UK House prices: News & Views

[drbubb]

Replying to Chazza, Jin and Bubb,

 

Mid-sized family homes in decent parts of London are in a bull market. It's as simple as that. That may change, with higher rates etc, but it's a bull market.

 

Buyers are families with children late 30s early 40s who, for the most part, by accident of birth, were buying their 1st properties in the mid 1990s. Thus they got in at the bottom and, even though they may have increased the size of their mortgage, will all have huge amounts of equity, as they have moved up the property ladder. Career-wise they are enjoying their best years 35-45, so earnings are good. And repayment-wise they are all feeling rich as the low rates of the last three years have meant their monthly repayments have been next to nothing.

. . .

It will take a hell of a sea change to destroy all that ...

Before they "roll over and die", Bull markets often narrow out into the slimmest of wedges, still rising.

This may be what you are seeing (for the reasons you mentioned.)

 

The UK as a whole is well off its highs. London is peaking and rolling. You have found the narrow wedge.

[frizzers]

It's not 'my island' . It's a whole generation.

 

I appreciate your wedge argument, but I think these type of houses are as immune as it gets, barring total catastrophe a la 2008 (and even then prices held up)

 

Listen I'm a bear, but I'm happy to bet a First Majestic silver dollar (by the way good Dr don't you owe me one already for gold and silver calls a few months back?) that prices will be comparatively strong and higher in two years

[fitkid]

barring total catastrophe a la 2008

 

We havent even started yet 2008 was not even close to what is brewing.

 

Oil prices up UP Food prices up UP.......................

 

http://www.bbc.co.uk/news/business-12449987

 

House prices will fall in 2011, says CEBR

 

Weaker household earning power will lead to a 1.7% fall in UK house prices in 2011, a research group predicts.

 

Higher inflation and weaker employment prospects will lead to a fragile economic recovery, the Centre for Economics and Business Research (CEBR) said.

 

 

 

http://www.bbc.co.uk/news/business-12445050

 

Sharp rise in job losses forecast by survey

 

Redundancies are set to rise sharply in the next few months as public sector cuts bite, a survey has suggested.

 

The Chartered Institute of Personnel and Development study found redundancy intentions with employers were at their highest level since it began in 2004.

 

http://www.bbc.co.uk/news/business-12458091

 

 

Auto Windscreens goes into administration

 

Auto Windscreens has gone into administration, putting 1,100 jobs at risk.

 

The Chesterfield-based company, the UK's second biggest windscreen repair firm, said it had temporarily suspended all operations.

 

The administrators from accountancy firm Deloitte said there were no funds with which it could carry on trading.

 

The majority of staff have been asked to stop work and customers are being advised to contact alternative firms.

 

IT GOES ON JUDAH ......THE RACE IT GOES ON..........................

[drbubb]

Listen I'm a bear, but I'm happy to bet a First Majestic silver dollar (by the way good Dr don't you owe me one already for gold and silver calls a few months back?) that prices will be comparatively strong and higher in two years

(I don't recall the specifics, but I will take your word for it):

Let's do it : Double or nothing.

Two years: ie. Jan 2013 - But what's the index ?

 

(I have a bet with a UK agent in HK - and he tells me he is winning - but when I look at the H&N-index it is down about 3%, so we need to agree on the index, or there is no bet.)

 

Fitkid has identified the triggers for lower property prices:

"Weaker household earning power will lead to a 1.7% fall in UK house prices in 2011... and Job losses."

 

Those buying in London think they are immune to falling earnings. I reckon they have a shock coming.

[drbubb]

ASKING PRICES FALLING - in London too

 

Regional Housing Markets

Regional Asking Prices for February 2011, showing gains and losses since August 2010

and current typical Time-on-Market.

Current average price 6-month change ToM

(days)

Wales.............. £177,692 +0.3% 186

Greater London £342,035 -0.6% 112

 

East Midlands... £170,208 -0.6% 160

East Anglia....... £240,128 -0.8% 129

Scotland........... £159,352 -1.1% 178

 

North West........ £171,802 -1.7% 184

South West........ £247,970 -2.0% 136

North East......... £151,369 -2.0% 195

South East......... £279,759 -2.4% 119

West Midlands.... £185,573 -2.4% 157

Yorkshire and Humber £166,769 -2.5% 187

 

England & Wales. £226,463 -1.5% 148

 

/source : http://www.home.co.uk/asking_price_index/HAPIndex_FEB11.pdf

 

Home Asking Price Index. Release date: 14th February 2011

Sellers Slash and Prices Tumble

Summary

The mix-adjusted average Asking Price for homes on the market in England and Wales has fallen for a fourth successive month: Down 0.3%.

Monthly asking price falls in all English regions (except East Anglia), Scotland and Wales.

 

The number of properties reduced in price has leaped to 65,692 for the month of January, a massive 64% more than in January 2010.

 

Typical time on market registered no change at 148 days (median).

Total properties new to market in Jan 2011 was 14% higher than in Jan 2010

Annual change in asking prices: -0.6%

6-month change in asking prices: -1.5%

[frizzers]

Yeah, we need to agree on an index.

