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UK House prices: News & Views


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Informal tender is what you do when you want to sell quickly, as you're providing a deadline, but don't think you'll get best value at auction.

Auctions are not aggressively bid any longer, I believe

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London Zones 1-4.

 

My workload has just exploded.

 

Housing is 5-10% above peak for family houses with demand far outstripping supply. Best and final offers are in full swing. Flats are now selling again after a very poor September - December 2010 period.

 

Buy to let sales have also been very strong early part of 2011 especially properties below £500,000. Most buyers I suspect are City types disposing of bonus money.

 

Alot of downzing has been noticed from Chelsea and Nottinghill especially families cashing in on their property and buying more space for their money in Zones 2-4.

 

Will it last? or is this a crack up boom?

 

 

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That's incredible if you consider a ~66% reduction in the number of sales on top of that!

 

Yes, the hard numbers are: Halifax mortgage approvals where 39,905 for January - 17.4% down on the same month last year and 6.2% down on December.

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London Zones 1-4.

Buy to let sales have also been very strong early part of 2011 especially properties below £500,000. Most buyers I suspect are City types disposing of bonus money.

SELLER SIDE -

Are the sellers making money?

How long have they owned?

And if you know, how old are they?

 

Rising rates ought to be a factor in the market now:

50977161.png

 

Where fixed rate loans exist, they are bound to be more expensive than in prior months

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Listened to this tonight. Some good anecdotals as to how hard it is to get a mortgage in the current economic climate

 

Well worth a listen....

 

File on 4. Homes but no loans

 

Homes but no loans. Despite the threat of a new slide in house prices and rising levels of negative equity, the number of property-buyers having their homes repossessed has declined over the past year. But now many economists predict interest rates will rise in the course of 2011, fuelling fears that Britain's housing market could be facing a double dip. With banks chasing profits and affordable mortgages harder to find. Michael Robinson asks what impact the new housing freeze will have on Britain's already battered economy.

 

iPlayer

 

http://www.bbc.co.uk/programmes/b00xppmm

 

Podcast/stream

 

http://downloads.bbc.co.uk/podcasts/radio4...10125-2044a.mp3

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Listened to this tonight. Some good anecdotals as to how hard it is to get a mortgage in the current economic climate

Well worth a listen....

 

File on 4. Homes but no loans

Homes but no loans. Despite the threat of a new slide in house prices and rising levels of negative equity, the number of property-buyers having their homes repossessed has declined over the past year. But now many economists predict interest rates will rise in the course of 2011, fuelling fears that Britain's housing market could be facing a double dip. With banks chasing profits and affordable mortgages harder to find. Michael Robinson asks what impact the new housing freeze will have on Britain's already battered economy.

http://downloads.bbc.co.uk/podcasts/radio4...10125-2044a.mp3

Wow. Fascinating !

I had no idea how much delusional thinking has taken root in the Uk Property market.

 

Also, the interview was highly listenable, but the interviewer seems to have gotten "the wrong end of the stick" at every turn.

Let me explain:

 

1/

Penny, the Junior Doctor who makes Pds.2,000 a month - that's less than Pds.25,000 a year, and she wants to buy a flat for... wait for it: Pds.210,000 - that's more than 8x income - a ridiculous multiple! And yet this passes without comment. And the interviewer seems to think that 10% down and a 90% Loan is somehow normal. I was amazed to hear than any bank would be willing to lend to her on a 90% LTV. And a 6% interest rate may seem high, but so is the risk for the bank. If the good Doctor gets pregnant (it happens!), then who is going to pay the mortgage? The state, I suppose.

 

Penny quite sensibly, is waiting. If she really wanted to buy, maybe she should look at something less expensive, or putting in lower bids. Or maybe she should accept those dinner invitations from that attractive young doctor across the ward. Why do young single people think that the "flat of their dreams" should be affordable on a 10% deposit?

 

2/

The banks ARE profiteering. They are trying to rebuild their capital bases without taking on excessive risks. The tightness in lending should help to bring property prices down. The real shame in this is that savers are being robbed (not borrowers!) to rebuild the banks' capital. we heard nothing about this, and how savings rates are well below inflation. Now is a great time for new banks to start up in the UK. They can make loans at fat spreads, and be unencumbered by loss-making legacy loan portfolios. New mortgage bansk are what the government minister should be encouraging. That is the way to build a more competitive market.

