UK Property - The former HPC addicts' thread

[Whosthedaddy?]

Another big monthly fall in prices (down 2.4%) according to HBOS

 

Similar numbers to the nationwides figures for last month (2.5%)

 

``The decline in prices is at risk of turning into a rout,'' said Malcolm Barr, chief U.K. economist at JPMorgan Chase & Co. who used to work at the Bank of England.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[drbubb]

``The decline in prices is at risk of turning into a rout,'' said Malcolm Barr, chief U.K. economist

at JPMorgan Chase & Co. who used to work at the Bank of England.

 

At risk?

It will almost certainly be a rout.

Maintreamer banks pay people to make stupid comments like this?

 

Yes. It's bad enough- even the M-streamers have to accept it is bad:

 

"The housing downturn isn't confined to the lower end of the market. Luxury-home prices in central London, the world's most expensive location for prime real estate, fell in May by the most since the first quarter of 1992, Knight Frank LLP said yesterday. Price declines in April were the most widespread since at least 1978, the Royal Institution of Chartered Surveyors said May 13.

 

``The decline in prices is at risk of turning into a rout,'' said Malcolm Barr, chief U.K. economist at JPMorgan Chase & Co. who used to work at the Bank of England.

 

[drbubb]

QUOTE (Magpie @ Jun 5 2008, 01:30 PM)

Going back to an old theme:

 

It's been fascinating to watch this boom from the point of view of collective hysteria. Here's a country that had a property crash of quite sizeable proportions that only ended 10-15 years ago. The government was unable to do anything about it.

 

But a huge proportion of the population once again became convinced that property always goes up, to the point when TV programmes about how brilliant it is that property always goes up became some of our most popular viewing. Now everyone is amazed to find that property prices can fall after all and is clamouring for the government to 'do something'.

 

How stupid are we?

 

 

IT'S A MEMORY THING.

Must sheeple are lazy, and do not want to study history.

So they can recall about 3-5 years. Before that, little maters from history.

Some will learn from the current painful episode that they need to look back further

than that.

[jerpy]

QUOTE (Magpie @ Jun 5 2008, 01:30 PM)

Going back to an old theme:

 

 

How stupid are we?

 

 

IT'S A MEMORY THING.

Must sheeple are lazy, and do not want to study history.

So they can recall about 3-5 years. Before that, little maters from history.

Some will learn from the current painful episode that they need to look back further

than that.

 

 

Unfortunately some are so stupid they will look to blame everyone but themselves.

 

Something to do with the compensation culture the U.K has adopted from the U.S! They will blame governments, lenders, estate agents, builders, neighbours anything they can pin on a reason for "their" highly mortgaged house's price fall on from it's vastly over inflated price they were "led" to believe was realistic.

 

Who signed the contract, i say!

 

[drbubb]

Unfortunately some are so stupid they will look to blame everyone but themselves.

...Who signed the contract, i say!

 

Right.

Taking responsibility for one's own financial decisions is a first (and important!) step to

learning how to manage money well

 

[GTG]

House prices still going up in Scotland.... apparently

The Scottish House Price Monitor showed that quarterly figures to the end of April rose by 2.3%, giving an average house price of £163,639. Despite a fall in the previous quarter, Scottish house prices have risen by 11.6% in a year. Aberdeen reported an annual increase of 19% while the north excluding Aberdeen showed an increase of 26%.

http://www.whatmortgage.co.uk/ccstory/2283...SB_Scotland.htm

 

[jerpy]

House prices still going up in Scotland.... apparently

http://www.whatmortgage.co.uk/ccstory/2283...SB_Scotland.htm

 

Is this not an area buoyed by an inflow of oil money? More of ask out loud question. Been there a few times and so wondering if this doesn't create it's own little bubble and what better time than at present?

 

Riggers

[allyjcambo]

I'm from up north and although I don't have the data my assumption is that Scotland (ex Aberdeen) is perhaps lagging a little in terms of house price falls. That's not to say the falls won't happen (after all the same factors as those downsouth have been, are and will be at play). The ESPC website (one of the main Scottish property sales sites) has shown the volume of houses for sale to be be very thin this year with the same properties sitting there for months. As with England, there is still a tendancy to market properties based on last year's hysteria and credit availability.

[jerpy]

I'm from up north and although I don't have the data my assumption is that Scotland (ex Aberdeen) is perhaps lagging a little in terms of house price falls. That's not to say the falls won't happen (after all the same factors as those downsouth have been, are and will be at play). The ESPC website (one of the main Scottish property sales sites) has shown the volume of houses for sale to be be very thin this year with the same properties sitting there for months. As with England, there is still a tendancy to market properties based on last year's hysteria and credit availability.

 

Dont you doubt it. Heading north of the border tomorrow to see a major construction company, i'll let you know if the lights are still on!

 

Riggers

[drbubb]

MORE REALITY -Another Tough Economic Lesson for the UK's Idiot BTL Brigade

 

(Learning from experience is the only way for some of these people)

 

Today's SCMP is talking about how a UK recession and a reverse of migration from Eastern Europe

could mean less demand ("poses a threat to Britain's buy-to-let sector".) If these fools had uses

their brains, or read GEI or HPC, they would have known that many months ago.

