UK House prices: News & Views

[harold bishop]

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And this is the problem. There simply isn't the volume of houses coming up for sale where I want to be in the South East of the UK.

 

What few do come up are snapped up.

 

I'm seeing another this today, not quite what I'm afetr but the right size and where I want to be. If I like it, I'll start at the asking price, in cash and be prepared to go up. It's a seller's market.

[BoldAsBrass]

My eldest son is 22. He messed around (education wise) when he was at school but, facing a future in dead end jobs, he is now studying part time for a degree.

 

Yesterday evening he had a friend around - same age as him. She is going to Canada in July because she is in a dead end job in the UK - hasn't got much support from her parents and struggles just to live in a flat share. She is thoroughly fed up with this country and sees no future here. She has a two year working visa for Canada and has no intention of coming back.

 

Two of my son's mates have just gone to Australia. One is a plumber, the other is a car mechanic. They are both in their early 20s and they have both EMIGRATED - they too have no intention of coming back. They mentioned loads of their friends who have either emigrated, are planning to emigrate or simply want to as a vague ambition for the future. We are not talking about 'travelling' here - they all seem to have realised that, for them, this country is - to use their expression - 'fucked'.

 

My son is DESPERATE to go too. He sees no future in this country and is annoyed with himself that he wasted a few years (education wise) and that he won't be qualified (and therefore able to get into another country easily) until he is 25 or so. But, he will go - of that I am certain.

 

He tells me that the main topic of conversation amongst his peers is 'who is going where, who has gone where, how they are getting on, what skills are wanted where, where I hope to go, where do you hope to go, why Canada is better than Australia, or South Africa is better than New Zealand, or the States is the place etc.'

 

I think this ought to be a bit of a wake-up call. There is a lot of talk of an ageing population, demands on health care, costs of pensions etc. ... what the hell are we going to do if 25% of our children emigrate and 25% are unemployed?

 

I've held the view for a few years now that it needs concerted action by young people to do something about the housing market. Talking to my son and his friend yesterday - and listening to their tales of all the people they know who have gone, are about to go, or want to go - I have suddenly realised they are taking a sort of concerted action. They are leaving this country - and my generation - to our fates.

[drbubb]

I think this ought to be a bit of a wake-up call. There is a lot of talk of an ageing population, demands on health care, costs of pensions etc. ... what the hell are we going to do if 25% of our children emigrate and 25% are unemployed?

If they cut the bejesus out of the transfer programs, then the imbalances (like inflated home prices) will disappear,

and they can put the UK back on track.

 

Way too many people in the UK are living off:

+ Transfer payments

+ House price appreciation

+ "Unearned" rental income

 

They need to eviscerate those sorts of folks, and encourage productive activity.

 

Taxing "City Workers" (and sportsmen too) at 90-95% for incomes beyond PDS 200,000 per annum, might also help

[BoldAsBrass]

If they cut the bejesus out of the transfer programs, then the imbalances (like inflated home prices) will disappear,

and they can put the UK back on track.

 

Way too many people in the UK are living off:

+ Transfer payments

+ House price appreciation

+ "Unearned" rental income

 

They need to eviscerate those sorts of folks, and encourage productive activity.

 

Taxing "City Workers" (and sportsmen too) at 90-95% for incomes beyond PDS 200,000 per annum, might also help

 

Yes, but all that will do is ruin the economy - such as it is.

 

What is a 'transfer payment'?

 

Too little too late I'm afraid. House prices may get cheaper but the economy will be on the floor. The economy is based on continuous debt expansion.

 

I'm going to give my kids every encouragement to emigrate - just hope they both end up in the same country and that Mum and Dad can blagg their way in too!

[drbubb]

What is a 'transfer payment'?

UNearned income

[Concrete Jungle]

My eldest son is 22. He messed around (education wise) when he was at school but, facing a future in dead end jobs, he is now studying part time for a degree.

 

Yesterday evening he had a friend around - same age as him. She is going to Canada in July because she is in a dead end job in the UK - hasn't got much support from her parents and struggles just to live in a flat share. She is thoroughly fed up with this country and sees no future here. She has a two year working visa for Canada and has no intention of coming back.

