Frontline News - 1 Year On

[Bearfacts]

Well - it's been nearly a year since I managed to beat my addiction to HPC and stopped posting so I thought it might be time to see if I can handle another short 'dose' with an update from the frontline. Mrs BF works in an EAs in the S.E so keeps me advised of activty as she sees it.

For what it's worth Mrs BF reports that they are currently very busy with properties being sold quickly and at very close to the asking price. It may be worth mentioning that we live in an area that has just been linked to London by high speed trains so this may not be representative of the rest of the UK.

I know this is not what you will want to hear but that is the situation as she reports it. Even though I bought this time last year, I share your dismay at the turn the market has taken - I have children who I want to be able to buy a home at a sensible price one day - I have no desire or interest in 'building' unearnt equity in my home and I fully expect in the fullness of time the market will correct and my home will be worth less than I paid for it but that correction looks like being 'kicked down the road' by the powers that be. It seems that the government / banks are prepared to do whatever it takes to keep the bubble inflated no matter what the costs or long term consequences. The UK economy is dependant on HPI as a vehicle for passing the costs of our living onto future generations and no politician has the cojones to admit this or take the action neccessary to change things.

It has been my experience ( sometimes costly ) that people who have power - be they politicians , bankers or business men will do whatever it takes to protect their own interests regardless of rights or wrongs, the effects on others or long term consequences. This government in collusion with the banks has robbed the prudent to rescue the reckless and amazingly been applauded by some for doing so.

As I have already said I still expect the correction to come but god knows when and I wouldn't discount the possibilty of the goverment and BOE letting inflation rip to get them out of the abyss.

[Tired of Waiting]

Well - it's been nearly a year since I managed to beat my addiction to HPC and stopped posting so I thought it might be time to see if I can handle another short 'dose' with an update from the frontline. Mrs BF works in an EAs in the S.E so keeps me advised of activty as she sees it.

For what it's worth Mrs BF reports that they are currently very busy with properties being sold quickly and at very close to the asking price. It may be worth mentioning that we live in an area that has just been linked to London by high speed trains so this may not be representative of the rest of the UK.

I know this is not what you will want to hear but that is the situation as she reports it. Even though I bought this time last year, I share your dismay at the turn the market has taken - I have children who I want to be able to buy a home at a sensible price one day - I have no desire or interest in 'building' unearnt equity in my home and I fully expect in the fullness of time the market will correct and my home will be worth less than I paid for it but that correction looks like being 'kicked down the road' by the powers that be. It seems that the government / banks are prepared to do whatever it takes to keep the bubble inflated no matter what the costs or long term consequences. The UK economy is dependant on HPI as a vehicle for passing the costs of our living onto future generations and no politician has the cojones to admit this or take the action neccessary to change things.

It has been my experience ( sometimes costly ) that people who have power - be they politicians , bankers or business men will do whatever it takes to protect their own interests regardless of rights or wrongs, the effects on others or long term consequences. This government in collusion with the banks has robbed the prudent to rescue the reckless and amazingly been applauded by some for doing so.

As I have already said I still expect the correction to come but god knows when and I wouldn't discount the possibilty of the goverment and BOE letting inflation rip to get them out of the abyss.

Welcome back Bearfacts,

I agree with you on almost all points.

I know for a fact that the next government "political horizon" (as they call it) will be the following General Election - re-election -whover wins.

And I think (or hope?) that all parties know that the current house price levels are not sustainable. If this is the case, I think they will allow the correction to take place in the first couple of years, hoping for some recovery before 2015 - next election year.

[VeryMeanReversion]

For what it's worth Mrs BF reports that they are currently very busy with properties being sold quickly.

Same here in South Cambs.

I just hope (but not necessarily expect) that the deficit starts to cause some real problems so interest rates will rise and the public sector shrinks back to affordable levels.

VMR.

[The Masked Tulip]

I am giving it till end of August - if there has not been a corrective blip by then, or an indication of serious cuts to the public sector, etc - it will just carry on as before for years to come... so, with a heavy heart, I will then buy.

[Si1]

the most im[portant comparison is between rents and purchase price - I have not come across any example anywhere where purchase prices were competitive to rental prices

care to elucidate?

or just give us a postcode to plug into rightmove etc?

[ManorHouseOwner]

1 year on?

Gross mortgage lending is 3%, 3% bigger than this time last year. March 2009 was the absolute NADIR of the housing market last time.

This is 3% increase as priced in a currency that has suffered a 25% devaluation on most currencies.

