UK House prices: News & Views

[Van]

RICS comes in at -26, a small improvement from last month's -31.

 

all areas are negative except London - I wonder how much of an effect the new 5% stamp duty on +£1m purchases is having. There is a very important point here - the deadline is 6th April on completion (not on exchange as other recent changes have been). Therefore there is an almighty rush at the moment to get things done and dusted before the deadline.

 

 

[BertieBee]

RICS comes in at -26, a small improvement from last month's -31.

 

all areas are negative except London - I wonder how much of an effect the new 5% stamp duty on +£1m purchases is having. There is a very important point here - the deadline is 6th April on completion (not on exchange as other recent changes have been). Therefore there is an almighty rush at the moment to get things done and dusted before the deadline.

 

 

It must be having an effect. Interesting timing too, with it coming just after bonus season.

[tallim]

Link to the full RICS report PDF;

 

http://www.rics.org/site/download_feed.asp...leExtension=PDF

 

I've never read it in detail before, I quite like all the bleating comments at the back that each Surveyor makes;

 

John Frost MRICS, The Frost

Partnership, Slough, Buckinghamshire,

01494 680909 - I look forward to the

media coverage concentrating on the

Royal wedding in order to reduce the

negative speculation over the housing

market which, if left alone, would give it

more stability.

[fitkid]

Growth in number of ‘retirement renters’ as appeal of homeownership wanes

 

The number of pensioners stepping off the property ladder to rent is growing fast according to retirement rental specialist, Girlings Retirement Rentals.

 

It reports that in five years, new enquiries have risen by 32% and the main attractions are rental affordability and the availability of life-time (assured) tenancies.

 

This growth in popularity of renting in retirement mirrors a general increase in renting in the UK. The English Housing Survey from Communities and Local Government reports this week that the number of households renting privately has increased by one million in the last five years and that one in six homes is now a private rental property.

 

In 2005-06, there were 2.4 million private rental households, which rose to 3.4 million in 2009-10.The private rented sector now accounts for 15.6% of all households in England, up from 14.2% in 2008-09 and 11.7% in 2005-06.

 

The affordability of renting is a big attraction for Girlings’ tenants. In a recent tenants’ survey nearly half said they are financially better off renting. 48% of people were former homeowners who sold their properties to release capital and invest it before renting a property through Girlings. They are now enjoying greater financial freedom with only monthly rents to meet, as maintenance costs and additional services, including a 24 hour Careline and the presence of a House Manager on site, are included in the rent.

 

Former big band singer Shirley Dew and husband Roy moved into a Girlings’ apartment in West Sussex when they returned from living in Gran Canaria and were priced out of the UK property market. One of the main attractions of renting for the Dews was the fact they could move into a modern, clean, purpose built retirement apartment immediately and make a fresh start in the UK. Other benefits were the assured (life-long) tenancy offered by Girlings. In addition, the development was very secure and the couple felt reassured by the presence of a House Manager on site to support tenants which they felt would be needed increasingly as they grew older.

 

Shirley said, “Financially, renting is a fantastic option for us. Whilst we don’t have the sunshine of Gran Canaria, we have marvellous walks, beaches and wonderful scenery on our doorstep – we definitely made the right decision to come back.”

 

Peter Girling, Chairman says, “Currently, 70% of over 65s are homeowners in the UK and many live in large, but under occupied family housing. £1 trillion is tied up in the value of their homes and yet many live in houses which are now too large for them, struggle to pay the bills and make ends meet. It is little wonder that many are opting to step off the property ladder and rent in order to free up their finances for retirement.

 

“Renting seems to make financial sense increasingly to this age group. Our assured (life-long) tenancies give people the same level of security as homeownership, but without the maintenance and financial worries and this is the big attraction,” he added.

 

 

 

 

 

 

[G0ldfinger]

Nice piece in MoneyWeek: Property investors are in for a rude awakening

http://www.moneyweek.com/investments/prope...awakening-10904

[drbubb]

(Do others who see this get as angry as I do - to see such stupidity repeated?):

 

 

(1)

Reintroduction of 90% mortgages should help turn a profit !

