Meralti

Historically Rightmove has been a reasonable leading indication of major shifts. What it really tracks is seller expectation (and EA influence there upon) when first marketing. It is a very poor indicator of actual selling prices. B.T.W I still haven't seen any direct coverage of these falls. They are only mentioned in the context of next years predicated rises.

Delusion index revisited: Record monthly falls on the Rightmove index. I wonder how big an impact London is having on this index. Rightmove is a seriously flawed index as discussed above but it's a good indicator of sentiment and confidence. No news coverage of these figures on mainstream sources yet. Despite this they are forecasting a rising market next year as the headline to this report!

It won't happen. The point of any devaluation would be to make the UK more competative. Halving the value of Sterling but doubling wages across the board would not achieve that objective. Sterling may devalue but no wage spiral would result from this, wages could rise eventually but certainly not immediately.

London prices begin their long awaited decline. http://www.moneyexpert.com/financial-news/none/800581305/housepricesfallacrossenglandandwales/article.aspx Prices are broadly flat-lining but now falling in London.

An rather odd conclusion. I think a better comparison would be between the Land registry's final sold prices calculated using the geometric mean and the geometric mean of the Rightmove series. The RM index would then need to be adjusted backwards in time to take account of the time lack of the LR series. As I stated RM tracks initial asking prices and takes no account of subsequent reductions or even whether a property sells or not. A property can easily be listed at a 50% premium and never sell. THe RM index would still count this datum as valid for the index. This and the fact RM uses the arthimetic mean is why the index is always much higher. I've seen houses listed at £500k and reduced to 475 to 450 to 425 to 400 and still sit unsold for over a year. RM will count the initial 500k as valid data. This property will never have reached the LR numbers. If it is possible to get hold of the RM data series it would be worth calucating the GM and from that calcuating the ration with the LR. You would then be comparing apples with apples and not allowing a few statistic outiers to skew the index. This would be a true delusion index. I would expect this to be around 15 -20 % higher than the LR number giving a ratio of 1.15 to 1.2.

But I see asking prices falling. Rightmove takes no account of that. Thats why it's a poor index. It's also why it is higher. A relatively few very highly priced properties skews the index upwards, which doesn't reflect the behaviour of the majority. The geometric mean was invented to get round this problem.

Rightmove tracks initial asking prices only (when a property is first put on the market). It uses a simple arithmetic mean and takes no account of subsequent reductions in prices. The other track either actual sold prices or mortgage agreements (so take account of any reduction in price needed to make a deal) and some (cannot remember which) use a geometric mean that take more account of the long right hand tail of house price distribution - so tend to be lower. The difference between rightmove and halliwide/LR gives a reasonable indication of the reduction from initial asking needed to sell the property. However, because of the different statistical methods used by rightmove it probably isn't that actuate but is indicative.

Non-Seasonally Adjusted comes in at 0.1% for October. So pretty much flat. The seasonal adjustment is based on past sales data that is largely irrelevant in an environment of minimum 60% LTV mortagages with the traditional 1st time buyer having almost disappeared.

The number of self-employed people increased by 35,000 to reach 4.20 million. the number of unpaid family workers (people who work in a family business who do not receive a formal wage or salary but benefit from the profits of that business) increased by 2,000 to reach 112,000. The number of people on government supported training and employment programmes increased by 13,000 on the quarter to reach 158,000″ Which, if you add them up, comes to a round 50,000. Self-employment and “government supported training and employment programmes” would seem have been behind much of the recent fall in unemployment. There doesn't appear to be any data on how much these new self-employed people are earning and they may have just switched from Job Seekers Allowance to Working Tax Credits. Few will be earning enough to reach the magical sum of 35 hours a week at minimum wage. This will be the required earnings threshold for self-employed people when Universal Credit begins next year. Unfortunately no current statistics for Working Tax Credits exist. Time to look behind the hype and headlines.

Oh, and btw mortgage lending has fallen off a cliff http://www.independe...gh-8216447.html>

A more sober look at the statistics reveals something rather less sanguine. Comparing June-August 2007 and June-August 2012: the number of people in full-time employment fell by 355,000 the number of people in part-time employment increased by 724,000 the number of unemployed people increased by 883,000 the number of economically inactive people, aged from 16 to 64, fell by 112,000 Household population aged 16+ increased by 1.853 million seasonally adjusted over the period The number of people in employment has not been higher since comparable records began in 1971, the employment rate of 71.3 per cent, for those aged from 16 to 64, is lower than the pre-recession peak of 73.0 per cent recorded for March to May 2008. Source: ONS: Labour Market Statistics October 2012 (pdf)

IMO you need to consider the following: 1. Size of the deposit - the lower the LTV the better, but this incurs an opportunity cost 2. Type of mortgage - it must be repayment for your scenario to work. If you're IO you're relying on rising prices. 3. Future rises in mortgage rates 4. Voids 5. Bad tenants, general hassle 6. The unpaid time you will spend managing the property 7. Taxes on income, but more importantly future taxes. I'm pretty sure that R&C will come after landowners eventually, they are currently under taxed and cannot move their assets. 8. Potential nominal falls when QE eventually fails. 9. Real value falls due to inflation 10. Owning an asset you cannot defend when QE eventually fails and the local constabulary are no longer being paid. 11 Changes in tenancy law giving renters more rights, the law is weighted in favour of landlords at the moment. If you already own a BTL and have a 100% repayment mortgage and it's making money I would keep it. If its on IO then I would be looking to sell. Personally I wouldn't invest in BTL for a few years yet.

