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UK House prices: News & Views


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A snip at 10k! :)

 

Thought this was worth reading:

 

CRASH 2: Banking crisis? Wait until the UK property bust really gets going…. from a blog called "The Slog":

 

Wait til property crash. . .

 

Thank`s for the link TrueNorth! Really nice article and the comments too, Deconstruction of Dogmatic Denialism at it`s best. :)

 

Quote:

 

"But after a certain balance is tipped, the rate of acceleration becomes exponential. Tired parallel or not, the Titanic’s loss still remains the best analogy: 67% of the submersion of the ship took place in the last ten minutes before it disappeared below the waves.

 

To each physical data set, for example, one must factor in the effect of micro family bad news, macro economic bad news, and micro market bad news. This is never 2+2+2: more often the progression is (2 x 2) squared. So instead of six, the answer becomes 16. Very few people can think beyond the linear; but most case histories of market panic and economic slump show that such thinking is central to accuracy. After a certain time, the sheer weight of bad news acts like the steel of a liner that is no longer buoyant: the speed is so frightening, everyone is taken by surprise."

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Ah, but the Titanic was not the QE2 (or should I say QE3 now!)

 

http://www.dailymail.co.uk/news/article-2009374/No-rate-rises-unemployment-drops-economy-grows-says-Mervyn-King.html

 

The Governor of the Bank of England Sir Mervyn King has suggested that interest rates would not rise until it was certain the economy was growing and there had been a drop in unemployment.

He was giving evidence to MPs at the Treasury Select Committee along with other members of the bank.

 

Sir Mervyn also indicated yesterday that a large cash injection directly into the economy to boost asset prices and spending was possible.

 

You can't beat the system.

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Nationwide MOM 0% (SA)

 

Full report here, with a few nice graphs at the end (NSA +0.6%)

 

http://www.nationwide.co.uk/hpi/historical/Jun_2011.pdf

More of the same?

“It’s hard to make the case for prices rising or falling sharply

over the remainder of 2011 if the economy develops as we

expect. Economic growth looks set to gather pace in the

months ahead, but is likely to remain unspectacular. This in

turn points to only modest gains in employment and sluggish

wage increases, which will continue to keep many potential

buyers on the sidelines.

“At the same time, the chances of a near term increase in

interest rates appear to have diminished. Ultra-low interest

rates should continue to support affordability for some time yet

and keep a lid on forced sales. Overall, a combination of low

transaction volumes, still tight housing supply and flattish

house prices looks set to stay for the remainder of the year.”

 

BE ALERT for "surprises" when you read something like that

 

That current policies are not working, is made clear by this article:

 

Bank of England MPC in disarray on rates as new data disappoint

 

The Bank of England released the latest personal lending figures this morning. The level stayed pretty constant at £1.2billion, but is still 30% below what it was in February. In the same month for 2008, the figure was £7.8billion – over six times higher. This is, however, only the latest confirmatory piece in a jigsaw that is beginning to suggest a property implosion of unparalleled enormity. And the influential BoE Deputy Governor Paul Tucker has signalled his growing conversion to the need for interest rate rises.

 

The two reasons the UK housing crash hasn’t been enormous to date are :

(1) the banks have a gun to their heads from government forcing them to be tolerant of those behind on their mortgage payments; and

(2) zero-rate interest policy (Zirp) has meant that only a fraction of buyers have actually handed over their keys to the provider.

 

UK Asset Resolution (UKAR), which owns Mortgage Express, many mortgages from B&B, and some £44bn of “bad” mortgages from Northern Rock is tackling the “forbearance” offered to 44,000 customers last year by reducing monthly repayments to help them stay in their homes.

 

/more: http://hat4uk.wordpress.com/2011/06/29/crash-2-banking-crisis-wait-until-the-uk-property-bust-really-gets-going/

 

Ultra-Low rates Forever?

I think not !

Why go on rewarding deadbeats, and punishing savers ?

Flip it around, and make the world "right" again !

(Though there will be some pain for those who overpaid for their houses.)

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A february 2011 news release from Association of Residential Letting Agents (ARLA) suggests something that would not only green britain, but create some much needed economic activity:

 

ARLA: TOP TIPS FOR "GREENING" RENTED PROPERTIES

 

Landlords overseeing residential properties should consider measures to improve the energy efficiency of their properties, according to the Association of Residential Letting Agents (ARLA).

 

The Government's Green Deal will encourage landlords to take advantage of up-front financing to make their properties more energy efficient, where tenants request improvements be made.

 

For those landlords who don't comply however, the Government has stated that it may introduce regulations to force landlords to improve their properties by 2015.

 

The Government's aim is for all properties with an Energy Performance Certificate (EPC) rating of F or G to be improved beyond that grading, which may be a significant challenge for older properties.