 

BBC: Northern Rock reports £232.4m loss for 2010

 

Nationalised lender Northern Rock, rescued after its near-collapse, has reported a loss of £232.4m for 2010. But the company said it was making progress, with income up and costs reduced during the second half of its financial year. However, executive chairman Ron Sandler said that trading remained "difficult" in the current environment. He said Northern Rock was still in talks with the government on returning the company to private ownership

/source: HPC NewsBlog

== ==

 

fine (!?) - and what's the long term impact here ?

 

 

(2)

In an interview with the Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”.

 

Mr King urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.

 

He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he says.

 

The Governor criticises the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.

 

Mr King expresses regret for not sounding a louder warning over his concerns before the last banking crisis.

 

/source: http://www.telegraph.co.uk/finance/economi...hief-warns.html

 

[BoldAsBrass]

(Do others who see this get as angry as I do - to see such stupidity repeated?):

 

 

(1)

Reintroduction of 90% mortgages should help turn a profit !

 

BBC: Northern Rock reports £232.4m loss for 2010

 

Nationalised lender Northern Rock, rescued after its near-collapse, has reported a loss of £232.4m for 2010. But the company said it was making progress, with income up and costs reduced during the second half of its financial year. However, executive chairman Ron Sandler said that trading remained "difficult" in the current environment. He said Northern Rock was still in talks with the government on returning the company to private ownership

/source: HPC NewsBlog

== ==

 

fine (!?) - and what's the long term impact here ?

 

 

(2)

In an interview with the Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”.

 

Mr King urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.

 

He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he says.

 

The Governor criticises the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.

 

Mr King expresses regret for not sounding a louder warning over his concerns before the last banking crisis.

 

/source: http://www.telegraph.co.uk/finance/economi...hief-warns.html

 

I don't see anything wrong with 90% mortgages. It is the salary multiples and interest rates that are important. It seems pure, undiluted madness to me to take on a 25 year, massive, debt with variable interest rates.

 

We're in a situation now where, if base rate went up to 5% and mortgage interest rates went up to 8%, millions of people who have taken mortgages out in the last 10 years will be completely stuffed.

 

To take out a 25 year variable rate mortgage now - with base rate at an all time low - is surely evidence of insanity. Yet, where are the experienced voices warning youngsters against taking mortgages out on these terms?

 

The sound of silence is deafening.

[drbubb]

CHARTS are Back - on the GPC data thread...

 

 

Techniques that called the bounce, are now predicting a slide

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

: // Link here: http://tinyurl.com/UKTrap

Barratt Dev'l / BDEV : Monthly chart

:

 

READ THE CHARTS ! They whisper their messages to those who can decipher them.

Close-up : H&N Index (ave. of Halifax & Nationwide) ... Rightmove's London Offering prices

..

 

Barratt closer / BDEV.L ... update : Longer Term : Last 12 months : 6mos

 

It looks to me like BDEV had a "fake out" bounce on light volume in Sept. 2009, and the NEXT LEG DOWN is underway. I will expect a continuing slide in Uk House prices into 2012/13 or later. Buy signal: after the Builder shares break up on high volume.

[drbubb]

I don't see anything wrong with 90% mortgages. It is the salary multiples and interest rates that are important. It seems pure, undiluted madness to me to take on a 25 year, massive, debt with variable interest rates.

 

We're in a situation now where, if base rate went up to 5% and mortgage interest rates went up to 8%, millions of people who have taken mortgages out in the last 10 years will be completely stuffed.

 

To take out a 25 year variable rate mortgage now - with base rate at an all time low - is surely evidence of insanity. Yet, where are the experienced voices warning youngsters against taking mortgages out on these terms?

 

The sound of silence is deafening.

What happens... when property prices drop 20-30% in 3-4 years?

Where does that leave the people who borrowed 90%, and the bansk that lent to them?

 

I can tell you how a smart country manages mortgage risk...

 

Hong Kong suffered a 70% DROP in property prices (from 1997 - 2003)

 

How many HK banks do you think went bust, and needed to be bailed out?

 

NADA - None, Not a single bank/

 

That is partly because HK people believe in paying their debts - they do not want to lose face.

But also because the banks rarely lend more than 70%, unless they have some enhanced security - a special second mortgage guarantee.

 

It is sound and sensible PROVEN by the disparate events over the last decade : with US and UK banks going bust, and HK banks remaining sound, even thought HK went thru a worse ringer than the UK.