If this area with the 'high speed link' is Medway, please ask Mrs BF if one takes away the Patels and BTLers buying the victorian terraced properties, how much is moving to FTBers and people moving up the chain.

[9999BBB]

I am giving it till end of August - if there has not been a corrective blip by then, or an indication of serious cuts to the public sector, etc - it will just carry on as before for years to come... so, with a heavy heart, I will then buy.

It's amazing to think how prices have risen since March 2009, yet still the windbags and know it alls on here will continue with the "next leg down is imminent" or wait til after the General Election stories. Never mind, they'll wheel out the bubble graph in a minute as evidence.

Don't buy now it's suckers rally, bull trap, next leg down imminent, after the GE!

Funny how despite their collective brains the size of planets, they're just not right, but you're hanging on their every word.

Have fun!

[noodle doodle]

1 year on?

Gross mortgage lending is 3%, 3% bigger than this time last year. March 2009 was the absolute NADIR of the housing market last time.

This is 3% increase as priced in a currency that has suffered a 25% devaluation on most currencies.

If this area with the 'high speed link' is Medway, please ask Mrs BF if one takes away the Patels and BTLers buying the victorian terraced properties, how much is moving to FTBers and people moving up the chain.

Your task for today is to substantiate your 25% fall claims

You can rule out...

US dollar: Apr '09: $1.46 now: $1.53 UP 5%

Euro: Apr '09: €1.13 now €1.15 UP 2%

Yen: Apr'09: 144Y now: 143Y DOWN 1%

Swiss Franc: Apr '09: 1.7F Now: 1.65F DOWN 3%

Can $: Apr'09: $1.80 Now: $1.53 DOWN 15%

Aus $: Apr'09: $2.05 Now: $1.66 DOWN 21% (biggest i can find)

HK$ Apr '09: $11.40 Now $11.94 UP 5%

Saudi Riyal: Apr'09: 5.50 Now: 5.77 UP 5%

Indian Rupee: Apr'09: 73.5R Now: 68.6R DOWN 7%

That's most of the major currencies there

So basically australia nearly makes it

http://news.bbc.co.uk/news/business/market_data/currency/11/12/twelve_month.stm

[Tired of Waiting]

I am giving it till end of August - if there has not been a corrective blip by then, or an indication of serious cuts to the public sector, etc - it will just carry on as before for years to come... so, with a heavy heart, I will then buy.

Also keep an eye on the monthly inflation figures. If it stays this high, then the Bank of England will have no choice but to raise interest rates, and that will bring down house prices.

And if the next government increases VAT, that will put extra pressure on inflation, then interest rates. A Sterling fall will also increase inflation and IRs.

But if you do decide to buy, consider a 10 years fixed, to be protected against rises in interest rates.

[Tired of Waiting]

(...) Never mind, they'll wheel out the bubble graph in a minute as evidence. (...)

Nah, no need.

If you want to see the economic future of Britain just look at the graph in my sig. instead, below.

.

Edited April 21, 2010 by Tired of Waiting

[libspero]

It's amazing to think how prices have risen since March 2009, yet still the windbags and know it alls on here will continue with the "next leg down is imminent" or wait til after the General Election stories. Never mind, they'll wheel out the bubble graph in a minute as evidence.

Sounds like you've been spending too much time here.. why not get out there and buy a few before a rush of pent-up HPCers flood the market?

[Si1]

It's amazing to think how prices have risen since March 2009, yet still the windbags and know it alls on here will continue with the "next leg down is imminent" or wait til after the General Election stories. Never mind, they'll wheel out the bubble graph in a minute as evidence.

Don't buy now it's suckers rally, bull trap, next leg down imminent, after the GE!

Funny how despite their collective brains the size of planets, they're just not right, but you're hanging on their every word.

Have fun!

nothing like an irrational bull argument to reinvigorate faith in my own bearish opinions

[libspero]

nothing like an irrational bull argument to reinvigorate faith in my own bearish opinions

There is a space open since Sibers left

[Bruce Banner]

nothing like an irrational bull argument to reinvigorate faith in my own bearish opinions

Posting style would indicate yet another Columbo alter ego .

[libspero]

Posting style would indicate yet another Columbo alter ego .

Columbo was pretty spot on though (from 2006):

Houses will change little in price.

If you are holding cash deposits or fixed investments take a look at the SM and commodities market.

Houses weren't going to crash, the stockmarkets definately weren't going to crash

[DeepLurker]

It's amazing to think how prices have risen since March 2009, yet still the windbags and know it alls on here will continue with the "next leg down is imminent" or wait til after the General Election stories. Never mind, they'll wheel out the bubble graph in a minute as evidence.

