ecoface

From a technical perspective POG in USD and GBP have tested their MT moving averages and uptrendlines, coupled with the charts showing them slightly oversold, means that they're pretty ripe for a bounce here, we'll have to see if that follows through to form the "bottom" of this correction.

Yes, I thought something else though - I bought in GBP at 144 dma heavily, and earlier too at £828, so been lucky I suppose. I didn't expect it this quickly though.

May be it's Egypt; it's making alot of hot news.

Blimey - gold just shot up by about 2% in USD, and GBP.

Any ideas why?

Taking BDEV, it looks like they rallied back to key resistance.

Hey, I hope you shorted them.

Down 4.3% today!! I opened my short this morning too. Thanks for flagging this up.

Persimmon, Taylor Wimpey also down alot. Min you, so are the miners. Some FTSE sectors looking sick today.

May be...

How do you explain the stong rally from the housebuilders since the Nov lows? You must admit that their perforance has been quite unexpected, and given their bellweather characteristics, surely there is something up?

That's Hometrack.

Is the data accurate?

Well around here (home counties) it's all tickety-boo, thanks. It's not agent-led hype but there's simply not enough stock = keeping prices up, and good stock is selling for stupid prices ....still!

For me, until the middle range houses (from say £500-£900k) around here drop, then there's not much to talk about. There are still no signs of it....at all.

Unfortunately, you don't erode the grotesque and disgusting amount of equity in chains built up over 10 years of HPI, in a year or two. Mr average around here sits on £100,000s of equity and is in no fear of losing it at all in this climate. When IRs rise, he might get itchy, but that's wishful thinking. IRs will be below 1% for a year to two more. Look at the BoE minutes - oh, there was the token 1 or 2 hawks, but nothing to get interested in.

Let's make no mistake, these falls will take a very long time, and IMO, in real terms only. Nominal will be frustratingly poor (ie 0.5% down, then 1% up, 2% down, 0.5% up etc. etc.)

Real, real, real, real falls that's where to look.

This doesn't bode well.

WASHINGTON (MarketWatch) — Home prices fell 1% in November from October in 20 major U.S. cities, according to the Case-Shiller home-price index released Tuesday by Standard & Poor’s.

It marked the fourth straight monthly decline for prices.

Prices have fallen 1.6% in the past year, marking the second consecutive decline. This is a faster decline than the 0.9% decline in October.

Now, given that the US housing cycle is about 9-12 months ahead of the UK's, then this could mean that the price falls in the UK that we have recently seen are going to gather pace.

Yeah, this looks pretty good. I may buy some today too.

Gold in GBP has bolted upwards since the poor UK GDP figures were released at 9:30 this morning. Who knows, but we may have had the bottom in GBP terms.

What happened in Dublin is not coming to London to anything like the same degree. The currency will go first.

Yep. Also, if £ the continues to appreciate, this may take the edge off the foreign buyers' market in London.

Anyone heard or read Fred Harrison's views recently?

I have just taken the plunge as it hit the 144 dma, and I'm too impatient to wait for the 200 dma.

http://img291.imageshack.us/img291/3779/27162698.gif

(sorry, can't seem to get imageshack to show the image today)

I sometimes browse the MoneySavingExpert forums to get a taste of what people in the UK are doing regarding debt and mortgages.

 

The mortgage brokers who post on there are a great indicator of lending standards being applied. At the moment, there's basically no nonsense going on, it's all; minimum 10% deposit (but you'll pay for it on rates), proper checks of documentation, repayment mortgages only, sensible income multiples, etc...

 

I found this thread interesting in particular

 

http://forums.moneysavingexpert.com/showthread.php?t=2992974

 

It's about a young couple who bought somewhere for £88k in 2006 on a 100% mortgage and now want to leave the UK (possibly back home, it doesn't really say). The poster says

 

 

 

Is this an example of someone at the Capitulation stage in the cycle?

 

Fear stage

Wow, thats a lot lower than I would have thought, but I guess until the last 100 years there wasn't too much inflation?

