UK House prices: News & Views

[drbubb]

(Here's the sort of project that is being marketed in Hong Kong now):

 

Pre-sales Started - The Mill Apartmetns, Mill Lane, West Hampstead, London NW6

 

A good place to store shoes ?? : http://zxcode.com/2011/05/the-mill-apartments-ballisodare/

 

Dear Valued Customers --PRE SALES STARTED--

 

Taylor Wimpey is proud to present this prestigious development at West Hampstead for your kind perusal.

 

- Brand new 1, 2 & 3–bed apartments with either balconies or terraces

- Exclusive setting adjacent to a nature reserve

- Minutes’ walk to West Hampstead Station (Tube & Rail) directly connecting to King’s Cross Station

- High Specification with underfloor heating system and wooden flooring throughout

- Secure underground car parking available

- 999-year leasehold

- Completion estimated in December 2012

- An excellent investment, with prices starting from £383,000

[G0ldfinger]

- High Specification with underfloor heating system and wooden flooring throughout

...

- An excellent investment, with prices starting from £383,000

Looks more like there is high spec graffiti on the outside already.

 

Wooden floors. Hmm, my experience is that most people have no clue what a real wooden flooring is. Most likely we're talking laminate here, or maybe not even this and just PVC with some "wood" printed on to it.

[drbubb]

Looks more like there is high spec graffiti on the outside already.

 

Wooden floors. Hmm, my experience is that most people have no clue what a real wooden flooring is. Most likely we're talking laminate here, or maybe not even this and just PVC with some "wood" printed on to it.

It looks bleak, and not even as nice as a good "industrial" building.

 

Where's the greenery ?

[John Doe]

The debt crisis which is now ravaging Greece and Ireland, will sometime soon show up in the UK. That will push borrowing rates for the UK government up, and I think this will be the pin that finally bursts the UK housing bubble.

 

Again, we are NOT Greece or Eire.

 

Nor did we have the huge oversupply of building that US, Eire and Spain had.

 

The UK debt is LONG dated (Twice as long as most others) and the deficit is being taken under control.

 

While it is likely house prices will continue to drift down (real more than nominal), like it or not, the debt crises affecting other countries has been averted here.

 

If the Con-libs keep to their targets, as they appear to be doing, there will not be a sov debt problem in the UK.

[Chartered Surveyor]

Thanks for that CS. So you would buy gold over the summer, averaging in, I suppose? Looking to hold until when? 2015? Then use gold to buy property? The property crash against gold prices must be around 70+% now. I'm wondering if it would not be opportune to buy property (for those in the UK) now with gold before prices retreat? But you think this will only be temporary.

Ummm...Why do you think no NOMINAL crash?

 

 

 

These are good questions you raise which should be put to the forum to answer. Has UK housing reached a bottom against gold and silver and what ratios are people looking for. ie the historical average for UK houses is 100 ounces of gold. We are a long way off from this. So gold has a lot of upside.

[drbubb]

"Nor did we have the huge oversupply of building"

 

Again, we are NOT Greece or Eire.

 

Nor did we have the huge oversupply of building that US, Eire and Spain had.

 

I REALISE that this is a commonly-held belief - But I just don't buy it !

 

I have a different point of view:

 

+ The UK's generous benefits (including housing benefits) have encouraged dependent Europeans and dependents from other countries such as so-called political refugees to migrate to the UK.

 

+ Overly-generous housing benefits have encouraged household formations, by those who would otherwise live with friends and family (single mothers come to mind.)

 

THE COMBINATION of these two have pushed up housing demand and created an artificial shortage, boosting rents and boosting house prices.

 

But these excesses are now being addressed, and benefits will be much less generous in the future, and that will REVERSE the trend of growing household formations, and Britain will soon wake-up and discover there is no shortgge of supply, but rather a surplus. That will help to drive house prices down. And the UK will finally get the correction it is due - even in London.

 

== ==

 

Press Releases

 

Seven out of Ten Lib Dem Voters Want Net Immigration sharply cut: New poll shows strong support for Cameron’s target

10 May, 2011

 

A new YouGov poll has found that 72% of potential Liberal Democrat voters want net immigration of 100,000 or less per year. A majority (55%) of Lib Dem supporters wanted to see a much lower figure of 50,000 or less. Only 8% wanted the present level of 200,000 a year or more.

 

Results for Labour voters were almost identical. 74% of potential Labour voters favour net immigration of 100,000 or less a year and a majority (64%) want 50,000 or less; only 7% wanted 200,000 or more.