 

Pain is such a long-lasting way to learn!

[allyjcambo]

I saw the start of 'Location, Location, Location' this week and was astounded to see the presenters (Kirsty and Phil) talking about how stamp duty had to be abolished to help first time buyers on to the market (as if that's the problem). Kirsty was even trying to contact Alistair Darling!

 

It's ironic that at the start of CWR, CC has to read out an FSA disclaimer before discussing the markets with Dr Bubb and yet these two air-heads can give out advice on a market which will financially cripple many of those who dare to take the plunge at this point. And what is it about the Government trying to help first time buyers onto the market at a time when it has only started to fall?

[jerpy]

House prices still going up in Scotland.... apparently

http://www.whatmortgage.co.uk/ccstory/2283...SB_Scotland.htm

 

Yep seen some estate agent figures that backed that up. During my brief visit to Aberdeen a guy i was talking to had the misfortune to be having to sell his parents house only a modest 2 bed bungalow. He'd done some research and thought £150,000 was fair value. The estate agent said try £160,000. He sold last week for £165,000. Small beer, but show's where they are at in Scotland.

 

Like he said, it's like a ripple effect from London and lags behind by a year at least. Though the ripple is less in either direction ie never had the huge rises and probably therefore have less to fall in any downside or weakness when it comes. His region also covers the North East, which is the worst performing area for his company's U.K business!

 

Riggers

 

[chazza]

http://www.channel4.com/4homes/buyingandse...redictions.html

 

In case you were wondering...

 

"....The property columns seem to have become obituary columns but markets never stand still and there are opportunities in both upturns and downturns. Recent Halifax figures show house prices fell by an average of 2.5 per cent last month, the biggest fall in a single month since 1992. However, they went on to conclude that average prices were still 1.1 per cent higher than they were 12 months ago.

....."

 

 

[frizzers]

From the Landlordzone newsletter:

 

June 2008

 

 

As I write this, mid-June 2008, things look pretty gloomy.

 

The credit crunch is putting the banks under extreme pressure (we still don’t know the full story) leading to a contracting property market because of a severe tightening of lending criteria and the end of cheap money.

 

Savills last week revised their forecast that residential property values could fall by 9%, to as much as 25%, by the end of 2009.

 

This in turn is severely affecting the construction industry which is seeing builders halting new development plans and even mothballing some current developments.

 

Rising redundancies in related industries will inevitably have knock-on effects to the economy as a whole, which is already feeling the effects of rising inflation and in particular higher commodity prices and quite dramatic fuel price rises.

 

Households are also feeling the effects of rising food and fuel prices and therefore retailers’ profits will be hit, inevitably affecting commercial rents and tenancies.

 

The whole scenario looks set to lead to a full blown recession (the first we’ve seen in the UK for 18 years—so much for Gordon’s “the end of boom and bust”) unless moves by government and the Bank of England have their desired effect—so far there’s little evidence of this.

 

Fortunately for landlords residential rents and demand for renting is holding up very well, though the situation could deteriorate quickly if mass redundancies result.

 

Established landlords with sizeable chunks of equity in their properties will inevitably ride out the storm and many will take advantage of distressed selling and falling values to add to their portfolios, ready for the up-turn—but things can get worse yet!.

 

Additionally, an overall shortage of UK housing should help shore up the market in many locations, especially as new development will slow down or stop.

 

The ones most likely to suffer are those overstretched newbie property investors, and in particular those owning new-build urban flats whose values are badly affected due to oversupply and poor tenant demand in some locations.

 

You didn’t need to be the Sage of Omaha or even those illustrious property education “experts” running overpriced property courses to see this coming a long time ago.

 

For what some have paid for these courses you could have gleaned more wisdom buying 3 or 4 good investment books and spending a luxurious two weeks of study in one of the best hotels in the Caribbean!

 

For all those responsible for fleecing and then leading naive and unsuspecting investors into a living hell, to now say: “we were taken by surprise by the credit crunch”, is nothing short of scandalous in my view.

 

Tom Entwistle, Editor

 

 

[drbubb]

From the Landlordzone newsletter:

 

Established landlords with sizeable chunks of equity in their properties will inevitably ride out the storm and many will take advantage of distressed selling and falling values to add to their portfolios, ready for the up-turn—but things can get worse yet!.

 

NOPE. Maybe not.

As their LTV gets pushed up by falling property prices, they may soon find themselves in a place

where the banks will be unwilling to finance them.

 

The REAL PROS sold out, or went to zero debt.

The wannabes bet on a worst case of 10-20% declibnes, and may be in for a big shock.

 

 

[Hogwild]

The REAL PROS sold out, or went to zero debt.

 

In late 2006/early 2007 the well known Foxtons agency began selling their commercial premises; preferring to lease back on short leases. They auctioned their properties off via Allsops of London. That was a clear signal that the market had topped.

