UK House prices: News & Views

[drbubb]

Ja, I am just not really convinced why Detroit should really recover. Maybe with Chicago and Toronto we have enough large and vibrant cities on the lakes, what would Detroit really have going for it? Maybe it is just going to stay like this, with some pockets of normality or even wealth, and the rest just falling appart.

I have started a New Thread, where I talk about Place-making and Walkscores:

http://www.greenenergyinvestors.com/index.php?showtopic=15895

 

I thought Detroit's best way for recovering was to build a "walkable heart" around a new Light Rail system.

This has been discussed for years, and had a real chance of moving forward, but was recently killed (again.)

 

RIP Detroit

[G0ldfinger]

It won't.

 

The model here is Glasgow, or any of the other industrial cities of the north.

 

It's like buying a dog of a share and betting on a bounce. You're better of buying something with growth potential that is trending upwards ...

Yes, that's a little what I fear. However, in all fairness, the former industrial cities of the north saw a bounce thanks to an unprecedented credit bubble over the past decade or more (I guess now it's slowly back into collapse mode). The problem with Detroit is that it was such a great boom town, and it will possibly never again come even close to its former self. That said, the right property in the right place... but for this I would have to be a local.

[drbubb]

...The problem with Detroit is that it was such a great boom town, and it will possibly never again come even close to its former self. That said, the right property in the right place... but for this I would have to be a local.

The Right place would be a stable, walkable neighborhood, like Ferndale, Royal Oak, or even Hamtramak

[G0ldfinger]

Mortgage rates in Ireland are still dangerously low, and the LTV ratios I see at some larger banks are at a financially retarded 95%! So here is my question for the experts: could someone in, say, a non-PIIGS country like Germany lever up wit an Irish mortage? I mean, from the Irish bank's view, a German mortgage should be a much safer bet. Does anyone know if this is possible, like an inter-European mortgage arbitrage? It could also work between other countries, say Spain and Belgium or so. I am curious to know.

 

At least in the old days, there were all these Swiss Franc to the Baltics mortgages, right? What happened to those, BTW. Those people must be so under the water, you'd need a submarine to find them.

[Perishabull]

Ja, I am just not really convinced why Detroit should really recover. Maybe with Chicago and Toronto we have enough large and vibrant cities on the lakes, what would Detroit really have going for it? Maybe it is just going to stay like this, with some pockets of normality or even wealth, and the rest just falling appart.

 

 

It won't.

 

Never is a long time.

 

 

A more up to date chart from ycharts.com;

[drbubb]

At least in the old days, there were all these Swiss Franc to the Baltics mortgages, right? What happened to those, BTW. Those people must be so under the water, you'd need a submarine to find them.

 

A Nautilus mortgage?

[G0ldfinger]

Just a remark: while the doofus banks in Ireland still offer 95% mortgages, I think it's pretty normal in Germany to have a 40% down payment - and the German economy is doing pretty well and there has been no house price bubble.

 

Mortgage rates in Ireland are still dangerously low, and the LTV ratios I see at some larger banks are at a financially retarded 95%! So here is my question for the experts: could someone in, say, a non-PIIGS country like Germany lever up wit an Irish mortage? I mean, from the Irish bank's view, a German mortgage should be a much safer bet. Does anyone know if this is possible, like an inter-European mortgage arbitrage? It could also work between other countries, say Spain and Belgium or so. I am curious to know.

 

At least in the old days, there were all these Swiss Franc to the Baltics mortgages, right? What happened to those, BTW. Those people must be so under the water, you'd need a submarine to find them.

[drbubb]

Just a remark: while the doofus banks in Ireland still offer 95% mortgages, I think it's pretty normal in Germany to have a 40% down payment - and the German economy is doing pretty well and there has been no house price bubble.

Good to hear it.

 

I have a piece of a Property Fund that owns flats in Berlin - near the new airport

[G0ldfinger]

No one has answered my original question yet: can a German take out an Irish mortgage to buy a house in Germany. My guess is not, but it makes no sense.

[John Doe]

No one has answered my original question yet: can a German take out an Irish mortgage to buy a house in Germany. My guess is not, but it makes no sense.

 

Don't know, but I can't see why not?

 

Slightly different was the Eastern Europeans that took mortgages out in Swiss francs.

 

For example, loads of Hungarians took out mortgages in swiss francs. Of course, the swiss franc has risen massively against the forint since. However, the Hungarian government recently decided to give these mortgage holders a reprieve, essentially allowing them to pay off these at the exchange rate at which they were taken out, which hasn't gone down well with the ECB.