 

So ARLA has come up with these simple tips to make your properties more efficient, thus saving money and further financial outlays in the future:

Cavity wall and floor insulation: This can often be a disruptive process, but effective insulation will represent a significant step towards improving the energy efficiency of your property.

Ensure you have effective loft insulation: Although many properties now have loft insulation installed, check the depth and quality. The recommended thickness is between 250-300mm for optimum energy efficiency.

Insulate your water fittings: ARLA recommends that lagging should be installed around water pipes and boilers to minimise heat loss. As many will have experienced this winter, water pipes are also prone to freezing, so insulation should help to prevent this.

Prevent draughts: Landlords should seek to block draughts in various parts of their properties, through draught proofing doors and windows, as well as reducing heat loss through floorboards.

Install a thermostat on your boiler: Thermostats ensure that when a room reaches its optimum temperature of around 19?C, the heating is automatically switched off, thus reducing heating bills.

Communicating with tenants: Effective communication between landlords and tenants can ensure that tenants are aware of the importance of energy efficiency, and take their own simple steps to reducing heating costs.

 

Ian Potter, Operations Manager of ARLA, commented: "Landlords can already take advantage of a tax allowance of up to £1,500 for these energy efficiency improvements through the Landlord's Energy Saving Allowance (LESA).

 

"It makes sense therefore for landlords to carry out these improvements straight away, as considerable cost savings can be made."

 

There is no incentive, however, as the tenant is the one who foots the bill for a poorly-insulated building. Until the property becomes unrentable by virtue of a "failing" EPC, I doubt landlords will make any efforts to "green" their housing stock.

 

I calculated the current energy costs of that pile I considered renting, plugging the EPC number the estate agent generated, oh, three years ago when it first went on the market. I input the EPC number into "EPCadviser" on t'internet and voila! Current costs? £7,500 pa. To heat it! Who can afford that?!

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Please forgive me if I'm covering really old or obvious ground here.

 

Many of the assumptions around a house price corrections revolve around interest rates. Which in the main are set by the BoE.

 

But what if the EU starts to implode and Bond holders start demanding higher interest rates from UK PLC to cover the risk?

 

Would this not force the BoE's hand regardless of housing or other internal economic factors and therefore increase interest rates for mortgage holders?

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Please forgive me if I'm covering really old or obvious ground here.

 

Many of the assumptions around a house price corrections revolve around interest rates. Which in the main are set by the BoE.

 

But what if the EU starts to implode and Bond holders start demanding higher interest rates from UK PLC to cover the risk?

 

Would this not force the BoE's hand regardless of housing or other internal economic factors and therefore increase interest rates for mortgage holders?

While it looks like the problem in Europe has been postponed for a while (again), if the EU does implode then there would be a flight to relative "safety". US usually, but if they follow the foreign money that has been flowing into London property, then it would actually bring yields down in the UK.

 

Besides, UK has mostly very long dated debt, so it wouldn't be forced to borrow during any "panic" period, and if they did need to sell bonds during this time, they would get our nationalised banks to buy them as they did recently (QE through the back door).

 

Also, they could always directly turn on the printing presses again.

 

You can’t beat the system.

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While it looks like the problem in Europe has been postponed for a while (again), if the EU does implode then there would be a flight to relative "safety". US usually, but if they follow the foreign money that has been flowing into London property, then it would actually bring yields down in the UK.

 

Besides, UK has mostly very long dated debt, so it wouldn't be forced to borrow during any "panic" period, and if they did need to sell bonds during this time, they would get our nationalised banks to buy them as they did recently (QE through the back door).

 

Also, they could always directly turn on the printing presses again.

 

You can't beat the system.

 

They control the bond markets, through the ability to print, yes.

 

But they don't control the currency markets.

 

'You can't buck the markets'

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Please forgive me if I'm covering really old or obvious ground here.

 

Many of the assumptions around a house price corrections revolve around interest rates. Which in the main are set by the BoE.

 

But what if the EU starts to implode and Bond holders start demanding higher interest rates from UK PLC to cover the risk?

 

Would this not force the BoE's hand regardless of housing or other internal economic factors and therefore increase interest rates for mortgage holders?

Yes!

That is a plausible scenario. And probably a likely one... eventually.

 

While it looks like the problem in Europe has been postponed for a while (again), if the EU does implode then there would be a flight to relative "safety". US usually, but if they follow the foreign money that has been flowing into London property, then it would actually bring yields down in the UK.

Potentially, but only in the short term IMHO.

The UK has debt problems galore, and will not escape "the reckoning."

 

Most mortgages are driven off deposit rates in the UK, I believe,

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I am in a bit of a quandary and wouldn't mind hearing the thoughts of a few of the clever people on this site.

