September 2006 Archive
Saturday, September 30, 2006 
£35 billion 'never-ending mortgage' trap for not sticking to or reducing the term of the mortgage
Firstrung: Homeowners: beware the never ending mortgage trap - moneysupermarket.com
For example, someone who extends the term of their home loan twice in their lifetime can end up paying £28,835 in additional interest. Given the average homeowner remortgages/takes out a new mortgage every five years - if a person takes out a 25-year mortgage, then remortgages in five years to another 25-year term, they effectively create a 30-year total term. The five-year extension will cost an additional £14,460 in interest charges. If they remortgage again in another five years, they would pay further interest of £14,375.
A rate rise in November could be crucial
Firstrung: A quarter per cent interest rate increase could leave 1.1 million on the brink of insolvency
A quarter per cent interest rate increase could leave 1.1 million on the brink of insolvency, according to a survey by Thomas Charles.
Friday, September 29, 2006
BoE figures suggest rate rise is working
Home.co.uk News: Housing market hit by rate rise after all?
Contrary to some VI reports on the housing market, the Bank of England suggests that growth in consumer debt, including mortgage lending, is slowing down.
US Recession Inevitable
The Daily Reckoning: US Economy Recession
- A recession and a bear market in asset prices are inevitable for the US economy. Recent economic data leave no doubt that both are on their way. What keeps triggering rebounds in US stocks is only the "bad news is good news" syndrome, reflecting the hope that economic weakness will stop the Fed's rate hikes. Dr Kurt Richebcher Fri 29 Sep, 2006
Property Prices Could Slump......Most Viewed Article!!
Telegraph: Property prices could slump
Property prices could slump: Experts warned that the housing market could be heading for a "mini-crash" next year after new figures showed property prices are jumping ahead again. The growth rate was faster than economists expected, and led some to speculate that this mini-boom would be followed by a mini-bust in 2007. They trace the market's recent strength to the Bank's decision to cut rates to 4.5pc in August last year, but speculate that its decision last month to reverse this cut will soon bring activity back to earth with a bump. Edmund Conway, Economics Editor Telegraph (Filed: 28/09/2006) Reported.
What goes up must come down
First Rung: Why the next house price crash will be worse
After eleven years of rising prices, it's no surprise that, to millions of homeowners, the last housing crash seems a lifetime away. However, its effects lasted for more than five years until 1995, when house prices set off on what is almost certainly their longest post-war winning streak.
Banks don't like the IVA - no surprise there
Guardian: Banks call for changes to debt advisory services
Leading banks are urging the authorities to change the way debt advisory firms are able to advertise and give advice on individual voluntary arrangements.
Why the next Housing Crash will be Worse
Motley Fool: Why the next Housing Crash will be Worse
According to the Halifax House Price Index, UK house prices have risen every year since 1996, and 2006 looks like another positive year for property owners. After eleven years of rising prices, it's no surprise that, to millions of homeowners, the last housing crash seems a lifetime away. However, its effects lasted for more than five years until 1995, when house prices set off on what is almost certainly their longest post-war winning streak.
Thursday, September 28, 2006
Parents DIY skills create huge wealth
Guardian: Parents DIY skills blah blah
I cannot summarise the article - I couldn't bear to read beyond the first line
Irish house price crash starting?
Irish Times: 70% unsold in washout week for auctions
Only seven of the 43 houses auctioned yesterday sold either under the hammer or immediately afterwards - an abysmal result that will force estate agents and vendors to reassess prices. Altogether, it's been a washout week in the auction rooms with over 70 per cent of properties failing to sell. The reality is that the market has run out of steam..........
House prices up, house prices cooling - who's telling the truth ?
The Times Online: Tills ring on as home loans cool
RISING interest rates have yet to put a dent in high street spending but may have begun to cool the housing market, a set of reports indicated yesterday.
Strange none of the VIs are reporting on this.
FT: By Chris Giles, Economics Editor
Error makes rate rise less likely The Office for National Statistics on Wednesday admitted to an error that dramatically reduced the worry over inflation in the economy and makes a further interest rate rise less likely.
Action not words
BBC: BBC Questiontime
If enough people ask questions about high house prices and what can be done to resolve the issue, it might get some coverage on the programme? Follow the link and ask a question about high house prices and the impact on society. Its all very well everyone talking about it here, but it needs to be talked about out there!
So why do we see so many price reductions ?
MSN: House prices up sharply this month
LONDON (Reuters) - House prices jumped in September, the Nationwide Building Society said on Thursday, evidence that August's interest rate rise had done little to cool the property market. The Nationwide said the cost of an average home rose 1.3 percent, bringing the annual rate of house price inflation to 8.2 percent -- its fastest rate since February 2005.
The frog begins to boil over?
Firstrung: Over two million households estimated to be struggling to pay council tax, says new research
Over two million households are estimated to be struggling to pay council tax and consideration needs to be given to the negative impact of the tax on the Government's drive to 'make work pay'. This is according to a new report by the Warwick Institute for Employment Research for the Joseph Rowntree Foundation
Examining the link between house prices, debt and economic conditions
The Independent: Till debt us do part? Rate rises will test our ability to live with credit
A well written article that dispels the aura of pending economic doom. It is pragmatic and realistic - worth a read.
Analysis of the implications of debt, long term and short term.
The Independent: A precarious situation - especially if house prices crash
Interesting and reable article but one which does not go into the issues in depth. Shame really. I like the bit"Alliance & Leicester, has calculated that the base rate, now at 4.75 per cent, would have to hit 8.5 per cent to put householders under the same level of pressure as at the peak of the Eighties boom." Are interest rates likely to reach 8.5% - errr, probably not.
