October 2006 Archive
Monday, October 30, 2006 
INTEREST RATES GOING UP ON GLOBAL EXCESS OF FUNNY MONEY
Bloomberg.com: Global Cash Glut Fuels Investment Frenzy, Pushing Up Rates
Can't improve much on the title. It's about the international investment which is now running wild on a cash glut described as "lavish" and with the obvious consequence that interest rates MUST go up to control disastrous inflation, apparently according to all but -- the Fed.
Headache approaching?
BBC News: Soaring City bonuses 'hit £8.8bn'
If this isn't indicative of boom and bust economics, I don't know what is. Reminds me of the weeks leading up to the economic 'downturn' in the late 80s, which was greeted with the famous Evening Standard headline, "The Party's Over". Amen to that.
Relentless...How about a 0.5% IR rise!!!
Reuters: Mortgage approvals highest in 2-1/2 yrs
Mortgage approvals hit their highest level in 2-1/2 years in September in another sign this summer's surprise interest rate hike has done little to cool the housing market and paving the way for a hike next week. The Bank of England said on Monday approvals for home loans stood at 126,000 last month, up from 120,000 in August and the highest since February 2004.
House price gains vs. Stock market
Home.co.uk News: House prices thrash stock market rises
In this VI inspired report we are shown just how wild house price rises have been relative to share price rises over the last ten years. Aren't they just saying that HPs are expensive and shares are relatively cheap now and will probably give better returns than property? Quote: "However, prices increases seen in the past decade are unlikely to be repeated in coming years because of affordability constraints. House price growth closer to earnings growth seems a more likely trend." So shouldn't investors should look elsewhere?
Guardian House Price Poll
Guardian Online (this morning): Business Poll
Guardian running a poll in their business section asking if current house price boom sustainable - 84% so far voted NO
UK Mortgage Approvals at 2 Year-High and likely Rate to Follow...
Financial Times: UK Mortgage Approvals at two-Year-High
The number of mortgage approvals in September were at their highest in more than two years, the Bank of England said on Monday, reinforcing expectations its monetary policy committee will increase interest rates to 5 per cent next month. Reports Jamie Chisholm, Economics Reporter Published: October 30 2006 10:37
Stating the obvious. Property is too expensive for many.
BBC: Property 'out of reach' for many
Cutting edge research shows that property is too expensive for many, in fact 17 million people cannot afford to or do not want to buy property.
Mortgage Fees Rocket
Independent: Arrangement Fees: Get the sums right, and it can pay to spend £1,999 on a mortgage
The cheapest home loan rates are carrying ever-bigger price tags - in the shape of vertiginous arrangement fees. For example, a competitive two-year fixed-rate deal from Abbey, with interest charged at 4.45 per cent, now has a £1,999 fee; ditto Birmingham Midshires' two-year fix at 4.49 per cent.
Europe Faces Infection From U.S. Home-Price Fall
bloomberg: Europe Faces Infection From U.S. Home-Price Fall: Matthew Lynn
Oct. 30 (Bloomberg) -- In the last decade, real-estate prices in Europe have moved in one direction -- up. That may be about to change. In the U.S., a booming property market has stalled. Plenty of people think it may be facing a full-scale crash. If that happens, it would be complacent to assume that Europe could avoid the fallout.
These figures are damning...
Firstrung: First rung out of reach for 17 million first time buyers
At least 17 million people in the UK are unable to get on the property ladder, according to research released from Abbey today. Abbey estimates that 17.3 million people are excluded from the housing market, with approximately 7.4 million blaming prices as one of the main reasons.
U.S market trends
macromavens: US plots
I know its the US again but this report is full of data that is comprehensive and well graphed. No opinions so you can make your own and this is from July!
bull market this autumn is just a suckers' rally
The Telegraph: Paulson re-activates secretive support team to prevent markets meltdown
Monday view: Paulson re-activates secretive support team to prevent markets meltdown Judging by their body language, the US authorities believe the roaring bull market this autumn is just a suckers' rally before the inevitable storm hits.
Affordable Housing Protest
World Socialist Web Site: Spanish protests demand affordable housing
500 people demonstrate in Barcelona about unaffordability caused by the housing bubble... I don't know why they don't adopt the wording of our very own Serious Organised Crime and Police Act 2005, Section 132: Demonstrating without authorisation in designated area, (1) Any person who- (a) organises a demonstration in a public place in the designated area, or (b) takes part in a demonstration in a public place in the designated area, or (c) carries on a demonstration by himself in a public place in the designated area, is guilty of an offence ...
