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UK House prices: News & Views

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EXCERPT:

 

It’s going to be a lot trickier to get a mortgage

In 2009 Britain’s financial watchdog (now the Financial Conduct Authority) concluded in a discussion paper that the mortgage market needed reform. It eventually published new rules – the Mortgage Market Review (MMR) – in 2012. These rules come into effect from tomorrow.

The big change is that lenders will have to make absolutely sure that a borrower can afford the loan. Details of what exactly counts as ‘affordability’ are deliberately vague. But the regulator has given guidance, which involves looking at spending patterns and sources of income.

There is also an obligation to ‘stress test’ the loan. In other words, the borrower will need to be able to afford payments even if interest rates rise. The upshot is that most people will find getting a mortgage trickier.

== ==

Maybe ~

That could be why BDEV has been weakening:

=

BARRATT Bounced off the 252d-MA... but seems to have made its Down TURN now

 

BDEV... update : Log-3yrs

 

BDEV_zps0714c857.gif

 

Note the big increase in Volume since the Peak was made at 455p

 

The drop to 350p was a decline of 23%

=

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It is now time to PAY really CLOSE ATTENTION to developing risks in the London and the UK markets.

The property market may be turning.
A very good Early Warning has been the chart of Barratt Developments (BDEV.L), which will often turn down 6-12 months ahead of the UK Property market, and BDEV seems to have peaked in early March 2014:

 

BDEV - 10yr chart ... update
BDEV-10yrs_zps12d8de29.gif

A good confirmation might be when the 76d-MA crosses below the 252d-MA - then later the 610d-MA, and that has not happened yet - But these crosses may happen later in the year, within the next several months.

The signal has worked brilliantly in the past - calling The Top in mid-2007, and the Low a few years later in early 2012.

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BDEV may soon test Key Support near 350P

 

Scenario for FTSE: Rally to 7,000+, and then DONE ?

 

UKX / FTSE-100 Index ... update : UKX-12mos : 10-days // BDEV-v-UKX-4yrs : 12mos : 10-days

UKX_zps9c8dfc49.gif

 

That's only one scenario, but it may be one of the likely ones IMHO.

 

At the moment, the Index is "banging on the ceiling", and some sort of breakout seems highly likely.

But what will happen after that? (if we see it)

 

An ongoing rally is possible too.

But I expect the US market to have put in an important high before the end of May,

and I anticipate that the US and UK markets could be both falling in June and after,

if the usual seasonal : "Sell in May, and go away", cyclical pattern occurs in 2014

 

UKX never made it to $7,000 - and a slide seems to have started already ... UKX-10d : BDEV-10d

UKX_zps2f3e3d7d.gif

 

Meantime, BDEV is getting hammered today, as it breaks Short Term support !

 

(UK)
UKX- : 6,838. -40.29 : - 0.59%
BDEV: 358.6P -18.40 : -4.88%
(US)
SPY- : 1,866. -22.23 : -1.18%
IWM- : 108.04 - 1.58 : -1.44%
XLF - : $21.68 - 0.29 : -1.32%

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Borrowing rates have started to rise from their record low levels:

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10623812/Rates-start-to-rise-on-fixed-five-year-mortgages.html

 

Just doing some searching, it seems the average rate for a mortgage has probably risen 0.3-0.5% from base levels 1 year ago. You can't get sub-2% 2yr or sub-3% 3yr fixed deals any more.

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It is an UNconfirmed Price Jump:

 

Telegraph.co.uk - ‎32 minutes ago‎
The price of an average home increased by nearly £10,000 between April and May, the biggest month-on-month cash increase ever recorded.
Meantime, BDEV's stock price is sliding...
BDEV_zpsf9de7099.gif

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Nadeem seems to have called it right

 

 

http://www.marketoracle.co.uk/Article45659.html

 

Mark Carney Smoke and Mirrors Warning of UK Housing Market Bubble CrashHousing-Market / UK Housing May 19, 2014 - 07:10 AM GMT

By: Nadeem_Walayat

 

diamond.gifMark 'Money Printing' Carney continued to put up a smoke screen of a UK housing market bubble that needs to burst as he acted to cover his and the Bank of England's backs for being the architects of the current UK housing bull market that continues to accelerate towards an average inflation rate of 10% per annum, which looks set to break to a new all time high within the next few months, whilst the London bubble already stands at a 20% premium to its 2007 bull market peak following waves of foreign buying that seek a safe haven from their own corrupt and always eager to steal the peoples wealth governments.

 

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"UK house building was half that of his own country, Canada,

despite the UK having a population twice the size."

- Carney

 

Hmm. Why ?

