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UK Property - The former HPC addicts' thread

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Scenario: As a medium term measure (eg 3-5 yrs), buy flat with cash in NW London now, or rent (using some of the interest) for the forseeable future? My gut says wait, despite the pressure to do otherwise.


my view is in complete agreement with that

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IMMIGRATION has been, well "helpful" for the market



More than 320,000 arrived in Britain from new EU states



LONDON (Thomson Financial) - More than 320,000 people from new EU members Cyprus, Malta and eight eastern European countries arrived in Britain in the last year, up 16 percent on the previous year, official figures showed Tuesday.


Some 321,000 migrants from the 10 countries admitted to the European Union

in 2004 were registered with national insurance numbers in 2006/2007, up 44,000

over the previous year. Poland accounted for 223,000 of the total.


In its biggest-ever expansion, the European Union admitted in May 2004 the

Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,

Slovakia and Slovenia.


The figures from the Department for Work and Pensions were higher than the

Home Office (interior ministry) data published in May, which showed that only

245,675 people from the 10 countries had arrived in Britain.


The Home Office figures exclude people coming to Britain to be self-employed

or as dependents. People must apply for a national insurance (NI) number to

work, even if self-employed, and to claim benefits and tax credits.


Damian Green, the opposition Conservative spokesman on immigration, sounded

the alarm.


"These extraordinary figures show that over two million new foreign workers

have come to Britain in the last four years -- and this is simply the number for

those who are working legally," he said.


= =


Will they keep coming if the UK slides into recession?

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And how long do they want to stay anyway? I imagine a fair proportion want the experience and preceived financial benefit of the UK at the moment, while they are young, but will take that back to their own countries. This might be the case especially in the case of countries like Poland which appear to be developing strong modern economies of their own.

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And how long do they want to stay anyway? I imagine a fair proportion want the experience and preceived financial benefit of the UK at the moment, while they are young, but will take that back to their own countries. This might be the case especially in the case of countries like Poland which appear to be developing strong modern economies of their own.


I have been lucky enough to have a Polish girlfriend for a while this year and have met a lot of Polish people. The general consensus amongst them is that they will stay for an average of two to three years. I'd say as a straw pole (ahem), that no more than 10 to 15 percent were considering settling here.


On another note, did anyone see or hear the stories in the mejah about houses in the flood-effected areas of England losing up to a third of their value? BBC Radio 1 had stories from Yorkshire etc where people were saying that the interest in buying their houses had just dried up (ahem ahem).

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A 1/3 drop? That might push some indices lower...

= = =


The Sunday Times is already heralding a downturn



Times: At last, good news for buyers


After three years of jaw-dropping growth, the frenzy is finally over and house prices are cooling–which will come as a relief to those on the hunt for a new home


Like summer itself, the property market lately has proved a flop. Pretty terraced houses that would have been snapped up in the spring sunshine languish on the market. There is a forest of "for sale" boards up, but few that say "sold"; and many people who rushed to sell their homes in late May and June, to avoid paying for a home information pack (they finally become a reality for four-bedroom homes on Wednesday), have yet to get a nibble.


Even estate-agent speak is changing. The talk now is of "repositioning" – cutting the price – and they are chasing "offers in the region of", not "offers over". But there is one group of people for whom none of this is bad news: indeed, they're overjoyed.


"We've entered a buyer's market," says Lucian Cook, director of residential research at Savills, the nationwide estate agency. "It is a turnaround since the beginning of the year: three months ago, it was definitely a seller's market. The average homeowner is going to have to take a more realistic look at the market this summer."


@: http://property.timesonline.co.uk/tol/life...icle2144647.ece

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The OLYMPIC CURSE- have you heard this before??


A London estate agent is blaming what he calls the “Olympic curse” for a fall in buying interest in areas where the Games will be held in 2012. “When London won the Olympics, there was a real buzz about east London as a property hot spot,” says Shane Jackson, sales director of Atkinson McLeod. But potential buyers have dried up, possibly because “in people’s minds, east London is going to be one gigantic building site for the next five years”.


@: http://property.timesonline.co.uk/tol/life...icle2103238.ece

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An invitation to the Bulls: "Get Real!"

