UK House prices: News & Views

[drbubb]

As for the CML figures, that'll be the Olympics/autumn/bad-weather/global-wierding-effect etc.

You can say that, and believe it, only if the trend does not continue

[John Doe]

BDEV 191, new high

 

http://uk.finance.ya...c?s=BDEV.L&t=1m

 

Seems many have underestimated the particular pequliarities of the UK market, and the lengths our PTB are prepared to go to, to prop up certain companies.

[Meralti]

Yep, right smack bang in the middle of one of the biggest recessions ever, the number of people in employment is just a percent or so off the most ever in history, which was recorded at the top of maybe the biggest boom in history. All in all, not so bad then.

 

Now I'm not defending current policies (actually I have moved a little towards the left on this now), or the data, (indeed, I was rather surprised, again, considering), but I still think it could be a whole lot worse.

 

Also, until those that lose their jobs are forced to sell (forbearance in full effect at present), it aint gonna effect the prices of houses much (as has been the case, so far).

 

As for the CML figures, that'll be the Olympics/autumn/bad-weather/global-wierding-effect etc.

 

The number of self-employed people increased by 35,000 to reach 4.20 million. the number of unpaid family workers (people who work in a family business who do not receive a formal wage or salary but benefit from the profits of that business) increased by 2,000 to reach 112,000. The number of people on government supported training and employment programmes increased by 13,000 on the quarter to reach 158,000″

 

Which, if you add them up, comes to a round 50,000.

 

Self-employment and “government supported training and employment programmes” would seem have been behind much of the recent fall in unemployment. There doesn't appear to be any data on how much these new self-employed people are earning and they may have just switched from Job Seekers Allowance to Working Tax Credits. Few will be earning enough to reach the magical sum of 35 hours a week at minimum wage. This will be the required earnings threshold for self-employed people when Universal Credit begins next year. Unfortunately no current statistics for Working Tax Credits exist.

 

Time to look behind the hype and headlines.

[John Doe]

The number of self-employed people increased by 35,000 to reach 4.20 million. the number of unpaid family workers (people who work in a family business who do not receive a formal wage or salary but benefit from the profits of that business) increased by 2,000 to reach 112,000. The number of people on government supported training and employment programmes increased by 13,000 on the quarter to reach 158,000″

 

Which, if you add them up, comes to a round 50,000.

 

Self-employment and “government supported training and employment programmes” would seem have been behind much of the recent fall in unemployment. There doesn't appear to be any data on how much these new self-employed people are earning and they may have just switched from Job Seekers Allowance to Working Tax Credits. Few will be earning enough to reach the magical sum of 35 hours a week at minimum wage. This will be the required earnings threshold for self-employed people when Universal Credit begins next year. Unfortunately no current statistics for Working Tax Credits exist.

 

Time to look behind the hype and headlines.

 

Indeed, and if you do you'll also see that the public sector shed 270,000 jobs during 2011 alone.

 

http://www.guardian.co.uk/business/2012/mar/14/osborne-austerity-270000-public-sector-jobs

 

So considering these (and many more losses before and since), the employment figures start looking a touch better again, then add in those coming off DLA and the figures look better again.

 

As I said, it ain't perfect, but it's a whole lot better than many (including me) would have thought, considering we are in the middle of the biggest economic crisis/downturn in generations, wouldn't you say?

[John Doe]

So has he done it? Really?

 

If he’s not getting blamed for economic mismanagement then he is being made the butt of jokes because of his privileged upbringing.

 

But could George actually have the last laugh?

 

Later this week the first estimate of GDP for the third quarter is expected to show a robust return to growth with economists forecasting a whopping 0.6% increase on the second quarter.

 

This would drag us out of recession and be far better than our neighbours’ growth rates in Europe and the US.

 

http://uk.finance.yahoo.com/news/could-george-osborne-have-the-last-laugh-23102012.html

 

Could be a little premature to be celebrating just yet methinks.

[Perishabull]

Excerpt from telegraph.co.uk;

 

 

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9629688/Tough-new-mortgage-rules-to-hit-first-time-buyers-and-borrowers-in-their-50s.html

 

"Tough new mortgage rules to hit first-time buyers and borrowers in their 50s

 

Tough new mortgage lending rules to be announced tomorrow are expected to hit millions of prospective first-time buyers as well as those in their 50s.

