No6

Surprisingly upbeat brokers note on William Hill yesterday. Surprising because this is a sector brokers have been talking down for about two years.

UK bookmakers looking to expand into India. Could be big news if they get a license.

Land Registry job cuts.

But are they actually down or is it just a correction to take into account the rights issue? More shares in issue are going to dilute the share price/div, etc. Nothing to be ashamed about in taking that punt, actually it was brave because many would have said that it was on the road to going out of business, when the reality is that many companies by March of this year were in the bargain basement bin for a punt if you had the nerve to do it. Some will have made 5-10 times their money on this and others and the company is still a dog!

I suppose the point I was trying to get across is that the number of sales right now are about half those reached at the peak of the boom in 2007. What if house prices went up 15% next year, but total sales fell by 20%? Then the year after, prices up another 15%, but sales another 15-20% lower? I'm sure this would be reported as positive because prices are still going up, yet in reality because of the lower sale numbers it would be meaningless. The market is being distorted by the attempts to maintain prices at the level reached in 2007, but as all the dodgy mortgage products have been removed and the FSA now want to make some of them illegal, these price levels are a farce and out of synch with the new reality of a properly regulated market. I await all the sob stories to come of those on self-cert mortgages who are struggling and want a Government/BoE handout to help them along after they find they cannot renew their mortgage because of the new regulations.

It is very difficult to get past the VI manufactured propaganda in the housing market. All of the reports today point to house prices being on the way up again, but hardly any mention is made of the poor level of sales compared to anytime in the last 10 years or so. Without a decent level of sales these price increase are meaningless because eventually you could have just a handful of sales at the top end of the market and that would be your average, but it would be no reflection of the real market price. To some degree there is a shortage of properties on the market right now because many people have pulled out of the market because they couldn't get the asking price or anywhere near it. If they came back to the market some will be waiting forever to sell if they are looking for a 2007 level price.

I think the ITEM club are being very optimistic about there being 1million sales next year. At the mortgage fraud assisted bubble high, 1.7million sales was the record.

Give the Guardian credit for correctly reporting the reality of the market. At this rate, when the market is down to just 12 sales to hedge fund managers in London and the average price of a house is £1,000,000 it will no doubt still be reported as a booming market.

At this rate by 2012 the average price of property in London will be £1,000,000 thanks to those 12 sales to Hedge Fund Managers.

Ah, the London market. Is it foreign money that doesn't need to get a loan that is driving it higher? How many sales are going through? As usual, no mention of sales levels or comparisons with previous years. All it says is; ‘Acute Shortage’ “There’s an acute shortage of property,” said Robert Green, a real-estate agent at John D Wood & Co. in Chelsea, southwest London. “Demand is very strong. Also mortgage availability is improving. It’s unlikely we’ll see enough supply come to the market to see prices falling.” Demand from foreign buyers is also helping drive up prices in central London due to the weakness of the pound, Green said. The U.K. currency has dropped about 17 percent against the euro in the past year. It also says; Debt Worries U.K. home values are rising partly because people are reluctant to take on more debt and are moving house less, curbing the supply of properties on the market, Rightmove said. Unemployment stayed close to the highest since 1995 in the quarter through August as the recession destroyed work in industries from banking to construction. Recent house price gains may not last, Shipside said. “The combination of economic hardship, pending taxation decisions and an imminent general election could stamp out the early stages of a housing market recovery,” he said. The opposition Conservatives had support from 41 percent of voters in YouGov Plc opinion poll published yesterday in the Sunday Times, leading the Prime Minister Gordon Brown’s ruling Labour party by 11 points compared with 14 points a month ago. An election is due by June. Curbs on lending may also affect the housing market. The Financial Services Authority today called for a ban on self- certification home loans after a review of Britain’s 1.2 trillion-pound mortgage market. The regulator also called for mandatory affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay. ------------------------ Somehow I doubt that even the city bonuses this year will do much accept to inflate the top end of the market. For the average person and most homeowners, the market is now dead, as any increase in properties coming to the market is unlikely to be met by available mortgage funding. The death of self-cert has left an enormous hole in the market for all those people in the £15-30 grand a year salary range who will now not be able to get a mortgage, whereas a couple of years ago it was easy to just add £5-10 grand to your salary figure on a mortgage application because no one checked it.