 

... I could say more, but it might just irritate people.

 

Funnily enough, a 30% or so slide in housing prices might create a mortgage market that looks more normal than the one of today. And that is one we will get, I reckon.

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1/

Penny, the Junior Doctor who makes Pds.2,000 a month - that's less than Pds.25,000 a year, and she wants to buy a flat for... wait for it: Pds.210,000 - that's more than 8x income - a ridiculous multiple! And yet this passes without comment. And the interviewer seems to think that 10% down and a 90% Loan is somehow normal.

 

I agree.....Its almost as if we have all become desensitised as to how much 210k really is. Aided by low interest rates, people are just focussed on how much the monthly payment is rather than how big the loan is.

 

2/

The banks ARE profiteering.........

 

It would be interesting to see if the banks try to maintain their margins should the BoE push interest rates up? I dont think they can

 

The point is from that podcast is that the general public are starting to get the message that the housing market is now dead in the water and hopefully we can look forward to more affordable house prices in the coming years. I was talking to a young 20 something friend the other day who cannot afford to buy, and similar to Penny the Junior Doctor, he is angry and frustrated that he has been priced out.

 

What I am trying to get across to him is that if he is patient and rents for a few years more, he will be presented with the buying opportunity of a lifetime in the coming years

 

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Nationwide and ING have the best deals for new mortgages. ING in particular are being very aggressive and undercutting just about everyone else in an effort to gain market share in the UK. I was quoted 2yr fixed at 3.69% with a 20% deposit.

It's a trap.... don't do it.

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...the general public are starting to get the message that the housing market is now dead in the water and hopefully we can look forward to more affordable house prices in the coming years. I was talking to a young 20 something friend the other day who cannot afford to buy, and similar to Penny the Junior Doctor, he is angry and frustrated that he has been priced out.

 

What I am trying to get across to him is that if he is patient and rents for a few years more, he will be presented with the buying opportunity of a lifetime in the coming years

Maybe.

But it might also be the TRAP of his life.

 

If the Urban economy collapses with the arrival of Peak oil, then almost any dwelling in London might lose at least 90% of its value in the next decade or two.

 

I have a hard tinme imagining how this will NOT happen. But forecasting such a drop now would make people think I am a lunatic. So I will not make that forecast (yet) and instead I will talk about a more coventional 30% or so

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just by looking at that graph and previous boom and busts

I reckon an avg price around £90k is not unfeasible

I would also say circumstances are much worse than any time in

the past so the actual figure could be even less

 

if someone bought in 72 and sold in 86 they would have made no profit whatsoever

 

if you bought in 86 and sold in 96 you would have made no profit whatsoever

 

if you bought in 96 I reckon by 2016 you will break even again

 

this bubble has had twice as long to go up than previous bubbles

so twice as long to deflate may seem reasonable

 

 

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Maybe.

But it might also be the TRAP of his life.

 

If the Urban economy collapses with the arrival of Peak oil, then almost any dwelling in London might lose at least 90% of its value in the next decade or two.

 

I have a hard tinme imagining how this will NOT happen. But forecasting such a drop now would make people think I am a lunatic. So I will not make that forecast (yet) and instead I will talk about a more coventional 30% or so

 

Lots of ifs there Doc.

 

What if the shale gas reserves prove to be as big as expected?

What if huge swathes of Africa etc are turned into productive crop areas for food an bio-fuels?

What if they are shuttling He3 back from the moon by then (easily feasible within 10 to 15 years)?

What if the space aliens come and give us new energy sources?

 

And a trap of his life?? After 20 years he would own it, outright (if bought with a 20 year mortgage).

 

No trap, just freedom ;)

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if you bought in 96 I reckon by 2016 you will break even again

 

this bubble has had twice as long to go up than previous bubbles

so twice as long to deflate may seem reasonable

1996 was a bottom after a previous boom. The data before that was under a totally different social setup.

 

EG many homes are now two earners, before they were not.

 

Prices are likely to fall for a few more months until the uncertainty currently circulating is put to bed by telling those who are going to be made redundant who they are.

