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UK Property - The former HPC addicts' thread

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My girlfriend has got a job in Oxford :) . The upshot being... I shall be in a position to sell my house next spring, as our jobs are close enough to rent together. BIG relief. I just hope the market holds another 6 months... fingers crossed for the big spring bounce of '07 !!

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VI's can't live with them, can't get fecked off without them.

 

First-time buyers will have to fork out a cool million pounds to get a foothold on the property ladder in less than 20 years, data showed on Monday.

 

The average first-time buyer home in the UK will hit the million pound mark in the second quarter of 2024, if the current trend in house price and income growth continues, according to Stroud & Swindon Building Society.

 

It said that would equate to seven times the average salary, projected to be 146,188 pounds by then, if earnings continue to increase at current levels.

 

http://today.reuters.co.uk/news/articlebus...xml&src=rss

 

I laughed so much I nearly did myself an injury. B)

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But what if we add in the expected 8billion+ of city bonuses this year? In fact this might be underestimate of the amount of bonus money out there.

 

Thousands of City workers – and a fair few in the major financial centres of Glasgow and Edinburgh – are set to receive bonuses of at least £1 million this year. Million pound-plus bonuses will be awarded to a record 4,200 staff, an increase of a third on 2005.

 

These are the findings of research by the Centre for Economics and Business Research (CEBR), which suggests the total pot is likely to be in the order of £8.8 billion, itself a rise from about £7 billion 12 months ago.

 

The focus of attention during the current bonus season is naturally on those lucky individuals earning more than £1 million in one fell swoop. But there are many times that number who, while not joining the Millionaires’ Club this year, are still likely to be receiving a very generous five- or six-figure lump sum in the next few weeks.

 

For example, mid-ranking bankers might expect to receive an average of up to four or five times their annual salary of £120,000 for this year. A fresh graduate working as a low-ranking analyst, might receive £35,000, plus a bonus worth up to twice his or her salary.

 

In fact, there are some suggestions that the £8.8 billion figure is a massive underestimate of bonuses that are paid out. Once you include the smaller, but still significant, lump sums paid out, plus annual bonuses paid to boardroom executives, the total could reach £21 billion, according to Office for National Statistics (ONS) data.

 

http://money.uk.msn.com/guides/salarycentr...umentid=1228417

 

To put this into context, it costs Gordon Brown, if he ever did it which is highly unlikely, about 3 billion to knock a penny off income tax for everyone. So by this reckoning, 21 billion is like 7p off income tax for everyone, accept of course, the wealth isn't being shared around as usual. What will that do to the bubble economy?

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... A fresh graduate working as a low-ranking analyst, might receive £35,000, plus a bonus worth up to twice his or her salary.

 

Can someone tell me why I went into engineering again? I seem to have forgotten! :blink: 20 years sucking up to all and sundry, and jumping through the corporate bullshit hoops and I might scrape senior manager, £50k a year. As opposed to a fresh finance grad pissing about with a few spreadsheets for £100k :o

 

Jealous? Too f---ing right!!

 

I should maybe say that a 37 hour week (no staying late expected or required), and a 15 min "commute" does go a tiny way towards making up for it. And £100k after Gordon's sticky paws have been at it isn't as great as it first sounds, I guess.

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I should maybe say that a 37 hour week (no staying late expected or required), and a 15 min "commute" does go a tiny way towards making up for it. And £100k after Gordon's sticky paws have been at it isn't as great as it first sounds, I guess.

 

Ah, but I'm sure those getting the big money bonuses will not be paying much in tax.

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Another example of how this market is being manipulated, approximately 20% of all FTB's now are not in fact FTB's. Many of us will have known this for a while, but it's not often that you get figures. These figures may actually be on the low side IMHO.

 

The number of young people able to enter the housing market may be considerably fewer than at first thought, and the proportion of first-time buyers (FTBs) getting financial help from their families is rising.

 

Leeds Building Society has analysed statistics from the Council of Mortgage Lenders and estimates that some 20% of the dwindling number of FTBs are in fact buyers who have owned a property before. Returners tend to be older than real FTBs and typically provide large deposits, funded partly by the previous sale of a property.

 

http://www.citywire.co.uk/News/NewsArticle...VersionID=86782

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According to the bbc there are now 13 lenders who will lend at four and a half times a single income, or more. Today the Co-op joined the madness with its 5x mortgage.

 

The most generous is the Darlington building society whose "income stretch" mortgage potentially goes to six times a borrower's earnings.

