drbubb

Fred Harrison describes how the reckless activities of bankers and property developers have left Ireland in a state of economic collapse with no hope of recovery. "People tried to make a fortune out of the value of the land... Instead, they bankrupted a nation." Great summary. Go get them, Fred. In a few years, they will be telling the same story about the UK. From the clip: Karl Deeter: "In effect, it has become a zombie..."

That HPC income estimate Sounds high to me. Perhaps we do not have enough "nutters" posting here

From the Zombie Homeowner thread... Great chart! If the Debt (red line) had risen much more gently, then maybe equity could have kept growing. Ramp up debt too hard and you destroy equity, because the long term balance gets destroyed, and homes get built in the wrong places. Too many homes were built quickly in the outer ring suburbs. Raise oil prices, and it becomes uneconomic to live there. Raise oil prices far enough and fast enough, and the whole "suburban project" becomes naught-but-malinvestment. The US should have been imposing taxes on oil to slow the spread of suburbs, not cutting rates to near zero to speed up their development. The wrong move created more zombies. But at least in the US many zombies are now being buried, and few new ones are being created. The US is working through its housing nightmare, while the UK has barely started to do so.

From the Zombie Homeowner thread... Great chart! If the Debt (red line) had risen much more gently, then maybe equity could have kept growing. Ramp up debt too hard and you destroy equity, because the long term balance gets destroyed, and homes get built in the wrong places. Too many homes were built quickly in the outer ring suburbs. Raise oil prices, and it becomes uneconomic to live there. Raise oil prices far enough and fast enough, and the whole "suburban project" becomes naught-but-malinvestment. The US should have been imposing taxes on oil to slow the spread of suburbs, not cutting rates to near zero to speed up their development. The wrong move created more zombies. But at least in the US many zombies are now being buried, and few new ones are being created. The US is working through its housing nightmare, while the UK has barely started to do so.

Zoopla.co.uk: Home Values Hit 8 Month Low Recent figures show that British property values are down 11% from last July with prices 18% below their peak. According to Zoopla.co.uk this dip has created some interesting buying opportunities. "Whilst it has been a challenging period for the property market over the past few months, the recent dip in prices and the notable variance between regions may have created some interesting buying opportunities. (Vocus/PRWEB) 30 March 2011 Having hit a 5-year low in February 2009, UK property values rose steadily during the rest of that year and throughout the first half of 2010, but have since fallen for the past eight successive months, accordingly to the latest data from property website Zoopla.co.uk, by an average of 11.09% since last summer, creating a potential buying opportunity. Property prices in England have fallen by an average of £26,240 (11.06%) since last July, whilst in Scotland they are down on average by £21,489 (12.37%) and in Wales by £17,205 (10.73%). The average home values now stand at £211,003 in England, £152,106 in Scotland and £143,182 in Wales according to Zoopla.co.uk, which provides free value estimates of every UK home. Across Britain, average house prices are now 18.01% (£45,594) below their peak, with the average house price at £201,911 compared to £247,505 in October 2007. The recent dip over the past 8 months could well have created a buying opportunity if prices start to pick up in the second half of the year as predicted by many. Regionally, the North East has been hardest hit over the past few months, down 14.12% since last July with average local house prices now at £146,242. Not surprisingly, London has proved most resilient down only 7.59% over the same period to an average of £378,295 today. Property values in the North East now stand at 24.39% below their October 2007 peak, a massive drop of £47,173, compared to London where prices now are only 8.36% below the peak levels having fallen £34,527. Nick Leeming, Business Development Director at Zoopla.co.uk, commented, "Whilst it has been a challenging period for the property market over the past few months, the recent dip in prices and the notable variance between regions may have created some interesting buying opportunities. The first half of 2010 provided strong gains in market values but, since last summer, economic uncertainty and lending constraints have eroded these gains and put downward pressure on house prices.” /more: http://www.prweb.com/releases/2011/3/prweb8248393.htm

True. He is well-named and more consistent. I am too often early. Buy early, Sell early. But as long as I make money, I do not care much

Yes. I think it was George. And one of his colleagues. They reminded me of the people you might meet hanging out in bars on Patpong road, if they still do that.

...and DrBubb... Who sold his property in 2001 (when gold bottomed) to buy Gold shared, and then used the profits to buy 10 propeties in Hong Kong. But that was so long ago (and seemed so crazy at the time) that no one can recall it.

