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

[drbubb]

Using the 2013 Forecast / seeing Gilt-Rate moves in action in the UK:

 

What works for me is for the next 12 months, a low a monthly outgoing as possible. I can then look at more stable options. Clearly there is a risk that things deteriorate quickly in which case I am exposed. However, recent history suggests that interventions will continue to make even very well telegraphed credit issues avoidable.

. . .

I also want a permanent home that I can make certain modifications to.

 

(This all makes sense, so long as you do not over-stretch yourself.)

 

Do keep an eye in UK Interest rates - as this Gilt yield chart shows,

Rates are creeping higher --- 10yrRates-update : closer-up

This trend could continue through 2013...

 

 

Here's one of my forecasts for 2013 / see thread:

+ UK House prices will have a deeper slide than the approx. 1% fall of 2012, as UK interest rates push higher

[drbubb]

Right now, it may look and feel (to most UK people) that a nice Spring Rally may be just ahead in UK Property

 

But that is not guaranteed.

I wonder when we will see the Retiring baby-boomers beginning to take advantage of the Obvious

huge Arbitrage opportunity represented by the GAP between London prices and Rest-of-UK prices ?

 

 

I am watching the differential with interest, and also watching UK Gilt Rates creep higher

 

That's the cause : the ultra-low interest rates.

By using these to save itself from a Property crash, the UK has buggered up its future.

Because when rates do rise, there will be Hell to pay.

 

Long Term rates are now creeping higher, and real trouble (for homeowners) may not be far away... update

 

 

I would suggest being VERY cautious about buying now.

Buying with a 5 year fixed mortgage may seem like a smart move, but if rates go up much, home prices are likely to start dropping, and although you may save some money relative to renting, you will still eventually have to cope with whatever reality looks like when the 5 year fixed rate ends.

 

The Risk is: Whatever you save on interest-vs-Rental costs, you may more than lose in falling property values.

 

I am older than many who post here, and can recall very painful periods of rising rates, that those under 40-45 may not quite have in their memory banks.

 

The timing of these most recent moves (rates up, property easing) may not look coincidental in hindsight

 

/see: London Crash thread : http://www.greenener...pic=17186&st=40

[drbubb]

I've been holding cash for 3 years. Totally wrong side of the trade.

 

Remember:

The usual thing that happens at the end of a long upwards trend is:

Those that have been fighting the trend, throw in the towel.

 

It looks to me that we are seeing some of that behaviour now

 

Having said that, when I look at this chart

 

 

It is rather easy to imagine a bullish exit from the recent pause.

 

CLUE?

If we are getting any clues now from Barratt etc. / BDEV-chart : PSN

They are currently suggesting a continuing move in an UPWARDS direction.

 

[drbubb]

House builders have shot up on the back on the budget.

 

And there's More to come, I reckon

 

BDEV / Barratt Developments ... update

 

 

The weak currency is helping too: FXB-chart

[drbubb]

BUILDERS STOCKS are Running... and it looks like they have more running room

 

PSN / Persimmon ... update

 

 

BDEV / Barratt Dev'l ... update

 

 

And the brokers are celebrating a possible resurgence in UK Home prices

 

THE MARKET

Last month was all about whether or not we had witnessed the green shoots of a housing market recovery. Since then, the good news has continued to emerge.

 

When the Funding for Lending Scheme was first launched by the government to encourage banks to lend money, many commentators were unsure how successful it would be. At first, it appeared only to be helping house buyers with a decent deposit and not those at the opposite end of the spectrum who needed it most. Since the end of last year, this has begun to change. The scheme is now starting to deliver reductions in the cost of borrowing across the board...

===

/more: http://www.property-...inkworthwestend

 

Notanewmember is talking about the Builder's Index going parabolic:

 

xx

 

And I think you know what follows.

[drbubb]

 

If London "breaks through the ceiling", it may drag UK Prices higher

 

Meantime, if you look at Rest-of-UK Prices, it looks as if they have made a nice Double bottom

 

[drbubb]

Hmmmmm.

Do I detect a bear turning bullish?

No more crash cruise speed?

(Then again, it is April 1st )

 

April 1st or not, this chart is at a possible Double Bottom - so maybe wave 4 is done...

