Meralti

Or maybe the real point of a bank is to do something else entirely. See a problem here?

Here's the original report and a good indication of which groups are benefiting from the growing inequity resulting from current policies.

Tax justice network report

From my point of view, yes, a bank is a place to put money and borrow money from. From the banks point of view it is a company that wants to be profitable, just like any of the privatised utilities if you like. Thing is, the regulation of the banks (whole financial sector even) broke down, much like if OFCOM allowed the telecoms companies to take the p**s.

 

Glass Steagall should be re-introduced ASAP.

 

 

 

Er that's sort of the point isn't it. Your kids wear 2nd hand clothes because you choose to do that. You have a choice, see the difference?

 

You speak like someone who can't remember just how different it was back then. Almost as if you have only experienced the good times. Do you mind if I ask did you entered the world of work before 1994?

 

And where the hell do you get the idea that I don’t have a problem with my friend that hasn't worked for 15 years?

 

When we left school it was into recession, mass strikes, mass layoffs and mass unemployment. Our city had the 2nd highest unemployment in the UK, just after Liverpool, (of course, being kids, for us, it just seemed that was the way things were).

 

It took me ~15 years to get out (several years of unemployment and odd jobs, couple of years of self employment, then, as the next recession hit, I went back to school and then university (and yes I worked evenings and weekends to do that, grants had finished a couple of years before and the loans I got didn’t even cover my rent).

 

So, actually, I would think a 20 year old today could do far better than I did, and far quicker also.

 

It seems you're trying to turn this discussion into an argument where none exists. Why?

Calm down. I'm not really interested in an argument. I do think that your view is rose-tinted; and that there is a generational reason for that. For many people things are getting worse and not better. It's true that this is a frog-boilingly slow process but never the less you should acknowledge it. The reasons are clear, the finance industry has to be sorted out before the corner can be turned and real social/economic improvements made.

...

but that mainly came from people themselves and, like it or not, a large amount of the increase in living standards over the last 25 years or so has to be attributed to the financial sector, (noteably since Big Bang). Banks are, for all their faults, pretty efficient (at making money that is).

 

However, I agree, they did get way too big and powerful, and I hate what has happened, but I don't remember people being forced to take out loans and MEW at the point of a gun.

 

The greedy banks (and too a lesser extent the reckless borrowers) of course have to take a good bit of blame, but it was the government that allowed this to happen, indeed encouraged it with all those lovely tax revenues pouring in, and it is they that are the real culprits (and indeed still are).

Surely the point of a bank is to act as a utility that connects customers that have capital deficits to customers with capital surpluses. This allows the virtuous (not malivestment) of those capital deficits. Or maybe the real point of a bank is to do something else entirely. See a problem here?

Not sure about that. I clearly remember many average (not poor mind) people having, for example, 2nd hand clothes at school, (good working class areas, most people were working class then ) and meat more than once a week was a real treat. Holidays consisted of a week at Butlins for the majority. This really wasn't that long ago (mid 70's).

 

I would wager any study of living standards through the decades would confirm that people in the UK are far better off today with a much higher living standard (indeed, the majority are middle class today).

 

The poor, and even some unemployed, including a good few friends of mine back home, (and my best man for that matter who hasn't worked for 15 years, and the council actually are buying his flat for him FFS! No really ) have designer clothes, trainers, big TVs, regular take-aways and holidays and many even have cars too!

My kids wear 2nd hand cloths. I find this normal. I earn a good wage and receive no welfare. In no way do I see this a sign of poverty, just sensible budgeting.

Interesting that you don't see any problem with your friend who hasn't worked for 15 years. His life style is only possible because of the large taxes that people like me pay to the state. To what extent do you think that the trajectory of his, or even your life, would be possible for someone in their 20ies today? Guess they're just in the wrong group.

 

I got slated here once for suggesting things were nowhere near as bad today as they were in the 70's, but I'll say it again, they're not, not by a long way.

