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UK House prices: News & Views


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I do hope GF that the rest of the prediction in your siggy's graph becomes true, now would it be nice to wave that under the noses of the 'but no one could predict it' brigades :)

Age demographics alone suggest his prediction may not be so far off the mark.

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(please

while reading this post)

 

"Spending every dime, for a good time..." (were the bulls. haha)

 

Barratt was down 6.7% yesterday on moderately high volume:

 

BDEV: 229.40 Change: -16.40

Open: 247.00 High: 247.00 Low: 228.20 // Volume: 3,045,838

Percent Change: -6.67%

 

Now we just need a further slide on rising volume : update

...to confirm Barratt's high is in (looks like August, as we expected)

 

...Meantime, here's what happened in the US on the first day of the new month:

 

WHO SAYS "THEY DONT RING A BELL" AT THE TOP ??

 

They rang the bell yesterday, on the 1st of Sept., the Bear's Month. : update

 

xxxd.gif

 

Look at that rise in volume, as the market came off the highs (at long last)

 

We also had a nice looking "Top Hat"* two days earlier.

 

*(A Top Hat occurs when you get a fresh high on light volume, sandwiched between

two days of lighter volume. Fred Astaire would be pleased, Putting on the Ritz.)

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Fleet-Street-Letter advert.

 

http://info.fleet-street-letter.co.uk/supp...amp;network=GAW

WARNING!

 

UK property prices to get cut in half!

 

But there’s one ‘against the grain’ housing play that could do very, very well – even as the market collapses!

 

Don’t you be fooled by the property ‘green shoots’ you hear about in the press.

 

They’re luring people back into a market that has no hope of sustained recovery. That goes for most housing stocks too. But not all...

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Here is a signal that the bull trap in UK house prices is close to an end!

 

Former maths teachers sell their property empire as prices creep up

http://www.timesonline.co.uk/tol/money/pro...icle6819301.ece

 

Fergus and Judith Wilson, 793rd on The Sunday Times Rich List this year with a combined value of £70 million, have decided to call it a day after almost 20 years of property investing.

 

At their peak they owned about 900 houses but their portfolio has been badly hit by the downturn, falling from an estimated value of £180 million early last year.

 

They have now decided to put the whole lot on the market to take advantage of a recent rise in house prices in Ashford, Kent. Mr Wilson said that they had already received a number of approaches from investors wanting to buy the whole portfolio, including a consortium of professional footballers and funds from Russia and the Far East.

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deadcat2.jpg

Amongst those selling out are BTL-ers, like the Wilsons:

 

Fergus and Judith Wilson, 793rd on The Sunday Times Rich List this year with a combined value of £70 million, have decided to call it a day after almost 20 years of property investing.

 

At their peak they owned about 900 houses but their portfolio has been badly hit by the downturn, falling from an estimated value of £180 million early last year.

 

They have now decided to put the whole lot on the market to take advantage of a recent rise in house prices in Ashford, Kent

 

Kent385_608634a.jpg..deadcat.jpg

. . He said: “The time is right for us to go.

It is much easier to offload them now than I think it will be in 18 months*.

We were going to wait until I was 65, but it is better to sell while interest rates are low, and I expect they will rise after the next general election.”

 

...and also selling will be the Baby Boomers, who realise the time to downsize their living space is coming, and better to sell while there is still some buying demand about

== ==

 

* (Who is he going to sell to?)

With so many properties suddenly on the market, the fresh supply may overwhelm demand.

Here's the answer... They are going to "teach" people how to buy (at high prices):

Mr Wilson said that he now intends to take part in TV property programmes to mentor buyers and people buying their own homes. Mrs Wilson already has her own website, which outlines her path to success for other would-be investors.

 

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OK, so the "clever" BTLers (who still took a while!) get out now. Good to know.

Well, there are only a limited number of consortia of "professional footballers and funds from Russia and the Far East".

Nobody else is buying.

 

The high-and-mighty of the BTL world may well get a last escape opportunity, but "Average Joe-BTL" is still stuffed.

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OK, so the "clever" BTLers (who still took a while!) get out now. Good to know.

Isn't their "property empire" quite concentrated in Ashford and surrounding areas? Isn't giving prior notice of the sale of 700 flats/houses in a fairly small area all at once, gonna hammer the price (especially in a thin market)? Maybe even worse than Gordon's announcement of impending BofE gold sales?