 

http://news.bbc.co.uk/1/hi/business/6168078.stm

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According to the bbc there are now 13 lenders who will lend at four and a half times a single income, or more. Today the Co-op joined the madness with its 5x mortgage.

 

Lovely jubbly. Lets have the last hurrah of this absurd bubble. Greatest fools... come on down! Yogi's place is going on the market in 5 months - not too long to wait, although it could still burst before then if sentiment turns on a dime. Fingers crossed...

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Lovely jubbly. Lets have the last hurrah of this absurd bubble. Greatest fools... come on down! Yogi's place is going on the market in 5 months - not too long to wait, although it could still burst before then if sentiment turns on a dime. Fingers crossed...

You might be alright in that timespan if the Fed start cutting IR's in the US as some seem to be hoping in the spring, 2007. The BoE may follow suit. If they do, the housing bubble may have one last surge, another 10-20%, helped by IR cuts, big city bonuses and the banks irresponsible lending practices. On the other hand, if the central banks suddenly realise how dangerous that will be and their are no cuts but even further increases, sentiment could change very quickly.

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What will become of the banks,,, with all the bad loans?

 

Somehow it doesnt seem fair that the bankers will avoid the consequences of this irresponsible lending

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Martin Wolf's bearish piece in the FT today?

 

The housing boom will end, but how?

By Martin Wolf

 

Published: November 24 2006

For the British, houses are as much gold mines as mere dwellings. Over the past 10 years, real house prices have doubled, while real disposable incomes have risen only 29 per cent. Ratios of house prices to incomes and rents have, as a result, reached all-time highs. Housing made up as much as 53 per cent of the total wealth of UK households in 2005, against 39 per cent a decade before. Can this last? No. Will it end with a bang or a whimper? That is indeed the big question.

 

Given this, what are we to make of a prediction that "sharp falls in real house prices may not come for a year or so, but come they probably will" (emphasis in original)? We should take it seriously, particularly since David Miles of Morgan Stanley, the lead author of the report in question ("UK Housing: how did we get here?"), is an erstwhile adviser on housing finance to Gordon Brown.

 

 

........ But, above all, it also depends on expected changes in house prices. The more house prices are expected to rise, the cheaper the effective purchase price also becomes.

 

This last point is central. If people's expectations of future price increases are affected by their recent experience prices will tend to overshoot fundamentals: this is just how bubbles form. ...............

 

None the less, the conclusion is clear: what we are seeing is, in significant measure, an overshoot of fundamentals, in which house prices are being lifted by their own bootstraps. In other words, people now buy houses at historically unprecedented prices because experience has taught them to expect those prices to go ever higher.

 

........is that the amplification of price movements works in both directions. At some point the real cost of housing will bring price appreciation down. When that happens adaptive expectations will go into reverse and so generate price falls.

 

......So how disastrous would such falls be? On this the study is sanguine. It argues that the impact on consumption is modest, in both directions, because higher prices make purchasers worse off to the same extent as they make owners better off.

 

The big point is that higher house prices cannot make society as a whole better off. They merely redistribute income from the young to the old, which is socially destructive.

 

Yet lower nominal interest rates make purchasing appear more affordable, .............. Affordability, thus measured, does remain below levels reached in the early 1990s, ..............That is surely one reason for higher demand and so prices.

 

The implication of this is that prices may stay high. But it also means that purchasers may have contracted to pay a far higher real amount than they realise. If so, this will prove a painful long-term burden upon them.

 

The question, above all, is not whether the boom will end, since it must, but how. Will real prices stabilise, or fall? I suspect that the answer will indeed be the latter. But, as the study notes, nobody can possibly know when or by how much.

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WRITING IS ON THE WALL...

What happens when house prices collapse?

 

http://www.timesonline.co.uk/article/0,,1052-2473231.html

 

Old-fashioned bank managers, before the age of call centres, used to regard it as their professional duty to give prudent advice to their clients. One of their rules of thumb was that young buyers should not pay more than four times their income for their first purchase of a house. For most of the past 50 years that advice has worked tolerably well. House prices did average about four times disposable income in the late 1950s, 1960s and mid-1990s.

 

However, there have been four postwar peaks in house prices, in 1948, 1973, 1988 and 2006. At each of these peaks the average price of a house had risen to six times the average disposable income. The first three of these peaks proved to be unsustainable. In real terms, house prices fell back by a third in each of the four-year periods that followed the peaks.

 

...