House prices up slightly, headed for 5% rise for 2006
Firstrung: House prices up 0.4% in October but could be dented by a flood of potentially over-priced properties coming to the market - Hometrack
UK house prices rose once more in October, a survey from Hometrack has revealed, however, the gain was driven by the continued strength in London's property market. Property consultant Hometrack said house prices rose 4.9 percent year on year, prices were 0.4 percent higher than in September, ( the monthly figures are not adjusted for seasonal factors). The data adds further evidence that August's rise in interest rates to 4.75 percent has not dented overall confidence in housing market activity and commentators will point to the now certain rise in interest rates in November when the MPC next meets.
Looming Consequences of Global Economic Imbalance
Gold Seek.com: An Unstable Dollar Standard
A discussion by a lecturer of the Austrian school of economics, Hans Sennholz, on what may be required to adjust the currency imbalances between the USA and Asian countries and whether or not this adjustment process -- which is predicted by some to be gradual and by others to be catacylsmic -- will drag the rest of the world into ultimate financial crises -- or not. In any case, he says that what happens to the USA economic balance realistically affects all. Big implications for HPC? Place your bets ladies and gentlemen.
Sunday, October 29, 2006
Banks throwing money at FTBs
This Is Money: Lender offers over 7.5 times income to mortgage borrowers
Pretend you are a mortgage broker and plug your details into this calculator here. Depending on your income, and the interest rate available you can be offered anything up to 7.53 times income. Fantastic? Ludicrous? Criminal? You decide. The calculator is hosted by First National, part of GE Money. Fascinatingly, GE's blurb contains the following: "An interest-only mortgage must be backed by an adequate investment vehicle." Ah. So that means that out of the 30 per cent of their income that remains after paying the mortgage interest bill, this couple needs to find money sufficient to invest in a vehicle that will produce a lump sum to pay off their £376,506 mortgage capital debt. Good, prudent advice from GE Money. Question is, what would that leave them to eat?
"Never, never never ever...
Times Online: Getting at the cash in your buy-to-let
...sell an investment property" That's what the salesman said at a free property investment seminar I attended.....I won't mention the companies name.....but it certainly wasn't a company called "outside lane". "Did you know that equity release is a tax loophole....a sort of untaxable 'directors dividend'" he also said. Well here we have a company promoting such wise words and all at the bargain price of 6.75% componded. You can almost here the VI community now: "If we can only persaude the crowd to hold at whatever cost, the house of cards might prevent toppling"
House prices aren't overvalued after all
Sunday Times: House prices just keep on flying
A round-up of the past year's housing market and some predictions for the year ahead. Lombard Street Research predicts rises of 12-14%, despite bank rates rising to 5.25%. Low interest rates and high population growth (partly immigration) to blame. Read it and weep. No mention of any counter-arguments, such as the fact that in most areas it's actually cheaper to rent than to buy....
Wage inflation creeping up
The Telegraph: Wages everywhere are rising too fast
Across the economy, though, wages are now going up too fast. In fact, it could well be wage inflation – and in particular a nasty pay round in January – that sparks real concern about inflation more broadly. And over the coming six months that could force interest rates up to levels that cause real pain.
Soldiers to avoid council tax...
Firstrung: Council tax exemption for armed forces
Soldiers on the frontline duty in Iraq and Afghanistan will not have to pay council tax under plans to be unveiled in the New Year according to the Daily Mirror. Chancellor Gordon Brown has apparently ordered officials to work out the cost of the move, which is backed by Tony Blair.
Beware botched jobs done by mates
Firstrung: First time buyers and home improvers gamble by getting friends and family in on the job
A generation of first-time buyers is in danger of risking quality and safety by cutting corners when it comes to home improvement. Research published today shows 218,000 (58%) of new UK homeowners admit to calling in friends and family to do work such as electrical, roofing or plumbing jobs on their home rather than calling trained professionals. This puts homeowners at risk of botched jobs, wasted cash and even injury - not to mention ruined friendships
Oh - Rich Homes Owners Get Hit - Sad ...
Torygraph Online: Council tax to soar 300% for homes in nice areas
I almost cheered when I read this. How often have I had to put up with my property owning friends boasting how rich they are and how clever they are to have earned this wealth by ... sitting on their bottoms and doing nothing. “I’m currently paying just over £1,000, but in 2007-8 my bill is going to go up to nearly £4,000,” said Mr Kelly. “I get by on a civil service pension of £100 a week – how am I supposed to afford it?” Well, clearly you need some financial education because no civil servent I know will retire on a pension of £100 per week. (And I have to work with the idle lot). Secondly, Mr Kelly has "benefitted" from the increasing value of his home, so YEP - you get to pay for that benefit. So, SELL up and ADD to the list of factors required to precipitate a HPC. Golly: Raising the burden of tax upon the rich is a new concept for this Glubberment. Some friends only bought their home in the SW because it was what they could afford, have bored me for years. They are on the financial edge and this could push them over. I wonder how many others are in this boat.
