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UK House prices: News & Views


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the psychology expressed here suggests to me that the uk property market is nowhere near a low

 

where's the fear?

Well, in the case of my friend buying with sealed bids, the very real fear is the vendor pulls out and re-lists at a higher price.

 

For the houses that are sticking, the vendors just sit tight or rent them out and go into rented themselves.

 

Unless interest rates rise, there will be little fear of defaulting on mortgage payments. Even mortgage holders losing their jobs is not an immediate issue as the government pays the interest.

 

As I see it, very large parts of the market are stagnant and there is a small part that is pretty active and pretty much operating in a different orbit.

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Well, in the case of my friend buying with sealed bids, the very real fear is the vendor pulls out and re-lists at a higher price.

 

For the houses that are sticking, the vendors just sit tight or rent them out and go into rented themselves.

 

Unless interest rates rise, there will be little fear of defaulting on mortgage payments. Even mortgage holders losing their jobs is not an immediate issue as the government pays the interest.

 

As I see it, very large parts of the market are stagnant and there is a small part that is pretty active and pretty much operating in a different orbit.

Yes, as has been pointed out several times, there is not a single market here in the UK (or probably anywhere). Different types of housing and different areas are behaving differently. The only time that there appeared to be a uniform movement was during the credit crunch when even the London properties fell in line (practically) with the rest of the country.

 

This could happen again, but it would need a massive spike up in IR's. Until then, the nice areas and nice houses will fair far better than the rest. It's the small pokey new flats in the not-so-nice areas will likely suffer most.

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Yes, as has been pointed out several times, there is not a single market here in the UK (or probably anywhere). Different types of housing and different areas are behaving differently. The only time that there appeared to be a uniform movement was during the credit crunch when even the London properties fell in line (practically) with the rest of the country.

 

This could happen again, but it would need a massive spike up in IR's. Until then, the nice areas and nice houses will fair far better than the rest. It's the small pokey new flats in the not-so-nice areas will likely suffer most.

 

Agreed. The future seems all about interest rates where many posters here think it is mathematically and politically impossible they will ever rise again. :)

 

Rises are likely to be pretty small for the next few years at least.

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Where's the fear?

Well, in the case of my friend buying with sealed bids, the very real fear is the vendor pulls out and re-lists at a higher price.

 

For the houses that are sticking, the vendors just sit tight or rent them out and go into rented themselves.

Do they never learn?

You friend is operating in an area beyond "foolish".

Think of him as one of the last fools - who will learn to regret his recklessness

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Do they never learn?

You friend is operating in an area beyond "foolish".

Think of him as one of the last fools - who will learn to regret his recklessness

 

Bubb,

 

In a rigged market this isn't completely irrational. There is no fear, or very little. It's hard to express the degree of complacency in the UK regarding property. It's going to take a really big wrench to change it and very few people seem to believe that a real change can or will happen. I was mocked again at work for my opinions only last week. Dispite explaining the last six months of falls. Low interest rates are propping up a stagnant market. There's less than half the volumne of money going into property than 4 years ago but it is being spent on somewhat less than 40% of the number of transactions at a similar time. So prices haven't fallen much. Despite the terrible fundalementals people who have bet on property continue to be rewarded for it - for the time being; and most don't lool beyond this.

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Do they never learn?

You friend is operating in an area beyond "foolish".

Think of him as one of the last fools - who will learn to regret his recklessness

 

You said the same thing of me, more or less, back in 2009, but i am now living in my home and having babies and very glad I am not still renting.

 

As it happens i seem to have bought at a low point but even if prices fall i will still be living in my home and raising a family.

 

Not everybody wants to wait for their life to be what they want it to be - I was too old to wait anyway.

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Definite two tier market. Most places that are normally bought with a mortgage are sticking and dropping.

 

 

I think the two tier market poses real problems for the bears.

 

It would be interesting to see people's views on when or how they think the cash rich (top tier) market will roll over, or catch up with the bottom and middle tiers.

 

I don't see interest rates rising having that much of an effect on the top, until they rise over 2% which could be years away. I actually see the top tier being driven my inflationary fears too - those of memories of the 70s will understand how the flight to real assets like property defends against inflation (I still struggle to see the logic, but the cash rich generation think inflation is good for housing).

 

I think it is not really worth having debate about the middle and bottom end of the market - they are continuing to slide.

 

May be the roll over of the top tier will signal the real panic, if and when it happens. Until then the media won't give a monkeys.

 

FWIW - I think the top tier market will freeze if and when stocks crash. The confidence from the buyers at that end of the market will be wiped out.

 

This happened to some extent in 2008 when EMs were in free-fall. Once QE and thus stocks rallied the top end market returned, having had interim support through the bank bonuses and weak £.

 

I know a few agents that work for the big boys like Knight Frank, Savills, and Strutt and Parker and there is no doubt in my mind, of the close link to the health of the city, and the top end of the market. The wealth spreads out of London like ripples on a pond. It is obvious, but we need reminding of this.