 

Two of my son's mates have just gone to Australia. One is a plumber, the other is a car mechanic. They are both in their early 20s and they have both EMIGRATED - they too have no intention of coming back. They mentioned loads of their friends who have either emigrated, are planning to emigrate or simply want to as a vague ambition for the future. We are not talking about 'travelling' here - they all seem to have realised that, for them, this country is - to use their expression - 'fucked'.

 

My son is DESPERATE to go too. He sees no future in this country and is annoyed with himself that he wasted a few years (education wise) and that he won't be qualified (and therefore able to get into another country easily) until he is 25 or so. But, he will go - of that I am certain.

 

He tells me that the main topic of conversation amongst his peers is 'who is going where, who has gone where, how they are getting on, what skills are wanted where, where I hope to go, where do you hope to go, why Canada is better than Australia, or South Africa is better than New Zealand, or the States is the place etc.'

 

I think this ought to be a bit of a wake-up call. There is a lot of talk of an ageing population, demands on health care, costs of pensions etc. ... what the hell are we going to do if 25% of our children emigrate and 25% are unemployed?

 

I've held the view for a few years now that it needs concerted action by young people to do something about the housing market. Talking to my son and his friend yesterday - and listening to their tales of all the people they know who have gone, are about to go, or want to go - I have suddenly realised they are taking a sort of concerted action. They are leaving this country - and my generation - to our fates.

 

The same applies to a lot of my peers in the 25 - 32 age group, plenty perhaps 15-20% have left and about 20/25% of the rest are seriously plotting their escape.

[tallim]

...I think this ought to be a bit of a wake-up call. There is a lot of talk of an ageing population, demands on health care, costs of pensions etc. ... what the hell are we going to do if 25% of our children emigrate and 25% are unemployed?

...

 

I think whe might see a tricky situation for Government. The UK has a total fertility rate of around 1.95, it's estimated that we need 2.075 to maintain population levels, but we're seeing increasing population due to increasing life expectancy and net immigration.

 

If the younger generation starts to emigrate in significant quantity we may get a Government that wants to respond with more immigration, but we have a Government who would find it very difficult to propose that while the population is seeing poor employment prospects. We might also see a Government implement economic tools to encourage births (ideally tax breaks, not cash), but again that will be a difficult sell for the current Government.

 

What we will hopefully see is a country coming to terms with the fact that much of it's economic prosperity was only ever based on increasing population (like a pyramid scheme) and that many of the programs implemented on this basis are undeliverable (unfunded final salary pensions, borrowing to infinity, etc...). Then some focus could be put back on how to make this an attractive place to live and raise a family.

 

The most worrying bit about economic emigration for me is that it would tend to take away the people we need to continue to be prosperous, you've probably proved yourself to be an ideal employee or business owner; able to think long-term, take balanced risks, etc...

 

On a personal anecdote, 3 friends (late 20's early 30's) have emigrated in the last 2 months to Oslo (hoping for better quality of life), Beijing (because that's where the jobs are in his industry) and Dubai (because the tax system means they will have a better income), incidentally all 3 are Chemical Engineering graduates, though only 1 still works in that field.

 

Emigration of younger people would make this population pyramid look ever more unstable.

[BoldAsBrass]

The most worrying bit about economic emigration for me is that it would tend to take away the people we need to continue to be prosperous, you've probably proved yourself to be an ideal employee or business owner; able to think long-term, take balanced risks, etc...

 

Spot on - and that's the bit that really worries me. My eldest lad is a good example. He's a decent lad - very hard-working and reliable (on the job front) and entrepreneurial too. I flatter myself that because he's had a nice upbringing he has mentioned a couple of times that he very much envisages that his future will include marriage and kids.

 

It's the good ones that will emigrate - let's face it no other country wants the (how shall I put it?) 'remainder'.

[drbubb]

Spot on - and that's the bit that really worries me. My eldest lad is a good example. He's a decent lad - very hard-working and reliable (on the job front) and entrepreneurial too. I flatter myself that because he's had a nice upbringing he has mentioned a couple of times that he very much envisages that his future will include marriage and kids.

 

It's the good ones that will emigrate - let's face it no other country wants the (how shall I put it?) 'remainder'.

They may return when those relying on Unearned income have been forced onto a diet,

and productive work is encouraged once again, through tax policy and an economy turned towards sustainable growth, rather than selling overpriced flats to each other, and spiv finance.