Saturday, October 28, 2006
Speech About Long Term Interest Rates.
Bank Of International Settlements: WHY HAVE LONG-TERM INTEREST RATES BEEN
Why have long-term interest rates been so low? Is the Global Interest Rate Cycle beginning to turn? This is a bit above my head but interesting regardless.
Banks continue to prey on the foolhardy
Guardian: Lenders increasing mortgage amounts
Two more mortgage lenders are increasing their lending multiples. Bristol & West and Bank of Ireland Mortgages (both part of the Bank of Ireland group) will now lend a single applicant up to 4.5 times his or her income - previously the standard "multiple" was four times income, and let couples borrow four times their combined income. In some cases they will even let a couple earning £60,000 between them get a loan of up to £270,000.
Coming to a country near you !
Independent: Housing slump hits US economy growth
Growth in the US economy slowed to its weakest pace for three years over the summer, according to official figures that triggered a drop in share prices across the world. The slowdown was driven by a slump in the housing market. The report showed that spending on new housing contracted by 17.4 per cent, the biggest annual decline for more than 15 years.
Quick! Last chance to get on the Titanic
This is Money: The soaring cost of your home
Rocketing house prices have left the average British home costing 187% more than it did when the property market began its recovery a decade ago. The cost of homes in Britain has leapt by 187% since 1996. A new report by Halifax showed that the average UK house price has risen from £62,453 at the start of 1996 to £179,425 now – rising by 10.6% a year.
House prices boom in last decade
BBC News: House prices boom in last decade
Economic growth since 1996 has fuelled house price increases averaging more than 10% pa (double the rate of earnings inflation)
Friday, October 27, 2006
Oil and housing put brake on US growth
FT: Oil and housing put brake on US growth
US economic growth slowed to an annualised rate of just 1.6 per cent in the third quarter of 2006, figures revealed on Friday, as a brutal correction in housing construction and an oil-fuelled rise in imports dragged down economic activity.
Houses cost too much!
Mortgage Solutions: House Price / Income Ratio 60% Worse Since 1970
The ratio of house prices to income has shot up 60% since 1970, according to the Alliance Trust Research Centre. The ratio has worsened most in London, East Anglia and the South West, where it increased by 66%, 65% and 63% respectively. London is the least affordable region for today’s first time buyers. House prices in the capital are now 4.4 times income, against 2.6 times in 1970. The South East, where the ratio has climbed to 4.3 times income from 2.7 times 35 years ago, is the second least affordable region.
How to raise more council tax.
THE BEST PLACE TO LIVE IN HULL: Hull Daily Mail
Saw this yesterday in our local rag, now any body who knows Hull will know Kingswood is the cheapest place to buy a house, and there is a good reason for that. Placed between 2 council estates with burnt out cars, and murders gallor, etc. But yet claims to be the best place to live in Hull. My theory, this table was produced by the council for -> Make house prices rise, receive more council tax. Simple!!
Rates to reach 5.25%, UK saving only 4% of income
Firstrung: Bank of England needs to raise interest rates to 5.25% to reach inflation target - NIESR
Inflation should fall back to the prescribed target by the end of next year if the Bank of England raises interest rates by another 50 basis points, the leading think-tank, NIESR has stated today. Financial markets were already gearing up for a quarter-point rise in borrowing costs to 5.0 percent in November and are starting to price in another rise early next year as policymakers have continued to stress their determination to keep prices and inflation under control.
Problems in US housing Market
Financial Times: US House Price Fall Steepest Since 1970
Prices for newly built American homes have suffered their largest drop year-on-year since 1970, according to data released yesterday, highlighting the dramatic nature of the downturn of the US housing sector.
BoE worried about HPC rather than inflation
Bloomberg: U.K. Home Shortage Keeps Property Market Ablaze as Rates Rise
Rates at 5.5 percent might be enough to slow the rest of the economy, but not property,'' said Peter Spencer of the Ernst & Young ITEM Club in London. ``The housing market is going to keep on chugging.'' While Britain's house-price boom has helped fuel economic growth, it also creates headaches for the central bankers as consumers borrow against the rising value of their homes to spend more. With consumers shouldering a record £1.25 trillion of debt, the housing market's importance to the economy may deter the Bank of England from clamping down too quickly. A speedy increase in rates might drive the investors and speculators who are helping fuel the boom out of the market.
The end of cheap money signals the end of the house price bubble
Daily Mail: Mortgage lenders axe cheap deals leaving homebuyers 'crippled'
Homebuyers face being crippled by their mortgage repayments as Britain's biggest lenders are axeing their cheapest deals, experts warned.......