Nationwide sees house prices increase again
BBC News: UK house prices see 'strong' rise
Nationwide sees house prices increase 1.3% in September. When is the BOE and government going to take their head out of the sand and take action before house prices creates an irreparable social imbalance. Short term gain, long term loss - with interest on top.
House prices see strong growth in September
BBC: UK house prices see 'strong' rise
According to the Nationwide house prices saw unseasonably strong growth in September. Nationwide's housing survey found that prices rose by 1.3% during the month, lifting the annual rate of growth to 8.2%.
'never, never land' - Bet you thought that was only make believe
Independent: Britain becomes 'never, never land' as personal debt runs out of control
UK borrowers account for one third of unsecured debt in western Europe On average, a Briton has twice the debt of a European Total consumer debt in the UK is at a record £1.3 trillion New debt last year came to an unprecedented £215bn Citizens Advice faced 1.25 million new debt cases last year - the figure is
The Social Cost of High House Prices
MSN: Families in unfit homes over prices.
"The shortage of housing not only hits first time buyers in the pocket, it also means thousands of homeless and badly housed families will continue to suffer in temporary, unfit or overcrowded homes." The comment that "Building more social homes will give those who will never be able to afford to buy, the chance of a decent place to live", however places a band-aid on a gaping wound.
US Massachusetts Home Prices Drop 6% in August 2006
Boston Globe: Mass. home prices fall 6.1% as downturn gathers speed
The downturn in the Massachusetts housing market gained momentum in August, with the median price of a single-family home falling 6.1 percent, to $352,000, and the number of sales down 21.6 percent from last year, the Massachusetts Association of Realtors said yesterday. Reports Kimberly Blanton, BostonGlobe Staff September 26, 2006.
Wednesday, September 27, 2006
Higher Interest Rates needed - everyone now jumping on the bandwagon
Financial Times: Higher rate rises may be needed to contain inflation
"The purpose of this letter is twofold. First, it is to support recent statements made by Mervyn King, the governor of the Bank of England, that - unless reversed quite soon - rapid growth of money will lead to higher inflation. (Mr King was quoted in May as saying, "in the long run, if you have rapid growth of broad money, you are going to get inflation".) Second, it is to warn that the containment of such inflationary pressures may require increases in interest rates larger than either markets or most commentators seem yet to appreciate."
Bashing the Banks
MoneySavingExpert: Debt suicide. The banks’ fault or the deceased?
Martin Lewis aka MoneySaving Expert has a bash at the Banks and their lending practises in his blog. I actually quite like this bloke's view that we live in a "Adversarial Consumer Society".
Watching the US ...
MoneyWeek: Why the US economy is more sickly than you think
A predicition of the US' economy which establishes a new link between equity withdrawl and economic growth. "US consumers have forgotten the difference between the wealth that arises from a surplus of income over expenditure and wealth that arises from the embracing of debt, that debt has been used as if it were surplus income."
Barratts defy expectations
Firstrung: Barratt reports 'forward sales' up 27 percent
Britain's second-biggest housebuilder by market value said it started its new financial year with forward sales at a record 1.14 billion pounds, up 27 percent from a year ago, and expected margins to improve as the housing market remains healthy.
Mortgage lending rockets Aug 2005 v Aug 2006
Firstrung: Mortgage lending up 24 percent in August compared to August 2005
David Dooks, BBA director of statistics:"Record gross and net mortgage lending is a reflection of house prices and mix of loans, rather than increased volumes. Compared to the numbers of secured loans approved at the same time in previous years, August shows robust and stable demand orientated towards house purchase rather than for other purposes, though below the volumes seen in 2003."
And all this is our 'economic miracle'
MSN: Brits 'have worst debts in Europe'
Overspending Britons are responsible for a third of all unsecured debt in Western Europe, according to a report. The average Briton owes just over £3,000, almost twice as much as his continental cousin.
The real story of house prices
Money Week: Will a London boom save the UK property market?
Asking prices for UK homes rose 6.4% in the year to June – the strongest growth in over a year, says property website Rightmove. Apparently “the mini-boom in prices continues to be led by the south of the country” where the average annual rise has now reached 9.4%. Sounds impressive, eh? Well, perhaps - until you look under the bonnet...
House price warnings in NZ
NZ Herald: Home owners warned to save
Many New Zealanders regard their homes as wealth "in the bag" and are leaving themselves vulnerable by saving less as a result, the Reserve Bank has warned. It said an ageing population could prompt a fall in house prices and recommended the introduction of policies that would encourage wider savings for households. (note: The Reserve Bank is the NZ equivalent of the BoE or Fed.)
Tuesday, September 26, 2006
Surveyors suggest rate rise?
Home.co.uk News: November rate rise says RICS
A solid economy will lead to another rate rise in November, the Royal Institute of Chartered Surveyors has predicted. Bearish stuff from the RICS
Good news for BTL-ers?
Merrill Lynch: Demand for Rental to Rise
Demand for houses and flats in the private rented sector will grow more sharply in the next 15 years than any other part of the housing market, says a new report by Merrill Lynch which could encourage buy-to-let investors to increase their portfolios. Mr Harrison says that landlords buying properties in today's market tend to be in their 40s, with deposits of around 25 to 30 per cent and expecting to own the properties for 16 to18 years before realising a lump sum for retirement. This is seen as a safer option than pensions, and much more flexible. He continued: "Average capital appreciation of bricks and mortar over the past 20 years has been 8.8 per cent per year - this figure takes into account the worst housing crash in living memory between 1991 and 1994."
Trouble up at mill?
BBC News: BoE deputy mulled rate rise vote
Senior Bank of England official Sir John Gieve has indicated that he considered voting to raise interest rates because of inflation concerns.
You can't fail with bricks and mortar you know!!
Money Week: Will the US housing market achieve a soft landing?
It’s official - US house prices are now falling.
