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UK House prices: News & Views


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Are you still thinking UK house prices will fall to an average of 100k from here Dr Bubb?\

Or is sterling now so doomed that everything will go up in nominal terms?

 

At the moment, I still think a Pds.100k price is possible.

The deflation back down should start again before the end of the year, if not much sooner.

 

Only if the government finds a way- and implements it - to get money back into people's

hands, is there a chance that the eventual downturn can be forestalled

 

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Beginning to doubt whether this is just a dead cat bounce, maybe we have underestimated the British obsession with property. Could the property cat have ten lives?

 

Spoke to a friend who is a small time property developer/landlord in Wimbledon, and he says property around there is selling at an all time high, higher than 2007/8 and very quickly.

 

He reckons anyone who had the guts to buy last winter would have made 15 to 20% in a matter of just a few months

 

Where the hell are people getting all this money from? house in SW19 are not cheap. A small terrace will set you back £600k

 

Not sure Wimbledon is representative of the UK

 

According to this report, prices are retreating after the bounce, perhaps the beginning of the next leg down.

 

http://www.home.co.uk/asking_price_index/HAPIndex_SEP09.pdf

 

Also note time on market for Wimbledon beginning to rise again despite limited supply.

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A little bit of anecdotal......

 

I'm moving to a new job at the end of the month and looking for a city centre flat (flat, not luxury apartment :P ) to rent for the first six months. A typical low-end BTL-athon willl do just fine while I settle in at work and decide where to live longer term in the city.

 

However, letting agents are very busy and hard to get hold of, and indeed most flats are gone by the time I get through to them. I've checked that I am not being played by the agents (I've asked friends to make seperate enquiries), so am a little suprised at the high demand-low supply situation here as new builds are everywhere in this city.

 

A little bit puzzled as to why this is. A temporary consequence of the dead cat bounce, or something more ?

 

I thought I would report back my explanation for this, having been 'at the coalface' the past week while flat hunting. It's to do with the fact I want a flat at the 'low-end' of the young professionals market.

 

My observations:

 

+ No FTBers at all - everyone under 35 is looking to rent

 

+ These people are all looking at the same segment of the rental market - basic one beds. For example, couples are looking for a one bed not something more roomy. The affluent young professionals (accountants, lawyers etc.) are not renting penthouses or top-end flats and instead are also chasing low-end one beds. People who normally favour exclusive are happy with basic at the moment.

 

+ Rich students for the new uni term are 'living out' not 'in halls'. You spot them as they tour flats with their 4x4 driving parents in tow saying "Well, its near the library" etc. What nicejim said fits here - students from 'well off' backgrounds may feel more afluent than a generation ago now they have access to student loans as well as the bank of mum and dad.

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So, people who know the value of money have decided that the going rate for a decent flat is too expensive for any flat whereas the people who are yet to discover the value of money think they're too good to slum it with the hoi polloi. Furthermore, those who know the value of money have their rental budget cut because they have to repay the debts they incurred when they didn't know its value.

 

The sort of flat a profession might actually want to live in will have to come down to the level they can actually afford.

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What area/town/city are you in?

 

Wakefield like the Grumpster, I rent from the builder one of these lifestyle riverside apartments which are useless round here, all young families and very few childless professionals.

 

I also noticed Yorks + Humber reported a 3.9% drop in the right move numbers which overall reported a rise.

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Overall, rents are down in Northampton and Milton Keynes also.

 

My point is that renters are now chasing affordable flats and are willing to compromise their standard of living for lower rent payments. This may create a floor at current levels in many rental markets. It will, however, murder any BTLer with a penthouse / concierge service / city views etc as nobody will pay the premium for this.

 

People are happy with 'Tesco Value' not 'Tesco Finest' in the current rental market.

 

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I'm surprised to be first to post this. It was on Radio Five news just now - is the summer party over for the UK housebuiders?

 

Housebuilders and property group in cash call

http://www.ft.com/cms/s/0/e15870be-a809-11...144feabdc0.html

 

Article starts:

A trio of share issues was unveiled on Wednesday as British companies looked to the buoyant stock market for cash to reduce their borrowings and fund growth.

 

The biggest was announced by Barratt Developments, the housebuilder, which said it was raising £721m through a placing and rights issue. It said the fundraising was designed to reduce debt, as well as finance the development of existing sites and the acquisition of new land.

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...

Article starts:

 

from the same article

 

Rival Redrow, meanwhile, announced a £156m rights issue to cut its own debt and fund a £15m bailout acquisition of assets from Harrow Estates, a developer owned by Steve Morgan, Redrow’s executive chairman and biggest shareholder.

 

:rolleyes:

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I'm surprised to be first to post this. It was on Radio Five news just now - is the summer party over for the UK housebuiders?

 

Housebuilders and property group in cash call

http://www.ft.com/cms/s/0/e15870be-a809-11...144feabdc0.html

 

Article starts:

 

If the markets do turn over the next week or so then Barratts et al could well be in a lot of trouble.

The rights issues that occurred earlier in the year were considerably better timed. Research from several estate agents indicate that activity has fallen off in the last week.

I reckon that come October we could be seeing the turn in property too, and winter may come early.

