.
Conf. Call #3: Topic : Are we about to see a Major Low in UK Housing ?

Description of Previous Call: "The Case for an early March Low in Stocks" (Held: 5. March, 2009)
GEI Conference call #2 examined the case for an early March low in stocks. Michael Hampton ("DrBubb") hosted, and gave his case for expecting a pullback in gold stocks and a near term low, followed by a big rally in global stock indices. Comparisons were drawn with lows in 1974-75, and the point of the "big breakout" in late 1996, when Fed chairman, Greenspan, threw caution to the winds, and lightened up regulations for banks, touching off a speculative boom which lasted a decade. The world will take a long time to clean up the mess from massive expansion of credit, a dotcom bubble, a housing bubble, and the resulting crash.

GEI members from around the globe contributed their comments and questions.

5th March 2009 Call LISTEN: http://globaledge.podbean.com/ (67 downloads at 25 March)
Charts for above : http://www.greenenergyinvestors.com/index.php?showtopic=6075

== == == == == == == == == == == == == == == == == == == == == == == == ==

::::
NEXT Call: April 3rd or 4th

3rd GEI Conference Call : The First week in April?

Topic: Are we about to see a Major Low in UK Housing ?

=============================================

Skype Forum POLL: http://forum.skype.com/index.php?showtopic=296891

Many investors and would-be FTB-ers have been hoping that they will see "The Low" soon, as lower rates, and government-mandated lending could make it easier for buyers to get the finance they want. Also, Builders stocks may soon show an upward break of the downtrend. These may signal a Low for some. But will it be "The Low", or just a dangerous dead act bounce?

Let's Talk about the reasons why this bounce is likely to be a "Fool's Rally."

Nationwide's Index of UK Housing, showing paek in October 2007


Ratio : UK Housing Index (Nationwide) to FTSE ...


Shall we discuss the prospects for a UK House Price Low, in the 3rd GEI conference call?

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..
Links to Threads on:
Call #1: http://www.greenenergyinvestors.com/index.php?showtopic=5973
Call #2: http://www.greenenergyinvestors.com/index.php?showtopic=6075

Clones:
HPC= :
GHPC : http://forum.globalhousepricecrash.com/ind...showtopic=48566

7.30 am suits me.

Do you see a low in UK housing coming soon?

Top Choices:
Next week Friday....: 7:30 am, London time, or
Next week Saturday: 9:30 am, London time,

I am hoping for a much larger participation, especially if we move it to Saturday.

Do I expect a low? Answer: I am expecting a decent bounce in UK Property, which will fool many people
into thinking that they are seeing the low. But I have several reasons for thinking that it would be a dangerous
"dead cat bounce", that could be very dangerous for one's wealth. Many will get sucked in, I fear.

=== CHARTS =====

C# 1 : UK House prices ran ahead of trend... again


C# 2 : Housing is a Cyclical market

/see: http://conservativehome.blogs.com/platform...-wadsworth.html

C# 3 : 18 year Cycles go back a long way


Peaks in Property
UK:
2007
1989 -18
1973 -16 (1948 +18= 1966, stretched by WW2)
1948 -25
USA:
1946 (2 years before the UK)
1926 -20
1905 -21
1887 -18
1871 -16



C# 4 : The Pattern show the 18 year Cycle peak is in place


C# 5 : The peak was preceeded by a top in Builder stocks 9 months earlier ... Spline's website


Most representative share price = Barratt Development (BDEV.L) ... update
xxx

C# 6 :
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.


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

Low Points:
L#1: Qx.1957 (- n/a -): 3.268 : Pds. 1,853
L#2: Q4.1968 (+56 q): 3.650 : Pds. 4,089
L#3: Q4.1981 (+52 q): 4.377 : Pds 31,557
L#4: Q4.1995 (+56 q): 4.707 : Pds 50,930
L#5: Q4.2008 (+52 q): 5.10E: Pds.126,000 (a fall of 31.6% from 184,131 high in Q3.2007)
L#6: Qx.2022 (+56 q):

Interestingly, this provides a different cycle (of 13-14 years between lows) and different future low points than Harrison's work.
The projected Low of Pds.126,000 in Q4.2008 is only a guess based on trendlines. The timing assumes 13 years (52 quarters) from the prior low of Q4.1995.

