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 survey has shown. The Royal Institute of Chartered Surveyors (RICS) said 35% more of its members reported a price rise rather than a fall during the month - up from 30% in July.
IMF warns over UK property crash
The Independent: House prices overvalued 'by any measure'. Brown must act to avert crisis in public finances
Brown fiddles while the country burns
What about the other 50% Mr Blair?
Firstrung: Fifty percent of students leave their course because of debt
New Labour's much heralded ambition to have 50% of young adults in Uni. lies in tatters. Whilst roughly 50% do in fact go, (some may question what happens to the ignored 50% that don't), 50% of those who choose Uni. then drop out due to debt....is the real figure therefore actually closer to 25%?...
House prices down £710
Firstrung: House prices fell by £710 in August - Assetz
This house price survey from Assetz is worth consideration in as much as it takes the simple average of the most readily available house price reports and computes a snapshot of the current price situation. Prices are down £710 in August....
Wednesday, September 13, 2006
hitting the fan
guardian: Debt warning as rising numbers face threat to their homes
despite historically low interest rates, there's more evidence that things are going pear shaped.
Would you credit it?
Firstrung: Doorstep lender Provident sees profits fall and bad debts rise
Doorstep lender Provident Financial, notorious for launching their Vanquish credit card with up to 65% apr, has reported lower interim profits and a sharp rise in bad debts in the first half of 2006, despite seeing UK customer numbers grow for the first time in three years.
Sound fundamentals of the UK economy?.
BBC News: UK unemployment at six-year high
Unemployment rose by 93,000 between May and July to 1.7 million, its highest level since 2000, figures have shown.
One more interest rate hike this year may not be enough
MoneyWeek: Why one more interest rate hike this year may not be enough
August saw inflation come in above target and above expectations once again. Consumer price inflation hit an annual rate of 2.5% last month. Analysts had expected 2.4%. It now looks as though inflation will exceed the Bank of England’s forecasts for the third quarter - and that makes a fresh rate rise by November seem even more likely.
Homelessness, the other side of the HPI tracks
Firstrung: Homeless housing crisis still acute - Shelter
"Despite the drop in new cases, the scale of the housing crisis remains virtually unchanged with almost 100,000 homeless people and families currently trapped in temporary accommodation - more than double the number in 1997. "Across Britain, almost 130,000 homeless children are having their health, education and future chances ruined by the lack of a safe, permanent home
Crash Gordon In Lights!
MSN: Gordon Browns Legacy Is a Taxing One
So let me see - the man of low tax - end to boom & bust etc etc. Here we see the true profits in stamp duty and houses to Crash Gordon. 5.5 Billion? Do BTL's & FTB's realise what they are paying?
RBS put positive spin on FTB situation
Royal Bank of Scotland: First time buyer property index
"Despite high house prices, there remains a range of desirable areas across Britain accessible to first-time buyers." The RBS First Time Buyer Property Index ranks Britain's postcodes by desirability and potential return on investment to reveal the top 22 areas with most potential for first-time buyers. The study also discloses five key factors in determining possible property hotspots.
Concern grow over number of people missing mortgage payments
BBC: Charity warning on mortgage risks
770,000 people have missed one or more mortgage payments in the last year a survey for citizens advice said. 1 in 10 people surveyed incorrectly believed that missed payments did not threaten their home.
770,000 have missed mortgage payments in the past year
Firstrung: Homeowners at increased risk of losing their homes due to unmanageable debt, says Citizens Advice
Homeowners could be at risk of getting into serious debt by over-committing themselves with loans and other forms of credit, say national charity Citizens Advice. A new survey - released for this year's Advice Week - shows that some 770,000 people throughout Great Britain, with a mortgage have missed one or more mortgage payments in the last twelve months
Tuesday, September 12, 2006
The inconvenient economics of amateur BTL
No Monkey Business: Buy-to-let: bets with the housekeeping
The buy-to-let fashion has not increased the 10% of the UK housing stock accounted for by the privately-rented sector – only facilitated a shift in ownership to a lot of amateurs. They are running a business inside their household finances. It’s now a bad business to be in, with prospects of negative cash flows (including financing costs) and virtually no long-term real growth to compensate. They are also likely to be the wrong people to be running it. Negative cash flows will severely hurt many middle-income households and threaten important savings goals. There is widespread ignorance of the true cash-flow variance, the magnitude of realistic expected returns and proper bases of comparison with other assets. This leads to sub-optimal long as well as short-run decisions.
Home.co.uk - more realistic than most
Home.co.uk: Asking Prices Defy Rate Increase
Home.co.uk sees falling house prices in the uk easing up slightly...