Admit the turn has happened- the slide has begun



(as posted on S-P-, a predominantly Bullish website):


When will the SP bulls admit the market has turned?


It should be fairly obvious by now, that the UK Property market (as a whole) peaked and turned down almost exactly at the end of June 2007.


The official indices do not yet show it, but we all now they report sales and price levels after a lag of many weeks, and evn months. The press sentiment is turning clearly Bearish, and the buyers are going on strike.


Isnt it time to admit it? And then the discussion here can move onto another plane to discuss:


+ How long might the downturn last?


+ How deep a fall might it be?


+ What exit strategies still make sense?


+ For those that want to hang-on through what might be a severe correction, what actions can be taken to limit the pain?


DENIAL will only make the pain more severe, and the hemoraging worse. Isnt it better to admit the turn has happened, and move on?



HPC- : http://www.housepricecrash.co.uk/forum/ind...showtopic=52265

GHPC: http://forum.globalhousepricecrash.com/ind...showtopic=21196

SP--- : http://www.singingpig.co.uk/forums/thread/314563.aspx

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"I think it is time to you stoped [sic] being negative and its [sic] time to post something positive and contructive if you carnt [sic] do that im [sic] sure there [sic] plenty of other forums for you to post on which have a subject which you feel less negative about."


:lol: (at the content of his post) :rolleyes: (at his spelling and grammar).

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On another note, did anyone see or hear the stories in the mejah about houses in the flood-effected areas of England losing up to a third of their value? BBC Radio 1 had stories from Yorkshire etc where people were saying that the interest in buying their houses had just dried up (ahem ahem).


This is perfectly logical. These houses will now be either uninsurable against flood risks or the premium will be very big.


Mortgage lenders require buildings cover and if insurance is unavailable, then the only market for some of these houses will be cash buyers.

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This is perfectly logical. These houses will now be either uninsurable against flood risks or the premium will be very big.


Mortgage lenders require buildings cover and if insurance is unavailable, then the only market for some of these houses will be cash buyers.


Absolutely. They would be literally up s**t creek.

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This graph is from Jan 2007 for London, and we all know as the VIs tell us London leads the way, as you can see the banks going to court for repossessions back then was 70,000, the peak in 1991 was 95,000, heavens knows what the number is now, its bad, its very bad, someone somewhere knows the iceberg is around the corner and they are keep stum, my betting is its passed the 1991 figures, the courts can only hold of the dogs for so long before the repossession orders match the court cases


@: http://www.housepricecrash.co.uk/forum/ind...showtopic=52575

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According to the National Housing Federation, average English house prices will top 300,000k in 5 years. I wouldn't write any possibility off, but I don't see where the cash is going to come from to make this happen, even if the economy continues to do ok. Views?



This is a transparent RAMP job, in the face of falling demand, and the shift to a buyers market.

No doubt, the story was placed by those with vested interests


"The National Housing Federation report, which was prepared by Oxford Economics, says that a slowdown will soon lift, with the average price of a UK home to reach £302,400, and £478,300 for London. House prices, it says, have risen more than four times faster than incomes since 1997. David Orr, chief executive of the federation, said: “Continuing house price rises and the resulting housing crisis are set to stay with us for a long time.” "


(er, ha. Why? There are signs of a turn already)


The problem will be most acute in London, where the gap between house prices and average earnings is already greatest. The average house price – £338,950, according to Land Registry – is almost 14 times the average salary of £24,445. Mr Orr said: “Fuelled by City hyperactivity and cash-rich foreign investors, swathes of the London housing market are becoming decoupled from the rest of the country.”


(Signs of the private equity and hedge fund boom peaking out are also apparent.)


About 700,000 people in London are on the waiting list for social housing, 57 per cent more than five years ago. The federation says that the Prime Minister’s recently announced goal of three million new homes by 2020 is not enough. The number of new households formed by then will be 3.9 million.


(Okay. So is it those at the bottom, awaiting the social housing handouts. Or the rich?)


The influx of foreign residents has put the most pressure on London – a situation that is likely to worsen with the 2012 Olympics. The estate agents Savills estimates that London is home to 16.7 per cent of Europe’s super-rich.


(And, hasnt it occurred to the writer that this si cyclical too?)