 

 

A rise to test (or nearly test) the old high over GBP 180K may be inspired by the Tories Deposit give-away scheme.

Selling in London (at much higher prices) and buying outside may be wise and prudent now, especially if your job

and living situation permits such a well-timed down-sizing.

[drbubb]

what probability do you give of a double bottom being a bullish signal?

 

I would say better than 50/50, probably much better than 50/50, assuming the deposit scheme stays in place.

 

If you want to "hedge you bets", selling in London, and buying more cheaply outside looks to be a good move.

Or maybe (if you are "a betting man") even buying cheap now, and looking to sell in London after a further 5 -10% rise, which will cover maybe 10-20% of your purchase cost, and allow you to ride the cheap deposit scheme on your purchase.

 

I think the Tories are playing Greenspan's game now, of juicing housing to get the UK out of recession. We saw how that worked in the USA, and now the UK will have a chance to repeat this trick in a more dangerous way.

 

If you buy outside London, I recommend to avoid anywhere that is too car-dependent.

[drbubb]

Oh, my - how eager are some folk to call a forecaster WRONG, without showing they can do better!

 

In this case, I am reacting to some posts from John Doe:

 

I don't think you should be in any hurry to call me Wrong.

 

My system works fine... and it has been simple: Watch BDEV ... as an early warning

 

 

Best forecaster for London price? BDEV

 

 

Meantime, I waited for a Low in UK and Rest-of-UK, and started saying we may have seen one some time ago:

 

UK

 

Rest-of-UK

 

Have we seen the end of any possible Price Drop?

No. Not IMHO. When interest rates rise, many people will find themselves "exposed."

But the new government policy should deliver at least several months of price increases.

 

What's your system?

[drbubb]

(2)

With all that, he wasn't finished... More followed:

 

Oh come on, really. You were constantly going on about crash cruise speed etc for years, and all the time BDEV, your Bellwether, continued to rise (try overlaying BDEV with Land reg figures).

 

Only recently have you suggested a bottom might be in (for now).

. . .

 

TBH, it’s served me very well thank you, as my historical posts here clearly show. From my concerns it was all a big ponzy from way back before HPC (my posts started here from ~2006 and explained how I'd been thinking it was all crazy since 2002-3) to my STR’ing in late 2007, and buying back in the dip of 2009 when it was clear that QE, here and abroad, along with other government interventions, was going to stabilise things and the financial collapse we were concerned about was averted and unlikely to happen for at least another 20 years or more (when they forget how close they came this time). They printed money FFS! (I still can't believe they did this)

 

Since then, I’ve put the more balanced case here, and been slated for it many times. However, here we are.

 

Anyway, the past is gone and it's the future that matters. So, if rates rise significantly in the next couple years (unlikely) then that could conceivably result in a new correction. If not, and we don’t have another boom in the meantime, then the excesses could well be worked off by the time rates start to go up.

 

You haven't read carefully - go back and look at my Diary.

 

When the dips came, I saw potential for further drops, but BDEV stayed strong, you will see I did my best to keep a balanced view, while warning that rising rates were likely to be the eventual Bubble-popper

 

Here's a recent example:

April 1st or not, this chart is at a possible Double Bottom - so maybe wave 4 is done...

 

 

A rise to test (or nearly test) the old high over GBP 180K may be inspired by the Tories Deposit give-away scheme.

Selling in London (at much higher prices) and buying outside may be wise and prudent now, especially if your job

and living situation permits such a well-timed down-sizing.

 

If that's not Calling the Low at the (possible) Low, then what is?

 

And have you forgotten these sorts of posts about "A PAUSE" from Summer 2011:

I haven't been talking "crash cruise speed" for months.

 

BDEV told us late 2010 and early 2011, that we could expect a "pause", and that is what we have been in for some months.

I reckon BDEV will signal with a sharp fall below 100p if/when the pause is going to be ending.

 

BDEV-chart

 

The fall through 100p may have begun from that recent "right shoulder", and the volume on the way down should give us an idea whether a sustained drop has begun

 

A cautious statement from July 2011 -

And shortly after that, I put a DEPOSIT DOWN on a property in New Festival Quarter, near Poplar.

I would have gone ahead with it, if my London-based business partner had been willing to Rent the flat.

He decided not too - He was too nervous, so I did not go ahead with it, and lost the deposit.

