UK House prices: News & Views

[wee Jinky]

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!

 

 

 

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

 

I used to work for Scotrail when I lived there

ended up driving the steam train to Mallaig in the summer

which was incredibly nostalgic ,well I was actually the poor sod

doing all the shovelling but I got wee shots at the controls

same train they used for Harry Potter ,owned by Rick Wakeman

We would also go through Rannoch moor with the snow ploughs

in the winter sometimes the drifts were 12 ft high \0/

worst part was when you hit a stag , those beasts can do serious damage

ahhh happy days

 

[John Doe]

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.

There was a caller into the any answers on Radio 4 at the weekend who described a “one off” tax on the most wealthy 1 or 2 % (IIRC) people in the UK in order to wipe out the deficit. Apparently, the vast majority in that bracket (with average wealth over £4million) were quite supportive of the idea.

 

I haven’t looked at the figures, but it made me think for a while. I mean, how many millions do you really need?

 

Just a thought.

[John Doe]

I used to work for Scotrail when I lived there

ended up driving the steam train to Mallaig in the summer

which was incredibly nostalgic ,well I was actually the poor sod

doing all the shovelling but I got wee shots at the controls

same train they used for Harry Potter ,owned by Rick Wakeman

We would also go through Rannoch moor with the snow ploughs

in the winter sometimes the drifts were 12 ft high \0/

worst part was when you hit a stag , those beasts can do serious damage

ahhh happy days

Sounds fantastic (sat here in my nice warm house), You are my hero!

 

Morar beach is probably my favourite beach in the UK! White sand, clear blue sea, happy days indeed!

[tallim]

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.

 

Agreed, the undeserving poor are a good side-show, no doubt there are many culpable people in there, but they are chicken feed compared to the real problem.

 

I'll come back to my favourite charts showing UK public spending in 2008/2009 and 2009/2010 by department & programme in nice clear terms;

 

http://image.guardian.co.uk/sys-files/Guar...ding_160909.pdf

http://www.scribd.com/doc/39553294/Public-...ment-department

 

If you study it you find it difficult to find anything that stands out as an easy cut to reduce public spending back to match public income (2009/2010 deficit was £160Bn, 24% of spending was funded by debt). The only conclusion I can draw from that is in general the government offers too many services, employing too many people, spending too much money across the whole board, nothing in particular has ballooned to cause this deficit in itself.

[John Doe]

Agreed, the undeserving poor are a good side-show, no doubt there are many culpable people in there, but they are chicken feed compared to the real problem.

 

I'll come back to my favourite charts showing UK public spending in 2008/2009 and 2009/2010 by department & programme in nice clear terms;

 

http://image.guardian.co.uk/sys-files/Guar...ding_160909.pdf

http://www.scribd.com/doc/39553294/Public-...ment-department

 

If you study it you find it difficult to find anything that stands out as an easy cut to reduce public spending back to match public income (2009/2010 deficit was £160Bn, 24% of spending was funded by debt). The only conclusion I can draw from that is in general the government offers too many services, employing too many people, spending too much money across the whole board, nothing in particular has ballooned to cause this deficit in itself.

True, but a huge amount of the current (not structural) deficit is directly down to the huge drops in tax receipts yes?

Barclays, for example, writing of their tax due to losses the year before (just one example of many).

That’s just one company. Take just the FTSE 100 and it soon adds up.

 

Structural deficit is also falling due to inflation at present. With inflation ~5% and pub sector pay rises ~0.5%, that's a 4.5% wages (and future pension) saving straight away. (Had a couple of years of that already).

[tallim]

True, but a huge amount of the current (not structural) deficit is directly down to the huge drops in tax receipts yes?

Barclays, for example, writing of their tax due to losses the year before (just one example of many).

That’s just one company. Take just the FTSE 100 and it soon adds up.

 

Structural deficit is also falling due to inflation at present. With inflation ~5% and pub sector pay rises ~0.5%, that's a 4.5% wages (and future pension) saving straight away. (Had a couple of years of that already).

 

Drop in tax receipts is not huge;

 

2002/2003 - £396Bn

2003/2004 - £422Bn

2004/2005 - £453Bn

2005/2006 - £487Bn

2006/2007 - £519Bn

2007/2008 - £549Bn

2008/2009 - £533Bn

2009/2010 - £520Bn

2010/2011 - £548Bn (Est.)

