July 2006 Archive
Sunday, July 30, 2006 
Housing Bubble, Recession, and That 70’s Show
Kitco: Housing Bubble, Recession, and That 70’s Show
This past January, I wrote an article titled “Real Estate Burst, Upcoming Recession, and Soaring Commodity Prices”. At the time of the article, most people thought that a recession prediction was outrageous and that a burst in the real estate market was hopelessly pessimistic. Since then, we have seen clear signs of an upcoming recession as well as a slowdown in housing that is only set to accelerate.
Pakistan tries to contain inflationary pressures
BBC News: Pakistan springs shock rate rise
The State Bank of Pakistan said that its main borrowing cost will rise to 9.5% from 9% on Monday
First time buyers, the week in focus
Firstrung: First time buyers the week in focus - 23/07/06 - 30/07/06
There has been definite patterns emerging in the various press releases the Firstrung team received this week and how property news has been reported in the mainstream sources. First time buyers, shared ownership, increasing questions on the viability of the 'buy to let movement', blaming the government for somehow forcing builders (against their better judgement) to build two bedroom boxes...it's all made for a fascinating and news worthy week.
Spending Less? You're Helping Slow the Economy
L.A. Times: Spending Less? You're Helping Slow the Economy
The cooling housing market does present a risk, and may be undercutting overall consumer spending as fewer people count on rising home equity to finance trips to the mall. Consumer spending grew by only 2.5% in the second quarter, down from 4.8% in the first quarter, mostly reflecting declining purchases of big-ticket items such as autos, according to the Commerce Department report Friday. "People were selling part of their house to finance dinner at Olive Garden," said Dirk van Dijk, director of research at Chicago-based Zacks Investment Research. "You can play that game as long as the price of housing is going up. You take that away and it becomes a scary proposition."
More bad news from the US
National Post: U.S. Home Prices in Peril
House prices are set to drop in the US for the first time on record, US investment bank Goldman Sachs warned this weekend. Prices in several segments of the market have already started to fall, and the overall market will move into the red even in nominal terms next year, fuelling fears that this will trigger a downturn in consumer spending and hit an already slowing US economy.
Inflation is low ... but only on the Chav Price Index
Times Online: Inflation is low ... but only on the Chav Price Index
It's one of the conundrums of new Labour: why in this “historic” era of low inflation are prices rising so quickly? Now the government’s own figures suggest it might be because Gordon Brown’s typical “shopping basket” used to assess the cost of living is chock-full of bargain items.
Another reason to regulate this market.
Guardian: High-risk lenders target vulnerable
'I would never buy again,' says Shelley. 'I only wanted to be able to leave something for the children, but this has ruined our lives. We will never pay off these debts.'
Saturday, July 29, 2006
American Empire Defeated by It Own Economics
Money Week: The five major trends reshaping the world economy
A good weekend read. Bonner identifies 5 world economic trends that will make the future very uncomfortable for many.
Put it on the card...again!
SKY News: Summer Credit Card Spree
People are likely to be reaching for their credit cards this summer, predicting they will spend 35% more on their plastic than last year, research has claimed. Consumers think they will put an average of £1,136 on their cards between July and September.
First time buyers wanted for tv show
Firstrung: Trapped first time buyers on
The producers of Tonight with Trevor Mcdonald have contaced Firstrung to ask for our input and that of our readership on a programme to be aired in September. They're developing content for the show looking at the phenomena of generations living under the same roof for ITV1's leading current affairs programme.
Protesters claim success at Newport
Firstrung: Latest on the Newport second home protest
The protestors wondered if they had made a difference as holiday home buyers were not there. One holiday home buyer reputed to be interested did not bid. People attending the auction said they thought the publicity about the protest could have put off the second home buyers. Everyone was happy to see a Welsh family with young children move into the small-holding.
Better late than never
Guardian Unlimited: Card limits 'to cut overspenders'
MBNA is changing its terms and conditions so that it can now refuse to authorise a transaction if it thinks a customer is "spending beyond their means", even if they have not exceeded their credit limit. Barclaycard, is introducing a similar new clause.
Chickens come home to roost in Northern Ireland
BBC News: House repossessions in NI rising
In the last year there were 2,600 cases of lenders seizing back property - an increase of 60% from five years ago. Ursula Toner from the Housing Rights Service said much of it is due to people borrowing against their homes to pay off other debts.
If they can afford a home then who is it that can?
BBC News: House price woe for 'key workers'
Public sector workers such as police, teachers, nurses and firemen cannot afford to buy property in two-thirds of UK towns, the Halifax bank has said.
Friday, July 28, 2006
Steep rise in repossessions in Northern Ireland
BBC: House repossessions in NI rising
There has been a steep rise in house repossessions in Northern Ireland, according to the latest figures. In the last year there were 2,600 cases of lenders seizing back property - an increase of 60% from five years ago. Ursula Toner from the Housing Rights Service said much of it is due to people borrowing against their homes to pay off other debts..........
Brown's 'miracle economy' is a sham
Daily Telegraph: Don't believe Labour: inflation is back
Of all the lies New Labour has told, the one for which it will pay the highest price is its claim that it has buried inflation............ Now, however, they must be worried. For the myth that inflation is dead is being exposed. Hardly a day goes by without some price rise or other.........For more than a decade, we have been dozing like lions, lolling luxuriously in the sun. But Britain is now so indebted that even the tiniest rise in interest rates to combat inflation will wake us up with a fright. The City is forecasting that it could come as soon as next month............In the circumstances, isn't it about time that the Conservatives opposed the Chancellor, instead of quivering in his shadow?
More ways to prop up the property market?
Financial Times: Vehicles set to queue for property schemes
Under the final version of the Finance Bill, which was passed last week, investors can get exposure to residential property through their self-invested personal pensions (Sipps) as long as it is through a so-called “genuinely diverse” investment vehicle. These schemes have to fit certain criteria: they must have at least 10 investors and own at least three different properties worth a minimum of £1m in total.
Brakes slam on US Growth
BBC website: Brakes slam on US Growth
Consumer slowdown. Funny that. IRs may not be increased. ANd HPs will continue to tumble I guess - just a guess, mind.
Despite tighter lending criteria bad debts at Alliance and Leicester rise 60% in the last six months
Telegraph: Personal insolvencies prompt A&L to rein in lending
A&L is now accepting a "lower level of new business" to ensure "high credit quality standards" are maintained.
Time to buckle the seat belts?
Telegraph: Britons feel poorer because they are poorer
The amount of money we can spend as we choose has fallen 10% in the last 5 years so if you are feeling poorer then you most likely are.
BoE will look a little feeble if they don't act soon...
Reuters: Rising growth warrant rate rise -NIESR
The economy is picking up faster than expected and with inflation likely to remain above target for some years, the Bank of England should raise rates sooner rather than later, a think-tank said on Friday.
Hometrack, a very cautious statement
Firstrung: UK house prices, signs of a slowdown emerging - Hometrack
The survey also shows how the extent of house price rises across the country has declined over the last month, reversing the upward trend of the last nine months. In June agents reported monthly price rises across 42% of the country, whilst in July this fell back to 31% - see chart 2, page 3. Stripping out the impact of London and the South East the Hometrack survey shows that prices rose across just 19% of the remainder of country in July.
US housing market may be busting
Telegraph online: US housing market 'going bust'
The quantity of unsold housing is at record levels in the US with sales falling creating fears that the US housing market is entering a bust.
Are potential BTL'ers waking up?
BBC News: Citizen reporter: Property as a pension
He investigates how much he needs to enjoy a comfortable old age - and whether property investment can help him achieve his ambitions.
More news on graduates v property
Firstrung: Graduates suffer years of first time buyer delays due to debts
Thomas Charles survey of 1000 graduates reveals the major negative impact of unsecured debt on property ownership. The survey suggests that the current levels of unsecured debt amongst graduates is having a major impact on the property market with fewer graduates being able to afford to buy a property and having to postpone getting on the property ladder by several years...
Moneyfacts philosophy on house price bubbles
Firstrung: Moneyfacts warns of house price crash and issues house price bubble philosophy
Moneyfacts issues its seven tablets of wisdom on house price booms and busts...
more pressure for the BoE
Guardian: Bank under pressure to increase interest rates
\"...approvals for house purchases in June - a rise of almost 22%...\"\r\n\r\nblimey. If they don't raise rates this month, my prediction is that they will next month. No later.
Wage inflation
guardian: Royal Mail pay deal averts national strike
Another fine reason for the BoE to ... ignore.
Time to fill up your oil tanks?
MSN: Could the Middle East crisis spell economic disaster?
For the global economy this latest conflict, like so many before, is not about what has happened but what might happen. Neither Lebanon, nor Israel for that matter, produces significant amounts of oil. If Syria, a small producer, or more particularly Iran, a huge one, are drawn into conflict then oil supplies may be at risk. This matters particularly now because there is almost no spare capacity in the world oil supply system. Even a small cut in output could have a big effect on oil prices.
Level of unsold homes in the US reaches record high.
AFP: Glut of unsold new homes across US hits record
The glut of brand new unsold homes for sale across the US hit a record high in June, a government report showed today, as some economists warned of a worsening market in coming months.