The important long term trendline is near Pds.170,000 in Q3.2008. That is less than a 10% fall from the Quarterly high, and has been broken already, I believe, if we used July prices.

It is possible that we may see an "early" low in 2010-11, a brief "inflationary bounce" as Catflap has described and then the 7-year mini-recession may come along with the 13-14 year cycle low that I have described here.

We will have to watch carefully what measures the government takes to prop up a rapidly deflating property bubble.


IMPORTANCE OF THE BUY-TO-LET BRIGADE

C# 7 : Winners Curse prices rises were driven by the BTL brigade, pushing yields below 4%

..
Different Ratios, based on different statistics?


C# 8 : Wise-up BTL-ers, it's over now

You boys (and girls) are losing cred every day

/see: http://ukhousebubble.blogspot.com/search/l...-income%20ratio

= = = = =


C# ? : YOU GOT IT WRONG, if you bet on a 16 year Cycle in the UK



C # ? : But later, using the Builder Bellwether Index, I nailed the top in July 2007



"Affordability is extremely stretched. Traditionally, it was FTBers who kept the property game alive. In the past, they would account for 25-30% of property purchases. But as prices rose out of sight, with an approximate 10% rise in the past 12 months, after almost tripling in the decade before, most potential FTBers can simply not afford the prices anymore. Their share of property purchases has now fallen below 10% of property sales. Meantime, investors and the super-rich have stepped in and bought with enthusiasm. And high-end properties favored by the super-rich have risen much more than middle tier and cheaper properties. Some observers estimate that top properties in areas like Kensington and Chelsea are up over 30% in a year.

Incomes have not kept pace...

Hometrack announced in the past few days that the number of properties on offer in London has suddenly jumped by 10.9 percent in June, as compared with May. That is the biggest single month rise since January 2005, when the big jump in supply triggered a pause of more than six months in the property market. Another indicator that I particularly like is the price of traded Builder shares. Normally, this will lead the market by perhaps six months. In the USA, the builders gave a great early warning (almost a year ahead) that the US property market was peaking. They may be doing something similar now in the UK. The average builder stock peaked around the turn of the year, and is now down about 25-30%.

A similar drop was a good warning in the US. This suggests that UK prices may be peaking out this summer, even in London, where the market had been so hot through the spring."

/see: http://www.financialsense.com/fsu/editorials/2007/0705.html

That's kind of what I'm thinking, as you will see with this morning's Money Morning. I'll post a link when it's up.

I had an old description of the last call, and changed it to this:

"Many investors and would-be FTB-ers have been hoping that they will see "The Low" soon, as lower rates, and government-mandated lending could make it easier for buyers to get the finance they want. Also, Builders stocks may soon show an upward break of the downtrend. These may signal a Low for some. But will it be "The Low", or just a dangerous dead act bounce?

Let's Talk about the reasons why this bounce is likely to be a "Fool's Rally."

Sorry about the confusion.

== == == == ==

THE US PROPERTY CYCLE - 18 1/3 Years

My chart from just off the Peak


As updated: Weekly Centex (CTX) ... Monthly update-since 1970 : Monthly-since 1992


Weekly Centex (CTX) ... Weekly-Last 5yrs :


Compare: UK's Barratt Developments (BDEV.L) ... update


Centex (CTX) ... Daily-Last 3years : Daily-Last 12 mos.


Historical Low - Late 2004

Centex Corp. / Friday, Nov. 25, 1994
Closing Price: 20.125 / Open: 20.375, Hi: 20.375, Lo: 20.125
Split Adjust.: $4.484 /

2009's Low :
Thursday, March 05, 2009
Closing Price: 5.47 / Open: 5.17, High: 5.57, Low: 5.03

Related, charts on US versus UK : a 17 month lag

== == ==
Kathy Fettke Podcast : Using More stable "Income properties" to beat cycles
My YouTube podcast : Nailing the 2007 high in the UK

Here you go:

http://www.moneyweek.com/investments/prope...hart-14664.aspx

I think we're singing off the same sheet

Hi Bubb/Frizzers,

Good article there Dom!