 

At present 1 in 4 people thinks it will be them. It’s worse in the public sector (1 in 3). No wonder people aren’t buying anything, let alone houses.

 

There should be a levelling out then, and inflation will mask the rest of the fall. Maybe we will get back to a more normal situation in a few years, maybe not.

 

 

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Is anyone else struggling to hold the line?

 

I STRd in 2009 and felt glad to have got a price about 8% off 2007 peak in London's Docklands. Since then have moved rentals a couple of times - all part of a slow orbit outwards from the centre to more suburbia. 2 kids, including one small baby. Last rental has been a nightmare - total amateur landlord totally unaware of his responsibilities. Every issue comes close to litigation to get anything done.

 

Since STRing property in the area I am interested in (N2) has gone up by more than 10%, my rent is vast at nearly £4k per month, I shifted most of my pension into cash/near-cash only to see the equities market go up by 15%, and am seeing the 50% of my STR fund that I didn't put into gold rapidly erroding. I am genuinely the laughing stock of my friends and family and it's getting hard to hold the line.

 

Classic "when the last bear turns bull" stuff? MSE style hugs needed.

 

 

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Is anyone else struggling to hold the line?

 

I STRd in 2009 and felt glad to have got a price about 8% off 2007 peak in London's Docklands. Since then have moved rentals a couple of times - all part of a slow orbit outwards from the centre to more suburbia. 2 kids, including one small baby. Last rental has been a nightmare - total amateur landlord totally unaware of his responsibilities. Every issue comes close to litigation to get anything done.

 

Since STRing property in the area I am interested in (N2) has gone up by more than 10%, my rent is vast at nearly £4k per month, I shifted most of my pension into cash/near-cash only to see the equities market go up by 15%, and am seeing the 50% of my STR fund that I didn't put into gold rapidly erroding. I am genuinely the laughing stock of my friends and family and it's getting hard to hold the line.

 

Classic "when the last bear turns bull" stuff? MSE style hugs needed.

 

I was very tempted to do what you have done back in 2009. The only reason I didn't was because I didn't want the upheaval and so decided that my home was a home and not an investment. It looks like that the FED are going to print, rint and print, so we are looking at inflation. Therefore I think it is likely that we we will see a sideways move in house prices and possibly rises in desireabale areas, ie in North London that you have already high-lighted. Once inflation starts to grip the economy, the government will have run out of options and at some point rates will have to go up and go up big. At that point, people will be screaming to get off the property ladder as they won't be able to afford their repayments, but won't be able to sell as the property market will be in free fall. It will be a blood bath. 30-50% drop in 3 years. You will then be sitting pretty with bucket loads of cash and you willl be able to pick up a property at bargain basement values with probably minimum mortgage.

 

The problem is, if the fed and bank of england may print to infinity and if we get hyper inflation, bricks and mortar will be a great way to protect your wealth, but at some point rates will have to go up to choke off inflation.

 

My view is that if you have your s2r stash in precious metals, you will grow that quicker than house prices will grow, albeit property is generally leveraged so the affects of the rises are multiplied on an ROI basis. You may have to put up with being the laughing stock for a few years, but I think you will eventually look very smart. I can't see any end to this financial mess other than high inflation, low growth for the next few years followed by very high interest rates.

 

My colleague told me that in the early 90's he lost his job and mortgage rates went up to 15%. He was within an inch of losing his house and finally found a job in the nick of time.

 

Hold on in there, but for heavens sake, make sure you invest your s2r fund in gold / commodities not cash. You have been bold enough to sell a real asset, albeit an over valued one, but to make this work you have to invest the cash in an undervalued asset, ie silver or gold or other commodities, otherwise, even if you are only half invested, you will get slaughtered by inflation.

 

I think in time, you'll be sitting pretty, but I dare say you will have a few years of snide remarks from friends who are seeing the value of their houses edge up. Once IR's go north, the shoe will firmly be on the other foot.

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Is anyone else struggling to hold the line?

 

I STRd in 2009 and felt glad to have got a price about 8% off 2007 peak in London's Docklands. Since then have moved rentals a couple of times - all part of a slow orbit outwards from the centre to more suburbia. 2 kids, including one small baby. Last rental has been a nightmare - total amateur landlord totally unaware of his responsibilities. Every issue comes close to litigation to get anything done.