Thursday, July 27, 2006
RICS critiques Australia HIPs model
Real Estate Enthusiast: Real Estate Enthusiast
The Royal Institution of Chartered Surveyors (RICS) has sternly criticised the UK Government’s decision to scrap the Home Condition Report (HCR) from Home Information Packs (HIPs). They claim that the Government failed to allow sufficient time to iron out the problem of training adequate numbers of Home Inspectors - an issue the RICS identified over a year ago. "If the Government had worked together with industry, as suggested, a workable solution would have been possible" the influential body stated in a press release. RICS research into the effect of HIPs on the UK housing market suggests the Government’s decision leans towards the low-regulatory model used in Australia where their version of the Home Information Packs are compulsory, but the HCR equivalent is not. The Australian model is a low cost approach to simplify the home buying process, and when introduced back in June 1988 had no effect on housing market activity.
Sub-prime borrowers in trouble
Telegraph website: Are the cracks showing of home loans?
With experts worried about rising debt, one 'sub-prime' mortgage lender has a third of its borrowers in arrears, writes Ambrose Evans-Pritchard
Possible runaway inflation for China
BBC: Chinese economy 'could overheat'
China's economic growth is red-hot. China's premier has called for urgent steps to prevent economic overheating, expressing concerns that runaway growth could precipitate a crisis.
Spiralling debt and spiralling inflation? Bets are off for a rate rise.
BBC News: Debt woe blamed on rising bills
Consumer spending is being choked by rising fuel costs. To a rational observer, this would mean a rate rise is needed. Our esteemed and hard-working MPC no doubt see things differently and (peversely) would see this as supporting the case for a cut!
Pressure mounting!
Reuters: Sterling holds near highs as rate rise talk mounts
Sterling held near the previous week's one-month highs against the euro after a run of strong economic data rekindled expectations for a hike in UK interest rates perhaps as soon as next month.
The misery of eviction
Firstrung: Evictions, not everyone gets to meet Davina
As the Big Brother housemates faced eviction "crunch time" last week, Shelter launched a national press advertising campaign to highlight that for the 135,000 households who face the threat of homelessness in real-life, eviction is no gameshow.
Mortgage approvals up 22 per ent
Firstrung: Mortgage approvals up a massive 22 percent in a year -BBA
Whilst we can easily break these figures down into; re-mortgages, secured lending and new approvals the fact remains that, according to the BBA, mortgage approvals are up a massive 22 percent in comparison with June 2005....
Northern Rock profits up 22% and bad debts charges up 100%
TimesOnline: Northern Rock's bad debt charges double to £44.5m
Northern Rock played down a large increase in bad debt charges by announcing a large 22% rise in mortgage lending over the last year. The company also announced that it was working with Lehman Brothers to enter the "near and sub-prime" mortgage market which is aimed at "riskier" borrowers.
Yet more rises for British Gas customers
BBC News: British Gas raises energy prices
British Gas owner Centrica has said it plans to raise gas bills by 12.4% for its 10.7 million customers. The firm's 5.8 million electricity customers will also face a 9.4% increase in their bills from September.
Worried about the day of reckoning?
Timesonline: Worried about the day of reckoning? Calm down – it has passed already
Why am I so optimistic? There are two broad reasons. First, the long-term structural underpinnings of the British economic miracle that began in the mid-1990s are still mostly in place. And while everyone recognises some of these structural advantages — the deregulation and privatisation of the Thatcher period and the monetary policy framework created by Mr Brown — the most important one is still not fully appreciated by the business community, the media and the financial markets. This underappreciated strength is Britain’s comparative advantage in finance and business services
How a US house price correction could come home to roost on this side of the Atlantic
Independent online: Would a US housing crash impact here?
It is the little signs that give you an early warning that something important may be happening. In this case it is the matter of US house prices, for, as here in the UK and in some other markets, it has been a housing boom that has helped support consumption growth. Now, it seems, the boom is over.
Wednesday, July 26, 2006
Rightmove and their HIPs
BBC News: Rightmove halts house pack cash
Property website Rightmove has pulled the plug on £22m of investment in Home Information Packs (Hips). The move was prompted by a government decision to make home condition reports - a key element of Hips - voluntary, rather than compulsory. Last week, Rightmove shares slumped after it warned earnings from Hips were likely to be "significantly lower" as a result of the decision.
The 'blame game' continues in the new build game
Firstrung: Are builders now desperately pinning their hopes on 'shared ownership'?
Wolsey blame the government for forcing builders to think small, smartnewhomes criticises the government for forcing their clients to build small. Given that it's all the govt's fault (obviously) how keen will they be to now help councils buy up the excess stock to protect builders profits?
People are comfortable with amount of their debt
SKY News: No Frowns Over Debts
Most people feel comfortable with the amount of debt they have taken on. And only a fifth expect their borrowings to increase further, says credit monitoring service CreditExpert. Around 76% of consumers said they were comfortable with their debts, 1% more than in January this year, the company said.
Daily Express criticised for ramping house prices
The Business News Source: English newspaper pushes up house prices
"In spite of all the evidence to the contrary, it (Daily Express) leads with following comment – ‘Record property prices are set to soar for at least 10 years in a massive boost for home owners’. Because we believe that it is articles like this that are contribute to the Housing Bubble, way after proper analysis indicates that ‘the party’s over’. In particular it cites ‘experts’ without reference and then goes on to ask Estate Agents (realtors) for their view – a bit like asking a Butcher if meat is good for you......"
Retailers are definitely feeling the pinch
BBC News: Woolworths sales see hard times
Retailer Woolworths has seen like-for-like sales decline by 7.7% in the first half of this year, hit by a "challenging" retail environment.
Northern Rock hopes for 'Soft Landing'
Times Online: Northern Rock cautious on house prices
Northern Rock, one of the more lax mortgage lenders, today added its voice to predictions that the mini-boom in property prices will peter out. With more than 14 per cent of the UK mortgage market, NR argued that over the medium term house prices are likely to grow at the same rate as wages.
Presumably the govt. makes builders use; one facing brick and plaster board for walls...
Firstrung: Average size of a new home is now below 1000 sq. ft., it's all the government's fault, apparently...
The size of the average new home is shrinking as the Government puts pressure on builders to produce high density developments, figures showed today. The average plot size for a new property has shrunk to 973 square feet from 988 square feet during the past 12 months, according to building finance group Wolsey Securities.
Tuesday, July 25, 2006
Are buy-to-lets unethical?
Ethical Consumer Magazine: Are buy-to-lets unethical?
Great article from Ethical Consumer Magazine published on the web for the first time by PricedOut.org.uk.
"What are the real costs of the recent trend for buy-to-let investments? Are they as ethically neutral as most people assume them to be? Simon Birch investigates."
India Hikes Interest Rates
BBC News: India hikes interest rates again
India has increased its short-term interest rate for the third time in four months in a bid to curb inflation. The country's central bank raised the rate by 0.25% to 6%, amid fears that strong global oil prices threatened financial stability.
Head of CBI calls for BoE not to raise interest rates
TimesOnline: Head of CBI warns Bank to stay its hand on interest rates
Richard Lambert former member of the monetary policy committee (MPC) called for the Bank of England to hold back on any interest rate increases. His argument is based on his belief that strong high-street spending will lose momentum. Lambert stated that an increase to interest rates would inflict a bigger blow than normal to economic activety. “A reason we think it would be sensible to sit and do nothing now is that consumption is at a delicate stage, and it would be possible to have greater than normal consequences if people think this is the start of a change,” Lambert said
Express delivery...of what I'm not sure
Firstrung: There\'s a bloke works down our chip shop swears he\'s Elvis..
Record property prices are set to soar for at least 10 years in a massive boost for home owners. They will see the value of their property increase by around £20,000 every year, pushing the average home to almost £400,000 by 2016, experts predicted last night.
Monday, July 24, 2006
Oh look, even more for the BOE to ignore next month.
BBC News: Energy prices rise at EDF Energy
EDF Energy is to raise the price of gas and electricity for its five million customers, as it has been affected by rising wholesale energy costs.
Why the CPI Inflation Measure Is Right?
Telegraph Money Online: Fact and fiction about inflation
Roger Bootle explores the relationship between actual and perceived inflation - and suggests why real inflation is actually low. He concludes that the Fed and the BoE are relaxed about current inflation but this state of mind will quickly turn to panic should inflation rise further. This article is worth a read as it projects an alternative view while containing some intellectual rigor.
You want fries with that degree?
Firstrung: Graduate job search not meeting expectations
According to research by the Higher Education Statistics Agency (HESA), a third of university graduates are in jobs that do not need a degree. Many are; stacking shelves, washing dishes, or working in bars. The agency said 34.4% of UK students who finished their first degrees in 2004-05 and went into full-time jobs were in "non-graduate" work.
The world's gone mad, let me off...
Independent: New hotspots on the radar of househunters
From Turkey to South Africa to Cape Verde, British buyers are broadening their horizons...
Moneyweek article published on Firstrung
Firstrung: Cobblers to estate agents, the infestation that will surely disappear
Great article from John Stepek@moneyweek "Invasion of the Estate Agents," screamed a Sunday Times headline last week. Instantly, I had a vision of our green and pleasant land overrun by phalanxes of overly-aggressive 19-year-olds with perma-tans, pastel shirts and fist-sized knots in their ties. They marched along, staring fixedly ahead, bellowing their masters' mantra: "Property prices can only go up."
