UK House prices: News & Views

[chazza]

Right.

I think she's operating on a 2005-7 paradigm: "Buy as much house as you can afford, and wait".

Maybe she and her friends, just dont "get it" yet. It's hard to give up old obsessions sometimes.

It's her life. She's free to do that. But if she's other-driven, she will feel increasing uncomfortable,

as she realises the extra debt has robbed her of financial flexibility, in order to fulfill an outmoded dream.

 

Of the people I know who are buying now, nearly all, I believe, are still operating with this mindset - Lever up and reap the rewards in 5-10 years time.

[drbubb]

Hi Dr B,

Where to move it to? USD? CAD? EUR? Gold? Silver? An equal mix of all?

Thanks

 

Im still long Sterling, thru stocks, and so I bought a Put to protect the FX value.

 

I hold some dollars, with the money earmarked for Gold, and Calls on Gold.

 

And I'm long C$ in cash and in Junior mining shares

 

[DoctorSolar]

Im still long Sterling, thru stocks, and so I bought a Put to protect the FX value.

 

I hold some dollars, with the money earmarked for Gold, and Calls on Gold.

 

And I'm long C$ in cash and in Junior mining shares

Thanks for that Dr B.

 

I'm similarly positioned but probably hold WAY too much GBP.

 

However, that GBP holding is earmarked to eventually buy property when prices finally meet reality.

With house prices destined to fall further that GBP will reduce a future mortgage amount regardless of any run on the currency.

 

A shade wary of buying more CAD at the moment.

We've already seen a 7% move in CADGBP and GBP is now very close to the low set in Jan.

 

Also getting a little twitchy regarding my USD holding that is ear marked for Gold.

Trying to hold steady on this one as I think USD POG may well go down with a stock sell off.

A situation that seems utterly perverse to me but I have to deal with the realities

 

[drbubb]

However, that GBP holding is earmarked to eventually buy property when prices finally meet reality.

With house prices destined to fall further that GBP will reduce a future mortgage amount regardless of any run on the currency.

 

A shade wary of buying more CAD at the moment.

 

Why not get OUT of Sterling with at least 50%, and return later?

USD and Gold are two things I'd be looking at

 

= = =

 

 

BDEV is definitely looking "toppy", and indeed yesterday's action has several of the features that you

would expect to see at an important top (opening gap up, big reversal, pick-up in volume.)

 

But the action is not yet distinctive enough to say that a "breakdown with volume" has happened.

 

Has anyone noticed this? - A nice drop in BDEV today (so far):

 

BDEV 179.00 Change: -9.25 // Percent Change: -4.91%

Open: 189.75 High: 190.00 Low: 179.00 / Volume: 1,262,081

 

The volume is rather light so far, so this might not amount to anything more than a dip.

 

But it bears watching.

 

Others: Chart

PSN : -12.75p / Percent Change: -2.98%

BKG : -16.00p / Percent Change: -1.96%

UKX : -32.46 / / -0.71%

[DoctorSolar]

Wonder how many ounces of gold it will take to buy the average UK house in 18-24 months time.

 

Currently 156000/575 = 271

 

Why not get OUT of Sterling with at least 50%, and return later?

USD and Gold are two things I'd be looking at

Yep sounds reasonable. I'm already steadily nibbling on the gold front buying a set GBP amount every week at Goldmoney.

If I keep the current burn rate I'll be fully positioned by end of September.

 

Talk on here of Gold going to £500 or £450 still gnaws away at the back of my mind.

Hopefully my buying little and often strategy will enable me to weather and even take advantage of such movements should they occur.

 

Also moved a little in to USD but messed up my timing getting in at 1.60 USD a few weeks back.

1.65 seems to be the BIG resistance mark so no real biggie.

Might extend my gold buying through October using any USD I have should we get a sell off.

 

 

 

[ziknik]

...

In any case, mortgage lending was mostly done by foreign lenders who have decided to leave the UK.

...

 

Looks like I was wrong about the foreign lenders. They might be coming back

 

http://business.timesonline.co.uk/tol/busi...icle6727253.ece

Bank of China has begun offering mortgages to British borrowers, who are finding it difficult to get loans from leading UK lenders. The world’s third-largest bank is lending at lower rates than many of the deals available from more established UK lenders. It has previously focused on lending to the Chinese community within the UK.

 

With rates from 2.5 per cent over base, it is targeting homeowners and buy-to-let landlords who are struggling to get credit. It is marketing deals via four brokers, including Savills and Legal & General Mortgage Club.

