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G0ldfinger

UK House prices: News & Views

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So how's the old barometer BDEV looking?

 

Oh, up 10% to 107 at one point! Hmm, what can it mean? :rolleyes:

http://uk.finance.yahoo.com/q?s=BDEV.L

Just kidding, perhaps it tallies with 50's short sharp bounce this spring.

It will probably go a bit higher now too, like 120P : BDEV-chart

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Oh and Dr. B, your recent favourite Rightmove has a report out today too :rolleyes:

 

· Record level of search activity as value-seeking buyers face the smallest ever choice of new listings

- 44 million property searches in first 10 days of 2012, up 27% on 2011, highlighting pent-up demand

held back by ongoing mortgage famine

- Estate agents marketing less than one new property per week per branch, the lowest ever seen

· First week of 2012 sees asking prices rise by 1.4%, though prices still down 0.8% on the month - an early

indicator that a new seller shortage is likely to underpin prices this year, especially in ‘micro-markets’

where supply is limited

· 2012 Winners: deposit-assisted first-time buyers, equity-blessed trader-uppers, savvy buy-to-let investors,

some golden-oldies, and those selling properties ‘with a difference’

· 2012 Losers: trapped renters and sellers of ‘average’ homes unwilling or unable to offer a cut-price deal

 

http://www.rightmove.co.uk/news/files/2012/01/january-2012.pdf

 

I'm going out on a limb here, but I'm guessing you won't be posting this one on several different threads, as you did with one of their previous ones are you? :P

 

 

(Told you rightmove can't be trusted ;) )

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Oh and Dr. B, your recent favourite Rightmove has a report out today too :rolleyes:

 

 

 

http://www.rightmove.co.uk/news/files/2012/01/january-2012.pdf

 

I'm going out on a limb here, but I'm guessing you won't be posting this one on several different threads, as you did with one of their previous ones are you? :P

 

 

(Told you rightmove can't be trusted ;) )

 

It sounds that indeed sellers in nice areas can afford to hold on to their properties. And they probably will for a long time as long as interest rates will keep down, which sounds likely to hold for a few years.

So, house prices will keep their nominal values : what is going to give then? That's the question I have to be asking myself. as I will soon be "forced" to buy by SWMBO.

 

I can see two radically opposed strategies:

- Put the smallest deposit I possibly can and ride on inflation through acquisition of inflating assets and benefit from low interest rates as long as they last.

- Go all in, losing pretty much all my financial cushion in a big deposit, but get a 10 years fixed rate mortgage which will allow us to be shielded against sudden surges in IR.

 

In both case, buying a property worse than what I can afford to rent.

 

Lose/lose situation each with their own risks :(

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It sounds that indeed sellers in nice areas can afford to hold on to their properties. And they probably will for a long time as long as interest rates will keep down, which sounds likely to hold for a few years.

So, house prices will keep their nominal values : what is going to give then? That's the question I have to be asking myself. as I will soon be "forced" to buy by SWMBO.

You can make that case.

But I see this:

 

London property prices are massively overvalued in the face of:

 

+ Low or No growth in real incomes

+ Falling prices for the UK as a whole

+ A developing capital shortage in the UK, with a strong possibility that rates will have to rise

+ Some steps towards austerity, and cutting back of rental subsidies

 

How much longer can the UK afford to prop up expensive London property?

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You can make that case.

But I see this:

 

London property prices are massively overvalued in the face of:

 

+ Low or No growth in real incomes

+ Falling prices for the UK as a whole

+ A developing capital shortage in the UK, with a strong possibility that rates will have to rise

+ Some steps towards austerity, and cutting back of rental subsidies

 

How much longer can the UK afford to prop up expensive London property?

 

Perhaps it's just wishful thinking but I agree. We're going to see just how many of the overseas investors in London property are truly "in it for the long haul" if we see a correction. If inflation stays high and even kicks up, how long will they accept negative real yields before selling? London has been pumped up by the property equivalent of hot money I think. They could liquidate as quickly as they bought with both fists.

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You can make that case.

