TrueNorth

Catching up here reminded me, how well did the pundits fare in their 2012 house price predictions?

I went to look for the story I recalled on the bbc news site, which I found here:

http://www.bbc.co.uk/news/business-16288438

What does it say that there is no analogous bbc story for 2013 predictions?

(there's one on the Telegraph site)

Welcome gallivant, hope you enjoy participating.

Has anyone seen this from Clive Maund, courtesy of 321gold.com?

http://www.clivemaund.com/article.php?art_id=67

A bloodbath is believed to be imminent in the silver market, now that its cheerleaders have herded their flocks into the corral, ready to be fleeced again.

In the last update posted early last week, we expressed the view that an intermediate top was forming in gold and silver, a view that is reinforced further by the inability of both metals to break higher later in the week, and the now towering Commercial short position in silver as revealed by the latest COTs.

On its 6-month chart we can see how silver has continued to track sideways beneath a resistance level approaching $35. It had a go at breaking out upside on Thursday when the dollar apparently broke down, but failed, and weakened again on Friday. If we look carefully at this chart we can see that, following failure of the steep uptrend that began in the middle of August, a potential Double Top is completing beneath this resistance that portends a drop, and we have already observed several bearish candlesticks with long upper shadows developing beneath the resistance, which is a big reason why we turned bearish. Failure of the support level shown, which is probably imminent, can be expected to lead to a brutal plunge.

That is a very sensible idea Bold as Brass. I commend your ingenuity.

Where's the Sense in this ?

 

The market is slowing down, so add to supply ??

 

FT: Coalition plans housebuilding stimulus

 

Ministers are preparing to unveil a new package of measures to stimulate the flagging house-building sector next month, in an attempt to help drag Britain out of recession. The plan has been drawn up by Oliver Letwin, the prime minister’s head of policy, along with Grant Shapps, housing minister, and Danny Alexander, chief secretary to the Treasury. Since 2010, the coalition has introduced several plans to boost housebuilding, such as putting forward more public land for development. [i see lots of vague plans and absolutely no concrete action.]

 

/see:

One can only conclude that the housebuilding industry employs the most talented lobbyists.

Great analysis GK.

And interesting and useful thoughts from Dr B on the overall trend and the builders as a bell-weather. Thank you.

last page of Savills report linked above

Market dynamics

Buying vs Renting

To buy or to rent? A simple question,

but a complex answer

O ne of the features of the housing market since the

downturn has been that some households have

chosen to rent, either taking a break from home

ownership or in the case of the lucky first time buyers sitting

on a sizeable deposit, delaying the decision to make their first

move onto the housing ladder.

For both groups the relative costs of buying versus the

costs of renting is critical both at a given entry point and in

the future. Simply comparing mortgage interest costs against

rental costs is a start point. For example, for someone looking

to buy a two bedroom property at £150,000 with a 25%

deposit, interest payments of just under £4,000 per annum

would compare favourably to rent of £9,150, assuming a

rental yield of 6.1%.

This simple analysis suggests that despite high lenders’

margins, the so-called ‘dead money’ of renting is a high price

to pay. But this is before taking account of the additional

costs of ownership, such as repairs and insurance, or the

cost of funding mortgage repayments at a time when interestonly

mortgages are a rare commodity.

Buyers should also take account of the income their

deposits would deliver if invested rather than being tied into a

property. On the basis of the same example that would swing

the balance in favour of renting, with home ownership costing

£1,300 more than renting over the course of a year.

 

Watching the market

At the peak of the market the additional cost of buying was

substantially higher because both mortgage rates and returns

on savings were higher and the relationship between house

prices and rents had become out of kilter.

Scroll back 10 years and the cash comparison was much

more like today’s, though lower house prices meant lower

capital repayments, making it cheaper to buy than to rent both

before and after accounting for the costs of ownership.

What distinguishes then from now are the house price

growth prospects. In 2001, prices rose by 25%. A decision

to delay moving and staying in rented accommodation could

therefore be very costly indeed. By contrast, with further small

house price falls forecast in the short term, there is no rush

to beat price growth – just one among many reasons why

housing transactions remain depressed. (bolding mine)

Prospective buyers should watch the market carefully.

As house price growth returns so the balance will shift again.

This will be seen first in London and the South East where

house price growth is expected to return more quickly and

more strongly. And this is likely to be particularly relevant to

those more mature households who have taken time out of

home ownership. Despite lower rental yields, and therefore

lower relative rental costs, recovery is expected to be stronger

in these equity rich sub-markets, potentially bringing such

households back into the market ahead of first time buyers

lucky enough to be sitting on a deposit.

full of NewSpeak

Residential Property Focus Q2 2012

 

14 May 2012

 

With the new property world dominated by cash and not mortgage borrowing, the time for residential investment has finally arrived.

from Savills

http://pdf.euro.savills.co.uk/uk/residential-property-focus-uk/residential-property-focus-q2-2012.pdf

sub required

The squeeze tightens on the UK housing market

By MoneyWeek Editor John Stepek May 03, 2012

Moneyweek link

in the comments section, CoolDude says

I hope Dominic Frisby reads this article. House prices always fall in a recession and this time will be no different.

hear hear!

snip

 

I believe the only thing that has crashed is the number of transactions.

