UK Property - The former HPC addicts' thread

[No6]

I like the free book of money. Is this the BoE's idea to solve the credit crunch? I will only accept it though if it comes with a Government guarantee.

[burbelly]

update from the coal face.

 

Landlord has reduced the price from 400k to 380k offers in the region off. 2 and half months now only one viewing, a second one tonight.

[No6]

Welcome to credit crunch reality.

 

Mortgage rates for some of 11.5%.

 

£50bn could be taken out of the home loans market.

 

Banks are turning away business, cutting lending limits and putting up interest rates as the credit crunch takes hold.

 

Fears over bad debt and the difficulty in borrowing money on the global markets is putting a squeeze on families.

 

Some firms specialising in mortgages for those with a patchy credit history have pushed up loan rates to an astonishing 11.5% - double the Bank of England base rate.

 

Barclaycard is turning down around half of applicants for its credit card and has cut the credit limit for 500,000 'at risk' customers.

 

Other firms are adopting a similar tough line following warnings from Bank of England governor Mervyn King about the perils of reckless lending.

 

The rules are becoming so strict that those who are behind with their mobile phone bill can find they are effectively on a loans blacklist. Some analysts suggest the belt-tightening could take £50bn out of the home loans market.

 

http://www.thisismoney.co.uk/mortgages/art...=5&ito=1452

[Steve Netwriter]

Thanks for that

 

Maybe if this had happened back in 2003, things wouldn't be so bad now !

[Steve Netwriter]

Hey guys, new here. Great content on this forum, hopefully I can contribute eventually as my insight builds in my new hobby

 

I'm moving back from Canada this year, got a lump of cash to bring back to the UK originally to buy somewhere, now wondering what I should do - leave it in Canada, or take it back to the UK and try and avoid inflation somehow. Certainly won't be buying any property for a while!

 

cheers

Mike

 

Welcome Mike

 

They do say "diversify". My favourite at the moment is Yen. Maybe some Yen would be a good idea.

[drbubb]

Don’t fall foul of the credit crackdown

Elizabeth Colman explains how to ensure that increasingly cautious lenders regard you as a good risk

 

"High Street banks are cracking down on borrowers with poor credit ratings, in some cases refusing loans and mortgages to those with only minor blemishes on their record. The move, in response to rising wholesale borrowing costs and bad debts, means that lenders are looking deeper into borrowers’ credit histories and tightening their eligibility criteria"

 

-see: http://business.timesonline.co.uk/tol/busi...icle2546689.ece

 

It is about bl@@dy time!

Now that all the horse and cows are out of the barn,

they close the door on the odd remaining pig.

 

Shameful !

[drbubb]

WHERE ARE RENT RISES going to come from?

 

Answer me that, please, you dwindling number of Property Bulls??

 

= = =

 

Soaring bills cut disposable income

Disposable income in the UK is at its lowest level for a decade, a report says.

 

The soaring cost of utility bills plus hikes in taxes and rent costs are behind the trend, according to price comparison website uSwitch.com.

 

Net household income in the UK as a proportion of gross household income is down 5% compared to 1997.

 

An increase in the number of households living below 60% of the average household income is another factor behind the cash squeeze, according to uSwitch.

 

The price comparison site says an 85% tax increase and a 77% rise in social contributions have pushed down take-home pay.

 

This means the proportion of money left to spend on non-essential items is lower than any time during the past decade, uSwitch found.

 

Despite a rise in average household incomes since 1997, the amount of "disposable" income has dropped 2% over the decade.

 

/see: http://uk.news.yahoo.com/pressass/20071008...-6323e80_1.html

 

= =

 

Some miracle! Some economy!

 

REPEAT : "disposable" income has dropped 2% over the decade

[Whosthedaddy?]

Anybody watch last nights (08 OCt) Panorama on the BBC, called Sub-prime Suspect?

 

http://news.bbc.co.uk/1/programmes/panorama/default.stm

 

it followed a few unfortunate people and their sub-prime nightmares. People who essentially would never have qualified for a mortgage when sensible lending practices were in place. They now of course face repossions and a mountain of debt.

 

The FSA seems unconcerned to vet the small-time dodgy mortgage 'advisers', who essentially cajole the financially unaware into ninja (no income, no job or assets) type loans that has allowed this flood of bad loans into the system. It was suggested that the UK is leveraged even more in the sub-prime area than the USA!

 

One guy on an income of £20K pa had amassed mortgages to the value of £500K

[drbubb]

(sensible quotes from a sensible spokesperson):

 

 

Will house prices fall off a cliff? Will first-timers rejoice in the rubble?

