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DrBubb's Property Diary : tinyurl.com/GPC-Diary

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THE PROPERTY CYCLE - as described by Home.co.uk: Last page

 

"Investors often talk of investment cycles. The cycle for property in the UK

appears to be around 18 years.1 The last bottom in house prices was around 1996;

hence, based on this rule of thumb, we should expect house prices to find a new low

around 2014. However, the unprecedented acts of quantitative easing perpetrated by

the western central banks may well have served to lengthen the current cycle. Only

time will tell if this is to be the case, but a good indicator of the next market low will

be when the number of ounces of gold required to buy the average UK home stops

falling."*

 

The cycle is dependent on behaviour and affordability, not time. Previous cycles matched because they were not subject to government intervention. Critically this intervention can only delay the reckoning and change behaviour, it does not fix the affordability problem.

 

I can see the case for the US bottoming being in 2014, but reaching the bottom of the UK cycle will take much, much longer IMO. Real or nominal, we haven't even really started yet - and that's coming from someone who now has had a 5-fold increase in house purchasing power thanks to gold.

I mostly agree with that, and I want to point out that timing tends to be consistent, because the Cycle represents an ongoing "learning process" and since we are all human and wired in similar ways, the learning process tends to take a similar amount of time from one cycle to the next.

 

But the last cycle encountered the stubbornness and ambition of Gordon Brown and his absurd intention to put an end to boom and bust. So he delivered a bigger boom, and stretched out the bust, using various tricks that I frequently describe here.

 

Result:

The down-phase of the cycle has been delayed, and delayed in London and particular. So it should take AT LEAST 3-4 years, and maybe 6-7 from the London peak, which I reckon we are seeing this year. Along the way, we may get a big fat "bounce" in the prices of UK Houses expressed in Gold, and that might be followed by a long period of further stagnation of Prices-in Pounds and an eventual lower low.

== == =

 

*That section came right after these comments:

 

When is the time to invest in property?

 

The famous banker and enormously wealthy contrarian investor Baron Rothschild

said about buying property, “Buy when there’s blood in the streets, even if the blood

is your own.” He made a fortune buying property in Paris after the battle of

Waterloo. Britain is now in the throes of social turmoil in the wake of the credit

crunch. Does this signify a new beginning of the economic cycle in property as

Rothschild suggests? Or should the patient and intelligent investor wait until this

economic winter has run its course?

 

House prices are still rather high historically relative to incomes. They haven’t

fallen as far as perhaps they should have, bearing in mind the huge house price

bubble that popped in 2007. And this is simply because of the record-breaking low

interest rates set by the Bank of England. This policy has avoided forced selling

(repossessions) on a massive scale by keeping mortgage rates low. Moreover,

quantitative easing and increased government debt has lost the pound much value

and this has served to avoid nominal price falls of the magnitude seen in the US.

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Barratt Long term ... update

 

BDEV-lt.bmp.jpg

 

London's a Safe Haven, isn't it ?

 

IT WAS:

London property is a Safe Haven

 

London property is considered to be a safe haven for investors, with a dramatic increase in the sales and letting market in March, particularly from buyers located in the Middle East.

 

Prime central London estate agent W A Ellis has reported a surge in demand from investors located in the region, with recent political instability, the tragic crisis in Japan and low sterling exchange rates believed to be behind the increase.

 

"As such, the Central London property market is attracting investment from all over the globe. This demand for property has led to an upsurge in prices and transactions over the last month," Richard Barber, partner and head of residential real estate at the firm, explained.

 

Mr Barber added that the impending increase in stamp duty has also played a part in the higher transaction levels, with many buyers keen to complete deals before the April 5th deadline. However, he questioned whether this would lead to a tapering off of demand once the deadline passes.

 

Meanwhile, recent research from Colliers International has suggested that retail property in central London is one of the best investment options. The study found that retail is the most favoured asset by 64 per cent of investors.