But I see this:

 

London property prices are massively overvalued in the face of:

 

+ Low or No growth in real incomes

+ Falling prices for the UK as a whole

+ A developing capital shortage in the UK, with a strong possibility that rates will have to rise

+ Some steps towards austerity, and cutting back of rental subsidies

 

How much longer can the UK afford to prop up expensive London property?

 

Or maybe it will be London proping up the UK again :rolleyes:

 

http://www.dailymail.co.uk/news/article-2087291/Osborne-wins-City-billions-China-slams-eurozone-doing-enough.html?ITO=1490

 

 

Billions and billions coming to London, China's new "place to be"

 

Easy money :D

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It sounds that indeed sellers in nice areas can afford to hold on to their properties. And they probably will for a long time as long as interest rates will keep down, which sounds likely to hold for a few years.

So, house prices will keep their nominal values : what is going to give then? That's the question I have to be asking myself. as I will soon be "forced" to buy by SWMBO.

 

I can see two radically opposed strategies:

- Put the smallest deposit I possibly can and ride on inflation through acquisition of inflating assets and benefit from low interest rates as long as they last.

- Go all in, losing pretty much all my financial cushion in a big deposit, but get a 10 years fixed rate mortgage which will allow us to be shielded against sudden surges in IR.

 

In both case, buying a property worse than what I can afford to rent.

 

Lose/lose situation each with their own risks :(

 

SWMBO hehe, haven't heard that for a few years (Authur Daily I think?)

 

I went for option A, with a long term fix.

 

Perhaps it's just wishful thinking but I agree. We're going to see just how many of the overseas investors in London property are truly "in it for the long haul" if we see a correction. If inflation stays high and even kicks up, how long will they accept negative real yields before selling? London has been pumped up by the property equivalent of hot money I think. They could liquidate as quickly as they bought with both fists.

 

Can't see it myself. inflation falling and yet more (CEBR) coming out saying rates low until 2016 at least, today.

 

http://www.myfinances.co.uk/mortgages/2012/01/15/cebr-says-interest-rates-will-remain-at-0-5-until-2016

 

Lots of rich people around the world and many joining them each day (BRICs etc), all seem to like having a London pad.

 

As for the rest of the UK, well that's a different matter :)

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Not sure the Chinese will like London when the riots flair up again inevitably.

 

My good man, just like other rich people (and MP's etc) they will not be frequenting those parts :D

 

Besides, now the rioters know they can't get away with it, I'd be suprised if there were any significant disturbances for a while yet.

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A fish rots from the head down

 

From the 16.01.12 RM report:

 

London’s Worst Performers January 2012

 

Monthly Change Kensington and Chelsea -1.7%

 

BTFD? ;)

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London’s Worst Performers January 2012

Monthly Change Kensington and Chelsea -1.7%

Well spotted.

The rest is mere hope

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Not sure the Chinese will like London when the riots flair up again inevitably.

The (ex) bankers and lawyers may riot, when they find their jobs are gone

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The (ex) bankers and lawyers may riot, when they find their jobs are gone

 

Nah, they'll just move to the new China Forex Trading Centre, coming to London real soon ;)

 

http://www.dailymail...h.html?ITO=1490

 

 

And Kensignton and Chealsea asking prices down 1.7% , woowee, that takes the average to a bargain..... £1,956,710! think I'll grab a couple :D

 

(See they are up 6% on the year though :( , still, better than a saving account :rolleyes: )

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Or maybe it will be London proping up the UK again :rolleyes:

http://www.dailymail.co.uk/news/article-2087291/Osborne-wins-City-billions-China-slams-eurozone-doing-enough.html?ITO=1490

 

Billions and billions coming to London, China's new "place to be"

Easy money :D

Wait until the money flow reverses (as it did in HK in 2008.)

Then London will quickly become "ground zero" for a property slide.

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SWMBO hehe, haven't heard that for a few years (Authur Daily I think?)

 

I went for option A, with a long term fix.