 

Why do the clowns that manage NRK do it - even when Gov. King is warning them?

Because they are reckless and greedy - and that behaviour deserves a "reward" of its own.

[Jake]

I don't see anything wrong with 90% mortgages. It is the salary multiples and interest rates that are important. It seems pure, undiluted madness to me to take on a 25 year, massive, debt with variable interest rates.

 

We're in a situation now where, if base rate went up to 5% and mortgage interest rates went up to 8%, millions of people who have taken mortgages out in the last 10 years will be completely stuffed.

 

To take out a 25 year variable rate mortgage now - with base rate at an all time low - is surely evidence of insanity. Yet, where are the experienced voices warning youngsters against taking mortgages out on these terms?

 

The sound of silence is deafening.

 

Now the drugs don't work,

they just make you worse,

but I know I'll see your face again..

 

A song for the 90% mortgage generation!

[BoldAsBrass]

What happens... when property prices drop 20-30% in 3-4 years?

Where does that leave the people who borrowed 90%, and the bansk that lent to them?

 

I can tell you how a smart country manages mortgage risk...

 

Hong Kong suffered a 70% DROP in property prices (from 1997 - 2003)

 

How many HK banks do you think went bust, and needed to be bailed out?

 

NADA - None, Not a single bank/

 

That is partly because HK people believe in paying their debts - they do not want to lose face.

But also because the banks rarely lend more than 70%, unless they have some enhanced security - a special second mortgage guarantee.

 

It is sound and sensible PROVEN by the disparate events over the last decade : with US and UK banks going bust, and HK banks remaining sound, even thought HK went thru a worse ringer than the UK.

 

Why do the clowns that manage NRK do it - even when Gov. King is warning them?

Because they are reckless and greedy - and that behaviour deserves a "reward" of its own.

 

But you're hung up on the idea that a house is an investment.

 

Say you're 25 years old, ready to start a family and you want to buy a house. Let's say houses were like cars and, over 25 years, become worthless.

 

So, you borrow 90% of the cost of the house, and pay it back after 25 years. At the end the house is yours - you have somewhere to live that is completely yours but - for the sake of argument - it is worth nothing. So what? You're still in a much better position that someone who rented all those years.

 

The idea that you shouldn't take on 90% mortgages because of the fear of negative equity is all based on looking at houses as an investment. We should look at them as homes.

 

When I was young it was common for people to marry in their early 20s (after finishing an apprenticeship) and they usually bought a house (often a 3 bed semi) on a 25 year mortgage which they lived in all their lives - or until they retired (etc. - obviously some variations on the theme - you get my drift.) This fear of negative equity is based on the mad climb of the property ladder with people moving half a dozen times - enriching estate agents and banks in the process and impoverishing themselves.

[BoldAsBrass]

Now the drugs don't work,

they just make you worse,

but I know I'll see your face again..

 

A song for the 90% mortgage generation!

 

As I said, it's not the 90% bit that is bad. It's the salary multiples and the variable nature of the interest rates.

 

People have had 90% mortgages since mass home ownership really got cracking after the war.

[drbubb]

But you're hung up on the idea that a house is an investment.

 

Say you're 25 years old, ready to start a family and you want to buy a house. Let's say houses were like cars and, over 25 years, become worthless.

 

So, you borrow 90% of the cost of the house, and pay it back after 25 years. At the end the house is yours - you have somewhere to live that is completely yours but - for the sake of argument - it is worth nothing. So what? You're still in a much better position that someone who rented all those years.

 

The idea that you shouldn't take on 90% mortgages because of the fear of negative equity is all based on looking at houses as an investment. We should look at them as homes.

 

When I was young it was common for people to marry in their early 20s (after finishing an apprenticeship) and they usually bought a house (often a 3 bed semi) on a 25 year mortgage which they lived in all their lives - or until they retired (etc. - obviously some variations on the theme - you get my drift.) This fear of negative equity is based on the mad climb of the property ladder with people moving half a dozen times - enriching estate agents and banks in the process and impoverishing themselves.

Dont you get it...

Once you fall into negative equity, a house is a trap, not a home

[fitkid]

Dont you get it...