 

It was horrific back then, the country was ripping itself apart - IMF bailouts, open battles on the streets (with hard working family men, not just ar**hole kids like now), electrical blackouts all the time, 3 day weeks, unions Vs state etc, hell there was nearly a coup! - and practically everyone went into that crisis period relatively poor.

 

Yes of course there were different problems and causes of those problems, but the effects were worse than we are seeing now and the country pulled out of it then, and it will come through this now.

You're forgeting an important point. The solution to the problems of the 70ies was provided by the state (in the 80ies) by taking on the unions and other entrenched vested interests. Thats not happenning now: the banks are playing the role the unions played in the 70ies - trying to create a system where society was held to ranson, in order to meet their demands/requiements. They are being aided in this by the state to the detriment of society and the economy at large.

It will take time, but it's been a hell of a boom and the vast majority are still way way better off now than equivalent families were 40 (even 20) years back.

People with property interests and certain other groups who've been protected are better off. This is mainly due to the artificially low rates and wholesale rigging of markets. I don't think others outside this group necessarily are.

Add to this a bearish figure from Rics.

British house prices fell last month at their fastest pace since October as demand failed to pick up and the number of properties being put up for sale dropped off, a survey showed on Tuesday.

 

The Royal Institute of Chartered Surveyors' (RICS) seasonally adjusted house price balance fell to -22 from a downwardly revised -17. That was far below economists' forecasts for it to hold steady at May's original reading of -16.

Rics has traditionally been a leading indicator for other indices predictiong the trend on inflection points of others quite well, but often overstating the levels.

Gross mortgage lending plunges 19% in April

Gross mortgage lending fell by 19 per cent in April from £12.6bn in March to an estimated £10.2bn according to the Council of Mortgage Lenders’ latest figures.

Britons' finances squeezed in May, outlook gloomy

Britons' household finances worsened at their fastest rate in four months in May as some mortgage holders grappled with higher repayments, while worries about jobs and rising living costs also increased, a survey showed on Monday.

Markit's headline household finance index fell to 36.6 in May from 37.0 in April, well below the 50 level which would mark no change in finances, showing the sharpest deterioration in household finances since January.

The squeeze is on.

Meanwhile Santander scales back leanding

Downward pressure on prices will increases due to lack of mortgage lending; fewer buyers leads to less demand. The end game is approaching; in SE England at a glacial pace. Faster up North.

BTW. It's rumoured that the reported increase in btl lending is for a large part due to mortgage fraud. People just cannot get residential mortgages so apply for BTL mortgages with no intentionos letting.

Have rents really increased by 30 or 40 percent in the last four years? In the middle of the economic disaster that Britain is going through that is simply crazy. Could I ask where? I wonder how much is driven by the government landlord and bank subsidy sorry, I mean housing benefit for hard working families.

As noted this is dependant on location. I'm sure some properties have increased that much, especially in central London. Where I am I just moved to a new rental. Rent is about 5/6 of the asking rent and £50 more than the previous tenants who had lived there for over 2 years. That said asking prices are up but my strong impression is that achieved rents much less so. Rents are volatile and landlords very often try it on when a property is first marketed. Those that drop prices after a few weeks can let easily and they would loose more by having the property empty for a month or two. At my last place the ll demanded a 12% increase - I refused and moved to a better place. He has now had an empty property for 1 and 1/2 months. Don't believe all the hype.

Why spoil a half decent post with this last line?

 

Nowhere have I ever said property only ever goes up, indeed, quite the reverse. All my posts say falls are ahead.

 

I really don't know why you persist in these attempts at baiting, when we are actually agreeing on quite a few things.

 

The simple fact is what really sets us apart is that the US, Eire and Spain all had huge oversupply. If you keep ignore this (amongst other things), then you are not looking at the whole picture.

 

Did Canada and Australia have a big oversupply? If not, then my arguments are actually given more weight. Also they have s**t loads of commodities, or do you think that has no effect as well?

 

 

 

That's right, but the current situation could go on for many, many years, slowly reducing the amount of outstanding debt, or do you not accept that is a possibility?

