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UK Property - The former HPC addicts' thread


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A great chart was posted by Spline on a HPC thread : http://www.housepricecrash.co.uk/forum/ind...48564&st=15

 

(My own reaction was):

 

I always find you charts intriguing. This one says alot:

 

beachiivy4.gif

 

Look how:

+ HPI went slightly negative in mid-2005, and within 2 months, the BofE had cut rates,

and they now admit that was a mistake,

 

+ Before year end-2005, HPI was shooting up again, bringing what I am calling the "last gasp rally"

 

+ HPI now looks set to breakdown, and very soon

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Interesting article in today's Telegraph, which includes such gems as:

 

"The yield on 10-year gilts rose to a seven-year high of 5.54pc in early trading yesterday, enough to threaten a serious "repayment shock" for mortgage borrowers on two-year fixed rates coming up for renewal. Deutsche Bank said 820,000 UK mortgages were due to be reset in the second half of this year at a rate now likely to be 1.4 percentage points higher, entailing an average 7pc cut in disposable income for borrowers".

 

and:

 

"Fitch Ratings says the immediate risk is Latvia, which has a current account deficit of 21pc of GDP and short-term external debt reaching 294pc of GDP".

 

they are impressive numbers that nicely illustrate the potential massive problems in store.

 

But, maybe the chickens wont come home just yet because seperately it was reported that the number of new buyers looking for homes has jumped according to RICS - an indicator that is believed to be a reliable indicator of future movements in house prices.

 

--------------------

Credit fears after bond yields hit 7-year high

By Ambrose Evans-Pritchard

Last Updated: 1:22am BST 14/06/2007

 

Inflation fears have pushed the yield on British gilts and German bunds to the highest level since the dotcom bust and sharply tightened credit conditions across Europe, with growing risks of financial turmoil in the ex-Communist bloc.

 

The yield on 10-year gilts rose to a seven-year high of 5.54pc in early trading yesterday, enough to threaten a serious "repayment shock" for mortgage borrowers on two-year fixed rates coming up for renewal.

 

Deutsche Bank said 820,000 UK mortgages were due to be reset in the second half of this year at a rate now likely to be 1.4 percentage points higher, entailing an average 7pc cut in disposable income for borrowers.

 

German bonds, which set the rate for almost all German property deals, rose to 4.67pc, with lockstep rises across Europe's bond markets.

 

The iTraxx Crossover index of low-grade European corporate bonds saw a roller-coaster day as spreads briefly spiked to 215 basis points, up from 190 in early June.

 

Tim Bond, an economist at Barclays Capital, said firms could soon find it much harder to borrow cheaply. "To me, credit spreads are the shoe that hasn't dropped yet. I think it's immensely bearish for credit markets."

 

Julien Garrel, chief investment strategist at Legal & General, said the 65 basis point jump in yields on global bonds over the past month is the most dramatic rise since 1994, an episode that triggered the Tequila debt crisis in Mexico and caused havoc in China. "Bond yields have broken out of their 20-year downward channel so this is a momentous occasion. You don't get movements like this without something happening. We're already seeing the shares of real estate companies in Europe and Japan being shattered. But my guess is that Eastern Europe is where things could go wrong."

 

The latest jitters came after warnings by former Federal Reserve chief Alan Greenspan that the era of easy money was coming to an end, with nasty implications for emerging markets where credit spreads have been compressed to wafer-thin levels. "It ain't going to continue that way. All the spreads are going to start to open up. So I'd suggest someone out there is not going to be as happy as we are today," he told mortgage bankers in New York.

 

The markets bounced back in US trading late yesterday, a sign that the once revered sage no longer packs quite the same punch. But few economists expect bond yields to fall back at a time when rising food and commodity prices risk setting off a global inflationary spiral.

 

For the rating agencies, Eastern Europe is now the epicentre of financial excess in this cycle, building up imbalances that surpass those of East Asia on the eve of the 1997 crisis. In Hungary, over 80pc of mortgages are now in being taken out is Swiss francs, while Latvians have even begun borrowing in yen, despite repeated warnings from the central banks of the two countries that this could turn ugly.