…

 

[ziknik]

Another hand out of my money

 

Cash for stalled housing projects

 

Hundreds of housing developments in England that have stalled during the recession are set to share in a £925m attempt to kick-start the industry.

 

About 270 projects could benefit from the cash, the government said, with a third of the funds to go to housing associations to build affordable homes.

…

But he insisted the funds were not a "handout" for developers who would NOT have to repay loans within five years..

…

[drbubb]

MY PSYCHOLOGICAL MODEL - from the Backwards-looking people thread

 

I thought trading shares in builders is a market SECONDARY to the actual housing market and by definition cannot be AHEAD of the latter....

In other words the relationship is inverse to what you are suggesting...

?

 

This is a common misconception.

Many seem to think that:

Builders sell homes, and that those home sales generate earnings, and then eventually the earnings are reported.

Then, finally, the Builder share prices react to higher earnings.

 

But it isnt like that. The Builders share prices react very quickly to changes in sentiment. They are way ahead of other

indicators like Halifax and Nationwide indices, which are only reported after a long lag, of several weeks.

 

(I have gone into this in great detail on other threads, and am not keen to repeat the arguments again.

Here's something to bear in mind. Insiders within a Builder cannot buy their own shares, but they can

buy - or sell - the shares of a competitor. So when they see things improving within their own company

they can buy the stock of a competitor, and recommend it to friends, family, and others. Perhaps this

is why it works so well.)

 

The typical thinking here seems to be:

Experts call the bottom, then people start buying a little, then prices move up, and the press notices it.

People read about higher prices, and then get more positive, and then they rush out and buy.

 

I dont see it that way. My model works like this:

 

Prices get knocked down to low levels on bearish sentiment, and a few people spot bargains, while others who are selling just get so fed up that they stop cutting prices. As soon as the bearish sentiment hits an extreme, the market is ready to move higher. Prices (including share prices) stop falling, and start to move higher after the extreme has been hit. The share markets reflect it more quickly, and move up faster, as the sentiment begins to swing to less negative. Builder shares shoot up, and the supply/demand balance in the physical market begin to shift to more positive, and people start shopping more aggressively for homes and also approach their banks for mortgage finance. Property prices start moving up, and eventually, within a few weeks, it shows up in the Halifax and Nationwide indices. Experts notice it, and the media begins to report that their favorite experts, the media darlings, are beginning to see an upturn. The john-come-lates who follow the crowd overcome their fear as the read the positive news reports. But they are the last wave of buyers. (This is the point that I think we have reached in this bounce - "the lates" are buying now.)

 

What I am expecting from here is: the Builders share prices are about to stall out and head lower. That will be a sign that the bullish sentiment has peaked, and the property market is beginning to get less bullish, and bearish feelings are beginning to creep back. At first, people wont notice it. Then they will say it is just a summer lull. But the number of properties for sale on the market will continue to grow. The sellers will be hoping that the buyers will return in September. Instead, they are likely to see falling stock market prices, which will help to undermine the bullish sentiment in the property market.

 

As property prices start to slide, some sellers will worry, and drop their prices in a hurry, hoping to catch those few remaining buyers willing to pay full "rally prices." This will put the downwards price slide into motion. It will pick up speed as forced sales hit whatever bids are left in the market. Bears will realise they are "back in control" of the market, and back off on the prices that they are willing to pay. When prices slide below the Feb.2009 lows, then the panic will truly be underway, and the real crash will be upon the UK market. I would expect this stage to be reached in Q4.2009 or Q1.2010. But, of course, I offer no guarantees- delays are always possible.

[drbubb]

From HPC's "market is being strangled" thread

 

But don’t be fooled by this tiny (0.1pc) increase. In fact, the real story behind the figures (which ought to be accessible from the Land Reg site, but it’s so appallingly slow at the moment that you shouldn’t wait up for them to load) is the picture they paint of a completely moribund housing market. Activity has fallen to almost unprecedented lows as families struggle against the combined forces of the recession, with its rising unemployment and falling profits, and the credit crunch, which prevents them from getting hold of a mortgage at a reasonable rate.

 

So who is fooled?

 

As I said elsewhere, the "Hero-Buyers" are almost finished with their buying.

They are running out of cash, and reasonably price credit.

 

Only the dumbest, and most foolish of homebuyers are left.

And they will soon be strangled too.

 

...Rather stupidly it looks like Estate Agents and vendors have used the increase in activity to start pushing asking prices back up which has just added to the log jam of stuck SSTC properties and completed transactions remain at historically low levels. Estate Agents shooting themselves in the foot - again.

 

They are trying to please sellers, at a time when they talked the market into withgolding cheap prices.