 

Is that the action of somewhat thinking we are in the middle of a Crash Cruise speed move? Of course not !

 

 

Where's your track record?

If you think you can do better, then why not start your own UK Property Diary here or in the Trading section?

(A serious suggestion,) You might even find that it becomes popular.

[drbubb]

Does Intelligent Design Exist?

 

 

There's an interesting response to that article on HPC.

It's just stupid to compare income-to-house-price multiples and assume they will revert to the mean. Interest rates have fallen, people are living longer, wealthy baby-boomer pensioners are investing in safe stable investments (property) for their retirements.

 

Actually, the pensioners should be thanking their lucky stars for this latest insane policy.

 

What a wonderful opportunity for shifting assets it affords for London-based pensioners !

 

They can sell their overpriced property in London,

and buy something larger and newer for half price outside London (in Chichester or whatever ),

and retire there.

 

No doubt, many will be able to pay off all their debts if they do that, but why not take a fixed rate,

and the cheap government money, and move some cash out of a country stupid enough to offer

a crazy deal. They can eliminate the exposure to falling Sterling that way, and have a golden retirement.

 

This nutty policy was designed to give boomers a golden retirement, and leave a mess for the next generation.

 

If I was thirty-something and living in London, I would be as angry as a mad terrorist.

[freekb]

 

This nutty policy was designed to give boomers a golden retirement, and leave a mess for the next generation.

 

If I was thirty-something and living in London, I would be as angry as a mad terrorist.

 

That's about right.

On the flip side, thanks to those near zero interest rate policy those boomers are at getting a shit deal on their annuities. If they're not financially astute through the inevitable inflatation their income will be shredded to bits.

Will that lead to gangs of eldery, like in Japan? http://www.telegraph.co.uk/news/worldnews/asia/japan/3213349/Japan-struggles-with-elderly-crime-wave.html

 

"Win some, lose some, always screw the young", a boomer anthem.

[drbubb]

Perhaps noone wants to invest in an "artificial" bull market-or sees the risk as too large for an illiquid asset whose props could easily fall away?

I see rising house prices as a desperate system failure, not success.

 

That's why I have suggested the DOWNSIZE maneuver to those who can afford to leave London.

I think outside London prices may benefit more (percentage wise) from the current prop-job than inside,

and the Ratio will narrow

 

 

But perhaps it may take a while for this rally to get rolling

 

Remember THIS old chart ?

http://www.housepric...=600&height=500

 

 

UK Hali-Wide is now "ready to run" - the chart and the Builders index suggests

 

 

 

/source: http://www.greenenergyinvestors.com/index.php?showtopic=17737

 

BTW:

Are HPC-ers talking about a likely Rally outside London ?

[drbubb]

Thanks to "easy finance" there is potential for a fast run-up in UK Housing in 2014

DrBubb, on 02 Jan 2014 - 10:59 AM, said:

"For the dumbfire way - wait for the breakout first. No point in trying to pick a bottom.

Anyway - it is easier to play the shares (but don't tell anyone!)"

 

The bottom in UK House Prices (Rest of UK) was months ago. and we picked it here on GEI:

 

 

/see:

A FINAL Rally in London property? How to play it.

in General Discussions / Started by DrBubb, 30 Apr 2013

> http://www.greenener...showtopic=17737

 

Selling Time?

Maybe soon - Especially if you SELL-in-London, and BUY-Cheaper-outside

 

I don't think the Last rally will go on quite so long as Nadeem W's chart shows:

 

 

The Property shares are likely to peak BEFORE property prices, and may give an early warning

 

Here's BDEV / Barratt Developments ... update

 

 

A breakout above the 12-mos high of 360p, could conceivably take BDEV to resistance near 500p,

or even up to 600-700p

=

[Mabon]

Here in north-west London house prices seem to be rising by the day again.

 

Particularly the 4-5 bed edwardian style suburban houses - Close to decent schooling and transport links.

 

I noticed recently that four flats on the road next to ours all sold (separate locales) all sold within 10 days of going on the market.

 

Smells like bubble territory again to me - Is there any end to this (in London)?

 

Probably not.