 

Conservative voters were 92% in favour of 100,000 or less while only 2% wanted 200,000 or more.

 

Taking the public as a whole, 79% favoured 100,000 or less while 5% wanted 200,000 or more. This underlines the strength of support right across the political spectrum for David Cameron’s aim to cut net migration to the “tens of thousands” during the course of the Parliament.

 

The poll also found strong support among potential Liberal Democrat voters for the Government’s measures to limit the number of economic migrants to Britain. 76% supported a limit while 18% opposed it, of those 4% strongly opposed. Labour voters took the same view while 96% of Conservatives supported a limit to economic migration, with only 3% opposing.

 

/more: http://www.migrationwatchuk.org/

[drbubb]

+ The UK's generous benefits (including housing benefits) have encouraged dependent Europeans and dependents from other countries such as so-called political refugees to migrate to the UK.

 

+ Overly-generous housing benefits have encouraged household formations, by those who would otherwise live with friends and family (single mothers come to mind.)

 

THE COMBINATION of these two have pushed up housing demand and created an artificial shortage, boosting rents and boosting house prices.

 

Households in the UK may be facing the biggest drop in "income" for 30 years, a leading economic think tank has warned.

 

The Institute for Fiscal Studies said median take-home incomes had actually increased during the recent recession.

 

But the institute's analysis of latest government figures suggested it was "entirely possible" that median incomes dropped by 3% in 2010-11.

 

The policy group said such a fall would leave median income levels back where they were in 2005.

 

'Pain delayed'

According to the Institute for Fiscal Studies (IFS) the squeeze from the recession on household incomes in the UK is only now being felt.

 

While new data shows average incomes rising faster than inflation in 2008-10, it says in the 2010-11 fiscal year they may have undershot.

 

The IFS also said child poverty had fallen but not by enough to meet the old Labour government's target.

 

Tony Blair's government said it would halve child poverty by 2010, but the IFS said that it would only have fallen by a quarter.

 

IFS research economist Wenchao Jin said: "The figures tell a story of pain delayed, but not pain avoided.

 

"Average living standards rose over the recent recession, likely to be driven by large increases in benefits and tax credit rates.

 

/ MORE: http://www.bbc.co.uk/news/business-13384857

== == ==

 

I find it amusing that they call transfer payments "Income" /

It should be called "State Charity" or something. It is the OPPOSITE of "earned income."

[Meralti]

The UK debt is LONG dated (Twice as long as most others) and the deficit is being taken under control.

 

And yet it continues to increase every month and it at it's highest level ever. Uk government debt is one of the higheest in the developed world. You yourself have stated that cuts are not really being implemented and so can be discounted as having any effect on the market. Now you claim the deficit is under control.

 

While it is likely house prices will continue to drift down (real more than nominal), like it or not, the debt crises affecting other countries has been averted here.

 

If the Con-libs keep to their targets, as they appear to be doing, there will not be a sov debt problem in the UK.

 

Simply stating that thing are not a desperate as it is for the PIGS does not mean that there will be no nominal fall. I'm beginning to see reductions in asking prices for the first time in 18 months. You bulls really do need a fresh tranche of QE to get thing moving again.

[John Doe]

Households in the UK may be facing the biggest drop in "income" for 30 years, a leading economic think tank has warned.

 

The policy group said such a fall would leave median income levels back where they were in 2005.

 

While new data shows average incomes rising faster than inflation in 2008-10, it says in the 2010-11 fiscal year they may have undershot.

 

 

"Average living standards rose over the recent recession, likely to be driven by large increases in benefits and tax credit rates.

 

I find it amusing that they call transfer payments "Income" /

It should be called "State Charity" or something. It is the OPPOSITE of "earned income."

They actually say living standards rather than income, however, it seems both incomes and living standards rose above inflation?

 

Sort of knocks the "inflation not eroding the debt" argument a bit .

 

I REALISE that this is a commonly-held belief - But I just don't buy it !

 

Well that's up to you, but it is what it is. Due to ridiculous planning laws and a builders cartel, the number of new properties built in the UK is pathetically (and historically) low. The numbers pale into insignificance when compared to these other countries, which went mad building everywhere, even where houses were not required, hence all the ghost estates. And that's not just a belief, AFAIK it's accepted universally.