 

What was the average over the last 50 years? I would wager much much higher.

IMO it's not about inflation, but the amount of return a bank / mortagagor can realistically achieve for the level of risk etc. of the loan for the loan period (average 11 years for a home before someone moves) vs the spread with the rate it borrows from the BoE. Obviously over time the balancing point is 5% - too much over and no one borrows, too much under and the banks don't make enough. 5% is the figure for mortgages (I hope your not confusing this with Central Bank rates- sorry if I wasn't clear.)

Interest rates have only been used as a method to control inflation since monetarism appeared in the late 70s-early 80s.

I think people's attitudes in this country have been distorted by interest rates that were way too high for decades. Why on earth should someone get (for example) 10% risk free return on their savings?

The average borrowing rate on residential property for the last 200 years (since retail banking started etc) has been 5%.

Gold in GBP is getting shat on.

Sterling is nearly at 1.59 USD again. For some reason the markets like sterling currently.

Odd.

Gold in GBP now punched down through the 50 dma, finishing at £872 per oz.

I am keen to see this correction challenge the 144 dma at £835 per oz, and 200 dma at £825.

Does anyone have the data on the average loan to values (ie debt to equity) on properties that were sold between 2005-2008 in the UK?

Secondly, do you have the quantity in £ of those loans made in the same years?

I would like to compare that under-water debt to the commercial property debt (which was about £50 billion last Autumn). The value of outstanding loans in mid 2010 was £215bn, aabout £160 bn of which needs repaying in the next 4 years.

I just wonder if we are focussing on a sector (resi) that is the little brother to a bigger problem.

According to DTZ:

"In 2011, banks will also be looking closely at any loans that are due to mature. The UK has typical loan terms of five years, so many of these maturing loans will be for property purchased in 2006 and 2007 at the height of the market. In many cases, current value will not match that paid for the property."

Also, returning to the resi market, if the size of underwater resi loans is say £20bn, and with another 10% falls is say £30 bn, its not that much to worry about if it can be financed at rates below 5%. Does anyone actually have any idea what sort of sums of money these falls are secured on? It's one thing making drammatic comments about price falls, but who gives a monkeys if (in theory) if the LTVs are say an average of 50%.

3.6% drop in GBP today.

Gold GBP and USD

Other than just sheer manipulation (or paranoia), surely someone can give a good reason?

Good points.

When the big 5% jump in Rightmove's October asking prices was announced, I characterised it a "seasonal, trying on" of higher prices, which would be quickly rejected - and so it was.

I wasn't aware of the time lag in the other figures.

With the big move down in Rightmove, I think we can safely ignore the dated Academetrics index.

 

I have to wonder how long those Builder share prices can go on levitating, when most everything else looks bearish.

And they haven't yet broken above key resistance. Blips like these have been "faded" several times in the last few years

 

Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx

2010

S. : : 229,767 : 399,019 : 157,600*-0.4% / 166,757 = n/a = 161,974 163,639 : £165,198 :- 1.49% :139.1%

O : : 236,849 : 418,778 : 156,200* 0.9% / 164,381 = n/a = 164,949 165,275 : £164,828 :- 0.02% :143.7% : Hi Delus.

N : : 229,379 : 420,248 : 155,575 - 0.4% / 163,398 = n/a = 164,708 163,268 : £163,333 :- 0.91% :140.4% :

D : : 222,410 : 408,248

=====================================

mom: -3.04%: - 2.86% : Est.DI: 136.2 % / : -0.60%: = n/a = : +1.82%: -1.4% : - 0.91%

 

The Delusion Index is dropping fast as those "aspirational" asking prices are cut / read: "unrealistically high"

I'm sorry to throw water on the fire but you will be unable to prove this is not a seasonal trend until the Spring.

For example, even during the winner's curse years of the greatest housing boom in history the winter figures were negative.

For example, the Halifax Index not seasonly adjusted for the South East in similar quarters.

