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UK House prices: News & Views

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Have you tried negotiating a Rental Cut Recently?

Show this chart to your landlord

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

 

This is not positive for BTL Landlords

 

RENTAL INDEX

zzzsq.png

Rent Index: 580.287 / calculated from 5,477 tenancies - at 23 Jun 2010 02:09

/source: http://www.rentindex.co.uk/Graphs.aspx

 

Why do you think showing this chart will help renters? Doesn't it just show that rents haven't changed really over the last couple of years (at least nominally)?

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Why do you think showing this chart will help renters? Doesn't it just show that rents haven't changed really over the last couple of years (at least nominally)?

Look carefully.

In recent months, the rental rates are breaking down, just as wage, salary, and job cuts are just beginning to be discussed for the public sector. What do you think is going to happen to incomes, and people's willingness to pay rents?

 

My strong view would be that Rents (as measure by this survey), are about to begin a prolonged slide.

 

I was glad to find such a service, charting rents. It is worth monitoring, and we can see how reliable it is.

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But did those other places have the depreciation the pound has seen?

Real prices have been clobbered as Dom's Moneyweek article pointed out. But nobody has really noticed in the UK.

 

I think it is in the best interests of the government to keep the property market decline as orderly as possible. So, more currency depreciation?

Problem is...

The depreciating curerency doesnt help domestic buyers. In fact, they get squeezed,

as they pay more for imported goods, and have less left for paying mortgages.

 

There is no sign that the falling pound is yet helping to push up UK incomes:

001zxm.jpg

The growth rate is the most negative in decades !

 

UK Incomes are now falling, and without the ultra-low rates, there would be huge pressure on UK house prices.

 

Sure, a few foreign buyers get suckered into buying property in London (HK is now filled with "FILTH-y"*

promoters trying to sell over-priced and mediocre London properties), but I wonder how long people will

fall for this trick when the Pound is under-pressure. Rising interest rates, and/or difficulty in securing

decent tenants, may fright away the foreign buyers.

 

*("FILTH": Failed In London? Try Hong kong.)

 

Data from real estate broker Knight Frank showed more than one in 10 new-build residential properties in London were sold to Chinese or Hong Kong buyers in the year to March, the highest share of the market by any offshore investors.

/source: http://uk.reuters.com/article/idUKTRE66001N20100701

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Builders stocks making nice new c.12 month lows.

Surely the leading indicator is shouting the new downward phase now?

Yes.

Ultra-low rates helped for one year, but their elevating impact is wearing off,

as household incomes slide and confidence ebbs away

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China's property market is beginning a collapse that will hit the banking system, Kenneth Rogoff of Harvard University told Bloomberg Television.

 

 

AP

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

 

 

Property transactions have dropped and prices are stagnating in the wake of steps in recent months by the central government to cool the market.

 

Xu Shaoshi, minister of land and resources, said at the weekend that he expected prices to start falling within a few months.

 

"You're starting to see that collapse in property and it's going to hit the banking system," Rogoff, a former chief economist at the International Monetary Fund, told the agency.

 

Not everyone agrees. Because home owners must make a downpayment of at least 20 percent and many pay entirely in cash, there is relatively little leverage in the Chinese property market.

 

"Despite the importance of the property sector in the economy, we believe that the deflating of this bubble should have only a limited impact on the real economy and the banking system," Nomura's chief China economist, Sun Mingchun, said in a report.

 

The Chinese-language 21st Century Business Herald newspaper on Tuesday quoted a real estate association official as saying government tightening measures were yielding initial results.

 

But prices in Tier-1 cities such as Beijing and Shanghai had not yet declined, he said, so officials needed to step up implementation of the measures, which include higher down payments, the end of mortgage rate discounts, curbs on purchases of multiple homes and restrictions on lending to developers.

 

An article today... http://www.cnbc.com/id/38100051

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An article today... http://www.cnbc.com/id/38100051

China Property collapse - widely predicted now.

 

No signs of that in HK yet, prices seem to be at new highs.

