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UK House prices: News & Views

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http://www.marketoracle.co.uk/Article43771.html

 

Formulating a House Prices Forecast

In formulating a trend forecast for UK house prices beyond my existing forecast expectations into Mid 2014 and for several years beyond of 10% per annum, I need to weigh up the influences of disparate drivers where on the positive side we have momentum, sentiment and a strong sustainable economic recovery that will last for many years whilst on the negative side we have a economy that continues to accrue a mountain of debt that seeks to delay the day of reckoning my means of the INFLATION, which is both a positive in times of inflating prices and a negative in terms of eroding purchasing power of earnings and affordability which is why many ask how can house prices rise when property is unaffordable for so many house hunters, and it is true that house prices today are nowhere near the affordability levels of the mid 1990's bottom, in fact today's house prices in terms of affordability are beyond the early 1990's peak!

Also that high inflation also carries the risk of the Bank of England panicking to prevent a wage price spiral. Though I expect wages will continue to be depressed in real terms as a consequence of continuing high immigration from eastern europe (20 times the rate the politicians propagandised that it would be), the benefits culture catastrophe that fuels deficit spending and the convergence of GDP per capita between East and West.

So this housing bull market is NOT going to be a re-run of the last bull market! We are not going to see anywhere near 30% per annum price rises. Instead it looks set to be a far more measured affair that will likely never see a bubble spike before the bull market tops that my opinion could only be replicated during a period of out of control inflation i.e. RPI well above 10% and approaching 20% per annum.

So, in term's of generating a multi-year housing market forecast this analysis continues to resolve around a relatively mild oscillation around 10% per annum. Which implies an acceleration into the run up to the next general election followed by a slowdown to a rate well below 10% per annum, that overall suggests that as long a UK inflation as measured by RPI does not persist beyond 5% per annum then UK house prices should target an average rate of 10% per annum for the remainder of this decade (6 years) and therefore target a 60% rise on the current Halifax House prices index into the end of 2019.

At present UK house prices are on an accelerating trend trajectory that implies the current momentum of 8.5% will continue to accelerate to a peak of more than 13% by Mid 2014, and likely stay above 10% into the May 2015 election, following which the momentum will likely slow sharply during 2016 which I am sure will prompt much bearish commentary at that time that slowing house prices inflation that could dip below 5% is a sign that the bull market is over when all it will do is lay the grounds for the next surge higher in momentum during 2017 and 2018, though I will leave the run up to the scheduled May 2020 General election for a future UK housing market ebook of some time during 2018. Therefore this analysis is focused on concluding in a detailed 5 year trend forecast into the end of 2018.

UK House Prices Forecast 2014 to 2018 - Conclusion

This forecast is based on the non seasonally adjusted Halifax House prices index that I have been tracking for over 25 years. The current house prices index for November 2013 is 174,671, with the starting point for the house prices forecast being my interim forecast as of July 2013 and its existing trend forecast into Mid 2014 of 187,000. Therefore this house prices forecast seeks to extend the existing forecast from Mid 2014 into the end of 2018 i.e. for 5 full years forward.

My concluding UK house prices forecast is for the Halifax NSA house prices index to target a trend to an average price of £270,600 by the end of 2018 which represents a 55% price rise on the most recent Halifax house prices data £174,671, that will make the the great bear market of 2008-2009 appear as a mere blip on the charts as the following forecast trend trajectory chart illustrates:

uk-house-prices-forecast-2014-2018-by-na

UK-housing-market-ebook-cover-2013-380.gEnsure you remained subscribed to my always free newsletter for housing market updates as well as FREE download access to my new UK Housing Market ebook (available from mid January 2014) which includes the full analysis and many topics beyond the forecast analysis such as -

  • A step by step guide of how to buy a house.
  • Analysis of buying vs renting
  • How to increase the value of your home
  • Managing your mortgage debt
  • Maintenance that can save you a lot of money long-term
  • Money saving low cost home improvements
  • Regional house prices analysis
  • Surveying properties - what to look for

and much more.

Mainstream Press Forecasts

Many academics and 'think' tanks that get reported upon in the mainstream press have been busy during the past few weeks up-grading their house price forecasts AFTER the recent surge higher, whilst most play it safe by just focusing on year ahead a few have looked 5 years ahead that typically still play it safe as they range in expectations for a rise in UK house prices of between 17% to 25% over the next 5 years -

CBRE - 17% Rise by 2018 - Commercial property consultants (CBRE).