 

But these excesses are now being addressed, and benefits will be much less generous in the future, and that will REVERSE the trend of growing household formations, and Britain will soon wake-up and discover there is no shortage of supply, but rather a surplus. That will help to drive house prices down. And the UK will finally get the correction it is due - even in London.

 

Yet immigration still keeps rising, and is very likely to keep doing so.

 

I wouldn't hold your breath for swinging benefits cuts either. Every government talks about this, yet even now they are u-turning and watering down the changes. Small adjustments will be the best you get.

 

Seriously, if you don’t believe me check out the new ruling that means Europeans have just been given the right to come to the UK and sign on immediately, not having to work here for 12 months first as it used to be .

 

There just isn't going to be the "revolution" of changing the benefits system as you hope and expect.

[John Doe]

And yet it continues to increase every month and it at it's highest level ever. Uk government debt is one of the higheest in the developed world. You yourself have stated that cuts are not really being implemented and so can be discounted as having any effect on the market. Now you claim the deficit is under control.

Actually the debt isn't the highest in the developed world, but, the deficit is and that is what is being cut. I stated that the cuts are not as bad as everyone was saying they would be, and they are not. But that was just government expectation management. Tell them the worst, then it's not so bad when the real numbers come out.

 

The real cuts will get rid of the deficit as they are planning, if they stick to the plan and the markets are happy with this.

 

See for yourself, yields are still falling

 

http://www.yieldcurve.com/marketyieldcurve.asp

 

Simply stating that thing are not a desperate as it is for the PIGS does not mean that there will be no nominal fall. I'm beginning to see reductions in asking prices for the first time in 18 months. You bulls really do need a fresh tranche of QE to get thing moving again.

 

I agree, and heh, check all my posts, I try to look at both sides and have stated several times I expect prices to fall nominally by about 5 to 10% over a year or so. I just don't see an "end of the world" scenario as some seem to.

 

Does that make me a bull?

 

Oh and, for the record, I think the rise in equities over the last year is about to end. Too much bad news not having any effect.

 

Seems like a good correction is overdue.

[Meralti]

Actually the debt isn't the highest in the developed world, but, the deficit is and that is what is being cut. I stated that the cuts are not as bad as everyone was saying they would be, and they are not. But that was just government expectation management. Tell them the worst, then it's not so bad when the real numbers come out.

 

The real cuts will get rid of the deficit as they are planning, if they stick to the plan and the markets are happy with this.

 

See for yourself, yields are still falling

 

http://www.yieldcurve.com/marketyieldcurve.asp

 

Sorry for the typo (I wasn't concentrating) it is the deficit that is the highest, however the total debt is continuing to grow regardless of the planned deficit reduction (which is what I meant). But the point that you're missing is the deficit reduction is dependant on growth. If GDP begins to fall then the deficit will actually increase. This is a bind: if GDP increases, we get growth and upwards pressures on inflation, leading to upward pressure on interest rates. If GDP fall the deficit increases, leading to either the necessitity for further cuts or an increasing cost of borrowing - increasing yields. The line being trodden is extremely fine and vunerable to external shocks.

 

 

I agree, and heh, check all my posts, I try to look at both sides and have stated several times I expect prices to fall nominally by about 5 to 10% over a year or so. I just don't see an "end of the world" scenario as some seem to.

 

Does that make me a bull?

 

 

Ok, so the end of the world will be avoided at all costs. For what it's worth I'm looking for a 20% fall over the next 2 years or so. That said, a European bank failure could wreak havoc.

[G0ldfinger]

"Average living standards rose over the recent recession, likely to be driven by large increases in benefits and tax credit rates.

Sounds like there is ballooning debt on the other side of this equation. Inflation will sooner or later erode these short term gains. (I guess that's exactly the point of this article: the pain has been delayed.)

[Meralti]

Sounds like there is ballooning debt on the other side of this equation. Inflation will sooner or later erode these short term gains. (I guess that's exactly the point of this article: the pain has been delayed.)

 

Yeah, classic electioneering by Brown. Give-aways before and election, pain afterwards as it's clawed back.

[John Doe]

But the point that you're missing is the deficit reduction is dependant on growth. If GDP begins to fall then the deficit will actually increase. This is a bind: if GDP increases, we get growth and upwards pressures on inflation, leading to upward pressure on interest rates. If GDP fall the deficit increases, leading to either the necessitity for further cuts or an increasing cost of borrowing - increasing yields. The line being trodden is extremely fine and vunerable to external shocks.

Oh I'm not missing it, I actually agree that it depends on GDP growth and if GDP starts falling badly then all bets are off. A very fine line indeed.