 

http://www.guardian.co.uk/news/datablog/20...x-receipts-1963

 

Drop in growth of tax receipts could be considered huge if someone straight-lined the forecast for 2008 onwards based on 2002-2007 though.

 

My estimate would put the structural deficit nearing £100Bn based on slightly inflated tax receipts in period 2004/2005 to 2007/2008, expecting on-trend tax receipts this year to be around £590Bn.

 

I disagreed before when you mentioned that inflation was helping (I assume you mean RPI when mentioning 5%), more expensive petrol, bread or TVs does not always equal equivalent higher tax receipts, it could squeeze the amount of money available to pay tax (as we may see officially recognised if the chancellor gives away some money in April by stopping the planned fuel duty rise).

 

If you're not talking about consumer or retail price inflation though, then I agree that keeping public sector pay inflation below tax receipt inflation is one valid (but very slow) way to reduce the deficit.

[drbubb]

Drop in growth of tax receipts could be considered huge if someone straight-lined the forecast for 2008 onwards based on 2002-2007 though.

 

My estimate would put the structural deficit nearing £100Bn based on slightly inflated tax receipts in period 2004/2005 to 2007/2008, expecting on-trend tax receipts this year to be around £590Bn.

 

I disagreed before when you mentioned that inflation was helping (I assume you mean RPI when mentioning 5%), more expensive petrol, bread or TVs does not always equal equivalent higher tax receipts, it could squeeze the amount of money available to pay tax (as we may see officially recognised if the chancellor gives away some money in April by stopping the planned fuel duty rise).

 

If you're not talking about consumer or retail price inflation though, then I agree that keeping public sector pay inflation below tax receipt inflation is one valid (but very slow) way to reduce the deficit.

they need to take passive income on property more heavily.

After all, property cannot be moved outside the country

[John Doe]

Drop in growth of tax receipts could be considered huge if someone straight-lined the forecast for 2008 onwards based on 2002-2007 though.

 

My estimate would put the structural deficit nearing £100Bn based on slightly inflated tax receipts in period 2004/2005 to 2007/2008, expecting on-trend tax receipts this year to be around £590Bn.

I think that was Brown's model (the genius ) hence the increase in spending each year.

 

Worrying seeing the rise in oil again today. Could easily end up being the shock that tips us over the edge again.

[ecoface]

Quite impressive really considering the impending SP bomb:

 

Housebuilder Barratt has slashed its losses and seen its revenues hold firm in the six months to December 31.

 

The company posted a £4.6m loss, compared to a loss of £178.4m in the same half of 2009. Its revenue was slightly up, at £877.6m compared to £872.4m.

 

 

[crushtherents]

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.

the vampire is the people who use the facilities paid for by others and contribute nothing back cos they trade shares for a living instead of doing anything useful to help anyone bar them self

[bitbigt]

the vampire is the people who use the facilities paid for by others and contribute nothing back cos they trade shares for a living instead of doing anything useful to help anyone bar them self

...hard to argue against that!

[drbubb]

the vampire is the people who use the facilities paid for by others and contribute nothing back cos they trade shares for a living instead of doing anything useful to help anyone bar them self

 

Why that dig??

 

What you call "doing nothing useful" is part of the capital allocation process.

If I help someone else manage their money, and do a good job and get paid for it, how is that any different from doing it for myself, and paying myself?

 

At least I am not "ripping off" someone by charging a fee for poor performance. (if I perform badly, I lose money when I manage my own.)

 

BTW, supporting myself by trading and running a (helpful) website, is far better than living off the state, and expecting people to pay taxes to feed me, don't you think?

 

(On further reflection, I think your comment must be a case of not wanting to admit that you are living off others - so you get no respect from me ! There may be good reasons for doing that, but I suggest you not bite the hands that feed you. And give some respect to those that manage to feed themselves, despite not having a "proper job.")

[wee Jinky]

http://www.moneyweek.com/investments/prope...or-a-fall-10707

 

nice bearish article from Moneyweek thats difficult to argue against

 

 

[crushtherents]

1Why that dig??

 

2What you call "doing nothing useful" is part of the capital allocation process.

If I help someone else manage their money, and do a good job and get paid for it, how is that any different from doing it for myself, and paying myself?

 

3At least I am not "ripping off" someone by charging a fee for poor performance. (if I perform badly, I lose money when I manage my own.)