But then again the duration of the dead cat bounce has surprised me. Cash rich buyers are the supporters of this market right now, and as EMs fall and fear sets in again, then property will be punished. I don't often link property sentiment to equity market's performance, but this time I can quite easily see how closely related they are.

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http://www.bloomberg.com/apps/news?pid=206...id=aXe9QqyAM40s

U.S. Existing Home Sales Unexpectedly Fell in August to 5.1 Million Rate

Ah. Totally unexpected.

Sept. 24 (Bloomberg) -- Sales of existing U.S. homes unexpectedly fell in August for the first time in four months, signaling the housing recovery will be slow to gain speed.

That's a nice euphemism.

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http://www.bloomberg.com/apps/news?pid=206...id=aE3XgycC1fhk

Landlord ‘King’ Sells Before Rate Rise ‘Slaughter’ (Update1)

 

By Kevin Crowley

 

Sept. 25 (Bloomberg) -- Fergus Wilson, the former mathematics teacher dubbed Britain’s buy-to-let “King,” says he’s selling 700 rental properties before interest rate rises bring “slaughter” to landlords in the U.K. housing market.

 

Wilson, who together with his wife Judith rank among the 1,000 wealthiest Britons according to this year’s Sunday Times Rich List, said it was inevitable that interest rates would rise from a historic low, pummeling rental landlords.

“You’ve got a lot of people who have taken out a mortgage and are right up to their throats” in debt, said Wilson as he settled into a black armchair at a hotel in Maidstone, south- eastern England. “As soon as rates go up, they’re going to be slaughtered.”

...

The Wilsons, called “The King and Queen of Buy-to-Let” by newspapers including the Guardian, last week agreed to sell their investment for 180 million pounds ($289 million) to an asset management company “possibly representing Russians,” Wilson said.

...

“When you’ve got low rates, there’s only one way they can go, and that’s up,” Wilson said. “There’s no better time to sell.”

Well, I guess 1-2 years ago would have been better.

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From another post: The markets are still too expensive, and housing is not going anywhere.

 

An average BTLer has to cough up a 40% deposit now. The rental income must cover the mortgage payments at 10% IR, I think. And the additional safety margin is 40%. BTL is dead, and so is the whole market.

 

Should hyperinflation set in, the property market will follow it belatedly and will still suck as an investment.

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A friend has had her high-end flat on the market since May (agent suggested 329k then and it was too high and generated no offers. It was trimmed to £299,000 in the summer). Had an open house last week and one of the viewers offered £280k. Agent told them this was too far off the asking price and wouldn't be considered.

 

They made a second viewing the other day, and returned with an offer of £290,000.

 

I told her to jump at it. She needs to check with her bank to see if this is a break-even proposition. If so, she will take the offer.

 

Interestingly, the guy making the offer is a property developer. He is looking for a modern flat in a good neighbourhood, with a lift, for his disabled 20-something son. This place ticks all the boxes, as it is in small three-story place in a very good neighbourhood. It is a big 2 br and was extensively and really nicely renovated into an open plan kitchen/sittingroom/diner by my friend.

 

I hope it proceeds as I want her out of the market ASAP!

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Interesting article here on US housing market, priced in gold, from oftwominds:

 

OfTwoMinds

 

The first chart is the S&P Case-Shiller House Price Composite (black line). The red line is an RS (relative-strength) of the composite to gold. Historical comparison suggests home prices are still overvalued. The red line indicates that homes are worth in gold what they were in the late 1980's while nominal prices remain elevated.

 

chart

 

At the peak in 2005, the median home price equaled 490 ounces of gold. The present median price is worth about 160 ounces of gold, or roughly the same valuation as 1988.

 

Nominal housing prices have returned to 2003 levels. But when priced in gold, the 2003 valuation was 420 ounces of gold. Now that nominal prices have returned to that level today, the median house will only fetch 160 ounces of gold.

 

But if nominal prices revert to pre-bubble valuations (1997-98), which is the typical course of popped asset bubbles, then we could see housing become even cheaper when priced in gold.

 

That is, if gold continues rising and housing continues declining, then it is certainly possible that the median house price could fall to 100 ounces of gold--a mere 20% of its 2005 peak.

 

etc

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Interesting article here on US housing market, priced in gold, from oftwominds: ...

Always nice these kind of comparisons. Although, I think the max for a US house was 800 oz in 2004. Here is the UK in comparison:

 

http://gold.approximity.com/since1968/UK_H...es_in_Gold.html

UK_House_Prices_in_Gold.png

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nothing massively new or original but here is a very recent National Institute of Economic and Social Research presentation, 'Prospects for the UK Economy'.

all seems sensible enough. see slide 8 for properdee, slide 10 for inflation, slide 11 for a laugh...

 

THEY ARE RIGHT about one thing...

 

In the future we are likely to be poorer than we thought

 

• We have re-evaluated our assumptions about future

spending in light of Ministerial statements

– But current plans predominantly rely on cuts to capital spending

 

• Borrowing remains high

– Still above £120 bn (7.5% of GDP) in 2013-14

 

• These spending cuts alone are not enough

– A mix of further spending cuts, tax increases and extended working lives would

probably be the best solution

 

== ==

 

BOTTOM LINE:

The Ministers have been lying - Expect more Tax rises !

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