April 2011: http://www.ipinglobal.com/ipin-live/365566/london-property-is-a-safe-haven

 

More Lies: http://www.mortgageintroducer.com/ccstory/240908/238/London_a_safe_haven_for_property_investors.htm

 

HOW ABOUT NOW?

london-riots1.jpg

 

Rioters went on the rampage in north London on Saturday, torching police cars, a bus and a shop amid widespread looting following a protest over the fatal shooting of a man by armed officers.

 

The patrol cars and the double-decker bus were set ablaze as hundreds ran amok outside the police station on the High Road in Tottenham.

 

Under a hail of missiles, riot officers and mounted police battled to regain control of the streets as fire crews rushed to tackle the burning building...

 

London-Riot-001.jpg

 

THE YOUNG - They're in this together

 

This is the most extensive rioting Londoners have seen in a generation, surpassing the scope of the huge race riots that paralyzed the city in the 1980s. However this is not race riots as crowds of very young men and women, of every skin colour, typically dressed in almost identical hooded sweatshirts, engaged in running skirmishes with police, looting hundreds of shops, setting dozens of buildings and houses ablaze. And this is not the typical simple hooliganism, something synonym with Britain’s football fans. There are some identical pattern with these rioters.

 

Almost all are under 20 with some as young as 11 years old. Most come from the same neighbourhoods they are looting and burning – the poor neighbourhood. There are high levels of youth unemployment in the districts affected by the riots. They’re also having trouble getting education. They belong to the category “NEETs” – Not in Employment, Education or Training. In short, they are high-school dropouts with no prospects of employment and there’re amazing 600,000 people under 25 in Britain who belong to this type of group.

 

London-Riot-looters-out-in-broad-daylight-on-walworth-road.jpg

 

Hence, the black person claimed to be shot by a policeman was an excuse for these people to release their frustration, by going to the streets. It was the tipping point and when the domino effect started, all hell breaks lose

 

/more: http://www.financetwitter.com/2011/08/stunning-photos-of-the-london-riots.html

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DrB: "The assumption that I would question here is Average Household size (will be stable or go on falling.)

In a severe recession, I reckon household size will RISE, surprising many bulls.

 

That's what happened in the USA.

http://www.cnbc.com/id/44274402/

CNBC_persons_per_hh_300.gif

No surprise there.

As the housing bubble burst, people were forced out of homes where they could no longer afford the mortgage.

Ironically, that made the bust worse, because the overall demand for housing was falling as new homes and apartment that had been contracted for building during the boom continued to be completed years after the peak in the market.

 

Also empty homes tied up in the foreclosure eventually came back onto the market, further adding to the excess supply.

 

America is now working its way through its housing mess, while parts of the UK -such as London - have not even begun to do so. It is going to get increasing ugly in the UK housing market, I reckon.

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Looking back at how the UK "saved" its housing market, delaying the crash...

 

Not sure about that as we had a deep fall over nearly 2 years. I think a lot of bull s**t themselves :D

 

Also, if you look the falls in percentage terms, they are about the same up to mid 2009 yes?

 

Also, the US started reducing rates a long long time beofre the UK. (Old Merv held out for quite a while).

Both countries fell at "crash cruise speed" from their peaks, and:

 

By late 2008:

+ After a July 2006 peak, the US was down about 33%, and

+ After a Aug. 2007 peak, the UK was down about 20% (less in London)

 

...When ZIRP was introduced. A 20% drop is easier to recover from, obviously.

Especially when it is suddenly cheaper to own than rent, and BTL landlords are coining it after ZIRP.

 

Brown's "sneak attack" on the Housing Bear market worked, but the magic is fading fast now.

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C-C-Crash Cruise speed in B-aaack !

 

U.K. House Prices Fall Most in 10 Months on Slow Economy, Nationwide Says

 

By Scott Hamilton - Aug 31, 2011 11:00 PM PT

 

U.K. house prices fell the most in 10 months in August as a slowing economic recovery threatens to undermine demand, Nationwide Building Society said.