The real reason the MPC won't raise rates in August
BBC News: UK total assets worth £6 trillion
UK assets were worth £6 trillion at the end of 2005, with property accounting for most of that wealth, the Office for National Statistics (ONS) has said. The Halifax has been keen to play down the threat of a housing crash, pointing to the UK's steady economic growth and interest rates.
Politicians have a think tank
Guardian: Tory thinktank calls for annual levy on residential property
Why do i get nervous when politicians start thinking? In some ways these ideas seem socially beneficial (proving further still that Labour are tory, and tory are labour??), but I can think of problems with a flat residential tax - more people buying cheaper FTB homes for one.
Banks begin to worry about interest-only mortgages
Scotsman: Alarm over debt burden as house prices continue to rise
Britannia Building Society is just one of a number of lenders starting to have concerns about how some of its mortgage holders intend to repay their loans. As house prices have risen, an increasing number of borrowers have opted for interest-only loans as a way to keep their monthly repayments affordable.
This is one of the scariest things I've read in a while!
Independent Online: Plastic is a girl's best friend: The motto of a generation in debt
Young women are running up record levels of debt, chasing a celebrity lifestyle they can't afford. Women between 21 and 25 have an average £3,830 in credit-card debts and most never save. More than half still live with their parents, and 65% dismiss the idea of a pension as a joke. Said one women in debt "I'm just the same as everybody else my age. We're all trying to get ourselves out of debt but none of us is prepared to sacrifice our lifestyles for it."
Australia: rate rises will hit housing industry
Sydney Morning Herald: Rate rises to cripple industry, hit growth
Two more interest rate increases will send the already weak NSW home building market to deeper lows and constrain economic growth this financial year, a forecaster says.
Go to Uni, get degree, get well paid job, buy house....er....not quite
Firstrung: Graduates have a one in ten chance of becoming first time buyers
Only one in 10 people who have left university since 2001 currently own their own home, with 58% saying they have been unable to purchase somewhere because of their debts, according to debt consultancy Thomas Charles.
Economic boom nearing end
Telegraph: Britain told to shake off its mindset of graceful decline
Britain's economic boom over the past seven years is sputtering out as consumers reach the limits of debt and UK manufacturers face a relentless slide in global market share, according to the latest Item Club report of Ernst & Young. Professor Peter Spencer, the group's chief economic adviser, said Britain had failed dismally to break into the fast-growing markets of China and developing Asia. "UK manufacturers seem to be locked into a vicious circle of low profitability, low investment and lack of cost control," he said.
Interest Rates
BBC News: UK rates 'could remain at 4.5%'
The Bank of England has enough room to manoeuvre to allow interest rates to stay at 4.5%, a forecasting group says. Rising oil and commodity prices will slow growth, allowing the Bank enough slack in the economy to leave rates on hold, the Ernst & Young Item Club said. Consumers and the government will also put the brakes on growth as they cut back after years of heavy spending. The group also expects inflation to slip below government targets of 2% and so negate the need to raise rates.
Sunday, July 23, 2006
Inflation
Telegraph: Fact and fiction about inflation
Inflation is on the up. It has risen to 4.3 per cent in the US and 2.5 per cent in the UK. Moreover, if recent elevated energy prices are sustained, inflation could easily rise a good deal further. I have written before on the reasons why I do not believe that recent developments presage an inflationary upsurge. But for many people this will provide scant comfort because they do not believe the figures anyway. Instead, they sense that the inflation numbers are like the data on immigration or the crime statistics - the product of an official machine that pays no attention to their daily reality and comes from another planet. Are they right?
Auditor General criticises Chancellor's policies
Telegraph: Public spending watchdog's verdict on Gordon Brown
Sir John Bourn, the Auditor General, has launched a blistering attack on the Chancellor, Gordon Brown, branding the Treasury's flagship tax credits policy "a failure" and describing the expansion of means testing as "ridiculous". The country's most senior public spending watchdog, Sir John also told The Sunday Telegraph that Network Rail's £23 billion debt should be on the Government's books - which would shatter the Chancellor's spending rules, causing the Government intense embarrassment. He also said official statisticians felt "real anger" that their independence "is being subverted" by ministers.
SLI to protect investors from an expected slowdown in UK real estate returns
The Scotsman: Standard Life 'approached' by Friends Provident
Standard Life Investments said last week that it plans to raise up to £200m for a property development fund to help protect investors from an expected slowdown in UK real estate returns.
Mortgages: Fixed or Variable
Independent: It's follow that base rate as fixed home loans rise in price
A recent rise in fixed mortgage rates is making trackers - which follow the Bank of England base rate - more popular. The cost of fixes has begun to creep up as economic warning signs, such as higher inflation, have persuaded the money markets - where lenders borrow from each other - that a base rate rise is on its way after 11 months at 4.5 per cent.
Halifax calls for rise in death duty threshold
The Times: Bank calls for rise in death duty threshold
The number of estates liable for death duties is likely to soar over the next 15 years as rising house prices push the value of four million homes above the inheritance tax threshold.
Barratts, the first time buyers friend....
Firstrung: Barratts look into parents pockets to aid first time buyers
Once again we find a builder offering the much criticised 'gifted deposits' in a different guise. Fact - most new builds are significantly over-priced and if there is to be a price correction historically the new build gets hit first and hardest. This should not escape the first time buyer. You could be left holding a property worth less than you paid for it and having received parental assistance the plight will be much worse if you witness your 'together' deposit simply evaporate in terms of value.
Saturday, July 22, 2006
Live and let buy
Citywire: Live and let buy
Some MPs and local authorities are calling for controls on what they see as the damaging buy-to-let market. However, the mortgage industry has hit back hard to counter this stance. The recent call by MPs for more controls on buy-to-let, claiming that it is ‘distorting’ the property market, forcing up prices and crowding out local buyers, caused something of a flutter in the mortgage and property market.
The sorry saga of future FTBs
Times Online: The really big test is after university
With no savings, an average debt of £13,500 and an average salary of £19,000 - assuming they find a job - this year’s graduates are hardly on the firmest financial footing when they enter the working world. A survey by Equifax found that 11 per cent of respondents with student loans are considering bankruptcy.
More surveys about confident FTBs but are they buying?
thisismoney.co.uk: New buyers happy to haggle
FIRST-time buyers are feeling increasingly confident about the property market, with nearly half saying they would not offer the full asking price straight away, a survey showed today.
HPC mentioned in the Telegraph
Telegraph: Word on the street: Apocalypse now? Having read the signs, I don't think so
House price forecasts aren't the kind of thing one gets into fisticuffs over. Or so I thought until I found myself in a fevered discussion with a friend-of-a-friend in the pub. The topic of the housing market came up, and I volunteered my predictions.
Guess the next financial scandal
guardian: Interest-only mortgage crisis looms
Whether house prices drop or not, there's going to be a lot of knackered people in the future. "There are worrying signs of irresponsible lending by mortgage companies happy to push loans without properly explaining the consequences of taking the interest-only route" marvellous.
It's all been bought up...
Firstrung: First time buyers locked out of local communities
Established communities in Lancashire are in danger of being ripped apart by a lack of affordable housing with local property experts suggesting that huge rises in house prices mean people who have grown up in towns and villages are being priced out, breaking up traditional community life.
Buying houses on the way to the supermarket
Firstrung: Home hunters taking longer to buy groceries than a house
House hunters spend less than 30 minutes viewing the property that becomes their family home, half the time they spend doing their weekly food shop. Yet, professional home buyers County Homesearch says that home buyers should spend double that when viewing a house and should not be swayed by positive first impressions.
Friday, July 21, 2006
Real reason for u-turn on HIPs
In2Perspective: HIPs were set to trigger a 30% fall in house prices
Home Information Packs (HIPs) would have triggered a crash in the property market that would have resulted in up to £1.35 trillion being wiped of the value of UK homes.
More pressure to concrete over Britain
Firstrung: Smartnewhomes.com admits prices of new builds continues to fall
Despite the current overall shortage of properties on the market, the price of new apartments fell in June, suggesting that builders are being wrongly forced to build too many apartments and not enough houses. This fall reinforces concerns that during a time when the country is suffering from a lack of supply, too many apartments and high density properties are being developed, at the expense of family homes and the consumer.
Industry is underplaying the number of households getting into difficulty
Firstrung: Repossessions set to double from their 2004 mark
The Council of Mortgage Lenders (CML) predicted repossessions would rise to 12,000 this year, up from 10,310 in 2005, while figures from the Department of Constitutional Affairs (DCA) showed a 29 per cent rise in the number of court actions between quarter one 2005 and quarter two 2006.
Mortgaged backed by wine!
Guardian: Could buying a lot of this be the smartest way to buy a house?
From an investment industry that came up with the endowment policy, many of which are falling far short of original expectation, there is a new wheeze. Lovers of fine wine are being offered the chance to stake their home on the value of their cellar with a mortgage invested in vintage Bordeaux.
Brown plunges the UK into more debt
BBC News: Worst June ever for UK finances
UK public finances suffered their worst June on record, figures from the Office for National Statistics (ONS) show. Government borrowing rose to £7.3bn in June from £6.2bn during the same month last year - significantly higher than analysts' forecasts of £6.5bn.
UK GDP up to 2.6%
BBC News: UK's economic growth accelerates
The UK economy grew at its fastest rate for two years in the second quarter of this year, the Office for National Statistics (ONS) has said. UK GDP grew by 0.8% between April and June, compared to the previous quarter.