Buy to let, let's party like it's 1999, or 1996...
Firstrung: Buy to Let
"A force for good?" Naturally you'd expect the Firstrung team to disagree. Well yes, but not unequivocally. Without a doubt, given the mobility and diversity of employment in the UK, the economy and society overall benefits from a supply of rented accommodation from responsible landlords who concentrate on providing a decent service and perhaps enjoy a reasonable yield/return on their investment commensurate with the risk taken.
It's official - US house prices are now falling
MoneyWeek: Will the US housing market achieve a soft landing?
The price of existing homes - which account for about 85% of the housing market - in the US fell year-on-year for the first time in 11 years last month. The median price of a previously-owned house fell 1.7% on last August, down to $225,000 (about £118,000), said the National Association of Realtors. There was some good news however - sales fell just 0.5% in the month, much less than analysts had expected. So what are the chances that the US will see a UK-style housing bounce?
12.1%!
Firstrung: Barclaycard increases credit card rate by 12.1% apr
In the last three months Moneyfacts researchers have seen 19 card providers increase interest rates, some by as much as 12.1%. Lisa Taylor, analyst at moneyfacts.co.uk comments: "While it may be argued that the 0.25% increase to base rate in August resulted in some of these increases, with rises of up to 12.1% it is clear other forces are at play.
It's all going pear-shaped in the US
Times Online: US rate cuts predicted as house prices start to fall
A Benchmark index of American house prices fell for the first time in more than 11 years last month, feeding concern that the Federal Reserve may have to cut interest rates to limit the damage spreading to the wider economy.
Monday, September 25, 2006
If you go down to the woods today...
Monster & Critics: U.S. existing home sales slightly off
you're bound to find a bear, atleast in the USA. Interesting comment left at the end of the article by some random yank.
US House prices DROP for first time in 11 years!!!!
BBC News: Drop in US HP inflation (!)
The US housing market is continuing to cool The price of existing US homes has shown its first annual decline in more than 11 years, a report has shown. Hallelujah!!!!!!!!
US housing slowdown
FT.com: US housing slowdown continues
I was in two minds whether or not this one should be posted. However, some people have been debating apparant house price falls in Ireland and USA so I thought it might be of interest. It is a brief article which reports a slight decline in the value of US homes. Sadly it doesn't say why but there are no [as yet] knock-on effects to the wider US economy.
Only 86%? Who are the other 14%, employees at agencies?
Firstrung: 86 per cent of the public do not trust their estate agent
A staggering 86% of the public do not trust their estate agent, according to a survey of over 1600 people by online HousePrices.co.uk, the free internet property pricing database. With house prices on the rise, buying, selling, and evaluating properties has never been so stressful and it would appear that one of the highest stresses involved is whether or not you can truly trust your estate agent to give you accurate figures, prices and advice..
Another reason to lower interest rates?
The Independent: Bank: Strong pound has ravaged exports
High pound, caused by increasing interest rates, is hitting UK manufacturing. Market conditions prevent UK firms from passing on price increases - eventually, it will no longer be possible to drive costs down though. Part of a case for lower IRs?
Which way for IRs? It Could Be Down!
MoneyWeek: Will the Bank of England raise rates again?
Jeremy Batstone of Charles Stanley on what the latest inflation data, MPC minutes and consumer attitudes suggest about November's interest rate decision. Basically, CPI should not be used; people's expectation of inflation is lower [yes, lower] then real inflation levels; and there is insufficient investment in UK Manufacturing to take on emerging economies in Asia. A bit of a surprise article from MoneyWeek which provides an alternative view.
How New Labour has ripped off taxpayers for billions
The Telegraph: Monday view
For years it has seemed that our Government has been intent on turning itself into UK plc, with departments filing annual audited accounts (many of which are rejected by their own auditors), treating taxpayers as customers and even hiring (yes, sorry, I'm going to write it) consultants. The question is whether this activity has been at the taxpayers' expense. The jury is out here, but there are plenty of indications that the taxpayer is losing out, particularly over the way companies involved in private finance initiative projects have made billions for themselves......... Companies, like fish, rot from the head down. This Labour Government is little different...........
Sunday, September 24, 2006
Drowning in debt in the UK
Sunday Telegraph: Personal debt – a crisis in waiting?
Gordon Brown has ushered in an era of dangerously easy credit. This has helped to fuel an economic boom, but has resulted in serious social costs.............
Firstrung, the week in focus
Firstrung: Firstrung, first time buyers, the week in focus - 24/09/06
Bad news for those expecting to build a business based on encouraging parents to re-mortgage in order to help their children climb on to the first-rung of the property ladder, most parents appear to have woken up to the problem of how to look after number one according to this survey from propertfinder.com.
Prices crashing in Dublin?
Firstrung: House prices falling by up to 20 per cent in Ireland
The extraordinary glut of houses coming on the market this month has led to widespread falls in the prices being demanded by estate agents. While the downward trend is most evident across more expensive houses on the prime southside suburbs of Dublin, the Sunday Independent has uncovered significant falls in asking prices in other areas of the city
FTSE pay spirals out of control
Telegraph: FTSE pay spirals out of control
The average pay of a FTSE100 chief executive has risen by 40 per cent in the past year to nearly £3m, according to a forthcoming report from the pay experts Income Data Services. Senior City figures last night said the astonishing figures for the first time laid bare how, after three years of more modest rises, executive pay was once again spiralling out of control.
Telegraph bear sounds note of caution
Daily Telegraph: House values come into their own as pension fears rise
Perhaps more of a cough than a growl, but the Telegraph economics editor is firmly of the view that prices could fall. See in particular the final paragraph, which starts "House prices have been rising for so long that people are becoming increasingly convinced that this could go on indefinitely. That kind of assumption is, of course, unwise and risky." Given his need to stay 'on message' with the rest of the property section, who work tirelessly to please the property developers and estate agents, this is good stuff.