 

The average cost of a home dropped 0.6 percent to 165,914 pounds ($269,800) from July, the Swindon, England-based customer-owned lender said in an e-mailed report today. From a year earlier, values were down 0.4 percent.

 

While a shortage in the supply of homes for sale and record-low Bank of England interest rates have supported prices, the housing market is struggling to gain momentum as banks restrict lending and Britons’ spending power is eroded by inflation. The British Chambers of Commerce cut its economic growth forecast today as the U.S. recovery slows, Europe’s debt crisis escalates and Britain’s government implements the biggest fiscal squeeze since World War II.

 

“We continue to expect house prices to move sideways or drift modestly lower over the remainder of 2011, although we recognize that the downside risks have increased,” Nationwide Chief Economist Robert Gardner said in the report. “The major risk for the housing market is that weak economic growth could lead to a further deterioration in the labor market.”

 

U.K. consumer sentiment fell for a third month in August as Britons grew more pessimistic about the economy, a report from GfK NOP Ltd. yesterday showed. An index of sentiment slipped 1 point from July to minus 31, while a gauge of households’ expectations for the economy over the coming 12 months fell 4 points to minus 31, the lowest in six months, GfK said. Jobless claims increased the most in more than two years in July.

 

/more: http://www.bloomberg.com/news/2011-09-01/u-k-house-prices-decline-the-most-in-10-months-nationwide-says.html

 

 

enjoy !

 

" the housing market is struggling to gain momentum... Britons’ spending power is eroded by inflation."

 

LOL.

What happened to the BOOST from inflation that some were talking about ???

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Nice of them to finally catch up and realise what many (esp here) have been saying for years.

 

Owning a house outright might just be a great hedge.

 

So could having a long term fixed rate mortgage.

 

Especially if (when) we get to the great debt jubilee! :lol:

Maybe.

But only if QE leads to higher incomes which allows people to more easily cover their mortgage payments (and also pay higher rents.)

 

What has QE delivered so far?

 

+ A weaker Pound

+ Higher food and energy costs

+ No significant increase in incomes (except maybe for speculators in the City)

+ A squeeze on household spending as people struggle to pay higher essentials, and some higher rents

 

+ A windfall to BTL Wizards who held onto their properties, and saw their interest costs drop.

 

 

So who do you think are going to be the main beneficiaries of this latest round of QE?

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So who do you think are going to be the main beneficiaries of this latest round of QE?

 

The ghastly Wilsons?

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The ghastly Wilsons?

LOL

====

 

 

JUST ONE YEAR AGO, I was banned on HPC.

Since then...

 

COMPARISON == : ( HPC ) / ( GEI )

Alexa Traffic Rank : 21,725 : 296,911

Traffic Rank in GB : ==753 : =30,077

Sites Linking In .. : ==318 : === 53

 

HPC has 138 Reviews (ave. 3.5 stars) : http://www.alexa.com/siteinfo/housepricecrash.co.uk#

COMPARISON == : ( HPC ) / ( GEI )

Alexa Traffic Rank : 27,303 : 186,889

Traffic Rank in GB : ==909 : = 9,150

Sites Linking In .. : ==456 : === 83

 

HPC has 138 Reviews (ave. 3.5 stars)

GEI has 003 Reviews (ave. 5.0 stars)

 

GEI is gaining on HPC, if only slowly, as HPC fades a bit

 

THANKS FOR THE POSTS, everyone !

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Possible forecast for FTSE, showing cyclical low point about 2020 (post #65:BigBearMkt?)

 

UKX3.png.jpg

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Your buying London property is entertaining, like watching people eat Ghost Chillies.

Its sure entertaining and increases site traffic!!

Az,

That's not accurate, it is misleading. Perhaps I was not clear.