 

If the activity we have seen in the last 2 weeks in equities is the start of a medium term correction then this could signal the top of this 12-18 month rally in the housing market's top tier (regardless of interest rates staying where they are).

 

People don't often align equity market cycles with housing cycles, but I think we can be more clever to segment the housing market and then draw comparisons.

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FWIW - I think the top tier market will freeze if and when stocks crash. The confidence from the buyers at that end of the market will be wiped out.

 

This happened to some extent in 2008 when EMs were in free-fall. Once QE and thus stocks rallied the top end market returned, having had interim support through the bank bonuses and weak £.

 

...

 

If the activity we have seen in the last 2 weeks in equities is the start of a medium term correction then this could signal the top of this 12-18 month rally in the housing market's top tier (regardless of interest rates staying where they are).

 

People don't often align equity market cycles with housing cycles, but I think we can be more clever to segment the housing market and then draw comparisons.

 

 

Agreed and a good post. This tread was losing it way a bit, thanks for helping to bring it back on track.

 

The top tier is driven by the City. A fall in equities would effect it.

The lower is sliding and the middle sticking or sliding a bit. I'm seeing this were I am.

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You said the same thing of me, more or less, back in 2009, but i am now living in my home and having babies and very glad I am not still renting.

 

As it happens i seem to have bought at a low point but even if prices fall i will still be living in my home and raising a family.

 

Not everybody wants to wait for their life to be what they want it to be - I was too old to wait anyway.

That's not true.

I was expecting a Rally at the low in April 2009 - check the records/

 

The psychological signature of major tops tends to be the sorts of opinions we are hearing now on this thread. It is similar in HK and I am ready to sell into it, if I get a high enough price/

 

Plotting ahead

In four months, Berkeley acquired 1,000 more plots across eight new sites. In total, it has acquired 3,500 plots across 21 sites in the past 12 months.

These include a mega-plot in the City of London with planning consent for 750 new homes, a 337-bed hotel, 601 student bedrooms and 100,000 square feet of commercial space. Berkeley also bought sites in swish Kensington, the southern Home Counties, and Oxfordshire.

In addition, Berkeley has plans to build 752 new homes in Tideway Wharf, Battersea, 400 homes in Southwark, and 4,500 homes at the Crossrail site at Royal Arsenal.

 

Pidgley may be right, I may be wrong. But I like to stick to my methods, and if I put my money into something cheap enough, I will be happy even if property rises. I did that with Gold shares in 2001

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The "prophet of property", Tony Pidgley, the chairman of Berkeley is looking at continuing improvement in the market.

 

Investors like Berkeley’s upbeat forecast.

 

"Happy Days for the Housing Market"

 

http://www.fool.co.uk/news/investing/company-comment/2011/03/18/happy-days-for-the-housing-market.aspx

 

 

And he doubless referred to the recent data from Zoopla to back up this sentiment.

 

The average value of a home in Britain is £201,000, down 18 per cent from £247,500 in October 2007, according to property website Zoopla.

 

Much of the drop has been seen during the last eight months, with prices dropping 11 per cent since last summer.

 

Happy days indeed. :blink:

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Pidgley may be right, I may be wrong. But I like to stick to my methods, and if I put my money into something cheap enough, I will be happy even if property rises. I did that with Gold shares in 2001

He has been right for more than the last 20 years.

 

However, to be fair he is talking about better areas in the SE mainly. More akin to the "many market" theory, and he is picking the best examples.

 

The Zoopla reading is a little strange, ie the falls (which it looks like they think will continue for a while yet) "creating buying opportunities".

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Some charts reposted from FreeTrader's HPC thread.

 

It is likely now, imo, that we closer to the end of the UK property bear market than the start.

 

HPC0211.gif

 

HalifaxReal0211.gif

The charts suggest that, I agree.

 

But I think the continuining excesses now, and the temporary nature of distortions from "ultra low rates", may mean this correction will ultimately be far greater than the prior one.

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Brum centre was full of glorious architecture until the 60s spiv developers & corrupt council did their worst.

Beeching did his worst too. The demolition of the hotel at Snow Hill station was another crime.

 

Rant over. - Brum is over too. Time to run, if one can.

 

They've not been doing too bad of a job of slowly undoing some of the worst mistakes in the last ten years or so. There was a bit of diversion into silly city centre flats recently, but obviously that's come to an end, and thankfully a lot of the 1960s concrete shit boxes are gone, whilst considerable efforts seems to be going into restoring some of the Victorian and earlier buildings. Not much you can do about the stuff that was knocked down, but the new stuff that is being put up is at least somewhat less utilitarian/brutalist than things like the old bullring.

 

Your OH is right about Nechelles though - drive through there with the doors locked at speed if I have to go that way!