Thursday, July 20, 2006
Another mad policy bites the dust !
Liverpool Daily Post: Homes reprieved as mass demolition plans frozen
LIVERPOOL'S plans to bulldoze 3,000 terraced houses as part of the biggest clearance programme for 40 years, lay in tatters last night, jubilant critics claimed.
Bank warns imports risk stoking inflation
Times Online: Bank warns imports risk stoking inflation
Sir John Gieve, the Deputy Governor of the Bank of England, today gave warning that policymakers "will not hesitate to change interest rates" to keep inflation on track as the deflationary benefits cheap imports show signs of retreating.
House price forecast to be taken with a pinch of salt
MoneyWeek: Can UK house prices really jump another 50% by 2011?
Earlier this week, a report conducted by Oxford Economic Forecasting, commissioned by the National Federation of Housebuilders, claimed that the average house price would top £300,000 by 2011. Money Week exposes a couple of flaws with this report.
US property heading South
Wall Street journal: Sizzling Housing Markets Chill
The housing market continues to weaken in much of the country as houses take longer to move off the market and many sellers cut their asking prices, according to a quarterly survey by The Wall Street Journal...
Sizzling Housing Markets Chill
WSJ: Sizzling Housing Markets Chill
The housing market continues to weaken in much of the country as houses take longer to move off the market and many sellers cut their asking prices, according to a quarterly survey by The Wall Street Journal.
Hawkish economists expect rates to rise as early as next month
TimesOnline: High Street piles pressure on rates
The Office for National Statistics (ONS) said retail sales rose at a higher than expected 0.9% in May. Economists has expected 0.2%. David Page an ecomomist at Investec said, "We had pencilled in an August rate hike and, if anything, this number makes our view slightly firmer". The HSBC ecomomics team believe the data will not be sufficient to sway the MPC who they say will treat the data with an eye on a possible World Cup effect.
Where's the IR rise?!?
Reuters: June retail sales soar
Retail sales rose more than expected in June, driven by food sales at supermarkets, while the previous month's increase was revised higher even as overall price pressures increased markedly. The surprisingly strong 0.9 percent monthly gain was more than double the 0.4 percent expected and confounded many analysts' forecasts that the World Cup football tournament would keep Britons away from the shops. It also boosted expectations that the Bank of England may soon raise interest rates, given that May's gain was revised up to 0.7 percent from 0.4 and the three-month on three-month trend rate was its strongest since February 2004.
In every cloud there's a silver lining
Firstrung: National Association of Licensed Home Inspectors comments on HIPS
Frustration, disappointment and anger are some of the immediate feelings being echoed around the country from potential Home Inspectors many of whom have committed heavily in terms of money and time to be ready for HIPs Day on June 1st 2007.
Can UK house prices really jump another 50% by 2011?
MoneyWeek: Can UK house prices really jump another 50% by 2011?
The demise of Home Information Packs has been largely welcomed by the estate agent industry. But there are still plenty of reasons to be worried about the UK property market.
Gross mortgage lending up 11% in June
Firstrung: Gross mortgage lending hit a new record level in June, reaching £32.2 billion
Gross mortgage lending hit a new record level in June, reaching £32.2 billion, according to new data from the Council of Mortgage Lenders (CML). This is up from £25.7 billion last June, and is higher than the previous monthly record, set only in May, of £29.1 billion.
Houses only ever go up in value..don't they?
Firstrung: Can UK house prices really jump another 50% by 2011?
Who will be buying all these houses? If people can't afford mortgage repayments, they won't be able to afford rents to cover them either. So unless buy-to-let investors remain uncommonly stupid (not to mention solvent) and keep subsidising their tenants' rents for the next six years, we just don't see how affordability could ever fall that far without a crash in the market.
Mortgage lending still very strong
BBC: June sees record mortgage lending
The council of mortgage lenders (CML) reports that gross mortgage lending reached £32.2bn in June making it the highest monthly figure on record. Lending was 11% higher than May and 30% higher than June 05.
HIPS U-turn wipes £100 million of Rightmove market value
TimesOnline: Rightmove suffers £100m Hips blow
Rightmove shares were downgraded from “buy” to “hold” by and its target price was slashed from 425p to 310p by Analysts at Panmure Gordon.
I'll be on the radio this morning in London
Colourful Radio: Debt and financial planning
Debt and how did we get here and what can we do about it. Can someone digitise it and put it on here if you think its good enough 11am ish this morning with Karen Morgan
I'll be on the radio this morning
Colourful Radio: Debt and financial planning
Karen Morgan interviewing. Debt and financial planning - how did we get here and what can we do about it?
Wednesday, July 19, 2006
HPC.co.uk in the news again
BBC News: How high can house prices go?
...But there are still some pessimists out there. Just because a crash hasn't happened yet doesn't mean that it won't, says Reinhard Schu, spokesman for Housepricecrash.co.uk.
US Producer prices surge!
BBC: Fuel pushes up US producer prices
US wholesale prices rose by a more than expected 0.5% in June, underpinned by higher food and energy costs, according to data from the Department of Labor. The increase in farm and factory prices beat the forecast of a 0.3% gain, and could push interest rates higher.
Choppy economic times ahead?
TimesOnline: Investors' outlook hits five-year low on the gloom scale
Investors around the globe are hunkering down in the belief that choppy economic weather is on the horizon. Sentiment has rapidly shifted with 60% of investors now expecting the world economy to weaken in the coming year. Just three months ago only 5% of respondents held that view.
A discrepancy at the heart of government home owner statistics?
PricedOut.org.uk: A discrepancy at the heart of government home owner statistics?
The article highlights some conflicting figures at the heart of government claims that home ownership is on the rise.
"71% of people now own their own homes proclaims the government. Owner occupation continues to rise steadily according to DCLG statistics. Sounds good doesn't it... but is it too good to be true?"
Couldn't have happened to a nicer company
FT: Rightmove shares plummet on Hip U-turn
Shares in property website Rightmove dived today after hopes of a major earnings boost from the launch of Home Information Packs were dashed. The blow came after the Government said the controversial survey element of the packs would not be included at their launch next year. Rightmove, which has positioned itself to offer services linked to the new packs, said revenues and potential earnings from its HIPs product were now likely to be "significantly lower" than current market expectations. Shares in the company, which rallied earlier this month because of a strong trading update, fell by 19% to 285.5p. One of its major stakeholders, estate agency group Countrywide, saw its shares dip by more than 6%. Rightmove's share price is now back below its flotation price of 335p in March.
Bigger issue than HIPS on the way, even a 0.25% rise is predicted to cause damage
Firstrung: First time buyers will need to spend 50% of salary on interest re-payments if rates rise by just 0.25%
Someone on average earnings buying an averaged priced property with a 20% deposit can expect to spend nearly half of their take-home pay on mortgage interest repayments if the cost of borrowing rises. A 0.25% rise in interest rates to 4.75% before the end of the year, would mean a typical buyer had to spend 49.8% of their salary on interest repayments alone, said lender Cheltenham & Gloucester, the highest level since 1991.
Minutes show no disagreements at last MPC meeting
BBC News: Bank unanimous over rate freeze
All seven members of the Bank of England's rate-setting committee voted to leave borrowing costs unchanged at 4.5% in July, minutes have shown. The minutes indicated that the monetary policy committee (MPC) was concerned about both accelerating price growth and a slowing economy.
When will UK interest rates rise again?
MoneyWeek: When will UK interest rates rise again?
UK inflation is now at its highest since Labour came to power in 1997. Commentators are still drivelling on about 'core' inflation, but since when was the price of suit hire more important than the price of petrol? So can we expect to see another hike in UK interest rates this summer?
Problems for BP in Alaska
BBC News: BP shuts down 12 Alaska oil wells
BP has shut 12 producing wells at its Alaskan operations after workers told the Financial Times the wells were leaking oil or diesel insulating agent. The British oil firm said they had been shut while the allegations were being investigated.
Is the word for this "delusion"
Firstrung: Hopeful homeowners, most Britons think their area will beat the market
An overwhelming majority of Britain's homeowners firmly believe that prices in their area will outperform the national average, according to new research from property website propertyfinder.com. Six times as many people believe their district is up and coming compared to those who think that it is doing less well than other areas.
The effect of a rate rise on affordability
Annanova: 50% of take home pay on mortgage
A 0.25% rise in interest rates to 4.75% before the end of the year, would mean a typical buyer had to spend 49.8% of their salary on interest repayments alone, said lender Cheltenham & Gloucester. That would be the highest level since 1991.\r\n
City investors fear global downturn after oil price spike
Guardian online: Global economic turmoil ahead?
Merrill Lynch survey showed yesterday that out of the 213 global fund managers surveyed by the investment bank, 60% expected the global economy to weaken over the next 12 months, a sharp leap from the 5% who took this view only three months ago and the most negative result in the survey's five-year history
Tuesday, July 18, 2006
Government housing policy now decided by Phil and Kirsty
FT: U-turn on home information packs
Sod the 700,000 FTB's displaced by BTL and insanely high house prices. Phil and Kirsty say anything that causes prices to do down is a bad thing so the government jump to their tune and can it. "The government appeared to have buckled under pressure after 130 MPs last week signed a motion against the packs amid fears they could affect house prices."