Couple of points i raised in my post a few weeks back:

http://www.greenenergyinvestors.com/index....amp;#entry98894

1) There is an affordability trap appeared as rents are falling but not as fast as house prices thus making them seem more affordable
2) We are entering the 6 month period where the bull trap occurred in the last UK housing crash
3) UK rental market is 'flooded' (bbc news's word) with homes that people don't want to sell and even a small change on the upside of property pricing would make the sales market equally flooded and precipitate the next downturn towards capitulation

Yes. In fact it was from your post that I got the idea of the last 91 bull trap. Thank you

Well done pyewackitt for your observation, I think you are spot on and great timely article Dominic. GEI is turning into a great place to be

Dr Bubb, re timing of the conference call, I think a Friday may be a good shot. I am based in Hong Kong and Saturday 9.30 am makes it 17.30 HK time. Am willing try that, but it generally is hard to plan a Saturday late afternoon. Anyway, let me know. The last conference call was very good, so I do not want to miss the next one.

By the way, I was wondering if it makes sense to show posts in reverse order, i.e. show the most recent one at the top (maybe after the "pinned" one which contains the agenda. When a topic gets a lot of posts (eg "Dr Bubb's Trading Diary") one needs to scroll several pages to get to the most recent posts. It seems more logical to show the most recent posts first. What do you think?

Excellent points, Pye.
I hope you can join the call. I want to put that "bull trap" idea together with my look at UK Builder charts

Here's top UK bellwether : Barratt Developments (BDEV) .... update


What could happen with Barratt : St.Joe -- (JOE) ... update


PIcking up a point from Dominic's article:

"I am detecting a certain amount of bullishness in the housing market of late. A number of people with cash are talking about "buying later this year", or "taking advantage of these low rates".

A gent I met at a drinks party at the weekend was very keen on a property in Kensington because it was down from £3 million to one and a half. Foreigners, we are told, are taking advantage of the falling pound to buy prime Central London property."

Even more, take into consideration the drop in Sterling (FXB) .. update
xx

So if you start with... and compare:

Peak Value : Pds. 3,000,000 x $2.00 = $6.00 Million
Current..... : Pds. 1,500,000 x $1.38 = $2.07 Million / drop: - 65.5% enough to attract buying?

Great thread. Anyone got any thoughts as to how long the dead cat bounce might take to play out, and for crash cruising speed to be resumed? 3-6 months?

Good to hear that, Dees.
Are you interested in UK property also?

I listened to the call today. It was a very interesting listen indeed. Thanks for all of the time and effort you have put in developing this site.

I would be very interested in hearing your opinions on UK housing and FXB, or Sterling in general.

I doubt I could make a call due to the time difference but perhaps if you pin instructions on how to join a GEI conference call somewhere I could dial in if I am up or at a computer then. I use Vonage rather than Skype so pinned instructions on how to join call might be useful for future reference.

Excellent work guys, listened to the podcast.

Can i add my thanks as well for all your time and effort.

I will try to make the time to join a call in the future.

It is free to join Skype, so why not do it?
You will have to do a search for "energyi", and the add me as a contact.
Send a message, and I will reply, then you will be set up as a confirmed contact, and I will be able
to add you onto the call. Please do this now, or sometime well before the call, because while the call
is on, I will be too busy coping with logistics and speaking to look for new people to add.

BTW, We are talking Friday/Saturday NEXT WEEK, not this week

I cannot join the call, so here's my contribution.
I agree with much of this, BTW
==============================

House prices 'could fall by further 55 per cent'
House prices may fall by a further 55 percent and there is a "very real probability" that Britain will be bankrupted, a leading investment bank has warned in a private note to clients.

By Robert Winnett, Deputy Political Editor / 11 Mar 2009

People who bought buy-to-let flats are expected to “begin panic selling” and the average home value could drop below £100,000.