 

Since STRing property in the area I am interested in (N2) has gone up by more than 10%, my rent is vast at nearly £4k per month, I shifted most of my pension into cash/near-cash only to see the equities market go up by 15%, and am seeing the 50% of my STR fund that I didn't put into gold rapidly erroding. I am genuinely the laughing stock of my friends and family and it's getting hard to hold the line.

 

Classic "when the last bear turns bull" stuff? MSE style hugs needed.

 

 

I'm in cash and not at all concerned with the bounce in the markets as it's all very risky particularly property and commodities.

Once deflation gets a grip on the economy, the government will have run out of options and cash will be the best investment. At that point, people will be screaming to get off the property ladder as they won't be able to afford their repayments, but won't be able to sell as the property market will be in free fall. It will be a blood bath. 40-70% drop in 3 years. You will then be sitting pretty with bucket loads of cash and you willl be able to pick up a property at bargain basement values with probably minimum mortgage.

 

The FED and BOE will NOT print to infinity and hyper-inflation is impossible for countries with a sophisticated bond market but even if they did bricks and mortar will NOT protect your wealth as history has shown. At some point rates will have to rise as the bond market signals no more printing then they will fall again.

 

Hold on in there, but for heavens sake, do NOT invest too much in gold and remember to short commodites - cash is king. You have been bold enough to sell a real asset, albeit an over valued one, but to make this work you have keep your cash. Silver or gold may be ok but commodities won't be, you will just get slaughtered by deflation.

 

I think in time, you'll be sitting pretty, but I dare say you will have a few years of snide remarks from friends who are seeing the value of their houses edge up. Once IR's go north, the shoe will firmly be on the other foot.

 

Good luck.

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Split your s2r fund half cash and average in the other half to gold/silver. You'll soon know which way is winning and can increase or decrease accordingly, thus covering yourself for inflation or deflation. For the past 10 years gold has been winning. Will it continue or is Prechter finally right? Only time will tell.

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Split your s2r fund half cash and average in the other half to gold/silver. You'll soon know which way is winning and can increase or decrease accordingly, thus covering yourself for inflation or deflation. For the past 10 years gold has been winning. Will it continue or is Prechter finally right? Only time will tell.

Not forgetting the so-called "wet dream" outcome, where they teeter between inflation and deflation for several years while slowly inflating away the debt (as they have been for the past couple of years).

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Not forgetting the so-called "wet dream" outcome, where they teeter between inflation and deflation for several years while slowly inflating away the debt (as they have been for the past couple of years).

 

Only with wage inflation, without it, the scenario will have a negative effect.

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Only with wage inflation, without it, the scenario will have a negative effect.

Personal debt yes, there are some negative, but also some positive (eg nominal falls in housing are less, therefore less neg eq).

 

But there are other (arguably more important) effects, eg the deficit will halve over ~5 years with just 3% CPI. That'll certainly help the help the tax payer, and keep rates lower.

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Personal debt yes, there are some negative, but also some positive (eg nominal falls in housing are less, therefore less neg eq).

 

But there are other (arguably more important) effects, eg the deficit will halve over ~5 years with just 3% CPI. That'll certainly help the help the tax payer, and keep rates lower.

 

Well considering how close to the edge many people are, many could be pushed over with either inflation or interest rate rises. Thus bringing about the very thing you mention they are trying to avoid.

 

Seeing a nice stream of repo's already. About the only thing selling in my areas.

 

Latest Birmingham auction has a 25% repo entry, banks not holding back any more me thinks.

 

http://www.cottons.co.uk/auctions.asp

 

Government debt i agree.

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Well considering how close to the edge many people are, many could be pushed over with either inflation or interest rate rises. Thus bringing about the very thing you mention they are trying to avoid.

True, but I never said it was a good outcome, just the best of the alternatives.

 

I think it will be grim whatever happens, just depends on how many it will be grim for. The fewer, the better.

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True, but I never said it was a good outcome, just the best of the alternatives.

 

I think it will be grim whatever happens, just depends on how many it will be grim for. The fewer, the better.

 

That's it, there is no good outcome. They are trying to mitigate and set a course of least impact.

 

But make no mistake this baby is crashing.