No rise in fuel duty
BBC News: UK fuel duty rise delayed again
An increase in fuel duty planned for the start of September has been ruled out by the government. Junior Treasury Minister John Healey said duty would be frozen as the risk of oil price volatility remains high.
Rollout of Home Condtion reports delayed - Govt. press release
HM Govt Press Release: Review of HIP
Home Conditon Reports, the key element of the Home Info Pack (HIP), has been postponed. This was to be the main fee-earning element for Home Inspectors (circa £150 per HCR).
Government needs a HIP replacement
In2Perspective: Estate agents 'thankful' for HIP U-turn
Estate agents and mortgage lenders are breathing a collective sigh of relieve today after the Government announced it is unable to meet the necessary timetable to fully introduce Home Information Packs (HIPs) in June 2007.
IRs likely to rise
guardian: Government braced for rate rise
The government was softening up the public today for an increase in interest rates after soaring gas and electricity bills pushed the annual rate of inflation to its highest level since Labour arrived in office more than nine years ago.
North-South property divide increases to widest level recorded
TimesOnline: North-South house price divide hits record
According to the Royal Institute of Chartered Surveyors (RICS) a mini-boom in the south east driven by the financial sector has caused house prices in London to grow at their fastest pace for six and a half years during June. RICS said that nationwide 28% more surveyors reported prices rising than those that saw falls
1000 mile each-way commuting
BBC website: International Commuting
Lord, give me strength. Report says Barcelona - London commuting will be taking off due to - guess what! IS it not at all possible to those regurgitating idiots (editors) that HPs will actually fall when this sort of this rears its stupid and ugly head.
London Housing Boom?
BBC News: London 'sees housing market boom'
House prices are surging in London and the south-east of England, widening the north-south divide, Royal Institution of Chartered Surveyors (Rics) has said. Are we seeing Spin in desperation?..
Inflation to 2.5%?
BBC News: Fuel costs push inflation to 2.5%
Rising energy bills continued to push drive UK inflation above government targets of 2% in June, the Office for National Statistics (ONS) has said. I wonder if the BoE care?..
Business failures up sharply
Firstrung: Experian witnesses business failures increase by 2% in the last quarter
Business failures in the UK rose to 4,720 (2.0 per cent) in the second quarter of 2006 compared to the same period in 2005, bringing the total for the year so far to 9,538 - 8.9 per cent more than in the first half of last year, according to the latest figures from Experian
A drop in the ocean for London?
Firstrung: Housing minister Yvette Cooper reveals 50mil for London homeless and overcrowded
£50 million to help homeless and overcrowded families in London, has been announced by Housing Minister Yvette Cooper.
Another 'nail in the coffin' for BTL?
Firstrung: Tenants to have their deposits protected legally from April 2007
The Tenancy Deposit Protection will take hold on April 6 in an effort to protect tenants and good landlords alike. It will put a stop to the situation whereby landlords can withhold deposits unfairly.
Monday, July 17, 2006
Are we importing house price inflation?
South China Morning Post: HK buyers face demands for UK capital gains tax
The British government ought to consider making Hong Kong investors pay capital gains tax, Britain's first-time buyers have demanded. Those Britons struggling to get their foot on to the property ladder have been angered by a wave of overseas investment that has helped to push up prices in some parts of the country, most notably London.
Housing crisis in England's housing timebomb
Firstrung: Disastrous news for first time buyers as house prices predicted to reach on average £300K by 2011
"Crisis is an over-used word but I make no apology for using it: we are already in crisis and this report shows that things are set to get worse. "High house prices are already having a disastrous effect on local communities. People are unable to find a home in the area where they grew up. Parents are forced to work longer hours and travel greater distances. Low-income families are forced to live in poor quality, cramped conditions."
Not where I live!
Rightmove: Asking prices jump 2.9%
Well, here's a surprise! Not round here, certainly, and one wonders whether this is a surge of optimism on the part of vendors that will not be matched by buyers. What's happening in your neck of the woods??
Asking prices defy concerns of sustainability
TimesOnline: South East leads property price rises
According to Rightmove asking prices in England and Wales jumped by £6137 in the month to the first week of July. The largest rise was in the South East where prices rose by more than £12000 during the month. Asking prices in two of the ten regions fell.
Econometrics is accurate
Guardian: House prices to soar 50% within six years
projection of housing prices by housing associations trying to point out how bad it could be.
Rightmove - You have to admire their persistence!
Telegraph: Increase in house prices is highest for five years
The average asking price for a home jumped by more than £6,000 in the past month, the largest monthly increase for almost five years. Figures from the property website Rightmove show that the average asking price for a home is now £217,580, almost 10 times the average salary. That represents a £6,137 increase between June 11 and July 8, Miles Shipside, the commercial director, said.
Sunday, July 16, 2006
Whatever happened to the demolition of our housing market?
The Independent: Whatever happened to the demolition of our housing market?
Prices have held up, but the doomsters haven't gone away The prophets of doom who forecast crashes wiping as much as 40 per cent from the value of our homes have been silent for months as UK house prices have chugged along. Latest figures from major indices, including those from Nationwide building society and the official Land Registry, put annual house price rises at between 5 and 9 per cent (the variation is largely down to different methods of collecting data).
Britain's dedt timebomb and the end of cheap money.
Sunday Telegraph: The interesting dilemma of debt
"Britain is a society awash with debt. Yet without strong consumer borrowing the economy would have come close to recession. So is consumer debt a threat or our salvation? The rapid growth of credit over recent years may be a good thing but riskless it ain't."
A long read, but spot on? HIPS and the FTB
Firstrung: Home Information Packs and first time buyers a definitive explanation
Is there more concise and relevant advice on the benefits of HIPS for the FTB than this? We don't think so..=;¬)
the housing crash that wasn't ? It's only July...
Firstrung: 2006 - the housing crash that wasn't - housing & mortgage market analysis
Now that we are past the half way mark of the year and the football and tennis is over, we can get back to chatting about our favourite subject - house prices! Just like the England team, house prices have recently suffered a set back. While looking better than expected than at the beginning of the year, house prices took a tumble in June as mortgage lending fell away by 4% during March and May.
More concern over the Global Economy
Times Online: Britain and world set for ‘hard landing’
Fears are growing of a sharp slowdown in the global economy, triggered by big increases in energy prices and rising interest rates. Economists at HSBC say there is a greater risk of a “hard landing” for both the world economy and Britain.
Mortgagee sales on the increase in New Zealand
New Zealand Herald: Middle-New Zealand feels pinch
Skyrocketing household costs are squeezing even comparatively wealthy New Zealanders out of their homes.
Saturday, July 15, 2006
UK Household Debt to rise to 1992 levels
The Business Online.com: The Market - Debt is real, house prices just opinion
That UK households are highly indebted is not news, but the scale is worrying. In the five years to the fourth quarter of 2005, the amount of debt held by euro zone households rose by 43%. In the five years to the first quarter of 2006, US household debt levels rose by 65% whilst the corresponding figure in the UK was 73%. This surge in UK household debt means that the debt-to-income ratio now stands at a jaw-dropping 158%.
MoneySavingExpert has doubts about BTL
MoneySavingExpert.co.uk: FTB - Buy to Let?
Not strictly an article, but I think you will find it of interest - I heard Martin Lewis on Jeremy Vine yesterday, talking on the subject of debt, but he twice expressed doubts about the wisdom of BTL, so I looked at his site for any further comment - nothing from him, but I was interested to read the forum, which seems to be predominantly against BTL. This posting and replies are illustrative. The importance for us is that Martin Lewis is highly thought of by \'ordinary people\' who may well visit his site and it\'s good news that the bulk of the feedback they will read is bearish on the property market. (Elsewhere in the forum, HousePrice.co.uk gets a mention, so all is in balance...)
Sarah Beeney's Dating Site!!!
MySingleFriend.com: Matchmaking our fabulous friends!!!
Sarah Beeney has just launched a dating site!!! Diversifying her cash flow streams? Why would she do such a thing?!!!
Analysis of the Japanese rate rise
Telegraph: Japanese rate rise heralds a new era
Small step for the banks threatens repercussions for global economy, writes Ambrose Evans-Pritchard. Japan has begun to close the last gusher of cheap and abundant global credit, ending its emergency six-year policy of zero interest rates.
Better planning the route forward?
Firstrung: First time buyer help onto the first-rung slammed by the NAO
Thousands of families would be helped onto the first-rung of the housing ladder if low-cost ownership schemes were better run, the public spending watchdog has said. Spiralling house prices have created a growing shortage of affordable homes for key workers and other priority groups, the National Audit Office (NAO) said in a report.
Is this excellent initiative given the exposure it merits?
Firstrung: Estate agents to abide by Ombudsman scheme or cease to trade
A Major initiative to combat cowboy estate agents has been unveiled. Trade minister Ian McCartney announced that all 12,000 of England's estate agents will be forced to join an Ombudsman scheme or be banned from trading
Friday, July 14, 2006
US 'could be going bankrupt'
Daily Telegraph: News Article
The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.
300 jobs to go at shipyard
SKY News: Shipyard Jobs Wrecked
The future of one of Britain's most historic shipyards is once again in doubt. The Ministry of Defence has pulled the plug on a a deal with Swan Hunter because of spiralling costs - around 300 jobs are to go. The historic shipyard has been ordered to hand over a half-completed ship to be finished off by a rival.
Ken's got control of London's housing
Home.co.uk: Sweeping powers handed to Londons mayor
New housing powers have been handed to the mayor of London through transfer of the regional housing board to Greater London Authority control.
