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UK House prices: News & Views

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I'll believe it when I really see it.

 

This is nothing more than a couple of ticks down, which has happened many times before. 2005 and, to a greater extent, 2008. The UK housing market has a habit of surprising people and , in my lifetime, the surprises have always been to the upside.

 

My observations of my locale is that there is a bit more property for sale than usual. But stuff is still selling - particularly family homes, which, in the event of a crash, are likely to hold up better for and for longer. Rents are still extravagant. There are no repossessions or anything approaching the wash-out of 89-94. I know they come further down the road.

 

But for now this is just a tick down.

 

So no premature congratulation

 

Playing it cool then Dom? Good idea, best not get carried away just yet.

As my wife says, it's never a good idea to be premature.

 

 

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A Doubting Thomas in our midst?

image0100x.jpg

 

I'll believe it when I really see it.

 

This is nothing more than a couple of ticks down, which has happened many times before. 2005 and, to a greater extent, 2008. The UK housing market has a habit of surprising people and , in my lifetime, the surprises have always been to the upside.

Hmm.

These ticks are MEANINGFUL to me, because of the context within which they are happening.

 

We are on the road to a Double Dip (or worse) all across the Western World.

What can the UK possibly do, that it has not done already, to prop up Housing?

The old tricks are failing, and the new government is ready to take some pain.

 

The market turned down in late 2007, as predicted, and the QE program saved it (temporarily.)

Then it turned up in April 2009, as predicted, and made a nice classic mult-month rally.

So far, this is the expected pattern, albeit the bounce was a healthy one. The next part of the

pattern is a slide, probably a severe one.

 

The fundamental, technical, political and cyclical forces are all aligned.

What do you imagine could possibly stop them?

 

My observations of my locale is that there is a bit more property for sale than usual. But stuff is still selling - particularly family homes, which, in the event of a crash, are likely to hold up better for and for longer. Rents are still extravagant. There are no repossessions or anything approaching the wash-out of 89-94. I know they come further down the road.

Ask yourself, does that LOCAL AREA lead or lag the market in a downturn?

Are the people in your area especially good at holding onto their confidence?

I reckon them may be somewhat sheltered, and have little idea what is happening across GB.

And also, they have learned time and time again to "buy the dips." It will take much pain,

to unlearn that dangerous behaviour.

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Sometime ago I remember Dr Bubb doing a calculation of the speculative premium in UK housing. The average house needs to fall from £168000 down to £135000 ie 20%. Despite all the frantic efforts to recreate the boom prices are stuck. The laxative of rising unemployment and the threat from the bond market vigilantes should shift the blockage in the next 18 months. In real terms of course we have already seen a substantial crash but of course the experts in smoke and mirrors technology have completely hoodwinked the bulk of the UK population about the true state of affairs.

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Over the next twelve months to two years I'm expecting big falls. House prices rose to unbelievably high levels. They have a long, long way to fall before they reach depression levels. And we are in a depression.

 

The auctions are a good leading indicator. As more repos go onto the block and fewer people are able to get credit price falls like this one will become common

 

Lot 209 : House, 2 beds, Thamesmead, London

Property Status : Sold at Auction

73 Waterside Close, Thamesmead, SE28 0GT

Guide Price : £130,000 : Sold Price : £130,000

 

http://www.mustbesold.com/index.php?option...tus=&live=0

 

last sold for £229,950 in 2006.

 

http://www.houseprices.co.uk/e.php?q=SE28+...p;s=11&n=10

 

Why buy now, when you can get the same house for half the price in twelve months?

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The govt WANTS the pain now...

 

Second home owners to lose tax breaks

 

Myra Butterworth, 15:16, Thursday 29 July 2010

Tens of thousands of second home owners stand to lose generous tax breaks on furnished holiday lets.

 

The tax advantages on furnished holiday lets were reinstated by the Coalition after the previous Government abolished them in April.

 

George Osborne reversed the measure in the June Budget saying he wanted to help small businesses operating in the tourism industry.

 

However, the Treasury has now said it intends to make it much tougher for home owners to qualify for the breaks.

 

The move comes as the Government prioritizes reducing the countrys deficit.

 

Under the proposals, home owners will need to secure more bookings and will no longer be able to offset their mortgages costs against their personal income. This tax break is one of the main financial reasons for investing in a furnished holiday let as it helps to reduce an individuals overall tax liabilities.

 

The new proposals aims to bring the rules in line with EU law and make them focused on commercial businesses rather than those run for personal use.

 

It means more than a quarter of the 65,000 home owners offering holiday lets in Britain will no longer be eligible for the tax benefits from 2011-2012, according to a consultation document published by the Treasury.

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just playing with the land registry data and as i suspected we haven't had the mini bounce up here, just a steady decline from peak of around 20% I think the north south divide is reopening and with the public sector cuts (Leeds and Sheffield seem to be two of the hardest hit) I can only see it getting worse

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The govt WANTS the pain now...

 

 

Interesting...

 

It will be more electable at the next general election if the pain comes quickly, so that the figures have a chance of being positive when electioneering starts. If it delays the pain for 2 years then it stands no chance of getting back in.