US in the red
BBC News: US trade deficit hits fresh high
The US trade deficit hit a fresh high of $68bn (£36bn) in July, due to the cost of crude oil imports reaching a new record, official data has shown. The figure was up 5% on June\'s deficit, and the gap for 2006 as a whole is now set to exceed 2005\'s record $717bn.
HIPS...
Firstrung: Home information packs should sink without trace - Trevor Kent
Trevor Kent is a former President of the National Association of Estate Agents. He has laboured tirelessly and without remuneration or vested interest (other than being an estate agent!!) to warn the public of the perils of Home Information Pack implementation.....
Living in Notting Hill? This may be of interest
Firstrung: Shared ownership scheme launched by Notting Hill Ownership
Notting Hill Home Ownership has today launched a brand new residential development available to workers and residents in the Hounslow area. The Edera development features a total of 24 New Build HomeBuy (previously known as Shared Ownership) properties, including 10 two and three bedroom houses, giving young families and couples living or working in the local area a unique opportunity to get a foot on the London property ladder.
Fixed rates on increase
Firstrung: Are mortgage borrowers now opting for short term fixed rates?
Mortgages Direct's monthly survey revealed that 75 per cent of borrowers opted for two-year fixed rate deals from only 60 per cent last month, as homeowners are fearful that the base rate will rise further in the near future
OZ market crashes 40%
Domain AU: Neighbours rethink plans after a shock in the street
The sale of 48 Feather Street for $260,000 shocked many in the street; the house had brought $450,000 in 2004. Last weekend's auction had been a forced sale after the owners could not meet the interest repayments on the $405,000 they borrowed to buy it. Most who bought in the street during that market peak paid between $290,000-$350,000 for their homes, including Ray Attard, a milkman, who bought the house next door for $350,000 in 2003. Attard had been astonished when his neighbours paid $450,000. "I thought they paid too much for the house. It was outrageously overpriced at the time," he says. Attard was nonchalant about the property's 42 per cent price fall. His home's worth had increased to $370,000 in a valuation by a real estate agent earlier this year. His brother, who also lives in Feather Street and paid $338,500 in 2004 for his property, also received a valuation - down to $315,000. Others in the street are concerned about how the price fall might affect the value of their homes.
HSBC couldn't organise a p...... brewery
Guardian: HSBC cracks down on its overdrawn customers
Despite the article yesterday regarding HSBC and it's incredibly dangerous exploits into the world of 'buy with your mates' mortgages, they are in fact very worried about bad debts. And to think that the fun hasn't even started yet. Tomorrow I remove all my savings from this freakshow of a bank.
Threat to Global economy
Daily Telegraph: Thirst for cash that threatens a crash
The articles discusses recent country financial crisis and asks the question whether the US housing recession will trigger a global crisis.
More Engery Price Hikes! - Inflation still at 2.5% though!!!
Times Online: Third rise in energy prices is on its way
CONSUMERS have been warned they face another round of energy price hikes before the end of the year, after Npower last week became the first supplier to raise bills for a third time, writes Ali Hussain. Other big suppliers, such as EDF and Scottish Power, have raised prices only twice this year and are expected to follow Npower’s lead. Paul Green, chief executive of Energyhelpline.com, said: “We’ve had two rounds of price rises so far this year, and there’ll be another one before the end of this year and going into the next one.” From October 1, Npower’s 6.3m customers will see gas bills increase by 17.2% while electricity bills will go up by 9.9%, bringing the average energy bill up to £1,008 a year. Customers have seen fuel costs rise 50% this year.
BOE, doing too litttle, too late?
BBC News: UK inflation up to 2.5% in August
UK inflation accelerated to 2.5% in August, the fourth month in a row it has topped the government's 2% target.
The latest article from greedy woman...
BBC: Debt diary: Race against time
The BBC debt diary latest installment...
12% its coming to get you...
MoneyExpert: Alliance and Leicester launches 6.1% current and 12% savings accounts
You may hate them but when it comes to money (at least making it), banks know what they're doing. A&L clearly have confidence in higher rates allowing them to recoup some of the 12% interest rates offered on their savings account.
Asking prices down 1% on year?
Home.co.uk: Asking prices defy rate increase
Asking prices for homes in England and Wales rose slightly this month by 0.2% but fell during Q3 by 0.1%. Asking prices in England and Wales fell 1.0% over the last year (ca. 3.4% below the CPI and ca. 5.3% below the AEI). East Midlands asking prices fell by 3.0% in Q3.
House price double!
Daily Mail: House Prices Double in Four years
Yet another VI article. However there is some negative comment in there. Why do they not just say houses currently are not currently good investment!
Monday, September 11, 2006
NHS Logistics employees to strike
SKY News: NHS Workers To Strike
Hundreds of NHS workers have voted to go on strike in protest at the privatisation of their jobs. Unison said the NHS Logistics employees - who deliver supplies to hospitals and GP surgeries - overwhelmingly backed industrial action in protest at the transfer of work to German-owned haulage firm DHL.