 

I am talking about 4-bed homes in better bits of say Zones 2 and, maybe, 3. God knows how you find an index for that. Unless an agent has one.

 

1.7% falls ... Who cares?

[chazza]

I have just move to prime London commuterville, a friend here is selling his 4-bed to upsize. Within 2 weeks and before offical marketting commences, he has received (and declined) 2 full asking price offers...

[drbubb]

1.7% falls ... Who cares?

That is over a year (2010), which made a recovery high in Q2, and then began to slide into "crash cruise speed."

 

My idea is that rate of decline will speed up in 2011, and continue into 2012 and 2013... perhaps longer.

 

We need an index, or there's no way to have an acceptable bet. Why not use the Rightmove index for Greater London?

 

BTW, why should people go on paying high prices for single family detached homes, when nice flats of various sizes in good parts of London are getting cheaper?

 

I am sure there are reasons to do that, but if the "arbitrage" gets big enough, people may eventually "see the light", and consider alternative living arrangements. As I have said, at some point: location (near transport and jobs) may trump owning one's own garden.

[frizzers]

No, Rightmove is no good for this. This has to be an index of houses.

 

At some point the arb will come into play, yes, but the difference between FTB's of flats struggling to get a load and equity rich families in their 40s with solid careers is very big. And that is what is driving this.

 

And, in most cases, they will hold out for a garden ... seen as essential for the kids.

 

And location - near transport and jobs - is already in play. Using Battersea as our example, there is overland - Clapham Junction - and Northern Line - both going to City and West End in 15-20 mins. Plus buses, cars, bikes etc

 

Chazza, I know you were in this neck of the woods. Where have you moved to?

 

 

[crushtherents]

land registry index can be broken down into london borough and type of house on the land registry website. what is the post code? i will get you a graph

 

[chazza]

No, Rightmove is no good for this. This has to be an index of houses.

 

At some point the arb will come into play, yes, but the difference between FTB's of flats struggling to get a load and equity rich families in their 40s with solid careers is very big. And that is what is driving this.

 

And, in most cases, they will hold out for a garden ... seen as essential for the kids.

 

And location - near transport and jobs - is already in play. Using Battersea as our example, there is overland - Clapham Junction - and Northern Line - both going to City and West End in 15-20 mins. Plus buses, cars, bikes etc

 

Chazza, I know you were in this neck of the woods. Where have you moved to?

 

Weybridge...all very nice!

[drbubb]

...equity rich families in their 40s with solid careers is very big. And that is what is driving this.

 

And, in most cases, they will hold out for a garden ... seen as essential for the kids.

I reckon that within 3-5 years, the notion of what is a "solid career" will change dramatically.

Cities will not fare well in a time of high food and energy prices. Nor will mainstream "urban careers."

 

At the same time, falling home prices will erode that wonderful housing equity (that they think is permanent wealth.)

[drbubb]

THE RESIDENCE, Manor House

 

(this place is being marketed in HK this weekend - Any comments?)

 

 

The Residence

 

The Residence is the last block in the current phase to be released at Woodberry Park. This iconic 27 storey tower consists of 167 one, two and three bedroom apartments and penthouses boasting spectacular panoramic views over both the East and West reservoirs and out towards London's iconic skyline.

 

Selected apartments including floors 20 and above will benefit from the platinum specification to include Bosch built in induction hob, microwave and double oven along with oak internal doors, fitted wardrobes to master and second bedrooms, multi room audio system including IPOD docking station, hard wired alarm system and video entry system.

 

With shops, cafes and restaurants due to open on the ground floor, and a residents only gym within the development* residents can experience the benefits of living above one of London's most prestigious new destinations.

 

 

Woodberry Park

 

Woodberry Park is the first phase of the stunning Woodberry Down regeneration project fronting the West Reservoir, providing stunning views towards the City and Canary Wharf. A fantastic development of studio, 1, 2 & 3 bedroom apartments, Woodberry Park is less than 5 minutes walking distance of Manor House tube station and only15 minutes from Oxford Circus by tube.

 

This property is currently being sold off plan and is due for completition in 2012

 

/see: http://www.rightmove.co.uk/property-for-sa...y-27180460.html

/brochure: http://www.berkeleygroup.co.uk/berkeley/woodberry-park

[frizzers]

I reckon that within 3-5 years, the notion of what is a "solid career" will change dramatically.

Cities will not fare well in a time of high food and energy prices. Nor will mainstream "urban careers."

 

At the same time, falling home prices will erode that wonderful housing equity (that they think is permanent wealth.)

Well, you're talking about major upheaval. In such an environment of course house prices aren't going to go up, except those with food production in gated communities (!)

 

But it might just be that London , as historically it has a habit of doing, muddles through, re-models itself and moves forward.

[frizzers]

I'm a Thames lover, so I've liked the thought of Weybridge.

 

But it might be a little too suburban?

[jinbal]

I'm a Thames lover, so I've liked the thought of Weybridge.

 

But it might be a little too suburban?

 

Kingston or Teddington may be slightly better then? I'm eventually looking to go back to Kingston as it is family friendly - trouble is lots of other people have the same idea - it's upsetting to be priced out of family houses in the town you grew up in.....