There may well be opportunities to make good returns in certain areas. What you're talking talking about is developing existing buildings for resale as residential flats, which is a different game to buying completed property units - and it's different outside of central London. The monetary policy is likely to continue as is; but it is, and likely to continue to have, a steadily decreasing effect. The effect per £ of QE is less for every round, this is clearly the case and well documented actually. Simply drawing a straight line into the future is the same stupid mistake that was made all the way up to the crunch. I maintain that nominal rises outside of central London are unlikely. If prices do not fall nominally (ie QE continues to work to maintain them) then real prices will be eroded slowly by inflation, making property a bad bet for anything other than a PPR.

Hmmm, there appears to have been a pre-olympic games peak. I've seen asking prices falling. Achieved London prices are also reported as falling. We had this story trotted out 4 years ago just before the major falls. Hmmm. A slide of a few percentage points and that turns everything bullish again. The fundamentals for Brits are still rubbish - in fact worse that 4 years ago IMO. Monetary policy is still holding up prices, nothing else.

I think you've been a bull for a while, right. That said you make a reasonable point, but only as far as a PPR is concerned not because property has suddenly become a good opportunity, in fact it is still a very bad bet as an investment. Buying somewhere to live for you and family is a different matter entirely.

Tinker around the edges; attempt to protect the margins for builders, keeping them afloat and people employed in construction. They help their friends in the industry and can present themselves as taking action to mitigate a crisis in the media. I.e. manage perceptions and help people who helped you.

Stumbled on a couple of interesting tweets from Ed Conway. It looks like UK rental demand is falling of a cliff: https://twitter.com/EdConwaySky/status/233848222832021505/photo/1 https://twitter.com/EdConwaySky/status/233844891300528130/photo/1 The original Rics report is found here. As usual a overall bullish message not really born out by the data. Any one got anecdotal evidence of an increase of flats for sale in London and surrounding?

Builders are being tax-payer subsidized by schemes like home-buy. It's presented as helping people step onto the ladder but it's really about maintaining the builders cash flow.

Perhaps the correlation has been weakened. Theres been so much interference in the housing market, what with lender forbearance and low interest rates, and stocks have been supported with QE just look what happened last autumn when there was almost a crash. They QEed and bingo back up they went.

Couldn't resist this one. http://www.thisismoney.co.uk/money/news/article-2177254/Recession-worse-1970s-figures-set-economy-shrank-quarter-row.html?ito=feeds-newsxml

I intend to start one but want it to be broader than just this incident.

I don't think socialism is the answer - haven't we been there and seen it fail. I think the problem is lack of capitalism - the rules aren't being applied to those in the protected groups and the those outside are being hung out to dry. There comes a time when the parasite has to cut out. If we'd let the banks fail in 2008/2009 we would be in this mess.

John, no, I don't mind but I'll limit what I publish on a public discussion board and be a little less emotional. Grew up in Northern England, rural location but close enough to the the old industial heartland to have seen the effects of the deindustrialisation in the 80s first hand and have that influence my outlook regarding employment/career/pre-80s jobs for life culture/welfare a lot. Was made redundant from my first real job, after about a year, in the last real recession (early 90s) moved to Europe and lived and worked there for 6/7 years, learned languages had relationships (with girls). This influenced me a lot regarding attitudes to work/employment/governmental models (welfarism and entitlement) and politics. Moved back to UK at end of the 90's to do a Masters degree (old industrial city), full grants were still available then, I got one of last I think. Since then worked in the South East. Wife stays a home most of the time - this suits us while the kids are still young. I think this country is badly and at it's core, dishonestly, governed; and has been for several decades but it got a lot worse under Bliar/Brown - the majority are being sold down the river. Specifically: Badly governed for a few decades, dishonestly since Bliar/Brown I suspect this includes both of us (unless you're a secret BTL investor, then you'll slot nicely into the protected group). When I have time to be I get quite annoyed about it. BTW, many countries in Europe are in worse state.

Perhaps the reason you seem so sanguine about this is that you're one of the generation that has benefited.

+1 That's correct. Previous downturns hit older workers. Much of the current younger generation in the UK are pretty much being screwed over. It may have been bad in the early 80's but the young then didn't have debt and by the end of that decade there were real employment prospects.