The boom may be over, says Laura Howard, but whether we're in for blip or bust depends on who you talk to

Published: 14 October 2007

The most recent surveys could finally be proof of what homeowners have been dreading and first-time buyers praying for.

 

Both the Halifax bank and the Royal Institution of Chartered Surveyors say house prices are falling – not by much but falling all the same. Meanwhile, Nationwide building society says prices rose slightly last month but well below the trend of recent months. What's more, surveyors report fewer enquiries from potential buyers, and mortgage firms are seeing fewer applications from new purchasers in the wake of the Northern Rock crisis. The signs are that the UK housing market – after years of spectacular growth – is finally on the turn.

 

The doomsayers are adamant. Jonathan Davis at website Housepricecrash says: "Any monthly rises still continuing are misleading, as they are largely derived from independent bubbles that distort the figures."

 

In particular, he points to property prices in Northern Ireland, which he believes have distorted the overall UK statistics. Partly thanks to the peace dividend, average prices in the province have risen by an unprecedented 42.6 per cent in the past year, according to Nationwide. This boom has been especially stark in Belfast, where increases over the past year stand at 50 per cent, taking the price of the average property in the city to a whopping £312,637.

 

Mr Davis's prediction for the UK is bleak: a fall of 30 to 40 per cent over the next four to six years. He adds that while the recent credit crunch may yield one more rate cut, the cost of borrowing will be higher than it is now by 2009. This combination, he believes, could lead to up to a million homes being repossessed.

 

But such doom and gloom is out of kilter with the views of other industry observers. "We are certainly undergoing a big slowdown in the housing market and prices are flatlining, but you need to get beyond national prices to obtain an accurate picture," says Ray Boulger at mortgage broker John Charcol. "While some areas will see falls of 5 per cent, others will continue to rise by 10 per cent."

 

/more: http://money.independent.co.uk/property/mo...icle3058837.ece

 

Bolger does the John Charcol waffle.

Reminds me of how my own arguments took John Wriglesworth's spin apart in the

"Pear-shaped Property Podcast": http://commoditywatch.podbean.com/

 

Any sensible observor would see the mainstream commentators on now on the run,

about to be chased away by the dust from their own spinning - like G. Gordon Brown.

[drbubb]

(At last, the Times is using the "C" word):

 

October 18, 2007

 

UK house market is ‘heading for crash’

 

Gary Duncan, Economics Editor

The property boom of the past ten years has left the British housing market in danger of following the slump in American house prices, the International Monetary Fund said yesterday.

 

In a bleak warning, the IMF found that homes in Britain were overpriced by up to 40 per cent — far more than the overpricing in the US before the current property slump began there. The finding will fuel fears over housing market prospects after growing evidence recently that prices have already begun to fall in some parts of Britain.

 

The warning came as it emerged yesterday that the Bank of England discussed whether to lower interest rates this month to shore up Britain’s growth. But there was substantial reluctance among the Bank’s Monetary Policy Committee to rush into lowering borrowing costs, with only one of the nine-strong panel voting for a rate reduction.

 

The IMF report said: “The extent of house price overvaluation may be considerably larger in some national markets in Europe than in the US. The estimates suggest that a number of advanced economies’ housing markets outside the US could be vulnerable to a correction.”

 

House prices in Britain now stand at about nine times average annual earnings — up from about five times in 2001. Average national house prices have risen threefold since the early 1990s, from about £60,000 to about £200,000 now.

 

In its twice-yearly report on world economic prospects, the IMF warned Europe’s governments that the tighter lending conditions for homebuyers caused by the worldwide squeeze on credit could lead to a serious correction in excessive house prices.

 

“The steady increase in interest rates has already contributed to some cooling of these housing booms, and recent developments are likely to have a further dampening impact,” it said.

 

The IMF, however, did qualify its pessimism, saying that there were “considerable uncertainties” in its model, which did not take in key factors in Britain such as shortages of supply, boosts to prices from immigration and greater affordability due to the availability of mortgages.

 

/see: http://property.timesonline.co.uk/tol/life...icle2681755.ece

[drbubb]

Could this be the ruin of the buy-to-letters?

 

17.10.2007 by Merryn Somerset Webb

 

I appeared on BBC Breakfast last week with a buy to let investor who was convinced he was very rich. He had, he said, made £8m out of the buy to let boom. Further chat revealed that he had properties valued at £8m but £5.5m worth of debt. So he is on paper ‘worth’ £2.5m. You might think that sounds like a reasonable margin of error but I’m not sure its enough: property can turn nasty fast. Many of the reasons not to invest now (the main one being the fact that yields are lower than interest rates) have been widely discussed but here’s one more reason to steer clear. Buy to let mortgages deals tend to contain little read covenants regarding the loan-to-value ratio of the mortgage. In a rising market this isn’t the kind of thing borrowers take notice of but in a falling market they may find that it is the ruin of them.

