drbubb

Pressure sure. But what can be done to raise incomes? Cost push inflation (higher food and energy prices), will squeeze a budget and REDUCE spending on housing. If rents do not fall, then people caught in the squeeze will be forced to downsize. Only those who have genuine pricing power will be able to get higher wages, and I do not see public sector workers getting much of a wage rise, and private sector workers will only get more in those industries that are seeing rising wages. Instead, wealth will fall, as more money is sent overseas to pay for imported food and energy. (Remember, the UK is running out of North Sea oil, and importing more.) Another problem, is that taxes are set to rise, and that will also put downwards pressure on disposable incomes.* If you want to see the future of rents and property prices, you must track incomes - not just inflation. == == *Families will have £1,000 less disposable income by 2013 (14 Jan 2010 article) By Harry Wallop, Consumer Affairs Editor 7:05AM GMT The average household in Britain will have £1,130 less money in their pocket to spend during 2013 compared with last year, according to analysts. "We've shopped ourselves out", said Neil Saunders at Verdict. Higher taxes, National Insurance, utility bills and mortgage payments will all conspire to eat into the average family's disposable income, leaving them with far less money to spend on food, clothes and non-essential products. The calculation comes from Verdict Research, which specialises in analysing the retail market. It warned that shopkeepers will find life far tougher emerging from the recession than they did during the financial crisis of 2008 and 2009 because shoppers will be forced to carry on being frugal. Neil Saunders, director at Verdict, said: "It doesn't matter which shade of government we have, taxes have to go up. And that will strip people's incomes. "Mortgage rates, which are at a very low level, are set to increase. And utility bills are also likely to rise. This will all take money out of people's pockets." The research predicts that by 2013 the average household will have 35.1 per cent of their gross income left over, after paying all the key bills. This is a sharp fall from 38.4 per cent left over as disposable income in 2009. Using figures from the Office for National Statistics, and on the presumption incomes stay flat, this suggests that the average family will go from having £13,160 a year after paying all their key bills to £12,028 – a drop of £1,132. Mr Saunders also pointed out that most consumers will feel compelled to pay a greater amount of their salary into a pension, once they realise how badly most company pension schemes have performed in recent years. /source: http://www.telegraph.co.uk/finance/persona...e-by-2013.html# (The article talks about paying the mortgage as an "essential item". Tell that to people in the US who are underwater on their homes, and have stopped paying their mortgages, and are awaiting foreclosure. Or to those who have sold their homes to rent or to downsize. Food is essential. And maybe energy for heating or for fueling a car to get to work. Housing is a flexible choice, and can be modified - though most are loath to do that, and will ask for a government handout before moving. But those handouts will be less likely to rise, and harder to get, in the future.) /see NEW THREAD on UK Incomes :: http://tinyurl.com/GPC-incomes : Andy Clarke, president and chief executive officer of Asda, said: "Last year disposable incomes dropped every single month, and 2011 is shaping up to be just as challenging. The cost of living continues to rise at a faster rate than people's earnings, putting a further squeeze on family finances. With government measures to reduce the deficit beginning to bite, it's unlikely there will be any let up soon."

The agents are frustrated. Since the new tax was introduced, properties coming on the market have falled sharply. What flats are on the market, are very high-priced, and the buyers do not want to pay those high prices. I am getting calls on my property, but am very reluctant to show it - since I do not know where I could live if I sell out - I do not want to pay the high rents that I am seeing.

(I am setting up a new member now, who said in part): "I am a daily reader of Mike “Mish” Shedlocks ‘s blog and so I got to know Dominics website as he interviewed Mish in december of 2009 for his prediction series. I listened to quite some interviews since, including of course the ones he did with you. . . . I would be glad to join your community. My username should be: eimsbusher" Maybe he can post the rest of what he said when his membership becomes effective

A few people working hard, and making more money will not raise Property prices. If the average person in the UK makes a smaller income, I think prices will go lower. At the same time, prices may have risen in London only while incomes are rising there. But if Austerity brings down London incomes, I cannot see how property prices will rise, or even how rents will rise. A change in average incomes, pushing them down, will push down rents and property prices too. And rising interest rates can press them down too, even if incomes rise a bit. The vulnerability of property prices should be clear to all who think clearly, beyond the soundbite-mentality of estate agents.

...here we go again - when will people learn?... Price inflation is of ZERO help to those who want to buy property. In fact, food and energy price inflation will make property less affordable, since people will have to buy essentials before they put equity into shelter or mortgage payments What is needed is RISING INCOMES - that is the key thing

No one likes missing a profit opportunity. But the "fear of missing out" on more profits, when property is already expensive... Is a poor rationale IMHO, and is a typical "late stage" phenomenom. Owning now looks cheaper than renting in HK - but that is only due to ultra-low interest rates. HK's rates are controlled by US interest rate policy, because of the peg. Adn without the peg, I think rates would be significantly higher - probably at least 2-3%, rather than 1%. I think that the HK government has not been very clever about addressing the discrepancy in growth rates - and that is unfortunately. Because I think many HK people are going to find themselves owning expensive flats when rates do rise.