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Isn't their "property empire" quite concentrated in Ashford and surrounding areas? Isn't giving prior notice of the sale of 700 flats/houses in a fairly small area all at once, gonna hammer the price (especially in a thin market)? Maybe even worse than Gordon's announcement of impending BofE gold sales?

 

Ya have to wonder why they didn't wait to announce a done deal.

 

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I am a big fan of the "x-in-ounces-of-gold" calculation to get a real sense of "prices".

 

Last year, a house in my neighbourhood went on the market for £280K in August and I think sold for around £290k in November, when gold was around £490/oz.

 

Using the November figures, factoring in a 30% drop from the peak (I will use £290k here), and the subsequent rise in the ££ price of gold, the cost of the house has dropped from 592 to 335 ounces of gold.

 

I find that amazing.

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Economic crash in Oregon boomtown

 

 

http://news.bbc.co.uk/1/hi/world/americas/8239227.stm

 

Bend, Oregon was a 21st century American boomtown.

 

It is a beautiful place, in the high desert of central Oregon, amid mountains. The sunshine is warm, the air crisp and filled with the scent of bitterbrush and pine. Its people are gracious, their gorgeous surroundings imbuing them with a certain American languidness.

All these attributes were - in the minds of the city's ambitious planners and businessmen - what would bring the retirees and tourists flocking to Bend. To accommodate them, a boom in housing began.

 

Boom and bust

 

The population of Bend quadrupled in under 20 years - from 20,000 to 80,000. Between 2001 and 2005, the median value of a home in Bend rose by 80%. By 2005, work was getting underway on 700 new homes each month. Some of the developments are stunning: houses filled with mountain light clinging to craggy hillsides.

 

More than 17% of the workforce was employed in construction - far higher than the national average. In what had once been an isolated lumber and mill town, high-end restaurants and brewhouses opened. Shops selling expensive bric-a-brac bloomed. Massage therapists and hairdressers proliferated. Downtown Bend looks like a shrine to post-millenial bijou: pricey shoes, scented candles, fancy coffee. There is even a shop specialising in beachwear - despite Bend's location in the high desert.

 

But when the US slumped, Bend crashed. The value of a home fell 40% in under two years. And unemployment nearly quadrupled from around 4% two years ago to 15% in the summer of 2009. "Everything that Bend produced relied on the credit market", says Carolyn Eagan, an economist with the Oregon Department of Employment. "Construction materials, doors and fittings, recreational vehicles: everything depended on people being able to consume more than they could use." Now the credit has dried up, and the building of Bend has stopped. The town is dotted with developments that got underway, and then ground to a halt. They are desolate expanses of weeds, dust and discarded construction materials.

 

Homeless shelter

 

In downtown Bend, we met Dan Hardt.

 

Mr Hardt used to employ 20 people hanging drywall in Bend's new homes. He owned three houses of his own, and a boat. He used to go on elk-hunting trips. Now it is gone - all of it.

 

"When the building stopped, the lifestyle went very fast," he told us. "It's a lifestyle I don't see coming back."

 

Dan now lives at the Bethlehem Inn, a motel converted to an emergency homeless shelter. "Those who were living at the at the top of the heap and who have fallen to the bottom, they don't know where to go for help, they don't know how to get that help. There's anger and frustration and a sense of entitlement," says Corky Senecal, who heads emergency housing services for Neighbor Impact, and has 30 years experience of providing services for the poor.

 

"The middle class is where it's really been decimated," she says.

 

When you lose your job in America, you will receive financial aid from the government. But it is limited. Typically, an unemployed worker in Bend will get state benefits for a period of six months to a year. After that, as many in Bend are discovering, you are on your own.

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But when the US slumped, Bend crashed. The value of a home fell 40% in under two years. And unemployment nearly quadrupled from around 4% two years ago to 15% in the summer of 2009. "Everything that Bend produced relied on the credit market", says Carolyn Eagan, an economist with the Oregon Department of Employment. "Construction materials, doors and fittings, recreational vehicles: everything depended on people being able to consume more than they could use." Now the credit has dried up, and the building of Bend has stopped. The town is dotted with developments that got underway, and then ground to a halt. They are desolate expanses of weeds, dust and discarded construction materials.