 

I have not bought a property yet. I have "gambled" something like the average day's trading profits (that I actually made over the last two weeks) on a "holding deposit" that was good for over a month while I analyzed the merits of an interesting-looking investment. At one level, this was a very cheap Call option. If I don't buy, I lose very little. I know a bargain-priced option when I see one.

 

LSCallOptions.gif

 

If I do buy, I will have an investment which looks better positioned (to do okay in a mild downtuirn) than anything London-based I have seen come through here (to HK) over the past 2-3 years. A quick drop of over 10-15% would make it look like a mistake. But even then , I will not know until I see how it comes through a property slide, whether it was a genuine mistake or not. In fact, my latest idea is to buy with the idea of flipping in the Spring, and the prospects of that look good, if the London markets holds up reasonably well.

 

I bought 10 properties in HK in 2007-8. At first, they ran up in price, and then they got hit with a big drop in late 2008. Ultimately, I sold nine of them, each one at a profit.

 

Some here may think it is odd that a self-confessed Bear would consider buying at all. I look at it differently. When I see a Bear buying (someone like Merryn at Moneyweek), I ask myself: Might he/she have spotted a genuine bargain? Does anyone know if Merryn SW is happy with her purchase of a few years ago? When a long term Bear or Bull does something out of character, there is often an interesting reason.

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WAS THIS TOO MUCH WORK for a project I will probably not invest in now ? : NFQ-post#28

 

Looks like a bit of a dump. How much are places? Anything 'sustainable' about the area (excluding crime)? Think I'd rather stay in Kowloon. At least you can go out at night without fear. Church is a monstrosity, too. But what do I know?

"Looks like a bit of a dump. How much are such places?"

(It isn't Kensington, of course. You can buy something new in Kensington for maybe GBP1,000-1,500 psf. To get a new property like this at under GBP400-500 psf, you have to go far away from London, or into a "gentrifying area", like Poplar's Lansbury Estate, which was for a long time a working class area. The other obvious areas at similar distance to Canary have already been developed, and are more expensive and more crowded.)

 

"Anything 'sustainable' about the area (excluding crime)?"

(Sure - the jobs! As you know, there is nothing within London that can really be considered "sustainable" from a food-growing point of view. You are unlikely to find that within one of the top cities of the world. You will have to go to some bombed out third world city like Havana, or maybe the Detroit of the future to find a place where a city grows a substantial amount of its own food. What you look for is jobs to sustain your investment. Nearby jobs will mean that people can afford to pay the rent. From NFQ, you can walk in 10-12 minutes to Canary Wharf where there are many high-paying jobs in law, finance, accountancy, etc. We can expect a decline in the earnings in that sector. Paradoxically, that might increase demand for good quality properties in the immediate area, as people with falling incomes choose to save money by living in something nice-but-cheap which is close to work and so has less commuting time and expense. But whether or not it will play out that way, time will tell.)

 

"Crime?"

(Again, the area is obviously not as safe as Kensington, or other "safer" and much-more-expensive neighborhoods. But neither is it the first new development in the area - Look around (!) there are many. But this one is large enough to begin to change the character of the neighborhood - which was the main reason that I was interested. I think this might represent the "inflection point" wherein the gentrification really starts to take hold and change the neighborhood. The fact that it is next to a park (Bartley Park), where the developers will spend GBP 1 million on landscaping and other up grading expenses will also help. Reading these future changes in not a science, it is more of an art. I have years of experience in making these assessments, and if I can walk around on the ground, I usually get it right. But I did not do the walk in this case, and of course it will take months and years to see if the gentrification really happens."

 

NFQfoto3.jpg

 

"The Church is a monstrosity."

(Beauty, or the lack of it may be in the eye of the beholder. The Church of St. Mary and St Joseph is a Grade II listed church, prized as an example of the work of architect Adrian Gilbert Scott. Like you, I would prefer a church by Thomas Hawksmore. But this one is meant to be very nice from the inside, and would look far better if/when it is cleaned up, and the landscaping is improved. Fortunately, the flat I choose was a top floor flat, looking across the top of the church, so it would be a small but important part of the view, rather than completely dominating it.)

