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G0ldfinger

UK House prices: News & Views

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There is once again a lot of hot money in UK property, and it is simply due to stupidly cheap mortgage rates thanks to the government't funding for lending scheme.

 

Currently you can get a 1.6% 2 year fixed rate, or a 2.4% 5 yr fixed rate.

 

Those are unbelieveably cheap, and we are seeing lenders constantly undercutting each other.

 

With rates this low frankly we should not be surprised that the market has reignited, but there will be hell to pay when the day comes when the markets have the pound of flesh.

 

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I've started noticing more BTL activity again. Adverts about buying student accommodation with a yield of 10% for 3 years apparently guaranteed.

 

1 in 5 properties is now BTL. With savings rates still rock bottom and the stock market dead ... more and more money is going to find its way into property. I sold to rent in 2003 and gave up and bought again in 2010. I'm really glad I bought back in - the house I rented for £1050 a month in 2003 is now renting for £1800. Where that money is coming from baffles me - but come it does.

 

Had a young lad around the house recently who was doing the annual service on my boiler. He had to order a part and come back to do a repair. Don't ask me why but during this process we had a detailed chat about his plans. He is 24 and is about to marry a girl who is a nurse. They have saved 25k between them over the last few years and are now looking to buy a 3 bed terrace a few miles from where I live in a reasonably nice area. Not great, but by no means an unpleasant place to live. Just an average area really. The house is going to cost them £250k and, according to the lad (who was off to see a mortgage broker later that day), they will have to move fast because anything on the market is selling in a couple of days. (I would say this is true in my area at the moment too).

 

He didn't say how much he earned but he said he thought his girlfriend was not very well paid - he mentioned a figure in the low 20ks. I don't know how much gas service engineers earn - 30k? So they'll have a joint income of about 50k and a mortage of £225k which (I think) he said was going to cost them £1200 a month. It all seems reasonably affordable. I did ask him the usual - 'what about when interest rates go up? - and - 'what about when you have kids?' and he just said that his money would go up in time and, if kids come along, they have parents nearby who can help out etc. I.e. that they would manage - and I am sure they would. Our chat included shares and pensions and I have to say, for a lad of 24, he is very switched on regarding finances and life in general.

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"So they'll have a joint income of about 50k and a mortage of £225k which (I think) he said was going to cost them £1200 a month"

 

HE will do okay, unless and until there is a shock.

 

There may not be one in the next 5-10 years ... but frankly, I will not be at all surprised if there are some Big shocks within 3-5 years.

 

Having said that, buy cheaper properties (under GBP 150,000) outside London seems to be a good bet to me right now

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UK mortgage approvals rise to a 17-month high as chancellor meets with lenders to discuss Help to Buy

 

July 23, 2013, 9:36am

by Chris Harlow

terracedhouses_1.jpg

Some 37,278 home loans were approved in June 2013 - a 17-month high - according to a report from the British Banker’s Association.

 

While this came in below analysts' expectations of a rise to 38,500, mortgage approvals were still up 32 per cent from June 2012 and 17 per cent from the 2012 average. It was also up 2.7 per cent from the month before.

Meanwhile, lending to non-financial firms increased for the first time since January 2013 and the value of house purchase mortgage approvals was up slightly to £5.7bn from £5.6bn in May.

 

Howard Archer, chief UK and European economist at IHS Global Insight, says this adds to "a plethora of recent data and surveys indicating that housing market activity is now really stepping up a gear" and expects house prices to see "solid but relatively limited increases" over the rest of the year, before strengthening "more markedly" in 2014.

. . .

The first stage of Help to Buy was launched in April, offering loans for new-build homes with a five per cent deposit. The second stage, mortgage guarantees, will launch in January and see the state take on some of the default risk by guaranteeing a proportion of the loan

===

- See more at: http://www.cityam.co...uss-Help-to-Buy

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Top economist warns of 'disastrous' house price crash due to new Government lending scheme

 

ONE of Britain’s leading economists today warned of a potentially “disastrous” house price crash due to a new Government home-buying scheme that many fear is causing an unsustainable bubble.

 

http://www.express.co.uk/news/uk/416885/Top-economist-warns-of-disastrous-house-price-crash-due-to-new-Government-lending-scheme

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Top economist warns of 'disastrous' house price crash due to new Government lending scheme

 

ONE of Britain’s leading economists today warned of a potentially “disastrous” house price crash due to a new Government home-buying scheme that many fear is causing an unsustainable bubble.

 

http://www.express.c...-lending-scheme

it might take many more months to get to a Peak.

But the UK seems determined to make the same mistake that Greenspan did:

 

Getting "out of a recession" by manipulating the market into a housing boom

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With the birth of the Royal Baby, Andy Murray winning the tennis,The Diamond Jubilee, the successful Olympics, the UK is just shrugging off bad news. The UK is going through a huge baby boom. Young couples will be further encouraged to buy a house. I don't thing we will see any meaningful crash in UK (we're talking London and the South East) house prices in this economic cycle.

 

http://www.youtube.com/watch?v=jiN-cNJxvN0

 

http://www.youtube.com/watch?v=YpQYgCxCF5c

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With the birth of the Royal Baby, Andy Murray winning the tennis,The Diamond Jubilee, the successful Olympics, the UK is just shrugging off bad news. The UK is going through a huge baby boom. Young couples will be further encouraged to buy a house. I don't thing we will see any meaningful crash in UK (we're talking London and the South East) house prices in this economic cycle.

You forget the Heatwave and the elusive World Cup to add to that list and then the good (bad) times roll??