I met the guys who run that site at a Google function in Hong Kong last year. They have created a real business around it, far more revenues than GEI, or even HPC, I think.

Yeah, I believe you do. It was the soundbite generators on HPC that I was thinking of. Many folks on GEI seem to prefer these more in depth discussion that are more common here.

THE REAL TEST is after the Spring, when rates rise and the HB cap slides into place. Actually, I think you need to look at the BIGGER PICTURE - not just the Nationwide Data. That is why I track several indices, and look at them together. (For some reason, I seem to be one of the very few people to do this - most interpret a few months statistics without any real sense of the wider context.) Mo.: Rt'mov : London : Hometrack %/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx 2010 J. : : 222,261 : 407,731 : 156,116 - 0.5% / 163,481 169,777 169,484 165,514 : £164,497 :- 0.11% :135.1% : HFsa HIGH F : : 229,398 : 427,987 : 156,584 +0.3% / 161,320 166,857 166,703 165,997 : £163,659 :- 0.51% :140.2% M : : 229,614 : 417,461 : 157,054 +0.3% / 164,519 168,521 168,433 167,808 : £166,164 :+1.53% :138.2% A : : 235,512 : 421,822 : 157,368 +0.2% / 167,802 168,202 168,212 170,772 : £169,287 :+1.88% :139.1% : H&N HIGH M : : 237,134 : 420,203 : 157,682 +0.2% / 169,162 167,570 167,287 169,204 : £169,183 :- 0.06% :140.2% J. : : 237,767 : 429,597 : 158,700*+0.1% / 170,111 166,203 166,351 166,395 : £168,253 :- 0.55% :140.5% Jl : : 236,332 : 422,248 : 158,500 - 0.1% / 169,347 167,425 167,536 168,331 : £168,839 :+0.35% :140.0% A. : : 232,241 : 405,058 : 158,200 - 0.3% / 166,507 = n/a = 168,124 168,889 : £167,698 :- 0.68% :138.5% 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% / 164,279 = n/a = 164,949 165,275 : £164,777 :- 0.25% :143.7% : Hi Delus. N : : 229,379 : 417,279 : 155,575 - 0.4% / 163,133 = n/a = 164,708 163,268 : £163,201 :- 0.96% :140.5% : D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,249 = n/a = 162,435 161,498 : £161,874 :- 0.81% :137.4% : 2011 J. : : 223,122 : 413,259 : 154,300 - 0.5% / 161,211 = n/a = 164,173 161,470 : £161,341 :- 0.33% :138.3% : F. : : 230,030 : 430,680 : 154,000 - 0.2% / 161,183 = n/a = 162,657 161,680 : £161,432 :+ 0.06% :142.5% : M : : 231,790 : 424,307 : 153,850 - 0.1% / 164,751 = ===================================== mom : + 0.8% : - 1.5% : Est.DI: 143.6% / + 2.21% : = n/a = : -0.92% : +0.13% What I see here, is a seasonally driven bounce back towards resistance at GBP 165,000 or so (as the Builder stocks have also been signalling IMHO.) You can track the big picture most easily, by looking at the "H&N Index" column. The economy has shown some signs of recover and wages are up a bit, but the BofE is recklessly keeping interest rates at ultra-low levels. Nationwide's report seems to be warning that current rate levels are unsustainable (and I am too - see the Zombie thread ). What's next? I real test of the resilience of the market, as Housing Benefits (finally!) get capped in April, and rates begin to drift higher. Watch wages and incomes - I think growth is need there to get any sort of soft landing. Meantime, I see Europe's debt troubles eventually spreading to the UK within 2011. NATIONWIDE - Excerpts ========== Interest rate increases – how much of a hit? The Bank of England is likely to start the process of returning interest rates to more normal levels at some point in 2011. However, rate increases may exert more of a drag on the household sector than would have been the case before the recession. Households more sensitive to rate increases Mortgages account for around 85% of household debt and since 2008 the proportion of mortgages on variable interest rates has risen sharply, from 48% to 62%. How much of a squeeze on borrowers? For those with a capital repayment mortgage, a typical mortgage payment is currently around £4551, equivalent to 23% of individual take home pay. A one percentage point rise in interest rates would see this rise to £494 - 25% of current take home pay. In the five years before the crisis, the Bank Rate averaged 4.5%. A rise to this level would see typical payments rise to £621 if rate increases were fully passed on to borrowers. If the Bank of England were to increase interest rates to 4.5% by the end of 2013 and wages keep rising at the current pace of 2.3% a year, this would take typical payments on repayment mortgages to 29% of take home pay. (4.5% by the end of 2013? We could get there much more quickly IMHO) It is interesting to see a statistic, saying that wages are rising at 2.3% per year (!?)