Budget cuts for government departments
FT.com: Brown turns screw on Whitehall budgets
Crash Gordon has managed - somehow - to be rather accurate in his long term predictions of tax revenues and economic performance, defying his critics. This articles shows he is now CUTTING budgets in many Government Departments. Why would he do this? Perhaps because he is predicting tax receipts will be falling in the next 3 to 4 years. What could cause tax receipts to fall - apart from an economic downturn? Any clues?
12 month house price report
Firstrung: House prices begin to stabilise - Assetz
Assetz claim to have compiled a more balanced report based on twelve months of stats, it doesn't make for any more pleasant reading. This time next year anyone?
VAT Fraud
BBC News: VAT fraud 'reaches record levels'
VAT fraud in the UK has reached record levels, HM Revenue and Customs statistics are expected to show. Criminal activity may have accounted for £6.5bn worth of UK trade in the last quarter alone, says an investigation by the BBC's Panorama. Officials say that fraudsters import goods from Europe tax free, sell them with VAT, then disappear without passing the tax on to the government.
The Number of Millionaires
Daily Mail: 100 new millionaires created a day
A hundred new millionaires a day are being created thanks to the astonishing rise in wealth in Britain, according to new figures. A combination of the power of the City, the remorseless growth of the property market and the rise of globalisation mean there are more rich people in the country than ever before, an analysis found. By 2011 there will be 760,000 millionaires as house prices continue to go up, it predicted. The current number of millionaires, including all assets, is just under 600,000.
Japan Interest Rates
BBC News: Japanese rates increased to 0.25%
Japan's central bank has raised its key interest rate from 0% to 0.25%, its first increase in nearly six years. The widely-anticipated move was announced by the Bank of Japan at the end of a two-day meeting. The move signals the Bank's confidence in the strength of the Japanese economy, which has seen accelerating growth and falling unemployment. It also marks a significant shift in monetary policy, away from tackling deflation.
The Oil Price
BBC News: Israel crisis sends oil above $78
Growing international tension over Israel's offensive in Lebanon has sent world markets tumbling after oil prices rose above $78 a barrel. Japanese shares fell heavily on concerns over oil prices, while in the US the Dow Jones index saw treble-digit losses for the second day in a row. In Asian trading, oil prices rose $1.40 to $78.10 a barrel, having closed at a record high of $76.70 in New York.
Public Sector pay
Guardian: Chancellor's freeze on public pay angers unions
Gordon Brown yesterday announced that the government would extend a tight squeeze on public sector pay, freezing it to 2011. The chancellor also said 45,000 civil service jobs had been cut in less than two years. He set the government on a collision course with the unions by unveiling an interim report on next year's comprehensive spending review in which he says that in the three years to 2010-11, pay settlements across the public sector will be based on the government's 2% inflation target.
MPC
The Independent: Brown's two MPC newcomers may tilt balance away from rate rise
Gordon Brown finally unveiled the names of the two economists who will fill the long-standing vacancies on the Bank of England's interest rate committee - although they will not bring it back to full strength until October. Timothy Besley, a professor at the London School of Economics, will join the Monetary Policy Committee in September. Andrew Sentance, chief economist at British Airways, will start in October.
Thursday, July 13, 2006
The latest installment!
BBC News: Debt diary: A serious blow
From the beginning I have tried to be open and upfront with my creditors. Some have been fine and accepted the plans drawn up by me and my debt counsellor. However, some have been bureaucratic and have simply refused to countenance coming to an arrangement which will allow me to have my baby in peace.
BTL mortgages still going strong
Home.co.uk: Buy-to-let mortgage grows - with more to come
The nightmare for FTBs continues... "While current business levels and future prospects remain buoyant, the research highlights that first time buyer activity continues to be subdued. The proportion of FTB loans arranged declined from 11% six months ago to 9% now. This compares with almost 20% 5 years ago."
I wonder which way they lean?
BBC: New members for MPC
Two new members have been appointed to the Bank of England's interest rate-setting committee. British Airways chief economist Andrew Sentance and Professor Tim Besley of the London School of Economics are to join the Monetary Policy Committee.
Repossession, Repossession, Repossession
MoneyWeek: Why home repossessions are set to accelerate
The latest results from Kensington Mortgages show that while lenders are still keen to dole out money to people with bad credit histories, they are becoming less patient with customers who fail to pay up.
All eyes on the BOJ on Friday
BBC News: Key Japanese rate decision looms
Japan's central bank has begun a crucial two-day meeting in which it is expected to raise interest rates for the first time in six years. The move - widely anticipated to be a quarter point rise from 0% to 0.25% - is expected to be announced on Friday.
RAPID DEMISE OF YET ANOTHER FIGURE OF THE FINANCIAL WORLD
Market Watch/Dow Jones: Banker/Enron Witness Found Dead in London Park
Brief news release on the fate of poor Neil Couldbeck, a banker who was recently questioned by the FBI to do with RBS and Natwest involvement in Enron. He was found today dead in a London Park, and this in anticipation of several other banking figures' impending deportation from the UK to the USA to answer on charges of Enron involvement.
Wednesday, July 12, 2006
All roads are leading towards higher inflation...
How long before UK retailers are forced to raise prices?: Money Week
How long can the UK economy shrug of inflation? Forever? Another article for the inflation watchers and those who believe house prices are linked to interest rates more then perceived housing demand. I like the bit "The inflation rate, excluding food, drink, tobacco and petrol prices, actually jumped more than the overall inflation rate, rising from annual growth of 2.5% to 2.9%." rather a lot.
Not "The Death of Inflation"
Why an inflationary bust is inevitable: Money Week
This article explains why inflation is popping up around the world. The logic appears sound. If you believe it, then inflation is likely to rise, irrespective of the price of oil.
Unemployment
BBC News: Further rise in UK unemployment
The number of people out of work in the UK has risen again, the Office for National Statistics (ONS) has reported. There were 1.65 million people classed as unemployed in the three months to May, an increase of 90,000 on the previous quarter, the ONS said.
Where's the profit for most in buy to let?
Firstrung: Buy to let investors under pressure as rental yields fall to four year low
Rental yields for Landlords have fallen to a four-year low in England and London, according to figures released by Landlord Mortgages. Figures for the second quarter of 2006 show rental yeilds have fallen to 5.69 per cent in England and 5.70 per cent in London.
Like the idea of emigrating to Canada? Think again...
Firstrung: House prices jump 21% in Nanaimo, Vancouver Island - Canada
Real estate prices in Nanaimo have jumped a whopping 21 per cent in the last year, with the average cost of a home now $338,948. In June 2005, the average price was $278,537. The figures, released by the Vancouver Island Real Estate Board, show a continued increase in values for June 2006, but along with higher prices comes an anticipated decline in volume.
Sellers Put House Prices Under Pressure
Home.co.uk: Testing Times For The UK Property Market
Affordability constraints have led to "a delicate balance in a highly price sensitive market," reveals the latest Asking Price Index report from Home.co.uk. A further asking price rise of 0.3% in July reflects growing seller confidence, thereby creating upward pressure on house prices in England and Wales. Greater London led the way as July's prices jumped by 2.3%, shrugging off a weak performance in Q2.
Anti-house pack campaign launches
BBC News: Anti-house pack campaign launches
The Daily Mail, Kirsty & Phil and a couple of Tory Boys...
A problem discovered
Telegraph: City faces meltdown if debt crisis hits
It seems it’s the complex nature of smoke and mirrors, and of course city bonuses that may be the problem.
Tuesday, July 11, 2006
HIPS and the Tories
Firstrung: The Tory intention to scrap Home Information Packs (HIPs) will cost consumers over £300 million
Ahha, now we get it, it's simply anti anything that is perceived as Euro interference.....The Tory intention to scrap Home Information Packs (HIPs) will cost consumers over £300 million a year and will delay the EU directive on Energy performance.
Soft landing on its way?
Firstrung: The house price crash that'll never happen
The biggest global housing boom in three decades may end not with a bang, but with an extended whimper that will keep the economy growing.
Trade deficit / Bank of England / Interest rates?
BBC News: Oil furthers UK May trade deficit
The UK's trade deficit with the rest of the world grew unexpectedly in May, new figures show, with oil seeing its greatest deficit since January.
Banks expand distressed debt teams
eFinanacial Careers: Banks expand distressed debt teams
Close Brothers, Lazard, Bank of America, Rothschild and Barclays Capital are leading the drive among Europe’s investment banks, advisory boutiques and hedge funds to expand their distressed debt and restructuring teams ahead of a potential rise in company default and bankruptcies. Hmm...the economy is doing well then...
New flats take a tumble
Home.co.uk: New home prices fall - dragged by apartments
A glut of new flats on the market has caused developers to cut prices. In doing so the avarage price for all new homes has dropped.
EAs still moaning about HIPS
thisismoney.co.uk: 'Hips won't help,' claim agents
The latest salvo in the battle over controversial Home Information Packs (Hips) has been fired by estate agents who claim they will fail to stop sales falling through.
Manufacturers are trying to pass inflation to the consumer
TimesOnline: Factory prices add to inflation fears
Core output prices rose at their fastest rate for 19 months. Manufacturing has held back passing on inflationary pressures of raw materials to their customers due in part to a subdued manufacturing sector but with manufacturing order books growing inflationary pressures are starting to appear at the factory gate and in turn the consumers pocket. The worse than expected figures will be monitored closely by the Bank of England (BoE) monetary policy committee (MPC) when considering the future direction of UK base rates.