A quote from the devil himself. "And to protect homebuyers further, we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments." From:

Already the representatives of estate agents are out there arguing against it, so you know it must be good in terms of the type of dodgy deals that it will stop. Be interesting to see if the FSA hold firm on this. If they do, I see UK house prices falling heavily once the General Election is out of the way because at current price levels, coupled with a tightly regulated market, you will only get about 50,000 sales a month if that.

I think this is the biggest news story in the UK today (even though it was effectively put out over the weekend), although it will probably take time to fully take effect, this is the final nail in the coffin of the UK housing market. Finally, self-cert and fast track, no check mortgages are laid to rest. Already the VI's are out in force, as can be seen by the CML comment in the article. Considering that house prices reached their bubble high on the back of loose lending and fraud between 2000 and 2007, if these regulations go through then house prices can only be held up by fewer sales, which is the current state of the market. I think that removing the 50% of no income check mortgages means that the vast majority will never be able to afford at current prices, especially as we are entering a period of low wage increases, if any, for the majority to re-balance the economy and pay for the bankers greed.

I do wonder if this is an example of insider trading, the attack on the Ladbrokes share price. Look at the coincidences here.

No return to the free for all of the self cert fraud years. Prices are going to go down, bank on it.

I think that there is a very good chance that the next downward leg in UK property prices will happen once the next election is out of the way. Regardless of who wins, the cutbacks in public spending, continued high unemployment levels, close to zero level pay increases or pay cuts will see house prices falling further. As it is the Tories who are likely to be elected, they will be hoping to get this bad news out of the way in the first two to three years of the next Parliament so that they can have a run at being re-elected in year 4/5 on the back of prices having stabalised and going back up again.

Prices have been going up recently, but on much lower sales levels. The removal of self cert, no income check mortgages from the market means that only those that can prove their income and put up a big deposit can afford to buy at current levels. House prices went up on the back of a self cert fuelled boom between 2000 and 2007 and house prices still reflect the fiction of prices achieved in a liars market because of the attempts and policies of Government and the BoE to keep prices as high as possible. The reality is that real income levels do not support current house prices, but they can be kept artificially higher through sales to high earners. Fact is that current mortgage approval levels are 50-60,000 a month compared to 100-130,000 a month at the self cert peak. The headlines only report the increases, not the reality of the market which is still a long way from being healthy if you believe that actual sales levels are important.

Raj Gill has an interesting story to tell. http://www.greenenergyinvestors.com/index.php?showtopic=7046

Not entirely sure that Buffett does just buy and hold.

They are not responsible for the way the media present the story, unless Bloomsberg have reported their press release word for word without any change. Your re-writing of it shows that bias works both ways, or can be made to work. Outside of pravda, I think it is a well balanced account of the facts, although the presentation could have been made in one of a number of ways.

I did say they were quite bullish on the investment side, but they are mining companies, they must have some idea of falling demand elsewhere.

Not sure why they would be seen as dopey? Is it because they said something that might be seen as a negative? They seemed fairly bullish on the investment side of things. Surely they are just reporting the facts that demand at the moment is down for certain things that gold is used for? The members list has a lot of mining companies that members here may well hold. http://www.members.gold.org/members_list/ Mind you, I did like the first question in their FAQ list. Frequently Asked Questions Alchemy: Can base metals be turned into gold? All metal atoms are made of the same building blocks of protons, neutrons and electrons, but in different quantities, so in theory it could be possible to change base metals into gold or any other metal of value to mankind. In practice, it is achieved only in nuclear reactions, where heavy radioactive metals decay into other lighter elements, including some isotopes of gold. However, man's ancient dream of turning base metals into gold is not a practical proposition. So it remains a dream! http://www.gold.org/faq/

I'm sure this has been posted??

IG Index seem to be doing well.

This is old news, but what with the money made from the open above, the bookies seem to have had a few big wins recently. Wonder if they will surprise on the upside when they next announce results? Shares for WHill and Ladb have seriously underperformed even in the market recovery.