[Jake]

Spot on - and that's the bit that really worries me. My eldest lad is a good example. He's a decent lad - very hard-working and reliable (on the job front) and entrepreneurial too. I flatter myself that because he's had a nice upbringing he has mentioned a couple of times that he very much envisages that his future will include marriage and kids.

 

It's the good ones that will emigrate - let's face it no other country wants the (how shall I put it?) 'remainder'.

BAB, Juat out of interest(as this doesn't include me) what are the credentials needed for emigrating? Are they only taking professionals or the 500,000+ cash account holders, age limit etc. Who can emigrate, and who can't? Maybe this needs a thread with different conditions set out for different countries. I think we used to have one years ago here, but it might have been another forum.

 

By 'remainder' I guess you mean 'undesireables'?? The old, the chavs, the poor, the uneducated, etc etc? Is this about right?

[BoldAsBrass]

BAB, Juat out of interest(as this doesn't include me) what are the credentials needed for emigrating? Are they only taking professionals or the 500,000+ cash account holders, age limit etc. Who can emigrate, and who can't? Maybe this needs a thread with different conditions set out for different countries. I think we used to have one years ago here, but it might have been another forum.

 

By 'remainder' I guess you mean 'undesireables'?? The old, the chavs, the poor, the uneducated, etc etc? Is this about right?

 

I don't know much about the demands other countries make on would be immigrants. I'm knocking on the door of 60 (years of age) and, a year or two ago, I filled out a form on the New Zealand government web site to see how many points I had. Can't remember the result other than it was 'no thanks'.

 

But for young people, if you have the job skills they want and have some of qualifications to prove this is the case, it seems to be relatively easy. If you're old and you want to retire somewhere they obviously only want you if you can prove you have the means to support yourself. Unlike this country, free health care is not part of the package either.

 

Yes, by 'remainder' I do mean 'undesirables' but only in the sense that other countries don't want them for whatever reason.

[John Doe]

Wow, I read recently that 40% of all house purchases are now cash sales!

 

Does anyone know the percentage of cash sales previously (boom years, crash years etc)?

[harold bishop]

Wow, I read recently that 40% of all house purchases are now cash sales!

 

Does anyone know the percentage of cash sales previously (boom years, crash years etc)?

 

Yes, I can believe that. Every house we have been interested in or bid on has gone to a cash buyer. I also understand 60% of houses in the UK are not mortgaged.

 

Older folk downsizing, those sitting in rented with cash, overseas cash buyers and a smallish numer of very wealthy people will keep the market moving, albeit at smaller volumes. With very low interest rates being maintained, house prices will take a long, long time to drift down. And a long period of modest inflation will, in the end, bring house prices to a more normal relative level.

 

I'm sure this is the gov/BoE plan. So long as the UK can maintain the confidence of the markets, the plan should hold togther.

 

Which is why I'm now looking to buy.

[John Doe]

I'm sure this is the gov/BoE plan. So long as the UK can maintain the confidence of the markets, the plan should hold togther.

 

Which is why I'm now looking to buy.

That's pretty much my thinking.

 

I had the actual figure earlier on this thread for the number of properties owned outright, I was shocked when I first read it (Thought was actually nearer 70%).

 

Of course, only those buying and selling dictate the market, but it seems as Financial planner rightly pointed out on SKY the other day, certain areas and certain types of property have already crashed massively (indeed, everywhere has when valued in gold/euros etc).

 

Also shows what a really small sample Halifax and Nationwide have for their indices, when nearly half of all sales are cash.

 

There are still a lot of very comfortably well off people in the country, way more than in the last crash. These are the ones holding up demand and prices in the nice areas. Without a major shock, or a massive increase of nice houses in nice areas, the only real falls we are likely to see in these places are of the slow inflationary type.

 

As for elsewhere, I wouldn’t suggest “getting on the ladder” just yet.

[BoldAsBrass]

Yes, I can believe that. Every house we have been interested in or bid on has gone to a cash buyer. I also understand 60% of houses in the UK are not mortgaged.

 

Older folk downsizing, those sitting in rented with cash, overseas cash buyers and a smallish numer of very wealthy people will keep the market moving, albeit at smaller volumes. With very low interest rates being maintained, house prices will take a long, long time to drift down. And a long period of modest inflation will, in the end, bring house prices to a more normal relative level.

 

I'm sure this is the gov/BoE plan. So long as the UK can maintain the confidence of the markets, the plan should hold togther.