 

Remember the old saying "Markets can stay irrational longer than you can stay solvent"?

Here something to remove from your list of bull-list.

Mortgage fraud no longer officially sanctioned

Mortgage lenders have set up a formal arrangement with the tax authorities to cross-check borrowers' income information on their mortgage applications.

 

The move is part of the continuing attempts to combat mortgage fraud, which amounted to an estimated £1bn last year.

 

Lenders will be able to send suspicious application forms to a special unit at HMRC which will check an applicant's purported income against their tax details and those supplied by their employer.

 

In turn, the tax authorities will use the lenders' information to check if an applicant's tax returns were accurate.

 

Paul Smee, director general of the Council of Mortgage Lenders (CML), said: "Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly.

 

"It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower's credentials in some cases that they might otherwise have felt compelled to refuse."

Btw. Yes I think that the commodity boom has helped Australia and Canada enormously. Not so sure how long it will continue though, it looks like we heading for a global recession next year.

The Canadian ecomomy shrank in the 2nd quarter.

Gross domestic product fell at an annualized rate of 0.4pc from the first quarter.

 

This was worse than a 0.1pc increase expected by economists and a 3.6pc gain in the first three months of the year

But Meralti, the fact is that the UK has not seen anything like the falls in other countries.

 

I think there are several reasons, low IR's being one of them, however, there are low IR's in the US and Eire and Spain also, so that really doesn't set us apart does it?

 

I have put forward several other possibilities. You rubbish them and mock me, yet when I ask you for your reasons, you ignore the question.

 

The arguments you say have been done to death have not been shown to be false when analysed at all.

 

For every person saying they don’t show a correlation, there is another who shows they do, and I’m sure you are aware of this if you really are researching the field.

 

If you don't like the reasons I think has stopped bigger falls, that's fine, but please don't dismiss them out of hand unless you have better ones.

 

Do you have better ones?

There are some attributes that set the UK apart. The ones that count for this argument are the fact we have our own currency and the boe can set the base rate as it chooses, while other countries like the US also have these attributes, the market in that country is also far greater in size and the degree of polical interference in it far less. Countries such as Canada and Australia also have their own currencies and set their own rates - these two have also avoided housing melt down - so far.

As you yourself have noted the nominal crash has been avoided, or is it just delayed, by devaluing the currency and maintaining ultra low rates so that property owners do not come under real stress. This has worked so far. I, and others, have noted many times that this was done for two reasons.

1. 
    
   
2. To prevent collapse of the UK banks in 2009.
   
3. To give Gordon Brown a fighting chance of winning the 2010 election.
    
   

While the first reason still has validity the banks have been recapitialised to an extent and could in most cases survive a decrease of 25% in nominal terms, although not without some loosing their bonuses. The second is now irrelevant.

The real question is how long will the current situation continue. Nothing more nothing less. As soon as it changes significantly a crash will be back on the cards. You've admitted this already.

Why continue to spout the same old arguments about why property only ever goes up. Or are you just trolling?

Howabout:

+ Lower real interest rates

This simple means that vendors don't have to sell and keeps them in a zombie state.

+ Increasingly firm rents (this encapulates all the misargument about supply/land etc etc)

This is a result of people not buying. This is highly oportunistic of landlord (not that I blame them for it) and I fully expect this to be tempory. In fact I am already seeing a softening in comparison to be rises seen in the spring.

U.K. House Prices Fell for Fourth Straight Month in August

U.K. house prices fell for a fourth month in August and demand for homes may weaken further this year, property researcher Hometrack Ltd. said.

 

The average cost of a home slipped 0.1 percent from July and was down 3.7 percent from a year earlier, the London-based firm said today in an e-mailed report on its monthly survey of real-estate agents. In London, prices increased by 0.1 percent.

 

“Weak consumer sentiment, pressure on household incomes and the uncertain economic outlook are likely to see demand weaken further over the remainder of the year,” Richard Donnell, Hometrack’s director of research, said in a statement. “This is likely to accelerate the downward pressure on prices over the autumn.”