I am still trying to offload two properties at good prices

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Persimmon holds back from buying land as job cuts hit housing market

Housebuilder's cautious approach to new projects reflects fears of double-dip recession and slump in demand for new homes

 

 

Persimmon, one of Britain's biggest housebuilders, is being cautious over new developments as lack of mortgages and economic uncertainty affect demand for homes.

 

The ongoing mortgage shortage coupled with the government's public spending cuts have prompted the housebuilder Persimmon to adopt a cautious approach to buying land for new homes. The move adds weight to warnings from City analysts that land buyers are withdrawing from the market over fears about a double-dip recession.

 

Persimmon, one of Britain's biggest housebuilders, today reported a 26% rise in first-half sales to 4,657 homes, despite seeing a slowdown in the run-up to last month's emergency budget. The usual seasonal slowdown since the start of May was exacerbated by uncertainty surrounding the government's austerity measures.

 

"There is a risk of the economy weakening if the spending cuts that are being trailed at the moment bite too hard," said the finance director, Mike Killoran. "Construction activity benefits from public spending. And what this [the cuts] means for jobs and employment within the public sector we have yet to see.

 

"From a housing market perspective increasing unemployment is not a good thing, even if it just affects sentiment ... That's why we are a bit cautious in terms of buying new land and getting on with future investment."

 

Alastair Stewart, an Investec analyst, said the comments "chime with more forthright statements from our industry meetings, which suggest major land buyers are pulling out of the market for fear of a double dip".

 

Robin Hardy, at KBC Peel Hunt, said: "The first half of 2010 is likely to prove to have been like the last days of Rome for the new homes market: improving mortgage lending, a benign pricing environment and rising public confidence in housing. We cannot see this continuing through the second half, and see another step down after the comprehensive spending review in late October, when the extent of public-sector cuts is unveiled."

 

/more: http://www.guardian.co.uk/business/2010/ju...ouble-dip-fears

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Yep. It's pretty obvious we are at the top of the second slightly smaller housing peak of the roller coaster and about to hurtle down.

 

But don't worry, the private sector is going to create 2m jobs in 5 years! And I ask - what in exactly? Can someone enlighten me?

 

 

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But don't worry, the private sector is going to create 2m jobs in 5 years! And I ask - what in exactly? Can someone enlighten me?

:blink: I thought that was obvious: nails & makeup, takeaways, travel agencies.

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SAME PATTERN will come in the Uk too, I suppose

 

MISH CALLS THE TOP

 

Vancouver Home Sales Drop 30 Percent , Calgary 42 Percent - First Comes Volume, Then Comes Price; Canada Housing Peak is Finally In

 

The Globe and Mail reports Vancouver home sales drop sharply.

 

The Real Estate Board of Greater Vancouver reported yesterday that home sales fell 30.2 per cent in June from the inflated levels of a year earlier, and 5.8 per cent from May. New property listings rose 1.2 per cent from May and 32 per cent from a year earlier.

 

The Calgary Real Estate Board, meanwhile, reported sales of single family homes fell 16 per cent in June from May and 42 per cent from June of 2009, while condo sales fell 14 per cent from a month earlier and 40 per cent from a year earlier. Notable is that sales of high-end properties worth $1-million or more are rising, the group said.

 

“We are seeing continued moderation in Calgary’s home sales in the face of higher mortgage rates, increased inventory levels and a decreasing number of fist-time home buyers entering the market,” said board president Diane Scott.

This pattern is quite similar to how things cascaded in the US once the top was in.

 

Housing Collapse Cascade Pattern

 

+ Volume drops precipitously

+ Prices soften a bit

+ Inventory levels rise slowly

+ High-end home prices remain relatively steady for a brief while longer

 

The real estate industry tries to convince everyone it's "business as usual" and homes are affordable because rates are low

+ Bubble denial kicks in with media articles everywhere touting the "fundamentals"

+ Stubborn sellers hold out for last year's prices as volume continues to shrink

+ Inventory levels reach new highs

+ Builders start offering huge incentives to clear inventory

 

Some sellers finally realize (too late) what is happening

+ Price declines hit the high-end

+ Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc

+ Gimmicks do not work

+ Price declines escalate sharply at all price levels

 

The Central Bank issues statements that housing is fundamentally sound

Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt

 

Some of those may happen simultaneously or in a different order, but the whole mess starts with a huge plunge in volume.

