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G0ldfinger

UK House prices: News & Views

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Anyone care to suggest how far this ratio may fall?

Definitely below 100oz. I think we could see 50oz average at the bottom. Not only do we have a UK HPC, we have a global financial system implosion. If it comes really bad we'll go 10oz.

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I am watching closely the developments in a certain area of Edinburgh. Of 87 flats/houses that are advertised in this area, 58 are 'fixed price'. For those who don't know the Scottish system: usually (6 months ago) EVERYTHING was 'offers over', leaving the interested buyer in the dark, causing insane bidding frenzies. Now with 66.6% 'fixed price', we have a clear sign that the market is collapsing. Literally, the emporer has not clothes anymore. The new (and often lower) price is on display for everyone.

 

Edinburgh = toast.

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Definitely below 100oz. I think we could see 50oz average at the bottom. Not only do we have a UK HPC, we have a global financial system implosion. If it comes really bad we'll go 10oz.

I wonder if this ratio may be a good tool for timing the bottom of the UK housing market.

(trade all your oz's for a country estate then GF!)

 

It peaked prior to both the 07 and 90 tops of the housing market. I might look into this more when I get some time.

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I wonder if this ratio may be a good tool for timing the bottom of the UK housing market.

(trade all your oz's for a country estate then GF!)

 

It peaked prior to both the 07 and 90 tops of the housing market. I might look into this more when I get some time.

You may have seen this one before:

HP_UK_in_gold_1952.PNG

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I wonder if this ratio may be a good tool for timing the bottom of the UK housing market.

(trade all your oz's for a country estate then GF!)

 

It peaked prior to both the 07 and 90 tops of the housing market. I might look into this more when I get some time.

 

Have you seen this thread ?

 

Cross Market Analysis: Property-in-Gold ounces

How to predict by using components of the relationship

http://www.greenenergyinvestors.com/index.php?showtopic=3028

 

I'm afraid I have a bee in my bonnet about this.

No doubt I will be doing a lot more work on this when prices get nearer to the opposite end of the pendulum swing :D

 

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While we're comparing house-price crashes:

 

crashcomparisonev6.th.jpg

 

(Assuming this whole ImageShack thing works... ;) )

 

I hope you don't mind - I've nicked your chart to post elsewhere :D

And added a bit:

 

Crash_Comparison_by_OJ_080830b.gif

 

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I hope you don't mind - I've nicked your chart to post elsewhere :D

And added a bit:

 

Crash_Comparison_by_OJ_080830b.gif

 

Ooh! Where else did you post it?

 

Here's a chart with this month's Nationwide figure added (although I have noticed that I didn't modify the legend to say that the Nationwide figures now go up to August):

 

crashcomparison200808nwv0.th.jpg

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That's an amazingly steep drop compared to last time !

 

Quite a comparison! Anyone know what the rise was like by comparison each time on similar time frames? Just wondered if their might be a link to expected rate of decline?

 

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http://www.thisislondon.co.uk/standard/art...ices/article.do

Perhaps we renters can start having competitive conversations about how much money we haven't lost this month?

:lol: That's exactly what I am doing all the time. I just told my wife that we haven't lost £20,000 over the last 12 month (unlike the average UK house). How good is this? :)

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Definitely below 100oz. I think we could see 50oz average at the bottom. Not only do we have a UK HPC, we have a global financial system implosion. If it comes really bad we'll go 10oz.

 

Umm, not sure about 10 oz or 50 oz - but it would be nice ;) New house prices are made up of materials, labour, land and greed. If we discount the greed, the reductions must be spread over the other three parts. Building materials increased 8% in the last year (RICS). So, labour and land has to plummet. Labour prices will & are getting hit but in the end brickies will not work for nothing. So, building land values have to take the major hit. We'll see this when the big developers start shedding the "land banks". I don't see this happening yet as I believe we are still at the beginning. There is lots more pain to come.

 

The house gold ratio is a good one. Where are we at the moment ?

 

 

 

 

 

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Umm, not sure about 10 oz or 50 oz - but it would be nice ;) New house prices are made up of materials, labour, land and greed. If we discount the greed, the reductions must be spread over the other three parts. Building materials increased 8% in the last year (RICS). So, labour and land has to plummet. Labour prices will & are getting hit but in the end brickies will not work for nothing. So, building land values have to take the major hit. We'll see this when the big developers start shedding the "land banks". I don't see this happening yet as I believe we are still at the beginning. There is lots more pain to come.