[drbubb]

Also on the Downsizing thread

 

Downsizing... to Upgrade quality, and enhance food availability

 

Well, you're talking about major upheaval. In such an environment of course house prices aren't going to go up, except those with food production in gated communities (!)

 

But it might just be that London , as historically it has a habit of doing, muddles through, re-models itself and moves forward.

It's Possible. Like Londonium did. Or like Detroit is doing now.

 

 

Here's what bothers me. When the final crisis hit Rome, taxes escalated, and food distribution deteriorated.

I am told (by a friend who has read the history) that Rome's population declined by about 80-90% in 50 years,

as people left the city to escape starvation and/or high taxes. Many endured themselves to rural landowners,

as a way to make sure they would get fed.

 

 

I don't think a garden in a city house is going to achieve that. At some stage, the city may decide to tax gardens,

if they need the revenues to avoid bankruptcy.

 

These are dire thoughts, but I think the coming crisis has a chance of exceeding people's worst expectations.

== == ==

 

Famine and Food Supply in the Graeco-Roman World

Responses to Risk and Crisis

Peter Garnsey .. September 1989

 

The first full-length study of famine in antiquity. The study provides detailed case studies of Athens and Rome, the best known states of antiquity, but also illuminates the institutional response to food crisis in the mass of ordinary cities in the Mediterranean world. Ancient historians have generally shown little interest in investigating the material base of the unique civilisations of the Graeco-Roman world, and have left unexplored the role of the food supply in framing the central institutions and practices of ancient society.

 

/see: http://www.cambridge.org/gb/knowledge/isbn...te_locale=en_GB

[chazza]

I'm a Thames lover, so I've liked the thought of Weybridge.

 

But it might be a little too suburban?

 

Possibly, but the fast train link into Waterloo helps you feel connected still.

 

Great for kids to grow up, which is my main reason.

 

 

[John Doe]

No, Rightmove is no good for this. This has to be an index of houses.

Zoopla do a good breakdown.

[alexreeve]

I live there.

 

You just need to walk down the Northcote Road one Saturday. The demographic is right in front of you.

Northcote Road is often nicknamed "Nappy Valley".

[G0ldfinger]

Well, you're talking about major upheaval. In such an environment of course house prices aren't going to go up, except those with food production in gated communities (!)

Your frustration is reminding me of a the-last-bear-throwing-in-the-towel scenario. I don't think house prices will continue to do well for long in the areas you have described. IMO, they will do sooner or later do what the rest of the country does.

[G0ldfinger]

I agree essentially 100% with Gonzalo's newest post. In Weimar, however, some people made a lot of money taking out loans and buying hard assets (not necessarily residential real estate though). Obviously, collapse here always means collapse in real prices.

 

http://gonzalolira.blogspot.com/2011/02/in...n-and-real.html

Inflation, Hyperinflation and Real Estate (or, The Lessons of The Great Hernán P.)

 

“Hyperinflation accompanied by a housing collapse is simply impossible—by definition.”

 

—None-too-clever financial blogger.

 

Most people in the advanced economies—including most economists—really don’t have any idea what inflation and hyperinflation is.

...

In other words, in an inflationary/hyperinflationary period, real assets do not all rise in tandem, like a tide lifting all boats. On the contrary, think of it as a pool table sitting on a gimbal: Some pockets rise, while other pockets fall.

 

The Great Hernán P.’s example is exactly what any sensible investor should do, in an inflationary or hyperinflationary period: Preserve capital at all costs, via commodities, while keeping a sharp eye out for real estate opportunities. As inflation rises and real estate prices collapse, be prepared to trade the commodities you own for real estate assets selling at depressed prices.

[drbubb]

I agree essentially 100% with Gonzalo's newest post.

. . .

In other words, in an inflationary/hyperinflationary period, real assets do not all rise in tandem, like a tide lifting all boats. On the contrary, think of it as a pool table sitting on a gimbal: Some pockets rise, while other pockets fall.

Right.

As I have discussed with him (off line), one of the signs of hyperinflation is a dramatical "price imbalance."

 

People are trying to escape the economy and maybe flee the country. Property does not do well in such a circumstance

 

[drbubb]

THE RESIDENCE, Manor House

 

(this place is being marketed in HK this weekend - Any comments?)

No takers?

I am going to start a new thread on this.

I slept on it, and it may provide a great opportunity.

But it is not the one the Builders are trying to sell you.

 

LINK: http://www.greenenergyinvestors.com/index....showtopic=14291

[tallim]

I'm a Thames lover, so I've liked the thought of Weybridge.

 

But it might be a little too suburban?

 

I lived there a year and found it an odd place, a bit slow if you're not family focussed.

 

Would have been perfect as a kid, compact enough to walk or cycle everywhere and plenty of open space in the woods and near the river and canals for childhood adventures. Great for spotting exotic cars if you like that kind of thing, I never thought I'd see a Ferrari F40 in the wild.

 

It is a bit rough around the edges though as a Friday night in the Percy Lambert will prove to you!