 

4BTW, supporting myself by trading and running a (helpful) website, is far better than living off the state, and expecting people to pay taxes to feed me, don't you think?

 

5(On further reflection, I think your comment must be a case of not wanting to admit that you are living off others - so you get no respect from me ! There may be good reasons for doing that, but I suggest you not bite the hands that feed you. And give some respect to those that manage to feed themselves, 6despite not having a "proper job.")

1. i dig at you cos you call people vampires. you are more like a vampire than any benefit claimant. look in the mirror and see if you reflect light like the rest me us. 2. it doesnt matter who you do the job for you are still more like a vampire than me. 3 you have no idea how well i perform at my job and no basis to assume i am ripping anyone off. 4. feeding your self is better than being a murder too and you forgot to say you are better than rapists because you are a 'trader'. 5. i admitted that i live off others in another post AND i do a job that YOU benefit from. your still more like a vampire than me. 6 i'm glad you a brave enough to admit you havent got a proper job. now admit you are more like a vampire than any benefit claimant and we can all move along.

[Meralti]

http://www.moneyweek.com/investments/prope...or-a-fall-10707

 

nice bearish article from Moneyweek thats difficult to argue against

 

 

There is some interesting facts about the special liquidity scheme in an article that this one links to. You can read it here Borrowing costs will go up

 

In a nutshell; the withdrawal of the special liquidity scheme means borrowing cost are going to continue rising regardless of what the BoE does with base rates. I remember mentioning this a while ago.

 

I've quote from the article to save you having to read the whole thing.

 

Why? Because as Vicky Redwood and Ed Stansfield of Capital Economics point out, the help that the banking sector has been getting from the BoE since the financial crisis kicked off, is being gradually withdrawn.

 

For a start there's the Special Liquidity Scheme. Under this, the BoE gave the banks nine-month Treasury bills in exchange for mortgage-backed securities and other rubbish that they were unable to sell, or use to borrow cash against. The banks were able to use these Treasury bills as "high quality collateral to raise cash in the markets".

 

By the end of this year, the banks are going to have to repay these loans. £110bn remains outstanding. In other words, they need to swap the nice, cheap source of funds that they got from the BoE for the harsh realities of the open market. The cost of this borrowing will be higher. And this, says Capital Economics: "is likely to feed directly into higher borrowing costs and reduced credit availability" for consumers.

 

There's also the Credit Guarantee Scheme. Under this, banks issued bonds with a government guarantee, "of which at least £110bn are still outstanding". This scheme is set to end next year. A third of the initial loans can be rolled over until April 2014, but the rest mature next April. In all – if you include other outstanding debt set to mature – the BoE reckons the big banks need to refinance about £400bn to £500bn by the end of 2012.

 

They can do this by raising more money from the likes of me and you – using 'retail deposits' to close this 'funding gap.' However, as Capital Economics points out, "outstanding deposits would need to rise by some 40% from their current level of £1.2 trillion to solve the funding problem". That's not going to happen. So you might end up getting banks competing with each other for deposits – in other words, offering better rates. That's good news for savers, but it will push up costs for borrowers.

 

The other option is to raise money in the wholesale markets. An over-reliance on wholesale funding is how Northern Rock came a cropper. And those markets shut down during the credit crunch. They've reopened – but "the amount that banks need to refinance far outweighs the £130bn of term debt raised in the markets last year". So again, there's going to be a lot of competition for those funds, which means they'll be expensive.

 

All banks really do at the end of the day, is buy money from one group of people (depositors) and sell it to another (lenders). If the money costs the banks more to buy in, then they have to raise the price at which they sell it. So borrowing costs look likely to rise this year, regardless of what Mr King does with interest rates.

 

[Perishabull]

Where's Buffy when you need her?

 

[TestIcicle]

1. i dig at you cos you call people vampires. you are more like a vampire than any benefit claimant. look in the mirror and see if you reflect light like the rest me us. 2. it doesnt matter who you do the job for you are still more like a vampire than me. 3 you have no idea how well i perform at my job and no basis to assume i am ripping anyone off. 4. feeding your self is better than being a murder too and you forgot to say you are better than rapists because you are a 'trader'. 5. i admitted that i live off others in another post AND i do a job that YOU benefit from. your still more like a vampire than me. 6 i'm glad you a brave enough to admit you havent got a proper job. now admit you are more like a vampire than any benefit claimant and we can all move along.

