UK House prices: News & Views

[Van]

I think the likely scenario for UK PLC is that inflation is allowed to run between 3-5% for the next 4 years or so. Real wages are eroded while the austerity programme is worked through and employment gradually heads back to 2m by the middle of the next parliament. House prices continue to fall nominally by a few percent a year because of restrictive lending but there will be few forced sellers because mortgages rates will remain low. 4 years of 4% inflation, coupled with 4 years of 3% nominal falls will result in house prices being 25% lower in real terms than they are today, probably below the long term average on most measures and a targetable bottom. Anyone buying houses between 2014-2017 will do very well imo.

 

[John Doe]

I think the likely scenario for UK PLC is that inflation is allowed to run between 3-5% for the next 4 years or so. Real wages are eroded while the austerity programme is worked through and employment gradually heads back to 2m by the middle of the next parliament. House prices continue to fall nominally by a few percent a year because of restrictive lending but there will be few forced sellers because mortgages rates will remain low. 4 years of 4% inflation, coupled with 4 years of 3% nominal falls will result in house prices being 25% lower in real terms than they are today, probably below the long term average on most measures and a targetable bottom. Anyone buying houses between 2014-2017 will do very well imo.

Agree.

[Van]

Amazingly story of Ireland's Boom and Bust:

 

 

Panorama (may be UK only)

http://www.bbc.co.uk/programmes/b00z0fyd

[John Doe]

Amazingly story of Ireland's Boom and Bust:

 

 

Panorama (may be UK only)

http://www.bbc.co.uk/programmes/b00z0fyd

Watched it last night.

 

Made me think of this

 

http://www.housepricecrash.co.uk/forum/ind...howtopic=155881

 

Brilliant

[BoldAsBrass]

I think the likely scenario for UK PLC is that inflation is allowed to run between 3-5% for the next 4 years or so. Real wages are eroded while the austerity programme is worked through and employment gradually heads back to 2m by the middle of the next parliament. House prices continue to fall nominally by a few percent a year because of restrictive lending but there will be few forced sellers because mortgages rates will remain low. 4 years of 4% inflation, coupled with 4 years of 3% nominal falls will result in house prices being 25% lower in real terms than they are today, probably below the long term average on most measures and a targetable bottom. Anyone buying houses between 2014-2017 will do very well imo.

 

Agree with that. Something else that will happen is that in any particular local market, high quality properties will not fall as much as mediocre or average properties. Although I agree with the proposition that house prices are a function of the price and availability of credit - and that the supply/demand argument is a red herring - where supply/demand does matter is the fact that there is always a high demand for nice houses in nice areas and always a limited supply of such houses. Our current planning laws exacerbate this situation as, even houses built only 20 years ago, have gardens twice as big as their contemporary counterparts.

 

Whenever I read this thread I always look at the title 'this HPC will be much, much worse than 1990' and find myself thinking 'that title could not be more wrong - or, in a sense, inaccurate'.

 

In general terms it won't be worse for reasons endlessly expounded (13 year boom instead of 3 year boom, massively increased amount of money lent into market with unthinkable consequences for banking and economy, government absolutely committed to maintaining status quo via low IRs, QE etc. etc) but, also, it will be the opposite of 1990 in that the mid to late 1980s boom was London/South East centric (and so was the bust) whereas London/South East have seen relative muted rises (okay, not true in some parts of London - and these will fall) whereas the big rises have been in Newcastle, Liverpool, Manchester, Leeds, Wales etc. Where prices rose by a factor of 6 over the course of a few years - of course they will fall significantly. But where prices went up by a factor of 2 to 3 over the last 20 years or more, they will barely fall.

 

I bought a house last year for exactly twice what it had previously sold for in 1988. We really haven't had a massive boom around here.

[ecoface]

Getting back on to the subject of UK house prices, do you remember in 2006-2007 how those of us in the know were closely monitoring the market in the US as an indicator of what was to come our way? It was around 6-12+ months ahead of us depending on where in the US and UK.

 

Well de-ja vue?

 

As of December, so almost three months ago, the housing double dip was getting increasingly worse. This was confirmed by the latest Case Shiller data, according to which the 10- and 20-City Composites posted annual rates of decline of 1.2% and 2.4%, respectively.

