline as exaggerated by an "unseasonal surge of cheaper than average 2 bedroom or fewer properties avoiding their 14th December HIPs deadline." Specifically, the proportion of two or fewer bedroom housing increased from 38% last December to 48% between Dec 2 and Dec 8. This is not to say there is a slump in the housing market, but that the 3.2% decline is a bit magnified by influx of cheaper homes and should be read carefully at this juncture where market reactions can be sensitive to such data.

RICS House Price Balance

December
12th, 2007

Actual

Forecast

Revised Form

-40.6%

-28.5%

-23.4%

-22.2%

For November

Rightmove House Price Index

November
18th, 2007

Actual

Forecast

Revised Form

-0.7%

2.7%

N/A

For November.

RHPI y/y: 7.9% (Nov), pr. 10.4% (Oct).

RICS House Price Balance

November
12th, 2007

Actual

Forecast

Revised Form

-22.2%

-19.0%

-14.9%

-14.6%

For October.
Royal Institution of Chartered Serveyors (RICS)

The number of real-estate agents and surveyors saying prices declined outnumbered those reporting increases by 22%. It's the lowest reading since July 2005.

The UK economy is straddled with record consumer debt. Higher credit costs and a hiking campaign by the Bank of England (5 hikes to 5.5%) have put the housing sector in a precarious position. The slowdown in housing that many economists had predicted may now be realizing. Other sectors of the UK economy are running strong such as employment and growth.

Rightmove House Price Index

October
14th, 2007

Actual

Forecast

Revised Form

2.7%

-2.6%

N/A

For October
Year to October: 10.4%

According to Rightmove, HIPs continue to distort the market causing the recent fluctuation in sellers' asking prices, which stands at an average of GBP241,642 in October. Despite prices rebounding from last month's decline, many expect the trend to continue downward.

RICS House Price Balance

October
10th, 2007

Actual

Forecast

Revised Form

-14.6%

-2.8%

-3.3%

-1.8%

For September

According to RICS, surveyors reported that house continued to stay negative for a second month. The 14.6% balance of Chartered Surveyors reporting a fall is the fastest decline since September 2005.

Market conditions tightened while "demand weakens further but supply remains constrained." Confidence in sales and prices deteriorated further, dragged down by the financial market issues.

On the positive side, the underlying economy remains strong, a reason vendors are in no hurry to sell. As per the HIPs impact, "some would-be buyers are turning to the rental market..."

RICS House Price Balance

September
12th, 2007

Actual

Forecast

Revised Form

-1.8%

10.0%

10.8%

12.6%

House prices surprisingly turned negative for the first time since October 2005, according to the Royal Institution of Chartered Surveyors (RICS). Rising interest rates are weighing down buyer affordability. RICS spokesperson Ian Perry mentioned that HIPs, introduced earlier this year, is making "family homes even more difficult to purchase." London however, remains the region with the strongest price growth in England and appears to have contained any impact from the credit crunch.

Rightmove House Price Index

August
19th, 2007

Actual

Forecast

Revised Form

0.6%

0.3%

N/A

The year-over-year figure for August saw an increase of 12.8% from the previous 10.3%.

RICS House Price Balance

August
13th, 2007

Actual

Forecast

Revised Form

12.6%

9.0%

10.6%

N/A

Although someone more people are expecting prices to be higher, then the number of people that believed so last month 12.6% is below the average of 21.6%. Furthermore, RICS noted that new buyer's enquiries dropped at the fastest rate since August 2004, and unsold properties inventory has reached its highest level since Janurary this year. The easing in housing definitely curbs rate hike sentiments. The BoE is expected to make another rate hike of 25 bps by year's end to 6.00%.

Rightmove House Price Index

July
22nd, 2007

Actual

Forecast

Revised Form

0.3%

0.5%

0.8%

N/A

residential property prices rose at the slowest pace this year coinciding with the tightening cycle going on the 3rd interest hike in the year. On the year to June, the annual price inflation was down to 10.3% from May's 13.2%.

RICS House Price Balance

July
11th, 2007

Actual

Forecast

Revised Form

10.6%

21.0%

22.5%

23.9%

In June, home prices continue to increase but at a much slower rate and lower than expected.

Rightmove House Price Index

June
17th, 2007

Actual

Forecast

Revised Form

+0.8%

+0.4%

N/A

Month over month figures for prices in June. Previous year over year was +13.1%. June y-o-y inched up 13.2%. The stock of houses per real estate agent soared 10% due to sellers putting up houses to avoid the costs incurred by the HIP which has extended its deadline. According to Rightmove, Gordon Brown has announced that he will make housing his top priority.