When your grocer turns Estate Agent
In the News: Asda moves into property market
Supermarket chain Asda yesterday made its first move into the property market, launching a new service that will allow shoppers to buy and sell their homes from within its stores.
Monday, July 10, 2006
First time buyers having to find approx. £1,500 extra to get onto the first-rung
Firstrung: First time buyers see their average house price rise by 1.1% in May to reach £147,868
The UK house price inflation rate for first time buyers rose from 4.9 per cent in April to 5.9 per cent in May. This was due to a rise of 1.1 per cent in prices between April and May in the properties bought by first time buyers compared with a smaller rise of 0.1 per cent over the same period last year. P.S.Whilst we wait for our favourite property debating forum to be back on-line why not pay the firstrung forum a visit? http://forum.firstrung.co.uk/index.php?showforum=3
Government survey says high price inflation picking up
BBC: House price inflation picks up
The Department for Communities and Local Government (DCLG) - formerly the ODPM - says prices rose by 5.6% in the year to May, up from 5.1%% in April.
Financial markets steeling themselves for the end of Japan's zero interest policy
TimesOnline: Markets braced for Japan to end zero rate policy
Confidence in Japan that the menace of deflation has been vanquished makes the first interest rate rise in 6 years highly likely.
A possible outcome of a long period of low interest rates.
Money Week: What's more likely - stagflation or depression?
This piece is a bit too America-centric but there is some direct read-across to the UK's situation. It does not pretend to give an economic prognosis but looks at and dispels parallels with the 1970s. By the end, the true effects of a long period of low interest rates are explored. Worth a read but it won't give any pointers to the future direction of home prices.
MPC are a dubious bunch
Guardian: Doing nothing seems to have worked
Job available for lazy economist who is happy to target a useless measure by doing nothing and getting paid 100,000 a year. Interesting alternative measures of inflation.
Inflation for non-discretionary items has been running above 4 per cent
Independent Online: Persistent inflation casts shadow over pay deal prospects
A short piece which explores the credability of CPI by analysing private sector pay deals and inflation of non-discretionary items. Should more journalists examine the "CPI Credability Issue", it will spell bad news for Crash Gordon and home owners addicted to low interest rates. It was written by the Economics Correspondent, Philip Thornton. Can anyone tell me how sensible Mr Thornton's views in the past have been?
Sunday, July 9, 2006
Why Middle Class Mothers and Fathers Are Going Broke
msnbc: Why Middle Class Mothers and Fathers Are Going Broke
Excerpt from a new book looking at how the ferocious bidding war for housing in America
Playing houses, everyone's doing it...
Firstrung: Property matters, I'm all lost in the supermarket, I can no longer shop happily
"Have you sold your house then?" the girl on the till asks as part of her continual unbroken dialogue whilst adeptly scanning various boxes and tins with spurious overseas labels, gathered (with the usual nonchalance), in order that I complete my weekly penance of shopping for my infirmed pensioner brother in law. Ensuring that his meagre income stretches once again to its fiscal breaking point is always a challenge in home economics.
Something for the weekend...
Firstrung: First time buyers, the week in focus 4th-10th July 2006
Once again a week dominated by two heavyweight house price reports from the HBOS and Nationwide. However, there appears to have been a disproportionate amount of column inches dedicated towards the buy to let industry this week, most notably from the pr companies that represent their clients through their mainstream media relationships....
Time to raise the rates in Japan
Observer: Buoyant Japan to raise rates
" ......Foreign investors had been borrowing for free in Japan, and pouring the cash into high-yielding assets in developing markets - the so-called 'yen carry-trade'. Emerging market assets plunged last month as investors hurriedly unwound these bets in the expectation of higher borrowing costs......"
Saturday, July 8, 2006
Time to reign in the Banks?
FT.com: Shaking off the debt stigma
A poor credit record is no longer a bar to taking out a mortgage. While 10 years ago a county court judgment or a default on a loan repayment would have shut you out of home ownership, lenders are now falling over themselves to lend.
Life saver - or a life sentence?
guardian unlimited: Life saver - or a life sentence?
Lenders are offering 40-year home loans to struggling would-be buyers. So now they do the mortgages ...
Buy to let, have the sums ever 'added up' for most investors?
Firstrung: Buy to let, the table never lies
So, are landlords having to pay more for acquiring properties even though the rents and therefore yields are falling? Worse still, if they are assuming that the properties they already hold have increased in value, based on widely held statistics, then perhaps they should take a peek at the latest Halifax report citing an across the board 1.2% fall in the month of June. To assume that terraced properties have increased by 5.39% in a month is quite simply fanciful....
US economy starting to cool?
BBC News: US jobs growth mild as wages rise
The US economy created 121,000 jobs in June, below analyst expectations, US Labor Department figures show. That outstripped May's figure of 75,000, later upgraded to 92,000, but is seen by some as signs that the economy is starting to cool.
Buy to let, the party is surely over?
Firstrung: Buy to let, the table never lies
Now, just how long investors can stomach these losses and continue to fund the gaps is the question. Those "in it for the long term" may find the idea of funding gaps of £200 per month per property palatable in a rising market, but a hike in rates by 0.5% and successive monthly falls in prices may just concentrate their minds...
Friday, July 7, 2006
London surge boosts house price growth
FT.com: Another surge in London’s house prices helped to nudge house price inflation a little higher to 5.6 per cent in June, according to the FT house price index.
Another surge in London’s house prices helped to nudge house price inflation a little higher to 5.6 per cent in June, according to the FT house price index.
Happy Birthday to the buy-to-let (BTL) mortgage
FT: Ten candles on buy-to-let cake
This summer marks the tenth birthday of the buy-to-let mortgage.
July 6, 2006
The Motley Fool: The Deadliest Home Loan!
I see that the Council of Mortgage Lenders (CML, a trade association which represents almost all UK mortgage lenders) has arranged a seminar on interest-only mortgages in November. suspect that some CML members are becoming increasingly nervous about the rising number of homebuyers who are taking out interest-only mortgages. These are home loans where your monthly payments consist purely of interest, unlike repayment mortgages, where each month that goes by sees a little more chipped off your debt.
IR rise in Japan?!?
BBC: Japan raises annual growth target
Japan's government has raised its annual economic growth forecast, citing a pick up in domestic demand and stronger corporate profit growth. According to the Cabinet Office, gross domestic product (GDP) will increase by 2.1% in the year to 31 March 2007, up from a earlier target of 1.9% growth. The move will fan expectations that the Bank of Japan is set to raise interest rates for the first time in six years.
Why housing wealth is an illusion
MoneyWeek: Why housing wealth is an illusion
What some homeowners seem to have difficulty realising is that equity in your house isn’t anything like cash in the bank. The ‘equity’ is based on an estimate of a value which may or may not be accurate. The only way you can find out how much equity is actually in your house is to sell it.
Haart sees average prices in London fall in June by approx. £2,500
Firstrung: London house prices down one percent in June
The latest data revealed the average London house price has fallen by 1 per cent to £247,703 from £250,137 in May. house prices have increased by 9 per cent since this time last year from £225,805. Activity levels have also dropped by 4 per cent from last month, Haart expects activity levels to bounce back and rise well above average summer months.
Redrow slash prices in order to achieve similar levels of sales
Firstrung: House builder Redrow drops selling prices by £11,400 in the past year
Not a headline we'll see in the Daily Mail over the weekend =;¬)
Equity withdrawal grows as housing market runs out of steam
TimesOnline: Housing market 'runs out of steam'
The Bank of England reports that levels of cash withdrawn against mortgages grew in response to a stronger housing market but recent reports from both the Halifax and Nationwide suggest the housing market has run out of steam. This begs the question has the recent upturn in consumer spending been on the back of equity withdrawal and will we soon hear retailers talking of a slowdown in consumer spending? With at least one interest rate increase very likely this year how will the consumer and the house buying British public respond?
Thursday, July 6, 2006
Academic modelling of housing peaks
ArXiv: Real estate price peaks: a comparitive overview
High energy physics prof turns his attention to modelling house prices, what drives them, and foresees house price crashes worldwide, hitting a low in 2010-11. Key phrase? "an upgoing phase followed by a plateau, has rarely (if ever) been observed"
Shock headline from the Times
Times: Shock fall in house prices
House prices in Britain fell by 1.2 per cent last month, its steepest fall since October 2000 and with further falls expected to come, according to the lastest figures from Halifax, the mortgage lender.
More people MEW
Reuters: Mortgage equity withdrawal rises
Mortgage equity withdrawal rose to 12.509 billion pounds in the first quarter of 2006 or 5.8 percent of post-tax income, the Bank of England said on Thursday.
ECB leaves interest rate unchanged
BBC News: ECB interest rate stays at 2.75%
The European Central Bank (ECB) has left its main interest rate unchanged at 2.75%. The decision follows a quarter-point rise in the cost of borrowing at its last rate-setting meeting in June.
MPC keeps interest rates on hold
BBC News: UK interest rates remain at 4.5%
UK interest rates have been kept on hold at 4.5% for the 11th month in a row after the latest meeting of the Bank of England's rate-setting body.