Don't forget, during the last crash houses sold for less than rebuild value. I see no problem for this happening again. Yes, it will mean building houses on empty lots won't make sense. And this is exactly what we need to get rid off all the oversupply.

 

The house gold ratio is a good one. Where are we at the moment ?

£164,654 / £456.00/oz = 361.08oz

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And this is exactly what we need to get rid off all the oversupply.

 

Ha ! Interesting language. To think we were being fed the "demand out strips supply" message.... How things quickly invert.

 

If Hp/Gp = 360 now, then, if my sums are correct, a 50% drop in house prices and a 50% increase in the gold price would put the ratio at 120. Throw in an overshoot and we could see 100 or sub 100.

 

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Ha ! Interesting language. To think we were being fed the "demand out strips supply" message.... How things quickly invert.

 

If Hp/Gp = 360 now, then, if my sums are correct, a 50% drop in house prices and a 50% increase in the gold price would put the ratio at 120. Throw in an overshoot and we could see 100 or sub 100.

 

Bang on target . . .100

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What's youreventual target, GF , forthe gold tohouse priceratio?

100oz or lower. Triple-whammy: houses will tank, Sterling will tank, gold will go up. Within only 6 months the media have changed their tunes quite a bit. In another 12 months any 3-year old on the street will tell you how bad of a dog houses are as an investment. Credit crunch is also not going away. Last time (in gold cycles) we hit 80oz, quarterly numbers. We could easily see the same or lower at the bottom this time. This crisis is worse than the 70s. Even Darling has woken up to this now.

 

Funny thing is, the street cafes are full, people are shopping. It's truly a While E. Coyote moment of the wider economy. :o

 

EDIT: I would put it like this: someone who didn't buy a house because he saw it coming, instead bought gold, and will exchange this gold for a house when the price in gold is lower than, say, 120oz, this person will have done very, very well.

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That's an amazingly steep drop compared to last time !

 

In my eyes it's a confirmation that this is a much bigger bubble and the current correction as I and many on the old HPC expected will be massive it is already looking like it will be much bigger.

 

The overshoot also should be in proportion very big and might produce very good bargains - not for a year or two yet IMO.

 

 

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What's youreventual target, GF , forthe gold tohouse priceratio?

Here an extension back to 1930.

 

Expect fireworks!

 

HP_UK_in_gold_1930.PNG

 

Av 212.05

Min 65.03

Max 691.49

 

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Bank of England mortgage approvals (for new purchases) released this morning. 33k (SA).

 

This is a new ‘worst ever’, beating the previous ‘worst ever’ (last month) by 2k.

 

NSA is also the 'worst ever' at 38k.

 

EDIT:

 

Just noticed that the series only stars in 1993, so the ‘worst ever’ tag doesn’t mean all that much.

 

EDIT2:

 

http://news.bbc.co.uk/1/hi/business/7591421.stm

 

The number of new mortgages approved for home buyers fell in July to just 33,000 - down by 71% on a year ago.

 

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'Free loans' offer to homebuyers

Tuesday, 2 September 2008 08:28 UK

http://news.bbc.co.uk/1/hi/uk_politics/7592852.stm

 

 

The government is to promise first-time buyers in England "free" loans of up to 30% of their home's value, in an effort to reinvigorate the housing market.

 

Households earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers. There is also speculation a Stamp Duty "holiday" could be included in the measures when they are unveiled later.

 

The Tories said it was a "short-term survival plan" for the prime minister.

 

House prices are reportedly falling at their fastest rate since the early 1990s, while rising fuel costs and the global credit crunch are denting economic confidence.

 

Communities Secretary Hazel Blears will announce a raft of proposals on Tuesday aimed at buoying the property market. She is one of several cabinet ministers putting forward plans seen as the beginning of Mr Brown's "recovery plan".

 

The loans system, called HomeBuy Direct, is to be run together with "large-scale" property firms.