Taxpayers foot huge bill for 'quango state'
The Telegraph: axpayers foot huge bill for 'quango state'
Here's what you get for all that grafting away. Anything to inflate the bubble even further.
Saturday, September 23, 2006
Bankruptcies hit young in Australia
Sydney Morning Herald: Many bankrupts are young, single and jobless
ONE-fifth of bankrupts are under 30 and struggling to survive in an economic climate of record debt levels and rising interest rates
Another landlord BTL myth exploded
Firstrung: Landlords quitting due to tough new Government rules
Landlords operating under HMOs are only 3% on the market. Therefore this nonsense belief that immigration and the student popultion will somehow keep multi occupancy landlords afloat is dashed....
Parents sucked into the madness
The Telegraph: Bank of Mum and Dad lifts young on to property ladder
Article reveals more evidence of desperate lengths people will go to get onto the property ladder.
Raise the Inheritance tax threshold say the Halifax..
Firstrung: Do the Halifax want the first rung kicked away from first time buyers?
The Halifax release another one of 'those surveys'. You know the script by now, (although their timing is off with this one, they normally save them for Bank Holiday weekends), wide ranging unspecific statements, guaranteed to get the Mail and Express readers choking on their muesli before their pilates and golf. Here's why, in the opinion of Firstrung, Hailfax are way out with this;
UK car production down - will it lead to less congestion?
Notional Statistics: Total Motor Vehicle production falls in 3 months to August
Total car production, seasonally adjusted, in the three months to August fell by 6.7 per cent compared with the previous three months. Home production decreased by 3.0 per cent in this period, and export production fell by 7.8 per cent. In comparison with the same three months a year ago, total production fell by 11.8 per cent. Home production decreased by 11.5 per cent and export production fell by 11.8 per cent.
Feeling really selfish? Buy a much needed home in the third world.
Guardian: A second home in the third world?
Beachside villas in Brazil, high-rise apartments in Kuala Lumpur, log cabins in Lapland (not my idea of the third world) ... growing numbers of British property investors are looking far beyond the traditional second-home and holiday-letting haunts such as France and Spain.
RICS members getting out of large property lets
thisismoney.co.uk: Landlords selling up over licence
Landlords with multi-occupation properties are quitting the letting market because of tough new Government rules. The Royal Institution for Chartered Surveyors said a quarter of surveyors in the south of England were selling their properties as they struggle with 'House in Multi-Occupation' laws.
Friday, September 22, 2006
Trevor McDonut's prog - Monday 8pm
ITV1: Debts and Lies
As the UK's personal debt mountain continues to rise, money worries are now becoming one of the major causes of breakdown in personal relationships. Linda Duberley meets two women who, having previously concealed their mammoth spending habits from their unsuspecting partners, prepare to reveal the true extent of their debt and attempt to move forward.
Opening Doors
Firstrung: Housing associations helping to 'open doors'
Six housing associations have been chosen as part of a new project to develop training and implementation of services for refugees and asylum seekers..
Location, location...er..price?
Firstrung: Community is ‘top of the flops’ when it comes to selling property
New research released by the National Association of Estate Agents (NAEA) today shows that a strong sense of community and a good local pub are least important when assessing the attractiveness of an area in which to buy a residential property
Bought for $262,500 in 2003, sold for $95,000 last week
Sydney Morning Herald: Bought for $262,500 in 2003, sold for $95,000 last week
This is Sydney's cheapest unit. The one-bedroom unit in Cabramatta sold at auction last week for $95,000. In November 2003 it cost $262,500.
Thursday, September 21, 2006
Lotus Cars jobs go as US slows
EDP24: 200 jobs go at Lotus car factory
Norfolk's economy has been dealt another blow as car manufacturer Group Lotus announced 200 job losses. Workers at the Hethel plant were told the news on Wednesday afternoon, which is being blamed on falling sales in the United States. It comes less than a week after Norwich Union announced 850 redundancies in Norwich and printing firm NJP closed with the loss of 286 jobs. Group Lotus said it needed to cut its manufacturing workforce because of a slowdown in the US - the company's biggest market.
More news on MPC's perception of inflation
Times Online: Global inflation points to rate rise
MPC expresses concern at the global rise in inflation with one exception, Mr BlanchedF.
Vince Cable speaks...
BBC News: Cable turns fire on 'lucky' Brown
Vince Cable...former Royal Dutch Shell Chief Economist...."This borrowing binge assumes that interest rates won't rise - but they are; that unemployment won't rise - but it is; and that house prices won't fall - well, they very well might."
Homebuyers 'face growing worries'
BBC News: Homebuyers 'face growing worries'
Growing numbers of people are being squeezed out of the housing market, a study says.
If it looks like a bubble, it is a bubble!
Guardian: First-time buyers squeezed out of housing market
More than a third of working households under the age of 40 cannot afford to buy their own home and housing costs for first-time buyers have returned to the 1990 peak, a think tank said today.
More chance of a job in Poland
Telegraph: Poland allows prisoners out to fill jobs left vacant by the rush to Britain
The Polish government is allowing prisoners to work outside jail as the country struggles to fill vacancies left by mass migration to Britain. More than 1.12 million Poles have gone west, the majority to Britain, since the country joined the European Union in May 2004.
More bad news for UK manufacturing
MSN: Nestlé sheds 645 jobs at York plant
Confectionery firm Nestlé is slashing 645 jobs at its biggest UK factory. The Swiss-owned firm said part of the site will be sold and a small number of products moved to other factories in the UK and Europe.