 

The region absorbed 60pc of the record $341bn of capital flows to emerging markets last year, according to fresh data from the Bank for International Settlements.

 

Fitch Ratings says the immediate risk is Latvia, which has a current account deficit of 21pc of GDP and short-term external debt reaching 294pc of GDP.

 

"Cheap and plentiful capital flows have undoubtedly played a key role in fuelling the economic boom. This poses the question how well the region would cope in the event of a marked increase in risk aversion and liquidity tightening," said the Fitch report. That event looks ever nearer.

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My fingers are crossed and touching wood... my house sale should hopefully complete in around 3 weeks' time. Since around the time the sale was agreed, the market seems to have noticably slowed around here. 3 months ago places were selling within a couple of weeks - now stuff is lingering and the number of properties on the market drifting upwards.

 

I guess its too soon to tell for sure if I've caught the exact top of the market by a useful combination of luck and judgement, but lets just say I'm not regretting the decision at the moment!

 

I have started tracking the market in Banbury (where I'm moving to rent, and may potentially buy - eventually). I'm looking at Rightmove total number of properties on sale / properties added in last 7 days, and number of price reductions on propertysnake.co.uk. I'm hoping over the next few weeks and months that this will confirm that a slowdown is indeed taking place (at the very least). I don't have any intention of rushing back in to buy at the first hint of price reductions - it's more that I can then comfortably keep most of my STR fund in risk-free savings if I'm satisfied that the housing market is moving in the right direction.

 

You may like to check out the house price forum on the FT website for hilarious outbursts of illogical denial from some prize numpty property permabulls. The FT should really archive that forum and publish it in due course as prime evidence of the psychology of speculative bubbles!

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I have started tracking the market in Banbury (where I'm moving to rent, and may potentially buy - eventually).

 

i like those Banbury homes on the canal.

Great place to be, if you like canalboats (an interest of mine- one day i'd like to tinker with putting solar on one)

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Funny you should mention that Bubb, I am looking for one at the moment. Was up at the Whilton marina yesterday where they have hundreds but a little over priced.

 

Hopefully see this one at the weekend

http://www.apolloduck.com/feature.phtml?id=60789

 

A chum of mine used to live on a canal boat and still follows the market. His view is that they have become over-priced, in part because they are influenced by house prices.

 

He also raves about dutch barges, which have a broader beam than narrow boats. That means standard kitchens and furniture can be used when they are fitted out, and they have much more liveable internal space. The downside is that the number of UK navigations they can be used on is very restricted.

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A chum of mine used to live on a canal boat and still follows the market. His view is that they have become over-priced, in part because they are influenced by house prices.

 

He also raves about dutch barges, which have a broader beam than narrow boats. That means standard kitchens and furniture can be used when they are fitted out, and they have much more liveable internal space. The downside is that the number of UK navigations they can be used on is very restricted.

 

i have a friend - a carpenter- who wants to buy one and fix it up.

I am considering backing him in this, as he has very little money.

but may not be around for the whole tenor of the project, so I am looking for a partner in this...

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I was in Leeds a couple of weeks ago and saw bridgewater place, which is now the tallest building in Yorkshire, 200 flats and 400 car parking spaces, they are now building the Lumiere towers which will be the tallest residential building in Europe. Wiki says

 

The building, due to be complete by 2009, could potentially become the tallest building in the United Kingdom outside London, a whole two metres taller than the current tallest building, Beetham Tower, Manchester. However, Manchester has already confirmed the construction of an even taller tower in the form of Inacity's Eastgate Tower, which at 188m would be taller than Lumiere).

 

This is all happening whilst the existing masses of flats which have been built are not reselling at all. There was one posted on HPC which originally sold for £220k and went to auction with a reserve of £110k and didn't sell and some are being advertised at 2002 prices.

 

I believe there is a correlation between the skyscrapers being built and the housing index. Wasn’t the empire state building though planned during the 20’s boom only finished during the great depression?

