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UK House prices: News & Views

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You can STILL get a mortgage for five times your salary

 

Oh, that's good then!*

By Sean Poulter

...

Banks are offering crippling mortgage loans of up to 5.5 times salary in a further sign that the lessons of the credit crunch have been forgotten.

 

Reckless lending to first-time buyers remains endemic in the financial services industry, according to a study of the practices of leading banks and a mortgage broker.

 

An investigation by the housing charity Shelter found a worker with an income of £28,000 could borrow more than £153,000 from one high street bank.

 

Read more: http://www.dailymail.co.uk/news/article-12...l#ixzz0UBV3oJCo

*This sucker will go down big time. We have seen nothing yet.

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You can STILL get a mortgage for five times your salary

An investigation by the housing charity Shelter found a worker with an income of £28,000 could borrow more than £153,000 from one high street bank.

Oh, that's good then!*

*This sucker will go down big time. We have seen nothing yet.

 

This foolishness should be rewarded.

The bankers who are lending like that will deserve their fate.

 

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This foolishness should be rewarded.

The bankers who are lending like that will deserve their fate.

This foolishness is being rewarded.

 

The bankers have got away with it.

 

 

http://business.timesonline.co.uk/tol/busi...icle6879558.ece

 

THE state-owned Royal Bank of Scotland is planning to hand out record bonuses of up to £5m each in a snub to struggling taxpayers.

 

The move would see the average employee in its high-risk investment banking arm take home £240,000, with the top 20 staff in line for payments of between £1m and £5m.

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This foolishness is being rewarded.

 

The bankers have got away with it.

 

I agree.

 

Not only have they got away with it - they now have the explicit backing of the government and the taxpayer to redeem them from the next inevitable crash due to their excesses.

 

I see no regulation or intervention only encouragement. The only end I see to this is the break-up boom. The FED the BoE, the governments on all sides have just stepped on the accelerator again. Its as if this thing is being orchestrated - now I don't really believe in conspiracy theories, but its also hard to believe that so many people are so dumb.

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Not only have they got away with it - they now have the explicit backing of the government and the taxpayer to redeem them from the next inevitable crash due to their excesses.

It's good that people like Wanderer and others pay for these bonuses with their pay cuts. I mean, otherwise, these banksters wouldn't get any bonuses, and this would really be too heart-breaking to bear.

 

Revolution, anyone?

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I think this is the biggest news story in the UK today (even though it was effectively put out over the weekend), although it will probably take time to fully take effect, this is the final nail in the coffin of the UK housing market. Finally, self-cert and fast track, no check mortgages are laid to rest. Already the VI's are out in force, as can be seen by the CML comment in the article. Considering that house prices reached their bubble high on the back of loose lending and fraud between 2000 and 2007, if these regulations go through then house prices can only be held up by fewer sales, which is the current state of the market. I think that removing the 50% of no income check mortgages means that the vast majority will never be able to afford at current prices, especially as we are entering a period of low wage increases, if any, for the majority to re-balance the economy and pay for the bankers greed.

 

Mortgage affordability test plan

 

Borrowers face a mortgage affordability test from lenders amid plans by the Financial Services Authority (FSA) to step up the regulation of home loans.

 

Self-certification mortgages will be banned under the proposals with lenders required to verify borrowers' incomes.

 

FSA chief executive Hector Sants said that some people who were able to get home loans in the boom would no longer be able to under the proposed rules.

 

The industry will have until 30 January 2010 to comment on the plans.

 

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

 

Ban plan

 

The most striking proposal is the ban on self-certification mortgages - the type with which customers do not have to prove their income.

 

When the FSA first took over the regulation of mortgage selling in October 2004, it proposed that borrowers who were not self-employed should not be allowed to self-certify their incomes. The mortgage industry lobbied against that idea and the FSA relented.

 

http://news.bbc.co.uk/1/hi/business/8313853.stm

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It's the lead story on BBC lunchtime news.

Already the representatives of estate agents are out there arguing against it, so you know it must be good in terms of the type of dodgy deals that it will stop. Be interesting to see if the FSA hold firm on this. If they do, I see UK house prices falling heavily once the General Election is out of the way because at current price levels, coupled with a tightly regulated market, you will only get about 50,000 sales a month if that.

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A quote from the devil himself.

 

"And to protect homebuyers further, we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments."

 

From:

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Oct. 19 (Bloomberg) -- London home sellers raised asking prices to a record high this month and led gains across the U.K. as the shortage of properties for sale intensified, Rightmove Plc said.