THE REAL TEST is after the Spring, when rates rise and HB are capped Actually, I think you need to look at the BIGGER PICTURE - not just the Nationwide Data. That is why I track several indices, and look at them together. (For some reason, I seem to be one of the very few people to do this - most interpret a few months statistics without any real sense of the wider context.) Mo.: Rt'mov : London : Hometrack %/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx 2010 J. : : 222,261 : 407,731 : 156,116 - 0.5% / 163,481 169,777 169,484 165,514 : £164,497 :- 0.11% :135.1% : HFsa HIGH F : : 229,398 : 427,987 : 156,584 +0.3% / 161,320 166,857 166,703 165,997 : £163,659 :- 0.51% :140.2% M : : 229,614 : 417,461 : 157,054 +0.3% / 164,519 168,521 168,433 167,808 : £166,164 :+1.53% :138.2% A : : 235,512 : 421,822 : 157,368 +0.2% / 167,802 168,202 168,212 170,772 : £169,287 :+1.88% :139.1% : H&N HIGH M : : 237,134 : 420,203 : 157,682 +0.2% / 169,162 167,570 167,287 169,204 : £169,183 :- 0.06% :140.2% J. : : 237,767 : 429,597 : 158,700*+0.1% / 170,111 166,203 166,351 166,395 : £168,253 :- 0.55% :140.5% Jl : : 236,332 : 422,248 : 158,500 - 0.1% / 169,347 167,425 167,536 168,331 : £168,839 :+0.35% :140.0% A. : : 232,241 : 405,058 : 158,200 - 0.3% / 166,507 = n/a = 168,124 168,889 : £167,698 :- 0.68% :138.5% 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% / 164,279 = n/a = 164,949 165,275 : £164,777 :- 0.25% :143.7% : Hi Delus. N : : 229,379 : 417,279 : 155,575 - 0.4% / 163,133 = n/a = 164,708 163,268 : £163,201 :- 0.96% :140.5% : D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,249 = n/a = 162,435 161,498 : £161,874 :- 0.81% :137.4% : 2011 J. : : 223,122 : 413,259 : 154,300 - 0.5% / 161,211 = n/a = 164,173 161,470 : £161,341 : - 0.33% :138.3% : F. : : 230,030 : 430,680 : 154,000 - 0.2% / 161,183 = n/a = 162,657 161,680 : £161,432 :+ 0.06% :142.5% : M : : 231,790 : 424,307 : 153,850 - 0.1% / 164,751 = ===================================== mom : + 0.8% : - 1.5% : Est.DI: 143.6% / + 2.21% : = n/a = : -0.92% : +0.13% What I see here, is a seasonally driven bounce back towards resistance at GBP 165,000 or so (as the Builder stocks have also been signalling IMHO.) You can track the big picture most easily, by looking at the "H&N Index" column. The economy has shown some signs of recover and wages are up a bit, but the BofE is recklessly keeping interest rates at ultra-low levels. Nationwide's report seems to be warning that current rate levels are unsustainable (and I am too - see the Zombie thread ). What's next? I real test of the resilience of the market, as Housing Benefits (finally!) get capped in April, and rates begin to drift higher. Watch wages and incomes - I think growth is need there to get any sort of soft landing. Meantime, I see Europe's debt troubles eventually spreading to the UK within 2011. NATIONWIDE - Excerpts ========== Interest rate increases – how much of a hit? The Bank of England is likely to start the process of returning interest rates to more normal levels at some point in 2011. However, rate increases may exert more of a drag on the household sector than would have been the case before the recession. Households more sensitive to rate increases Mortgages account for around 85% of household debt and since 2008 the proportion of mortgages on variable interest rates has risen sharply, from 48% to 62%. How much of a squeeze on borrowers? For those with a capital repayment mortgage, a typical mortgage payment is currently around £4551, equivalent to 23% of individual take home pay. A one percentage point rise in interest rates would see this rise to £494 - 25% of current take home pay. In the five years before the crisis, the Bank Rate averaged 4.5%. A rise to this level would see typical payments rise to £621 if rate increases were fully passed on to borrowers. If the Bank of England were to increase interest rates to 4.5% by the end of 2013 and wages keep rising at the current pace of 2.3% a year, this would take typical payments on repayment mortgages to 29% of take home pay. (4.5% by the end of 2013? We could get there much more quickly IMHO) It is interesting to see a statistic, saying that wages are rising at 2.3% per year (!?)