 

The regulations, designed to bring an end to the reckless borrowing of the past, are likely to mean those wanting to get on the property ladder continue to face high hurdles to take out loans.

 

The Council of Mortgage Lenders warned that it would mean today’s tight lending conditions remained a “permanent feature” of the property market.

 

Among those affected by tomorrow’s announcement by the Financial Services Authority will be those looking to take out interest-only mortgages.

 

Because they have lower monthly repayments, these types of loans have in the past helped millions get onto the housing ladder.

 

It is expected that under the new rules, these borrowers will in future have to show that they are saving a pot of money to pay off the capital when the mortgage matures.

 

Lenders would be required to check at least once during the term of the loan that the savings pot its still in place, it is thought."

[John Doe]

Excerpt from telegraph.co.uk;

 

 

http://www.telegraph...-their-50s.html

 

"Tough new mortgage rules to hit first-time buyers and borrowers in their 50s

 

Tough new mortgage lending rules to be announced tomorrow are expected to hit millions of prospective first-time buyers as well as those in their 50s.

 

The regulations, designed to bring an end to the reckless borrowing of the past, are likely to mean those wanting to get on the property ladder continue to face high hurdles to take out loans.

 

The Council of Mortgage Lenders warned that it would mean today’s tight lending conditions remained a “permanent feature†of the property market.

 

Among those affected by tomorrow’s announcement by the Financial Services Authority will be those looking to take out interest-only mortgages.

 

Because they have lower monthly repayments, these types of loans have in the past helped millions get onto the housing ladder.

 

It is expected that under the new rules, these borrowers will in future have to show that they are saving a pot of money to pay off the capital when the mortgage matures.

 

Lenders would be required to check at least once during the term of the loan that the savings pot its still in place, it is thought."

 

Always thought it strange that some companies were giving out IO mortgages without requiring proof of a repayment vehicle. (Though not as bad as the liar loans).

 

We had an IO mortgage once (2005 to 2007) and had to show actual statements of our ISA's etc, as evidence of our repayment vehicle each year (that was with Britannia).

[drbubb]

Always thought it strange that some companies were giving out IO mortgages without requiring proof of a repayment vehicle. (Though not as bad as the liar loans).

"repayment vehicle" ?

 

Selling the property - what else?

 

But if they lend too high a LTV, it is an inappropriate risk

[John Doe]

"repayment vehicle" ?

 

Yeah sounds daft, but that was what they called it.

 

Essentially we had to show that we were building up a savings pot to pay off the capital the end of the loan period. Not all IO motgages were lent out in a totally reckless manner (but many were).

[John Doe]

UK GDP growth 1% Q-to-Q!

 

Out of recession with a bang!

 

(unless you use real inflation figures that is )

 

Still, as some have been saying, it's still better than the back to back recessions the 70's (so far).

 

Anyone up for the treble dip?

[John Doe]

Hmmm, I see the thread name has been changed.

 

Is this a tacit admission, by some of the people who thought this house price crash would be much much worse than before (including the proponents of "crash cruise speed"), that they might just have been wrong?

 

Strange thing is, that, in real terms, it is actually not that far off, for most parts of the country

[John Doe]

Jees, just read this...

 

for potential first-time buyers like me, buying that first home is becoming an increasingly unattractive prospect. There are mortgage rates to consider and deposits to get hold of... and even if you manage to get to grips with all that, you could end up in negative equity due to an unforeseen economic downturn. If that sounds a bit off-putting, don't worry - you're not alone.

 

http://uk.finance.ya...-083800610.html

 

Makes sense. But now, just look at the comments! FFS!

 

Just a few months back, they'd all be agreeing with him. Today they're hammering him!

 

One day and a good GDP number and, for the first time in many years, the majority of the responses are negative towards him!!

 

The tide certainly seems to have turned, we are now (in the absence of a major shock) at, or, at the very least, very, very near the (nominal) bottom.