Bank of England issues inflation red alert
Telegraph: Inflation red alert points to rate rise
The Bank of England has commissioned independant inflation data which raises serious questions regarding the validity of inflation stats produced by the Office for National Statistics (ONS). The ONS shows inflation currently at a nine year high at 2.5% but the data used by the Bank of England suggests inflation has risen by 2 percentage points since last summer alone, while retail services were rising at their fastest pace since records began 6 years ago.
Inflation red alert points to rate rise
Daily Telegraph: The Bank of England has issued what experts described as an inflation "red alert"
So what will be the excuse for no rates rise this month? The Bank of England has issued what experts described as an inflation "red alert" after its independently-produced survey recorded a dramatic spike in living costs.
A third of all working households under 40 cannot afford to buy even at the low end of local housing markets
Firstrung: Major new UK report reveals alarming trends in housing supply, availability and affordability
One shocking statistic, that is sure to resonate with the mainstream media, is the fact that around 21/2 million people (600,000 households) in Great Britain are living in overcrowded conditions, similar to the number a decade ago. Although the problem is worst in London, the prevalence among families of five or more is high everywhere - 20% on average, rising to nearly 30% in London.
Insecurity grows as FTBs who are critical to the market are priced out
BBC NEWS: Homebuyers 'face growing worries'
Growing numbers of people are being squeezed out of the housing market while first-time buyers find themselves very stretched, research has concluded.
Wednesday, September 20, 2006
UK Housing market still defies all logic!
BBC: Mortgage lending jumps in August
Mortgage lending is still booming, according to figures published by the Council of Mortgage Lenders (CML). In August, total new lending hit a fresh record of £32.7bn, 7% up on July and 21% higher than a year ago. And the Bank of England last month reported that mortgage approvals, a very good indicator of near term trends, were at their highest level of the year so far and 24% higher than at the same time a year earlier.
BOE: Bank voted 8-0 to hold UK Interst Rates Unchanged at 4.75%
BBC News - Business: Bank voted 8-0 to hold UK rates
You wouldn't 'Adam 'n' Eve It'!: The decision to hold UK rates at 4.75% earlier this month was backed by all eight members of the Bank of England's rate-setting body, minutes have shown.
MoneySavingExpert questions brainwashing by property porn shows
MoneySavingExpert: A Nation Hypnotised By TV Property Porn? Property isn’t as safe as houses
Martin Lewis AKA Money Saving Expert questions the role of "property porn shows" in ramping up property prices and also focuses on the dangers which lie ahead for those who have over-extended themselves. Martin for those who don't know him came to prominance by helping to save householders money i.e through paying less for goods and services as opposed to saving money as in where best to save. Martin, IMHO has done an excellent job in helping the financially illiterate and hoodwinked British public become aware of how unless they take some responsibility for their financial decisions will most likely pay too much.
The Case For Rising Rates
Telegraph - Money:: Rate rise likely after record housing data
More lending stokes the case for rising interest rates. Yet the doves in the MPC, Kate Barker et al, do not believe another rise is needed.
Of course, it couldn't happen here ...
The US housing market 'freefall' continues: MoneyWeek
US housing not facing a hard landing but a crash landing. Article reasons the vicious circle effect of house price crash causing job losses which in turn causes lower house prices. Concerns for the dollar if Big B doesn't fight inflation.
The US housing market 'freefall' continues
MoneyWeek: The US housing market 'freefall' continues
The rate of decline in the US housing market is continuing to surprise the pundits. The number of housing starts - that is, new home construction - fell 6% in August, down almost 20% on last year, the worst annual decline in four years, and a much worse fall than expected. That came hot on the heels of news from the National Association of Home Builders that house builders’ confidence is at its lowest since 1991.
US house builders' confidence is at its lowest since 1991
Firstrung: The US housing bubble continues its ‘freefall’ tailspin
The rate of decline in the US housing market is continuing to surprise the pundits. The number of housing starts - that is, new home construction - fell 6% in August, down almost 20% on last year, the worst annual decline in four years, and a much worse fall than expected. That came hot on the heels of news from the National Association of Home Builders that house builders' confidence is at its lowest since 1991.
Mortgage lending up unsecured lending cooling
Firstrung: Mortgage lending up as consumers begin to pay down their unsecured credit
"The draw-down of house purchase loans in particular has driven net mortgage lending higher of late and August's increase set a new monthly record. This buoyancy in mortgage lending is contrasted by the trend in consumer credit, where credit card lending has shown a further decline (the fourth month in a row) while lending on personal loans and overdrafts was weak."
National public sector debt up 10% on year
National Statistics: £5.6 bn current budget deficit August
Net debt was £474.2 billion at the end of August, compared with £436.2 billion a year earlier. The Budget forecast net debt at the end of March 2007 is £493.0 billion.
Where has all the money gone?
Guardian: Pensions plunge could sink happy retirements
Figures show that someone retiring with a personal pension could be up to 75% worse off than someone paying the same contributions each month but retiring 10 years ago.
Let's just wait for the great 'Baby Boomer' sell off
thisismoney.co.uk: Half will sell home to fund care
Half of those nearing retirement will be forced to sell their homes to pay for nursing care bills, says an alarming study.
Head for the hills!
Independent: Sea levels are rising faster than predicted, warns Antarctic Survey
Is there any point worrying about house prices - we are all stuffed anyway .... The global sea level rise caused by climate change, severely threatening many of the world's coastal and low-lying areas from Bangladesh to East Anglia, is proceeding faster than UN scientists predicted only five years ago.
Tuesday, September 19, 2006
Reality bites in Aus
news.com: Rates to force down home prices
"Almost half the 2065 people surveyed in August by NEWS.com.au - or 48 per cent - expected house prices to fall in coming months, up from the 42 per cent in a June survey." Peoples expectations here seem more in touch with reality than UK. They expect a fall - they will get a fall.
