UK Property - The former HPC addicts' thread

[drbubb]

HONESTY...

 

"lots of properties coming up,its shocking the amount of calls i got this week, i've told them i'am not interested in buying anymore. On the other side another property developer , old friend in manchester is putting 60% of his portfolio up for sell he's getting out, i m seeing property developers in london surrey hants tell other developers dont sell prices are going up yet the guys giving the advice are selling"

 

EXCERPT from Blue Peter: http://www.singingpig.co.uk/forums/1/19397...ead.aspx#193972

[frizzers]

Every previous crash in UK house prices, in the early 1930’s depression, in the stagflation years of 1973-76 and most recently the early 1990s were accompanied by a severe recession. The crash of early 1990s followed a doubling of interest rates to 15% and a near doubling of unemployment from 1.6m to 3m. So with Britain enjoying 57 successive quarters of growth there is no reason to believe that a house price crash is imminent. History also tells us that the scale of house price crashes, though painful for those that bought at the top, has been quite modest. Both in the early 1930s and early 1990s the fall in house prices from peak-to-trough was only 13%.

 

 

http://www.moneyweek.com/file/24809/are-uk...ut-to-fall.html

[Vicarious]

Every previous crash in UK house prices, in the early 1930’s depression, in the stagflation years of 1973-76 and most recently the early 1990s were accompanied by a severe recession. The crash of early 1990s followed a doubling of interest rates to 15% and a near doubling of unemployment from 1.6m to 3m.

 

Not sure I agree with this, didn't house prices peak in 1989 whilst interest rates 1993? Couldn't it therefore be argued that the prices drops caused the recession rather than were accompanied by it, due to the removal of MEW money from the economy and the redirection of disposable income to clear negative equity?

[No6]

Is the end in sight? The pips are beginning to squeek for some Estate Agents. This could be a classic.

 

'Rate rise is outrageous!'

By Tan Parsons

 

A HARLOW estate agent has slammed the Bank of England's decision to raise interest rates.

 

Alan Howick, of Howick and Brooker estate agents, High Street, Old Harlow, criticised the bank's Monetary Policy Committee for lifting the cost of borrowing by a quarter of a point to 5.25 per cent - the highest rate for almost six years.

 

He said: "It's outrageous that homeowners have to bear the brunt of the drive to keep inflation under control.

 

"This is the third time in six months they've had to suffer rises like this. If inflation is too high extra money could be put on the price of consumables - things that people can make a choice whether to buy - not basic necessities such as the homes people live in."

 

Currently an average £123,000 interest-only mortgage will cost £335,000 for a homeowner to pay off over 25 years - a profit for the mortgage company of nearly 175 per cent.

 

Mr Howick suggested the rate hike could cause a jump in the number of repossessions and insolvencies in the town.

 

He added: "I feel particularly sorry for people who have followed advice to become private landlords.

 

"They've worked hard to raise equity to buy homes to let, and suddenly find that their monthly outgoings will exceed the income that they are getting in rent.

 

"All that work - and then they get hammered like this.

 

"I fear that for some people this latest hike could be the straw that breaks the camel's back."

 

http://www.bishopsstortfordcitizen.co.uk/n..._outrageous.php

[Mabon]

Is the end in sight? The pips are beginning to squeek for some Estate Agents. This could be a classic.

 

Many reductions here in west Wales.

 

Even in this area (Pembrokeshire) which has attracted a lot of english people buying second homes, holiday homes, or retirement homes etc, the market has many 'New Price' and 'O.I.R.O' adverts in the papers and on the websites.

 

Also, I notice that many houses are still on the market that were on in April last year, often at reduced prices and still not sold.

 

Depending upon the property in question and where it is cited.

 

Same goes for the rest of west Wales as far as I can see, many reductions in Ceredigion and Carmarthenshire, not only in houses, but also some smallholdings.

 

What about where you are? I wouldn't call it a bust, but certainly the market at present here, seems to have reached some kind of ceiling.

 

Part of the reason for that, I feel, is the fact that you can't have a healthy market based solely upon holiday home and second home buyers. It also has to function for the local population and in that respect, the local wages are an average of approx. 12,000 per year for those not in self-employment or working for one of the larger corporations.

 

Therefore the vast majority of properties on the market here are well beyond the reach of the majority of the local population.

 

Which leads to?

[chas and dave]

I've walked my local roads of north london recently, key dates being a week after the yellow pages was delivered to doorsteps, the other being 24 and 48 hrs after the recent snow fall.