Wishful Thinking
ThisisMoney: Extra room adds £180,000
THE huge profits that homeowners can make by adding a bedroom or extra living space to their property are shown in a new survey today
Not the ones I am looking at!
ThisisMoney: House prices jumped £3,000 in July
THE summer homebuying rush led to the cost of the average home jumping by more than £3,000 in July, according to official figures released today.
House price inflation for first time buyers fell from 6.9 percent in June to 5.6 in July
Reuters: UK house price inflation at 14-mth high in July
LONDON, Sept 11 (Reuters) - British house price inflation rose to a 14-month high in July, with gains in the London area leading the charge, government figures showed on Monday.
Who writes this stuff?
BBC: House prices show strong growth
House prices increase by 6% in July. Well, not quite, as once again we see fact confused by fiction.
Oil going down - Inflation Over?
New York Times: AT OPEC, some worry as oil prices start falling
Oil is noe falling - FAST - prices at petrol stations have dropped 10p in circa 2 weeks ? Is inflation dead and the BOE right?
Sunday, September 10, 2006
Look what the miracle economy brings
Independent: UK children the unhappiest in Europe, says study
Britain's 12 million children and teenagers are the unhappiest and unhealthiest of any wealthy European country, a major new study has revealed.
Can't afford a mortgage on your own? Ask a friend...
The Times: First-time buyers offered group home loans
More than three quarters of those still living with their parents said they would consider clubbing together with family and friends to buy a home of their own, according to HSBC. The bank said it had seen a 50% rise in group mortgage applications this year alone after 93% of those seeking to buy their first home said affordability was a problem. Carina Kemp, head of mortgages at HSBC, said: "First-time buyers are thinking more laterally about how to get on the ladder. More people are clubbing together with friends or family to buy a home and this is a trend we expect to continue." Also reported at: http://scotlandonsunday.scotsman.com/uk.cfm?id=1335892006
Damn those pesky meteorites!
Safe Haven: Festering Dudgeon
A genuine hard landing for U.S. housing will send up dust all over the world [yes, that means us]. Like the impact of a giant meteor it threatens to block out the sun...and lead to the extermination of whole species of investments... Big picture stuff from the big country.
Repossessions on the rise in Australia.
The Age: Blame game as homes repossessed
The NSW Government and Opposition are at odds over who is responsible for a dramatic rise in the number of homes being repossessed in the state. New figures from the NSW Supreme Court show the number of home repossessions has more than doubled in the past three years.
Saturday, September 9, 2006
Work till 68 and then enjoy retirement in poverty - why bother?
FT.com: Message to save early and save often falls on deaf ears
According to recent research on pensions saving, not that many. Scottish Widows says the number of people saving adequately for retirement has dropped from 55 per cent last year to 46 per cent this year, while the proportion of people who do not know where their main income in retirement will come from has almost doubled to 23 per cent.
Will the gloom spread to the housing market
Sky News: Workers' Job Gloom
Workers believe job prospects have worsened over the past year and that inflation will rise, according to a new report.
Friday, September 8, 2006
Homeowners breathe sigh of relief -- but where to now? - Where indeed....
Reuters: Homeowners breathe sigh of relief -- but where to now?
LONDON (Reuters) - Homeowners breathed a sigh of relief on Thursday after the Bank of England maintained interest rates at 4.75 percent. Mortgage holders -- first-time buyers, in particular -- are already feeling the pinch of last month's base rate rise and Stuart Law, managing director of property investment firm Assetz, said a further jump would have had a "disastrous effect" on the market.
Aussie's squabble over house prices.
Sydney Morning Herald: PM told he's wrong on house prices
THE Prime Minister's claim that state government land release policies are the main cause of high property prices locking first-home buyers out of the market is not credible, a Macquarie Bank economist says.
More on US house prices.
Fox News: Home Sales to Be Weaker Than Forecast, Group Says
Even the US "Realtors" expect prices lower than last year.
Karma has a sense of humour, with twist of irony.
Telegraph: Have Tony and Cherie made a £3.6m property blunder?
When Tony Blair and his wife Cherie bought a £3.6 million house last year they were hoping to secure their financial future and catch up what they had missed in their years away from the London property ladder. Connaught Square, The £3.6m townhouse remains empty Nearly five months later, however, the Georgian townhouse stands shuttered and empty, haemorrhaging cash on mortgage repayments while earning nothing. The idea was to rent the house out until Mr Blair leaves office and can live there. But now it is starting to look as if the Blairs may have landed themselves something of a white elephant.
Rates held but house prices still pose threat
Times Online: Rates held but house prices still pose threat
THE Bank of England kept interest rates steady at its monthly meeting yesterday but robust figures from the housing market suggested it could have to raise rates again before the end of the year.