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I was in Leeds a couple of weeks ago and saw bridgewater place, which is now the tallest building in Yorkshire, 200 flats and 400 car parking spaces, ...

This is all happening whilst the existing masses of flats which have been built are not reselling at all. There was one posted on HPC which originally sold for £220k and went to auction with a reserve of £110k and didn't sell and some are being advertised at 2002 prices.

 

I believe there is a correlation between the skyscrapers being built and the housing index. Wasn’t the empire state building though planned during the 20’s boom only finished during the great depression?

 

good point.

The builder/developers can still make money preselling to fools (who disguised EA's like Inside Track drum up).

But those who have bought, are gradually realising that they have been totally stuffed. Once the word gets around,

the offplan buying will dry up, and those skyscrapers will be left half-sold... and a glut on the market for years to come

 

Yes, there's a thread about the skycraper index somewhere. I will try to find the link and post it here

 

= =

later: here's the link, with a focus on shanghai:

http://www.greenenergyinvestors.com/index.php?showtopic=124

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Banbury itself or one of the villages? I can give you a list of some of the best villages, they are absolutely beautiful

 

The Banbury Guardian is inundated with rentals, haggle hard!

 

It's a little awkward as my GF needs to get the train to work (Oxford). The village properties are much nicer and better value, but practicalities might force us to stick to the town (Cherwell Heights / New Grimsbury). Would still be interested to hear any recommendations though - we haven't ruled anything out yet.

 

The good value places are getting snapped up quickly, but others seem to be languishing on the market. Loads of 2-bed "executive apts" but needless to say we don't want one of them! It's as if you can tell which are the old landlords and which are the johnny-come-lately struggling-to-cover-the-mortgage types, based on the type of property and the rent they're asking. Purely speculation, but it does seem that some are clearly better value and I'm guessing this is why.

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http://business.guardian.co.uk/economy/sto...2105535,00.html

 

Selected quotes:

 

Anyone taking out a fixed-rate mortgage in the second half of the year will feel the impact of the recent sharp rise in yields around the world. They hit nine-year highs in Britain last week and five-year highs in the United States.

 

Along with the Bank of England's series of interest rate rises over the past nine months, this will really put the squeeze on the housing market.

 

...crash unlikely with strong economy etc etc (i.e usual disclaimer)...

 

Indeed, there are already signs that the housing market is slowing, even in London, which has boomed because of City bonuses and an influx of foreign money. Prime London real estate has jumped 32% in the past year, and it is not as if it was cheap to start off with.

 

But outside Belgravia and Chelsea, things are starting to cool. The latest survey from Rightmove, out this morning, reveals that asking prices in half of London's boroughs actually fell last month.

 

Unreliable evidence, but interesting.

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I had read elsewhere, but cannot find the link, that house sales in the UK were falling, but this news item by the VI's best friend the BBC would seem to disprove it. People in Britain must be so rich, such a great miracle economy, it's both astonishing and shocking. Good job prices are only going up by 11% this year, at least that's keeping up with real inflation.

 

"The number of properties being sold in England, Wales and Northern Ireland has reached its highest level since the property boom of the late 1980s.

 

Figures from HM Revenue and Customs (HMRC) show that 1,859,000 flats and houses were sold in 2006-07."

 

http://news.bbc.co.uk/1/hi/business/6227666.stm

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I had read elsewhere, but cannot find the link, that house sales in the UK were falling, but this news item by the VI's best friend the BBC would seem to disprove it. People in Britain must be so rich, such a great miracle economy, it's both astonishing and shocking. Good job prices are only going up by 11% this year, at least that's keeping up with real inflation.

 

To be fair to the Beeb, the Ceefax version of that story had the "crash" word in it. There was a very strong hint in the way it was written.

 

BBC Breakfast News today had a feature on an OFT investigation into housebuilding. The word "bubble" was mentioned (in the future tense).

 

Allied to private equity getting a (IMO well deserved) roasting in the press with regards to tax, the conspiratorial side of my nature wonders whether fall guys are being set up. Also, just as Brown becomes PM. Obviously there is no hard evidence, but it is an interesting thought.