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Interesting...

It will be more electable at the next general election if the pain comes quickly, so that the figures have a chance of being positive when electioneering starts. If it delays the pain for 2 years then it stands no chance of getting back in.

Indeed that is it.

Politics played a huge part in the UK bubble.

Brown promised, "An End to Boom and Bust," and believed he deserved to be PM if he delivered that.

Along the way, he used a Housing Bubble, and massive public sector job creation to delay and delay a recession.

Instead of a Bust, he delivered an economy with massive debts, and ready to slide into a Bigger Bust.

 

This was a crime against the future, for which he deserves to be villified as a ambitious monster.

2lbmmbb.jpg

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It will be more electable at the next general election if the pain comes quickly, so that the figures have a chance of being positive when electioneering starts. If it delays the pain for 2 years then it stands no chance of getting back in.

 

Totally true. Notice that the coalition government have agreed on a full five year term in advance of the pain being dished out. So they have scketched out a timetable for a pain-and-recovery process. The recovery need not be complete by ballot box time, just nicely gaining momentum.

 

48529382houseprices464.gif

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Brown promised, "An End to Boom and Bust," and believed he deserved to be PM if he delivered that.

Maybe he would have been more succesful in promising "and End to High Tide and Low Tide".

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Housing market 'faces abyss' over new rules on mortgages

 

18 July 2010 .. By Teresa Hunter

 

HOMEBUYERS are heading for a house price abyss if watchdogs press ahead with new mortgage rules which could leave up to one in five, or nearly two million borrowers, unable to remortgage or move house.

The Financial Services Authority wants early next year to restrict advances sharply, scrap self-certified mortgages, impede interest-only loans and block fast-tracked arrangements.

 

If it presses ahead with its plans, nearly 20 per cent of existing borrowers may be unable to remortgage without reducing their debt significantly, funds available to borrowers overall could be reduced a further 10 per cent, and the self-employed may be prevented from taking that first step on the property ladder.

 

Rather than safeguarding borrowers, these proposals could lead to rocketing repossessions, experts warn.

 

Peter Williams, chairman of the Intermediary Mortgage Lenders Association, said: "This really is a step into the abyss. By 2012 the UK mortgage market could be unrecognisable. It will be a conservative market serving only the relatively well-off."

 

/more: http://business.scotsman.com/business/Hous...over.6425794.jp

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If it presses ahead with its plans, nearly 20 per cent of existing borrowers may be unable to remortgage without reducing their debt significantly, funds available to borrowers overall could be reduced a further 10 per cent, and the self-employed may be prevented from taking that first step on the property ladder.

 

Why would that be? I would've thought that most reputable lenders would take the word (albeit written) from an accountant about the state of the self-employed person's income/profit.

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Why would that be? I would've thought that most reputable lenders would take the word (albeit written) from an accountant about the state of the self-employed person's income/profit.

 

That is correct and is already happening with a lot of the lenders.

 

It is just the self cert (Liar-Loans) that will be banned, the vast majority of which have already been withdrawn some time ago. This will just stop them reappearing.

 

The market will likely stay flat or (more likely) drift down slightly until the real nail in the coffin comes with rising interest rates. But, the rise in IR may not be for a good while yet.

 

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But, the rise in IR may not be for a good while yet.

 

If the BoE was to raise IRs it would be ideal to do it this week. Why?

 

1) Mervyn King has said that we can expect low IRs for a long time recently, thus softening the market for rises, still claiming that a 0.25-0.5% increase maintains very low rates overall....

 

2) That Q2 GDP figures were much higher than previously thought so the ideal time to control inflation (see Construction has grown 6.6% which is predominantly in cost-push inflation)....

 

3) The £ has rallied well since the lows, and so it is the ideal signal to the capital markets that it is good to invest in the £, and it will help maintain the £ rally....

 

4) Purchasing Managers figures released today indicate that manufacturing is doing well, so an IR increase can be justified without undermining the sector.

 

 

To raise would of course be the right thing to do. The BoE has plenty of justification and evidence - will it have the stomache?

 

 

 

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If the BoE was to raise IRs it would be ideal to do it this week. Why?

 

1) Mervyn King has said that we can expect low IRs for a long time recently, thus softening the market for rises, still claiming that a 0.25-0.5% increase maintains very low rates overall....

 

2) That Q2 GDP figures were much higher than previously thought so the ideal time to control inflation (see Construction has grown 6.6% which is predominantly in cost-push inflation)....

 

3) The £ has rallied well since the lows, and so it is the ideal signal to the capital markets that it is good to invest in the £, and it will help maintain the £ rally....

 

4) Purchasing Managers figures released today indicate that manufacturing is doing well, so an IR increase can be justified without undermining the sector.

 

 

To raise would of course be the right thing to do. The BoE has plenty of justification and evidence - will it have the stomache?

 

Have to disagree, your points would signal the opposite to me, or am I missing something?

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Have to disagree, your points would signal the opposite to me, or am I missing something?