Government cash in on the bubble they aided and abetted.
Home.co.uk News: That £1bn will do nicely - thank you homebuyers
Homebuyers topped up the Treasury’s coffers to the tune of one billion pounds in the three months between April and June, according to a report out this week. The total stamp duty paid by homebuyers in quarter two was nearly 30% up on the period between January and March, said the Portman Building Society. What a fiddle!
FT says prices up 0.3% in August
FT.com: FT index shows house prices calming
House price inflation has levelled off as the revival in the housing market earlier in the year matures into steady growth, the FT house price index for August shows.
Thursday, September 7, 2006
The desperation is showing
Lifestyle Extra: Change Of PM 'Could Boost Economy'
Tony Blair could help restore confidence in the UK economy by resigning as Prime Minister, according to a financial expert.
Falling Confidence?
In2perspective: UK confidence 'lowest ever'
The Nationwide Consumer Confidence Index fell 11 points to 83 in August – its lowest ever level. The Index is now 17% lower than 12 months ago and is well below its 12 month average which has been falling steadily since the start of 2006.
Falling Confidence?
In2perspective: UK confidence 'lowest ever'
The Nationwide Consumer Confidence Index fell 11 points to 83 in August – its lowest ever level. The Index is now 17% lower than 12 months ago and is well below its 12 month average which has been falling steadily since the start of 2006.
Climbing house prices but for how long
IFA Online: House prices climb in August but annual rate of inflation falls
House price inflation has fallen back just over 1% since May, despite rising by the same amount in August alone, the latest figures from the Halifax House Price Index reveal.
Why don't they just rent ?
Daily Mail: Friends join forces to get on property ladder
Britain’s biggest bank, HSBC, said it has seen a 50 per cent rise in group loans. These allow up to four friends to club together in a single mortgage so that they can buy a property that would otherwise be way beyond their reach.
Npower announces third price rise
BBC News: Npower announces third price rise
Energy company Npower has announced its third price increase for domestic customers so far this year. Its six million customers will face a 17.2% rise in their gas bills while electricity prices will go up 9.9% from 1 October. Rising wholesale energy prices, which it said had jumped 250% since 2003 and 60% in the past year, were blamed. The new charges will lead to an average increase of £92 a year for gas users and £36 for electricity customers.
The American Dream Downpayment Act
Whitehouse: National Homeownership Month, 2006
Owning a home is an important part of the American dream ... promise of America ... The American Dream Downpayment Act ... NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, do hereby proclaim June 2006 as National Homeownership Month. I call upon the people of the United States to join me in building a more hopeful society and recognizing the importance of expanding the ownership of homes across our great Nation.
BBC looks at UK/US housing markets
BBC News: UK may avoid US-style housing pain
The once-mighty US housing market seems to be on the slide. Since the UK is seen as tending to follow the economic and cultural lead of the US, is the UK housing market now set for a serious downturn?
Aftermath of Blair
Telegraph: By the time Blair goes, he\'ll have left an Enron-style disaster
Interest rates are going up, unemployment is going up, so too are taxes and domestic fuel bills. Little wonder that Britain\'s feel-good factor is down in the basement. \r\n \r\n
UK Interest held at 4.75%
Bank of England: Bank of England Maintains Interest Rates at 4.75%
The Bank of England\\\'s Monetary Policy Committee today voted to maintain the official Bank rate paid on commercial bank reserves at 4.75%.\\r\\n\\r\\nThe minutes of the meeting will be published at 9.30am on Wednesday 20 September.\\r\\n\\r\\n
House prices on the up
Guardian: House prices rise again
House prices rose by 1% in August, figures showed today, suggesting last month's interest rate rise had little impact on homebuyers.
How will the US housing slump affect stocks?
Moneyweek: How will the US housing slump affect stocks?
The US housing bubble is exploding - but what will the impact be on stock markets, and what warning signs do you need to watch out for?\r\n
House prices bounce back
BBC: UK house prices climb in August
House prices rose by 1% in August, bouncing back from a shock drop in the previous month, according to Halifax, the UK's biggest mortgage lender. In the three months through August prices rose 0.2%, compared with 2.9% in the preceding three-month period. The Halifax's findings echo those of the latest survey from the Nationwide building society, which said prices rose by 0.8% in August.
'...House price inflation to ease to 5%...'
In2Perspective: Halifax: House prices up 1%
UK house prices rose by 1.0% in August, according to the latest Halifax housing survey. The lender pointed to signs that house price growth will continue to moderate.
'Fly to let ' crash diving?