 

The average cost of a home in the capital rose 6.5 percent, the most since records began in 2002, to 416,157 pounds ($680,000), the owner of the U.K.’s biggest residential property Web site said today in a statement. Prices climbed 2.8 percent across Britain as transaction levels dropped by half from 2007.

 

London asking prices have now surpassed the peak reached in November 2007, Rightmove said. The report shows how the credit squeeze, the construction slump and a shortage of properties have combined to skew the U.K. housing market at a time when the recession and rising unemployment have hurt affordability.

 

U.K. home values are rising partly because people are reluctant to take on more debt and are moving house less, curbing the supply of properties on the market, Rightmove said. Unemployment stayed close to the highest since 1995 in the quarter through August as the recession destroyed work in industries from banking to construction.

http://www.bloomberg.com/apps/news?pid=206...id=aTAk2M_ZrU2g

 

London house prices surge past 2007 record high

Asking prices in London jump 6.5% to £461,157

http://www.guardian.co.uk/business/2009/oc...above-2007-high

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Oct. 19 (Bloomberg) -- London home sellers raised asking prices to a record high this month and led gains across the U.K. as the shortage of properties for sale intensified, Rightmove Plc said.

 

The average cost of a home in the capital rose 6.5 percent, the most since records began in 2002, to 416,157 pounds ($680,000), the owner of the U.K.’s biggest residential property Web site said today in a statement. Prices climbed 2.8 percent across Britain as transaction levels dropped by half from 2007.

 

London asking prices have now surpassed the peak reached in November 2007, Rightmove said. The report shows how the credit squeeze, the construction slump and a shortage of properties have combined to skew the U.K. housing market at a time when the recession and rising unemployment have hurt affordability.

 

U.K. home values are rising partly because people are reluctant to take on more debt and are moving house less, curbing the supply of properties on the market, Rightmove said. Unemployment stayed close to the highest since 1995 in the quarter through August as the recession destroyed work in industries from banking to construction.

http://www.bloomberg.com/apps/news?pid=206...id=aTAk2M_ZrU2g

 

London house prices surge past 2007 record high

Asking prices in London jump 6.5% to £461,157

http://www.guardian.co.uk/business/2009/oc...above-2007-high

 

Ah, the London market. Is it foreign money that doesn't need to get a loan that is driving it higher? How many sales are going through? As usual, no mention of sales levels or comparisons with previous years.

 

All it says is;

 

‘Acute Shortage’

 

“There’s an acute shortage of property,” said Robert Green, a real-estate agent at John D Wood & Co. in Chelsea, southwest London. “Demand is very strong. Also mortgage availability is improving. It’s unlikely we’ll see enough supply come to the market to see prices falling.”

 

Demand from foreign buyers is also helping drive up prices in central London due to the weakness of the pound, Green said. The U.K. currency has dropped about 17 percent against the euro in the past year.

 

It also says;

 

Debt Worries

 

U.K. home values are rising partly because people are reluctant to take on more debt and are moving house less, curbing the supply of properties on the market, Rightmove said. Unemployment stayed close to the highest since 1995 in the quarter through August as the recession destroyed work in industries from banking to construction.

 

Recent house price gains may not last, Shipside said.

 

“The combination of economic hardship, pending taxation decisions and an imminent general election could stamp out the early stages of a housing market recovery,” he said.

 

The opposition Conservatives had support from 41 percent of voters in YouGov Plc opinion poll published yesterday in the Sunday Times, leading the Prime Minister Gordon Brown’s ruling Labour party by 11 points compared with 14 points a month ago. An election is due by June.

 

Curbs on lending may also affect the housing market. The Financial Services Authority today called for a ban on self- certification home loans after a review of Britain’s 1.2 trillion-pound mortgage market. The regulator also called for mandatory affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay.

 

------------------------

 

Somehow I doubt that even the city bonuses this year will do much accept to inflate the top end of the market. For the average person and most homeowners, the market is now dead, as any increase in properties coming to the market is unlikely to be met by available mortgage funding. The death of self-cert has left an enormous hole in the market for all those people in the £15-30 grand a year salary range who will now not be able to get a mortgage, whereas a couple of years ago it was easy to just add £5-10 grand to your salary figure on a mortgage application because no one checked it.

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Give the Guardian credit for correctly reporting the reality of the market.

 

At this rate, when the market is down to just 12 sales to hedge fund managers in London and the average price of a house is £1,000,000 it will no doubt still be reported as a booming market.

 

Property asking prices in London have broken through the record high set in November 2007 as the drought of homes for sale around the country continues to distort the market. New research out today shows that the average asking price in London jumped 6.5% to £461,157 in the four weeks to 10 October, sailing through the high of £412,731 set in November two years ago.

