The tabloid newspapers cater for the extremes of human desire;- the Peoples’ Princess and similar rose-tinted, heart-warming stories help all who believe that mankind is fundamentally a force for good, each day that passes marking progress for civilisation. England, cricket on the green, warm beer and the sound of children laughing. Or the other view ;-
The end of the world. Armageddon. Youths tearing through town centres, beating up middle-class women who dare to talk back – or ‘diss’ as it’s called, the young thugs high on something that the Government ought to have banned when it came into office eleven years ago!
And so it is with housing market stories. While some swear they see the green shoots of recovery (perhaps through the bottom of an upturned glass to help with magnification?) others are still crying into it. The optimists blame the pessimists for what they see as their self-fulfilling prophecies. The ‘realists’ condemn those they say have ‘vested interests’ of being responsible for the mess in the first place. Oh, yes, and of having done it purely to profit from it all!
Who’s right?
Both sides claim that the statistics back their argument and trot out numbers and quote ‘experts’ usually without listening to the opposing view. “The number of new instructions” say the optimists “confirm the sighting of the first swallow that defines the arrival of summer and a return to a bull market”. The doom mongers suggest that they are simply cuckoo. Surveys from both the National Association of Estate Agents and Primelocation both recently suggested that asking prices in December actually rose. This at a time when all the main house price surveys say that house prices have fallen between 14-18% in 2008. So is the market springing back to life or having one last gasp?
The numbers.
If you are confused, finding yourself agreeing with the most recent argument you have heard then perhaps you’d like some arms-length numbers? Her Majesties Revenue & Customs have published the first results for 2008. These are the numbers of residential property transactions over £40,000 and unlike the Land Registry they cover the whole of the UK. You can see the table here but these are the headlines;-
The total number of sales in 2008 was 908,000, down from 1,628,000 in 2007 and 1,686 in 2006. In Northern Ireland the fall has been dramatic. Down from 52,000 in 2006 to just 15,000 last year whilst in England the numbers have ‘only’ halved from 1.4m to 758,000.
On every radio program I contributed to last year, someone would call in or email to say “it may be rough down south but the market in Scotland is fine and I’m selling more houses in Edinburgh this year than I have ever!”. Well, it turns out that either the Scots are serious tax-dodgers and are not reporting their transactions or these folk were misreading their own numbers. According to HMRC the number of sales in 2006 was 144,000 which did indeed rise in 2007 to 148,000 but unaccountably fell to 99,000 in 2008.
The Welsh have not escaped falling from 71,000 to 36,000 but here’s the bit you might want to ignore/concentrate on – depending on the state of your glass. The trend is down. The graph is getting steeper and if you extrapolate or extend the line it suggests that 2009 isn’t going to be much better.
Conclusion.
We will see more numbers in the next couple of weeks. I am already calculating just how much revenue the Exchequer has lost in Stamp Duty due to the fall in sales working out (with a big calculator) the stamp duty paid on each sale. When compared to the amount that the Government seems to announce almost every week it is pumping into the banks then I expect it will look like loose change. In the meantime, which ever view you take, you can either point to the reduction in both supply and demand and claim that this will help to underpin values or your will pronounce the end of home ownership for a generation. Either way, I hope you will find these numbers useful and do check back soon for yet more definitive proof that you were right all along!