 

I am now confident the peak in Canadian housing insanity is finally in.

 

Mike "Mish" Shedlock / http://globaleconomicanalysis.blogspot.com...30-percent.html

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Pidgley: Market stable, but no dividend yet

Tony Pidgley, chairman of Berkeley Group, said the housing market stabilised in the year to 30 April 2010 but not to the extent that the residential developer would pay shareholders a dividend

 

Announcing a 12% fall in turnover to £615m last week, Pidgley said: “Berkeley’s strategy is to maximise shareholder value in a sustainable and safe way over the long term. At present, the board believes that greatest value will be achieved through land acquisition, investing in work in progress and opportunistic share purchases, as opposed to declaring a dividend.”

 

The consensus expectation was a dividend of 10p per share.

 

Despite admitting to a “growing sense the worst is over”, he remained cautious amid the austerity measures being imposed by the government.

 

He said: “Such reviews and changes in policy are inevitable and necessary. Most important is that hard work and innovation are rewarded and growth is encouraged. In our own industry, this means a continued and concerted commitment from the private and public sector to work together to address the shortage in supply of quality housing.”

 

Pre-tax profit fell 8% to £110m and the company ended the year with net cash of £317m, which compares to the net debt position of most of its listed peers.

 

Although completions rose from 1,501 to 2,201, the average selling price fell from £395,000 to £263,000. Transaction levels are still 40% below what was the historic average.

 

It produced an operating margin of 17.3%.

 

Managing director Rob Perrins, the heir apparent to the company founded by Pidgley, said results had been boosted by the weakness of Sterling and the appetite of overseas investors although this was tempered by domestic economic and political uncertainty and restrictions around mortgage finance.

 

The company added 2,200 plots across 20 sites over the year, which Cammack said was disappointing although outweighed by the positive trading numbers, which were at the upper end of expectations.

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According to a Reuters poll UK house price recovery to taper off but no double dip RTRSUK house prices to rise 3.5 pct in 2010, 1.9 pct in 2011

 

16 of 22 economists see no double dip in prices

 

Monthly UK mortgage approvals to creep up

 

British house prices will regain some lost value this year but while the speed of the uptick will taper off next year there is little chance of a double dip, according to the latest Reuters poll of property analysts.

 

The quarterly survey of 27 analysts showed house prices will increase 3.5 percent this year but just 1.9 percent in 2011, a rosier outlook for 2010 than in April's poll which saw prices rising 2.0 percent this year and 1.9 percent in 2011.

 

Only six of 22 analysts in the poll taken between July 1-8 said prices would fall again.

 

Will they regain lost value in terms of gold though? It's funny how "economists" rarely mention this.

 

 

 

 

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House prices fell for the third month in a row during June as the housing market recovery showed further signs of faltering, according to the Halifax.

 

The average price of a home fell by 0.6% during the month to £166,203, following a 0.5% slide in May and a 0.1% decline in April, the lender said. However, prices in the second quarter were largely unchanged compared with the first three months of the year. They are also 6.3% higher than a year ago and 7.5% above their April 2009 trough.

 

Martin Ellis, housing economist at the Halifax, said the house price data was in line with his expectations. "This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole," he said.

 

"A shortage of properties for sale in 2009 contributed to an imbalance between supply and demand and was a key factor driving up house prices last year. An increase in the number of properties available for sale in recent months has helped to reduce the imbalance, relieving the upward pressure on prices. The low level of interest rates, however, continues to support housing demand."

 

Nigel Lewis, property analyst at FindaProperty.com, said: "It is no surprise that the latest Halifax house price index shows a dip in house prices; our own figures show that there has been an influx of stock over the past few months, which has served to drive prices down.

 

"There are currently 23% more properties for sale on our site than there were a year ago

 

/see: http://www.guardian.co.uk/money/2010/jul/0...uccessive-month

 

Is anyone surprised?