 

The yellow pages sit on the doorsteps uncollected, the snow sits on the roofs of the unheated empty houses - and on my super insulated house by the way.

 

Put together with and confirming what I know of the local housing, these visits indicate 10% of the family houses in my road are empty, with 5% long-term (one ten years, another nearer 25 years!) - I counted a possible/probable 50 in the local half a dozen streets that likewise seem a fair bet for being empty, and this sis supported by the number of uncollected yellow pages and draw curtains - this would be less than the confirmed percentage for my own road.

 

Many of these are empty houses I know have never been rented out.

 

An interesting situation that I wil be doing more work on - with a morning walk prior to rubbish collection.

 

Here's my roof, and further along a property now empty, and another empty but with heating.

I wonder if these properties are being prepared for spring sale?

 

 

 

Get a life C&D!

[No6]

Interesting point on the number of empty properties C&D. I often wonder just how many properties are empty, or available for sale or rent at any one time. I was on the Digital Look website the other night looking at RightMove and they say that RM covers about half the estate agents in the country. Now, RightMove's website states that they have 800,000 homes for sale or rent, so I think a conservative estimate, including all the ea's not on Rightmove and private sales/rentals, we are talking in excess of a million. So much for the shortage of housing we are led to believe is helping keep prices up.

[frizzers]

Well, market absolutely mental in Fulham. Most mental I've ever seen it in my limited experience. Will report back with further updates in a few weeks.

[No6]

Well, market absolutely mental in Fulham. Most mental I've ever seen it in my limited experience. Will report back with further updates in a few weeks.

Doesn't surprise me. Not all places will stagnate or fall in harmony and some will continue on their merry way upwards to bubble heaven. This is just another sign of the desperation of the type of mentality that you see at this stage in the cycle. An obvious sign of this was Northern Ireland playing "catch-up" last year, prices up 40%+? Now just who in Northern Ireland, with some of the lowest salaries in the Union can afford that? It doesn't really matter once the bubble mentality takes over.

[room305]

Doesn't surprise me. Not all places will stagnate or fall in harmony and some will continue on their merry way upwards to bubble heaven. This is just another sign of the desperation of the type of mentality that you see at this stage in the cycle. An obvious sign of this was Northern Ireland playing "catch-up" last year, prices up 40%+? Now just who in Northern Ireland, with some of the lowest salaries in the Union can afford that? It doesn't really matter once the bubble mentality takes over.

 

I can tell you that most of the increases in housing in NI are being driven by purchasers in the South. Fundamentally (so the newspapers report) it is driven by Southern buyers happy with the progress of the peace talks etc. This coupled with our lower interest rates, the fact that our market has clearly topped and a healthy dose of blinkered bubble mentality has Southern investors buying up vast amounts of NI property by remortgaging their own houses in the South.

 

A friend of mine is from Derry and his family have property there and in Belfast. He says that while prices are increasing all over, it is particularly pronounced along the border areas.

 

Clearly, there is huge room for improvement in the NI economy, particularly if they convince the EU to lower their corporation taxes and Paisley and Adams learn to get along. However, at these prices buyers are making some huge assumptions about how fast NI wages will actually increase!

[No6]

I can tell you that most of the increases in housing in NI are being driven by purchasers in the South. Fundamentally (so the newspapers report) it is driven by Southern buyers happy with the progress of the peace talks etc. This coupled with our lower interest rates, the fact that our market has clearly topped and a healthy dose of blinkered bubble mentality has Southern investors buying up vast amounts of NI property by remortgaging their own houses in the South.

 

A friend of mine is from Derry and his family have property there and in Belfast. He says that while prices are increasing all over, it is particularly pronounced along the border areas.

 

Clearly, there is huge room for improvement in the NI economy, particularly if they convince the EU to lower their corporation taxes and Paisley and Adams learn to get along. However, at these prices buyers are making some huge assumptions about how fast NI wages will actually increase!

Interesting post which does raise a number of questions. For instance, are the Northern priced out, who will probably be mostly young, happy that it is Southerner's, with the money created from their own property bubble, buying up Northern properties? We know the history of Ireland as a whole, resentment can build up in many ways and the extremists on both sides know how to exploit this.

[No6]

Well, market absolutely mental in Fulham. Most mental I've ever seen it in my limited experience. Will report back with further updates in a few weeks.

Slightly older figures to September 2006. Will try to find the last qt figures to see if the IR's have hit yet.