Typical media hype garbage

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Thanks DrB. I don't know much about them, but this is who they say they are:


'The National Housing Federation represents 1300 independent, not-for-profit housing associations in England and is the voice of affordable housing. Our members provide two million affordable homes for five million people.'


They appear to be at the more socially responsible end of the housing economy. I haven't been able to access the full report yet (at their website), and so don't know if it includes more bearish analysis. The press may have quoted selectively.


This is their website: http://www.housing.org.uk/default.aspx

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"U.K.'s Subprime Crisis May Be Worse Than U.S.'s: Matthew Lynn

2007-08-07 19:17 (New York)


- - - - -

the ratio of household

debt to personal income is 1.62 in the U.K., compared with 1.42

in the U.S., 1.36 in Japan and 1.09 in Germany

- - - - -


Commentary by Matthew Lynn

Aug. 8 (Bloomberg) -- We are now all familiar with the damage that can be done to financial markets by a subprime lending crisis. Global equity markets have taken a battering recently because of concerns about U.S. home mortgages. So which country is next?


The U.K. has had a property bubble every bit as crazy as the U.S.'s. Valuations were stretched, and lending criteria loosened. And now arrears are starting to rocket, even while the economy remains healthy. Not only does the U.K. face its own subprime crisis, it could be far worse than in the U.S. The latest figures on debts and mortgage arrears in the U.K. certainly make grim reading. Households ``are getting into more trouble when it comes to their mortgages,'' London-based consulting firm Capital Economics Ltd. said in a note to investors. ``With higher interest rates yet to have their full effect, mortgage arrears are likely to rise further, while unsecured bad debt might start to rise again too.''


The signs of trouble ahead can be seen in the number of homes now being repossessed because their owners can't keep up the payments. According to the Council of Mortgage Lenders, lenders foreclosed on 14,000 properties in the first six months of the year, 30 percent more than in the year-earlier period. That reflected ``the impact of an increasing amount of subprime lending within the overall market,'' the council said in a statement on the figures.


Britons in Debt


Arrears aren't in great shape either. An estimated 125,100 households are behind with their mortgage payments, about 1 percent of the total, according to the council. Home owners behind with the payments will have their homes repossessed a few months down the line, unless their finances improve. The wider picture of indebtedness isn't much more comforting. The British are deeper in the red than any other major economy. According to data from the National Institute of Economic and Social Research in London, the ratio of household debt to personal income is 1.62 in the U.K., compared with 1.42 in the U.S., 1.36 in Japan and 1.09 in Germany. The U.K. is now facing a subprime crisis on a similar scale to the U.S. As anyone who has taken out a mortgage in Britain will know, banks shovel out money without asking many questions. A review by the U.K.'s Financial Services Authority last month criticized reckless lending in the subprime sector, which has, it said, ``resulted in the approval of potentially unaffordable mortgages.''


No Proof of Income


The British market doesn't fall neatly into ``prime'' and``subprime'' categories. Most of the mainstream lenders offer so-called self-certified mortgages, which require no proof of income. Plenty of prime borrowers -- meaning people who haven't defaulted on a loan yet -- are likely to take out mortgages that will be hard to make the payments on.


The U.K. subprime crisis may be a lot nastier than the U.S one. Here's why. First, despite the mounting evidence that people can't afford them, house prices continue to soar. The National Housing Federation predicted this week that British house prices will rise 40 percent in the next five years, taking the average value of a home to 302,400 pounds ($618,000) by 2012. The average British home already costs 11 times the average local salary, and that figure continues to increase. It is driven mainly by the U.K.'s small geographic size, high levels of immigration, and very low levels of house building. People have to live somewhere -- a home, after all, isn't an optional item for most of us. The net result is that even as payment problems mount, people will carry on taking out bigger mortgages. What choice do they have?


Rate Differences


Next, U.S. interest rates may have reached their peak and could soon fall. In the U.K., that isn't the case. The Bank of England is likely to raise borrowing costs at least once more to 6 percent. If the housing market and general inflation don't show any sign of responding to that treatment, interest rates could go higher still. That won't help borrowers already hard-pressed to make their payments.