 

Meanwhile in parts of Wales, Scotland and England you can get decent 3 bed houses for 40 grand or less...And decent 2 bedders for 25 and under...Ho and Hum

ratingTextUndefined

[Jamus]

At my company (a global property company), the London agents are selling more new build properties at higher prices than ever before. A director was talking about it just earlier today, anything within zone 3 is getting snapped up by Singaporean/Chinese investors etc... It's like it's gone into overdrive, no sign of slowing at present, but perhaps signs of the madness of crowds and a bubble?

[drbubb]

LONG OVERDUE, this was IMHO.

Other countries with rapid House Price inflation, imposed these long ago.

I moved from the UK years ago, and have been wondering when we would see these types of measures

Stop rich overseas investors from buying up UK homes, report urges

Rightwing thinktank proposes curbs on non-EU residents to open up more of housing market to Britons

Toby Helm, political editor

The Observer, Saturday 1 February 2014 21.27 GMT

Radical plans to stop rich overseas residents who live outside the EU buying British houses – as well as tight restrictions on them acquiring "newbuild" properties as investments – will be published in a report by a leading rightwing thinktank on Monday.

Free-market organisation Civitas castigates government ministers for allowing wealthy foreign investors to stoke a property boom that it says is driving up prices and locking millions of UK citizens out of the housing market.

The plans would prevent the likes of Roman Abramovich, owner of Chelsea football club, or other Russian oligarchs from adding to their multimillion-pound UK portfolios. They also aim to stem a flood of investment from countries such as China, Malaysia and Singapore.

Concerned that many middle and lower earners are being forced to pay high rents in London because they can't afford to buy, Civitas calls on ministers to adopt a scheme similar to one operating in Australia, which ensures that no sale can take place to overseas buyers unless they can show that their investment will add to existing housing stock.

Such a system would mean that no existing home could be sold to a buyer from outside the EU, and that such buyers could acquire newbuild homes only if their investment led to one or more additional properties being built.

> http://www.theguardian.com/business/2014/feb/01/rich-overseas-investors-uk-eu-housing-market

[drbubb]

Barratt Developments may Be Done

 

BDEV.L / ... update

 

 

A slide in the stock price would not bode well for London Property and UK Property.

 

The UK Builders often peak 6-9 months before the physical property market.

A drop below the bottom of the channel, if we see that, would be very bearish

 

Let's monitor the price

[drbubb]

TOP of the Morning to you, London Property Buyers !

 

what will cause the crash?

 

politicians are so heavily invested in property they will never let interest rates rise, whatever the cost.

 

There are SIGNS of Buyer Fatigue already:

 

Through discussions with agents as well as my own observations :

there are early signs emerging that a market top may be forming in London.

It would appear that buyers are starting to question the excessive increases and madness in asking prices that have occured over the last year and are now taking stock of the situation

 

This could prove to be an excellent call, C.S. !

 

BDEV / Barratt is also showing signs of weakness ... update

 

 

The "classic" signal of a top (in my system) would be when the 76d-MA crosses over the 252d-MA.

And it should cross the 200d-MA first.

 

It nearly happened last year, but the market as saved by the bizarre "Help-to-Buy" scheme

[drbubb]

BDEV and the possible DOWNTURN in LONDON

 

LOOKING for Confirmation? - It may come soon ! ... update

 

 

EXCERPT from the article by Dominic Frisby

 

Housebuilders are warning of a potential peak in house prices

...I like to watch the house builders. By that I mean the likes of Barratt (LSE: BDEV), Persimmon (LSE: PSN) and Taylor Wimpey (LSE: TW). They have, over the years proven to be reliable indicators as to the future direction of house prices.

. . .

Here’s a chart of UK house prices since the mid-1980s from Nationwide.

 

(compare):

 

 

In each move, Barratt has been ahead of the housing market. Intraday, Barratt actually peaked in 2006 and retested that peak in February 2007, while house prices themselves peaked in late 2007.

So, to 2014. Having been as high as 450p in early March, Barratt touched 360p on Monday. That’s a fall of more than 20%. In other words, it’s bear market territory.

==

 

> more: http://moneyweek.com/money-morning-dont-speak-too-soon-but-the-housing-bubble-may-be-peaking/

[drbubb]

It is now time to PAY really CLOSE ATTENTION to developing risks in the London and the UK markets.