RICS property forecast for 2007
RICS.org: residential e briefing
Their conclusion is that it is likely that 1 or 2, 0.25% interest rate increases, in the next few months, will result in a fall of house price inflation to 3% next year. No forecast is given for 2008 onwards.
Reid signals curb on EU immigrants
News24: Reid signals curb on EU immigrants
Work rights in the UK for Romanians and Bulgarians are likely to be restricted if they join the EU next year, Home Secretary John Reid has said.
Another interest rate hike then?
The Telegraph: House price inflation has taken us by surprise, says MPC member
House prices are rising faster than the Bank of England was expecting this year, according to Monetary Policy Committee member Kate Barker. Ms Barker’s comments underline the fact that the recent jump in house price inflation could be short-lived, and may cause added concern about the fate of the property market. She also indicated that, with the economy growing strongly, the MPC was prepared to be more aggressive about raising rates to combat future inflation.
How obvious...
Morgagesforbusiness: Inflation to lead to rates hike
I'm just posting this for comedy value, it doesn't deserve to be thought of as a serious news article as it is so ridiculous: _____________ People with Buy to Let Mortgages are among a number of property owners who are concerned that a further interest rates increase would not help their investments, according to a survey by the Bank of England (BoE). The Inflation Attitudes survey suggests that 51 per cent of investors with mortgages, including those with buy to let mortgages, believe that a cut in interest rates would benefit them, while 36 per cent of all respondents said a rise in interest rates would not be "best for them personally". _____________ If you want a more intelligent analysis of the BoE Inflation Attitude survey, try here: http://today.reuters.co.uk/news/articlebusiness.aspx?type=businessNews&storyID=2006-09-18T105524Z_01_L18805322_RTRUKOC_0_UK-ECONOMY-BRITAIN-INFLATION.xml
The IPOD generation - Insecure, Pressured, Over-taxed, Debt-Ridden
Daily Telegraph: The IPOD generation: insecure, pressured, over-taxed, debt-ridden
Telegraph article descibing the bleak financial prospects of the 20-35 yr old generation.
Monday, September 18, 2006
US current account defecit firmly in the red
BBC News: Costly oil pushes up US deficit
Record oil import costs have pushed the US current account deficit to $218.4bn (£116.3bn) in the second quarter, a 2.4% increase on the previous period. The deficit is the broadest measure of US global trade, including investment flows and trade in goods and services.
BTL in trouble outside of London
The Independent: Buy-to-let pitfalls
Thanks to RealistBear in the forums for this one: Outside of London the market is now weak and oversupply of some types of property is causing problems. It is important that buy-to-let landlord understand the differences between London and "everywhere else" because it has a major impact on the investment decision. The main difference is that London has a tradition of renting, which is seen as the thing to do by young professionals who want to experience the metropolitan buzz rather than create a nest. Everywhere else, smart new apartments in city centres are competing with relatively cheap housing in suburbs that are fairly close at hand. "Apartments are already standing empty in many regenerated northern city centres," Town says. "I know one where 50 per cent of units are unoccupied."
Anyone up for a FTB 'show' in N.Ireland?
Firstrung: Black Holes and Revelations - Firstrung newsletter 18/09/06
The week starts with the publication of another property 'asking price' report. This time it's Rightmove's turn. Perhaps there is 'method in the madness'. Reaching as many commuters as possible in the Monday morning rush hour, as they're crammed into the train compartments like sardines on the 7.30 from Reading to Liverpool Street.........
Bah humbug...
Firstrung: Retiring Brits inclined to squander children's inheritance
52% of people are planning to trade down the housing ladder to release some of the equity locked up in their homes when they retire. 6% plan to stay in their own home but want to use an equity release product to supplement their income. A further 7% would sell up and use the proceeds to fund life in a modern retirement community. Just 1% will look forward to life in an old people's home
But luckily for those waiting to get on the property ladder ...
Sunday Times: Why I don't care for sharing
But luckily for those waiting to get on the property ladder, you stand a much better chance of staying solvent if you simply avoid getting involved in this particular irrational market. Most people can easily rent a nicer property in a nicer area than they could afford to buy. So why not just sit it out? At some point — and some point soon, if arrears and interest rates continue to rise — the same people who are panicking about getting on the ladder now will be rushing to get off it. And, eventually, houses in Britain might just reach the point where they’re worth buying again.
Ipod generation
Sky News: Future grim for Ipodders
sorry not v good at this summarising thing, basically article saying what we already knew: It says ''under 35s risk becoming the IPODs - Insecure, Pressured, Overtaxed and Debt-ridden...''
Slippery Slope
MSN: Worst yet to come for UK economy
Money week article by John Stepek, link from MSN Brief summary: article quoting CAB figures from last week, discussing inflation, and advising ''avoid UK property – both commercial and residential – like the plague; and the retail sector looks no more attractive.''
CBI worried about rising inflation
TimesOnline: CBI calls for rate rise in November
The CBI has called for the BoE to raise interest rates to control inflation which in their opinion is rising faster than expected.
Latest Rightmove report: House Prices rise 0.2% in Sep
Forbes: UK's Rightmove finds instructions falling in Sept, prices rising modestly
Rightmove revealed that average asking prices rose by only 0.2% in September. This rise follows August's sharp 1.6% fall, which came on the back of seven consecutive monthly increases. 'Asking prices are at a virtual standstill,' said Miles Shipside, Rightmove's commercial director. 'The market appears to be correcting affordability issues itself and does not need further intervention for the Bank of England. At this pivotal stage it is likely to do more harm than good,' he added. The BoE is widely expected to raise its key rate by a quarter point again to 5.00% in November.