 

Once the five-year "free" period is up, homebuyers will be asked to pay a fee
, the Department for Communities and Local Government said -
although no more detail of this was provided
.

 

I think the 'free' 30% loan for 5 years is designed to trap foolish people, how will the 30% loan be paid back? simple, idiots will believe that this will kick-start the housing market and that the value of the house they buy will rise over the next five years. They will think that they can pay back the 30% loan with an increase in house prices. In reality this measure will trick people into allowing the government to own 30% of their home, thus nationalizing private housing by stealth and deception.

 

This is of course economic insanity, when the Nasdaq shares fell in price we didn't give out 'free' 30% loans to temp first time share buyers into the market to support share prices, this is all going to end in tears.

 

I am reminded of the scene in Jaws where the Hooper asks Quint if he has ever encountered a shark that is able to submerge with three barrels on it, Quint responds that he has never encountered this situation before and for the first time appears unsure of what to do. The shark continues to attack the boat and Quint powers his boat, retreating towards shore with the shark in pursuit. Quint hopes to draw the shark into shallow waters to beach it, that will cause it to drown. Hooper warns Quint to lower the pressure on the engine because he's going to overload it, at which point Quint increases the revs...

 

Farewell and adieu to you, fair Spanish ladies. Farewell and adieu, you ladies of Spain. For we've received orders for to sail back to Boston. And so nevermore shall we see you again

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(I stole this entire post from HPC, thanks Alfie Moon)

 

From Reuters details of the 'rescue':

 

LONDON (Reuters) - Prime Minister Gordon Brown will announce a package on Tuesday to prop up the slumping housing market. The Department for Communities and Local Government said the package would include:

 

* A new mortgage rescue scheme to help 9,000 vulnerable families struggling with payments avoid losing their homes. Eligible home owners will have three options under the scheme:

 

-- a registered social landlord clears all secured debt and occupants will then pay a rent they can afford.

 

-- a registered social landlord buys a share in the home and converts the property to a shared ownership lease.

 

-- a registered social landlord provides an equity loan allowing mortgage payments to be reduced.

 

A government source said the scheme would cost about 300 million pounds.

 

* A new shared equity scheme to help up to 10,000 first-time buyers earning less than 60,000 pounds buy new homes over the next two years. Buyers will be offered an equity loan of up to 30 percent of the house value, interest-free for five years, co-funded by the government and the housing developer.

 

A government source said this scheme would also cost about 300 million pounds.

 

* New social housing. The government will bring forward funding from existing budgets for affordable housing schemes which could deliver 5,500 more homes over the next 18 months.

 

A government source said this measure would be worth 400 million pounds.

 

see: http://uk.reuters.com/article/domesticNews...02?rpc=401&

 

The 30% scheme to help FTB'ers will only be available for up to 10,000 FTB'ers - NOT ANY AND ALL FTB'ers!!!

This 'rescue' will not stop the house price crash - it won't even put the brakes on a little bit. Move along, nothing to see here, etc.

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BBC Business

UK house prices in August were 10.9% lower than the same month a year ago, according to the Halifax.

 

The lender said that property prices dropped 1.8% in August compared with July, leaving the cost of an average home in the UK at £174,178.

 

It said market conditions would remain "challenging" in the months ahead, despite government help for buyers.

 

House prices dropped across the UK, but some surveys have shown the Scottish market to be the most resilient.

 

The figures show that the average price of a home in the UK was at the same level in August 2008 as it was in February 2006.

 

Interest rates

 

The figures were released just a few hours before the Bank of England's Monetary Policy Committee was set to announce its latest decision on interest rates.

 

They also came two days after the government announced measures aimed at supporting homeowners and buyers, such as raising the threshold at which stamp duty is paid from £125,000 to £175,000.

 

"This week's announcement on stamp duty is a welcome development and will benefit a significant number of homebuyers, particularly outside the South East of England. Market conditions, however, will remain challenging," said Halifax chief economist Martin Ellis.

 

He said that pressure on householders' income, and the mortgage squeeze, were still driving prices and housing market activity down.

 

The falls officially reach 10.9% by August. A significant break into double digit figures, for consumption by the masses on the news later on no doubt. Yet still I am seeing sellers desperately cling onto valuations made in 2007!! When will reality sink in for these people?

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