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18 Year property cycle - using it as a Timing tool


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hmm

 

one of the few with a vested interest worth listening to

 

still cant see where the money is coming from - deposits needed, people realising property doesnt always go up, job losses juts getting started - still at least 2 years from bottom methinks - unless quantative easing starts reaching wages

 

oh dear - if this gets passed Gordon will be angry

 

 

link

 

Mortgages to be capped at three times salary

 

08:03 | 16.03.09

 

Home buyers will be prevented from borrowing more than three times their annual salaries under new mortgage rules to be announced this week.

 

As part of a wide-ranging package of measures for banking regulation, Lord Turner, the chairman of the Financial Services Authority, will also declare a ban on 100% mortgages.

 

In all but the most exceptional circumstances, it will become 'normal practice' for loans to be limited to a maximum of three times the borrower’s salary.

 

Prospective home owners will have to provide a deposit of at least 5%, with many banks and building societies expected to ask for even larger amounts.

 

The move is in response to Gordon Brown’s request last month that the FSA look into banning risky mortgage lending.

 

Daily Telegraph

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... still at least 2 years from bottom methinks - unless quantative easing starts reaching wages

 

I agree with you.

But I am expecting a brief bounce (of a few months) driven by a temporay drop in interest rates,

and some over-enthusiastic ramping by those with Vested Interests

 

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House building 'to hit 88-year low'

6 days ago

 

The number of new homes being built in England looks set to slump to an 88-year low during the coming financial year, a national body warned.

 

The National Housing Federation expects just 70,000 homes to be completed during 2009/10 - around half the 140,000 properties that will be built this year.

 

The group said the figure was the lowest since 1921, with the exception of the years during the Second World War.

 

Around two-thirds of the homes being completed will be built by housing associations, as struggling private builders mothball developments across the country until the market picks up.

 

The combination of the recession and the credit crunch make it look increasingly unlikely that the Government's target of building three million new homes by 2020 will be met.

 

The Government wants 240,000 new properties to be built every year by 2016, but building levels are currently falling rather than rising.

 

The Federation is calling on the Government to introduce a housebuilding fiscal stimulus package, under which it would fund the building of 100,000 affordable homes during the coming two years, at a cost of around £6.3 billion.

 

The group said building the homes would boost the economy, save thousands of construction jobs and help stimulate long-term market stability. It added that with waiting lists for affordable housing expected to hit five million next year, the current decline in the overall number of new homes being built could plunge the country into a deep housing crisis.

 

Ruth Davison, director of the National Housing Federation, said: "After years of boom, the housebuilding industry is lurching towards bust - with a very real possibility that the number of new homes built in 2009/10 could slump to the lowest level since the 1920s."

 

A Communities and Local Government spokesman said: "We are taking action to help keep up our £8 billion affordable housing programme in the current climate with a range of measures including buying unsold stock, bringing forward our investment in new social housing, expanding our shared equity schemes, and supporting councils who want to build more homes. We are constantly looking at what more we can do to overcome present difficulties in the housing market."

 

/see: http://www.architectureweek.com/cgi-bin/wl...Bi7nNDABfY7Eonw

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Mortgages to be capped at three times salary sounds like a big deal to me, assuming it actually happens.

 

Average house prices to drop below £85k? (Average salary of, say, £25k, multiplied by three and add a generous £10k deposit.)

 

I think the average house price to average wages is the best indicator of house price levels.

But I don't think it is correct to assume that the average wage earner buys the average house.

 

Low wage earners don't buy low priced houses they simply don't buy houses.

And (Sorry no link) - there was an press release recently by, i think, halifax saying that the average wage of people who got mortgages from them was significantly higher than the national average wage.

 

 

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I think the average house price to average wages is the best indicator of house price levels.

But I don't think it is correct to assume that the average wage earner buys the average house.

 

Low wage earners don't buy low priced houses they simply don't buy houses.

And (Sorry no link) - there was an press release recently by, i think, halifax saying that the average wage of people who got mortgages from them was significantly higher than the national average wage.

 

Aww, shucks... Why did you wake me? I was having such a lovely dream! :D

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Aww, shucks... Why did you wake me? I was having such a lovely dream! :D

 

I actually think that average prices will bottom around the 85k level

 

I posted this before, IMO - 55% of peak isn't out of the question:

http://www.greenenergyinvestors.com/index....ost&p=93501

 

Halifax peaked around 200k, nationwide around 190k

so average prices of approx 85k doesn't seems too bad to me.

 

I believe the 3X average wage + deposit *should* be the steady state of "starter houses" - but we will see an undershoot at the bottom.

 

Or pinch me, cos I'm dreaming too -_-

 

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  • 4 years later...

In an parallel attempt to decipher the cyclical influences I have put the Nationwide Quarterly data

on a Logarithmic scale, so it is easier to see dips in a long term context.

 

hpilogju1.jpg

Raw Data source: http://www.nationwide.co.uk/HPI/downloads/..._since_1952.xls

 

Over this period (1952 to 2008) Prices rose from Pds.1,891 to a Pds.184,131 peak in Q3.2007.

The latest price for Nationwide "All Houses (UK)" was Pds.174,514 for Q2.2008

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