Are traders vampires? I don't think so. I think they're just like any other buyer/seller of general "stuff", the stuff just happening to be shares/stocks/bonds/gilts... which are issued in the first place by an organisation to generate capital, which in turn drives growth by way of investment.

 

More growth = more jobs = higher employment = more spending - more stuff needed to be made = more growth = virtuous circle...

 

The trader just plays the part of "price discoverer" of said shares/stocks/bonds/gilts etc. If they're good, they'll make a profit doing so. Another comparison is a newsagent buying a crate of 24 Special Brews from the wholesaler for £12, then selling them to winos at £1 a can, representing a 100% markup. Is this vampiric?!

 

You could argue an employer is vampiric because they earn money off the back of their employees. The CEO of McDonalds creaming off the dosh from all those minimum wage burger flippers, and all the middle management in between.

 

I'm not saying ANY of this is moral, just my take on capitalism, economics and the markets and whatnot.

 

On t'other hand, I think it IS fair to say BTL landlords are vampiric because the property assets they hold seem to impose price distortions which causes (i) a money-for-nothing "wealth effect" via excessive HPI (only realised through MEW), and (ii) the existence of grotty, shoddy rental abodes which are not fit for purpose but legally "OK", and (iii) ignorant, unprofessional landlords who don't recognise the responsibilities of their roles and don't do stuff they're meant to do.

 

Thinking further, if you say a trader is vampiric, you may as well say they same about a professional poker player... as far as I see they're both staking their own dough and making carefully calculated (to be successful) judgements of probability. That said, the difference between a trader and poker player is that the former deals with largescale interconnected worldly affairs (which is why this forum is so interesting) whereas the latter is just dealing with numbers.

 

DrB might not have a "job" but to be successful he has to work hard and this website, again, is part of that. Successful people always divide opinion and attract detractors... that's the way the cookie crumbles!

 

Of course the REAL vampires are those who work at BANKS (and their political allies) who trade financial instruments to create wealth alchemically. They thought/think they were/are geniuses, whereas they actuallly need their heads to be severed from their bodies and put onto pointy sticks.

[crushtherents]

Are traders vampires? I don't think so. I think they're just like any other buyer/seller of general "stuff", the stuff just happening to be shares/stocks/bonds/gilts... which are issued in the first place by an organisation to generate capital, which in turn drives growth by way of investment.

 

More growth = more jobs = higher employment = more spending - more stuff needed to be made = more growth = virtuous circle...

 

The trader just plays the part of "price discoverer" of said shares/stocks/bonds/gilts etc. If they're good, they'll make a profit doing so. Another comparison is a newsagent buying a crate of 24 Special Brews from the wholesaler for £12, then selling them to winos at £1 a can, representing a 100% markup. Is this vampiric?!

 

You could argue an employer is vampiric because they earn money off the back of their employees. The CEO of McDonalds creaming off the dosh from all those minimum wage burger flippers, and all the middle management in between.

 

I'm not saying ANY of this is moral, just my take on capitalism, economics and the markets and whatnot.

 

On t'other hand, I think it IS fair to say BTL landlords are vampiric because the property assets they hold seem to impose price distortions which causes (i) a money-for-nothing "wealth effect" via excessive HPI (only realised through MEW), and (ii) the existence of grotty, shoddy rental abodes which are not fit for purpose but legally "OK", and (iii) ignorant, unprofessional landlords who don't recognise the responsibilities of their roles and don't do stuff they're meant to do.

 

Thinking further, if you say a trader is vampiric, you may as well say they same about a professional poker player... as far as I see they're both staking their own dough and making carefully calculated (to be successful) judgements of probability. That said, the difference between a trader and poker player is that the former deals with largescale interconnected worldly affairs (which is why this forum is so interesting) whereas the latter is just dealing with numbers.

 

DrB might not have a "job" but to be successful he has to work hard and this website, again, is part of that. Successful people always divide opinion and attract detractors... that's the way the cookie crumbles!

 

Of course the REAL vampires are those who work at BANKS (and their political allies) who trade financial instruments to create wealth alchemically. They thought/think they were/are geniuses, whereas they actuallly need their heads to be severed from their bodies and put onto pointy sticks.

i did not intend to call all traders vampires and i appologise for it. i was wound up by him using the word 'vampire' for benefit claimants. bubb invests in property him self and makes a profit from peoples basic need for shelter. people who are poor need the benefits to pay the cost of living. people dont chose to be poor. he is more like a vampire than me.