 

Which is why I'm now looking to buy.

 

And why I bought a few months ago.

 

Certainly, when we were looking for somewhere to buy, the feedback from agents was that the market was being supported by cash buyers. Weird really, for years I laboured under (what turned to be) the illusion that First Time Buyers (or BTL scumlords) were necessary for the market to function. It appears not.

[Pal]

I'm more of a lurker than a poster on this site, though I do enjoy many of the gold articles. I thought I should add a little detail on this here.

 

Many of the "Cash purchases" are actually financed via bridging finance (I know this as I own a bridging finance company). These are then later mortgaged but still go down as a cash purchase initially.

 

My own feelings on the market are that we are still likely to see another slide in prices after the summer and we have had a couple of interest rate rises. I own quite a few properties myself but have held back from buying more for the time being (except for the occassional steal that I can't refuse). I doubt that we will see a huge crash as there still very many people desperate to buy when the financing becomes available, the old supply and demand story.

 

Spring is always quite bouyant but October to December is generally a great time to pick up bargains.

 

That's pretty much my thinking.

 

I had the actual figure earlier on this thread for the number of properties owned outright, I was shocked when I first read it (Thought was actually nearer 70%).

 

Of course, only those buying and selling dictate the market, but it seems as Financial planner rightly pointed out on SKY the other day, certain areas and certain types of property have already crashed massively (indeed, everywhere has when valued in gold/euros etc).

 

Also shows what a really small sample Halifax and Nationwide have for their indices, when nearly half of all sales are cash.

 

There are still a lot of very comfortably well off people in the country, way more than in the last crash. These are the ones holding up demand and prices in the nice areas. Without a major shock, or a massive increase of nice houses in nice areas, the only real falls we are likely to see in these places are of the slow inflationary type.

 

As for elsewhere, I wouldn’t suggest “getting on the ladder” just yet.

[John Doe]

Yep, we have a huge seasonal variation up in the nice bits of Glasgow. So, we have always sold spring/summer and bought late Oct, renting in between, sometimes ~6 months, most recently ~ 18 months. That was up until autumn 2009 when we spotted a bargain, with several other factors making it a go just outside our normal timing range, although things had been grim here at that time, (the old 5 or 6 month lag behind the rest of the UK).

 

The swings were even pronounced during the good times! I guess the cold and dark really means the potential buyers dry up by Oct.

 

(Didn't know about the cash purchase bridging etc)

[drbubb]

I'm more of a lurker than a poster on this site, though I do enjoy many of the gold articles. I thought I should add a little detail on this here.

 

Many of the "Cash purchases" are actually financed via bridging finance (I know this as I own a bridging finance company). These are then later mortgaged but still go down as a cash purchase initially.

 

My own feelings on the market are that we are still likely to see another slide in prices after the summer and we have had a couple of interest rate rises. I own quite a few properties myself but have held back from buying more for the time being (except for the occassional steal that I can't refuse). I doubt that we will see a huge crash as there still very many people desperate to buy when the financing becomes available, the old supply and demand story.

 

Spring is always quite bouyant but October to December is generally a great time to pick up bargains.

Thanks, Pal, for that useful remark.

Could you be the same PAL as posted on SP?

[tallim]

Yes, I can believe that. Every house we have been interested in or bid on has gone to a cash buyer. I also understand 60% of houses in the UK are not mortgaged.

 

Older folk downsizing, those sitting in rented with cash, overseas cash buyers and a smallish numer of very wealthy people will keep the market moving, albeit at smaller volumes. With very low interest rates being maintained, house prices will take a long, long time to drift down. And a long period of modest inflation will, in the end, bring house prices to a more normal relative level.

 

I'm sure this is the gov/BoE plan. So long as the UK can maintain the confidence of the markets, the plan should hold togther.

 

Which is why I'm now looking to buy.

 

The thing that still makes me very uneasy is when I try to consider who the underbidder would be, i.e. the theoretical person who would buy the place if I didn't and who would buy it off me if circumstances meant I needed to sell.

 

I'd be more confident if I was wanting to buy something / somewhere that had a likely cash-rich underbidder; landlord, retiree downsizer, banker stuffed with bonuses, etc... (So that's a bungalow within 45 minutes of London that would rent at a return of 8% gross rental income )

[Pal]

Hi DrBubb

 

Yes I'm the same poster that used to post on SP. I've been enjoying your forum for some time now, though I rarely post. It is good to see such a wide range of knowledgeable investors discussing various points of view and I appreciate the sharing nature.