 

A stuttering economic recovery, rising joblessness and the deepest government spending cuts since World War II are weighing on Britain’s housing market and eroding consumer confidence. The Bank of England cut its growth forecast this month and left interest rates at a record low as it warned the euro-area crisis and global economic cooling threaten to hurt the U.K. economy.

 

Demand for homes fell by 1.2 percent in August, the Hometrack survey showed. The percentage of sales agreed rose 3.6 percent this month, compared with a 9.6 percent jump in July. Sellers accepted on average 92.5 percent of the asking price of a property, the least in six months.

 

So, if you insist on childishly implying that I am (or was an EA) in these very personal attacks, at least do it when (or rather if) I ever actually try to misrepresent views, rather than when you just don't like the facts, again

JD, I've never seen you present an argument outside of:

• 
   
  
• Britain is a small island, land - they aren't making any more of it.
  
• Immigration will continue to boost demand
  
• Housing benefit keeps rents high and underpins capital values.
  
• Money Printing/ bank bailouts.
  
• We're a nation of house buyers/ Pent up FTBers and investors
  
• UK housing provides a yield the only thing left in the UK that has value.
   
   
  

These arguments have been done to death in various fora over the years. Most have been should to be false when fully analysed yet you continue to select any evidence that superficially supports any of the above, included the Laguarde speach. Your sound like a broken record and deserve to be mocked. The availability of credit is what drives the market. Low interest rates means vendors are not under duress to sell. The rest really is irrelevant, it would be easier to just admit it.

I think we might soon see more gov intervention.

 

Did you hear Lagardes latest speech as IMF head?

 

Wow!

 

More mortgage let offs, new lower rates for mortgage holders, capital injection into the banks etc etc

 

http://www.bbc.co.uk/news/business-14699093

At no point did I notice anything explicit being said about mortgage let offs, debt forgiveness or lower rate for mortgage holders outside of a US context.

Concerning Europen bank capitalisation she said:

Second, banks need urgent recapitalization. They must be strong enough to withstand the risks of sovereigns and weak growth. This is key to cutting the chains of contagion. If it is not addressed, we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis. The most efficient solution would be mandatory substantial recapitalization—seeking private resources first, but using public funds if necessary. One option would be to mobilize EFSF or other European-wide funding to recapitalize banks directly, which would avoid placing even greater burdens on vulnerable sovereigns.

Explicitly concerning debt she said:

We are not without options. We know what needs to be done to support growth, reduce debt, and prevent further financial crises. But we need a new approach—based on bold political action, with a comprehensive plan across all policy levers, implemented in a coordinated global way.

Not quite the same as what you imply with your misquotation JD. Misrrepresentation - those old EA habits did hard huh!

The full transcript can be read at Global risks are rising

What she did say about mortgage holders was in a specific US context:

Second—halting the downward spiral of foreclosures, falling house prices and deteriorating household spending. This could involve more aggressive principal reduction programs for homeowners, stronger intervention by the government housing finance agencies, or steps to help homeowners take advantage of the low interest rate environment.

This is not the same as what you imply in your post. Anyway Laguarde doesn't determine US policy in this regard.

Er no, that actually means more people in the UK.

 

Just because you don't like the facts, it does not make them go away.

 

And what's with the ex EA c**p again? I am not, nor have ever been, an EA.

 

I suggest you get your facts right before throwing around slanderous accusations .

 

http://www.greenenergyinvestors.com/index.php?showtopic=4058&view=findpost&p=224700

The number of new-comers is not much changed, less people are leaving. Many of the non-eu people entering are students. The number of returning Brits has increased.

So, less houses on the market for both sale and rent, as less people leave. Returning Brits who rented their properties whilst abroad will reduce the number of family houses for rent.

Not sure it makes much difference at the end of the day. The key market driver for residential housing is availability of credit. Total mortgage lending is reduced and the trend is downwards.