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Good chart.

The dead cat seems to have stopped levitating higher

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Problem is...

The depreciating curerency doesnt help domestic buyers. In fact, they get squeezed,

as they pay more for imported goods, and have less left for paying mortgages.

 

There is no sign that the falling pound is yet helping to push up UK incomes:

001zxm.jpg

The growth rate is the most negative in decades !

 

UK Incomes are now falling, and without the ultra-low rates, there would be huge pressure on UK house prices.

 

Sure, a few foreign buyers get suckered into buying property in London (HK is now filled with "FILTH-y"*

promoters trying to sell over-priced and mediocre London properties), but I wonder how long people will

fall for this trick when the Pound is under-pressure. Rising interest rates, and/or difficulty in securing

decent tenants, may fright away the foreign buyers.

 

*("FILTH": Failed In London? Try Hong kong.)

 

Data from real estate broker Knight Frank showed more than one in 10 new-build residential properties in London were sold to Chinese or Hong Kong buyers in the year to March, the highest share of the market by any offshore investors.

/source: http://uk.reuters.com/article/idUKTRE66001N20100701

 

It's all part of the global wage arbitrage game. Real wages have to adjust, and its a lot easier to adjust real wages via inflation / currency falls than via nominal wage cuts.

 

Sadly for us Brits over the next few years nominal wages will stay flat whilst inflation ticks away at 5%+ year after year.

 

With compounding you can cut real wages quite quickly.

 

The real trick will be to support asset prices (remember the banks won't be allowed to go bust). Personally, I suspect that Eton Dave will try to get the plebs to take on more debt to support the HPI machine by extending mortgage terms - hello intergenerational 100 year + mortgages.

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Sadly for us Brits over the next few years nominal wages will stay flat whilst inflation ticks away at 5%+ year after year.

This is why the government's "triple guarantee" to pensioners makes no sense. They benefited from the credit boom but are not being made to pay for it, in terms of state pension allowance at least. Compounding works here too, so after 3 years of flat wages and 5% inflation the pension will have risen 15.8% in nominal terms. Workers, who will have had a 14.3% pay cut in real terms, will have to pay higher taxes to fund this.

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This is why the government's "triple guarantee" to pensioners makes no sense. They benefited from the credit boom but are not being made to pay for it, in terms of state pension allowance at least. Compounding works here too, so after 3 years of flat wages and 5% inflation the pension will have risen 15.8% in nominal terms. Workers, who will have had a 14.3% pay cut in real terms, will have to pay higher taxes to fund this.

 

 

Politicians are thick. The policy will be changed at the next budget

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2011 - A Crash coming?

 

Paul Diggle, a property economist at Capital Economics, said: “Today’s figures showing accelerating house price falls fits with our long-held position that we will see a second leg of the house price correction soon.

 

“With incomes set to be squeezed further, we believe that our pessimism about the housing market will prove justified.

 

“Prices will close 2010 below their end 2009 level and we expect them to continue falling in 2011.”

 

Howard Archer, an economist at Global Insight, said: “It is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in, which will hit people's pockets and lead to serious job losses in the public sector.”

 

/see: http://www.telegraph.co.uk/finance/persona...ll-in-2011.html

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2011 - A Crash coming?

 

Paul Diggle, a property economist at Capital Economics, said: "Today's figures showing accelerating house price falls fits with our long-held position that we will see a second leg of the house price correction soon.

 

"With incomes set to be squeezed further, we believe that our pessimism about the housing market will prove justified.

 

"Prices will close 2010 below their end 2009 level and we expect them to continue falling in 2011."

 

Howard Archer, an economist at Global Insight, said: "It is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in, which will hit people's pockets and lead to serious job losses in the public sector."

 

/see: http://www.telegraph.co.uk/finance/persona...ll-in-2011.html

 

Falling house prices + unemployment = bad losses for the banks = 2nd banking crisis.

 

I expect QE2 to support nominal asset prices.

 

The government works for the banks, they're in charge.

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