Firstrung: Bulgarian 'Fly to Let' returns plummet from 104% to 44% as market growth collapses and rental competition hots up
Bulgaria has suffered a dramatic change of fortunes. With total returns on cash invested falling from 104% in June this year to 44% currently, Bulgaria has plummeted from the top of the table where it has been since March, to sixth place and is likely to drop further still.
House prices up 0.2% over three months...
Firstrung: Halifax house price index - August 2006
"House prices rose by 1.0% in August. There are signs, however, that the market is slowing with an overall increase in house prices over the three months from May to August of only 0.2% compared with a 2.9% rise in the preceding three months.
Wednesday, September 6, 2006
Ah, inflation must be under control.. NOT
BBC News: Bank set to leave rates on hold
The Bank of England is expected to leave interest rates unchanged when it makes its latest decision on Thursday.
House price confidence slumps says Nationwide
Home.co.uk News: Expectations of house price rises moderate
Stuart Bernau, Nationwide’s executive director, said: "The Bank of England’s decision to increase Base Rate clearly had a dramatic impact on consumer confidence and people’s reactions over the coming weeks will be crucial." "If confidence fails to bounce back, the impact on many areas of the economy could be severe. Beside the rate hike, a number of other events have occurred in the past month; the continued fighting in the Middle East and consequent uncertainty over energy prices, coupled with the suspected terror plot, have all put a dampener on confidence." Much less bullish than his colleague Fionnuala Earley!
Govt. rake in stamp duty at the expense of the FTB
Firstrung: First time buyers still paying stamp duty despite threshold being raised
The average first-time buyer property now costs £147,868 (over £22,000 more than the new threshold level) and whilst people may be able to buy their first homes for below the threshold in certain areas of the country, the change offers little or no relief to those who want to get on the property ladder in London or the South."
Rising rates begin to bite in Ireland
Bloomberg: Irish Home Mania Squeezes Consumers as Rates Rise
As rising mortgage payments eat into wage packets, spending on everything from holidays to furniture may slow. First-time homebuyers are already spending 27 percent of their incomes on repayments, almost double the level 10 years ago, according to Dublin-based EBS Building Society, the country's biggest customer- owned lender.
Labour? Enron?
Telegraph: By the time Blair goes, he'll have left an Enron-style disaster
Interest rates are going up, unemployment is going up, so too are taxes and domestic fuel bills. Little wonder that Britain's feel-good factor is down in the basement. Nationwide's consumer confidence index fell to its lowest-ever level in August, a drop of 17pc from where it was only 12 months ago. A quick recovery looks unlikely. The building society's survey of 1,000 customers reveals that one third of us believe that the economy will deteriorate even further over the next six months.
House Price Declines in US begin to snowball
New York Times: Home Prices Fall in Nearly One-Fourth of Metropolitan Regions
Price declines are spreading to more parts of the country. The 89 areas affected in the second quarter compares to 66 metropolitan areas where prices fell in the first three months of the year. In the fourth quarter last year, only 29 areas reported such declines.
Bank of Australia leaves rates on hold at 6%
ABC News Online: RBA keeps rates on hold
The Reserve Bank (RBA) has announced that interest rates will stay on hold, after two hikes this year. The cash rate remains at 6 per cent. It is the last rate decision by departing Reserve Bank governor Ian Macfarlane, who will be replaced by his deputy Glenn Stevens later this month.
IMF warns of ‘severe global slowdown’
FT Website: IMF warns of ‘severe global slowdown’
The world is set to enjoy a fifth record year of high growth next year, says the International Monetary Fund, but it warns that the risks of a sharp slowdown have significantly increased.
Consumer confidence at a low
Firstrung: Consumer confidence in doldrums - Nationwide
British consumer confidence fell to its weakest in 2-1/2 years in August after the Bank of England's surprise interest rate hike, a survey by mortgage lender the Nationwide Building Society showed on Wednesday.
US house prices in reverse
Firstrung: U.S. house prices show biggest decline in thirty years
U.S. home prices continued to rise in the second quarter of 2006, but showed the biggest slowdown in three decades, federal regulators reported on Tuesday
Tuesday, September 5, 2006
Face it: The housing bust is here
MSN Money: Face it: The housing bust is here
Missed in last week's 'Fed is done' euphoria was more stark evidence the housing bubble has burst. Growing numbers of homeowners can't make their payments.
Euro interest rates to keep rising
BBC: OECD sees Europe's economy strong
Europe's recovery seems "sufficiently robust", the organisation (OECD) says, to boost eurozone growth to 2.7% in 2006 - up from its May forecast of 2.2%. Growth of that magnitude would justify higher interest rates, OECD chief economist Jean Philippe Cotis said. Bad news for the Irish housing market
USA Oil Reserves Boosted by upto 50%
CNN: Chevron says Gulf drilling a success
Sorry Folks crash is cancelled, USA is now awash with oil. NEW YORK (Reuters) -- Chevron Corp. said Tuesday it had successfully drilled for oil in the Gulf of Mexico's deep waters, and one published report suggested the breakthrough could increase U.S. oil reserves by as much as 50 percent.