 

It depends on whether or not you accept the basic premise which is that they have to go up.

 

The BoE know this.

 

Therefore you have to consider when, and what will allow them to do it.

 

Why don't you try and think like the BoE would about the facts as they currently are and ask if you would leave IRs as they are.

 

Or put it the other way around to those arguments above: would you raise interest rates when, manufacturing was declining more, when the £ was in a worse state, when cost inflation was lower, and if GDP growth was not as positive. No you wouldn't. How much more positive do the indicators have to be?

 

If you think IRs will stay as they are regardless of the economic indicators, and that they have to go up to resolve the debt, then there is no point in analysing this further.

 

 

 

 

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It depends on whether or not you accept the basic premise which is that they have to go up.

Sorry but the IR will only "have" to go up when the market demands.

 

Until then, the BoE want them to be low. It appears that you think that the BoE want them to rise?

 

They absolutely do NOT want them to rise, as they know the damage that this would cause.

 

They believe a weak pound is great for the UK, and inflation (which they secretly want a bit of) will trump potential deflation every time for the CB's.

 

Even with a couple of indicators looking slightly positive, it seems generally agreed that the risks are all still to the downside.

 

That coupled with the looming cuts (many of which have already begun) is forecast to further suppress demand and inflation expectations for a considerable time to come.

 

If anything, there will be more money printing to come.

 

Oh, and I never said anything about "IR's remaining the same regardless of the economic indicators" :blink:

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Okay -points taken.

 

You say the markets decide - definitely, that is my point too. But it is the capital markets that decide, and the currency traders need to see a strong £ and an attempt to reduce the deficit; that is not achieved by indefinitely low rates. Let's monitor how the £ copes with the BoE's releases this week. Perhaps the £ will rally if IRs stay the same, perhaps not.

 

I just have a strong view that the BoE is petrified of sterling being attacked by bond vigilantes later this year or early 2011. The capital / currency flows out of £ and lack of confidence in the £ trumps everything IMO. Higher interest rates will keep them away. The June "eturdency" budget kept the vultures away, but only until the Autumn. Then, and only then will we see if these cuts will come through as aired. If the coalition wimps out, which is my view they will, then the £ will bollock out, and so IRs will have to increase to compensate.

 

Talking of politicians, my guess is that they would rather accelerate the pain, in order to give them a better chance of re-election in 4 years as by then times will be relatively better. The last thing they want is a long drawn out torture.

 

 

 

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Talking of politicians, my guess is that they would rather accelerate the pain, in order to give them a better chance of re-election in 4 years as by then times will be relatively better. The last thing they want is a long drawn out torture.

Now that I can agree with :)

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Are beach huts the new penthouses?

 

Beach huts in Scarborough are fetching £35,000, the same price as some one-bedroom flats in the town. So what do you get for your money, and why is the market for beach huts so buoyant?

 

Luxury, though, means a small wooden room, four chairs, a table, a plug, a kettle and a single cold water tap. You are not allowed to sleep in it - indeed, you have to leave it by 10.30 each evening. Neither is there hot water nor a toilet. Yet so far this year, 15 have been sold and most are fully let.

 

From bbc.co.uk

 

Bubble, what bubble?

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[...]

I just have a strong view that the BoE is petrified of sterling being attacked by bond vigilantes later this year or early 2011. The capital / currency flows out of £ and lack of confidence in the £ trumps everything IMO. Higher interest rates will keep them away. The June "eturdency" budget kept the vultures away, but only until the Autumn. Then, and only then will we see if these cuts will come through as aired. If the coalition wimps out, which is my view they will, then the £ will bollock out, and so IRs will have to increase to compensate.

 

Talking of politicians, my guess is that they would rather accelerate the pain, in order to give them a better chance of re-election in 4 years as by then times will be relatively better. The last thing they want is a long drawn out torture.

 

I have a feeling that the £ will at least hold up well until the autumn. Markets are IMHO basking in the feelgood factor of government change and the encouraging noises that are emanating, and are not realising how dire the situation is!

 

The story may be an altogether different one come autumn when George Osborne has to make firm announcements how and where he wants to cut spending. Markets may not take too kindly to the prospect of rising unemployment and reduced consumption, and they may not take too kindly to the UK economy either if no convincing plans are forthcoming. That's the dilemma the BoE is in at the moment IMHO.

 

NS&I have pulled the plug on their inflation-linked certificates. That tells its own story how the government plans to reduce the debt, i.e. inflate it away. They can't do that if servicing the cost of the debt rises with inflation figures.

 

My best guess is they won't raise rates.

 

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I have a feeling that the £ will at least hold up well until the autumn...

 

As a long term investor rather than trader I'm starting to wonder if the £ is actually undervalued. Analysis includes the Big Mac Index plus some currency charts since 1971 here http://retirementinvestingtoday.blogspot.c...ndervalued.html

 

Of course as someone currently trapped in the UK maybe I'm also becoming delusional :)

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Is "creativity" good for cities?:

http://www.washingtonmonthly.com/features/...05.florida.html

 

I suppose London scores rather well on this measure.

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