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I'm in cash and not at all concerned with the bounce in the markets as it's all very risky particularly property and commodities.

Once deflation gets a grip on the economy, the government will have run out of options and cash will be the best investment. At that point, people will be screaming to get off the property ladder as they won't be able to afford their repayments, but won't be able to sell as the property market will be in free fall. It will be a blood bath. 40-70% drop in 3 years. You will then be sitting pretty with bucket loads of cash and you willl be able to pick up a property at bargain basement values with probably minimum mortgage.

 

The FED and BOE will NOT print to infinity and hyper-inflation is impossible for countries with a sophisticated bond market but even if they did bricks and mortar will NOT protect your wealth as history has shown. At some point rates will have to rise as the bond market signals no more printing then they will fall again.

 

 

 

I think in time, you'll be sitting pretty, but I dare say you will have a few years of snide remarks from friends who are seeing the value of their houses edge up. Once IR's go north, the shoe will firmly be on the other foot.

 

Good luck.

 

 

Anyone tempted to sit on currency believing that it will increase in purchasing power would be advised to read this article at zerohedge:

 

http://www.zerohedge.com/article/guest-pos...bal-debt-prison

 

So, the question of debt default turns from theoretical to quite imperative. If the Federal Reserve continues buying our debt with fiat, it means that the effects of the debt will only be delayed, the dollar will be dropped as the world reserve currency, and hyperinflation is a certainty. If they do not continue buying, then our government defaults, the country’s financial infrastructure ceases to exist, the dollar loses its world reserve status, and hyperinflation is a certainty. The banking elites haven’t just erected a prison, they’ve tossed us in Alcatraz!

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Anyone tempted to sit on currency believing that it will increase in purchasing power would be advised to read this article at zerohedge:

 

http://www.zerohedge.com/article/guest-pos...bal-debt-prison

 

So, the question of debt default turns from theoretical to quite imperative. If the Federal Reserve continues buying our debt with fiat, it means that the effects of the debt will only be delayed, the dollar will be dropped as the world reserve currency, and hyperinflation is a certainty. If they do not continue buying, then our government defaults, the country’s financial infrastructure ceases to exist, the dollar loses its world reserve status, and hyperinflation is a certainty. The banking elites haven’t just erected a prison, they’ve tossed us in Alcatraz!

 

Anyone tempted to sit on currency believing that it will increase in purchasing power would be advised to............................

 

head_up_ass.jpg

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Maybe.

But it might also be the TRAP of his life.

 

If the Urban economy collapses with the arrival of Peak oil, then almost any dwelling in London might lose at least 90% of its value in the next decade or two.

 

I have a hard tinme imagining how this will NOT happen. But forecasting such a drop now would make people think I am a lunatic. So I will not make that forecast (yet) and instead I will talk about a more coventional 30% or so

Okay, here you lost me. I've always read and thought that, generally speaking, peak oil will increase the value of urban land because urban residents use less energy, for transport and for heating. For instance:

 

By the most significant measures, New York is the greenest community in the United States, and one of the greenest cities in the world. The most devastating damage humans have done to the environment has arisen from the heedless burning of fossil fuels, a category in which New Yorkers are practically prehistoric. The average Manhattanite consumes gasoline at a rate that the country as a whole hasn't matched since the mid-nineteen-twenties, when the most widely owned car in the United States was the Ford Model T. Eighty-two per cent of Manhattan residents travel to work by public transit, by bicycle, or on foot. That's ten times the rate for Americans in general, and eight times the rate for residents of Los Angeles County. New York City is more populous than all but eleven states; if it were granted statehood, it would rank 51st in per-capita energy use.
http://www.walkablestreets.com/manhattan.htm

 

The suburbs and xurbs will die. Some rural communities with productive activities will thrive. But most people will be compelled to turn to urban living.

 

and greenhouse gas emissions are a fraction of the national average, at 7.1 metric tons per person per year, below San Francisco, at 11.2 metric tons, and the national average, at 24.5 metric tons.
http://en.wikipedia.org/wiki/Environmental...n_New_York_City

 

Electricity_use_kwh_per_customer_2000-05.PNG

^^Average annual residential electricity usage by city, 2000-2005. Measured in Kilowatt hours per customer

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