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To be fair to the Beeb, the Ceefax version of that story had the "crash" word in it. There was a very strong hint in the way it was written.

 

BBC Breakfast News today had a feature on an OFT investigation into housebuilding. The word "bubble" was mentioned (in the future tense).

 

Allied to private equity getting a (IMO well deserved) roasting in the press with regards to tax, the conspiratorial side of my nature wonders whether fall guys are being set up. Also, just as Brown becomes PM. Obviously there is no hard evidence, but it is an interesting thought.

Here is the link B)

 

http://news.bbc.co.uk/1/hi/business/6229194.stm

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For the past decade - as far as property owners are concerned - all has been sunny.

 

On Tuesday, the Office of National Statistics (ONS) said that UK house prices had risen by 204% in the past decade compared with a 94% increase in average wages.

 

In the past year alone, prices according to both Halifax and Nationwide have risen by about 10%, way above most analyst forecasts.

 

 

In the past 10 years a global bubble in house prices has developed and it is now bursting

 

Jonathan Davis, chartered financial planner

 

 

How majority of UK towns are now unaffordable

 

Global bubble?

 

But there is a doomsday scenario; if you are a homeowner with a large mortgage that could well be beginning to play itself out.

 

Some suggest the long-predicted crash could finally be on the cards.

 

"In the past 10 years a global bubble in house prices has developed and it is now bursting," says Jonathan Davis, a chartered financial planner and spokesman for website housepricecrash.co.uk.

 

"In the US, we see a credit crunch as lenders restrict the money they lend to mortgage borrowers.

 

"If lines of credit are closed off people are not able to afford high house prices. This ultimately leads to falling demand and falling prices.

 

"The result? Prices are falling faster in the US than at anytime in history.

 

"This is already slowing US growth and will inevitably hit the UK as well. When the US catches a cold we tend to catch one as well," Mr Davis adds.

 

Credit crunch

 

At the root of Mr Davis's view that the US is experiencing a credit crunch is the crisis in the sub-prime lending market.

 

...more: http://news.bbc.co.uk/1/hi/business/6549299.stm

======

 

sensible chap, that jonathan davis

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  • 3 weeks later...

i think we are now PAST the tipping point

 

The Builders bellwether is now forecasting a 5-10% drop in UK house prices:

http://www.housepricecrash.co.uk/forum/ind...90&start=90

= =

 

Tomorrows Mortgage Front Pages, FT, Mail & Independent

HEADLINES- is this the sign that the market is waking up??

http://www.housepricecrash.co.uk/forum/ind...=50992&st=0

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Would I have been better of buying?

 

I moved to my present rented house two years ago in October 2005. I had orginally gone to view the house with the purpose of possibly buying it.

 

It was for sale for $400k in March of 2005. I thought it too much so left it. 3 months later it was reduced to 375k but also up for rent at £1400. Compared to the rent I was paying I also decided that was too much. Some 6 weeks later I saw the rent had been reduced to £1000 a month. So decided to go for the rental.

 

Now the house is back up for sale. Landlord needs cash to help pay for the house he moved to. I suspect the the rate hikes are hurting. Normally this would be a pain. Lovely house, lovely area etc etc but it so happens my plans have changed and I need to move anyway. But yes in any other circumstances it could have been a pain

 

So how much would it have cost to buy the house say at £375k including fees and mortgage payments two years ago compared to renting (asume he gets the full 400K asking, which I doubt he will)?

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So how much would it have cost to buy the house say at £375k including fees and mortgage payments two years ago compared to renting (asume he gets the full 400K asking, which I doubt he will)?

 

Sounds like he has been subsidising the renting for two years,

and is now trying to claw back his losses.

 

You might consider paying what would cost you the same as renting: Pds.250,000 ??

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(from HPC)

 

Some of the riverside flats in Sheffield must surely have been affected.

 

CIMG4109.JPG

 

River- "side"?? / More like: Mid-stream

 

BTS? ... = Buy-to-Swim?

 

= = OT:

 

I will add this chart to the header

bubblepsychologyck8.jpg

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