Interesting article comparing the American and British perspectives on HPC
MSNBC: The Long View: Looking for signs of a hard landing over the white picket fence
Americans do not share Britons' obsessive interest in house prices. But this has not made the US immune to housing bubbles. How US homeowners react is now a key question for the global economy over the next two years. If, as many expect, the fall in house prices leads to what economists call a "wealth effect", and homeowners cut down their consumption in response to their reduced wealth, the US could be in for a "hard landing". This would mean reduced interest rates and a fall for the dollar, and have knock-on effects across the globe. And that is why it is suddenly important to study how American homeowners' behaviour might differ from those in Britain. Recent international experience suggests that a fall in house prices need not trigger a recession. Britain suffered a decline in house prices early last year, while Australia suffered the same fate some years earlier. In neither case has a housing downturn gone on to have a severe impact on the economy.
Sunday, September 17, 2006
Not news - but a sister site in the US. Worth a look ... if you are bored
patrick.net: US Housing Crash Continues
Nice pithy answers to the drivel of the chattering (VI) classes, such as the following: "Maybe we should just accept that we missed out on a great opportunity to get into the real estate in the past N years." FALSE. Did we all miss out on a great opportunity to get into the stock of pets.com or other Internet companies with no business model? The real question is what is likely to happen in the next few years according to fundamental economics. The answer is a huge crash. The last guy to buy into the bubble will get hurt the most
Brown talks up economy but warns of rate rises
Sunday Times: Brown hint over new rate hike
Gordon Brown he will ..... warn of the risks from rising global inflationary pressures, and implicitly endorse further interest-rate rises from the Bank of England.
Firstrung, the week in focus
Firstrung: Firstrung, first time buyers, the week in focus 17/09/06
The week started with the DCLG, formally the ODPM, isuing their latest information on house prices. Annual house price inflation is at 6%, up from 5.3% in the corresponding period of last year. First time buyers have seen the prices for typical 'FTB properties' fall slightly in July although hardly by an amount to encourage a stampede with FTBs still seeing 150K as an entry level price to the market place.
Are first time buyers being prudent, or are they succumbing to a collective madness that will end in tears?
Firstrung: Something strange is happening to the price of houses
Excellent article from the Telegraph, please click the link at the foot of this introduction to take you to the full article where you will also find the reader comments. You could be mistaken for thinking you have found housepricecrash.co.uk such is the quality of the reasoned and well argued points made in relation to run away house price inflation
House and apartment prices in Warsaw and other leading Polish cities have boomed
Firstrung: Polish house prices out of reach of local workers
Supposedly migrant Polish workers come to the UK, for the most part earn minimum wage, apparently live in overcrowded BTL property and send the residual of ther earnings back home where their own families cannot afford to buy property at current inflated prices.....
Saturday, September 16, 2006
The lies come back to haunt New Labour
Independent: Estate agents more trusted than politicians
Estate agents are now more trusted than ministers by the public to tell the truth. "Lies" over Iraq could be largely to blame.
Everybody Wins!
The Scotsman: Funding university life by buying a student flat means everybody wins
The Scotsman tells us that parents can use BTL to "potentially fund their child's university education on tax savings alone."
Kids, just say no...
Firstrung: Co-buying gets the thumbs down from Experian
This is Money punch one of the many holes through the bizarre concept of co-buying. Firstrung has covered the subject often, our own stance remains steadfast, co-buying is an act of desperation, rather than succumb stay out the the market until it corrects enough to suit your own personal circumstances....
Why can National Homebuyers thrive in such a booming market?
firstrung.co.uk: This time next year Rodney....
Need to top out at the peak of the market? The Firstrung team cannot figure out whether National Homebuyers are skilled operators offering a genuine service to speed up what can be a laboured process, or quite simply 'mugs' left holding the hottest of hot potatoes.
Bad debt is everywhere
Guardian Online: Bad debts eat into Co-op profits
The rise in provisions for debts that have turned sour was almost entirely responsible for the fall in Co-op's profits in the first half of the year to £44.7m from £60.2m. Without a £58.2m provision against bad debts - up from £43m - profits would have been over £100m, the bank said.
When will the madness stop?
thisismoney.co.uk: The rise of the more-gages
The mortgage industry has responded to the difficulties facing first-timer buyers with 100% or more mortgages, the latest lender being Coventry Building Society, which is offering borrowers 125% of the value of their home.
This time next year Rodney....
Firstrung: This time next year Rodney....
With forecasters such as Neil Woodford from Invesco Perpetual forecasting a 30-40 per cent fall in the market in the next 2-3 years, the sight of rows of 'for sale' boards seems set to be part of our landscape but National Homebuyers, who agree to buy your house quickly appear to be an increasingly important player in the property market.
Friday, September 15, 2006
Don't lose hope!
The Times: Market slowdown on the way
If you take delight in seeing experts proved wrong, the misplaced pessimism of most 2006 housing market forecasts could permit you to give full vent to that emotion. You could enjoy a special thrill, for example, at the sight of the latest Halifax figures showing annual price growth of 8.2 per cent; you could also get a kick from the similarly gratifying new numbers from the Department for Communities and Local Government. The predictions for 2006 may have been overcautious, but the evidence for a more subdued mood ahead is convincing. Prices seem set to slow, but not to fall. Nothing dramatic seems about to happen, just a slackening of the pace. But even that may be scant comfort to those whose entry into the market has been once more postponed by this year’s upward surge. But this should not stop you heeding the new consensus on the direction for prices
More high earning job losses - this time in Cheshire
BBC NEWS: Swiss company to axe 360 UK jobs
Its a Never Ending Story
Telegraph opinion on the housing bubble
Telegraph News: The dream of home ownership must one day surely shatter
This article discusses the desire to own a home, the wellbeing that may people have knowing that the value of their home has risen and the terrible debt burden taken on by FTBs in buying their first home. It concludes that we are in a bubble, that the bubble will surely burst and with it the dreams and illusions of so many people.