There should be two self-correcting mechanisms for fixing a subprime crisis in the housing market. House prices should gently fall, making properties more affordable, and reducing the size of loans. And interest rates should stabilize or fall, making the payments on those loans easier to maintain. Neither seems to apply in the U.K. Instead, interest rates are rising and so are house prices. The result is that thousands of families are left in a vulnerable position -- and so are the banks that have lent them money (not to mention the investors who have bought those loans as they have been sold on).


Just Walk Away


While the property market rises, everyone will be safe. If your house is worth more than your mortgage, you will be desperate to hold on to it. If you get into trouble, you can always sell it, repay the loan, and move somewhere cheaper. Yet, as the U.S. has discovered, if house prices start to fall, that arithmetic changes. If you are in trouble with your mortgage, you can't pay it off by selling. There is little incentive to keep up the payments. Why not just walk away, and hand the keys and the problems over to the mortgage company? Britain hasn't reached that point yet. But if it does, the mess could be even worse than in the U.S."


@: http://www.housepricecrash.co.uk/forum/ind...showtopic=52776

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People who think US problems will NOT spread to the UK are just kidding themselves


+ The UK cycle bottomed about two years after the US cycle, so a later peak is to be expected




+ UK Builders peaked in Dec.2006, 17 months after the peak in the US Builders




+ The pattern in both countries followed rate movements, with rates in the UK pushing up later


+ We are now in the time frame (summer 2007) where HPI indices would be expected to peak


+ All the same problems exist in the UK, although the names (of lending instruments) and definitions

are a bit different


+ Valuations in London are more stretched than they were anywhere in the UK


Homeowners are in mass denial, because they want to believe their fantasy that the UK is different.

Don't fall for the garbage (incomplete) reports on the mainstream media.

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Even my uber-bull former next door neighbour who works for an EA in Balham says the market is dead. Not quiet. Dead.


1 viewing last Sat and they cancelled.


She says it's partly the time of year and partly because things had to level off.


Will she be proved right? Or is this it?

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It's the Video that did it- launched last weekend. (just kidding)


When agreed transactions start fall through, then it will be really the end.

Watching one or two of those now

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  • 3 weeks later...

I am not the only one who suggests: SELL NOW...


" What the heck is wrong with these people? A lifetime as a peasant (possibly only to get repossessed anyway) in exchange for a bank-owned home? Rent, rent, rent."


Shows the amazing power of a widely-believed dream - A bubble-forming mania.

But when they burst, they tend to fade rather fast, as the US is showing.



= =



From an article, entitled:

UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth


Northern Rock/ NRK chart



"For an example of the credit crunches impact on the UK mortgage banking sector , we need look no further than at Northern Rock. The mortgage banks stock price has fallen from recent highs of ?2.58 to recent lows of just ?.20, a drop of more than 50%. Trading on a PE of just 7.5 and a yield of 4% may now make the stock seem enticing, but the mark down is in anticipation of the much higher risk of mortgage defaults and repossessions in the UK as the housing market starts to nose dive. These repossessions (foreclosures) are already hitting the likes of northern rock with expectations of a tripling in the rate over the next 6 months as compared with the same period last year. This surge in repossessions will impact the earnings of the UK Mortgage banks as they make every larger bad debt provisions and issue profit warnings."

. . .

"UK home repossessions continue to soar this year and are forecast to total as much as 34,000 by year end, which is double the number of 2006 of 17,000. Going into 2008 we could be seeing repossession not seen since the last housing bust of the early 1990's. The mortgage banks such as Northern Rock are being hit hard, which reported a doubling in the rate of repossessions. The impact of this will mean even tighter borrowing requirements and a similar squeeze on house prices led by sub primers as has occurred in the US. Where expectations are extremely tight credit for those with poor credit histories."


What to Do ?

1. Home Owners - If you are thinking of selling your home then the time to act is now ! Waiting whilst the credit crunch continues to tighten is a big mistake, especially given the fact that further sharp falls are in the financial markets are just around the corner.


2. Cash - Invest in Fixed Interest Bonds issued by large strong banks , avoid issues from mortgage banks such as Northern Rock. Keep in mind that In the UK savers have protection at 90% of holdings of the first 35k of investments in fixed bonds and savings accounts so bare that limit in mind. Also ensure you have used up your Tax Free ISA allowances.