Please ! ON PAUSE, not "cancelled." Property prices are still down on a 6 months horizon. This is within the range of a "normal seasonal bounce" so far. UK Builder prices have been giving a warning for weeks that some sort of "pause" may be coming. == == == SOBRIETY CONTINUES in this report from Hometrack, which was also released today: London first region to register price rise for 8 months Time on market suggest pricing across most regions to remain weak By Richard Donnell, Director of Research, Hometrack Summary- - - - - - - - - - : Jan-11 Feb-11 Mar-11 Monthly price change (%) - 0.5% - 0.2% - 0.1% % change in new buyers .registering with agents... - 9.5% +14.7% + 4.2% % change in volume .of property listings......... - 5.4% + 7.5% + 5.2% Note: Supply rose faster than Demand, despite the season Results The number of buyers registering with agents has been positive for the second month in a row, growing by 4.2% over March. This is a slower increase compared to the strong seasonal pick up seen in February, but it is consistent with the level of growth seen over the same month in previous years. The volume of sales agreed grew by 12.6% over March following a 25.4% increase in February. However, this figure comes off a low base. Adverse weather and the seasonal slowdown which characterised December and January resulted in low levels of sales agreed. Despite increased demand and rising sales volumes, average prices fell by 0.1% over March. The average price of a property is now £153,100. The year on year growth rate stands at -3.2%. Prices were down across 27% of the country in March while 8% of the country posted price rises. London registered the first monthly increase in prices for 8 months on the back of rising demand and dwindling supply. Central London was the primary driver of a 0.2% increase in prices across the capital. Across all other regions prices moved lower by between 0.1% and 0.3%. House prices in the South West were unchanged. The time on the market stands at 9.9 weeks but in three regions the average is over 3 months. In two other regions it is just under 3 months. Rising sales volumes have led to a firming in underlying pricing levels with the proportion of the asking price rising from 91.9% in January to 92.7% in March. Despite this improvement the proportion of the asking price achieved is still down on the level seen 12 months ago (94%). The supply of housing continues to grow on the back of improved levels of market activity. Listings were up 5.2% in March - greater than the growth in demand over the month. Continued expansion on new supply over the coming months could put pricing under further pressure. /more: http://www.hometrack.co.uk/commentary-and-analysis/house-price-survey/20110331.cfm

SOBRIETY CONTINUES in this report from Hometrack, which was also released today: London first region to register price rise for 8 months Time on market suggest pricing across most regions to remain weak By Richard Donnell, Director of Research, Hometrack Summary- - - - - - - - - - : Jan-11 Feb-11 Mar-11 Monthly price change (%) - 0.5% - 0.2% - 0.1% % change in new buyers .registering with agents... - 9.5% +14.7% + 4.2% % change in volume .of property listings......... - 5.4% + 7.5% + 5.2% Note: Supply rose faster than Demand, despite the season Results The number of buyers registering with agents has been positive for the second month in a row, growing by 4.2% over March. This is a slower increase compared to the strong seasonal pick up seen in February, but it is consistent with the level of growth seen over the same month in previous years. The volume of sales agreed grew by 12.6% over March following a 25.4% increase in February. However, this figure comes off a low base. Adverse weather and the seasonal slowdown which characterised December and January resulted in low levels of sales agreed. Despite increased demand and rising sales volumes, average prices fell by 0.1% over March. The average price of a property is now £153,100. The year on year growth rate stands at -3.2%. Prices were down across 27% of the country in March while 8% of the country posted price rises. London registered the first monthly increase in prices for 8 months on the back of rising demand and dwindling supply. Central London was the primary driver of a 0.2% increase in prices across the capital. Across all other regions prices moved lower by between 0.1% and 0.3%. House prices in the South West were unchanged. The time on the market stands at 9.9 weeks but in three regions the average is over 3 months. In two other regions it is just under 3 months. Rising sales volumes have led to a firming in underlying pricing levels with the proportion of the asking price rising from 91.9% in January to 92.7% in March. Despite this improvement the proportion of the asking price achieved is still down on the level seen 12 months ago (94%). The supply of housing continues to grow on the back of improved levels of market activity. Listings were up 5.2% in March - greater than the growth in demand over the month. Continued expansion on new supply over the coming months could put pricing under further pressure. /more: http://www.hometrack.co.uk/commentary-and-analysis/house-price-survey/20110331.cfm

Please ! ON PAUSE, not "cancelled." Property prices are still down on a 6 months horizon. This is within the range of a "normal seasonal bounce" so far. UK Builder prices have been giving a warning for weeks that some sort of "pause" may be coming.