[drbubb]

HOUSE PRICES versus Inflation: Myth versus Reality

 

 

Surely the key issue is this:

(1) Govt finances are a disaster. The choices are deflation / austerity which leads to an implosion of the banking system or inflation. As the first choice is politically unacceptable the politicians will go for the second

(2) However regulatory changes for banks etc mean that printing money is not creating enough (/any) inflation of the right type. (Velocity of money is collapsing)

(3) At some point credit availability / velocity will return

(4) The average guy in the street thinks that housing will track inflation - in the long run it roughly does (can anyone confirm this?)

However high leverage makes housing sensitive to interest rates. Is the big issue between Germany and the UK the level of leverage in residential housing?

(5) How much of UK house prices are driven by demand and how much by artificial rules (planning permission / green belt) creating artificial limits on supply?

(6) Does telecoms ie the ability to work from home etc plus transport links (eg Crossrail (again!)) reduce the pricing pressure in the centre?

 

I think it will track Net Incomes, more than inflation

 

And in fact, if food and or energy prices are pushed up by Cost-push pressures from abroad,

then people will have LESS MONEY to put into housing

 

I went back and studying inflation rates during Weimar times - and that is exactly what happened:

Food prices had 100X the inflation rate of Rents - I think that is very telling !

[John Doe]

Ah, but you're forgetting all the good news.....

 

In summary, the British economy’s most recent data show that we’ve just experienced the fastest quarterly growth in five years, employment is going up, unemployment is coming down, public-sector borrowing is falling; pay in both the public and private sectors is rising, inflation is fading (though still above target), retail sales are positive, as are new car registrations.

 

and whilst some think it's just a switch to part time work (of which no doubt some is)........

 

As the Bank of England’s governor pointed out last week, since 2010 “in the private sector, more new jobs have been created than over any other two-year period since the mid-1990s”. He added that this surge in employment “is not the product of a switch from full-time to part-time jobs because total hours worked have risen at the same rate as employment.”

 

http://uk.finance.ya...-065448613.html

 

Wonder how long it'll last

[littledavesab]

 

Strange thing is, that, in real terms, it is actually not that far off, for most parts of the country

 

Very relevant to this discussion. Do like AH's commentry.

 

http://www.cityam.com/latest-news/allister-heath/outside-prime-london-house-prices-are-falling-back-earth

[drbubb]

Very relevant to this discussion. Do like AH's commentry.

http://www.cityam.co...ling-back-earth

Right...

 

A QUIET CRASH has happened in the UK:

 

"House prices in virtually all parts of the country excepting prime London have collapsed. It’s hard to believe if you live or aspire to live in Kensington, Richmond or another prosperous location, but it’s true – and it’s impossible to understand the overall economy, as opposed to the London bubble, and British politics without getting to grips with these statistics.

The average home in Britain sold for £163,910 in the third quarter, according to Nationwide. That is 11 per cent below the all time high reached at the height of the boom, when the average home was changing hands for £184,131 in the third quarter of 2007. But these figures are in nominal terms. Since then, inflation has substantially eroded the purchasing power of the pound.

The inflation-adjusted figures reveal that the peak to trough real terms decline has now reached around 24.2 per cent"

[BoldAsBrass]

Right...

 

A QUIET CRASH has happened in the UK:

 

"House prices in virtually all parts of the country excepting prime London have collapsed. It’s hard to believe if you live or aspire to live in Kensington, Richmond or another prosperous location, but it’s true – and it’s impossible to understand the overall economy, as opposed to the London bubble, and British politics without getting to grips with these statistics.

The average home in Britain sold for £163,910 in the third quarter, according to Nationwide. That is 11 per cent below the all time high reached at the height of the boom, when the average home was changing hands for £184,131 in the third quarter of 2007. But these figures are in nominal terms. Since then, inflation has substantially eroded the purchasing power of the pound.

The inflation-adjusted figures reveal that the peak to trough real terms decline has now reached around 24.2 per cent"

 

Boy, why is this trotted out over and over again? The purchasing power of the pound, in house buying/inflation terms, is only relevant to house prices.

 

"Wow, my electricity bill has gone up again. The purchasing power of my pound has been eroded. I now need £50 a month instead of £40 a month to pay for the electricity I use. The house I want to buy is the same price is it was, yet, somehow, miraculously, it's now cheaper for me to buy the house because it's more expensive for me to buy electricity! It's a miracle!"