 

Any more good news for the UK to wallow in? A fracking oil boom perhaps? Oil in the Malvinas? More rich EU immigrants? Passing of Prince Philip? The Queen as the longest reigning Monarch celebrations? Another kiddie for the Royal couple? Disintegration of the EU? Re-election of Cameron as PM? Or Boris?!

 

Maybe Britain is special. Maybe not.

 

btw When does 'this economic cycle' end?

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The Crash (in London property) has not been called off --

 

Just repeatedly kicked down the road

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btw When does 'this economic cycle' end?

 

I think we are close to the end of this economic cycle. It maybe marked by the 1-1 gold/dow ratio. The US has been on a recovery, where the US leads, the world follows. They can just keep devaluing as before. Sure, millions will continue to be on food stamps, but so long as the rich are OK, everything is fine. By the moment the recovery trickles down to the bottom, it will already be another bust around the corner.

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This is from Freetrader

 

PCL = Prime Central London

 

FathomPCL.gif

 

One can see that PCL broke out to new highs in 2011, and just motored on. After the financial crisis, central bank intervention mostly benefited the elite. You can see the rest of us were left behind - the rest of us don't have excess money to bid up prices for property - prices have stagnated.

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Vince Cable warns Help to Buy poses housing bubble threat

 

Financial Times - ‎44 minutes ago‎

Vince Cable has voiced misgivings over the chancellor's pet project to boost home ownership, warning that the Help to Buy mortgage guarantee scheme could stoke another housing bubble.

 

== ==

 

Er, ah...

Isn't the point of it to MAINTAIN THE BUBBLE which already exists in London ?

 

... which is now in danger of bursting

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Everything beat Cash on a 10 year Horizon

 

(BP too, if you include dividends, I reckon)

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The UK is going through a huge baby boom. Young couples will be further encouraged to buy a house. I don't thing we will see any meaningful crash in UK (we're talking London and the South East) house prices in this economic cycle.

 

"What would a 'Yes' mean to you?"

"So they could have me."

 

That message goes straight for the Nesting instinct, which drives much of the home buying.

 

Things always seem "Right" near a top. And the emotional sell, rather than the logical one, is the one that predominates in this kind of territory.

 

Many things can upset the Apple cart, starting with rising rates.

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HK Buyers increasingly look beyond London - SCMP article

 

Hong Kongers are at last looking to buy outside London - partly as a response to more HK students at Unis outside London

 

HK students in British Uni's

 

2011 : 10,440

2012 : 11,335 : + 9%

 

38% of HK Buyers in the resale market bought outside London over the past 5 years

 

Some Targets:

===========

 

+ Birmingham : Mi Place, opposite Ashton University: 62 studios, starting at GBP 83,200

 

+ Birmingham : The Hive, The Cube

 

+ Bristol : The Crescent, at Harbourside : 9 of 23 flats went to HK Buyers

 

+ Oxford and Cambridge : also popular

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LOW YIELDS Point to Crash in London : Another SCMP article

 

They are talking about Retail space - where yields are down to 2.75%, and may fall to a very low 2.25% by year end

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"What would a 'Yes' mean to you?"

 

Hatred is a very low vibration but that mortgage advertising sure brings out the heebee jeebies in me man. Like the devil offering something in exchange for your soul (excuse the hyperbole).

 

That message goes straight for the Nesting instinct, which drives much of the home buying.

 

Assisted by, ooh, just three examples of the horridness of UK renting:

 

1. Terrible UK renting rules for tenants - damn the assured shorthold tenancy! 6 months minimum term! a mere 2 month landlord notice period and don't be surprised to hear a "get out of my house!"

2. Insecurity of UK rental tenure for tenants. What happens if when the landlord defaults on a loan secured on the property or even the mortgage itself? See ya later tenant scum, out yer go on yer bum!

3. Loads of cynical add-on admin fees by unregulated letting agencies who "forget" to mention an original contract can just be left to roll on indefinitely on a monthly basis, and insist, pester and nag both tenant and landlord to sign up to another year's tenancy, only to charge them BOTH an admin fee. Go capitalism!

 

Housing in this country has become the new religion/politics. It's the new topic of taboo at dinner parties. Speak up either way and be damned, for in the same social groupings I'm noting the disparity and silent resentment from those traditional HPC-ers (a flavour of whom may reside here) versus the loadsamoney MSE-ers who "loaded up" and pity those too "unfortunate" not to "achieve" as much as they have somehow (er, so far??) gotten away with.

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COMPLETELY CRAZY, they must be...

 

Foreigners buy nearly 75% of new homes in inner London

 

Financial Times-Aug 2, 2013

 

But developers argue that many housing projects would never break ...

The average house price in the UK is now £170,825, Nationwide said.

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Key Dates to keep in your diary

 

Help to buy Scheme geared up for 2015 election. Political as opposed to economic reality. London 2 years ahead of the regions. House prices WILLl rise outside London before the election

2015 large volume of 2 year fixed mortgage rates coming to an end all looking to remortgage.

2015 Labour to win election and will extend home help to 2018.

2015 large proportion of London new builds near completion. House builders profits till then will be healthy.

2015 either interest rates rise or sterling starts to get hit. Your mortgage will be cheaper than your council tax. Loss of purchasing power will cause a Political storm as the politicians that we have elected to serves us fail to carry out their duty. The smart money that already holds $ sees a fire sale in UK real estate fuelling a further increase in London prices.

2018 large volume of 5 year fixed mortgage rates coming to an end all looking to remortgage.

2018 - 2022 game over.

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Khy.

The smart money that already holds $ sees a fire sale in UK real estate fuelling a further increase in London prices.

 

why does a fire sale cause London prices to rise?

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