Smartnewhomes blames government for builders building properties no-one wants
Firstrung: Proposals to speed up the planning system are welcomed by David Bexon, C.E.O SmartNewHomes.com
Nothing to do with us guv, honest...."The Government's planning policy currently demands that high density homes are built, effectively forcing developers to build apartments rather than houses, regardless of demand. It angers me when developers are accused of looking out for their own interests, building flats while the public are crying out for houses - it simply isn't true"
Housing market bubbles? No, housing market is a bubble!
thisislincolnshire: Incentives start to go as housing market bubbles
People are brushing aside fears about the economy and jobs and breathing fresh life into the housing market, it is claimed. Today George Wimpey and Barratt East Midlands said there are signs that the housing market has stabilised.
Will MPC keep rates on hold?
SKY News: Interest Rate Decision Due
The Bank of England looks set to leave interest rates unchanged for the 11th month in a row today. The Bank's Monetary Policy Committee is expected to vote for the cost of borrowing to stay on hold at 4.5%.
Rightmove making the money, but for how long?
Times: Rightmove soars but Halifax warns on prices
Rightmove, Britain’s largest property web site, confidently predicted today that it would exceed profits of £16.4 million this year as the number of customer and the fees charged to advertise climbed sharply.
Are US interest rates set to rise again next month?
TimesOnline: Record oil prices help push FTSE higher
Dow fades as record oil prices raise fears of rising costs and interest rates. Strong US factory orders and employment survey have traders already betting on an 18th consecutive monthly increase to US interest rates.
UK house prices go into reverse
BBC News: UK house prices go into reverse
One swallow and all that..... More significant is seeing Halifax report it and the BBC putting it up in lights.
Tax Credits Funding Property Boom in Eastern Europe
Daily Telegraph: Tax credits 'used by foreigners to buy homes abroad'
You couldn't make this stuff up. Eastern Europeans are claiming tax credits here to buy property back home.
Wednesday, July 5, 2006
Are developers becoming desperate?
Independent Online: Why developers' gifts may not be all they seem
The atmosphere of pessimism in the property market is now so pervasive that developers are offering guarantees to investors that they will not lose money.
Financial Services Compensation Scheme has record claimants
BBC News: Claims against finance firms soar
The number of official compensation claims made by investors who lose out when a financial firm goes bust has nearly trebled in the past year. The Financial Services Compensation Scheme (FSCS) handled 26,000 complaints during the 2005/2006 tax year, as against 9,220 the previous year.
Sharp rise in inflation accross industrialised countries
Independent: Rates amy continue to rise worldwide?
Inflation rose sharply across the major industrialised countries in May, according to a report that will fuel fears that central banks are about to embark on another round of interest rate rises.
More woe for BTLers
BBC News: Law change looms for landlords
New rules regarding multiple occupancy houses comes into force today
Housing cool-off not a problem for global growth...
New Zealand Herald: World's economies should survive housing cool-off
The biggest global housing boom in three decades may end not with a bang, but with an extended whimper that will keep the economy growing.
Tuesday, July 4, 2006
All eyes on Japan on the 14th July
BBC News: Mixed message on Japanese rates
The ministers responsible for Japan's economy have given conflicting messages to the Bank of Japan ahead of its interest rate meeting next week. The bank is widely expected to raise rates from zero for the first time in five years at its meeting on 14 July.
800 mining jobs to go in Cornwall
SKY News: Dark Day For UK Miners
French company Imerys is to cut 800 jobs in the mining industry in the South West of the UK. The cuts will be a blow to the region's historic china clay industry.
If you're in a position to choose then do it carefully
Firstrung: First-time buyers are being urged to get tough with mortgage lenders
First-time buyers are being urged to get tough with mortgage lenders this summer and refuse unnecessarily expensive and outdated loan choices.
End of Japan six year zero rate policy imminent
FT: Tankan signals end to Japan’s zero rate
The Tankan survey of economic sentiment showed sharp upswing in business spending plans and corporate confidence. Glenn Maguire, economist at Société Générale said, "The underlying details of the Tankan survey were extremely strong and reveal very real indications that the Japanese economy is at risk of overheating....” Maguire also added that interest rates should be raised, "The Bank of Japan is well and truly behind the curve and must start closing that gap.”
Profits-2-go
Guardian: Floors-2-Go profits continue to subside
Possibly a change in taste - laminate flooring is yesterdays vinyl - or possibly a sign of a reduction in property development. Hopefully the latter, as property developers are desperately in need of laminate flooring to add 150,000 pounds to the value of their bedsits.
It's all the fault of the glubberment
Guardian: Lloyd's names seek £1bn compensation from government
The mega rich are blaming the governments lack of regulation of Lloyds for their losses. Can you imagine the fallout if the millions of brits in massive debt got together and made the same accusation? Absolutely nothing, because the people in debt are poor, and the Lloyds names are bred to have money and power, bless them.
Manufacturing grows
Guardian: Jobs created as British manufacturing gears up to meet demand
Manufacturing grows but no interest rate move expected. Not sure what excuse - other than house price rises - the BoE could possibly have for leaving rates unchanged, and I'm sure it's not their remit.
Oz set to keep rates on hold
smh.com.au: Mortgage holders to get another reprieve
Australian mortgage holders will have at least a month to enjoy their tax cuts with the Reserve Bank set to leave interest rates on hold on Wednesday. Economists are unanimous in expecting the bank, which held its board meeting on Tuesday, to leave the official cash rate at 5.75 per cent until it gets a clearer view of inflationary pressures across the economy.
Monday, July 3, 2006
More Hype to confirm House prices are 95% Spin
Loansite.co.uk: UK Property News - July 2006
Basically an artical designed to loan money as if theres anyone in the uk left that still needs a major loan, shows how the public can be suckered into taking loans by all the relentless spin nowadays
Tipping point for credit tigtening
Guardian: Suicide prompts credit card investigation
The after-effects of the Beeb documentary. this may focus the banks attention a little better.
Beginning of end or just beginning of summer?
Irish Independent: End of road for soaring property market
After so many false starts is this really the begging of the end?
Is shared equity the future for the first time buyer?
TimesOnline: House share solution to rising prices
Devoid of independent thought BTL evangelist Clare Francis is again spoon fed comments from a panel of property professionals; Mark Clarke, chief executive of Advantage (Lender), Ray Boulger (Lender), Richard Donnell (HomeTrack), Fionnuala Earley (Nationwide), Alex Solomon (Rightmove) and for good measure a non-VI gets his sentence worth, Vince Cable, the Liberal Democrat shadow chancellor, said: "“With 2m households living on a financial knife-edge and a further 500,000 households already with serious financial problems, any rise in interest rates could spell financial disaster." “There needs to be greater access to free independent advice and a crackdown on irresponsible lending.”
Research reveals chaotic state of personal financial education in schools
TimesOnline: "Chaotic" financial education in schools
Inflexibility of the National Curriculum and teachers' lack of confidence to blame for chaotic state of personal financial education in schools.
House sales up 12% in first half of year - Your-move.co.uk
Firstrung: Strong housing boost in the first half of 2006, but market showing signs of fragility
Housing transactions up 12% on last year but monthly volatility has also increased in the wake of a number of adverse external factors according to data just released from your-move. UK home sales rose 12% in the first half of 2006 compared with the same period last year. However, the market has been volatile this year, being affected by a number of one off external events...
Unbelievable!
BBC News: The money trap
Did you see this? The marriage of the blame culture and the BBC has been consummated. Those who borrow money are victims, those who lend are villains. A program that contained no serious consideration of a debtor's moral obligation to repay.. incredible!
Sunday, July 2, 2006
OECD stats rubbished in mainstream press
Daily Telegraph: It's good news from our French friends - but utterly misleading, non?
We all (well most of us..) poored scorn on the recent OECD statement that the UK has a less than 5% chance of a property crash - well here is the Property Section of the Daily Telegraph doing just the same. So, those of you who think that we are all just a bunch of nutters that rubbish anything we don't agree with, read it and weep...
Housing market on a knife-edge
The Observer: Trillion-pound trapeze act for house market
Despite the upbeat articles from the VIs over recent months the nagging doubts won't go away...
We'll have to wait until Thursday to see if they were correct
Economicsuk.com: Shadow MPC votes 7-2 for no change
The SMPC poll was completed on Tuesday 27 June, although most contributions were received earlier, and the UK rate recommendations are with respect to the Monetary Policy Committee (MPC) rate decision to be announced on Thursday 6 July.
Ooooh my Hip!
Telegraph: When an inspector calls 'It will be like a doctor examining a patient with their clothes on'
Every night when Paul Taliotis gets home from his job as a carpenter on the building sites of High Wycombe he tries to fit in two hours of revision. It is hard work, he says, learning how to become a Home Inspector, qualified to carry out the "home condition reports" that will be an integral part of the Government's Home Information Packs (HIPs) when they become compulsory for anyone selling their house from June 1, next year.
Saturday, July 1, 2006
25% of over 50's can't afford to buy
Firstrung: Life doesn't begin at fifty for some first time buyers
Nearly a quarter of people in their 50s do not own their own home, and are instead renting, or even living with their parents, new research from the Alliance and Leicester has revealed whilst 41% of over 50s cannot afford to buy. This rises to 45% in London and 58% in the South East, up on last year's data when 33% of the over-50s who were not yet on the property ladder said they wanted to buy somewhere but were unable to.