 

Now, as you have said, they are left with a big hold in their flat-feet

[alexreeve]

Just for fun, the latest from rightmove. I certainly don't agree.

 

With increasing evidence that we've already hit the bottom of the market... ...what’s the forecast for the rest of 2009?

 

While there are innate risks in forecasting, key indicators increasingly suggest that prices have bottomed out. We have seen a modest recovery in mortgage approvals and an improvement but not an oversupply of new sellers coming to market. With no real signs of increased mortgage funding or a relaxation of high deposit requirements, the ‘Steady State’ is the most likely scenario for the remainder of 2009.

 

Historically low volumes will persist, which will mean that asking prices have seen most of their gains for this year. In areas of chronic under-and-over supply there will be the scope for further price rises and falls, with unemployment-driven repossessions dragging on into 2010 and 2011.

[ziknik]

http://news.bbc.co.uk/1/hi/business/8175479.stm

 

Homes 'may rise in value in 2009'

 

The UK's largest building society believes there is a "reasonable chance" that house prices could end the year higher than they started 2009.

 

Such an outcome was "unthinkable" a few months ago, the Nationwide's chief economist said.

 

The Nationwide's latest house price survey showed prices rose by 1.3% in July compared with the previous month.

 

The average UK home costs £158,871, with the annual rate of property value falls slowing sharply to 6.2%, it said.

…

[DoctorSolar]

http://news.bbc.co.uk/1/hi/business/8175479.stm

 

It's precisely this kind of news that causes much frustration. To quote from the Delusionary pricing thread

 

Sod this, just what I didn't want to hear, Ive got a large deposit in the bank getting no interest and I'm 30 in feb, i allways said if i hadn't bought a house by the time i was 30 I wouldn't bother. as a tradesman I dont want to be working past 50 trashing my body to an early grave just to pay a huge mortgage off. This watching of the monthly figures is mind numbing for me. i should have bought years ago and am a fool for not doing so.

Oh well, onwards and upwards. think i'll start looking at a bigger house to rent as this shitty shoe box is draining my energies. lol. I'm out of HPC! even though i know they will have to fall sooner or later, i just havnt got the years in me.

 

dammit. this can't be described as a blip now, it's a proper mini-recovereh in house prices.

 

how long will it last? who knows.

 

what is causing it? i can't imagine... like slaughterhouse cattle rutting, the british populace seems determined that, if it's going down, it's taking some overpriced pwoperdee with it. pathetic.

 

Causing a McEnroe moment for Dr Bubb "are you serious"

 

Thing is I can kind of sympathise with their frustration.

Property went up for much longer than expected.

It hasnt come down as much as some had expected.

And now they see it going back up again.

They feel they missed out the first time they sure as hell aint going to miss out this time.

 

Now I agree that this thinking will most likely result in financial pain for those buying now. However, the thing you have to remember is that property has been at worst a reasonable bet for at least 13 years in the UK. It is so ingrained in the public psyche by the decade long relentless property porn shows. It is going to take a LONG LONG time for people to truly become fed up of the whole property thing. This slow motion crash could grind on for many years. Eventually some will think I need to get on with my life and part of that is owning my own home.

 

I sold to rent but it aint so easy here in the UK. Tenants rights are not what they are elsewhere. We have already had to move accom several times already as landlords pulled the plug on our rental after just 6 months in a couple of places. NOT fun I can tell you. It is entirely understandable that people get worn down by this kind of thing and think sod it I know its over priced but I need a stable home for me and my family, I can afford it and my job is stable.

 

 

[ziknik]

It's precisely this kind of news that causes much frustration.

...

 

This is a frustrating period for pretty much everyone.

 

A number of people want to sell their homes but are unable to do so because they are in negative equity.

 

People want to downsize and collect as much cash as possible for their retirement but are unable to do so because there aren’t enough buyers to settle the property chains.

 

Most peoples’ pension has taken a beating.

 

Inflation is the only way out of this mess. Let’s hope it doesn’t turn hyper on us.

[DoctorSolar]

Just back from some open viewings on flats in Edinburgh. Not looking to buy but to get a feel for sentiment and what people are getting for their money. And let me tell you this dead cat bounce is alive and well so to speak lol. These viewings were absolutely mobbed with people. A near constant stream of eager buyers. So much so that there was almost a queue to get in and see some places! And this is with prices not even falling to 2005/6 levels yet.

 

Most folk seemed to be expectant/new parents. There seems to be a real stigma round here if you are a parent and not on the property ladder snake. Already heard the surprise in peoples voice of "oh you are expecting a child and you are going to continue renting".