OBR - 20% Rise by end of 2018 - The governments think tank (Telegraph).

Knight Frank - 24% rise by end of 2018 - A global real estate consultancy (KnightNox).

Savills - 25% rise by end of 2018 (up-rated from 18% a few months ago)- LSE listed Estate agent, whilst the most bullish but still playing it safe (Telegraph).

 

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"For the dumbfire way - wait for the breakout first. No point in trying to pick a bottom.

Anyway - it is easier to play the shares (but don't tell anyone!)"

 

The bottom in UK House Prices (Rest of UK) was months ago. and we picked it here on GEI:

 

ukhaliwrest13pred.png

 

/see:

A FINAL Rally in London property? How to play it.

in General Discussions / Started by DrBubb, 30 Apr 2013

> http://www.greenenergyinvestors.com/index.php?showtopic=17737

 

Selling Time?

Maybe soon - Especially if you SELL-in-London, and BUY-Cheaper-outside

 

I don't think the Last rally will go on quite so long as Nadeem W's chart shows:

 

UK-housing-market-ebook-cover-2013-380.g

 

The Property shares are likely to peak BEFORE property prices, and may give an early warning

 

Here's BDEV / Barratt Developments ... update

 

b4v.gif

 

A breakout above the 12-mos high of 360p, could conceivably take BDEV to resistance near 500p,

or even up to 600-700p

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Fergus Wilson: The landlord who wants to put 200 families out on the street

 

http://www.independent.co.uk/news/uk/home-news/fergus-wilson-the-landlord-who-wants-to-put-200-families-out-on-the-street-9052651.html

 

Gemma Jupe, a 25-year-old single mother from Ashford, had just got home from hospital after giving birth to her second child when she discovered she was facing eviction.

 

Her landlord is the now notorious Fergus Wilson, who said this week that he was kicking out 200 families on benefits from his properties to replace them with Eastern European migrants. Mr Wilson said coldly of his decision: “We’ve found [migrants] to be a good category of tenant who don’t default on their rent.”

 

The pitchforks will be out!

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SOMETHING DOESN'T ADD UP - in these news reports

 

(1)

Daily Mail - ‎2 hours ago‎
The longest pay squeeze in history could finally be over, with millions of workers expected to receive pay rises which beat inflation this year, experts said yesterday.
(2)
Metro - ‎46 minutes ago‎
Tens of thousands of people are taking out payday loans to cover their mortgages and rent, research from Shelter suggests. One in 50 resorted to the high- interest credit in the past year and the housing charity claims it received 9,000 calls to its helpline in ...

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^ People are struggling - those who have to work to pay bills, and those with their benefits cut (which I saw coming before 2007). Those who own big houses with big mortgages, but who are benefiting from low interest rates on mortgages (as opposed to unsecured payday loans) are able to splash out on new luxury cars, cruises etc because of reduced mortgage payments.

 

I have been cold called to come in and probably come off my fix to a variable mortgage which might slash my payments by a couple hundred pounds+ per month. I am mulling it over - and I may use the cash in a savings account to ride through a interest rate spike. I won't be buying a luxury car that is for sure! It is always interesting to watch others fill up at the pumps. To fill up a BMW 3 series we are talking about £70 a week, I don't know how people on mediocre incomes can keep this up. Fuel prices have remained at 133p level. I am watching a breakout to the upside....

 

fuel+prices.PNG

 

 

UK retailers generally, have had a "off" Christmas; Namely, M&S, Tesco, Debenhams, Morrisons etc. More people are shopping online, but overall takings have contracted.

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The Shard in London's Eye


9on7.jpg


The Shard

Soaring 310 metres and with 72 storeys, everything about the Shard is dramatic




London's Shard skyscraper almost empty one year after opening


27 January, 2014 / The Guardian in London


The London Bridge skyscraper - the capital's newest landmark, with views stretching 70 kilometres and which is visible to drivers crawling around the M25 orbital motorway - bills itself as "Europe's first vertical city".


It is the highest building in western Europe and, together with the Place, a 17-storey "baby Shard" next door, it cost its Qatari backers £1.5 billion (HK$19 billion).


The skyscraper's observation deck can be hired out for corporate events at £30,000 an hour and tables at its three restaurants are reported to be in huge demand.