 

It works like this. The loans allow lenders to periodically revalue properties (at the borrowers expense naturally). If the value has fallen and the loan to value ratio has, as a result, risen above the level required by the mortgage (say from 80% to 85%) the lender can then ask the borrower to come up with more cash to get it back down. The result, says my lawyer friend, will be that as capital values drop, buy-to-let investors will start to receive letters from the lenders along the lines of "Dear Mr Bloggs, I should be grateful if you would restore your loan to value ratio by sending us a cheque for £25,000".

 

This, most mortgaged-up-to-hilt investors will be utterly unable to do. The result? Panic selling and not just from the market’s new entrants. People who have been in the market for more than a few years are keen to suggest that they will be immune from any drop in prices thanks to the equity they have built up. But most of them – the man I met on the BBC sofa included - have also bought new properties in the last year. If margin calls – for this is what they are - start coming in on these how are they going to come up with the cash? No one’s immune.

 

/more: http://www.moneyweek.com/file/36564/could-...to-letters.html

[No6]

Getting tougher and tougher.

 

According to Moneyfacts, the number of home loans has been slashed by around two-fifths (41%) in just three months. In total, over 6,400 different mortgage products have been withdrawn. The table below shows that the biggest cutbacks have come in the subprime market, both in home-buying and buy-to-let:

 

...one in five mainstream home-purchase loans (20%) has been withdrawn, along with a sixth (16%) of all prime buy-to-let mortgages. However, there's been an outright collapse at the subprime end of the market. Indeed, an astonishing five in seven ‘impaired credit' home-buyer loans (72%) have been pulled, along with more than half (54%) of subprime buy-to-let mortgages. Overall, for every five mortgages available in July, only three remain today.

 

http://www.fool.co.uk/news/property-home/m...ioowftxt0010011

[burbelly]

Well thats it, I have moved now. House is empty, for sale and for rent. Price has dropped 20k and only a handful of viewings in 3 months. Rent has dropped by nearly a hundred a month from what I was paying and no views at all.

 

I shall keep an eye on it and see what eventually happens. The landlord doesnt understand why and is very worried!

 

 

http://www.seccombes.co.uk/propertyDetails.php?pid=54538

 

 

Nice house though in a lovely area.

[Steve Netwriter]

Well thats it, I have moved now. House is empty, for sale and for rent. Price has dropped 20k and only a handful of viewings in 3 months. Rent has dropped by nearly a hundred a month from what I was paying and no views at all.

 

I shall keep an eye on it and see what eventually happens. The landlord doesnt understand why and is very worried!

http://www.seccombes.co.uk/propertyDetails.php?pid=54538

Nice house though in a lovely area.

 

Wow, memories of the UK with all those old houses. You don't get very many old places here

It looks lovely

[drbubb]

Price: £995

Property Description:

 

A GRADE II LISTED HORNTON STONE VILLAGE COTTAGE Dining Hall, Sitting Room, Kitchen, Two Bedrooms plus Bedroom/Study and Bathroom on First Floor. Two Bedrooms and wc on Second Floor. Courtyard Garden to front. Oil Fired Heating

 

Radway Cottage, Farnborough Road, Radway, Warwick, CV35 0UN

 

= =

 

at under Pds.1,000- i will take it!

[burbelly]

S Warwickshire/N Oxfordshire seriously lovely area.like the Cotswalds but with out the crowds and mental prices

 

Bubb you can knock that rent down as well, I reckon he would go for £900

[frizzers]

Looks idyllic.

 

just makes me depressed how expensive London is.

[Mabon]

Lovely house that. 900 UKP a month would be sweet. I was paying that for a minging flat in Camberwell a couple of years ago.

 

Well thats it, I have moved now. House is empty, for sale and for rent. Price has dropped 20k and only a handful of viewings in 3 months. Rent has dropped by nearly a hundred a month from what I was paying and no views at all.

 

I shall keep an eye on it and see what eventually happens. The landlord doesnt understand why and is very worried!

 

 

http://www.seccombes.co.uk/propertyDetails.php?pid=54538

 

 

Nice house though in a lovely area.

[drbubb]

I'm confused. Surely, you're supposed to feel rich during a boom, but I've been feeling increasingly poor over the last decade. Does this mean that I am going to feel increasingly rich in the coming recession?