 

(From ZeroHedge)

 

Zero

 

And there is a new report which states that the crash in the US was (is?) worse than claimed!

 

Reuters House Report Fudge

[Jake]

I think the likely scenario for UK PLC is that inflation is allowed to run between 3-5% for the next 4 years or so. Real wages are eroded while the austerity programme is worked through and employment gradually heads back to 2m by the middle of the next parliament. House prices continue to fall nominally by a few percent a year because of restrictive lending but there will be few forced sellers because mortgages rates will remain low. 4 years of 4% inflation, coupled with 4 years of 3% nominal falls will result in house prices being 25% lower in real terms than they are today, probably below the long term average on most measures and a targetable bottom. Anyone buying houses between 2014-2017 will do very well imo.

The idea that the UK can bat on through this crises basically unscathed till the last man is a bit abhorrent to me. It would mean that Brown is a genius. But what happens when the last man is out? And what will the 'last man' be, if we get that far? Interest rates? I'm not sure.

 

I think the housing boom went on in Japan after the crash had started. That sounds stupid but it is true. People were still transixed by property (and nowhere is this more true than the UK) and they know no other means of success. The last episode in 2008 led to where we are now with interest rates and prices going up in places as the suspension of disbelief is allowed to reassert itself. I don't think it will last. Still I dont think that rates will be substantial enough to cause catastrophe-the housing market is all we got. If it goes.... down goes the UK so they will try to keep it up, 'whatever it takes'. 25% lower in real terms isn't bad but another 25% off in nominal terms would be nice too.

[John Doe]

The idea that the UK can bat on through this crises basically unscathed till the last man is a bit abhorrent to me. It would mean that Brown is a genius.

Not necessarily, it could be argued that it was the Tories plan to eliminate the deficit thereby keeping the markets happy and rates low. If Brown had stayed, the markets would probably be crucifying us with high rates as he kept on spending.

 

Not saying it would be like that, just trying to cheer you up

 

[wee Jinky]

I have been watching the Highlands (specifically Glencoe area) as my main area of interest

and at last am beginning to notice some price drops but only

on the cheapest of properties and of those they seem to be restricted to Kinlochleven

which is the most undesirable of all the local villages

 

Mind you very little selling seems to be taking place

on any level ,still stuck in the denial phase imo

news doesnt travel fast ,time to pay a visit and scream it

from a megaphone

 

[Jake]

Not necessarily, it could be argued that it was the Tories plan to eliminate the deficit thereby keeping the markets happy and rates low. If Brown had stayed, the markets would probably be crucifying us with high rates as he kept on spending.

 

Not saying it would be like that, just trying to cheer you up

Cheers! My own view is Camerons meddling is merely a stay of execution. It's too late to drive austerity through the UK. And too painful. This hasn't been realized yet. But it will before his term is up. Feel sorry for him.

[drbubb]

The UK is different in many ways, not least with our benefits system, but also, on the whole, we don't have the "fend for yourself" veiw that's prevalent in the US. We can't just walk away from our mortgage either. (Unless declaring full bankruptcy, which is still taboo here).

Don't kid yourself. You cannot get "blood from a stone", and if taxpayers are unwilling to pay more,

then those vampires that live off the state, will find the blood they have been feeding off is drying up.

 

We would have seen a fall in property prices earlier, but the vile Brown regime found ways of keeping

the game going for a few years longer. Pushing rates down was part of the trick, and pushing up housing

benefits (to pay HIGHER rents) was another part. That trickery is now coming to an end.

 

I think that the current government may realise that subsidising rents, and putting more money in the

pockets of landlords, who have done little to earn the largess, is counterproductive. It pushes up property

prices, and makes it harder for FTBers to get on the housing down-escalator. UK taxpayers lose twice:

They pay more tax, and they find house prices pushed higher. Unless they happen to own property already,

such taxpayers are PAYING for the privilege of watching property to be pushed out of reach.

[Jake]

Not necessarily, it could be argued that it was the Tories plan to eliminate the deficit thereby keeping the markets happy and rates low. If Brown had stayed, the markets would probably be crucifying us with high rates as he kept on spending.