 

In a strongly worded legal opinion, the ECB warned a law allowing foreign currency mortgages to be repaid at below market rates risked creating “a situation that can substantially weaken the banking system’s stability and is likely to also have adverse spill-over effects on the economy”.

 

 

http://www.ft.com/cms/s/0/a3875322-0a27-11e1-92b5-00144feabdc0.html#axzz1lV7MWqxy

[G0ldfinger]

Don't know, but I can't see why not?

Differences in repossession law, would be my guess. Maybe there would be other legal subtleties.

 

Ah, well, if no one knows or where to read up on it, maybe I'll just have to phone in. Thing is, I haven't heard of it, and I haven't ever seen advertising for it (foreign but inner-Eurozone mortgages).

 

Thing is, I could see European non-bubble markets to become a target of reckless (e.g. Irish or Spanish) lenders, and in the wake creating bubbles in these more prudent European property markets, wrecking the whole union in the end.

[John Doe]

Differences in repossession law, would be my guess. Maybe there would be other legal subtleties.

 

Ah, well, if no one knows or where to read up on it, maybe I'll just have to phone in. Thing is, I haven't heard of it, and I haven't ever seen advertising for it (foreign but inner-Eurozone mortgages).

 

Thing is, I could see European non-bubble markets to become a target of reckless (e.g. Irish or Spanish) lenders, and in the wake creating bubbles in these more prudent European property markets, wrecking the whole union in the end.

 

AFAIR, Bubble Pricker did a thread on something similar to this many years back. I think he even set up a fund to buy property in Germany for BTL.

[Plastic Elastic]

AFAIR, Bubble Pricker did a thread on something similar to this many years back. I think he even set up a fund to buy property in Germany for BTL.

 

I think there are a number of investment vehicles that were created to enable British people to buy German property. I'll have a look and see if I can find some information.

 

That's probably not what you meant though, GF.

[G0ldfinger]

I think there are a number of investment vehicles that were created to enable British people to buy German property. I'll have a look and see if I can find some information.

 

That's probably not what you meant though, GF.

Well, that would be interesting to know too, so thanks for looking into it. However, there is a currency risk (if these are not EUR mortgages from British banks). I was asking for the inter-Eurozone case. But anyhow, what you mentioned would be interesting to know too. It might tell us something about the connectivity of these markets.

[John Doe]

Halifax 0.6% up on the month, down 0.9% on the quarter.

 

Howard Archer, chief economist for Global Insight said that January's positive figures were an anomaly.

 

"House prices are notoriously volatile from month to month and from survey to survey, and it is notable that most of the latest evidence remains soft with the Nationwide reporting that house prices fell 0.2pc month-on-month in January and Hometrack reporting that they were flat," he said.

 

"As such, we are sticking to our view that house prices are likely to fall by around 5pc in 2012. The latest Halifax data, along our belief that the economy will likely just avoid recession, suggests that house prices are unlikely to fall sharply."

 

 

http://uk.finance.yahoo.com/news/house-prices-remain-weak-despite-094005861.html

[signofthetimes]

Halifax 0.6% up on the month, down 0.9% on the quarter.

 

 

 

 

http://uk.finance.yahoo.com/news/house-prices-remain-weak-despite-094005861.html

 

and down 1.8% YoY , might as well have the full facts

[stunlee]

Halifax 0.6% up on the month, down 0.9% on the quarter.

 

http://uk.finance.yahoo.com/news/house-prices-remain-weak-despite-094005861.html

 

Some extremely negative commentary there from Howard Archer, from someone that you would expect to be talking up the market.

 

 

and down 1.8% YoY , might as well have the full facts

 

And that after a year of economic news that could bearly (sp) get any worse. That 1.8 percent fall might just about be covered by the difference in rent and mortgage payments if one was on a really expensive mortgage.

 

 

Spring bounce will be along in a few weeks time (god I hate that phrase).

[John Doe]

Some extremely negative commentary there from Howard Archer, from someone that you would expect to be talking up the market.

 

I always found Archer quite bearish (for 2009 he forcast 20% falls, for 2010-2011 he forecast 10% down) so he's been relatively good compared to many.

 

 

Spring bounce will be along in a few weeks time (god I hate that phrase).

 

Yeah, whenever I say it (I try hard not to), I get the urge to spit

[Van]

All indices basically confirm very slow nominal deflation since mid-2011, no point in denying otherwise whether you are bull or bear.

 

Question now is will we see traditional strength in first half of this year? I would bet that the next few months will show more strength than the last 6 months.