 

I do appreciate the questions, but am disappointed that you seem to have not bothered to at least skim the many hours of research that has already been put into developing this thread. But thanks for the questions whether you looked at the prior posts or not. It does help to clarify the thought process.

 

Part of the reason I did all this work, and then left it posted on GEI, was to show the sort of work that I think a person should do on a large property investment before they invest 100,000's of Pounds. As someone once said, many people will invest 5 years or 10 years worth of income in a property without doing as much work as they do in deciding what stereo system to buy.

 

I think it would be great if others would do research like this on a property investment, and then post the results oin GEI/GPC. What a wonderful resource this website would become !

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Will we see a post-olympics crash in london property? maybe

 

i am in london now, and had an interesting chat with an estate agent yesterday. he was surprisingly honest, and not overly bullish. in fact, he was in some ways more bearish than the comments here. his office is in the poplar area, near canary wharf

 

some points:

 

+ the sales market has changed since 1-2 years ago, and it is much more difficult to find buyers.

 

+ the "over gbp.250,000" is healthier than the "under gbp.250,000" market - where buyers really struggle to find the required deposits. because of this weakness in prices, you can get higher yields in the lower tier of the market, where yields close to 7% are achievable. in the higher priced sector he has seen buyers "keen to push their money" into the uk property market, bacause they can a higher yield thasn in the banks, and "bricks and mortar" are safer than lending depositing money with wobbly banks.

 

+ the rental market remains firm, but it is partly related to olympic hype, and he expects there to be a downwards shift in rents after aug-sept next year

 

+ olympic hype works in an interesting way. landlords are reluctant to sign one year leases unless the price is high enough - at full market, or with a uplift. for existing leases, they prefer to leave the rent on a month to month basis at renewal time, so they will be free to find new tenants in march (or whenever the new olympic related tenants would appear.) they would then hope to sign a 3-6 months lease at a much higher price, and push out the existing tenant,or find a new 12 months tenant that will be desperate enough to pay more.

 

+ meantime existing tenants are willing to pay a bit more for 12 months leases to get them through the olympic period. when asked if this was pure hype, or there was real new demand coming, he did say that he had rented flats to people who were working on olympics-related projects, mostly construction related. he expects media people, camera men and such to start showing up in march-june, and they would rent flats through august or september. after that, all the extra demand will disappear, shifting rents downwards. And normal tenants will alo know that the olympics are over, so they will be looking for lower rents too

 

many countries see a drop in their economies after the olympics, so london and the uk are expected to be no different

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Barratt ... BDEV-chart-5yr : BDEV-1yr

 

Is approaching another breakout-or-smackdown moment from 100P

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Barratt ... BDEV-chart-5yr : BDEV-1yr

 

Is approaching another breakout-or-smackdown moment from 100P

 

Hey, I've just found this thread and noticed that on several occasions you had been pasting my comments from other threads here and then responding to them.

 

Please let me know when you are going to do this as otherwise, not having time to check all the threads and boards all the time, it doesn’t offer the chance of rebuttal.

 

Thanks in advance.

JD

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Hey, I've just found this thread and noticed that on several occasions you had been pasting my comments from other threads here and then responding to them.

 

Please let me know when you are going to do this as otherwise, not having time to check all the threads and boards all the time, it doesn’t offer the chance of rebuttal.

 

Thanks in advance.

JD

There's not much discussion here (yet)

 

The thread is mostly an archive

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Chartered Surveyor, on 17 November 2011 - said:

QUOTE =====

May I suggest this title is changed to No HPC, this time its different...

. . .

Like a tide London leads the way and I am firmly of the opinion that we have are now entered the start of a crack up boom that is moving at a great pace now.