Yeah, we are looking at Malaysia. We came very close to buying a new property in Mont Kiara last week. In the end, I decided to try for a lower price, and the developer lost interest in talking to me. It was a nice looking property, but Malaysia's long cycle should peak in 2011-12, per my charts: Instead, it looks like it rode up to a new high. I am moving the Kuala Lumpur thread to Main, for a brief time. Should we start a Thai thread ?

Youy've seen the Costa Rica thread. Maybe you should start a thread like that about where you live. Or would you rather keep it a secret

Yup. But what will happen to you if they suddenly decide they want foreigners to leave?

Kurtz, are you joking about that internet expense? How high are you in relation to sea level? Any tsunami risk?

I have heard that 50% of the medical expense incurred on each of us goes into the last 6 months. Imagine the costs when the boomers hit their maturity dates mostly within the same decade or so.

Part of the rebalance will be making Property cheaper- else how can the UK compete? When the UK is forced to raise rates to protect its weak currency - that's when the deluge will happen. At the moment the inflation is mostly in import prices, with little showing up in wage packets. Only those in London who have benefitted directly or indirectly from the (artificial?) run-up in stock prices are buying property I reckon. Those, and naive foreigners are buying. If I've got this wrong, please explain how.

Buyer's market Home purchasers are seeing more reasonable deals in the secondary residential market, as vendors seem willing to drop their asking prices. Price cuts of 3 to 8 percent can be found in benchmark projects in Kowloon and the New Territories, including City One in Sha Tin, and Mei Foo Sun Chuen. . . . However, there was little action on Hong Kong Island, where benchmark projects like Tai Koo Shing, Kornhill and South Horizons recorded only one deal over the past weekend, as prices remained firm, Midland Realty said. At Grand Promenade in Sai Wan Ho, an owner reduced his asking price twice - to a total of 3.75 percent off - before selling his flat for HK$6.16 million. The recent price cuts suggest market participants have become more rational, said Jeffrey Ng Chong-yip, a director at Hong Kong Property. "Many potential homebuyers, particular end-users, are reluctant to buy at high price levels. Owners also realized that, so many of them are willing to cut prices," he said. But Ng noted the volume of recent transactions was still below average, as many potential buyers remain on the sidelines. "Even some banks are slow in providing valuation quotes lately." Midland Realty chief analyst Buggle Lau Ka-fai said the number of registrations in the secondary market is expected to fall further in the coming months. "The HIBOR-based mortgage rate hike and the Japan crisis are having quite an impact on the market." The top five lenders, including Bank of China (2388) and HSBC, have all raised their Hong Kong interbank offered rate-based mortgages this year /more: http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=109678&sid=31854243&con_type=1&d_str=20110331&fc=7 == == ...this doesnt sound cheap: "The Gloucester, a residential project by Henderson Land Development (0016) in Wan Chai, launched more than 70 flats over the weekend. They were priced at HK$20,455 psf on average - 1 to 3 percent higher than that of similar flats in the secondary market nearby."" We saw it, and found it well-marketed, but wall over-priced compared to other properties on HK island. (I think I would prefer Island Crest)

I had drinks with a friend who had just returned from the UK. His parents are elderly and ailing. He was amazed by the care they are getting in Wales. The hospital was happy to send a car to pick them up and brink them to a clinic 100 miles away (at government expense.) He is pleased that his own parents are getting such incredible service, but at the same time, he knows the taxpayers cannot afford to carry on with that sort of wastefulness. Eventually the governments are going to have to start telling the truth. This is exactly what senior advisor Lee Kuan Yew told Charlie Rose in the interview tonight. Western governments have to start telling the truth to voters: The world they expected has not arrived. The benefits need to be cut (and some drastically!) and taxes will also go up. The good old days are not coming back.

Are the Nationwide numbers out yet? They should make interesting reading - and we may get a hint of the size of the "bounce" this Spring