[Plastic Elastic]

http://www.pmm-partners.co.uk/funds.html

 

Its not bad and it'll probably be okay given the valuations of Berlin property vs elsewhere and, say, Germany leaves the Eurozone...

 

Wouldnt mind re-allocating a portion however

 

Well, that would be interesting to know too, so thanks for looking into it. However, there is a currency risk (if these are not EUR mortgages from British banks). I was asking for the inter-Eurozone case. But anyhow, what you mentioned would be interesting to know too. It might tell us something about the connectivity of these markets.

 

GF, I only found this one. I know there are others as well but I can't find anything at the moment.

 

Edit: I guess this isn't based on, say, investing a UK mortgage into German property either. Even so, there is definitely some flow of foreign money in German property. Also, there were also American REITs that bought up former public property in Dresden, for example. I read about this a few years back, well before the crisis hit. A foreign investor may also buy shares of TAG Immobilien, for example, and related shares.

 

Whether all this is enough to have a serious impact on prices I do not know. Plus, as you are well aware, there aren't really any house price indices in Germany.

[G0ldfinger]

Plus, as you are well aware, there aren't really any house price indices in Germany.

There is this one: http://www.hypoport.de/hpx-hedonic.html

 

[Plastic Elastic]

There is this one: http://www.hypoport.de/hpx-hedonic.html

Thanks, this one is new to me! Apparently, the index encompasses around 10% of all property transactions in Germany.

[G0ldfinger]

I think and somehow fear that the sweet spot for German property might have been reached.

 

(1) Interest rates are at an historic low. Depending on LTV and your occupation (lifetime state employee), there seem to be 30-fixes at 4%.

 

(2) Prices have been fairly stable over the past 5 years, and also before, there was not really a bubble like in the UK-PIIGS.

 

(3) But see the hockey stick at the end of the chart above? I fear that this is a first sign of a PIIGS-imported hyper-inflation. While they will see some asset deflation (Athens house prices minus 70% anyone?), I fear that the flood of money (ECB in hyper-drive) will

(i) keep IRs in Germany extremely low for the foreseeable future.

(ii) will make people who fear about their savings buy hard assets like houses (because they don't understand that gold would be better).

 

(4) The general economy is doing fine and supporting house prices at the moment. This might change, but how bad would it have to get to really have a proper impact on house prices?

 

This is a theory I have at the moment. This could be the sweet spot for German property. I wouldn't sell any (or at least: much) gold for it, but the time could be right to lever up. If house prices suffered some deflation in Germany too, it might come together with higher IRs and the effect on affordability could be muted.

[Plastic Elastic]

I think and somehow fear that the sweet spot for German property might have been reached.

 

(1) Interest rates are at an historic low. Depending on LTV and your occupation (lifetime state employee), there seem to be 30-fixes at 4%.

 

(2) Prices have been fairly stable over the past 5 years, and also before, there was not really a bubble like in the UK-PIIGS.

 

(3) But see the hockey stick at the end of the chart above? I fear that this is a first sign of a PIIGS-imported hyper-inflation. While they will see some asset deflation (Athens house prices minus 70% anyone?), I fear that the flood of money (ECB in hyper-drive) will

(i) keep IRs in Germany extremely low for the foreseeable future.

(ii) will make people who fear about their savings buy hard assets like houses (because they don't understand that gold would be better).

 

(4) The general economy is doing fine and supporting house prices at the moment. This might change, but how bad would it have to get to really have a proper impact on house prices?

 

This is a theory I have at the moment. This could be the sweet spot for German property. I wouldn't sell any (or at least: much) gold for it, but the time could be right to lever up. If house prices suffered some deflation in Germany too, it might come together with higher IRs and the effect on affordability could be muted.

 

I heard anecdotal evidence that Greeks were buying lots of properties in Hamburg but it could be that somebody was having me on I also feel that German people are getting concerned about inflation, and, thus, are herding into property, and, as you say, it might not be the wisest step in all cases. Firstly, Germany will not be spared from all the outfall from the PIIGs desaster, thus rents and tenants may and probably will become less reliable. Secondly, German property is likely to become a prime target of financial repression - I think they will simply raise taxes and all sorts of other legal hurdles (environmental legislation etc.) by a lot. We are seeing that already. Thirdly, you are "immobile", as the German term implies. Of course, a lot of these arguments may not apply if you looked for a property to live in but if you look towards renting out you better choose wisely and in a good location I think.

 

I wouldn't be very keen to sell any gold for a property at this point.

[shawth]

This is an interesting topic. One that I looked at a few years ago. I'll start a new thread.