 

YOU WILL feel rich if:

 

+ You are out of debt, rent, and have a regular income

+ House prices slide sharply

+ Other prices fall in relation to your income

 

But those with big debts, and a depreciating home- will feel poor

 

/see: http://www.housepricecrash.co.uk/forum/ind...showtopic=59804

[munsterkings]

Just had a conversation with a guy who's setting up a UK [south East] commercial property syndicate. While from an asset allocation perspective I had planned to put part of the fund into property, but I am considering doing nothing in this area until mid 2008....; i.e. put the money into commodities etc once we are at the bottom of the near term correction and review in 6-9 months.

GVA Grimley [ http://www.gvagrimley.co.uk/PreBuilt/Resea..._UK_Q3_2007.pdf ] have the following view

....."The market is now at a critical point, and we consider that some upward correction in yields is almost inevitable. However, the timing and extent is difficult to predict, given that sentiment is such an important factor, and the tendency of markets to over-and under-shoot. We take the view that this re-adjustment is now beginning, but that the bulk of this re-adjustment will occur in 2008.

As a result, we have reduced our forecast for total returns this year to 7.3%, and we expect performance next year to be considerably lower, at only 4%. Thereafter, performance should revert to what we would regard as ‘normal’ returns, averaging 8.4% pa over the last three years of our forecast period from 2009-2011. This will mean that total property returns will average 7.3% pa over the period from 2007 to 2011.

The office market will see higher returns than the all-property average, forecast at 8.5% pa from 2007-2011 (inclusive), in line with the better rental growth prospects (notably in central London). We forecast retail returns averaging 6.2% pa, and industrial returns of 7.1% pa over the same period."....

 

At this stage, I think I will use this allocation of my fund to set up an alternative energy company, starting with domestic/light commercial wind turbines. Ireland does not yet have a standard for connecting to the national grid, and this will be a large market once it happens; there are so many services that you can add on that I really think putting a sound value proposition together would be possible.

 

thoughts/comments/counter argument.....

 

MunsterK

[drbubb]

Just had a conversation with a guy who's setting up a UK [south East] commercial property syndicate.

While from an asset allocation perspective I had planned to put part of the fund into property, but I am considering doing nothing in this area until mid 2008....;

 

i.e. put the money into commodities etc once we are at the bottom of the near term correction and review in 6-9 months.

 

....."The market is now at a critical point, and we consider that some upward correction in yields is almost inevitable.

However, the timing and extent is difficult to predict, given that sentiment is such an important factor, and the tendency of markets to over-and under-shoot. We take the view that this re-adjustment is now beginning, but that the bulk of this re-adjustment will occur in 2008."

 

I would wait.

Watch LAND Securities (LAND) and other commercial property stocks.

Dont consider investing in UK commercial property until AFTER seeing a strong rally in the stocks

of at least 3-6 months duration

[drbubb]

It says "Ed Mead, sales director at Douglas & Gordon, said prices in central London were already down about 5%. "

 

http://www.thisismoney.co.uk/mortgages/hou..._id=57&ct=5

 

- -

 

If he says 5%,

then current sales are unlikely without a 10% discount from peak levels

[DontPanic]

Any chance the drop in UK housebuilders has been over done ?

 

If you have a big land bank the construction prices for house have not increased that much in recent years.

 

<a href="http://www.fool.co.uk/news/investing/compa...ket-latest.aspx" target="_blank">http://www.fool.co.uk/news/investing/compa...ket-latest.aspx</a>

[drbubb]

Any chance the drop in UK housebuilders has been over done ?

If you have a big land bank the construction prices for house have not increased that much in recent years.

 

they already built on the cheap land.

whats left cost alot, and they would lose money at future prices

[HollandPark]

Sub-prime ‘time bomb’ is set to explode in Britain

Grainne Gilmore and Gabriel Rozenberg

 

Lenders are cracking down on sub-prime borrowers across Britain and could force tens of thousands of homeowners into forced sales of their homes, property experts warned yesterday.

 

The global credit crunch provoked by the crisis in American sub-prime mortgages is creating a time bomb in Britain’s own market for loans to borrowers with imperfect credit records.

 

The warning came as figures from the British Bankers’ Association (BBA) suggested that the slowdown in house prices was on course to be the most severe in at least a decade, as would-be buyers take fright at a declining market.The number of mortgages approved in October for home purchases by the BBA dropped by 17 per cent over the month to only 44,105, the lowest figure since the body began to compile figures in September 1997. Approvals were 37 per cent lower than a year ago.

 

Experts fear that the emerging British sub-prime crisis could further destabilise the domestic property market. As existing homeowners with particularly bad credit records – known as “heavy” sub-prime customers – come to the end of the cheap two-year fixed deals that were readily available until the summer, lenders are refusing to offer similar terms.