. . .

In view of this I am now interested in the opinions of the readers of this site as to the effects of a crack up boom on debt, housing in the UK.

UNQUOTE =====

Artificially low rates have delayed the crash, but they cannot prevent it.

So far, the government has show no ability to boost incomes in a meaningful way, so when the rate rises come, the crash will come too.

These charts, may back up my still-Bearish view on UK Property...

 

SAME OLD SAME OLD... until it breaks

 

 

"We are injecting GBP 75 Bn in the British Economy" - Merv

 

Nothing new here, this "reflationary effort" has been going on a long time.

See Bond prices - and this is what it has done to the UK Yield Curve

 

UK Bonds ... update : 6mos

ukbond.png

 

UK Curve ... update

ukcurve.png

 

No magic is coming from this, apart from ongoing levitation in Property prices.

If they stop lowering rates, then something wil break, and they cannot go on lowering

them forever - Especially since "something IS BREAKING" now in Europe, and may spread.

 

Good luck, Merv. You may be a Hero-in-your-own-mind now.

But you will be a Greenspan-like Villain when this method blows up!

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Is it crash cruise speed yet?

hpiuk2011nov.gif

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2010

J. : : 222,261 : 407,731 : 131,918 - 0.42% / 163,481 169,777 168,390 165,514 : £164,497 :- 0.11% :135.1% :sa

F : : 229,398 : 427,987 : 128,801 - 2.36% / 161,320 166,857 166,928 165,997 : £163,659 :- 0.51% :140.2%

M : : 229,614 : 417,461 : 130,995 +1.70% / 164,519 168,521 168,435 167,808 : £166,164 :+1.53% :138.2%

A : : 235,512 : 421,822 : 135,058 +3.10% / 167,802 168,202 168,593 170,772 : £169,287 :+1.88% :139.1% :

M : : 237,134 : 420,203 : 134,739 - 0.24% / 169,162 167,570 167,207 169,204 : £169,183 :- 0.06% :140.2%

J. : : 237,767 : 429,597 : 133,097 - 1.22% / 170,111 166,203 165,686 166,395 : £168,253 :- 0.55% :140.5%

Jl : : 236,332 : 422,248 : 133,627 +0.40% / 169,347 167,425 167,497 168,331 : £168,839 :+0.35% :140.0%

A. : : 232,241 : 405,058 : 134,088 +0.35% / 166,507 = n/a = 168,124 168,889 : £167,698 :- 0.68% :138.5%

S. : : 229,767 : 399,019 : 132,880 - 0.90% / 166,757 = n/a = 161,974 163,639 : £165,198 :- 1.49% :139.1%

O : : 236,849 : 418,778 : 131,396 - 1.12% / 164,279 = n/a = 164,949 165,275 : £164,777 :- 0.25% :143.7% :H

N : : 229,379 : 417,279 : 128,245 - 2.40% / 163,133 = n/a = 164,622 163,268 : £163,201 :- 0.96% :140.5% :

D : : 222,410 : 408,248 : 127,473 - 0.60% / 162,249 = n/a = 162,803 161,498 : £161,874 :- 0.81% :137.4% :

2011

J. : : 223,122 : 413,259 : 127,148 - 0.25% / 161,211 = n/a = 164,145 161,470 : £161,341 :- 0.33% :138.3% :

F. : : 230,030 : 430,680 : 125,624 - 1.20% / 161,183 = n/a = 162,697 161,680 : £161,432 :+ 0.06% :142.5% :

M : : 231,790 : 424,307 : 127,160 +1.22% / 164,751 = n/a = 162,712 162,151 : £163,451 :+ 1.25% :141.8% :

A : : 235,822 : 431,013 : 127,721 +0.44% / 165,609 = n/a = 160,393 162,303 : £163,956 :+ 0.31% :143.8% :