 

Hammersmith And Fulham

 

Average Cost: £478,456

Detached: £656,666

Semi-detached: £1,061,025

Terraced: £707,324

Flat: £330,883

 

Change in last quarter: 4.6%

Change in last year: 9.1%

Sales: 999

 

http://news.bbc.co.uk/1/shared/spl/hi/in_d...ces/html/an.stm

[room305]

Interesting post which does raise a number of questions. For instance, are the Northern priced out, who will probably be mostly young, happy that it is Southerner's, with the money created from their own property bubble, buying up Northern properties? We know the history of Ireland as a whole, resentment can build up in many ways and the extremists on both sides know how to exploit this.

 

Such talk has already started apparently. I have also read of people from Dublin selling and moving to Belfast as even with a reduced wage they can enjoy a better quality of life (e.g. live in a better house, have more disposable income). With typical Northern humour they are often referred to as "Mexicans" (i.e. travelling North over the border to build a better life for themselves ). I doubt these people will be a source of resentment so much as the investors who maybe deny a young couple the ability to buy a house by leveraging against their expensive Southern property at lower interest rates.

 

Don't think it is at anything beyond the "bloody Southerners buying up all the property" stage but it is easy to see how resentment can build in these situations. That said, maybe they could work it to their advantage and generate employment for NI workers building houses to sell at idiotic prices to people from the Republic who (judging by their purchases in other countries as well) invest under the presumption that all property prices globally will eventually converge on Dublin prices (now higher than London)?

[No6]

When she moved from Berlin with her partner in the autumn, Jennifer Burns was pregnant and anxious to buy - two bedrooms, maybe a garden, west London, around £500,000. Today, after four months, 50 viewings, four serious contenders and two bidding wars, she is the mother of a 10-week-old, still renting, and, she says, "very, very jaded".

 

The couple have looked in Fulham and Hammersmith, in Wimbledon, in St John's Wood and Little Venice, even in Harrow and Sudbury Hill. But so far they can't find anyone to take their money, simply because so many other people have the same ambition. "We have had about 10 estate agents looking for us, in 10 different areas, but anything that comes on to the market is gone. If it's worth seeing, it's gone within two days. I think I'm being very flexible, I'm willing to look anywhere, but this is ridiculous," she says.

 

http://money.guardian.co.uk/businessnews/s...2010114,00.html

[spline]

A quick update - I’ve added about 450 pages of region / city / district graphs to HousePrices.uk.net based on the DCLG median prices from LR. At the moment it runs up to Q3/2006, but the Q4 figures should be available quite soon, and I still need to add data for NI and Scotland and tidy it up a bit.

 

Anyway, here’s the link to house prices in Hammersmith and Fulham.

[drbubb]

http://business.timesonline.co.uk/tol/busi...icle1383828.ece

 

Time to diversify from bricks and mortar

 

Asset allocation may not be at the top of your list of favoured topics for dinner party conversation but it should be a key part of your investment strategy.

 

Unfortunately most people are very bad at asset allocation, which is basically the process of dividing your wealth into various different ‘pots’, such as shares, property or cash, rather than putting all your eggs in one basket.

 

UK investors’ obsession with bricks and mortar tends to cloud their judgement about where to put their money and, all too often, they do the very opposite of sensible asset allocation. Their house becomes not just their home, but their main investment and their pension.

 

Some research conducted by New Star Asset Management illustrates this point very well. At the start of 2006 it asked more than 700 investors what they thought would be the best performing asset over the calendar year. It also asked them to rank five other asset classes in descending order.

 

Buy-to-let residential property topped the list by a comfortable margin of votes, followed by commercial property, UK shares, international shares, cash and bonds. In fact, residential property was only the third best performer, behind commercial property and shares.

 

Despite this, private investors are once again predicting that residential property will be the top-performing asset in 2007. This flies in the face of a series of forecasts by property professionals that the residential market will experience a slowdown in the coming year.

 

It also contradicts the views of financial advisers. They reckon shares will perform best this year, followed by commercial property and bonds. Residential property is relegated to fifth place.

 

Of course financial advisers are not infallible either. Many private investors are still angry with them for recommending technology funds in the last bull market, only to see the value of their investments nosedive as the tech bubble burst.

 

If nothing else this reinforces the importance of ensuring you don’t put all your eggs in one basket - in other words, of carrying out a proper allocation of your assets.