And, while the number of new homes being built keeps falling, the number of people in the country continues to rise, at an alarming rate.

 

 

 

http://www.bbc.co.uk/news/uk-14663354

Showing your credentials as an ex-EA by misintepreting statistic again JD. The rise in NET immigration is almost entirely attributable to a fall in emmigration, i.e, fewer people are leaving - this number is normally subtracted from the number arriving to give a net figure. Due to other economies battening down the hatches and refusing to take disaffected Brits. All the more fuel for the next set of riots.

But now we may now get a fall that cannot be stopped thru ZIRP,

as would-be buyers find that their incomes cannot stretch to pay high prices, when banks are looking at what is happening to their loans to the Builder sector, and the decide they want to tighten their property lending criteria even more.

 

BTW, I don't think lending has been tight the last 2-3 years. It has merely been somewhere near what should be normal. From here, we can move to tight.

I think you're right about the banks and lending, their stocks are getting hammered too. Could this be the start of a second credit crunch.

That's true. Especially in London.

 

But now we may now get a fall that cannot be stopped thru ZIRP,

as would-be buyers find that their incomes cannot stretch to pay high prices, when banks are looking at what is happening to their loans to the Builder sector, and the decide they want to tighten their property lending criteria even more.

 

BTW, I don't think lending has been tight the last 2-3 years. It has merely been somewhere near what should be normal. From here, we can move to tight.

9:00 am and check out the action on BDEV. Down 6.47% already. 21 MA 252MA cross imminent.

Looks as if the 21 day MA will cross the 252 MA in a couple of days of trading. BVS and PSN have also crossed the 252 MA in the last few days. For these the 21 day MA is a little behind the 252 MA - but we see the same pattern emerging after bearish head and shoulder action in the weeks before.

Not sure about the timing of HPI falls. I thought the the builders shares led property by a few months, the really signifcant falls happened in 2008 and where halted by ZIRP.

The Carnage continues... : BDEV-intraday

 

 

The elephant-in-the-room (Inflated prices) may soon be on the prowl.

 

 

BDEV : 87.45 / Change: -3.70 // Percent Change: -4.06%

Open: 92.70 / High: 92.80 / Low: 87.00 // Volume:4,332,997

 

I wonder if the reckless folks who bought homes recently, understand that their housing dreams

may be eviscerated - in the sense that they may soon slide into Negative Equity.

 

Where are the other warnings coming from now ??*

Are we headed for a big August or September surprise in the UK housing indices?

Why are so few now talking about that (strong?) possibility?

 

== == ==

 

*we did get warnings back in 2007:

 

House price crash warning

 

on 6th December 2007

 

The housing market may be heading for a sharp fall, a leading expert will warn today. Economist David Miles says property prices will probably drop dramatically in the next few years.

 

The collapse will come when the rapid rise in prices starts to tail off, according to Mr Miles, who is a former adviser to Gordon Brown.

 

Demand has been heavily influenced by the expectation that prices will continue to rise quickly. When the big annual rises fail to materialise, 'significant' falls are likely.

'A sharp fall in real house prices is likely at some point in the relatively near future, though it could yet be one to two years away,' his report concludes.

 

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-1604590/House-price-crash-warning.html#ixzz1U3lMbplo

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.

And the hint was?

They should call it a "Housing Elevator", and make it clear that the BofE (amongst others) has its finger poised over both the Up and Down buttons

 

Have people noticed the move in Barratt?

 

BDEV ... update

 

Further downside may be dead-ahead, with a CROSS confirm a bigger move down in BDEV, to be followed by a break in UK house prices

Barret down 3.6% today so far and now just under 101.

Looks like we've broken below the neck-line of the head-and-shoulders pattern that we've seen emergee over the last few weeks.

Well, I think this is a useful excuse that they would like to believe.