Once you fall into negative equity, a house is a trap, not a home

 

QUITE QUITE......!!!!

 

Just like......................

 

Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.

 

Norm Franz. "Money and Wealth in the New Millennium"

[tallim]

..So, you borrow 90% of the cost of the house, and pay it back after 25 years. At the end the house is yours - you have somewhere to live that is completely yours but - for the sake of argument - it is worth nothing. So what? You're still in a much better position that someone who rented all those years...

 

This view relies on two things, the second of which is the major flaw, if your case is true they both have exactly the same net assets.

 

1, Rent is on average equal to or more than repayment mortgage and maintenance

2, That this worthless house is not available to the renter to purchase also for zero money putting them in exactly the same position

 

What could happen based on point 1 is that the rent is on average less than repayment mortgage and maintenance, the renter saves this difference and over 25 years lots of interest is compounded. At the end the buyer has a worthless house and the renter has lots of extra cash.

[Van]

90% mortgages are OK imo so long as they are not given out at more than x3.5 or maybe x4 salary, and on a repayment basis only. Maximum LTV on interest-only should be capped at 75% or 80%, max.

 

At the end of the day lenders must be sensible.

[Meralti]

This view relies on two things, the second of which is the major flaw, if your case is true they both have exactly the same net assets.

 

1, Rent is on average equal to or more than repayment mortgage and maintenance

2, That this worthless house is not available to the renter to purchase also for zero money putting them in exactly the same position

 

What could happen based on point 1 is that the rent is on average less than repayment mortgage and maintenance, the renter saves this difference and over 25 years lots of interest is compounded. At the end the buyer has a worthless house and the renter has lots of extra cash.

 

You're dead right there tallim. However, your argument assumes a fully functioning financial system where true prudence, self-reliance and sound investment are rewarded. This isn't the case right now. The renter in your scenario must speculate in order to receive the compounding of interest you mention and my loose if (s)he makes a mistake. Of course this has been done deliberately to heard people into property and support prices. It looks like it worked with BaB. This is one of the reasons that people like this still think property is a good "investment". It's just another speculation - one that has been up until very recently been supported by government intervention. Of course his arguments for property rely on this policy remaining as it was under Brown. Something he never states explicitly.

 

 

[Meralti]

90% mortgages are OK imo so long as they are not given out at more than x3.5 or maybe x4 salary, and on a repayment basis only. Maximum LTV on interest-only should be capped at 75% or 80%, max.

 

At the end of the day lenders must be sensible.

 

Most have moved towards this. Mortgages are now difficlut go get and getting more expensive.

[BoldAsBrass]

This view relies on two things, the second of which is the major flaw, if your case is true they both have exactly the same net assets.

 

1, Rent is on average equal to or more than repayment mortgage and maintenance

2, That this worthless house is not available to the renter to purchase also for zero money putting them in exactly the same position

 

What could happen based on point 1 is that the rent is on average less than repayment mortgage and maintenance, the renter saves this difference and over 25 years lots of interest is compounded. At the end the buyer has a worthless house and the renter has lots of extra cash.

 

Clearly I was making a hypothetical point regarding the REASON why someone buys a house. In my hypothetical example I was merely pointing out that even IF a house became worthless over the 25 years of paying a mortgage, all other things being equal, that person would be in a better position than someone who had rented all that time.

 

Given that, in the real world, it costs money to rent a house off someone else, clearly a house will never have no value.

 

I was just trying to challenge the assumption that 90% mortgages are intrinsically a bad thing. On this basis loans for anything that depreciates in value are, by definition, a bad thing.

 

If you are buying a house to live in, if you decide that, one day, you would like to own a house and not rely on someone else renting a house to you - then buying one on a 90% mortgage makes sense - if you can afford it.

[drbubb]

This view relies on two things, the second of which is the major flaw, if your case is true they both have exactly the same net assets.

 

1, Rent is on average equal to or more than repayment mortgage and maintenance

2, That this worthless house is not available to the renter to purchase also for zero money putting them in exactly the same position

 

What could happen based on point 1 is that the rent is on average less than repayment mortgage and maintenance, the renter saves this difference and over 25 years lots of interest is compounded. At the end the buyer has a worthless house and the renter has lots of extra cash.