Pensioners in Debt: No plans to pay it back ever - shocker!!!Oh how the deck of cards......
BBC News: Debt culture 'seduces' pensioners
One in four pensioners are borrowing money without any plan to pay it back. In addition, one in seven of the 2,000 pensioners surveyed said they would consider equity release to clear off credit card and loan debt.
Shared ownership - a genunie option for FTBs?
Firstrung: Not all 'doom and gloom' for first time buyers - Smartnewhomes
Despite continued concern surrounding the plight of the first time buyer, there are an increasing range of options and properties available to enable this struggling group of want-to-be homeowners to take their initial steps onto the housing ladder says SmartNewHomes.com.
Earn 130K, a week but rather rent...
Firstrung: Chelsea's Michael Ballack - "London property prices are too expensive, it's better to rent"
In fact, even the people who really do have money to burn think UK property is poor value. Chelsea's Michael Ballack, who earns a mere £130,000 a week, has been widely reported as saying: "London is extremely expensive. It is better to rent." Now we wouldn't normally advise taking economic advice from a footballer - but in his case, we'll make an exception....
The dream of home ownership must one day surely shatter
Daily Telegraph: The dream of home ownership must one day surely shatter
More and more negative property PR appearing or is it just me?
Thursday, September 14, 2006
Ford on the way out?
BBC News: Ford 'wants to cut 75,000 jobs'
Ford wants to cut more than 75,000 jobs, its main US union has said. The carmaker, which posted a $123m (£66.5m) loss in the second quarter of 2006, needs to cut costs as it tries to turn itself around. It is not yet known whether the latest Ford job cuts will be restricted to the US or include its overseas operations.
Sydney's property slump
moneyweek: The real lesson from Australia’s property slump
The economic outlook for the UK isn’t getting any better.
Fall in public sector jobs
guardian: Fall in public sector jobs
Along with tightening credit rules, this other prop of a false economy is also in decline. This thing could snowball
First-time buyers in record debt. I would never have guessed that!
This Is Money: First-time buyers in record debt
First-time home buyers are risking financial meltdown by taking on record loans averaging £110,500.
More evidence from OZ
Domain.com: Repossessions at all-time high
This web site is very mainstream in Australia and the evidence is mounting. More and more sources from the Sydney housing market are backing up what most people in Australia believe is, at the very least, the start of a REAL national slowdown. The property examples in this article are a diverse range suggesting that this is not confined to certain areas or price brackets.
House price rise defies rate hike
BBC News: House price rise defies rate hike
Report on a RICS study which shows that house prices are rising "faster than anyone expected", despite the recent rate-rise
Latest UK Debt Figures - how the bubble will burst!!!
in2perspective: Latest UK debt figures
At the end of July 2006 the total UK personal debt was £1,237bn. The growth rate increased to 10.5% for the previous 12 months which equates to an increase of £105bn. Total secured lending on homes has exceeded £1 trillion (£1,000 billion) and in July 2006 it stood at £1025.4bn. This has increased 11.2% in the last 12 months.\r\n
Ouch!
CNN: Foreclosures spiked in August
With real estate markets slowing and mortgage rates well above levels of recent years, times are getting tougher for homeowners - the number of homes entering into some stage of foreclosure is surging.
How can people be so stupid?
BBC News: http://news.bbc.co.uk/1/hi/uk/5340878.stm
Hundreds of thousands of people are failing to maintain mortgage payments and risk losing their homes, according to a Citizens Advice survey. More than one in 10 of the people surveyed wrongly believed a secured loan meant they could miss repayments but their home would still be safe. A further 10% of people thought it was a loan where borrowers could pay back as little or as much as they want each month.
Guardian - IMF sounds a warning on Britain's housing market
Guardian Online: IMF sounds a warning on Britain's housing market
Guardian's take on the IMF warning
Even the IMF is worried
The Times: House prices far too high, warns IMF
HOUSE prices in Britain are still too high, the International Monetary Fund said yesterday. The IMF said that last year’s sharp downturn in property prices, which followed three years of double digit increases, had failed to restore balance to the market. British homes, it said, “still seem over-valued by most conventional measures”. Britain The Times September 14, 2006 House prices far too high, warns IMF as upward surge resumes By Gary Duncan, in Singapore HOUSE prices in Britain are still too high, the International Monetary Fund said yesterday. The IMF said that last year’s sharp downturn in property prices, which followed three years of double digit increases, had failed to restore balance to the market. British homes, it said, “still seem over-valued by most conventional measures”. The warning came amid new evidence of surging activity in the housing market, with property prices rising at their fastest for more than two years. The Royal Institution of Chartered Surveyors said that a hike in interest rates last month had failed to deter buyer inquiries from rising at the fastest rate for three years. House prices grew for the fifth consecutive month in August at the fastest pace since May 2004. Price rises were led by Scotland at its fastest pace in two years, with the North West, Yorkshire, Humberside and Wales also experiencing growth. Prices were static in the West and East Midlands which may have been held back by the impact of struggling manufacturing industries. The institution is sceptical about whether the acceleration can continue, with economists pencilling in another interest rate rise in November. A spokesman said last night: “Would-be buyers have been encouraged by a strong economic performance, but additional rises in rates before the end of the year could deter buyers as more pressure builds on personal finances.” This week it was announced that inflation had risen to its highest level for nearly two years and a survey suggested that up to 770,000 households have defaulted on mortgage payments in the past year. There were also growing fears in financial markets that an abrupt slowing of America’s housing market could plunge the world’s biggest economy into a severe downturn, or even recession
And still they rise.....
The Guardian: House prices soaring
Houses prices rose at their fastest pace in more than two years in August with a hike in interest rates failing to deter buyers, a