3. Government Bonds - Invest in Government Bonds, be prepared to hold to maturity so as to reduce risk of market volatility.


4. Government Certificates - Invest in national Savings Certificates such as the and Index Linked Tax Free Certificates, which are an excellent vehicle for higher rate tax payers.


5. A Stock Market Crash or Slump Would be A Buying Opportunity. The stock market is expected to be volatile since we are moving into a new risk climate. Despite a high probability of further sharp falls, and even a crash, there are plenty of long-term plays out there especially in the big cap oil sector. I would also look at bargain hunting metals and mining on further sharp falls or a crash. Similarly for the utilities sectors such as Water. The best plays are probably via investment trusts, of which there are many. I favor investment trusts over unit trusts as they are traded on the stock exchanges exactly as any stock is. Whereas, as I recall in previous financial crisis you may find the phone off the hook on the other end of the line when you try to call to buy or sell unit trust positions.


6. Emerging Markets - I would avoid china, the market is not pricing in risk and is primed for a crash. India and Russia look enticing especially on any sharp falls in sympathy to global market sell offs.


Whatever you do, remember that today's Idyllic pleasant picture in the UK is very shortly in for a rude awakening, much as the US home owners are experiencing in increasing numbers. The bull market in housing is over for now, better to realize this now whilst you have the opportunity to do something about it rather than be forced into a decision later on.


Related: http://www.marketoracle.co.uk/Category36-All.html

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An overview of the European housing market....



Overheating sees house price downturn in Europe

Last Updated: 1:07am BST 27/08/2007


House prices in the overheated markets in Europe have begun a downturn , writes Ambrose Evans-Pritchard


House prices on the overheated fringes of Europe have begun to turn down sharply, replicating the early phase of the sub-prime property slide in the United States.


Housing booms in Romania, Bulgaria, Croatia, and even Russia are all looking stretched to extremes


Irish property has fallen for the past four months in a row as higher eurozone interest rates start to bite harder, while the speculative bubble in the Baltic states has burst.


House prices in the greater Riga region of Latvia fell 3.5pc in June, following a 1pc fall in May. Flats in the old city became more expensive than Berlin by early this year in a speculative frenzy, much of it with euro, Swiss franc, and yen mortgages that could prove disastrous if Latvia's currency is suddenly devalued - as may well happen, given the country's current account deficit has exploded to 26pc of GDP.


Similar booms in Romania, Bulgaria, Croatia, and even Russia are all looking stretched to extremes. Danske Bank has warned that much of Eastern Europe has been inflated by a "monster bubble" that recalls conditions in east Asia shortly before the crisis broke in 1997.


In Ireland, house prices dropped 2.6pc in first six months of the year to June, with falls of 3.3pc in Dublin. The slowdown is rapidly spilling across into building. House registrations are down 34pc over the first half. Roughly 15pc of housing stock lies empty, according to the Irish census.


Jean-Michel Six, chief Europe economist for Standard & Poor's, said extreme levels of household debt across large parts of Europe left the region vulnerable to tightening credit conditions. Debt levels are above 100pc of GDP in Ireland, Britain, Spain, the Netherlands, and Denmark.


"Spain is heading south. Local real estate companies have reported price falls on a quarter-to-quarter basis in Madrid and several other provinces," he said.


French property prices fell 1.5pc in July - though they were still up 5pc over the year. "House price inflation could turn negative in the second half of this year," he said, adding that proposals by President Nicolas Sarkozy to allow new buyers to offset part of their interest costs against tax would help support the market.


"The spate of interest rate rises by central banks is exacting its toll on disposable incomes already weighed by rising household indebtedness," he said. The European Central Bank has doubled rates from 2pc in December 2005 to 4pc.


The recent turmoil has pushed up the effective rate of borrowing even further in some countries.

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update on my rented house that the landlord is trying to sell.


6 weeks now and not a single viewing, I kid you not. Landlord has now asked if we will stay and will reduce rent by a £100 a month to £900. House on the market for £400k, same as two years ago.


I should imagine the price will drop soon.


Ive noticed no decent family period houses here, around Banbury are selling.

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