 

I currently live (with wife and kids) in a small inherited flat, too small for the family but a nice safety net. We are trying to buy a larger property (yes I know its a bad time to be doing this but we are far too cramped) and we have sale agreed on the flat for a good price - buyer is a investor/landlord.

 

But we can't find anywhere to move to (mainly due to the unrealistic prices people are currently marketing their properties at in my local area) and we are now in danger of losing the sale.

 

The option has been put forward to sell the flat and rent back from LL. I really don't know if this is a good idea, where would I put the cash and am I wise to let go of my families safety net in these uncertain times?

 

Any thoughts would be appreciated.

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I am in a bit of a quandary and wouldn't mind hearing the thoughts of a few of the clever people on this site.

 

I currently live (with wife and kids) in a small inherited flat, too small for the family but a nice safety net. We are trying to buy a larger property (yes I know its a bad time to be doing this but we are far too cramped) and we have sale agreed on the flat for a good price - buyer is a investor/landlord.

 

But we can't find anywhere to move to (mainly due to the unrealistic prices people are currently marketing their properties at in my local area) and we are now in danger of losing the sale.

 

The option has been put forward to sell the flat and rent back from LL. I really don't know if this is a good idea, where would I put the cash and am I wise to let go of my families safety net in these uncertain times?

 

Any thoughts would be appreciated.

 

Go for it. Options like that particularly golden one rarely come along so easily!

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I am in a bit of a quandary and wouldn't mind hearing the thoughts of a few of the clever people on this site.

 

I currently live (with wife and kids) in a small inherited flat, too small for the family but a nice safety net. We are trying to buy a larger property (yes I know its a bad time to be doing this but we are far too cramped) and we have sale agreed on the flat for a good price - buyer is a investor/landlord.

 

But we can't find anywhere to move to (mainly due to the unrealistic prices people are currently marketing their properties at in my local area) and we are now in danger of losing the sale.

 

The option has been put forward to sell the flat and rent back from LL. I really don't know if this is a good idea, where would I put the cash and am I wise to let go of my families safety net in these uncertain times?

 

Any thoughts would be appreciated.

Why not hedge....

 

Rent the flat out and then rent a slightly bigger place using the rent from the flat, even if you have to add a little to get a bigger place.

 

You will still have the safety net, and can live in a bigger place for a very small** (if any) outlay.

 

You could even buy a place using the rent you get from the flat to pay (towards) you mortgage..

 

** if your flat is in a fantastic area and you're happy to live in a cheaper area, the rent from the flat could cover all the cost of the new place.

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I am in a bit of a quandary and wouldn't mind hearing the thoughts of a few of the clever people on this site.

 

I currently live (with wife and kids) in a small inherited flat, too small for the family but a nice safety net. We are trying to buy a larger property (yes I know its a bad time to be doing this but we are far too cramped) and we have sale agreed on the flat for a good price - buyer is a investor/landlord.

 

But we can't find anywhere to move to (mainly due to the unrealistic prices people are currently marketing their properties at in my local area) and we are now in danger of losing the sale.

 

The option has been put forward to sell the flat and rent back from LL. I really don't know if this is a good idea, where would I put the cash and am I wise to let go of my families safety net in these uncertain times?

 

Any thoughts would be appreciated.

 

Many people would say - sell up and rent - and, when prices go down, your money will go further.

 

I'd say, hmmmm, people have been saying that (and acting on it (I did)) since 2003.

 

 

When I STRed everthing was fine at first. The interest on my STR fund easily covered renting a similar house to the one I sold and paid for a couple of holidays too. Then, of course, as soon as it became noticeable that house prices were falling, they slashed interest rates to reverse the process.

 

Suddenly the STR fund is not covering the rent ... and rents keep rising.

 

Then, of course, a banking crisis. And suddenly I'm a lot more worried about losing my money in the bank than I am about falling, or rising, house prices.

 

Having watched the shenanigans over the last 8 years, I would advise you not to sell and rent.

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Why not hedge....

 

Rent the flat out and then rent a slightly bigger place using the rent from the flat, even if you have to add a little to get a bigger place.

You will still have the safety net, and can live in a bigger place for a very small** (if any) outlay.

You could even buy a place using the rent you get from the flat to pay (towards) you mortgage..

** if your flat is in a fantastic area and you're happy to live in a cheaper area, the rent from the flat could cover all the cost of the new place.

That could work, especially if you think prices might rise.

But it is not tax efficient, since you will need to pay some tax on your rental income,

whereas living in a property you own gives you the living space as a "tax free dividend."

 

Personally, I might have enough risk appetite to sell out and rent, and bet prices will fall.

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When I STRed everthing was fine at first. The interest on my STR fund easily covered renting a similar house to the one I sold and paid for a couple of holidays too. Then, of course, as soon as it became noticeable that house prices were falling, they slashed interest rates to reverse the process.

 

Suddenly the STR fund is not covering the rent ... and rents keep rising.