Nothing has really changed except for a bit of hard talk. The actual measures mentioned by Cameron (which have given allowed the stay of execution) have largely been backpeddled on as they realize the pain is too much, too soon. A case of 'the horror'.

 

The housing market needed crucifying and was on it's way to crucifixtion back in 2008. This (low rates) is simply a potentially an even more damaging delay sucking in more unsuspecting customers IMO. Meanwhile prices have fallen since 2008 when measured in gold or some foreign currencies.

 

How long this can be kept going is anyone's guess. In a fairly low interest rate environment (lets imagine) what else can bring house prices down is more the question. Walking it down with Van's scenario over 4 or 5 years is a best case scenario without looking at other problems surfacing and the world marching on with QE and extend and pretend. Maybe the next 12 months will be eventful. Oil. Gold. Commodities. Inflation in essentials. Or a nice little deflationary deleveraging, another banking crisis, unemployment. When whatever hits, hits we have no defence to save the housing market again. Good luck coalition!

[Carlton]

I have been watching the Highlands (specifically Glencoe area) as my main area of interest

and at last am beginning to notice some price drops but only

on the cheapest of properties and of those they seem to be restricted to Kinlochleven

which is the most undesirable of all the local villages

 

Mind you very little selling seems to be taking place

on any level ,still stuck in the denial phase imo

news doesnt travel fast ,time to pay a visit and scream it

from a megaphone

It sure looks like a beautiful area on GoogleEarth. It's the kind of place I could fall in love with. The combination of mountains and water is just excellent. I hope you find the right place at the right price.

[Jake]

Not necessarily, it could be argued that it was the Tories plan to eliminate the deficit thereby keeping the markets happy and rates low.

 

* The economy has an upswing.

* The upwsing starts to falter, as is natural to the business cycle.

* Politicians say “Hey, let’s keep this thing going.”

* The system is juiced with leverage-enhancing liquidity.

* Via stimulative reinforcements, a boom mentality takes hold.

* The boom continues, now in an unnatural state.

* The “can’t lose” mentality sets in. Greed and hubris run amok.

* Via risky marginal investments, unproductive debt accumulates.

* After a period of years (or even decades), cracks reappear.

* The “mountain of debt” now casts a long cold shadow.

* That same mountain threatens to topple and collapse.

* The authorities panic. They know the debt will crush them.

* To circumvent the avalanche, the debt is monetized.

* Via monetization, the economy experiences temporary relief.

* But the relief is not enough… the problems persist…

* …and so more monetization is applied.

* As alternative to full collapse, the currency is destroyed.

 

 

In regard the housing market perhaps you are here:

 

* Via monetization, the economy experiences temporary relief.

 

Plans to eliminate the deficit may just be that. Plans.

[tallim]

...Remember, with inflation at 3%, the deficit will be halved by the end of the present parliament, so actually, that could pay towards any wage rises.

...

 

I don't think I agree with you. We're not looking for general inflation or GDP growth to deal with the debt, specifically it needs to be tax receipts.

 

We did have a good January though, UK running a net surplus of £3.7bn, probably due to personal filings and corporation tax, tax receipts can be highly seasonal.

 

http://www.statistics.gov.uk/cci/nugget.asp?id=206

 

I really hope the chancellor holds his nerve and doesn't start giving cash away.

 

I went to a large private-sector office in the North-West yesterday largely staffed by ex-Public-sector employees where the workforce is largely under UNITE the Union, some of the rubbish they had up on the Union noticeboards was amazing. One of the posters would have you believe that the UK has had higher debt for most of the 20th century and that there's no problem today, see link below;

 

http://www.dontbreakbritain.org/sub_pages/...th_busters.aspx

 

Spin of statistics at it's worst, no mention of interest rates, context of prior debt (WWII, etc...), off-balance sheet liabilities, etc...

[John Doe]

Don't kid yourself. You cannot get "blood from a stone", and if taxpayers are unwilling to pay more,

then those vampires that live off the state, will find the blood they have been feeding off is drying up.

Wow, that's a bit harsh.

 

No one likes a sponger, but with the system we have at present, you can't blame people for not taking a job if they would be worse off. That's daft.

I do agree something should be done mind, like the US states that make you work for benefits and the moves being made now to make it pay to work.

 

I heard some interesting figures the other day.

