ecoface

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?

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?

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.

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.

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)

Fear stage

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.

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?

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.

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.

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).

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.

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

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.

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

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.