 

MALINVESTMENT fueled the boom,

and "Back to Reality" is fueling the bust

 

They can "thank" Greenspan and the Fed for the boom,

But do they understand who to blame?

 

greenspan_book_0918.jpg

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In the day we sweat it out in the streets of a runaway american dream

At night we ride through mansions of glory in suicide machines

Sprung from cages out on highway 9,

Chrome wheeled, fuel injected and steppin out over the line

Baby this town rips the bones from your back

Its a death trap, its a suicide rap

We gotta get out while were young

`cause tramps like us, baby we were born to run

 

Wendy let me in I wanna be your friend

I want to guard your dreams and visions

Just wrap your legs round these velvet rims

And strap your hands across my engines

Together we could break this trap

Well run till we drop, baby well never go back

Will you walk with me out on the wire

`cause baby Im just a scared and lonely rider

But I gotta find out how it feels

I want to know if love is wild, girl I want to know if love is real

 

Beyond the palace hemi-powered drones scream down the boulevard

The girls comb their hair in rearview mirrors

And the boys try to look so hard

The amusement park rises bold and stark

Kids are huddled on the beach in a mist

I wanna die with you wendy on the streets tonight

In an everlasting kiss

 

The highways jammed with broken heroes on a last chance power drive

Everybodys out on the run tonight but theres no place left to hide

Together wendy well live with the sadness

Ill love you with all the madness in my soul

Someday girl I dont know when were gonna get to that place

Where we really want to go and well walk in the sun

But till then tramps like us baby we were born to run

 

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http://www.bloomberg.com/apps/news?pid=206...id=aOYQzpAp2o9w

Wealthy Families Succumb to Bankruptcy as Real Estate Crashes

 

By Jeff Plungis

 

Sept. 9 (Bloomberg) -- Wealthy individuals’ Chapter 11 bankruptcy filings jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center, a research firm in Burlingame, California.

 

More individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured are using Chapter 11 of the U.S. bankruptcy code typically associated with business reorganizations. Falling U.S. home prices leave them unable to refinance or sell properties when they drop below the value of the mortgage, said Chicago bankruptcy attorney Joseph Baldi.

...

“They can’t make the payments, and they can’t sell the house.”

...

“Real-estate is an incredible thing on the downside,” said Jason Green, a bankruptcy attorney based in Washington. “Equities can only go to zero. Property can go well below zero,” because of ongoing expenses such as property taxes, insurance and maintenance on primary residences, vacation homes and investment properties.

More jumbo defaults coming our way. Get ready for impact.

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More and more celebrities getting wiped out by real estate:

 

http://www.bloomberg.com/apps/news?pid=206...id=aOYQzpAp2o9w

Actor Stephen Baldwin sought voluntary Chapter 11 bankruptcy protection in July after lenders began foreclosure proceedings. Baldwin, 43, listed $1.1 million in assets and $2.3 million in debt in documents filed in U.S. Bankruptcy Court in White Plains, New York. His home is valued at $1.1 million and the banks sought to recover about $1.2 million in mortgage loans, according to court papers.

...

Approval for National Football League quarterback Michael Vick’s Chapter 11 plan took almost 14 months ...

 

http://www.bloomberg.com/apps/news?pid=new...id=adNhjptoZJn0

Photographer Leibovitz’s Deadline on $24 Million Loan Passes

 

By Katya Kazakina

 

Sept. 9 (Bloomberg) -- Annie Leibovitz’s deadline to repay her $24 million loan to Art Capital Group passed at midnight, forcing the celebrity photographer’s creditor to decide how tough it must be in pursuing its claim.

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http://www.guardian.co.uk/money/2009/sep/0...-mortgage-costs

Fixed-rate mortgage costs rise

 

Interest rates on fixed-rate mortgages are rising despite a falling inter-bank rate, according to Bank of England figures

...

The cost of borrowing between banks fell in August, but lenders are not passing on the savings to mortgage customers on fixed-rate deals, figures showed today.

 

Data from the Bank of England showed the average interest rate charged on a five-year fixed-rate mortgage with a loan to value (LTV) of 75% reached an average 5.72% in August, having dipped to below 5% between January and May.

...