Don't buy now it's suckers rally, bull trap, next leg down imminent, after the GE!

Funny how despite their collective brains the size of planets, they're just not right, but you're hanging on their every word.

Have fun!

[libspero]

Your task for today is to substantiate your 25% fall claim.

Linky

Edited April 21, 2010 by libspero

[Alfie Moon]

the most im[portant comparison is between rents and purchase price - I have not come across any example anywhere where purchase prices were competitive to rental prices

care to elucidate?

or just give us a postcode to plug into rightmove etc?

+1

[Agentimmo]

Your task for today is to substantiate your 25% fall claims

You can rule out...

US dollar: Apr '09: $1.46 now: $1.53 UP 5%

Euro: Apr '09: €1.13 now €1.15 UP 2%

Yen: Apr'09: 144Y now: 143Y DOWN 1%

Swiss Franc: Apr '09: 1.7F Now: 1.65F DOWN 3%

Can $: Apr'09: $1.80 Now: $1.53 DOWN 15%

Aus $: Apr'09: $2.05 Now: $1.66 DOWN 21% (biggest i can find)

HK$ Apr '09: $11.40 Now $11.94 UP 5%

Saudi Riyal: Apr'09: 5.50 Now: 5.77 UP 5%

Indian Rupee: Apr'09: 73.5R Now: 68.6R DOWN 7%

That's most of the major currencies there

So basically australia nearly makes it

http://news.bbc.co.uk/news/business/market_data/currency/11/12/twelve_month.stm

Apr '09 is only a year back. Late 2007, early 2008 I was getting 1.35€ to a £ or thereabouts.

Late 2008, the £ was near parity with the Euro. So there was a fall of around 30%, albeit for a short period. 6 months?

Even today, you'll be lucky to get 1.13€ you quote. Mere mortals are happy with 1.08€

Housing for us who earn euros has got cheaper, but I'm waiting for real UK house price falls of 20% or more before buying in the UK..........

[noodle doodle]

Apr '09 is only a year back. Late 2007, early 2008 I was getting 1.35€ to a £ or thereabouts.

Late 2008, the £ was near parity with the Euro. So there was a fall of around 30%, albeit for a short period. 6 months?

Even today, you'll be lucky to get 1.13€ you quote. Mere mortals are happy with 1.08€

Housing for us who earn euros has got cheaper, but I'm waiting for real UK house price falls of 20% or more before buying in the UK..........

yes, but "only a year back" is the period we were comparing and commenting on. Any other arbitrary time period is irrelevant to this particular argument, or we could compare £/$ ratios between 1986 and now and house prices between 1986 and now...

[noodle doodle]

Linky

doesn't show a 25% fall, it's just the £/$ for the last year showing what I posted earlier

[libspero]

doesn't show a 25% fall, it's just the £/$ for the last year showing what I posted earlier

It shows a five year range and a pound falling around 25% against a basket of currencies, as the original poster suggested.

The 1 year criteria is your own.

[edit to add: Ok, I realise now that you mis-read the post and were trying to nit-pick. Fair enough]

Edited April 21, 2010 by libspero

[Guest absolutezero]

Also keep an eye on the monthly inflation figures. If it stays this high, then the Bank of England will have no choice but to raise interest rates

Is that so?

What makes you think they will have no choice?

There are no rules any more.

[sleepwello'nights]

Also keep an eye on the monthly inflation figures. If it stays this high, then the Bank of England will have no choice but to raise interest rates, and that will bring down house prices.

Can you explain why?

To my simplistic mind the purpose of higher interest rates is to dampen demand. Demand is already subdued, why would it be necessary to dampen it further. Sterling falling against other currencies increases inflation and surely dampens demand.

My logic doesn't fit with conventional economic theory but where is it flawed?

[Tired of Waiting]

Can you explain why?

To my simplistic mind the purpose of higher interest rates is to dampen demand. Demand is already subdued, why would it be necessary to dampen it further. Sterling falling against other currencies increases inflation and surely dampens demand.

My logic doesn't fit with conventional economic theory but where is it flawed?

Yes high interest rates do dampen demand. Your logic is right, and fits perfectly with economic theory.

The only phrase where there is a little imprecision is: "Demand is already subdued, why would it be necessary to dampen it further."

To control inflation, and because we are still living beyond our means, unfortunately: Our foreign current account is still negative.

We are indeed much less wealthy than we thought. It was a bubble. Sorry.