The predictions in a 298-page report from Numis Securities, a City investment bank, are the bleakest yet on the deteriorating state of the British property market.

House prices have already fallen by about 20 per cent over the past year.

However, in the note written last month, Numis said: “Despite UK house prices already having fallen 21% from the peak, we do not believe that the correction is anywhere near over.

“Our core headline forecast is that UK property prices remain between 17% and 39% overvalued based on fair valuation. Moreover, history has shown us that when property…which has experienced a price bubble corrects, the price tends to fall below fair value for a period of time, as confidence in that market remains low. Prices could fall a further 40-55% if the over-correction was as bad as the early 1990s in our view.”

The report warns that “city centre flats” and “new executive homes” are likely to record the biggest reductions and describes investing in buy-to-let property as a “poor man’s hedge fund”.

“It is the action of these amateur investors over the next few months which we are most concerned about,” the report says. “We expect some to begin panic selling their portfolios, with the peak volume as is almost always the case with private investors, being at the market trough.”

Yesterday, Alistair Darling, the Chancellor, warned that the world is facing the most difficult economic conditions for “generations”.

However, the Numis report is scathing of Government attempts to help the economy.

“The Prime Minister and Chancellor have publicly stated that they want banks this year to lend at 2007 levels,” it said. “We think this is a crazy policy, given that too much debt was one of the prime reasons why the economy has its current problems.”

It also criticises the huge debts being run up by the Government to pump money into the economy. Yesterday, John Lewis, the retailer, said that the £12.5 billion cut in Vat has not made “any long term difference at all”.

The Numis report says: “The bankruptcy of the UK is a very real probability as the UK Government is trying to stimulate a greater debt burden in a grossly indebted economy. We believe the scale of the macro imbalances in the UK means there is no prospect of a recovery in 2009 and we expect the UK to be mired in a deep recession through all of 2010.”

UK property is not high on my list as I have little to do with it, and have not previously followed it. But it is a component of the larger market, and could therefore be interesting if that is the topic that will be discussed (and if that is what the majority wants to be discussed).

Interesting article here suggest perhaps further 55% falls in UK property:

http://www.telegraph.co.uk/finance/economi...5-per-cent.html




Regarding the next conference call i think it's perhaps worth considering a segment on the immediate future of the Euro. There seems to be a lot of potential negative influences on what happens to the Euro next and we all know that the complexities of managing a currency across so many borders makes the ECB's job the hardest of any of the central banks.

That would be timely.
However, sitting here in HK, I do not feel that I am sufficiently well informed.
Any experts that we can tap on thsi subject?

A PRIME LIE ?



Prime central London property prices rose by 0.94% in February, according to Primelocation.com this morning, the fourth successive month of rising values. Foreign buyers are snapping up trophy homes in the capital, taking advantage of the steep fall in sterling. This might cheer the editor of Country Life – whose property porn pages have been looking painfully thin – but few others will share the sentiment.

Outside of Mayfair and Knightsbridge, values continue to fall. Perhaps most striking is that if you drive just a few miles beyond the M25, "prime" homes are falling in value fast. The south-east recorded a 0.56% fall over February, while the south-west saw a decline of 1.83%. The bonus-rich City bankers who spurred astonishing price rises in the likes of Tunbridge Wells and St Albans have faded away, while the Asian and Russian oligarchs buying in zone 1 will never be tempted by the 7am train from Sevenoaks.

Primelocation sensibly does not predict a "ripple out" in prices from central London to the rest of the country. It can see the other side of the prime property coin – lettings to international high-flyers – and the picture there is grim. Last week, Hamptons International reported a 20% decline in the number of overseas applicants looking for top-end rental property in the capital, as few international banks are bringing employees from overseas to work in the City.

Primelocation this morning said prime London letting prices fell for the eleventh consecutive month, and were 13.7% lower than this time last year. Meanwhile, stock levels are up 97% on last year. It says the fall in rents is now a "firmly entrenched trend" and that landlords remain under pressure.