M : : 238,874 : 430,936 : 128,189 +0.37% / 167,208 = n/a = 161,039 162,344 : £164,776 :+ 0.50% :145.0% :H

J. : : 240,394 : 438,622 : 128,965 +0.61% / 168,205 = n/a = 163,430 163,642 : £165,924 :+ 0.70% :144.9% :

Jl : : 236,597 : 432,641 : 129,766 +0.62% / 168,731 = n/a = 163,981 164,714 : £166,723 :+ 0.48% :141.9% :

A : : 231,543 : 418,008 : 12X,??? +0.??% / 165,914 = n/a = 161,743 162,076 : £163,995 : - 1.64% :141.2% :

S : : 233.139 : 427,889 : 12X,??? +0.??% / 166,256 = n/a = 161,132 162,375 : £164,316 : + 0.20% :141.9% :

O : : 239,672 : 450,210 : 12X,??? +0.??% / 165,650 = n/a = 163,311 164,311 : £164,981 : + 0.40% :145.3% :

N : : 232,144 : 444,724 : 12X,??? +0.??% / 165,798 = n/a = 161,731 160,801 : £163,300 : - 1.02% :142.2% :

========================================

mom: - 3.14% : - 1.22 % : -Est.DI : 142.2% / + 0.XX% = n/a = : -0.97% : -2.14% : - 1.02%

 

Maybe not yet.

So far, only "high delusion" (near 144-145%) is being corrected.

 

When the Delusion index slides below 140% or 137%, then more "fun" maybe be underway.

Watch London asking prices, when they start it crumbled, it is really over.

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READ THE CHARTS HERE ! (And examine the actual DATA): http://tinyurl.com/GEI-data

They whisper their messages to those who can decipher them, as we have done on GEI.

 

hpiuk2011nvcalls.gif

Close-up : H&N Index (average of Halifax & Nationwide) ..... Rightmove's Greater London Offering prices

ukhansm.jpg.ukgrlsm.jpg

 

The Rest of the UK (H&N Index, with Gr.London prices extracted)

ukruksmp.png

ukruksmp2.png

ukruksmp2.png

 

=== === ===

 

Rest of the UK is now in Crash Cruise Speed, and should soon crash below GBP 120,000.

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From the Main board's property thread...

BAB's: "...a lot of people own, or part own, more than one property whose mortgage is being paid off by tenants..."

 

This is very emotive language that doesn't really describe the situation at all, but has been used an awful lot in the last decade.

I would put it differently:

 

In return for paying a "risk premium" called a rent, a tenant gets :

+ Use of the property, and

+ Passes the risk of changes in asset values to the Landlord

 

Many UK LL's living outside London have already discovered that being a "bagholder" in a sliding market is no joy,

and I think those with property in London will discover that same truth soon too.

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Halifax Dec-11 was -0.6% @ £160,063.

The Halifax price-to-ASHE earnings is now lower than it has been since Dec-02.

pe_dec11.gif

Seasonally Adjusted?

(Anyway, at -0.6%, that's Crash Cruise speed range)

 

What do you suppose the NSA change is?

The answer may surprise you...

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

N : : 232,144 : 444,724 : 124,083 -2.49% / 165,798 = n/a = 161,731 160,801 : £163,300 : - 1.02% :142.2% :

D : : 225,766 : 434,871 : 12X,xxx - X.xx% / 163,822 = n/a = 160,063 157,803 : £160,813 : - 1.52% :140.4% :

========================================

mom: -2.75% : -2.22 % : -Est.DI : 138.3% / - 1.19% = n/a = : -1.03% : -1.86% : - 1.52%

 

-1.86% = That's 3X the SA figure !

 

447533814_5d5f918e87.jpg

 

This sucker's coming Dooown !

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See we are all in lovely bear mode this year (so far).

. . .

Didn't we hear everyone crying Crash Cruise Speed.... 20% falls coming..... etc etc this time last year?