 

The latest catalogue received from Allsops shows that some professionals have left it rather late to sell off some of their holdings. Grainger Plc is clearly under pressure as it has no less than 68 properties for sale in the up coming auction. A look at their share price tells us a lot. However, it could get worse for them. It looks like they need the cash to enable their long term survival.

 

The last time I posted I mentioned the end of terrace house just round the corner from me selling for £2.75M. It was refurbed for about £200K and is still unlet. The small problem is the rent level; asking rent is £4250 per week! Now, that is more than the average UK house price on an annual basis!

 

 

[frizzers]

UK property to return to 1998 levels?

 

[drbubb]

Falling fast, it does look like the lending figures will stop falling there

[drbubb]

(SP is back.

The following comes from a "Blind Fool's Survival Guide". part 2 started by chief misleader, Carl Henry):

 

Very happy with differing views though!

== ==

 

I don’t think you are at all – they seem to make you very angry…

OK, since you are asking, here are some facts:

 

1. UK average house prices from 1945 to 2002, oscillated between 3 and 5 times average earnings*

 

2. From 2002 onwards, when the FTB was priced out, price change was driven by a frenzy of BTL leveraged speculation, driven in turn by ever-improving mortgage availability as well as low mortgage rates and higher economic growth

 

 

3. In 2007 average house prices reached 7 times average earnings*

 

4. All the drivers of house prices (mentioned in 2 above) have now gone into reverse.

 

5. This means a fall to at least 4 times average earnings, and probably 3 times average earnings.

 

6. This in turn means a bear market of 2 – 3 times as bad as the 1989-1994 market, so falls of some 30-50% on average.

 

7. Because this is the bursting of a leveraged and speculative bubble, those areas where BTL has been the most concentrated will be hit the worst.

 

 

* For some reason I can’t post the chart here, but you can find by paging down a little here:

 

http://www.landlordzone.co.uk/forums/showthread.php?t=12050

===

 

Quite a good posting froim "Edward Martinez

[tinecu]

Falling fast, it does look like the lending figures will stop falling there

 

 

Shortage of mortgage credit ain't going to change in the short term, but the real killer for anyone trying to get mortgage finance now (even with a 20%+ deposit) is the up front 'Set up fee'....

 

see: http://www.home.co.uk/guides/news/story.ht...rrangement_fees

 

The CML says that fees, which have risen dramatically in recent months and are around £3,000 in some cases...

 

To my mind this added pain for buyers will almost ensure a 50% drop in house prices. Poor poor UK economy.

[drbubb]

GETTING CRUSHED

 

From "High Street Hit..." article in Thursday's The Times:

 

"The danger that a house price slump will combine with rapid rises in living costs to undercut consumer spending was emphasised by the plight of Taylor Wimpey. It predicted that the housing downturn could last for 18 months as a key survey showed the toughest conditions in the construction industry for at least 11 years. The seven biggest listed homebuilders had 21 per cent wiped off their value yesterday. They have now lost 87 per cent of their value, £18.4 billion, over the past 18 months. Sums borrowed by homeowners against their properties, meanwhile, fell in the first quarter to a seven-year low of £5 billion."

 

/see: http://business.timesonline.co.uk/tol/busi...icle4258748.ece

 

 

[medhyk]

UK property to return to 1998 levels?

 

 

 

Yes…. Sorry not to have any graphs or statistics to support this but, based on nothing more than instinct and discussions with friends I believe that house prices could indeed be heading back to 1998 levels, simply by using levels of disposable income as an indicator.

 

On average wages in the UK have only kept up with inflation over the last ten years.

Since 2002 HPI has whittled away at disposable income but relatively easy access to credit for discretionary expenditure has masked this.

 

With markedly higher taxation, recent massive increases in the cost of living and huge levels of personal debt built up as a result of HPI, disposable income is possibly something that the average wage earner can now only dream of having.

 

Wages are unlikely to keep ahead of inflation, taxes will probably increase, so the only shock absorber left in the system is the price of houses.

 

With present average incomes, the cost of living and of course unsecured debt, house prices would need to be at 1998 levels for homes to be 'affordable' again.

 

[drbubb]

From Council of Mortgage Lenders statistics page

http://www.cml.org.uk/cml/statistics

 

Total Mortgage lending in 2007 £155 Billion (1,016,400 Loans)

 

Total BTL lending in 2007.......... £44 Billion ( 346,000 Loans)

 

= BTL Loans are 28% of total Gross Lending / 34% by number

 

 

[littledavesab]

Hey Dr B just read a FT report on Hong Kong - apparently you may be having inflation concerns (where hasnt ?) over there as your interest rates are dropping due to the peg with the USD?

 

Is that likely to lead to a property bull run and does it make you nervous?

 

 

[drbubb]

ANECDOTAL - from HPC

 

EA acquaintance of mine, works for a well-known chain in a sleepy corner of SW London, says told me just how bad things are - "At least three times as bad as what is being reported in the media."

 

Does that mean prices are falling "three times as fast"?

 

Or that there are only a third as many deals?

If the later, then the EA's will just have to work harder to get sellers to cut prices.

 

I dropped in to Foxton's two days ago, and saw prices that were truly beyond belief.

Anyone who pays even 80% of their prices has lost their minds