AND MEANTIME...

The "owner" is trapped - paying the mortgage, if he falls into negative equity.

Unless he is willing to reach into his pocket, and lose another sum of money (the negative equity)

ontop of the large DEPOSIT that he may have paid already.

 

This is only a sensible deal TO BUY, of the house is cheap enough, and RENTS are not much cheaper than owning.

 

I think that many will find they have to learn this lesson the hard way... once again.

[drbubb]

Clearly I was making a hypothetical point regarding the REASON why someone buys a house. In my hypothetical example I was merely pointing out that even IF a house became worthless over the 25 years of paying a mortgage, all other things being equal, that person would be in a better position than someone who had rented all that time.

 

Given that, in the real world, it costs money to rent a house off someone else, clearly a house will never have no value.

Tell that to the good people of Detroit !

I was born there, so I know that you cannot take it for granted that "a house will never have no value"

[BoldAsBrass]

You're dead right there tallim. However, your argument assumes a fully functioning financial system where true prudence, self-reliance and sound investment are rewarded. This isn't the case right now. The renter in your scenario must speculate in order to receive the compounding of interest you mention and my loose if (s)he makes a mistake. Of course this has been done deliberately to heard people into property and support prices. It looks like it worked with BaB. This is one of the reasons that people like this still think property is a good "investment". It's just another speculation - one that has been up until very recently been supported by government intervention. Of course his arguments for property rely on this policy remaining as it was under Brown. Something he never states explicitly.

 

 

You have missed my point completely. I was trying to make a point that if people stopped looking at houses as an investment - and looked at whether they could afford the mortgage - then, having a 90% mortgage was not a big deal. People have had mortgages that size since home ownership became widespread.

 

So. when you say that 'people like this still think property is a good investment' - you, as I say, miss my point completely.

 

If my son said to me: "I want to buy a house. It is 100k - I earn 30k so it will be a 3 x salary mortgage if I get a 90% mortgage and, historically, I should be able to afford the mortgage repayments as long as interest rates don't go up by some radical amount' - I would advise him to buy it. If, at the end of 25 years it is worth 50k because someone decided to build 10 million new houses in the meantime - so what? He will own his own house and not be beholden to anyone.

 

Unfortunately, at the moment he would need a 10 x 30k salary mortgage and, obviously, this is truly absurd and he - unless things change - will never be able to afford to buy.

 

But, to labour the point - 90% mortgages are not the problem - high salary multiples are.

[John Doe]

Dont you get it...

Once you fall into negative equity, a house is a trap, not a home

 

Not if you keep paying the mortgage and don't want to move.

 

Then it really doesn't matter what happens to the price.

 

After 25 years it is your house. Meanwhile, rents and prices have all gone up, while your savings have also grown.

 

It really isn't as clear a case as some make out, especially if you get a US style 25 year fixed rate.

[BoldAsBrass]

Tell that to the good people of Detroit !

I was born there, so I know that you cannot take it for granted that "a house will never have no value"

 

So what? If someone in Detroit has paid off their house and it is now worth nothing - so what? They still have a house and don't have to pay rent to anyone.

 

If your argument is that if you had waited all this time you could now buy a house in Detroit for nothing - well, who'd have known? You could probably buy a house for next to nothing after an earthquake but it's not something you'd bet on happening in the particular town you want to live in.

 

It's a risk you take in life. If there was major radiological accident at Aldermaston and it contaminated the local area - houses there would be worth nothing - but that's no more relevant than the fact Detroit has died. What you going to do if you want to live in Aldermaston - just wait until the day it happens?

[ecoface]

So what? If someone in Detroit has paid off their house and it is now worth nothing - so what? They still have a house and don't have to pay rent to anyone.

 

If your argument is that if you had waited all this time you could now buy a house in Detroit for nothing - well, who'd have known? You could probably buy a house for next to nothing after an earthquake but it's not something you'd bet on happening in the particular town you want to live in.

 

It's a risk you take in life. If there was major radiological accident at Aldermaston and it contaminated the local area - houses there would be worth nothing - but that's no more relevant than the fact Detroit has died. What you going to do if you want to live in Aldermaston - just wait until the day it happens?

 

If there was an incident at Aldermaston it would wipe out the south east of the UK.