 

But I think their reasoning is rot. Sellers are pulling out of deals because they cannot add their MEW, stamp duty and agents fees to their new mortgage deal. This means, unless they are earning more and can borrow more, they cannot move to a house of the same price as the one they are selling. A £500,000 house is £25,000 in stamp duty, and maybe £15,000 in agents,lawyer and moving costs. Basically, it costs 8% to move to a same value house. LTVs are reducing not increasing, so, many vendors cannot afford to move - except downwards.

 

My ex has had three sellers pull out and her cash/non chain offers were not insulting. Every reason was the same - the vendors could not afford to move.

Agreed. I think that this is also one reason why I'm seeing houses sitting on the market for months (often more than 12) unsold. People just cannot afford to sell at the prices that are buyers are willing to pay. Yes, there is some wishful thinking in testing the market but if they are really serious about selling then they will lower prices - and I mean by more than 5K.

They should call it a "Housing Elevator", and make it clear that the BofE (amongst others) has its finger poised over both the Up and Down buttons

 

Have people noticed the move in Barratt?

 

BDEV ... update

 

Further downside may be dead-ahead, with a CROSS confirm a bigger move down in BDEV, to be followed by a break in UK house prices

I noticed this and an excellent call. I expect imminent falls. Asking prices are just starting to be reduced. Properties are sticking for ages and buyer interest appears to be low. Vendors who want/need to sell will have to get real, otherwise their properties will hang around for ages.

Another article mentioning the unthinkable!

 

http://www.independent.co.uk/opinion/commentators/mary-dejevsky/mary-dejevsky-the-property-ladder-that-threatens-to-become-a-snake-2313834.html#disqus_thread

 

There's an excellent comment on this article posted by Mack that I've quoted below: This speaks for itself and gives a pretty good international perspective too.

I have personally experienced 5 housing crashes - Ireland in the late 1970s, the US in the late 80s/90s, Japan in the 90s and Ireland since 2007. Every symptom of an imminent crash is present in the UK today. Take for example James Gregory's cited "measures, including different types of mortgages, shared ownership and more secure private rented accommodation, that might be developed to help." These are measures akin the the Japanese "multi-generational mortgage," the Irish 50 year mortgages, etc. that I have seen in every market where house prices have departed from sane levels. Ultimately these solutions have been obviated by the crash they presaged.

 

The other defining sign of a market about to "go over a cliff" has been rental yields, or as an old shrewd and very successful developer over 50 years said to me in 1992, having survived, for him, yet another crash with his fortune undiminished - rents don't lie. As he pointed out, 8% is about a sensible yield for a landlord - after taxes, expenses, real-depreciation (i.e., the need to renew and update) and voids are backed out it leaves a bit over 4% or so, comparable with long term interest rates on Aaa bonds. But then as he pointed out, tenants will only pay what the property is worth to them, as a function of the profits they can make by occupying a commercial property, or the share of their income that they can afford to devote to housing. By his measure the UK property market is massively overpriced, 30-40% for most - much more for central London where yields are of the order of 3% or less.

 

There is not question in my mind that this situation is increasingly dangerous for the UK. A huge proportion of Britons perceived wealth is tied up in property. Moreover, over the last decade there has been a massive misallocation of investment into residential property. However, the biggest issue is that the soaring price of property has caused the cost of living to rise, and UK labour costs to rise to support these housing costs, without a rise in the UK's broader standard of living. In short, UK workers are getting very expensive, but not living any better, all to support the soaring cost of housing. This is part of what choked the Irish "Celtic Tiger" - the soaring cost of housing in the Irish cities where high technology and pharmaceutical companies were anxious to locate in the 80s and 90s made labour costs increasingly too high by the 'oughties.

 

In a Eurosceptic environment it may be unfashionable to suggest that the UK could learn from its European neighbours - but there is much that they have done - ranging from legislative limits on lending (making law of the old bank deposit and income multiple requirements) to better long term leases.

y/y m/m forcast actual

----- ----------- ------

DCLG HPI -1.6% -0.2% -0.3%

released today

by the forex factory

The trend is from the chart and has broken into the negative.