/more: http://www.guardian.co.uk/money/blog/2009/...on-house-prices

== ==

I can see the currency argument.
But frankly I find this argument:
"Foreign buyers are snapping up trophy homes in the capital, taking advantage of the steep fall in sterling. "
... hard to buy. Seems like a lie, or maybe a "statistical quirk" to me.

In the end, the falling rental demand has GOT to be the driving factor in Mayfair.
And the story there is dire, I believe.


NOTE : I am moving this thread to the GEI-N section, where I hope it will be easier to find

Sorry I missed the last conference call. After taking part in the first one, I had intended to join in with the second, too.

Hopefully, I will be around and available to join in with this one.

DUMPING THE SURPLUS PROPERTIES - can Britain suck in the foreigners?

They are trying like mad ! Pushing the "affordability" brought by a weaker Pound

Here's Sterling (FXB) ... update : closeup-10days


(Note: anyone who buys thinking the FX rate will stay below $1.40 is taking a big chance IMHO)

LOOK HOW they are pumping Vauxhaul properties in Hong Kong...

There's a FULL PAGE advert in today's SCMP

Headlines:
1/
Riverside property attracts shrewd investors (haha!)
High-quality London development offers overseas buyers the chance to cash in (actually: to waste their cash)
on favourable British market conditions despite global economic slowdown



"... Asture cash rich investors may find that it is an opportune time to buy property" (or perhaps not!)
"The London property markety has fallen by 17 percent from its peak in 2007" (on its way to 50%+ down)
"British interest rates rates have dropped to 0.5 percent, lowest in BofE's 314 year history" (thnx to bad mgmt.)
"By the end of 2009, we expect income to service mortgage to be lowest since 1993." (so why not wait?)

"London population expected to increase by at least 410,000, or 5 percent, by 2016." (not likely in depression)

Prime central London development: Aquarius House in St George Wharf: spring/summer, 2010

1BR and 2BR units : Prices start from Pds.399,950 (HK$ 4.41 million)
Rental yields are expected to be "in the region of" 6.0 percent

"Purchaser interest is reviving in Central London... Foreign buyers... Sterling weakness."



2/
Regenerated South Bank shows strong potential
"Location, location, location has long been the estate agents mantra." (so why look at such a gloomy place?)
"the redesigned Vauxhall Cross station is directly opposite St.George Wharf." (and it's still a dump)

ASSETZ Trying to Talk up the Uk Market

http://www.cnbc.com/id/15840232?video=1022393969&play=1

Airtime: Thurs. Feb. 5 2009 |
The sharp declines in UK interest rates are boosting people's confidence in the property market again, Stuart Law, chief executive of Assetz, told CNBC Thursday.

"Average rate in the UK is 5.x%... way above the 1%."

But now... "People are flipping into a tracker rate."
"We cannot be ceratin how long these low rates will last. At some point, the rates will go higher...
Don't take a two year. Take a ten yera."

Housebuilding guru says bottom of the property market has been reached

By Mark Leftly / Sunday, 15 March 2009

Tony Pidgley, the great sage of the housebuilding industry, has called the bottom of the market.


Mr Pidgley, who made a fortune and his reputation for calling the 1990s housing crash correctly, told The Independent on Sunday: "We all accept that, give or take 5 per cent, the market is somewhere along the bottom [of its economic cycle]."

The chief executive at Berkeley Group, one of the few cash-rich housebuilders, added that there would be between 35,000 and 50,000 construction starts on new homes in 2009. He said 40,000 was most likely, meaning government ambitions to complete up to 240,000 new homes a year would not be fulfilled.

In its last interim results, Berkeley had a pre-tax profit of £79.6m, 12.1 per cent down on the same six months in 2007 – a good result, given the sharp downturn in housing

/see: http://www.independent.co.uk/news/business...ed-1645222.html

"BULL TRAP" IN HOUSING ?
==================

Bloomberg's Bernie Lo will be interviewing Marc Faber today, at 11am Hong Kong time.
I have a question and sent an email...

(Let's see if Bernie goes for this one):

Question for Bernie Lo and Dr.Marc Faber:

Global property prices are down sharply from their highs, and interest rates could be bottoming soon,
are we setting up for a "Bull Trap" in House Prices?