 

The survey by the property website Rightmove also shows that asking prices in England and Wales are now higher than a year ago, after climbing 2.8% in the past month. However, any optimism about the speed of any housing market recovery is expected to be dampened by today's report from the Financial Services Authority, which will outline plans for reform of the mortgage lending industry.

 

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

 

Rightmove said 95,000 new homes were put up for sale in England and Wales during the month, 36% less than in the same month of 2007. All areas saw price increases during the month, except the north and East Anglia, where prices fell by 2.5%. London saw the biggest monthly gain of 6.5%, followed by Yorkshire and Humberside at 5.3% and the south-east at 3%. Average asking prices are now higher in London, the south-east, West Midlands, north-west and Wales than a year ago.

 

The number of mortgage products available has collapsed from 15,000 to 1,500 in just two years, according to Fathom Consulting, with mortgage approvals also down sharply. Many first-time buyers are frozen out of the market due to the hefty deposits and the industry fears that the proposals outlined in today's FSA mortgage market review could further affect demand.

 

http://www.guardian.co.uk/business/2009/oc...above-2007-high

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I think the ITEM club are being very optimistic about there being 1million sales next year. At the mortgage fraud assisted bubble high, 1.7million sales was the record.

 

The ITEM club on house prices

 

Ernst & Young Item Club today repeated its warning that the recent rise in UK house prices may be a false dawn.

 

It warned today that the property market would not return to 'normality' until it became affordable to first-time buyers. 'Although housing may appear to have turned the corner, this recovery is supported by cash-rich investors rather than the first-time buyers needed to restore the market to normality,' it said.

 

The Item Club sets out the problems facing the property market:

 

• Mortgage lenders are reluctant to foreclose and crystallise a loss for fear of damaging regulatory capital so households that are in negative net equity simply cannot move.

 

• Even those with some residual equity are stuck – loan criteria are currently too demanding.

 

• The low level of sales will weigh down on prices over the medium term because these locking-in effects prevent people from sustaining demand and house price inflation by moving up-market.

 

The group says that prices and transactions are 'linked by a series of intricate financial and behavioural effects': Rising prices build equity, allowing families to move up-market. That in turn pushes prices up. 'Whatever the reason for this, prices and transactions are closely intertwined, both on the upside and the downside (see chart) making it hard for prices to move ahead while transactions remain depressed.'

 

It therefore sees transactions struggling to reach one million next year and remaining well below the peak of 1.7 million seen before the credit crunch and house prices will 'bump along the bottom for another two years'.

 

http://www.thisismoney.co.uk/mortgages-and...ticle_id=492090

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New mortgage lending regulations

The VIs in the Times tried to make it a Nanny State issue because we're going to have to tell the banks how much we spend on alcohol*.

http://business.timesonline.co.uk/tol/busi...icle6880612.ece

 

I consider it a good thing if I don't have to outbid a booze-addled nomark who can't really afford a mortgage. It's no consolation to me that he'd lose the house in 3 or 4 years, leaving me to pick it up cheap at auction - I'll have paid loads in rent by then, and it will have burn marks in the carpets and smell of dog :angry:

 

 

 

Supply shortage leading to record prices

Someone on the HPC newsfeed pointed out that this is Righmove prices, so it's dreamworld seller prices rather than feet-on-the-ground buyer prices. Also, the supply squeeze is not quite as reported. They checked a few London postcodes and didn't find a shortage. Fulham is mentioned in the article so I checked the SW6 postcode: Rightmove has 574 for sale (not including under offer) and houseprices.co.uk has 580 sold since the start of last August. Their latest sales data is for August 2009, so it's about 1 year's worth of property on the books of those who use Rightmove.

 

 

 

 

 

* Nanny State and alcohol. Couldn't resist this OT article:

http://news.bbc.co.uk/1/hi/scotland/north_east/8278312.stm

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Supply shortage leading to record prices

Someone on the HPC newsfeed pointed out that this is Righmove prices, so it's dreamworld seller prices rather than feet-on-the-ground buyer prices. Also, the supply squeeze is not quite as reported. They checked a few London postcodes and didn't find a shortage. Fulham is mentioned in the article so I checked the SW6 postcode: Rightmove has 574 for sale (not including under offer) and houseprices.co.uk has 580 sold since the start of last August. Their latest sales data is for August 2009, so it's about 1 year's worth of property on the books of those who use Rightmove.