 

 

Yes, unfortunately I can't do both :)

If I go for a long term fixed, the deposit would engulf all my savings... in an asset that's got a strong risk of depreciation (be it nominal or through inflation)... Mmmmh!

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Yes, unfortunately I can't do both :)

If I go for a long term fixed, the deposit would engulf all my savings... in an asset that's got a strong risk of depreciation (be it nominal or through inflation)... Mmmmh!

 

This comment makes me think you've pretty much made up your mind on what to do, you can't beat having a financial cushion.

 

I'm sure I've seen some 90% LTV loans fixed for 5 years. I was initially looking at 10 year fixed loans at 75% LTV, but decided that I'd rather hold onto more of my PM's than worry about where we will be a decade from now.

 

JL

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Wait until the money flow reverses (as it did in HK in 2008.)

Then London will quickly become "ground zero" for a property slide.

 

Ah, but I meant from London being the new (out of china) centre for remimbi trading, not hot money. (See the link)

 

People always write of the UK too soon. In time, maybe :D , but it's not done just yet.

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This comment makes me think you've pretty much made up your mind on what to do, you can't beat having a financial cushion.

 

I'm sure I've seen some 90% LTV loans fixed for 5 years. I was initially looking at 10 year fixed loans at 75% LTV, but decided that I'd rather hold onto more of my PM's than worry about where we will be a decade from now.

 

JL

 

You're right JL, that's my line of thinking.

I'm also thinking about how much interest rates are likely to raise in the next 5 years... Perhaps enormously, but then that means inflation has kicked in and the PM pot will help probably more in that situation than a fixed interest rate mortgage...

The political will is to favour assets in detriment of savings, regardless of the cost. Let's not disappoint them, then, and have the largest safety net possible in case the rulers' strategy didn't quite work out as expected (which is to be expected :))

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Or maybe it will be London proping up the UK again :rolleyes:

 

http://www.dailymail.co.uk/news/article-2087291/Osborne-wins-City-billions-China-slams-eurozone-doing-enough.html?ITO=1490

 

 

Billions and billions coming to London, China's new "place to be"

 

Easy money :D

 

Could this mean Doncaster being highlighted once more as the London fast commute hotspot?

Those were the days; she said, pausing only to wipe away an unexpected tear of nostalgia.

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Could this mean Doncaster being highlighted once more as the London fast commute hotspot?

DownCaster?

What an expressive name

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You can get good 5yr fixed deals for around 4% if you can get the 25%-30% deposit together. That's cheaper than renting in most places. Make overpayments while on this cheap rate, and at the end of the fixed period, if prices have fallen (nominally) then trading up will be easier and cheaper, and if they have risen then you will have a big equity cushion and be able to remortgage for a good rate again.

 

Of course this requires that you can put down a large deposit in the first place...

 

IMO the best thing that house prices can do is to remain level in nominal terms; I don't want them falling much as this will just kill the economy (better to have expensive houses and jobs, rather than cheap houses and no jobs), and more expensive houses are not desirable either and put them further out of reach of everyone. At that rate houses should fall back to long term trend in 3-4 years.

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Could this mean Doncaster being highlighted once more as the London fast commute hotspot?

Those were the days; she said, pausing only to wipe away an unexpected tear of nostalgia.

 

Perhaps, when HS2 is finished :rolleyes:

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You can get good 5yr fixed deals for around 4% if you can get the 25%-30% deposit together. That's cheaper than renting in most places. Make overpayments while on this cheap rate, and at the end of the fixed period, if prices have fallen (nominally) then trading up will be easier and cheaper, and if they have risen then you will have a big equity cushion and be able to remortgage for a good rate again.

 

Of course this requires that you can put down a large deposit in the first place...

 

IMO the best thing that house prices can do is to remain level in nominal terms; I don't want them falling much as this will just kill the economy (better to have expensive houses and jobs, rather than cheap houses and no jobs), and more expensive houses are not desirable either and put them further out of reach of everyone. At that rate houses should fall back to long term trend in 3-4 years.

 

Yes. 25%-30% would be pretty much all my savings in, hence why I'm hesitating.

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