 

Seems people are in the "never a better time to buy" mentality. And have not thought to themselves "oh I wonder what the massive joblosses that have still to come at HBOS/RBS in Edinburgh are going to do to house prices"

 

Ah well, its a time to keep patient and keep nibbling at gold via goldmoney.

 

 

[wren]

Just back from some open viewings on flats in Edinburgh. Not looking to buy but to get a feel for sentiment and what people are getting for their money. And let me tell you this dead cat bounce is alive and well so to speak lol. These viewings were absolutely mobbed with people. A near constant stream of eager buyers. So much so that there was almost a queue to get in and see some places! And this is with prices not even falling to 2005/6 levels yet.

 

Most folk seemed to be expectant/new parents. There seems to be a real stigma round here if you are a parent and not on the property ladder snake. Already heard the surprise in peoples voice of "oh you are expecting a child and you are going to continue renting".

 

Seems people are in the "never a better time to buy" mentality. And have not thought to themselves "oh I wonder what the massive joblosses that have still to come at HBOS/RBS in Edinburgh are going to do to house prices"

 

Ah well, its a time to keep patient and keep nibbling at gold via goldmoney.

Thanks for the grass roots report.

 

Somebody needs to buy to make the dead cat bounce.

 

I wonder whether this will end in the autumn or winter. Seasonally slower of course, but with unemployment building up a change of attitude will presumably happen albeit slowly.

 

Has the recent devaluation of the pound been getting noticed much and are people complaining about any higher prices? I live in the Eurozone so cannot observe for myself.

[DoctorSolar]

Has the recent devaluation of the pound been getting noticed much and are people complaining about any higher prices? I live in the Eurozone so cannot observe for myself.

From what I can tell speaking to a wide range of people from a wide range of backgrounds/current situations, this crisis hasn't affected any of them in any noticeable way. Those on tracker/variable rates are feeling hugely better off. Most are perceiving this crisis as something removed from them. All of which makes me think this thing hasn't even really got going yet.

 

[allyjcambo]

Just back from some open viewings on flats in Edinburgh. Not looking to buy but to get a feel for sentiment and what people are getting for their money. And let me tell you this dead cat bounce is alive and well so to speak lol. These viewings were absolutely mobbed with people. A near constant stream of eager buyers. So much so that there was almost a queue to get in and see some places! And this is with prices not even falling to 2005/6 levels yet.

 

Most folk seemed to be expectant/new parents. There seems to be a real stigma round here if you are a parent and not on the property ladder snake. Already heard the surprise in peoples voice of "oh you are expecting a child and you are going to continue renting".

 

Seems people are in the "never a better time to buy" mentality. And have not thought to themselves "oh I wonder what the massive joblosses that have still to come at HBOS/RBS in Edinburgh are going to do to house prices"

 

Ah well, its a time to keep patient and keep nibbling at gold via goldmoney.

 

Thanks for sharing your views. I know the Edinburgh market quite well and recognise the sentiments you mention: in particular, the idea of home ownership being something sensible remains embedded in most people.

 

Ultimately it depends I guess on one's view of the economy. Most people still think things will return to 'normal' within the next few years and so remain convinced that property is great investment. I think almost all on GEI (irrespective of whether you're in the deflation/inflation camp) don't believe in a quick turnaround.

[wren]

From what I can tell speaking to a wide range of people from a wide range of backgrounds/current situations, this crisis hasn't affected any of them in any noticeable way. Those on tracker/variable rates are feeling hugely better off. Most are perceiving this crisis as something removed from them. All of which makes me think this thing hasn't even really got going yet.

Catflap over the HYPERINFLATION thread said that maybe the worst for Sterling will come after the election (May at the latest?).

 

I guess a real wake up will come only next year.

 

[G0ldfinger]

From what I can tell speaking to a wide range of people from a wide range of backgrounds/current situations, this crisis hasn't affected any of them in any noticeable way. Those on tracker/variable rates are feeling hugely better off. Most are perceiving this crisis as something removed from them. All of which makes me think this thing hasn't even really got going yet.

Exactly. Only rates over 10%, 15% or 20% will unveal the real mess we're in.

[drbubb]

"Getting on with your life" in a "Double Bind Trap" ?

Why Renting might prove far better than owning

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

 

Thing is I can kind of sympathise with their frustration.

Property went up for much longer than expected.

It hasnt come down as much as some had expected.

And now they see it going back up again.

They feel they missed out the first time they sure as hell aint going to miss out this time.