But despite the stunning design by the Italian architect Renzo Piano and glamorous marketing, almost a year after its opening the building remains practically a shell.


Ten apartments, designed to pull in some of the richest people on the planet with price tags of £30 million to £50 million, lie empty - still for sale just as the so-called ultra-prime London property market seems to be slowing.

. . .


+ The only office (of 25) occupied is that by Duff + Phelps, insolvency lawyers


+ New tenants coming: Al Jazeera, a Qatari media business, and Hospital Corp. of America (with a huge private medical clinic - for the super-rich)


Qatari landlords have been unwilling to cut their asking prices to attract tenants, and many potential tenants are sniffy about moving there


===


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LONG OVERDUE, this was IMHO

 

Stop rich overseas investors from buying up UK homes, report urges

 

Rightwing thinktank proposes curbs on non-EU residents to open up more of housing market to Britons
Kensington-Palace-Gardens-011.jpg
Rich pickings: the entrance to Kensington Palace Gardens in London. Photograph: Alastair Grant/AP

Radical plans to stop rich overseas residents who live outside the EU buying British houses – as well as tight restrictions on them acquiring "newbuild" properties as investments – will be published in a report by a leading rightwing thinktank on Monday.

Free-market organisation Civitas castigates government ministers for allowing wealthy foreign investors to stoke a property boom that it says is driving up prices and locking millions of UK citizens out of the housing market.

The plans would prevent the likes of Roman Abramovich, owner of Chelsea football club, or other Russian oligarchs from adding to their multimillion-pound UK portfolios. They also aim to stem a flood of investment from countries such as China, Malaysia and Singapore.

Concerned that many middle and lower earners are being forced to pay high rents in London because they can't afford to buy, Civitas calls on ministers to adopt a scheme similar to one operating in Australia, which ensures that no sale can take place to overseas buyers unless they can show that their investment will add to existing housing stock.

Such a system would mean that no existing home could be sold to a buyer from outside the EU, and that such buyers could acquire newbuild homes only if their investment led to one or more additional properties being built.

==

> http://www.theguardian.com/business/2014/feb/01/rich-overseas-investors-uk-eu-housing-market

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There seems to be a new "DrBubb was right" type thread on HPC: #195842

 

http://www.housepricecrash.co.uk/forum/index.php?showtopic=195842

 

Of course, the 2008 forecasts did not prove very accurate for London itself, so probably few benefitted

from selling at the peak and waiting years (in "the Big Smoke", I mean)

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because many MPs are BTL

Many of those fat fingered MP's were rather embarassed during the 'expenses' scandal a few years ago. I wonder why nobody goes after the property BTL brigade? Housing and the price of which, being so close to the hearts of your average dinner table Brit.

I think I know why and it's that near on everyone would lie to have their little property empire, charging the little people rents. It would be seen as 'envy' and an envy that many aspire to...

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morally I know it's wrong but we live in a parasitical casino economy and if I could have a life of leisure living like a parasite on the hard work of others I would

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morally I know it's wrong but we live in a parasitical casino economy and if I could have a life of leisure living like a parasite on the hard work of others I would

 

Zoomraker, that's fine... maybe. But I expect better from our law making right 'honorable' MP's, serving in HMG, the country some of our family members have given their lives for.

 

If your leaders don't lead but are mere parasites and hypocrites, then god help your country. Isn't that the problem we have in so many places?

 

I wonder also if you can extend your philosophy to benefit cheats, living like parasites on the hard work of taxpayers. Surely, one and the same?

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sorry Jake but until we have a system that aligns the financial interests of MPs with the financial and social interests of the people they will never represent us.

 

Benefits cheats are not parasites they are just making a decision not to be a slave. Of course the slaves hate them and are encouraged to do so by the media which represents the interests of the real parasites.

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I am finding it difficult to disagree with anything you said there, Zoomraker.

However I would like to know the extent of our MP's BTL's.

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it's not just BTL though Jake.

as far as I understand it MPs get the interest on their mortgage paid on at least one home from expenses..

this means they are effectively getting a free go at the casino and have a clear and unambiguous interest in rising house prices, and therefore constrained supply and overpopulation

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Time to LOOK CLOSER at this?

 

"Hindsight is a wonderful thing!