 

= == =

 

(from Spline's excellent website):

 

 

New top - but momentum peak ws years earlier

[drbubb]

AN IRRESPONSIBLE ECONOMIST WORKING FOR AN IRRESPONSIBLE LENDER...

 

Full-salaried industry apologists like John Wriggleworth seem to think lenders can go on being

more and more irresponsible:

 

John Wriglesworth:

"Back in 1990, rates were 15%, but lenders were giving people 3.5 times their income. It’s taken them a bit of time to work out that now rates are 5% they can afford to lend more, especially now we have longer-term fixed-rate deals, which insulate people from rising rates. Three years ago, four times income was considered a bit shocking - not now. Two years ago, five times income would have been headline news - not now. I’m telling you: six times income will not be shocking next year. That’s going to create more demand - it doesn’t take a genius to see that if you can borrow five or six times income instead of three times, you can pay more for a house."

 

2/

"JW: About 50% of landlords are planning to buy another property, so they can’t be doing that badly. I can see that you might have a negative cash flow with a 100% mortgage, but if you’ve got a wee bit of equity, you shouldn’t have and you’ll have capital appreciation to rely on. Most investor-landlords know that we’re an overcrowded island with not enough houses for our growing population and too many planning regulations. It does not take a genius to see that housing is in short supply over the long term."

 

@: POST#15: http://www.housepricecrash.co.uk/forum/ind...showtopic=42057

 

"it doesnt take a genius" means: an idiot can see...

and JW is just such an idiot

 

i wonder if he ever reads any reports about the US property market??

[Whosthedaddy?]

Does anybody know which lenders have the largest exposure to the BTL madness?

 

I've a feeling I read somewhere that its Bradford and Bingley, will investigate further.

 

I don't see how the UK housing market can stay afloat for very much longer.

 

Thinking about shorting some of the UK lenders.

 

Your thoughts and musings are always welcomed

[drbubb]

I suggest puts on Northern Rock (NRK)

 

In-the-money are probablybest, but try to work out what Vol you are paying

[Whosthedaddy?]

A quick comparison between Northern Rock and B&B

 

 

Northern Rock

 

Total Lending £33bn

UK Mortgage Share 8.4%

Percentage of BTL within residential lending 10% (no figures for self-certified loans)

Percentage of residential loans 3 months in arrears 1.09%

 

Reading between the lines of their annual reports, it seems they have perhaps a tighter lending criteria than B&B.

 

 

 

Bradford and Bingley

 

Total lending £45.4bn

UK Mortgage share 4.5%

Percentage of BTL within residential lending 58% (Self certified loans are 22% of total)

Percentage of residential loans 3 months in arrears 1.30%

 

Interestingly B&B have just bought £804million of loans from GMAC (subsidery of ResCap, a major lender in the USA) with the option to acquire a further £1.4bn - £4bn over the next three years. The GMAC website advertises itself as ' The leading non-conforming lender' sounds pretty sub-prime to me

 

B&B seem to be concentrating almost purely on BTL and self certified loans (80% of their lending).

[No6]

AN IRRESPONSIBLE ECONOMIST WORKING FOR AN IRRESPONSIBLE LENDER...

 

Full-salaried industry apologists like John Wriggleworth seem to think lenders can go on being

more and more irresponsible:

 

John Wriglesworth:

"Back in 1990, rates were 15%, but lenders were giving people 3.5 times their income. It’s taken them a bit of time to work out that now rates are 5% they can afford to lend more, especially now we have longer-term fixed-rate deals, which insulate people from rising rates. Three years ago, four times income was considered a bit shocking - not now. Two years ago, five times income would have been headline news - not now. I’m telling you: six times income will not be shocking next year. That’s going to create more demand - it doesn’t take a genius to see that if you can borrow five or six times income instead of three times, you can pay more for a house."

 

2/

"JW: About 50% of landlords are planning to buy another property, so they can’t be doing that badly. I can see that you might have a negative cash flow with a 100% mortgage, but if you’ve got a wee bit of equity, you shouldn’t have and you’ll have capital appreciation to rely on. Most investor-landlords know that we’re an overcrowded island with not enough houses for our growing population and too many planning regulations. It does not take a genius to see that housing is in short supply over the long term."

 

@: POST#15: http://www.housepricecrash.co.uk/forum/ind...showtopic=42057

 

"it doesnt take a genius" means: an idiot can see...

and JW is just such an idiot

 

i wonder if he ever reads any reports about the US property market??

 

Well, JW is certainly not a genius. Hey 10x must mean even higher prices, do I qualify for MENSA?