NO NEW SPAMMERS - Are you curious about "the Rabbit Holes" ? What is interesting, is that we were getting an average of 10-20 New Members a day, and most of them seemed to be Spamsters. That has totally stopped now, relieving our noble Mods of the need to clean out the spam and suspend the phony members. I think we have also lost some genuine prospective members, but it just wasn't worth the hassle, and by irritating our Mods and destroying theit goodwill, it was a threat to the long term viability of the site. We had to do something. No one has complained about the new policy, even in emails to the "New" address given above. But then: how do you complain, if you cannot join? == == == Cgnao has been a popular poster here for a long time, and it is interesting to read his notions about Rabbit Holes. I think some of the postings in the FRinge Section discuss various other "Rabbit Holes", which are real or imagined. Those who surf here, will have to become members to see what I am talking about.

That is merely a forecast - not reality (yet) Austerity is being introduced... but very slowly. And as it is, we may instead see a "shortage of tenants." The big drop in HK prices in 2008, came just after rents began to slide. So, if we see stagnating and falling rents, it may be a sign of a coming sharp slide in the market. London will be helped to some extent by the Olympics, since that will bring people to the capital. But after that temporary influence, there will be a falloff since the works will be done and the crowds will be gone. THE NUMBERS: 11.5pc The average amount prime London rents increased in 2010 17.6pc The 2010 growth rate for rents in prime North London (including Islington and Hampstead) 4.8pc The increase in rental values across the UK last year 0.7pc The increase in property capital values across the country in 2010, according to Nationwide 4.8pc The rise in prime London property values last year

Registering to become a New Member on GEI New Members procedure - ======================================== IGNORE WHAT IS BELOW the second line Follow this link, to register: http://www.greenener...ection=register ========= I am going to establish a new procedure for New Members to register on GEI (It has been in place since Feb. 2011): Here's what you do: 1. Send an email to me at: New@GlobalEdgeInvestors+dott Com (ie using ".com" ending, not "dott Com") 2. Explain in a sentence or two, why you would like to be a member 3. Give me the User name that you would like to use (in the email) 4. I will set you up, and give you a temporary password 5. Please post ON THIS THREAD, the reason you gave me for wanting to be a member (if it is to "sell shoes", or to "sell drugs", or similar, I will not let you in.) That should be your first posting on GEI as a new member. If you fail to make a post on this thread within a day or two of joining, I may delete your membership. I see this a temporary procedure. We will see how it goes == == == Link to here: http://tinyurl.com/GEI-newmem

SELL on Weakness, says Neely: http://www.traders-talk.com/mb2/index.php?...st&id=18195 also: http://www.mexicomike.ca/php/phpBB2/viewto...er=&start=0

It has been a long time since I was there... My main recollection was being on the Wey River. I know that Weybridge is a different place, far away from the Mouth - but I temporarily got the names confused. But I probably know London better than most Brits, including some born there, having cycled or walked around most parts North of the river, As to the supply, 1,000's or homes are being built now in the Manor House area, see the thread: http://www.greenenergyinvestors.com/index....showtopic=14291 There's a now bonus program for councils that find a way to make this happen, and still-high prices, regeneration, and densificiation (brought together) are providing a means to make this happen.

I must be thinking of another part of the Wey River. Weymouth perhaps ?

I suspect you are right. It is going to be very tough to rent the 2BR's in the tower for Pds. 350-400 per week, which is what the buyers will want to earn a 5% yield. But as I say... / on the other thread: http://www.greenenergyinvestors.com/index....showtopic=14291 The opportunity is not in what the Builder is selling.

Weybridge I recall visiting there, and liking the canal link - and I found it oh-so-cheap compared with London. But then, there are some areas of London that may look cheap soon too. /see:

No takers? I am going to start a new thread on this. I slept on it, and it may provide a great opportunity. But it is not the one the Builders are trying to sell you. LINK: http://www.greenenergyinvestors.com/index....showtopic=14291

Right. As I have discussed with him (off line), one of the signs of hyperinflation is a dramatical "price imbalance." People are trying to escape the economy and maybe flee the country. Property does not do well in such a circumstance

Also on the Downsizing thread Downsizing... to Upgrade quality, and enhance food availability It's Possible. Like Londonium did. Or like Detroit is doing now. Here's what bothers me. When the final crisis hit Rome, taxes escalated, and food distribution deteriorated. I am told (by a friend who has read the history) that Rome's population declined by about 80-90% in 50 years, as people left the city to escape starvation and/or high taxes. Many endured themselves to rural landowners, as a way to make sure they would get fed. I don't think a garden in a city house is going to achieve that. At some stage, the city may decide to tax gardens, if they need the revenues to avoid bankruptcy. These are dire thoughts, but I think the coming crisis has a chance of exceeding people's worst expectations. == == == Famine and Food Supply in the Graeco-Roman World Responses to Risk and Crisis Peter Garnsey .. September 1989 The first full-length study of famine in antiquity. The study provides detailed case studies of Athens and Rome, the best known states of antiquity, but also illuminates the institutional response to food crisis in the mass of ordinary cities in the Mediterranean world. Ancient historians have generally shown little interest in investigating the material base of the unique civilisations of the Graeco-Roman world, and have left unexplored the role of the food supply in framing the central institutions and practices of ancient society. /see: http://www.cambridge.org/gb/knowledge/isbn...te_locale=en_GB