 

Benefit fraud ~£1B

 

Tax Fraud by the rich and multinationals ~£30B

 

Tax avoidance (slightly different) ~£100B

 

The tax avoidance is not illegal, yet, if you are unemployed and dispose of assets so you qualify for full aid, that is illegal and you will be imprisoned.

When a company does the exact same thing, it is called tax avoidance and is perfectly legal.

 

Puts things in a little more context, dont you think?.

[drbubb]

Wow, that's a bit harsh.

 

No one likes a sponger, but with the system we have at present, you can't blame people for not taking a job if they would be worse off. That's daft.

I do agree something should be done mind, like the US states that make you work for benefits and the moves being made now to make it pay to work.

 

I heard some interesting figures the other day.

 

Benefit fraud ~£1B

 

Tax Fraud by the rich and multinationals ~£30B

 

Tax avoidance (slightly different) ~£100B

 

The tax avoidance is not illegal, yet, if you are unemployed and dispose of assets so you qualify for full aid, that is illegal and you will be imprisoned.

When a company does the exact same thing, it is called tax avoidance and is perfectly legal.

 

Puts things in a little more context, dont you think?.

I don't think it is harsh - It is factual.

 

Look what happens when the state falters, all those people living off it, find they are cut off.

This result - a faltering government - is so very likely... not only in the US, but in the UK too.

 

People had better learn to be more self-sufficient, or they are going to face a big shock in the months and years to come.

I do not limit my comment to benefit takers, but to all manner of people and enterprises who live off the state.

And that includes politicians, who are some of the worst "vampires" of all.

[BoldAsBrass]

I have been watching the Highlands (specifically Glencoe area) as my main area of interest

and at last am beginning to notice some price drops but only

on the cheapest of properties and of those they seem to be restricted to Kinlochleven

which is the most undesirable of all the local villages

 

Mind you very little selling seems to be taking place

on any level ,still stuck in the denial phase imo

news doesnt travel fast ,time to pay a visit and scream it

from a megaphone

 

House prices may well come down - but not anywhere you'd actually want to live.

[BoldAsBrass]

Wow, that's a bit harsh.

 

No one likes a sponger, but with the system we have at present, you can't blame people for not taking a job if they would be worse off. That's daft.

I do agree something should be done mind, like the US states that make you work for benefits and the moves being made now to make it pay to work.

 

I heard some interesting figures the other day.

 

Benefit fraud ~£1B

 

Tax Fraud by the rich and multinationals ~£30B

 

Tax avoidance (slightly different) ~£100B

 

The tax avoidance is not illegal, yet, if you are unemployed and dispose of assets so you qualify for full aid, that is illegal and you will be imprisoned.

When a company does the exact same thing, it is called tax avoidance and is perfectly legal.

 

Puts things in a little more context, dont you think?.

 

Indeed it does put things in context.

 

Which is why I think the refrain often expressed here of doom, gloom, despair and dire warnings that everything is about to unravel is just a wee bit overdone. There is plenty of scope to increase government income if they start to get tough with certain people.

 

New Labour's answer was endless debt. The Coalition are continuing in the same vein but, if we do have a crisis (which, as far as I can see, will mean a bond crisis) then they'll have no choice but to start to collect the tax evaded and avoided by the rich and multi-nationals.

 

This could yet end up with exchange controls.

[aliveandkicking]

Indeed it does put things in context.

 

Which is why I think the refrain often expressed here of doom, gloom, despair and dire warnings that everything is about to unravel is just a wee bit overdone. There is plenty of scope to increase government income if they start to get tough with certain people.

 

New Labour's answer was endless debt. The Coalition are continuing in the same vein but, if we do have a crisis (which, as far as I can see, will mean a bond crisis) then they'll have no choice but to start to collect the tax evaded and avoided by the rich and multi-nationals.

 

This could yet end up with exchange controls.

 

taxes for rich foreigners and exchange controls will hammer the hell out of london property however.

[tallim]

Indeed it does put things in context.

 

Which is why I think the refrain often expressed here of doom, gloom, despair and dire warnings that everything is about to unravel is just a wee bit overdone. There is plenty of scope to increase government income if they start to get tough with certain people.