 

I've enjoyed seeing the rise in gold over the last few years since you brought it to the attention to many on SP and i'm sure some will have benefitted from this.

 

Due to my position within the property investor community and financing i'm in quite a priviledged position to see what plans many are making and where there is pent up demand or over supply. Inspite of all that the one thing I can state with absolute certainty on the property market (or any market really) is that I've learned enough to know that you can't be certain of anything.

 

Thanks, Pal, for that useful remark.

Could you be the same PAL as posted on SP?

[drbubb]

Due to my position within the property investor community and financing i'm in quite a priviledged position to see what plans many are making and where there is pent up demand or over supply. Inspite of all that the one thing I can state with absolute certainty on the property market (or any market really) is that I've learned enough to know that you can't be certain of anything.

LOL. I have to agree.

 

A pity you do not post here more. I'm sure that some here - myself, included - could learn from your experience.

 

I have to say, that if I look back over the last 5 years, the strength in London property has surprise me. It has managed to defy cyclical forces so far. I do think it may correct in the years to come, but I cannot rule out a "continuing surprise."

[drbubb]

Where the money going to come from to pay those higher rents ??

 

Gold Over £900/oz As British Pound Falls Sharply - Soaring Inflation Sees UK Retail Sales Plunge Most On Record

http://is.gd/JXlrhX

Households in the UK are seeing their spending power eroded at the fastest rate in more than 60 years as food and energy costs soar and the faltering recovery restrains wage increases. Concerns about the tentative economic recovery as well as the government’s VAT increase and the deepest spending cuts since World War II are undermining consumer confidence.

[John Doe]

What?

 

There was a 10% fall in the MOM inflation figure reported this morning!

 

 

 

 

(Well, CPI 4.4% to 4% = ~10% less )

[neil324]

What?

 

There was a 10% fall in the MOM inflation figure reported this morning!

 

 

 

 

(Well, CPI 4.4% to 4% = ~10% less )

 

Still 50% over target, also what's falling ipods,ipads can you eat them do they keep you warm, do you buy them daily?

[tallim]

Still 50% over target, also what's falling ipods,ipads can you eat them do they keep you warm, do you buy them daily?

 

Month on Month; food down, utilities slightly up. I've certainly noticed some price falls, carrots are particularly cheap even for the season.

 

http://www.statistics.gov.uk/cci/nugget.asp?id=19

 

CPI annual inflation – the Government’s target measure – was 4.0 per cent in March, down from 4.4 per cent in February.

 

By far the largest downward pressure to the change in CPI inflation came from food and non-alcoholic beverages where prices, overall, fell by 1.4 per cent between February and March this year compared with a rise of 0.3 per cent between the same two months a year ago. The 1.4 per cent this year was a record fall for a February to March period. The downward effects were widespread and reflected supermarket led sales this year. The most notable contributions came from fruit where prices fell by 4.7 per cent this year (also a record February to March movement) but rose by 0.7 per cent a year ago, and bread and cereals where prices fell by a record 2.6 per cent this year compared with a fall of 0.2 per cent a year ago.

 

There were also large downward pressures from:

 

* recreation and culture, principally from games, toys and hobbies (particularly computer games), recording media and data processing equipment

 

* air transport, where fares rose by less than a year ago, particularly on European routes

 

The largest upward pressures to the change in CPI inflation came from:

 

* housing and household services: prices, overall, rose by 0.4 per cent between February and March this year compared with 0.1 per cent between the same two months a year ago. The main upward effect came from domestic heating costs where average electricity and gas bills rose this year but were unchanged a year ago

 

* purchase of vehicles, where prices rose this year but fell a year ago, particularly for second-hand cars

 

In the year to March, RPI annual inflation was 5.3 per cent, down from 5.5 per cent in February. The main factors affecting the CPI also affected the RPI.

 

RPIX annual inflation – the all items RPI excluding mortgage interest payments – was 5.4 per cent in March, down from 5.5 per cent in February.

 

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in February was above the provisional figure for the European Union. The UK rate was 4.4 per cent whereas the EU’s as a whole was 2.8 per cent.