That's because the UK government (and US and HK too) have adopted the policy of robbing savers to subsidize the bloody fools who bought overpriced housing. Why not openly discuss it, and characterise it as the unfair policy that it is.

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Surprised nobody has suggested this: sell the flat, invest the proceeds in precious metals, and rent either your old place or another, larger place.

 

I expect your PMs will provide a lot more security than any other investment.

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<!--quoteo(post=190286:date=Oct 31 2010, 09:07 PM:name=azazel)--><div class='quotetop'>QUOTE (azazel @ Oct 31 2010, 09:07 PM) <a href="index.php?act=findpost&pid=190286"><{POST_SNAPBACK}></a></div><div class='quotemain'><!--quotec-->Can I get paid with £20 worth of silver please, even if its just a gram or even a scraping? Id rather not have that buttwipe stuff with Her majesty on it...<!--QuoteEnd--></div><!--QuoteEEnd-->

Sure thing! Same for me too if I am unfortunate enough to win.

Goldmoney or Bullionvault is easiest for me.

 

So the nationwide index is the one we shall use.

 

The October 2010 report can be found here:

 

<a href="http://www.nationwide.co.uk/hpi/historical/Oct_2010.pdf" target="_blank">http://www.nationwide.co.uk/hpi/historical/Oct_2010.pdf</a>

 

The average house price was: £164,381

 

So you need the average UK house price to go below: £131,505 to win

 

The June 2011 report can be found here:

 

http://www.nationwide.co.uk/hpi/historical/Jun_2011.pdf

 

The average house price was: £168,205

 

18 months to go on this bet. What's your thoughts on this one now?

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That's because the UK government (and US and HK too) have adopted the policy of robbing savers to subsidize the bloody fools who bought overpriced housing. Why not openly discuss it, and characterise it as the unfair policy that it is.

Has it ever been fair?

 

Really?

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I always thought that Housing Minister Grant Shapps was a bit of an idiot, today he tries his best to prove it with his "Mates Mortgages" (must appeal to the plebs with the type of language they understand). There again, he is only doing what is expected to be done to prop things up.

 

Group mortgages to help first-time buyers

 

The housing minister will call on banks to offer mortgages to groups of friends when he hosts a second first-time buyer summit today.

 

Grant Shapps wants lenders to introduce ‘mates mortgages’ that would allow individuals to club together to access the necessary finance to get on the housing ladder.

 

The summit is the latest attempt by the government to find ways to make it easier for young people to buy their first home.

 

At the first event, which was held in February, the minister urged lenders and house builders to find innovative ways to support first-time buyers.

 

The following month the chancellor George Osborne announced the £180 million firstbuy scheme, in his Budget. This helps first-time buyers to acquire new properties by offering them a 20 per cent equity loan. The buyer has to find a 5 per cent deposit, and secure a mortgage for the remaining 75 per cent.

 

http://www.insidehousing.co.uk/finance/group-mortgages-to-help-first-time-buyers/6516486.article

 

Banks should offer 'mates mortgages' so friends can buy together, says housing minister

 

* Mortgage experts question practicality of MP's proposal

 

Banks should offer ‘mates mortgages’ to help groups of friends buy a home together, a Government minister will say today.

 

Grant Shapps will urge lending giants to send a lifeline to the record numbers of first-time buyers struggling to get on the property ladder.

 

The housing minister said that without urgent help from banks a generation of young people would be locked out of the market.

 

The answer, he suggested, was a radical and new type of lending that he called ‘mates mortgages’.

 

In most parts of the country it is almost impossible for a young person with a full-time job to buy a home on their own.

 

The average salary of workers in their 20s is £21,000 whereas the cost of the average home is around £160,000.

 

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

 

David Hollingworth, of the independent adviser London & Country, said the proposal was ‘absolutely full of risks’.

 

'Full of risks': Critics of the scheme suggest that friends have enough problems sharing flats and it will only get worse if they have a mortgage to worry about

 

He added: ‘People get into enough strife when they rent a flat together over basic things like: “Who finished off the milk?” and “Who is going to do the washing up?” It will be even worse if they have a mortgage to fight over.’

 

Mel Bien, of the mortgage broker Private Finance, said: ‘It is one thing to rent with friends, which is traumatic enough, let alone to get a mortgage with them.’

 

The vast majority of mortgage deals are restricted to couples or two sisters or two brothers.

 

http://www.dailymail.co.uk/news/article-2011237/Grant-Shapps-Banks-offer-mates-mortgages.html

 

 

 

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I always thought that Housing Minister Grant Shapps was a bit of an idiot, today he tries his best to prove it with his "Mates Mortgages" (must appeal to the plebs with the type of language they understand). There again, he is only doing what is expected to be done to prop things up.

 

Unbelievable! Is he really serious?

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