 

Didn't realise you were a brummie -au--

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Budget day today.

 

Let's see what the poor home owners (mortgaged masses) get handed out.

 

Heard there might be some sweetners given?

 

http://www.telegraph.co.uk/finance/budget/8402403/Budget-2011-Buy-to-let-opportunities-opened-up-by-stamp-duty-reforms.html

Institutions such as Aviva and Legal & General have been heavily linked with creating residential property funds, but stamp duty pushing up the cost of buying or building large portfolios has impeded investment.

 

However, it is now proposed that stamp duty on the purchase of more than one property will be calculated by the average value of the properties, not the bulk value. This means that if an investor buys 100 properties worth an average of £200,000, it will pay stamp duty at 1pc, equal to £200,000, rather than at 5pc, equal to £1m. The measure will cost the Treasury £560m over five years.

 

George Osborne has also launched consultations on making it easier for residential investors to become a Real Estate Investment Trust, which would mean they do not pay capital gains tax. In the 2012 Budget, the Chancellor is proposing to scrap the 2pc entry charge that landlords must pay to become a Reit and scrapping the rule restricting Reits to stock market-listed companies. This will allow pension funds to turn property portfolios into Reits and potentially allow smaller buy-to-let landlords to benefit from tax breaks on capital gains.

 

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "Changes to Reits and stamp duty will.... provide a revolution in how rented homes are supplied."

 

However, the Chancellor also aims to stimulate investment through traditional housebuilders. As well as a £250m fund for first-time buyers, he will allow offices to be converted into homes without planning permission and auction public sector land for development.

 

If this is correct, this could provide some support for prices. Should also enable the banks to sell off whole portfolios quicker.

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http://www.telegraph.co.uk/finance/budget/8402403/Budget-2011-Buy-to-let-opportunities-opened-up-by-stamp-duty-reforms.html

 

 

If this is correct, this could provide some support for prices. Should also enable the banks to sell off whole portfolios quicker.

 

It may provide some support. But it looks as if it is principally aimed at banks and housebuilders. This will allow banks to sell large portfolios of repossessed properties and housebuilders to sell large numbers of unsold new builds to institutional investors at a tax advantage. This will allow the market for these sort of properties to clear, at least in part. Which actually may well put downward pressure on the market. Any support will come from large bulk deals done behind closed doors and off-market, as it were. The tax break is therefore a subsidy for banks with bad loan books and housebuilders. I'm not sure it will do much for the small scale BTLer or anything at all for people selling their PPR. It should also stimulate new building if housebuilders start to clear their stock. Construction boosts GDP while simple changes of ownership do not.

 

Oh yeah, institutional investors entering the rental market on a large scale will probably start to push down rents after a while. The kind of properties that will be most effected by these changes were always destined to become social housing anyway.

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Some charts reposted from FreeTrader's HPC thread.

 

It is likely now, imo, that we closer to the end of the UK property bear market than the start.

 

HPC0211.gif

 

If only people's pay and employment prospects would rise in line with RPI, I wish my employer paid me in loaves of bread, petrol and ringtones. ;)

 

Great site below though listing and linking almost all upcoming auctions across the UK, some value showing here, but they're not auctioning average places in decent areas in any numbers yet.

 

http://propertyauctionaction.co.uk/

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...I think the continuining excesses now, and the temporary nature of distortions from "ultra low rates", may mean this correction will ultimately be far greater than the prior one.

The "target" that I am showing below could occur if we get a deeper slide on the same time frame

HpcUK.gif

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Didn't realise you were a brummie -au--

 

I'm not! - He is :) ... & so was his mother :(

 

.................................

 

Industry cool on UK housing fix

 

http://www.ft.com/cms/s/0/4bc1f3a2-5859-11e0-9b8a-00144feab49a.html

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In the last housing bust in the UK, didn't certain Tories buy up vast portfolios of repossessed houses from the banks?

 

Kind of makes sense to drop stamp duty for REITS and 'institutional' portfolio buyers now then.

 

Call me a cynic . . . <_<

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It may provide some support. But it looks as if it is principally aimed at banks and housebuilders. This will allow banks to sell large portfolios of repossessed properties and housebuilders to sell large numbers of unsold new builds to institutional investors at a tax advantage. This will allow the market for these sort of properties to clear, at least in part. Which actually may well put downward pressure on the market. Any support will come from large bulk deals done behind closed doors and off-market, as it were. The tax break is therefore a subsidy for banks with bad loan books and housebuilders. I'm not sure it will do much for the small scale BTLer or anything at all for people selling their PPR. It should also stimulate new building if housebuilders start to clear their stock. Construction boosts GDP while simple changes of ownership do not.

Agree on most, but if the institutional investors buy up these places to rent them out, doesn't that put upward pressure on those remaining for sale to private individuals (less supply etc)?

 

Could put downward pressure on rents though, unless they create a cartel.

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