(in edit, after watching the show):

My question made it onto the Screen, but not into Faber's ear
Bloomberg screen shot at about 11:35am, HK time:

MICHAEL : "BULL TRAP" IN PROPERTY ?

They ran into a time limit before Bernie could ask the question properly.
Nevertheless, Faber did share his view on property:

+ Avoid buying property in financial centers (there might be a war, and terrorism in such places)
+ "Second cities" are better
+ Better still, is good FARMLAND "in the middle of no where"

Faber himself owns property in New Zealand, and in Thailand where he grows "good stuff"

The question went on today.
ROGERS TO ME: "I wouldn't buy property in Boston with YOUR money."

My question about a possible Bull Trap was abbreviated.
Jim was asked, "What do you think about property?"

He answered,
"Property? Depends on where it is.
I wouldnt buy property in Boston. I wouldn't even buy property in Boston with YOUR money.
But Nebraska is a different thing. I would buy farmland in Nebraska."

The usual Rogers soundbites.

I just listened to the second conference call and really found it informative. Thanks for putting it together. I would like to participate in the third call but am not sure about timing. When will it take place in Hong Kong?

BTW, I just saw the Marc Faber video and saw the question you posted. Too bad he wasn't able to ask it. I thought that Faber was still based in HK but I guess he is spending more time in Chang Mai with his "good stuff" and dogs.

Can anyone point me at the CC recordings? I've looked on the CWR site and don't seem to be able to find anything?

This CC re the HPC sounds very interesting. IMHO we may get a DCB going into the summer, then perhaps inflation will start kicking off again (imports are already rising massively, although they've removed them all from the CPI/RPI of course) so rates will rise. Can only hope....!

Thanks!

http://globaledge.podbean.com/

ok how do i sign up for next weeks conference

This link is given in the first post here, and also above: this should work too: http://GlobalEdge.podbean.com

Soon you will be able to get all the post useful links on the GEI Dashboard, which will be in this section.
Also with a link to it in the header.
== ==

CC Timing?: A week from Friday, or the day after on Saturday - let me know which is preferred

Friday.... 27 March : 7:30am London / or 3:30pm HK Time (does this reflect the time change?), or:
Saturday 28 March : 9:30am London / or 5:30pm HK Time

(Still looking to determine which date works best. Comments are welcome)

morning suits me best preferably a friday or monday

March = still unchanged as far as BST /GMT is concerned

Living nearby, I go past "St.George Wharf" frequently and every time i wonder who has paid, probably, a great deal of money for these flats. More than 50% face Vauxhall bus station, the roads surrounding it are never quiet. Oh and MI5 is over the road, so you face a decent terrorsit threat also.

Awful location

That's what I thought. None of that was apparent from the marketing pitch.
I decided to visit the sales area at the Mandarin to see what they were selling, and how they were selling it.
It took me 10 minutes to work out the property they were selling was on the back, with no view of the water.
I told the sales person that I tought it was probably noisey, and maybe a bit dark.

When I showed that I knew how to use a calculator, and I had worked out that their prices were equivalent to
HK$10,000 - 12,000 psf, I was told they they were prepared to discount the prices. I asked by how much, and
was told, "maybe by 15%." I told her that I would pass - that was still beyond my budget.

== == ==






From: http://www.youtube.com/watch?v=WL-larBxL7k
That's it!
The same question was meant to be asked of Jim Rogers yesterday, but Bernie flubbed it.
I think he found it too complicated, so he ask, "What do you think of property."

I saw Rogers yesterday, standing outside a conference (the Money Show), where he was speaking.
I had just had lunch with one of the other speakers, and when I was ready to approach him, and ask the question
properly, he had disappeared.

I suppose it doesnt make sense to ask about a possible "Bull Trap", until after the property rally has already started.
It may have started yesterday, with the encouraging news on housing starts.

Many have been looking for a Good Bounce for a Long time.
This is from the old "time to buy the homebulders" thread - in Members section



Finally, we may have seen the time for the US.
But I reckon the final low in the UK may continue to lag the US.