 

Nadeem explains this comment (sort of): ... immigration (?) - and*

 

Mark Carney's statements are pure smoke and mirrors back covering, it's just so that when he leaves for his next job he can point out to his future employer that he did warn of x,y,z when the truth will be that in actions he did the exact OPPOSITE to INFLATE the housing bubble.

 

Understand this fundamental truth of the British economy - Inflating the housing bubble is the ONLY thing that can prevent the British economy from collapsing ! The BANKS! The BANKS! are STILL BANKRUPT! There is NO WAY, ZERO chance of the Bank of England acting to burst Britain's housing bubble instead they will act to SUSTAIN it!

 

Perhaps Mark Carney has only just realised this fundamental fact that his job is as it was when he was the Governor of the Central Bank of Canada was to INFLATE housing bubbles for that is what he did for Canada and the primary reason why he was hired by the British Government to INFLATE UK house prices so that the debt slaves fall for the illusion of increased wealth and go and borrow more for consumption and pay ADDITIONAL high taxes such as Stamp Duty.

 

The dynamics of the ever inflating housing bubble are not by chance but by design! We have high Immigration by DESIGN, we have LOW house building by DESIGN - None of it is by chance as I will illustrate further in this article...

 

===

 

*"and":

that the average size of households has continued to shrink falling from 3.1 in 1960 to just 2.25 in 2013 (one of the lowest in the world) as a consequence of the increase in single person households and single parent families

(thanks for destroying the UK family, PTB !)

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HIS BULLISH ARGUMENT

 

UK-housing-market-ebook-cover-2013-380.g

 

This suggests that the often put forward academic standards in terms of valuing the housing market affordability ratios such as X3.5 salary towards the likely path for the UK house prices does not take into account that of new demand against new supply trend that implies affordability ratios look set to be pushed ever higher to new trend extremes, and therefore supporting long-term rising price trends for UK house prices in real terms, i.e. expensive UK house prices look set to be here to stay for as long as the lack of new supply exists, especially as the UK population is expected to grow by at least another 5 million over the next 10 years and probably nearer 6 million which demands at least an extra 2.5 million homes to be built which is set against an realistic estimated construction of just 1.4 million new homes, which means UK over crowding is going to continue to get much worse and thus drive house prices ever higher.

 

The bottom line is Britain's over crowding ratio insures that no matter what the arguments are put forward by academics that many people just cannot afford to buy so house price rises must be unsustainable, instead the population growth fundamentals are such that their argument just does not matter, the only thing that can effect this fundamental trend is if the UK literally doubled the number of houses built per year, and even then it would not result in a fall in house prices but tend to index house prices to inflation. But off course that is not going to happen, the UK is not going to build anywhere near 300,000 homes per year

. . .

 

The truth about the the UK housing market as illustrated at length in the new UK Housing Market ebook (free download ETA 21st May 2014) and excerpted below is that of continuing exponential inflation resulting in average UK house prices being far from the bubble stage -

real-uk-house-prices-inflation-adjusted-

The implications of the real trend in UK house prices are:

1. The forecast real terms trend trajectory of June 2010 proved remarkably accurate in terms of mapping out where UK house prices would likely bottom several years later both in terms of price and time. Thus this indicator will again play a pivotal role in the extension for my existing forecast.

2. This supports my long standing view that the UK housing bull market can be sustained for the WHOLE of the remainder of this decade (6 years) and probably beyond.

3. That my existing expectations for a 10% per annum trend trajectory is more than sustainable, in fact the average rise in UK house prices over the next 6 years could easily exceed 80%! Which translates into an average of over 13% per annum that is well beyond anything that most housing market commentators, academic economists and journalists who think they are economists can comprehend today.

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an older one

 

http://www.marketoracle.co.uk/Article36414.html

 

 

Therefore this confirms my existing view of the birth of a embryonic UK housing bull market taking place this year which follows on from the crash of 2007 to 2009 (22 Aug 2007 - UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth ) and the subsequent depression into early 2012 as correctly forecast several years ago.

Last forecast (03 Sep 2010 - UK House Prices and GDP Growth Trends Analysis) concluded in a continuing depression in the UK housing market for the next 3-4 years, with the most probable outcome being for a gradual shallow drift lower in prices over the next 1-2 years (6-12%), followed by a further 1-2 years of base building.

uk-house-price-forecasts-may2011.gif

Detailed and lengthy analysis will be required to enable me to generate high probability trend trajectories for the housing market over the next few years, but I am continuing to see positive signs towards a multi-year bull market, so I am giving you another head start on an emerging probable multi-year bull market in UK housing.

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"A pledge from Labour to introduce Rent control"

 

Has been written about in today's SCMP Property section.

 

Another nail being prepared for the coffin ?

