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UK House prices: News & Views


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Nationwide was -0.7% today (or -1.4% for NSA).

 

Now tantalisingly close to going YoY negative. Once that happens I think sentiment and prices will take another big lurch down as people buying on the bounce in the last 18 months will realise they've lost money in the last year and that the bull market really is utterly dead and buried.

 

http://www.bbc.co.uk/news/business-11638433

_49686293_house_prices_464_oct.gif

 

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I think I'm getting email notification of posts, so I'm happy!

 

I also think it's a blip. The UK economy is in tatters and set to get worse thanks to Gorgeous George being a bit too hasty with the scissors, for ideological reasons presumably. This being the case and lending unlikely to ease any time soon, it's hard to see how RE can't fall.

 

Where I disagree with DB is that I don't see this as necessarily a bad thing for UK property investors.

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RMV's earnings have done well, as vendors and buyers seek a new, cheaper alternative to old-fashioned EA's

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Sorry newbie question. Is there any way to follow this debate without posting on it yet?

??

Do you mean how to "find" this thread?

 

I have been moving most of the property threads from Main (& elsewhere) onto the new GPC section:

http://GlobalPropertyCycles.com

 

But property is a side-interest for many of our posters, so only a small, but rising number are visiting GPC,

and the starter of this thread (Goldfinger) recently asked that it be moved back to Main, and that was done.

 

This thread is a bit Iconic, people look for it, so it will attract ongoing posts, which will move it to the front

page of Main.

 

Other property-related threads on Main will get transferred to GPC after they slide down off the front page.

They will be easier to find there.

 

In the long run, I expect traffic on GPC to grow, as we get more posters whose primary interest is discussing

property related topics.

 

Gold, Stocks and Economics tend to rule on GEI's Main board now.

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I think I'm getting email notification of posts, so I'm happy!

 

I also think it's a blip. The UK economy is in tatters and set to get worse thanks to Gorgeous George being a bit too hasty with the scissors, for ideological reasons presumably. This being the case and lending unlikely to ease any time soon, it's hard to see how RE can't fall.

 

Where I disagree with DB is that I don't see this as necessarily a bad thing for UK property investors.

Interesting comment.

 

Do you mean: Property prices will not fall?

Or: Property investors will see bargains after they fall?

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Do you mean: Property prices will not fall?

Or: Property investors will see bargains after they fall?

 

 

That’s odd I thought I replied to that.

 

Do you mean: Property prices will not fall?

Or: Property investors will see bargains after they fall?

 

I mean both!

 

If an investor is holding long-term and doesn't need to refi, short term falls over the next three or four years may not be relevant. Property is not a liquid asset and unless bought at an extreme discount the process of trading is too expensive to be worthwhile.

 

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Which is why base rates won't rise. It's a possible scenario which must not happen at ANY cost.

Not ... "at any cost"

 

What choice does the UK have?

 

Current levels of: Property prices + Interest rates + Incomes : are unsustainable

 

Something in the current formula has to give. ...There are no easy choices. And "kicking the can down the road" / ie holding things as they are - becomes more and more difficult.

 

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If an investor is holding long-term and doesn't need to refi, short term falls over the next three or four years may not be relevant. Property is not a liquid asset and unless bought at an extreme discount the process of trading is too expensive to be worthwhile.

 

That is a BTL owners fantasy notion IMHO, RichG. Hanging on thru a big price drop is likely to be a suckers game.

 

Suppose prices drop 20% over the next 3-4 years, and rates start rising. The owner will find himself trapped. Much of his equity will be wiped out, and he may find himself in a position where he has to sell and accept that big loss, or hang on longer and cover an increased financing cost, feeding cash into the property(-ies) until he eventually gives up.

 

Ultra-low rates bought time, and temporarily put cash flows into a positive mode for many LL's. But this level of rates is not sustainable, unless austerity plays out, and then you may see rents falling over the next few years, with rates rising after that.

 

The rate cut created a wonderful selling window, but it seem that few LL's have taken advantage, and instead some of increased their portfolios rather than slimming them down. They are sleep walking into probably disaster - that's how I see it.

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Despite wanting house prices to fall and understanding the arguments why it should happen I'm beginning to feel pretty doubtful it will actually happen to the extent discussed on here. I just don't see it falling 20% or more from here when priced in sterling. In other currencies/commodities sure.

 

Anyone care to have a wager on this?

 

If I lose the bet to you I just saved even more money off a property :)

 

If I win the bet well I'll probably be even more upset than if I had lost!

 

Lets say the other person wins if by Dec 2012 or earlier the nationwide index falls by 20% or more from here.

 

Any takers? Just a modest sum of say 20-50pds or so?