However, the lower rates in the Uk and the money growth, may generate I nice rally, creating
a trap for Home Buyers, who cannot get in and out quickly enough

The following paper "“The Aftermath of Financial Crises”, by Carmen Reinhart and Kenneth Rogoff" may be interesting reading
http://www.economics.harvard.edu/faculty/r...s/Aftermath.pdf

Basically for RE it paints a scenario that on average from Peak to Trough of the following crash the time it takes RE is 5 year.

If as some say the peak was 2007 then 2012 is the trough.

But who said this was average.

Enjoy your call.

OWNERS OF LUXURY and their agents love to pretend...

http://www.ft.com/cms/s/0/c6abd334-a9d4-11...?nclick_check=1

The Candy’s well-publicised wranglings with Kaupthing, alongside separate discussions in the summer with Qatari partners at Chelsea Barracks, may be the least of their problems.

Far more important will be signs of a faltering market for luxury residential property. The slump in house prices has not yet hit the top end of the market, but there are question marks about how long “super prime” homes worth more than £10m ($16m) can defy gravity.

This became clear last week, when both partners in Noho Square admitted that their equity had long been wiped out.

In fact, given more than £200m of debt was used to acquire the site and take it forward, and a site value now as low as £50m, most of the Kaupthing debt will have disappeared as well.

The Candys, and their partners at Chelsea Barracks, which set a new record for land in London, will not want to think about what the £1bn site might now be worth.

Such high profile sites are likely to become emblematic for the rest of the super prime property market, so far the most resilient part of the residential sector.

In London, annual price growth for homes of more than £10m peaked at a whopping 45 per cent in September 2007, according to Knight Frank. Unsurprisingly, the rate has since fallen but remained positive until August this year against the trend of almost every other sector.

While the annual rate of growth was 6 per cent last month, this disguises the fact that values fell 5.4 per cent in September and October.

PROPERTY LAGGING SHARES - here's why that should not surprise anyone...

Do not pass go – or expect house prices to rise soon

With the value of property still in freefall Edmund Conway asks four experts why the housing market has failed to follow the upward trend of shares.

Last Updated: 8:12PM GMT 23 Mar 2009

Since hitting a low of just above 3,500 points earlier this month the FTSE 100 index of benchmark shares has rebounded almost 10pc higher. The explanation, say strategists, is clear: use almost any method of valuing the equities and they look extremely cheap.

So why has the housing market not enjoyed the same fortune? Granted, property values simply don't move about as fast as the stock market. But on most metrics house prices, which have fallen by around 20pc on most bases since peaking in late 2007, are now close to fair value. And yet every major economist expects prices to fall by a further 10pc or 20pc in the coming months.


In part this is because, like equity markets, house prices usually tend to overshoot in a crash. There is every chance shares drop back beneath their recent lows in the coming months as it transpires that there is more bad news in store for the world economy. But in part it derives from a fundamental fear that this housing crash is not like every other.

The problem, according to a range of economists surveyed by The Daily Telegraph, is that the rise in house prices in recent years was due less to supply and demand fundamentals − the famous mismatch between the paucity of new homes being built and the glut of people wanting to buy − than to the cheap availability of mortgages. If, as some suspect, this credit super-boom will be followed by a long-term drought, whether because banks simply do not recover fully or because the Government imposes new regulations on lending, the implication may be that house prices simply never recover.

/ more: http://www.telegraph.co.uk/finance/economi...-rise-soon.html

== ==

House prices 'could fall by further 55 per cent' (Numis Securities):

"“Our core headline forecast is that UK property prices remain between 17% and 39% overvalued based on fair valuation. Moreover, history has shown us that when property…which has experienced a price bubble corrects, the price tends to fall below fair value for a period of time, as confidence in that market remains low. Prices could fall a further 40-55% if the over-correction was as bad as the early 1990s in our view.”

The report warns that “city centre flats” and “new executive homes” are likely to record the biggest reductions and describes investing in buy-to-let property as a “poor man’s hedge fund”."