 

It is very difficult to get past the VI manufactured propaganda in the housing market. All of the reports today point to house prices being on the way up again, but hardly any mention is made of the poor level of sales compared to anytime in the last 10 years or so. Without a decent level of sales these price increase are meaningless because eventually you could have just a handful of sales at the top end of the market and that would be your average, but it would be no reflection of the real market price. To some degree there is a shortage of properties on the market right now because many people have pulled out of the market because they couldn't get the asking price or anywhere near it. If they came back to the market some will be waiting forever to sell if they are looking for a 2007 level price.

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...just a handful of sales at the top end of the market and that would be your average, but it would be no reflection of the real market price.

The indexes are more sophisticated than that, but I expect a small number of sales would make them less accurate in any case. As I understand it, they calculate the price of various characteristics of houses sold (number of bedrooms, size of garden, etc) and project those prices onto an average house (3.6 bedrooms, 0.21 acres, etc). When there are fewer buyers and less panic to get on the ladder, the houses which sell might be those which score highly in characteristics which are not counted by the statisticians (stylish wallpaper, recently installed boiler, etc). If the index includes the value of these characteristics in the price of those which it measures then it will overestimate the average price by overstating the attractiveness of the average house.

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The indexes are more sophisticated than that, but I expect a small number of sales would make them less accurate in any case. As I understand it, they calculate the price of various characteristics of houses sold (number of bedrooms, size of garden, etc) and project those prices onto an average house (3.6 bedrooms, 0.21 acres, etc). When there are fewer buyers and less panic to get on the ladder, the houses which sell might be those which score highly in characteristics which are not counted by the statisticians (stylish wallpaper, recently installed boiler, etc). If the index includes the value of these characteristics in the price of those which it measures then it will overestimate the average price by overstating the attractiveness of the average house.

I suppose the point I was trying to get across is that the number of sales right now are about half those reached at the peak of the boom in 2007. What if house prices went up 15% next year, but total sales fell by 20%? Then the year after, prices up another 15%, but sales another 15-20% lower? I'm sure this would be reported as positive because prices are still going up, yet in reality because of the lower sale numbers it would be meaningless. The market is being distorted by the attempts to maintain prices at the level reached in 2007, but as all the dodgy mortgage products have been removed and the FSA now want to make some of them illegal, these price levels are a farce and out of synch with the new reality of a properly regulated market. I await all the sob stories to come of those on self-cert mortgages who are struggling and want a Government/BoE handout to help them along after they find they cannot renew their mortgage because of the new regulations.

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bit of a turn in Barratts today I see....:-)

 

down 40%

 

Yes, I just saw this.

Its the post Rights issue price. Pre RI £2.56

TERP = (£2.56 + £1.30)/2.3 = £1.68

 

In theory the price should level off around £1.68 (depending on confidence, take up etc etc)

 

It should pick up now, so just an admin blip?

 

 

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900 Houses?

Whichever, That's a serious number. I found 10 Flats was more than I wanted.

 

"People want to live in houses... not flats," he says.

"Only poor people live in flats."

"Flats don't have the ability to increase in value, as houses do."

"At similar rents, people will take a house over a flat."

"There seem to be cycles every 17 years."

"In the mid-1990's there was a shortage of flats, and now there is a surplus."

"A professional landlord makes his money out of the surplus of rents over mortgage payments."

 

"We didnt really put in much money at all."

"We bought at auction, and by the time we had to pay, (the valuation was high enough to allow

us to borrow all the money from the bank)"

 

 

This interview truly sickens me.

 

I wonder what would happen if a load of 20 somethings banded together and every weekend bought every FT and Telegraph from every newspaper stand, then bought all the wine from m&s, bought all the pipe tobbaco from the newsagents and blockaded Golf clubs, I imagine it would getting mildly annoying after a while and we'd have lots of disgruntled middle age people reading the news of the world, drinking asda wine, smoking ciggies and watching footy... oh wait, no we wouldn't.

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This interview truly sickens me.

 

I wonder what would happen if a load of 20 somethings banded together and every weekend bought every FT and Telegraph from every newspaper stand, then bought all the wine from m&s, bought all the pipe tobbaco from the newsagents and blockaded Golf clubs, I imagine it would getting mildly annoying after a while and we'd have lots of disgruntled middle age people reading the news of the world, drinking asda wine, smoking ciggies and watching footy... oh wait, no we wouldn't.

 

Okay.

But there are more than 900 houses in the Uk.

 

And the ultimate effect may be that prices of house in his area will be relatively depressed

over the 2-4 years he is selling down

 

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Okay.

But there are more than 900 houses in the Uk.

 

And the ultimate effect may be that prices of house in his area will be relatively depressed

over the 2-4 years he is selling down

 

Yes, but his attitude and actions are hardly uncommon

 

p.s. my post was a bit tongue in cheek ;)

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