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Despite wanting house prices to fall and understanding the arguments why it should happen I'm beginning to feel pretty doubtful it will actually happen to the extent discussed on here. I just don't see it falling 20% or more from here when priced in sterling. In other currencies/commodities sure.

 

Anyone care to have a wager on this?

 

If I lose the bet to you I just saved even more money off a property :)

 

If I win the bet well I'll probably be even more upset than if I had lost!

 

Lets say the other person wins if by Dec 2012 or earlier the nationwide index falls by 20% or more from here.

 

Any takers? Just a modest sum of say 20-50pds or so?

 

I will take you up on that at £20, just for fun. If houses dont crash by that amount it will be because the currency has. So gold will be even heigher. I believe both houses will crash and the currency, but I'm easy...

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Despite wanting house prices to fall and understanding the arguments why it should happen I'm beginning to feel pretty doubtful it will actually happen to the extent discussed on here. I just don't see it falling 20% or more from here when priced in sterling. In other currencies/commodities sure.

Oh I think the scene has been set

the restrictions on banks ,new guidelines for lending

no more 100/125% loans

proof of income now a necessity

housing benefit cuts ,unemployment due for a big rise

vat up to 20% ,fuel gas and food costs rising

child benefit cuts , disability allowance claimants purged

 

I think the majority live pretty much on the limit as it is

the biggest factor is sentiment and that is plummeting as

even the media are now preparing the people mentally

to expect and accept lower values

 

The Tories need the bust so they can point the finger

and they need it sooner rather than later so they can start

a recovery or stabilisation of sorts before the next election

 

the cash rich will pile in but rate rises will insure that

those needing to buy by mortgage will be no better off

in monthly payments

 

this way the banks and the wealthy win and the poor pay for it

as it ever was

 

as an aside ,I am noticing around 75% of auction property

is going unsold - prices will drop - there is no alternative

 

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Oh I think the scene has been set

the restrictions on banks ,new guidelines for lending

no more 100/125% loans

proof of income now a necessity

housing benefit cuts ,unemployment due for a big rise

vat up to 20% ,fuel gas and food costs rising

child benefit cuts , disability allowance claimants purged

 

I think the majority live pretty much on the limit as it is

the biggest factor is sentiment and that is plummeting as

even the media are now preparing the people mentally

to expect and accept lower values

 

The Tories need the bust so they can point the finger

and they need it sooner rather than later so they can start

a recovery or stabilisation of sorts before the next election

 

the cash rich will pile in but rate rises will insure that

those needing to buy by mortgage will be no better off

in monthly payments

 

this way the banks and the wealthy win and the poor pay for it

as it ever was

 

as an aside ,I am noticing around 75% of auction property

is going unsold - prices will drop - there is no alternative

 

I totally agree with your analysis, however, if property prices fall by 20% or more from here the banks will be well and truly on fire if they are not already. The UK gov are trying everything they can to prevent the seemingly inevitable fall. I hope they fail as a fall and cleansing of the system would be much healthier for future generations.

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Which is why base rates won't rise. It's a possible scenario which must not happen at ANY cost.

 

Unfortunately this is a very dangerous assumption, as the statement on Goldfingers chart shows many will be caught out by just a small rise in interest rates. I used to work for a firm of financial advisors, they would routinely advise people to go for short term discount rate or tracker mortgages despite rates being way below the long term average. That was a serious problem since the more prudent longer term fixed rate mortgages, at a higher cost, don't look so immediately attractive and most would go for the lower initial cost since they were told by the advisors they would be able to get a similar cost discount or tracker deal when theirs ended in 2 or 3 years. Of course advisors prefer people being on shorter term deals since it opens up the possibility of another commission payment in 2/3 years rather after a 10 year fix, say.

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I think the banks have been relining their pockets

by QE and stealing savers money for long enough

to survive the 1st wave down

those in neg equity and repoed will be chased for years

by the banks as they were in past slumps

Banks will resort to stealing of the customer for survival

I'm sure they have all been stress tested for 20% falls

and would survive

the banks need this as much as anyone to start the whole cycle off again in the future

 

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Can I get paid with £20 worth of silver please, even if its just a gram or even a scraping? Id rather not have that buttwipe stuff with Her majesty on it...

Sure thing! Same for me too if I am unfortunate enough to win.

Goldmoney or Bullionvault is easiest for me.

 

So the nationwide index is the one we shall use.

 

The October 2010 report can be found here:

 

http://www.nationwide.co.uk/hpi/historical/Oct_2010.pdf

 

The average house price was: £164,381

 

So you need the average UK house price to go below: £131,505 to win

 

 

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