[John Doe]

Thinking further, if you say a trader is vampiric, you may as well say they same about a professional poker player... as far as I see they're both staking their own dough and making carefully calculated (to be successful) judgements of probability. That said, the difference between a trader and poker player is that the former deals with largescale interconnected worldly affairs (which is why this forum is so interesting) whereas the latter is just dealing with numbers.

 

Now that's a good analogy. The trader who uses their own money is essentially a professional gambler. Nothing wrong with that. Quite right about the gamblers that play with other peoples money though. They win when their clients win, then they win when their clients loose and we, the tax payers, end up with the bill. They really are the vampires.

 

DrB might not have a "job" but to be successful he has to work hard and this website, again, is part of that.

 

I don't always agree with him, but I do believe he works hard and tries to "give back" in quite a few ways.

 

i did not intend to call all traders vampires and i appologise for it.

 

Well said CTR. It's not many nowadays that have the honesty (and cahoonas) to apologise I'm sorry to say. (no pun intended )

[wee Jinky]

quite simply

if there was no one to invest in building or buying houses

then there would be nowhere for those who cannot afford to build or buy to live

both the investor and the renter "rely" on each other

 

 

[John Doe]

quite simply

if there was no one to invest in building or buying houses

then there would be nowhere for those who cannot afford to build or buy to live

both the investor and the renter "rely" on each other

Not in Cuba ..............................

[Van]

Mortgage rates have risen in the last week.

 

2 deals that I have been monitoring:

 

Nationwide 2yr fixed 85% LTV 4.39% -> 4.99%

ING 2yr fixed 80% LTV 3.69% -> 3.89%

 

Despite the bullish Rightmove figure, the reality is that the screws are being turned on the UK housing market as economic reality begins to bite.

 

Even since this post on Monday, lenders are raising their rates.

Nationwide have raised all their rates and other lenders are doing likewise. That 4.99% deal is no longer available - it's up to 5.29% now.

[John Doe]

Where's Buffy when you need her?

I ask the same thing every day

 

Even since this post on Monday, lenders are raising their rates.

Nationwide have raised all their rates and other lenders are doing likewise. That 4.99% deal is no longer available - it's up to 5.29% now.

 

Yep. But, can still get 5.59% fixed for ten years from Brittania (although, was 5.09% a while back).

 

So, the dilema is fix now, or wait till oil hits $150 again (or way above), and then the next recession, which will lead to the presses being turned on again and cheap money for all again! Woo Hoo!

[Van]

Yep, 5yr fixed rates are up too.

 

http://www.moneysupermarket.com/c/news/bor...s-rise/0011001/

 

According to some recent number-crunching from moneysupermarket.com, the average cost of a two-year fixed rate has risen from 4.27% to 4.52% just in the past month. The number of two-year fixes that lenders are offering has also fallen from 802 to 658, as banks and building societies keep their coffers closer to their chests in preparation for harder times.

 

It's the same story for five-year fixed rates. Last month, the average cost of one of these deals sat at 5.24%, compared to 5.50% in mid-February - an even bigger rise of 0.26%. The number of deals available in this lending camp has also slumped from 365 to 344 in the last month.

 

So, borrowing costs up, number of products down.

Looks like mortgage approvals are going to be plumbing new lows this year.

 

 

[drbubb]

1. i dig at you cos you call people vampires. you are more like a vampire than any benefit claimant. look in the mirror and see if you reflect light like the rest me us. 2. it doesnt matter who you do the job for you are still more like a vampire than me. 3 you have no idea how well i perform at my job and no basis to assume i am ripping anyone off. 4. feeding your self is better than being a murder too and you forgot to say you are better than rapists because you are a 'trader'. 5. i admitted that i live off others in another post AND i do a job that YOU benefit from. your still more like a vampire than me. 6 i'm glad you a brave enough to admit you havent got a proper job. now admit you are more like a vampire than any benefit claimant and we can all move along.

 

Well, obviously I disagree with that.

If you are living off the state (& its taxpayers) you are hadly in a position to call independent people, who pay taxes: "vampires."

(BTW, I have paid more than Pds 500,000 in taxes since I began this way of life. I wonder how many vamps lived off that?)

 

I suggest you think again, and realise that a defensive impulse has corrupted your ability to reason. Time to reboot.