 

New Labour's answer was endless debt. The Coalition are continuing in the same vein but, if we do have a crisis (which, as far as I can see, will mean a bond crisis) then they'll have no choice but to start to collect the tax evaded and avoided by the rich and multi-nationals.

 

This could yet end up with exchange controls.

 

Even if every single penny of that estimated £31Bn Fraud and £100Bn Avoidance was somehow collected, the UK would still run an annual deficit of £18Bn based on the latest ONS estimate for net borrowing for 2010/2011.

 

In reality there is no way to collect anywhere near the full amount that is avoided, as it would require wholesale re-writing of tax law without introducing new loop-holes and removing all the 'loop-holes' that are placed in there on purpose to encourage certain types of economic activity.

 

If you then consider that a proportion of the UK's tax intake is from individuals and corporations that have no reason to exist in the UK other than convenience, you will get flight if you start to reduce avoidance and hike rates too much. A prime example of a large company doing that recently is INEOS;

 

http://www.theengineer.co.uk/channels/proc...1001284.article

 

..Changes in UK tax legislation will result in significant levels of additional tax being payable by its businesses and reduce its ability to re-invest in its production facilities, said INEOS, which estimates that moving to Switzerland would provide potential cash tax savings of around €450m between now and 2014...

 

Tax is now a point of global competition, as Dr Bubb said earlier in the thread, and this applies to individuals and companies;

 

...You cannot get "blood from a stone"...

[John Doe]

Even if every single penny of that estimated £31Bn Fraud and £100Bn Avoidance was somehow collected, the UK would still run an annual deficit of £18Bn based on the latest ONS estimate for net borrowing for 2010/2011.

 

In reality there is no way to collect anywhere near the full amount that is avoided, as it would require wholesale re-writing of tax law without introducing new loop-holes and removing all the 'loop-holes' that are placed in there on purpose to encourage certain types of economic activity.

 

If you then consider that a proportion of the UK's tax intake is from individuals and corporations that have no reason to exist in the UK other than convenience, you will get flight if you start to reduce avoidance and hike rates too much. A prime example of a large company doing that recently is INEOS;

 

http://www.theengineer.co.uk/channels/proc...1001284.article

 

 

 

Tax is now a point of global competition, as Dr Bubb said earlier in the thread, and this applies to individuals and companies;

 

Totally agree, if looking at the worst case scenario, just trying to put the fiddle figures in context. The poor are an easy target.

 

Also agree with BAB, in as much as the gloom here is totally overdone. It's bad, but it's not the end of the world. We have been through worse and we will again.

 

[wee Jinky]

It sure looks like a beautiful area on GoogleEarth. It's the kind of place I could fall in love with. The combination of mountains and water is just excellent. I hope you find the right place at the right price.

 

cheers

I lived there for 10 years

and there wasnt a single day I didnt wake up and thank God

I remember driving through there years earlier and said to myself

one day I will come here to live,totally out of the blue my wife got offered a job

at Glencoe Hospital (now closed) hence our departure.

The weather can be appalling ,the midges are hell on earth

and the locals extremely cliquey and to cap it all Jimmy Saville lives there as well (tosser)

 

 

[John Doe]

House prices may well come down - but not anywhere you'd actually want to live.

The price rises in the bad areas were way bigger than the good areas. "Nice" people started moving into the previously not so nice areas as prices rose and new shops/cafes/estate agencies moved into the areas. The opposite effect is happening now, as the "not so nice" areas are going down the pan with shops/cafes/ea's closing, and prices falling hard.

 

Perhaps that partially explains the "flight to quality" where good areas are still doing quite well?

 

As someone told me in the depths of recession in the 80's "remember, even with 15% unemployment, 85% are still working". (Yes I know they fiddle the figures, but the point remains)

 

[John Doe]

The weather can be appalling ,the midges are hell on earth

Yeah, we stayed in Kinlochleven on the last night of doing the WHW before the final leg. I've never seen midges like it, the sky was black!

 

and the locals extremely cliquey and to cap it all Jimmy Saville lives there as well (tosser)

 

It really is an amazingly beautiful area. Even the train trip back to Glasgow was through scenery as breathtaking as the walk!

 

And that includes politicians, who are some of the worst "vampires" of all.

 

Aint that the truth Along with the bankers and multinationals