[drbubb]

Quite a number of Mensans hang out on GEI, i reckon

 

Should we invite Wriggie to join?

[Bubble Pricker]

A HARLOW estate agent has slammed the Bank of England's decision to raise interest rates.

 

"This is the third time in six months they've had to suffer rises like this. If inflation is too high extra money could be put on the price of consumables - things that people can make a choice whether to buy - not basic necessities such as the homes people live in."

 

He added: "I feel particularly sorry for people who have followed advice to become private landlords.

 

"They've worked hard to raise equity to buy homes to let, and suddenly find that their monthly outgoings will exceed the income that they are getting in rent.

 

This mindless babble of an estate agent just shows the financial ineptitude of the perople involved in the property business. Particularyly funny is his suggestion that the price of other goods should rise, not interest rates, as people have a choice about them. Yes, sure, then why not lower the price of property itself. Following the logic of this moron, government could just decree that property may not be sold for more than x pounds per sq foot.

 

He feels sorry for people who have been advised to become private landlords. Advised by whom? People like, errr, estate agents?

 

The comment that angers me most is, "people have worked hard to raise equity to buy homes to let". Erm, excuse me, how is borrowing huge amounts of money against the value of existing properties "hard work". This just shows the perverse state of mind the UK debt culture has created. It is now considered "hard work" to borrow money. Yes, all that form filling must tire the wrist muscles a lot.

[HollandPark]

(from a HPC posting today):

 

"I think by now, there can be little doubt that UK property is headed towards a severe slide, if not an outright crash.

 

Those that have tried to discredit the bearish arguments, are looking sillier and more foolish as the US progresses into a severe downturn. All of the excesses which are now undermining the US market, are also apparent in the UK. And values are even more strained. It is only a matter of time before the markets start punishing the UK lenders who have lent irresponsibly. Problems in the US subprime market, are quickly spreading to the wider US markets. It no longer takes much imagination- as US mortgage markets melt down, and loan losses rise - to see that those lenders who are lending irresponsibly in the UK are exposed to the same risk of meltdown. Increasing foreclosure pressure will put mounting downwards pressure on US real estate prices.

 

UK Lenders must be quietly tightening now. As that happens, the ability of UK buyers to access aggressive lending terms will quickly change. Loan terms will be tightened. More equity will be required, and the prices that already-stretched UK buyers are willing and able to pay will be eroded.

 

With the US example now in everyone's minds, it is possible that the UK market will slide even faster than it did in the US.

 

The bears may not have much longer to wait, before sentiment in the market turns decisively. Those from HPC that have been talking about a slide, and maybe a crash, before 2008-2010 still have a great chance for vindication, if not outright victory over the irresponsible mad bulls, which have kept the market going well past its normal cyclical "sell-by" date. Too many bulls are now trapped in a illiquid investment, which they will have real trouble in exiting with anything near their expected prices. How long before a full scale panic erupts?"

 

@: post#13: http://www.housepricecrash.co.uk/forum/ind...showtopic=43802

[frizzers]

A quick comparison between Northern Rock and B&B

Northern Rock

 

Total Lending £33bn

UK Mortgage Share 8.4%

Percentage of BTL within residential lending 10% (no figures for self-certified loans)

Percentage of residential loans 3 months in arrears 1.09%

 

Reading between the lines of their annual reports, it seems they have perhaps a tighter lending criteria than B&B.

Bradford and Bingley

 

Total lending £45.4bn

UK Mortgage share 4.5%

Percentage of BTL within residential lending 58% (Self certified loans are 22% of total)

Percentage of residential loans 3 months in arrears 1.30%

 

Interestingly B&B have just bought £804million of loans from GMAC (subsidery of ResCap, a major lender in the USA) with the option to acquire a further £1.4bn - £4bn over the next three years. The GMAC website advertises itself as ' The leading non-conforming lender' sounds pretty sub-prime to me

 

B&B seem to be concentrating almost purely on BTL and self certified loans (80% of their lending).

 

My own experience when I tried to get a self-certified mortgage a few years back was that Northern Rock were actually quite responsible.

 

 

That said their stock has rocketed during this boom, so it's likely to do the opposite if it crashes.

 

B&B look a good bet too with all that exposure to buy-to-let.

 

The very act of STR is effectively shorting housing so to go one stage further and buy puts is v.extreme. That said , who are the UK equivalents to the sub-prime mortgage lenders? They must be worth shorting with a small percentage of the portfolio.