THE RESIDENCE, Manor House (this place is being marketed in HK this weekend - Any comments?) The Residence The Residence is the last block in the current phase to be released at Woodberry Park. This iconic 27 storey tower consists of 167 one, two and three bedroom apartments and penthouses boasting spectacular panoramic views over both the East and West reservoirs and out towards London's iconic skyline. Selected apartments including floors 20 and above will benefit from the platinum specification to include Bosch built in induction hob, microwave and double oven along with oak internal doors, fitted wardrobes to master and second bedrooms, multi room audio system including IPOD docking station, hard wired alarm system and video entry system. With shops, cafes and restaurants due to open on the ground floor, and a residents only gym within the development* residents can experience the benefits of living above one of London's most prestigious new destinations. Woodberry Park Woodberry Park is the first phase of the stunning Woodberry Down regeneration project fronting the West Reservoir, providing stunning views towards the City and Canary Wharf. A fantastic development of studio, 1, 2 & 3 bedroom apartments, Woodberry Park is less than 5 minutes walking distance of Manor House tube station and only15 minutes from Oxford Circus by tube. This property is currently being sold off plan and is due for completition in 2012 /see: http://www.rightmove.co.uk/property-for-sa...y-27180460.html /brochure: http://www.berkeleygroup.co.uk/berkeley/woodberry-park

I reckon that within 3-5 years, the notion of what is a "solid career" will change dramatically. Cities will not fare well in a time of high food and energy prices. Nor will mainstream "urban careers." At the same time, falling home prices will erode that wonderful housing equity (that they think is permanent wealth.)

That is over a year (2010), which made a recovery high in Q2, and then began to slide into "crash cruise speed." My idea is that rate of decline will speed up in 2011, and continue into 2012 and 2013... perhaps longer. We need an index, or there's no way to have an acceptable bet. Why not use the Rightmove index for Greater London? BTW, why should people go on paying high prices for single family detached homes, when nice flats of various sizes in good parts of London are getting cheaper? I am sure there are reasons to do that, but if the "arbitrage" gets big enough, people may eventually "see the light", and consider alternative living arrangements. As I have said, at some point: location (near transport and jobs) may trump owning one's own garden.

ASKING PRICES FALLING - in London too Regional Housing Markets Regional Asking Prices for February 2011, showing gains and losses since August 2010 and current typical Time-on-Market. Current average price 6-month change ToM (days) Wales.............. £177,692 +0.3% 186 Greater London £342,035 -0.6% 112 East Midlands... £170,208 -0.6% 160 East Anglia....... £240,128 -0.8% 129 Scotland........... £159,352 -1.1% 178 North West........ £171,802 -1.7% 184 South West........ £247,970 -2.0% 136 North East......... £151,369 -2.0% 195 South East......... £279,759 -2.4% 119 West Midlands.... £185,573 -2.4% 157 Yorkshire and Humber £166,769 -2.5% 187 England & Wales. £226,463 -1.5% 148 /source : http://www.home.co.uk/asking_price_index/HAPIndex_FEB11.pdf Home Asking Price Index. Release date: 14th February 2011 Sellers Slash and Prices Tumble Summary The mix-adjusted average Asking Price for homes on the market in England and Wales has fallen for a fourth successive month: Down 0.3%. Monthly asking price falls in all English regions (except East Anglia), Scotland and Wales. The number of properties reduced in price has leaped to 65,692 for the month of January, a massive 64% more than in January 2010. Typical time on market registered no change at 148 days (median). Total properties new to market in Jan 2011 was 14% higher than in Jan 2010 Annual change in asking prices: -0.6% 6-month change in asking prices: -1.5%

Thanks for posting that Dave. I was traveling since you posted that. But the good news is: We seem to be picking up some new posters from Hong Kong.

(I don't recall the specifics, but I will take your word for it): Let's do it : Double or nothing. Two years: ie. Jan 2013 - But what's the index ? (I have a bet with a UK agent in HK - and he tells me he is winning - but when I look at the H&N-index it is down about 3%, so we need to agree on the index, or there is no bet.) Fitkid has identified the triggers for lower property prices: "Weaker household earning power will lead to a 1.7% fall in UK house prices in 2011... and Job losses." Those buying in London think they are immune to falling earnings. I reckon they have a shock coming.

Before they "roll over and die", Bull markets often narrow out into the slimmest of wedges, still rising. This may be what you are seeing (for the reasons you mentioned.) The UK as a whole is well off its highs. London is peaking and rolling. You have found the narrow wedge.

Since this was posted, there has been talk of more "government action" in the way of putting more LAND on auction, and property shares and the Hang Seng index have fallen. So maybe the turn is arriving now. Here's my favorite bellwether / predictor for HK property prices: Henderson Land / HK:12 ... update A further drop below $50, dragging the MA's down with it, could provide a nice confirmation that the HK property market is turning down