 

Now I agree that this thinking will most likely result in financial pain for those buying now. However, the thing you have to remember is that property has been at worst a reasonable bet for at least 13 years in the UK. It is so ingrained in the public psyche by the decade long relentless property porn shows. It is going to take a LONG LONG time for people to truly become fed up of the whole property thing. This slow motion crash could grind on for many years. Eventually some will think I need to get on with my life and part of that is owning my own home.

 

I suspect you are right that it will take years for people to put property into a different perspective.

As it is, price fell to the level of the "the flat" in 2004, when prices went sideways, and now they are bouncing.

 

 

Maybe the bounce is being driven, because there were enough people out there who somehow recall 2004/5

price levels as being where they feel "value" was established. They may have decided that they can afford to buy

and that "property is a good bet in the long run" (which it may NOT be), and with rates so low, why not take

a chance and buy. That sort of reaction is very understandable. Understandable, and very likely WRONG.

 

My expectation, is that prices will start falling again in the next 1-3 months, as the fundamentals of the

UK economy continue to worsen. And at some stage Sterling interest rates will start rising too, putting

today's home buyers into a very uncomfortable double bind: negative equity with rising rates - a horrible

and painful trap.

 

The prices will slide right through the 2004 support level, and the panic will really set in - I expect this to

hit sometime in 2010. Then the banks will realize that they are facing monumental problems, and the foreclosures

will start to accelerate. My guess is that they will peak in 2011 or 2012, and UK housing prices will not bottom

until foreclosure rates start to drop again, maybe a year after that.

 

Eventually some will think I need to get on with my life and part of that is owning my own home.

 

I pity those people who are buying now, and thinking they can "get on with their lives."

They may be buying into a trap, What may lie ahead is nothing like what they are expecting.

The reality may be: rising mortgage rates, rising taxes, and increased worries over job security.

Is that the sort of NORMAL LIFE they want? And at the same time: trapped by negative equity.

 

I am posting so aggressively on HPC these pat several weeks to try to save people from that

sort of trap. (I wonder if anyone will appreciate these efforts?)

 

I sold to rent but it aint so easy here in the UK. Tenants rights are not what they are elsewhere. We have already had to move accom several times already as landlords pulled the plug on our rental after just 6 months in a couple of places. NOT fun I can tell you. It is entirely understandable that people get worn down by this kind of thing and think sod it I know its over priced but I need a stable home for me and my family, I can afford it and my job is stable.

 

Your point is valid.

 

But is that sort of life worse than the double bind trap that I have described?

 

By the way, you might consider doing what my gf and I did in London. We took a rental for a longer period,

paying a lower rent because we paid so many months in advance. Partly that was because the savings we got

was more than if I had left the money in the bank, and partly because the big upfront payment allayed the

LL's concerns about renting to "someone without a proper job."

 

If you do that, you have to be very certain your LL is financially sound, and maybe investigate your legal rights

as a longer term tenant.

[drbubb]

Just back from some open viewings on flats in Edinburgh. Not looking to buy but to get a feel for sentiment and what people are getting for their money. And let me tell you this dead cat bounce is alive and well so to speak lol. These viewings were absolutely mobbed with people. A near constant stream of eager buyers. So much so that there was almost a queue to get in and see some places! And this is with prices not even falling to 2005/6 levels yet.

 

Most folk seemed to be expectant/new parents. There seems to be a real stigma round here if you are a parent and not on the property ladder snake. Already heard the surprise in peoples voice of "oh you are expecting a child and you are going to continue renting".

 

Sadly, these "motivated" people are ideal sucker-buyers who are oh-so-likely to get caught in the Double bind trap

 

[spline]

Tradition Future HPI / SPREFS chart, Jun/09

 

The step up clearly indicated a turn in the Halifax, but unclear whether it's done or ongoing?

[drbubb]

Tradition Future HPI / SPREFS chart, Jun/09

The step up clearly indicated a turn in the Halifax, but unclear whether it's done or ongoing?

 

To me, it looks like it is at/near possible resistance

[leviathan]

Dr B

 

Any thoughts on what happens to Sterling when the dead cat bounce comes to an end. Will the interest rate rises you talk about prop sterling up or do you expect a hastening of its fall vs US$ and Euro?

 

Lev

[ziknik]

I thought this (below) was an interesting statistic.

 

http://www.guardian.co.uk/business/2009/au...-fall-recession

 

The report said that the total value of residential houses and flats tumbled by nearly £400bn, or 9%, to £3.9tn. Housing still remains by far the most valuable single asset class, accounting for 56% of the country's net worth. Commercial buildings shed £100bn of value to be worth a total of around £600bn.