He added that many lenders had "at least as many customers as they want to attract" and that there was little enthusiasm for increasing competition as banks are "no longer chasing volume" when it comes to mortgage borrowers.

Such a pity.

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I found this on GHPC, its a summary of Allsops auction research report.

 

http://www.rapidinfo.uk.com/Issues/6/6-distressed.html

 

. However, it should be noted that, whereas the number of repossessions recorded by the CML continues to rise, the proportion offered at auction has been falling dramatically since H2 08. Although the number of repossessions forecast in 2009 was reduced from 75,000 to 65,000, this is still a significant volume of potential sales. These have yet to feed through to the sale rooms and, with around 425,000 borrowers expected to be more than three months in arrears by the end of 2009, it would seem unlikely that this trend will not be reversed within the next 12 months.

 

 

post-1236-1252531895_thumb.png

 

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Colleague got his house valued recently, 22% higher than his 07 purchase. This was the sell tomorrow price not the marektable price.

 

He apparently did get a good purchae price, but it seems the bull is back.

 

I exchanged at the start of the week.....(to sell)

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I wasnt going to post this but the uber bullish comments continue right until the last paragraph.

 

http://www.telegraph.co.uk/finance/persona...more-to-go.html

 

The analysis, by Cazenove, brings out what an astonishing turnaround there has been.

 

As the broker comments, the line of questioning on house-building companies has moved from “which ones are going bust?” and “by how much will house prices fall?” to “which house builder will be the first to get back to peak margins?” and “what are your assumptions about house price growth?”

 

This change has happened in a matter of months. The transformation has been justified by the way house prices seem to be rising, according to the Nationwide and Halifax surveys.

 

Much more spectacular is the chart on the year-on-year change in the number of mortgage approvals. This chart went down ungracefully starting as early as May 2007 and then lurched upwards from October last year, crossed into positive territory last May and has continued soaring. It augurs well for house prices.

 

Further encouragement comes from Cazenove’s index of housing affordability, which has improved 34pc in the past year. And then perhaps the most interesting remark in the report: “it is our assessment that house prices are effectively set by the lending institutions”.

 

At first it sounds extraordinary, but there is a lot of truth in it. Cazenove means that the banks and building societies decide whether to lend people up to two or three times their salary and whether to demand a 30pc deposit or none at all.

 

In this way, lenders decide how much people can borrow and that, in turn, strongly influences the level of house prices. The consequence is that house prices in future will depend significantly on how bold banks become in lending again.

 

Cazenove thinks that in the medium term they won’t become much more forthcoming than now, but in the long term, “we do not expect to see the current restraint maintained”. In other words, the banks will lend with gusto again, one day. I suspect the broker is underestimating how soon the banks are going to get back to lending freely.

 

It is unfortunately true that shares of house builders have already recovered as astonishingly as mortgage approvals. One is bound to worry, “have I missed the boat?”

 

But I have gone ahead for three reasons: once a trend gets going, it often goes a lot further than seems likely at the time; the shares are about the net asset values; if house prices continue to recover, the net asset values of these geared companies could rise dramatically over the next few years.

 

Cazenove likes Barratt least among the builders. It foresees the company having a £500m rights issue and a write-down in the value of its sites. It may be right, but I comfort myself with the thought that Barratt is quite heavily borrowed so the ultimate upside in its net asset value is substantial

 

Wow :blink:

 

I especially like the way he reasons that banks decide on how much we can borrow - genius!

 

And that kicker in the last line of buying the most heavily indebted because it has the most leverage......

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http://www.forbes.com/2009/09/08/bill-gros...kets-bonds.html

Forget Housing, Says Bill Gross

...

“Housing cannot lead us out of this big R recession no matter what the recent Case-Shiller home price numbers may suggest,” Gross writes in his September outlook.

...

“All of those three in combination, to us at PIMCO, means that if you are a child of the bull market, it’s time to grow up and become a chastened adult,” Gross writes “It’s time to recognize that things have changed and that they will continue to change for the next -- yes, the next 10 years and maybe even the next 20 years.”

...

This is Gross’s “new normal,” and it makes the U.S. look much less exciting than the past 50 years. Companies will see lower profit growth, unemployment will remain stubbornly high and people, fearing for their jobs, won’t spend as much.

...

Expect to see the dollar fall.

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