 

At the same time:

 

"Asking prices rose 3.6 percent in the four weeks to May 10 - the biggest increase for this period -

to an average of GBP 272,003 - up 8.9 percent from a year ago."

 

BofE officials have been expressing more concern about the strength of the property market.

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cameron said he was thinking of ending help to buy to stop prices getting out of control

 

osbourne said help to buy would not increase prices

 

 

seems all it has done is make things even harder for people who want to buy a home, benefiting the older generation and landlords at the expense of the young.

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Summer 2014 will be the peak.

People who are projecting a new multi-year bull cycle simply forget that we're starting from a base that is higher than the last peak. There's nowhere to go but down.

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Summer 2014 will be the peak.

People who are projecting a new multi-year bull cycle simply forget that we're starting from a base that is higher than the last peak. There's nowhere to go but down.

 

 

they will increase the government backed deposit scheme

 

it is the availability of credit that is the short term driver - longterm - i know it ends in a crash

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The Times (subscription) - ‎6 minutes ago‎


The chief executive of Nationwide has said house prices in London could begin to fall this summer in the latest indication that the housing boom could be receding.

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The Times (subscription) - ‎6 minutes ago‎
The chief executive of Nationwide has said house prices in London could begin to fall this summer in the latest indication that the housing boom could be receding.

 

 

Max Kaiser could about to be proven right in calling the peak "within 2 years"

 

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MAx is looking rather Spiv-like in that photo

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http://www.home.co.uk/asking_price_index/HAPIndex_MAY14.pdf

 

London Property Bubble Confirmed.

 

  • Home prices in Greater London leapt a further 2.4% over the last month, bringing the annual rise to an alarming 20.8%.
  • Home Prices accelerate bringing the average annual appreciation for England and Wales to 9.2%.
  • Typical time on market drops further to 90 days as the regional markets slowly heat up.
  • Supply of properties for sale entering the market: Down 50% vs. April 2008.

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Scotsman - ‎3 hours ago‎
HOUSE prices leapt by 11.1 per cent over the last year, the strongest annual growth seen since June 2007, the Nationwide building society has reported.
Wall Street Journal - by Jason Douglas

LONDON--U.K. house prices hit a record in May and construction activity remained buoyant, according to data Tuesday, a sign that demand for homes in Britain shows no signs of ebbing despite tougher mortgage rules.

Mortgage lender Nationwide Building Society said Tuesday that average house prices in the U.K. were up 0.7% on the month in May and 11.1% higher than a year earlier. That rise took the average price of a home in the U.K. to GBP186,512 ($312,333), surpassing the GBP186,044 peak reached in October 2007, just before the financial crisis struck.

Rapidly rising house prices have stoked concern the U.K. may be experiencing a real estate bubble, which could burst as interest rates rise back to more normal levels, leaving banks and borrowers nursing heavy losses.

Bank of England Data Monday showed the number of new mortgages approved in Britain fell in April for the third successive month, a sign tougher lending standards may be starting to bite.

But Nationwide Chief Economist Robert Gardner said it is too soon to gauge whether the housing market is cooling, citing low rates on new loans and healthy demand for homes.

Sky News - ‎3 hours ago‎
Borrowing levels are low but instead consumers are increasingly turning to their savings, with ISA deposits taking a big hit. 8:19pm UK, Tuesday 03 June 2014.

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Haven't been on this site for a while ... thought I might provide my anecdotal view of the world. To recap: Sold to Rent in 2003 (yes, almost 11 years ago now!) - because I thought the market was about to crash - just as it had in 1988. Had intended to rent for a couple of years and buy back in when prices had fallen. I did not allow for New Labour's determination to keep the credit boom going and ended up renting for 7 years. For the first 5 of those 7 years, we did okay in the sense that the money in the bank more than paid the rent and, at least at first (2003-2005), house prices did fall a bit. But, of course, after 2008 interest rates were slashed and suddenly the money in the bank wasn't paying the rent. In 2010 the landlord wanted to sell up and we found to rent a similar 4 bed house would cost £1800 to £2000 a month, instead of the £1100 a month we were paying. So, we bought. Still convinced, deep down inside somewhere, that house prices must fall.

 

Well, here we are 3 and a half years after buying and, unbelievably, we could sell our house now for at least £150k more than we paid for it.

 

My adult sons are reconciled to never being able to afford their own place. We are selling up again - moving to a slightly cheaper area and buying a 6 bed house that we are going to extend so that we end up with 3 separate living spaces - each with 2/3 bedrooms. My sons will need smallish mortgages - probably of about 50k each but it means they will live in a nice area with their brother and mother and father on hand for baby-sitting duties etc. - if the day comes and they settle down and have children. Upside for them is a small mortgage and a nice place to live without having to struggle all their lives. Downside is the fossils will always be next door and if they want to sell up and move on to their own place it will be difficult.