Q4 2004 to Q1 2005 = - 0.48%

Q4-2005 to Q1 2006 = - 1.04%

Let's not count our chickens yet. Traditionally the Spring market has been the catalyst for YoY growth and allayed fears of winter doldrums. We will have to wait until March/ April to be sure that these falls are not seasonal IMO.

The economists spun a web, and caught everyone in it. All were seduced by debt... and consumed the future.

Good poetry - do you mind if I use that line?

Phase 2 of the HPC in US is gathering momentum. This is shocking TBH:

Re Sets on Mortgages

Concluded with:

Adding all of these together, we come up with a total of roughly 6.97 million residences that are almost certainly going to be thrown onto the resale market as distressed properties at some point in the not-too-distant future. This massive number of homes will put enormous downward pressure on sale prices. To believe that prices are firming now is to completely ignore this shadow inventory. Ignore it at your own risk.

Yes, you would certainly get a dis-believing-type-reaction from me if you claimed houses would fall 80% in the next couple of years. BUT, I don't completely rule it out. It's not impossible I suppose. However, I think it is less likely than a 30% fall over the next 2/3 years

I think sooner or later people will be thinking in terms of real (not nominal) falls.

In real terms with cpi at 5% and rpi at 3%, a nominal 0% is x?

(in the UK of course).

Not related to HPC, as I said.

 

So, the council built this? Maybe the builders are happy about the extra work that they have now. Nothing to do with HPC of course.

Lol

A few young arsonists from the neighbouringvcouncil estate have been arrested for setting a timber frame block on fire.

That's all. I like you're thinking because I too initially thought that, so researched more. I know a lot of the housebuilders in the area and was intrigued and unfortunately there's nothing suspicious here - just a sad example of twat youths with nowt to do and v sadly preventing much needed council houses being occupied for local people.

Firefighters tackle Basingstoke construction site fire

http://www.bbc.co.uk/news/uk-england-hampshire-11268241

 

What a loss. Certainly all this flats had been sold "off plan" already months ago.

 

 

Certainly, this has nothing to do with the house price collapse.

Wrong, sorry!!!

This site is a social housing site, not private. Best not to spread rumours eh.

Ah, see what you mean.

 

When I talk of IR rises, I am thinking more of the long term average of ~5%. That I think is still some way off (assuming no major shock like sov default etc, in which case all bets are off).

 

However, I wouldn't say 2.5% is impossile within a year or two. But think it is still a very low IR and won't hammer the population anywhere near as much as 5%

Sort of agree - historically 2.5% is half the 300 year average of 5%...

...but 2.5% on massive amount of debt, is a lot worse than 5% on less debt.

I used to have a similar debate with property bulls in the boom years when they said rates "are so low", and they couldn't see my view that it is not solely about the rates per se, but the rate in relation to the size of the loan or debt. The cost to maintain the debt will be grotesque at 2.5%, because the debt is obscene.

Similarly, a rise from 0.25% to 2.5% is 900%.

0.25%/ 250 basis points to 5% / 500 basis points is only 100%.

I think it works this way? Basically the point I'm making is that a rise from a low level should theoretically have more of a disproportionate impact than the same rise from a higher foundation.

Bought Monday morning myself as expected half bullish update and sold first thing this morning. Didn't time it perfect but i'm not greedy so sat on fence.

 

Mind think the bullishness was no doubt in part down to George Osboune's banks must lend more comments which swayed me for a punt. Just my opinion.

I could understand Persimmon or Berkeley, or even Barratts, but T-W??

Did you see TW. figures yesterday? Bears out all this with the exception of their "relatively robust" comment, probably attributed to 2009 sales "secured". But it was a good churn, last week first time i've had a long position for some time in the sector; expect others will make similar noises.

 

Taking profits fairly quickly though.

That's funny as I've I just taken a short position at 31 on T-W after that non-sensical spike yesterday. I mean, really, that company is in all sorts of mess. May be that's priced-in, may be not.