 

If anything, the world (apart from a couple of crappy little economies in Europe) is in better shape today than it was this time last year.

. . .

The predictions of doom, gloom and Crash Cruise Speed might just prove to be a little premature again methinks :rolleyes:

JD,

You are right about one thing: The Spring will make or break this market slide.

I think the weakening of the UK economy (see Steve Keen) will pull the rug on the spring rally.

But we will not know for sure until we get there

 

THE LAST FIVE MONTHS - in 2010 prices fell a bit more than 2011

 

Month-: Rt'mov : London : Rest of UK %chg/ Nt'wide Hal.NSA: HNindex

'10 drop

Jul'10 : 236,332 : 422,248 : 133,627 / 169,347 168,331 : £168,839

Dec10 : 222,410 : 408,248 : 127,473 / 162,249 161,498 : £161,874

change: -13,912 : -14,000 : : - 6,154 / - 7,098 : - 6,833 : - £ 6,965

Pct.chg: - 5.88 % : - 3.32 % : : - 4.60% / - 4.19% : - 4.06% : - 4.13 %

Annual: -14.11% : - 7.97 % : : ===================== - 9.91 %

Dec-Jul: +14,187: +24,393 : : ==================== + £ 4,849

'11 drop

Jul'11 : 236,597 : 432,641 : 129,766 / 168,731 164,714 : £166,723

Dec11 : 225,766 : 434,871 : 12X,xxx / 163,822 157,803 : £160,813

change : -10,831 : + 2,230 : - X, XXX / - 4,909 : - 6,911 : - £ 5,910

Pct.chg: - 4.58 % : +0.51 % : : - 4.XX% / - 2.91% : - 4.20% : - 3.54 %

Annual: -10.99% : +1.22 % : : ====================== - 8.50 %

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BDEV breakout ?

So how's the old barometer BDEV looking?

 

Oh, up 10% to 107 at one point! Hmm, what can it mean? :rolleyes:

http://uk.finance.yahoo.com/q?s=BDEV.L

Just kidding, perhaps it tallies with 50's short sharp bounce this spring.

It will probably go a bit higher now too, like 120P : BDEV-chart

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...I do have to agree that this looks like a major breakout for Barratt

 

bdev.png

 

It is impossible to know where it will stop, because it has moved into a fresh range, and BDEV will need to form its own top ... in its own time.

 

X : 069.20p : 01.Dec.2010

A : 120.60p : 13 May.2011

B : 064.91p : 19.Aug.2011

? : 146.90p : 23 Feb.2012 (so far)

X-to-A : 51.40p

B-to-? : 82.--p (159.5%)

Target : 83.--p (161.8%) : 148p ??

 

A few days later, we look back and see:

52 Week Range:

64.912 to 150.00

 

Best closing high? 149.20- 2.28

 

Now at: 146.20 Change: -1.00

Open: 147.40 High: 148.60 Low: 145.00

Volume: 6,990,423

Percent Change: -0.68%

 

No Runaway so far

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From the Property thread on the Main board:

...The economy is now structured in a way that it is dependent on ZIRP to feed the debt bubble. Deficits will continue to be run, the debt will continue to grow which all the time makes it impossible to for rates to go voluntarily higher. Any rise in rates will collapse this house of cards, which no government will allow. Government isn't the solution. Government is the problem.

Agreed.

London never had sufficient Property price correction to bring prices down to affordable levels, as has know happened in some parts of the UK, and across almost the whole of the USA.

 

So those ultra-low rates are vital in London to maintain some illusion of affordability. Take them away, and anyone with a mortgage LTV of 70% or maybe even 50% of peak values would suffer greatly.

 

Yes, it could bring the House down, and probably will IMHO.

 

The only good point for London residents is that higher rates would probably trigger a huge rush of (forced?) sales by foreigner BTL owners, and that might help to make London property more affordable in the future. I think that many foreigners have been suckered into buying expensive new properties.

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