What about miss-selling mortgages?
BBC News: Broker in payment protection fine
The Financial Services Authority (FSA) has, for the first time, fined a mortgage broker for mis-selling payment protection insurance (PPI).
And of course none of this effects inflation.
BBC News: Fuel bills drive up motoring cost
Higher fuel prices mean the cost of keeping a car on the road rose by 7.2% in the past year, research suggests.
Fuel bills drive up motoring cost
BBC News: Fuel bills drive up motoring cost
Higher fuel prices mean the cost of keeping a car on the road rose by 7.2% in the past year, research suggests...
The VI-BC report doing the BRC's job for them.
BBC News: August slowdown hits retail sales
Slowing High Street sales in August are prompting fears of more declines in consumer spending, the British Retail Consortium (BRC) says.
FTB dreamers need dose of reality
Firstrung: Unrealistic first time buyers need lessons in basic maths
With the natural optimism of youth three quarters (73%) of teenagers say that owning a property is part of their life plan but only 21% acknowledge the fact that it will be a financial burden. Just 8% of teenagers worry that they might never be able to own a home - despite the well documented hurdles facing first time buyers.
Then the Princess moved to Scotland and lived...
Scotsman: Economic slowdown looks likely to bypass rising Scottish house prices
SCOTTISH house price rises look set to continue despite the threat of an economic slowdown later in the year, according to the latest UK Residential Research Bulletin by property group Savills. Jamie MacNab, Savills Scotland partner, ascribes the continued rise to the enduring affordability of the Scottish market, as measured by the "house price to income ratio".
JP Morgan downgrades property stocks
newratings.com: JP Morgan Cuts Three UK Property Stocks
Confidence on the ebb..."Estimates a slowdown in European property growth, and expects stocks with UK retail exposure to show the slowest growth."
Botched jobs cost consumers dear
Firstrung: Homeowners Waste £8 billion on botch jobs
More than 15 million Brits (35 per cent) have employed someone to carry out home improvements in the last two years at an average cost of £7,430. Yet one in 10 (seven per cent) were unhappy with the completed work, and of those 14 per cent were stung by tradespeople not standing by a contract.
The frog simmers gently..
Firstrung: Gas prices up 83%, electricity prices up 56% since 2003
Well the frog is not quite boiling but simmering gently....small wonder that economists scoff when faced with the argument that "historically low interest rates will keep disposable income high". The price of: water, gas, electricity, council tax, insurance has all ballooned over recent years... still not to worry, prices in the supermarkets have never been cheaper...`er 'ang on..
Rosie Millard extols the virtues of BTL
The Times: Happy birthday, buy-to-let
The effect on the nation of the buy-to-let craze has been astonishing. Property has become regarded as a natural alternative to the classic pension. “There is now a lack of trust in the financial sector,” says Justin Urquhart Stewart, an investment specialist, “and people have looked round for something more certain. They want something they can touch, and think they understand. Property fits the bill." Analysts have predicted the private rental sector will expand from its current level to answer for 15% of all housing stock over the next 10 years. Will the small-time buy-to-let landlord be part of this growth? It’s hard to see why not. Apart from anything else, it’s the only investment that you can go and walk around in. The physical feelgood factor is probably the most important quality in buy-to-let investing.
Another laughable survey from a VI
inthenews.co.uk: Buy-to-let investors 'in it for the money'
Investors in Britain's booming buy-to-let sector expect high yield levels over and above the mortgage costs of their property, according to new research from lender Mortgage Trust. Findings revealed that upbeat buy-to-let investors are increasingly looking for lower rental income requirements and higher loan to value loan limits. Nicola Severn, Mortgage Trust's marketing manager, said that the results "display a strong confidence in the buy-to-let market". "It is obvious from our findings that the appetite for buy-to-let investment shows no sign of waning. With rental demand remaining strong and house prices continuing to climb, it is no surprise that buy-to-let investors are keen to secure higher loan-to-value loans and release equity in order to maximize their investment potential." More neutral account from the London Stock Exchange here: http://www.londonstockexchange.com/en-gb/pricesnews/investnews/article.htm?ArticleID=17585010
Monday, September 4, 2006
Luckily we can see through this propaganda but I pity those that can't!
LCP: Intelligent Growth
As an international market, global events have clearly affected London central, but they have created only small term variances to long-term trend growth. The result has been sustainable growth with minor corrections happening along the way. As an investment market, there is an added control mechanism. If the market overheats periodically, yields reduce and investor activity cools off. Growth over the last eight years has been an average of 8.5% per annum compared with a 20 year trend of 9.5%.