 

As a further anecdotal - my eldest brother is about to do something very similar - they are extending to create a granny annexe and their daughter and her family are moving into the house.

 

In the early days I used to post on the HousePriceCrash web site until, one day, I got banned for not spouting the party line (i.e. pointing out that the crash most of us had fervently believed would happen, wasn't going to.) Now, I still see posts with people predicting the crash or the correction. What can one say after 11 years of this? Give it up?

 

I have to say I no longer believe there will be any sort of serious correction. The longer it goes on, the more people are sucked in, the bigger the debts and the threat to the whole system. I think we have ample evidence that 'they' will do absolutely anything to keep the market going. More and more people of my baby boomer generation are now making changes to, in one way or another, accommodate their children. This, I think, is the future and is simply born of necessity.

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"My adult sons are reconciled to never being able to afford their own place.

We are selling up again - moving to a slightly cheaper area and buying a 6 bed house that we are going to extend so that we end up with 3 separate living spaces - each with 2/3 bedrooms. My sons will need smallish mortgages - probably of about 50k each but it means they will live in a nice area with their brother and mother and father on hand for baby-sitting duties etc"

 

That sounds like a shrewd move - Downsizing with a familial twist.

The London market could be close to another important peak, or the rally could go on for another year or two.

 

Whenever a reversal comes, it sounds like you and your family will be well set up for it.

 

QUESTION: (an odd one):

Will you wind up with a garden or anywhere you can grow food?

If so, that could be a big plus too.

 

You might want to take a look at my own story in Hong Kong - posted here as "OTP":

http://www.greenenergyinvestors.com/index.php?showtopic=13789&page=14

 

And also consider my suggestion for an Avatar - since if you will be posting a bit, it will look smarter:

http://www.greenenergyinvestors.com/index.php?showtopic=19060&page=2

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Yes, on the subject of garden/growing food - I'm very focused on that. I keep telling my (adult) kids 'if we can get ourselves into the position where we are all housed - and you lads have enough room to have your own family - and we can grow some of our own food - then you can enjoy your lives without the constant worry and stress of always having to be in highly paid jobs just to get by'. Once you get past a certain amount of money - property with a couple of acres is on the cards and, often, these types of properties have an additional 5 or 10 acres you can buy at a sensible price. Not enough to be self sufficient, but enough to make a dent.

 

Yes, I'll have a look at your OTP story.

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Here's the Avatar thread:

http://www.greenenergyinvestors.com/index.php?showtopic=19060&page=2

 

"Not enough to be self sufficient, but enough to make a dent."

Yes. that's a good start.

The food you grow yourself might be far healthier too.

This is something not easy to achieve in HK, unfortunately

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BARRATT does not seem to be able to hold its "bounce" gains ... BDEV

 

Closing Level :

BDEV: 346.30 -23.30 : -6.30%

 

I WOULDN'T BE BUYING UK PROPERTY after seeing THIS chart

(at least, not until the trend turns up!)

 

 

BDEV_zps67a912c1.gif

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http://www.dailymail.co.uk/news/article-2657470/The-REAL-reason-children-afford-buy-house-How-Chinas-middle-classes-snapping-British-homes-Liverpool-Croydon-theyre-built.html

 

So, they were all winners: the estate agents, the developers, and the speculators, who had walked away with investments that are safer and promise higher yields than any other commodities — from blue-chip shares to gold bullion — according to a recent Knight Frank survey.

Investors such as Polly Ling, who has only been to Manchester once, 30 years ago, but agreed to pay £130,000 — in cash — for a one-bedroom flat at X1 The Exchange, in Salford Quays, after talking to Alice Macdonald for just 15 minutes. ‘It seems like a good city and London is too expensive now,’ she told me.

And Eva Leong, a divorced, 54-year-old accountant (and confirmed Beatles fan) who knew even less about Liverpool, but paid £65,000, again in cash, for a studio flat in the city, to add to the one she owns in London’s Barbican.

 

 

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Telegraph: Housebuilders collapse on rate rise fears

 

"Investors took fright and dumped shares in housebuilders after Mark Carney, the Governor of the Bank of England, signalled an earlier than expected interest rate rise, and Chancellor George Osborne gave the central bank new powers to curb mortgage lending in an effort to stave off a housing bubble.

Persimmon dropped 4.8pc and Barratt Developments slid 4pc â the two heaviest fallers in the FTSE 100. In the mid-cap FTSE 250, Taylor Wimpey tumbled 4.7pc, Berkeley Group shed 4.2pc and Bovis Homes lost 4.1pc. Fears about the impact of a rate rise extended beyond the housebuilder stocks." The property builders have become used to loose monetary policy.

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