I'd say the smart money should now go long gold and short London property (although I would expect it to rise further this year)"

- Jim Turk

 

Like this? Swap every Two years (between Gold and BDEV)

 

9qz.gif

 

 

It looks like the right sort of timing from Gold's perspective, but BDEV may have further to go

=

 

BDEV.L versus GLD - from beg. 2013 ... update

 

pndg.gif

 

Key Points - The Highest Ratio?

 

Date==== : -BDEV- : --GLD-- : Ratio-1 : --FXB-- : Bdev-$ : Ratio-2 :
12/19/13 : 337.4 P : $ 114.82 : 2.939- : $161.38 : 544.50 : 4.742 :
12/31/13 : 349.0 P : $ 116.12 : 3.005- : $163.30 : 569.92 : 4.908 :
01/21/14 : 389.9 P : $ 119.70 : 3.257- : $162.31 : 632.85 : 5.287 :

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An excellent chart Bubb, that needs to be book marked. For me it throws significant weight and guidance as to the potential direction the London market may take.

 

Many new builds throughout London are due for completion 2015. Hence going long gold and shorting London property would not be a bad punt.

 

I agree that BDEV looks set for continued growth. Any second phase new builds that form part of the same development are planned for completion 2018, that is too far out to assess. London will continue to rise this year as the mania is in full swing, and is in a serious bubble now. There are alot of plumbs out there panic buying that will soon be in serious debt. Already the smart money in Central london are asking agents for valuations in anticipation in selling up for two reasons:.

a) they have made significant gains B) potential capital gains tax that may be introduced next year. If the smart money sells up even taking a 20% cut in todays prices they would still have made serious money. The knock on affect is that the ripple out affect to the suburbs will have a significant impact.

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An excellent chart Bubb, that needs to be book marked. For me it throws significant weight and guidance as to the potential direction the London market may take.

 

Many new builds throughout London are due for completion 2015. Hence going long gold and shorting London property would not be a bad punt.

 

I agree that BDEV looks set for continued growth. Any second phase new builds that form part of the same development are planned for completion 2018, that is too far out to assess. London will continue to rise this year as the mania is in full swing, and is in a serious bubble now. There are alot of plumbs out there panic buying that will soon be in serious debt. Already the smart money in Central london are asking agents for valuations in anticipation in selling up for two reasons:.

a) they have made significant gains B) potential capital gains tax that may be introduced next year. If the smart money sells up even taking a 20% cut in todays prices they would still have made serious money. The knock on affect is that the ripple out affect to the suburbs will have a significant impact.

 

That's for the comment.

There's a thread on the Trading section about Creative Real Estate investing.

I will post the chart and your comment there - so it will be easier to find.

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What do those living in Britain think of this ?

(if you are not afraid to answer)

Why should very wealthy property owners also get money FROM the public purse?

 

Should they not put their affairs in order, run a budget, and pay taxes?

 

 

Exposed: The Queen's enormous property empire

 

If you've ever wondered how the Queen makes her money, you may be surprised by the answer.

 

nyq6.jpg

. . .

A report by the Public Accounts Committee revealed the Queen’s advisers were failing to control her finances while the royal palaces were “crumbling”. Both Buckingham Palace and Windsor Castle are reported to be in urgent need of repair with staff routinely catching rain in buckets to protect art and antiques.


As recently as 2001 the Queen’s “reserve fund” was at a healthy £35million but now stands at a paltry £1million. MPs blamed the Royal Family’s advisers for overspending.

Don’t feel too sorry for the Monarch though. Queen Elizabeth II’s rainy day fund may be looking a bit lame but she’s worth a lot more than that – £320million according to the Sunday Times Rich List 2013.

==

Does she depend on taxes? »

 

Er... um...

Let THEM serve cake ! (?)

(They can open their palaces to tourists, and live off that)

 

They and we might prefer THAT to the alternatives

 

=

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It throws up big questions about the role of the nation state, patriarch organizations and the cross-class-hopping that massive wealth enables - so that the oligarchs mix with the old money. An old I mean the Viking settlers of Normandy who took over in October 1066.

 

Working in London in all the boroughs from Tower Hamlets to Kensington I see that you need to be mega rich to live in all of them. London now a mad, money grabbing city state. Twas ever thus?

 

Poor bloody plebs we are, will be beaten or arrested or just sacked. House of Commons and Lords, Bank of England and City of London based promoting and participating in fraud.

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