"The Numis report says: “The bankruptcy of the UK is a very real probability as the UK Government is trying to stimulate a greater debt burden in a grossly indebted economy. We believe the scale of the macro imbalances in the UK means there is no prospect of a recovery in 2009 and we expect the UK to be mired in a deep recession through all of 2010.”

Hi, has the time/date of GEI conf call 3 been decided yet?

Perhaps...

4) Coinciding with the flood of properties is a rise in interest rates at the end of 2009?

Sorry guys,
But I am, not really sufficiently prepared to do a call tomorrow or Saturday.

So I propose that we put of off for another week. And I will open the time up for voting.

Please vote! I will put this thread in the Main section for at least a few days, so more people will see it.

I will also add a button in the top of the site, leading into this thread

I dont know enough to lead that. Does someone else on GEI?

New mortgage lending hits 10-month high

By Daniel Pimlott ... March 24 2009

New mortgage lending jumped to its highest level in 10 months in February, the British Bankers’ Association reported on Tuesday, in the latest sign that the housing market may be stabilising.

But mortgage approvals remain barely above the record lows of last autumn and economists warned that it was too early to predict a recovery.

New mortgages rose by 16 per cent last month to a seasonally adjusted 28,179 from 24,278 in January. That was the highest level since April of last year and is up 58 per cent from the record low in November.

However, it was still 31 per cent lower than in February 2008 and nearly two-thirds lower than the peak levels of lending at the end of 2006.

Ben Broadbent, an economist at Goldman Sachs, said that the data were encouraging for the economy, but that they were not enough to mark a turnround.

“Activity in the housing market is a better correlation for spending than house prices and is a leading indicator,” said Mr Broadbent. “But for demand to recover lending has to be freer. It is not sufficient on its own, but it’s a relief to have the necessary conditions there.”

The figures showed a rising number of loans for the third month in a row, and follow data from the Royal Institution of Chartered Surveyors on the rising numbers of inquiries about house purchases in the past four months.

/more: http://www.ft.com/cms/s/2/3578204c-18ca-11...00779fd2ac.html

How about putting a straightforward option like 'will not be participating in this call'.

I've voted with this 'I cannot participate, but would prefer alternative times (Tell us)' but don't necessarily mind the (any) times being considered.

Okay. that's done. I will change your vote. Thanks

Hi second part of vote says multiple votes are allowed but doesnt allow for multi votes!

Personally Tuesday or Friday mornings suit me best. Prefer 7am.

Suggestion for a future conf call is how to adopt the mentality of a trader ie how to view the markets from a short term perspective of next few days/weeks/months in advance. If doing an options into could be incorporated with that ?

? - should be fixed now.

(Here are some charts that we will be discussing - Any early comments?)

THE US PROPERTY CYCLE - 18 1/3 Years

My chart from just off the Peak


As updated: Weekly Centex (CTX) ... Monthly update-since 1970 : Monthly-since 1992


Weekly Centex (CTX) ... Weekly-Last 5yrs :


Compare: UK's Barratt Developments (BDEV.L) ... update


Centex (CTX) ... Daily-Last 3years : Daily-Last 12 mos.


Historical Low - Late 2004

Centex Corp. / Friday, Nov. 25, 1994
Closing Price: 20.125 / Open: 20.375, Hi: 20.375, Lo: 20.125
Split Adjust.: $4.484 /

2009's Low :
Thursday, March 05, 2009
Closing Price: 5.47 / Open: 5.17, High: 5.57, Low: 5.03

Related, charts on US versus UK : a 17 month lag

== == ==
Kathy Fettke Podcast : Using More stable "Income properties" to beat cycles
My YouTube podcast : Nailing the 2007 high in the UK

5 out of 6 want this time:
Time#1: Friday (3 April) 7:30am London / 3:30pm HK Time

Any dissenters?

Even if you cannot participate in the call, please vote in the Poll:

Poll: Speed of UK House price decline - what is it?
Speed up? Steady falls? or Slowing down?

/see: http://www.greenenergyinvestors.com/index.php?showtopic=6354

I dont wind to find myself speaking garbage, about the rate of decline