Interesting, reading this what came to mind was Jonathan Davis saying, paraphrased, "Whence goes volume, so goes price".

I cannot understand how prices have held up. I can only conclude that the only transactions taking place are between motivated buyers and slightly delusional sellers.

We are moving house and have offered to rent a new-build that simply has not, and likely will not, sell at its current price. Why they haven't lowered the asking price is beyond me.

gdx and gdxj currently up around 7%. Could this be lift-off for gold stocks?

If so it has taken it's freaking time in coming!

My friend sent me this

It's the USD. Possibly because Bernanke said they'll hold at zero until 2014 now?

 

http://www.bloomberg.com/news/2012-01-25/fed-says-benchmark-interest-rate-will-remain-low-until-at-least-late-2014.html

thank you GF.

Goldmoney chart

what the hell just happened?

I presume you are in the North ... down here in the South I bought last year because to rent a similar property to the one I was being kicked out of was going to move me up from £1100 a month to £1700 a month - 2 grand if I wanted a similar sized house. Rents here are truly nuts. How people afford them baffles me.

Baffles me, too. I suppose some people are simply forced to spend a ridiculous percentage of their income on shelter. "Forced" in that they need to live close to their work, for eg.

And yes, am up north. I reckon to buy this place would cost me at least £1700 a month even with a decent downpayment.

Years of this HPC obsession have resulted in my constantly watching, observing and noting my local market. And, here in leafy Surrey, I have the feeling that the market is, once again, grinding to a halt.

 

Certainly, not a lot has been selling over the last year, but until a few months ago the odd one was selling - and going through.

 

Now the ones with Sale Agreed are turning back to For Sale some weeks after going under offer and others, nice houses (relatively) reasonably priced, are just sitting there, month in, month out.

 

I'm wondering if the cash that was driving the market is, finally, beginning to dry up.

Funny you say that, I have been noticing the same thing here. Houses that were 'sold' are coming back on the market. Lots of places just sitting. A few have gotten offers after dropping advertised prices by 10 or 15 grand. A nice one bed flat in a converted mill was dropped from £89 950 to 84,950 and has finally sold for -- brace yourself -- £64.500. That is the advertised price, anyway. I realise it is not a house, but as a percentage, that is a huge haircut.

On the lettings front, after a shortage of 4+ bed houses being available, or being quickly snapped up over the summer, since September these have been accumulating on the market. There are now several that have been available since the start of Sept. I guess everyone with sprogs wanted to get moved and be done with it, so now they aren't moving.

One place in particular I would be interested in. A nice 5-bed victorian, they are asking £975 and it has been advertised since the end of August. Vacant since end of Sept. So one month vacant, and owner looking to do a deal. How much should i offer? I recall someone saying that unless you are embarrassed by your offer, you are offering too much. I was thinking of saying £750 and seeing where we go with that.

Bottom line is, I would like to live there for at least a year. I am finding my current place is a bit small, so it would suit me to move, even to pay a bit more. But I am not desperate to move.

UK is generally just a bleak over rated dump no matter how you look at it

I agree. And the weather is dreadful.

My sister told me, "You have to find somewhere with better weather. Life is too short."

She's right!

Have noticed locally that vacant high-end properties that haven't sold in +6 months are finally being offered for rent. Vendors clearly wise in choosing to get tenants and having the place heated this winter, to heating them themselves. I would happily rent one but they tend to be thermally disastrous and completely wasteful. It's a shame, though, because these are some decent properties.

BOE QE to the tune of £75,000,000,000 and gold moves £14/t.oz and now it's only up £3/t.oz since the announcement... WTF! Why hasn't gold reacted to a drop in Sterling? BTW - I don't accept "It was already priced in" as an answer...

That's a good question warpig.

PositiveDeviant that is an excellent chart, thank you for posting. As one who wanted to buy juniors but was too scared in 2008, that is the kind of kick in the pants that I require.

I don't think that sort of critique is particularly helpful, Van.

No I won't because I agree with you

 

As I have said before, nice family homes in nice areas are far cheaper to rent than buy (and I listed several reasons why this tends to be the case).

 

However, nice houses in nice areas adds up to only a small percentage of all homes in the UK and it's all the rest that are cheaper to buy than rent.

I agree. I just found a gorgeous 5 bed end-terraced victorian to rent for £1000/month. I couldn't buy it for a mortgage payment of nearly twice that. . . not yet, anyway. But hopefully, it will drop in price in the coming denouement. . .

I am in the midst of reading the Tullet Prebon Armageddon Report and was particularly interested to see Tim Morgan hint at property in the executive summary.

Ashraf Laidi on silver today, interesting analysis

Ashraf

some good charts including this one

Another new nominal high in gold in USD.

Not much comment here. Interesting. Have we all become very complacent about gold's rise?