 

House prices are hard to predict; all who try to advise on economic trends have sometimes got them wrong. Nevertheless, the postwar pattern is clear. There is an average price, which is about four times disposable incomes. There are regular peaks that take prices up to six times disposable incomes. So far there has been no occasion on which such a peak has been followed by a further significant rise, and no occasion on which it has been sustained.

 

...

 

The evidence is reviewed by Fred Harrison in the latest issue of Money Week. He quotes David Miles, the chief UK economist of Morgan Stanley, who gives warning that "a sharp fall in real house prices is likely at some point in the relatively near future". Clive Briault, the manager of retail markets at the Financial Services Authority, gave his warning to the British Bankers Association that the banks should now factor in the possibility of a 40 per cent fall in property prices. That is not a prediction but a precaution.

 

...

 

All his life Mr Brown has wanted to be Prime Minster. If he becomes Prime Minister in July 2007 he can be more or less sure of three years in office — years in which he can impose many of his ideas. He will not give that up for the uncertainty of an election in September 2007. But by 2010 house prices may have fallen by a third and Labour may lose by a landslide.

 

 

This post has been edited by King Of Fools: Today, 11:57 AM

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"VICTIMS" OF THE CRASH- a tv researcher is looking for these

=======

 

From an HPC thread: http://www.housepricecrash.co.uk/forum/ind...showtopic=37565

 

MAYBE he/she is looking in the wrong place. As was posted on HPC:

 

"Researcher,

Actually, i think you have it the wrong way 'round

 

In reality, the Crash did not claim "victims".

the price drop then, was nothing more than a return to reality.

 

The victims were created by the hyper-bullish psychology, and the unthinking and unblinking buying of property at excessive prices.

 

Many such victims are being created now. The eventual crash, will only expose the irrational exuberance that is driving people to buy.

 

Look for your victims amongst those that thoughtlessly buy into a mad dream of forever-rising prices.

For most, the money is "lost" as soon as it is borrowed and spent on overpriced property. They will

not wake up to the danger that they have taken on, until it is far too late to get out.

 

If someone sticks their fingers into an electric socket, and then their heart stops as electricity pumps

through their body, is the person a heart-attack victim? Or are they a victim of their own recklessness

in playing around with electric sockets?

 

If you want to do a service with this programme, you need to understand why people bought when prices

were so high- what analysis or thinking they relied upon to make their buy decision. And why they ignored

the obvious dangers at the time. That will be more instructive to anyone viewing today, then just describing

the process of how they were squeezed when house prices fell."

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From Money Morning

 

The Big Picture: What's propping up UK property?

 

BP12016.gif

 

If you are wondering how a friend with a poor credit rating received a five-times salary mortgage, look no further than the booming trade in UK mortgage securitisations. Banks are selling off pools of mortgage debt as bonds to everyone from US hedge funds to eastern European banks.

 

The Daily Telegraph reckons 15%-25% of the UK's £1trn in outstanding mortgage balances has been sold on like this. Growing demand for these bonds means loans are being extended to prospective buyers who might once have been denied credit - thus driving activity in the housing market ever higher.

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Apparently, there is great demand on the Planet Mars

for loans backed up by dodgy UK mortgages

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look how the comfortable asumptions peal away:

 

+ the feb rate cut came early in january

 

+ inflation rose to a new high for the decade

 

+ fixed rates have been withdrawn

 

+ buyers have become to disappear

 

IS THIS A CREDIT TIGHTENING I SEE BEFORE ME ?

 

= =

 

Banks withdraw fixed-rate mortgage offers

By Rosie Murray-West and Faith Archer

Last Updated: 2:10am GMT 16/01/2007

 

 

 

Audio: Borrowers suffer as lenders withdraw

 

Banks and building societies pulled many fixed-rate mortgage deals off the market yesterday, denying borrowers the chance to avoid the Bank of England's next increase in interest rates.

 

Critics said lenders were anticipating further rises from the Bank but giving homeowners with big mortgages less chance of protecting themselves.

 

 

One analyst said banks and building societies were also increasing their profits "by stealth" through increases in fees charged to customers.

 

The withdrawal of fixed-rate deals, which have been championed by Gordon Brown, the Chancellor, began after the Bank raised its rate to 5.25 per cent last week.

 

About 12 lenders have suspended popular fixed-rate mortgages, with some withdrawing their entire range.

 

At present, 60 per cent of customers have fixed-rate deals with the remainder vulnerable to fluctuating rates.

 

Lenders claimed they have acted because customers rushed to buy fixed deals and have used up all the available funding for the mortgages, which has been bought in the money markets at a lower rate than is now available.