 

It's just that GDP is not falling and is not expected to fall (albeit that it is rising slightly less than expected previously).

 

I still believe the master plan is to inflate the debt away, while scaring the population enough with cuts (and moreover, the threat of worse cuts) so that they will not dare demand increased wages. Again, a very fine line, but one which they have managed quite well (depending on your point of view) for nearly 4 years now.

 

Meanwhile, the average debt maturity for the UK is 14 years. In the US it's 4 years! So while an EU bank could be a black swan, the fact the US needs to roll over s**t loads of debt over the next 12-24 months scares me far more.

[drbubb]

Yeah, classic electioneering by Brown. Give-aways before and election, pain afterwards as it's clawed back.

Yes.

And how about this:

 

If you read David Icke, Brown is a paedophile..........

In this case...

Not only did he follow his "inclinations" and roger the young,

He rogered the whole nation.

 

Despicable character, whether Icke is right or not.

[drbubb]

I still believe the master plan is to inflate the debt away, while scaring the population enough with cuts...

How do you "inflate away debts" when incomes are not rising?

 

It worked in the 1980's, but that was when North Sea oil production was ramping up.

That windfall was wasted on social programmes, while the whole nation lived beyond its means.

And the "solution" is not repeatable.

[John Doe]

How do you "inflate away debts" when incomes are not rising?

 

It worked in the 1980's, but that was when North Sea oil production was ramping up.

That windfall was wasted on social programmes, while the whole nation lived beyond its means.

And the "solution" is not repeatable.

 

We’ve already had this conversation. It's Government debt. As has been stated by many commentators, the UK deficit will halve over the term of the parliament with an RPI of just 5%.

 

"Cuts by the back door"

 

As you know, it erodes debt in real terms.

 

Besides, talking of personal debt, wages have been, and will continue to rise (average ~ 2.8% currently. 5 years of that is ~15% off your mortgage, which would just about cover the loss on your property between now and then ).

[drbubb]

We’ve already had this conversation. It's Government debt. As has been stated by many commentators, the UK deficit will halve over the term of the parliament with an RPI of just 5%.

 

"Cuts by the back door"

 

As you know, it erodes debt in real terms.

 

Besides, talking of personal debt, wages have been, and will continue to rise (average ~ 2.8% currently. 5 years of that is ~15% off your mortgage, which would just about cover the loss on your property between now and then ).

The burden represented by the Debt only "halves" if Income doubles.

 

If income is unchanged, the burden of inflation of imports makes the debt more burdensome.

This should be clear if you think about it, but must people (especially Estate agents) speak rubbish on this subject

[John Doe]

The burden represented by the Debt only "halves" if Income doubles.

 

If income is unchanged, the burden of inflation of imports makes the debt more burdensome.

This should be clear if you think about it, but must people (especially Estate agents) speak rubbish on this subject

I know that, but I never said the debt halves, rather the deficit halves.

 

However, if you are inflating the money supply (through QE or whatever other means), your debt indeed reduces in real terms.

 

QE is amazing in this respect, printing money then using it to buy bonds to keep the yields low (which of course would normally rocket if you started printing money).

 

It's genius really!

 

A lot of people don't seem to get that.

 

Also, income is not unchanged. It is, and will keep on, rising. If inflation gets higher, so will the call for wage rises. The population will not sit on their hands forever.

[drbubb]

Also, income is not unchanged. It is, and will keep on, rising. If inflation gets higher, so will the call for wage rises. The population will not sit on their hands forever.

I am not at all sure about that.

 

If pre-tax income rises, and then the tax bite rises so fast that post-tax income is unchanged,

then the "real people" in the private sector who are in the productive jobs are no better off.

 

In fact, after taking into account inflation, they are worse off.

 

The public sector is the only area showing an increase in "income", and much of that is going towards malinvestment like housing benefits which just pushes up rents and house price, HARMING those who do not own property, and only helping parasitic landlords.

 

The way I see the present system is that it benefits parasites, rather than productive folk.

[Meralti]

I know that, but I never said the debt halves, rather the deficit halves.

 

However, if you are inflating the money supply (through QE or whatever other means), your debt indeed reduces in real terms.

 

QE is amazing in this respect, printing money then using it to buy bonds to keep the yields low (which of course would normally rocket if you started printing money).

 

It's genius really!

 

A lot of people don't seem to get that.