The property market may be turning.
A very good Early Warning has been the chart of Barratt Developments (BDEV.L), which will often turn down 6-12 months ahead of the UK Property market, and BDEV seems to have peaked in early March 2014:

 

BDEV - 10yr chart ... update : 2-years : 6-months


A good confirmation might be when the 76d-MA crosses below the 252d-MA - then later the 610d-MA, and that has not happened yet - But these crosses may happen later in the year, within the next several months.

The signal has worked brilliantly in the past - calling The Top in mid-2007, and the Low a few years later in early 2012.

[drbubb]

Have we seen The Turn in London Property?

The headline news is turning negative - just 3 months after the peak in Builder shares

PRICES IN LONDON RUN OUT OF STEAM - scmp, P5

 

Concerns over overpaying prompt homebuyers to step back from the market as common sense takes hold

 

Asking prices for London homes fell from a record this month... according to Rightmove

 

- 0.5% : to GBP 589,776, the first decline this year

- 0.3% : to GBP 2.38 million in Kensington and Chelsea, the most expensive area

 

Rightmove cited:

+ New tougher mortgage rules, and

+ Cooling in demand

 

In the past year:

: London prices are up 14.5%

: British homes prices up 7.7%

 

(Partly seasonal, I think. But Important tops can be made when prices "fall under their own weight")

 

London, Final Rally: http://tinyurl.com/L-FinalRally

 

Barratt Development / BDEV ... update : the best early bellwether for UK property : 6-9 months lead time?

 

 

Addition confirmation of Turn: would come If/when the Blue MA (76d) breaks below the Red MA (252d).

[drbubb]

40% of UK Wealth is "False Wealth" says the FT

> http://www.ft.com/cms/s/0/8d5c6ed8-0c0a-11e4-a096-00144feabdc0.html

The link doesn't work for me, so here's a summary that I picked up from another website:

"Here's the short general idea in my own words...
They say more than £3th of assets = 40 percent of UK wealth, are what planning restrictions have added to house prices, they are the ransom that recent buyers and renters are forced to pay to homeowners, this is plunder, from younger to older, from poorer to richer. But if we let people build more houses we turn the false wealth into real wealth of houses and flats, improving living conditions, creating jobs, and making society fairer and more equal."

Hmm.
I don't entirely understand that.
I do "get" that ultra-low interest rates can Pump up house prices to false levels, persuading people that they are wealthier than they really are. We saw that in the US, and many people went out and spent that wealth on things they did not need. When home prices fell, any debt they took on secured by false wealth was still there, when the wealth melted away.

I do not get how borrowing against false wealth and spending much of it on home construction is much better than on other items, except that housing assets might be somewhat more durable than many other assets.

In any case, there is likely to be a Debt problem when the bubble bursts.

[drbubb]

Barratt - Property Bear Market confirmation is Looming

 

In the past I have used the crossover of the 76d and 252d-MA's

as a confirmation of a change in the UK Property Market.

A fresh signal is looming

 

BDEV.L / Barratt Development ... 10-years : 5-years : 2-yrs : 6mos

 

 

BDEV closed Friday at 334P, and the 76d-MA is about to cross the 252d-MA at 360P.

 

BTW, an even better confirmation would be rollovers in the 252d and 377d MA's, to point down.

We cannot rule out a last gasp rally before that happens. (It would probably need to start soon.)

[drbubb]

I still think you need to watch London Property and Barratt's together... as one system

=

London record biggest Price Drop in 6 years - SCMP Today

 

(this headline won't surprise GEI's regular readers... but Be Careful*...)

 

5.9% Drop in Month-on-month Asking prices in August

Home sellers slash asking rates as market in British capital endures steep summer slump

 

+ London prices fell 5.9% from July to average: GBP 552,783 (HK$ 7.15 million), per Rightmove

+ Nationally, prices fell 2.9 %, a record for an August

+ Cost of mortgages are going up, limiting what buyers will pay

+ Biggest drops were in affluent areas, like Kensington & Chelsea (-7%), Camdem, H'smith/Fulham

+ Yr-on-yr prices down -1.4% in K&C, and up 10.3% in London as a whole

 

===

 

*the "Be Careful" comes from observation of BDEV, which is showing some signs of recovery.

A continuation of the rally is not impossible, if BDEV can make new highs

 

=