[drbubb]

I basically agree with you.

 

But:

+ Nominal prices are down too

+ INCOMES are what really matter, and even more than that: After Tax Incomes

(but the data is not so readily available as CPI or RPI data)

[Walktothewater]

Boy, why is this trotted out over and over again?

 

Because it's correct, though the 'penny hasnt dropped' yet for the average person. And i doubt it ever will. Joe Soap gets to say yeah my property is still worth X, forgetting of course that X buys far less of everything else then it did before.

 

In hard money terms (gold) property has well and truly crashed. But that's mumbo jumbo talk LOL...

[Van]

Boy, why is this trotted out over and over again? The purchasing power of the pound, in house buying/inflation terms, is only relevant to house prices.

 

"Wow, my electricity bill has gone up again. The purchasing power of my pound has been eroded. I now need £50 a month instead of £40 a month to pay for the electricity I use. The house I want to buy is the same price is it was, yet, somehow, miraculously, it's now cheaper for me to buy the house because it's more expensive for me to buy electricity! It's a miracle!"

 

I agree that disposable income is what really matters, but that is just a function of nominal prices vs income.

 

If nominal prices didn't matter then would be happy if your income fell 30% but the price of your gas bills fell 35% and the house stayed the same price? Of course not.

[John Doe]

Ah, the joys of renting in the UK...

 

http://www.housepricecrash.co.uk/forum/index.php?showtopic=184295&st=15

 

Amazing

[drbubb]

I agree that disposable income is what really matters, but that is just a function of nominal prices vs income.

 

If nominal prices didn't matter then would be happy if your income fell 30% but the price of your gas bills fell 35% and the house stayed the same price? Of course not.

It depends how much you spend on gas,

But sure, if the net after tax income is flat, and food and gas prices fall, you may not mind paying a little more for rent

[drbubb]

http://www.telegraph...wer-prices.html

 

Quote

 

The 0.1pc fall in house prices in October – the third month in a row they have fallen – was mainly down to sellers re-pricing homes that have failed to attract buyers, rather than a significant fall in demand, according to the confidence index from property analyst Hometrack.

 

Demand for housing remains “subdued”, with the market unlikely to recover fully until there is a sustained rise in household incomes, the report said.

 

Prices were flat in London and fell across the rest of England and Wales. The West Midlands saw the biggest drop of 0.5pc, prompting the second biggest increase in sales.

[BoldAsBrass]

Because it's correct, though the 'penny hasnt dropped' yet for the average person. And i doubt it ever will. Joe Soap gets to say yeah my property is still worth X, forgetting of course that X buys far less of everything else then it did before.

 

How many people sell their house and buy electricity with the money?

 

The vast majority of people buy a house to live in. The only factors they are interested in are:

 

What they earn

How much their mortgage is

Whether general inflation makes it harder for them to pay their mortgage

 

Whether their house price has gone down in nominal terms or in terms of how many ounces of gold you would need to buy it is of no interest whatsoever.

 

Nor does the price of houses in terms of ounces of gold mean anything to anyone other than someone who sold to rent and put all their money into gold.

 

If the price of gold halved tomorrow, would you think that house prices had doubled?

 

If gas halved in price tomorrow, would you consider that house prices had been affected?

[Jake]

How many people sell their house and buy electricity with the money?

 

The vast majority of people buy a house to live in. The only factors they are interested in are:

 

What they earn

How much their mortgage is

Whether general inflation makes it harder for them to pay their mortgage

 

Whether their house price has gone down in nominal terms or in terms of how many ounces of gold you would need to buy it is of no interest whatsoever.

 

Nor does the price of houses in terms of ounces of gold mean anything to anyone other than someone who sold to rent and put all their money into gold. ( or someone who has zero gold)

 

If the price of gold halved tomorrow, would you think that house prices had doubled? Yes, and if gold doubled, house prices half. Depend how you count your dosh.

 

If gas halved in price tomorrow, would you consider that house prices had been affected? Depends if your wealth is in gas.

 

*the 'penny hasnt dropped' yet for the average person. And i doubt it ever will. Joe Soap gets to say...*