 

Also, income is not unchanged. It is, and will keep on, rising. If inflation gets higher, so will the call for wage rises. The population will not sit on their hands forever.

 

This seems remarkably complacent and smacks of bull-ramping. I see no sign of wages rising anywhere near the rate of inflation.

Nor are they simply garrenteed to rise, especially with rising unemployment.

 

But more importantly cost are likely to increase for other reasons, removal of implicit tax payer support for mortgage lending.

 

The end of the special liquidity scheme began last month, and repayment are due to start this month. The money mnade available is due to be repayed by January next year (I think this is the right date). But I haven't seen any comment about this in the press.

 

Lenders who need to repay money they have borrowed from the scheme will not be able to lend at low prices. Those that were not involved in the scheme will probably raise rates on mortgage deals because of lack of competition.

 

There was talk of a £300bn funding gap opeing up between what property buyers wanted to borrow and the available funds. This will naturally lead to rising rates.

 

I talked about this a few month ago when I posted about changing government policy.

 

Isn't it time to admit that the only thing supporting pices is an ultra low base rate; and domestic rates can rise independently of base rates and probably will unless the funding shortfall can be met by other means.

 

In this way the BoE can let domestic rates gradually rise while doing nothing with base rates. Therefore if prices fall due to lack of mortgage availability it isn't their fault - it's the domestic banks.

[John Doe]

This seems remarkably complacent and smacks of bull-ramping. I see no sign of wages rising anywhere near the rate of inflation.

 

Never said anything about wages rising in line with inflation, just said they were rising (which they are, and for some sectors quite sharply) and, therefore, if you have a fixed interest debt, it will be eroded by the rise in incomes, whether that rise is above or below inflation.

 

Also, if you believe everyone else will just sit on their hands and let prices keep rising while there is NO rise in wages for an extended period of time, then, frankly, you are dreaming.

 

Threats of job losses or not, unions get a huge gain in support in these circumstances. People are starting to reach the point of max pain and before too long there will be strikes if either inflation isnt damped or wages arent improved.

 

This is the evil genie of inflation they really want to keep in the bottle.

 

Take the other points though.

[drbubb]

Isn't it time to admit that the only thing supporting pices is an ultra low base rate; and domestic rates can rise independently of base rates and probably will unless the funding shortfall can be met by other means.

 

In this way the BoE can let domestic rates gradually rise while doing nothing with base rates. Therefore if prices fall due to lack of mortgage availability it isn't their fault - it's the domestic banks.

RATES, and the overly-generous Housing benefits, which help to soak up (and disguise!) excess supply.

[drbubb]

Never said anything about wages rising in line with inflation, just said they were rising (which they are, and for some sectors quite sharply) and, therefore, if you have a fixed interest debt, it will be eroded by the rise in incomes, whether that rise is above or below inflation.

 

Also, if you believe everyone else will just sit on their hands and let prices keep rising while there is NO rise in wages for an extended period of time, then, frankly, you are dreaming.

Are you looking at Earned Incomes on an AFTER-TAX BASIS?

I would be surprised if they are rising much, and they may be falling

[John Doe]

Are you looking at Earned Incomes on an AFTER-TAX BASIS?

I would be surprised if they are rising much, and they may be falling

 

While the one off tax change will affect quite a few, it is only for 1 year and it just isn't the case for everyone anyway.

 

For the lower paid - and many medium paid for example (under ~ 40k) - after tax income is rising due to the TAX threshold going up.

 

Also, people forget that in the public sector, in addition to yearly pay increases, most people also get an annual increment (going up the pay scale), usually worth ~2 to 3%. So even in a year with a 2% pay rise, these people are keeping up with inflation.

 

Just to cheer you up more, I found this shocking story on HPC about someone who has given up a £60k job and has bought a place in Wales to become "self sufficient" - largely from benefits it appears!

 

http://www.housepricecrash.co.uk/forum/index.php?showtopic=163690

 

More importantly, one of the comments....

 

What you fail to mention is where your £16,000 income actually comes from:

 

Assume partner works 16 hours at minimum wage = £4938.96

Working tax credit (as one person works 16 hours a week) = £3872.28

Child tax credit = £5662.02

Child benefit =£1752.40

 

Total income = £16,225.66

 

So the £16K income is likely to include £11,286.70 of benefits!

 

As you have no savings you'll also get council tax benefit on top of this which is likely to be about £1,500 a year.

 

So it seems to me that the taxpayer is subsidising your lifestyle whilst you write your book.