 

@: http://www.telegraph.co.uk/news/main.jhtml...16/nbanks16.xml

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Am going to a breakfast meeting/seminar with one of the head investment analysts at CBRE in feb, he'll be giving his opinions on the forthcoming year, will keep you all posted.

 

 

...Hey...my 100th post! A momentous occasion.

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welcome, new centurion, bob

 

= = =

 

NO MARGIN IN UK PROPERTY...

 

Interest rate hike confirms Standard Life’s gloomy outlook for property

Published: 07:00 Tuesday 16 January 2007

By: Tim Sharp, NMA Assistant Editor (news)

 

Standard Life Investments (SLI) has veered firmly into the negative camp on UK property, warning that yields had dropped below gilts even before the Bank of England’s surprising decision to raise interest rates last week.

 

The property sector passed a crucial valuation market at the end of December when 10-year gilt yields, one of the closest measures we have of a risk-free return, moved up to 4.75%, above property yields of 4.62%.

 

Alex Watt, SLI’s managing director for property investment, added: ‘More of the market now looks expensive. As a result, we anticipate more muted performance for the period ahead, with total returns in single digits.’

 

He said prospects on the high street were particularly poor with below-inflation rent rises expected although offices, particularly in London offered better prospects.

 

Standard Life Investments’ head of property research, Anne Breen, believes figures to be released next week will bear even worse news for UK property investors, showing that yields on commercial property have fallen further to 4.57% or even 4.55% leaving the market looking even more vulnerable.

 

‘We have had this healthy positive margin up to now. Gilts are what we can consider to be a risk-free investment. If you are investing in an asset class like property which is more risky than gilts you would expect to get some margin,’ she said.

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THIS STAT: 2/3RDS Staggered me!

=======

 

http://business.guardian.co.uk/story/0,,1989698,00.html

Buy-to-lets nab London's homes

 

More than two thirds of new homes in London are sold to buy-to-let investors, increasing fears that the property market's rise - which is squeezing out first-time buyers - is being fuelled by speculators.

 

The findings come in a study by the Greater London Authority which found that buy-to-let investors snapped up 67 per cent of the 20,000 new-build homes for sale in the capital.

&

But Association of Residential Letting Agents' spokesman Malcolm Harrison said: 'Buy-to-let investors produce homes for people. It's not as if investors take homes off the market. A lot of it is catering for people coming to London. Buy-to-let is to be welcomed.'

 

'Buy-to-let investors produce homes for people” ???

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The findings come in a study by the Greater London Authority which found that buy-to-let investors snapped up 67 per cent of the 20,000 new-build homes for sale in the capital.
If they start bailing out, no amount of London bonuses will keep this market high, because I suspect that money isn't buying these properties. One or two more rate rises could topple it big time.

 

But Association of Residential Letting Agents' spokesman Malcolm Harrison said: 'Buy-to-let investors produce homes for people. It's not as if investors take homes off the market. A lot of it is catering for people coming to London. Buy-to-let is to be welcomed.'

 

But only at a price, assuming they can get it. Next they will be saying that landlords care about their tenants. ;) The caring type is a very rare creature indeed, but very welcome if you can find one.

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THIS Work of Art

 

award_full.jpg

 

reflects the future relationship between the average BTLer and coming house price slides.

when the pain becomes unbearable, they will sell

 

= = =

 

Fr.,

from that article:

 

"Early in 2006 we reiterated the overbought state of the UK housing market and how it was ripe for a decline. But the decline failed to materialise, as an early slowdown failed to go negative, with the market starting to trend higher again later in the year. Despite two rate rises, the housing growth has accelerated going into the end of 2006 to an annualised rate of over 8%."

. . .

 

UK housing Market forecast for 2007

"The UK housing market has been underpinned by continuing economic growth, low historic interest rates and high employment, going into 2007 all three factors are still expected to support the UK housing market. We do expect interest rates to rise to 5.5%, and thus economic growth is expected to slow and unemployment also rise. These will undoubtedly have an impact on the UK housing market and thus should slow during 2007. Whether it will actually go negative during 2007 is hard to say, since it has failed to go negative for each of the last 3 years !."

 

- -

 

THEY seem to have missed the importance of the 14% growth in M4 money.

Will such rapid growth, and only 1 rate rise, is HPI of 8% so surprising?

i think it is slowing down now, and the recent "suprise" rate rise shows more attention at the BofE

in doing their job, and fighting inflation

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