Curry's and PC World to create 2,000 jobs
SKY News: DSG To Create 2,000 Jobs
Currys and PC World owner DSG International is to create some 2,000 jobs over the next five years. The extra staff will be taken on because of its £50m plan to set up a new technical support service for customers, it has announced.
Ireland is drowning in debt
Ireland On-Line: Crisis looms as Irish debt approaches 'unsustainable' level
Total debt levels in Ireland are on course to reach €300bn by the end of next month, according to figures published today by the Central Bank. The startling rise in private borrowing has prompted a warning from consumer campaigners that a crisis is now looming........
Inflation at risk of spiralling out of control...
Daily Telegraph: Central banks risk letting inflation genie out of bottle
Interest rates are surely set to rise again. The favoured month in the markets is November, at the time of the Bank's next Quarterly Inflation Report. But I would not rule out the possibility of another hike this week, with rates up to 5.25pc by end-year. Meanwhile in the eurozone there is also concern about inflationary pressures and rapid money supply increases. The ECB has upgraded its forecasts for both GDP growth and inflation rates. Even in the US, where there was a pause in rate increases at the August FOMC meeting, it would be unwise to rule out another rate hike.
Debt firm profits rise
Ireland OnLine: Record insolvencies boost UK debt firm's profits
Debt advice firm Debt Free Direct forecast bumper profits today as record numbers of people became insolvent.The company said it expected to bank pre-tax profits “at least 10% ahead” of the £9.8m (€7.6m) forecast by City analysts this year.It pointed to a massive increase in the number of people entering individual voluntary arrangements (IVAs), which allow people to repay a set amount of cash each month in exchange for creditors freezing interest payments on the debt.
Nationwide talk it up again
Home.co.uk News: House price growth is fastest since early 2005
Fionnuala Earley said: "While we expect base rates to reach 5% by the end of the year - above the peak of the last rising cycle - we do not expect the market to slow as sharply as before." "There are three main reasons for this. First, current macroeconomic conditions suggest fewer increases in base rates; secondly, fixed mortgage rates have moved more gradually, and thirdly, demand, particularly from the investment sector, is likely to remain fairly supportive." Wrong, wrong and wrong again?
House prices: crash postponed or crash avoided?
No Monkey Business blog: House prices: crash postponed or crash avoided?
Previous articles on the 'No Monkey Business' personal finance blog have argued that the outlook for house prices in the medium and long term can be judged from the starting level of real prices (adjusted for general inflation) relative to their long-run history. Because housing represents such a large part of the stock of assets in the economy, it is sensible to assume that both the trend and the limits of past deviations are fundamentally justified, in an 'equilibrium' sense. The 'double top' in real house prices leaves them as extreme as in 1989 and 1973, each of which was followed by real price falls of about 30%. Avoiding a large correction is highly unlikely, acccording to this article. But even if prices level out for a long period, allowing equilbrium to be gradually re-established (as many 'bulls' hope), the opportunity cost will still be very high. In terms of the eventual wealth destruction for individuals, particularly where the opportunity cost is the real cost of borrowed capital, this is potentially a worse outcome than a bear market.
More IR rises in cheap credit central?
FT.com: Rise in Japan’s capex lifts BoJ rate policy
Capital spending and sales by Japanese companies grew this spring at their fastest pace since the bubble era, providing some much-needed moral support for the Bank of Japan’s recent decision to raise interest rates from zero. *** I like that "era of the bubble" - woe betide we mention the crash word :-)
50 year motgages likely
cantos alerts: property report
David Stubbs, Senior Economist, RICS suggests 50 year motgages as a way to help first time buyers get on to the property ladder
Roll up, roll up...more mugs (sorry 'investors') needed...
Firstrung: Bulgarian property sales almost exclusively to UK and Irish buyers
Demand for holiday homes in the country has taken off in recent years. The upcoming EU accession, the growth of the tourism industry, and the comparatively low prices are among the main factors driving demand. Private middle-class individuals from Western Europe, mainly the UK and Ireland, account for most of the demand.
Abnormal property markets need to cool
Firstrung: Cool down before meltdown, ECB President gives warnings on overheated abnormal property markets
Speaking at a press conference, following the decision by the ECB not to raise rates, Trichet called the Irish property market 'abnormal'. He said the area of 'strong property market developments' needs careful watching.
Citigroup sees CPI at 3% by the end of the year.
FT.com: Inflationary Pressures Build
Interesting article stating opinion that CPI inflation will reach 3% by the year end along with rates at 5%. '...could lead to a destabilising of households’ inflation expectations and a round of higher pay claims in 2007'
Sunday, September 3, 2006
UK property demand increasing
News24: UK: factors driving property demand
South African property expert on increasing demand for property in th UK.
Economists predict rates on hold for BoE
SKY News: Rates Expected To Stay Put
The Bank of England is expected to leave interest on hold this week after it raised the cost of borrowing last month for the first time in two years. Economists predicted that the Bank's Monetary Policy Committee (MPC) would peg rates at 4.75% at the end of its monthly two-day meeting on Thursday.
Buy To Let still get space to plug the market!
Observer: Influx of EU immigrants pumps up buy-to-let market
Property boss Nigel Terrington argues that new workers will provide a firm foundation for the rented sector: Nigel Terrington is chief executive of the Paragon group of companies. Paragon, listed on the London Stock Exchange, is the UK's third-largest buy-to-let lender
High street recovery 'on knife edge'
Observer: High street recovery 'on knife edge'
Deja vu! Must be MPC meeting next week!
House price crash on the way
The Business Online: The end of the property boom
FIVE and half years ago the great equity bubble of the 1990s finally ended in tears; today, it is the turn of the global house price bubble to pop............. All of this is now coming to an end, largely because the era of ultra-loose monetary policy is also over...........
The week in focus
Firstrung: Firstrung, first time buyers, the week in focus 03/09/06
Every Bank Holiday we expect a 'seaside town report' suggesting that "prices have gone up 300% in a decade" etc.. True to form and right on time the Halifax did not disappoint. No disrespect intended towards the inhabitants of Seaham in C. Durham, but describing it as a seaside town and painting a vision of prosperity is hardly realistic.....
The HIPS saga rumbles on
BBC: Seller packs could face delay
The government's compulsory Home Information Packs (HIPS) are likely to be delayed, a senior member of the Royal Institution of Chartered Surveyors has warned.
Saturday, September 2, 2006
Twenty percent of BTL investors are in neg. equity territory
Firstrung: If house prices crash by twenty percent, half of buy to let investors will be ruined
The median figure, a 7% fall in values causing negative equity for 21% of investors, this is probably where we are currently at today, given that most sellers accept offers at 93% of their asking price. One in five BTL investors therefore have no equitable value in their property and have no chance of creating any in the short to medium term given most use interest only BTL mortgages...a sobering thought.
Last one out switch of the light..if you can afford the energy saving bulb
Firstrung: The miracle economy - credit action stats. for 1st September
One person is falling victim to insolvency every minute of the working day - 26,021 people became insolvent between April to June 2006 which is a 66% increase on the same quarter last year. The number of people becoming insolvent in 2006 is likely to exceed 100,000.
Friday, September 1, 2006
There will be no
LewRockwell: The Crowd and a Soft Landing
.......The normal will soon be back in style...even in America. And when it does, the gentle, soft landing Americans believe is their due, may go out the window. Instead, housing will come down like the Hindenburg...and the economy with it.
Racist Spain
Search Engine: Racist Spain
Are you thinking of moving to Spain? Spain is heading for a deep recession. Properties are not selling. taxes are high. Inheritance tax is very high. In the UK the threshold is £285,000 before inheritance tax is due. So why do people sell up and move to Spain where the threshold is only €15,000 yes thats only around £10,000? Take a look at this website to understand the real Spain: http://www.racistspain.com Tell me what you think to this website?
How vested interests try to influence the BoE
Money Week: Trying to spin doctor the economy doesn't work
Property pundits in the UK seem a little more sophisticated than in the US. In the States, everyone from house builders to estate agents are, frankly, panicking. There’s no pretence of everything being OK - there’s talk of the worst slump in decades, markets in freefall - it’s bad out there and they know it...
US house price crash could lead to global recession
Daily Mail: Home slump may batter Uncle Sam
COULD the US housing market pull us into a global recession? Half a decade after the dotcom crash, the American economy is once again on the edge of a precipice, and the effects can be felt from London to Beijing........
US HOUSES IN FREE FALL?
MSN: Why we should be worried about US house prices
Good article which lays blame for bubble in the right place. Also mainsteam article read by many pointing out the problems.
STORM IN US HEADING HERE!
MONEY UK: Why USA House Prices affect us
Article pointing out how bad things really are in the US and we are going the same way.
More debt than the rest of Europe combined!
Credit Action: September Debt Statistics
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. The average first-time buyer was paying 3.21 times their income to get a mortgage in June - the highest figure on record - and the average new mortgage for first time buyers has now reached £110,000.
You spin me right round baby, right round
Firstrung: So pushing the spin aside, what's the underlying reality of the housing market?
We've heard a lot about the US housing bubble this week. But what of our own, carefully nurtured, lovingly tended little house price bubble here in the UK? Property pundits in the UK seem a little more sophisticated than in the US. In the States, everyone from house builders to estate agents are, frankly, panicking. There's no pretence of everything being OK - there's talk of the worst slump in decades, markets in freefall - it's bad out there and they know it.