The economic effects of large scale immigration
Daily Mail: British workers forced out by Eastern European migrants
Tens of thousands of Britons have been forced out of work because of the arrival of a wave of migrant workers from Eastern Europe, experts warn. Authoritative new research suggests almost 100,000 people have become unemployed as a result - though even that may be a significant underestimate......... Wage growth is being held down because more people are looking for jobs, meaning employers do not have to be so generous to their recruits. That is good news for borrowers because it allows interest rates to be kept relatively low. But on the other hand, "wage earners may feel that migration makes them worse off" because their salaries appear to be static, the report said.
The end of cheap money signals the end of the house price bubble
vonm@yahoo.co.uk: Mortgage lenders axe cheap deals leaving homebuyers 'crippled'
Homebuyers face being crippled by their mortgage repayments as Britain's biggest lenders are axeing their cheapest deals, experts warned.........
UK CPI inflation
AFX News: UK CPI inflation seen 2.6 pct in Q4; 2 more rate hikes needed in Q4, Q1 - NIESR
LONDON (AFX) - UK CPI inflation is set to remain well above target during the fourth quarter, necessitating another two rises in interest rates by early next year, while economic growth remains around its trend rate, a leading UK think-tank said.
US housing bust coming to an end?
CNN: Greenspan: Housing slump spares economy
Former Federal Reserve Chairman Alan Greenspan said Thursday the U.S. economy was pulling past a sharp housing sector downturn. Turning to the U.S. economy, he said it had gone through a very weak patch during the summer, due to an accelerating decline in housing construction and a slowing pace of inventory building. But the outlook was now "reasonably good." "Most of the negatives in housing are probably behind us," Greenspan said. "The fourth quarter should be reasonably good, certainly better than the third quarter."
Thursday, October 26, 2006
Does Tuffers know?
Firstrung: FSA order huge fine against Loans.co.uk for failures selling payment protection insurance
The Financial Services Authority (FSA) has fined Loans.co.uk Limited (LCUK) £455,000 for failing to treat its customers fairly when selling Payment Protection Insurance (PPI). The regulator found that LCUK did not have appropriate systems and controls to minimise the risk of unsuitable sales.
ECB talk hawk
Business Week: ECB president wary of inflation
Jean Claude Trichet talks of further tightening. Does the ECB only meet every 3 months? Only time will tell if he's talking hawk or crying wolf....
US House Prices show largest fall for 35 years
Yahoo Finance: Home Price Drop Is Largest in 35 Years
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970.
US House Prices Plummet
New York Times: Home Price Drop Is Largest in 35 Years
The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
Bulgaria investment plans lie in tatters
Firstrung: Property investment returns in Bulgaria have fallen by over 70% due mainly to over development - Assetz
Bulgaria has suffered a dramatic change of fortunes in recent months, with the annual rate of capital growth plummeting from a remarkable 36% in 2005 to 13.9% in September 2006, and possibly set to fall further. Some areas, such as the Blagoevgrad District including the Bansko ski region, actually experienced price falls in the second quarter although these recovered in the third quarter. The oversupply of apartments has created fierce competition for rentals, even in the face of quickly-growing tourist demand, which is being aggravated by reported poor management from local agencies. Overall the return on cash invested has dropped from 116% in 2005 to just 35% for the year up to the end of September 2006
Councils get green light to fleece us with more taxes
BBC: Councils to get fresh law powers
Town hall pensions and perks are guaranteed by extra tax raising powers. Council tax payers have to struggle and have more stupid laws to worry about in return.
After the crash, things might be different next time
www.progress.org: After the Housing Bubble Bursts, Fix It!
I might be getting ahead of myself but for those interested in economic theory this article presents "geonomics" as a way of avoiding the extreme housing booms and busts in the future. Geonomics replaces taxes with land dues and replaces subsidies with rent dividends. Once implemented, geonomics changes the dynamics of the land-price cycle and the whole economy. To pay the land dues, owners use their land efficiently; owners who had been speculating get busy and develop. No longer allowed to tax anything that moves, local governments, too, which presently let acres of abandoned urban land and buildings lie fallow, get busy, too, and make sure to get those acres into the hands of ambitious owners who’ll pay land dues. More locations put to use and more buildings put up increases supply, which dampens price.
Will US housing have a soft landing?...And are hard landings in store for the UK and Australia?
MoneyWeek: Will US housing have a soft landing?
The US housing slump seems to be worsening. September saw sales of existing US homes fall at an annual rate of 14.2%. It's the seventh month in a row that sales have fallen. More worrying was the fact that house prices fell 2.2% on last year. That was faster than August's fall, and the first back-to-back monthly price declines in 16 years. But predictably, the realtors and Wall Street like to put a positive spin on these things. Many like to point to the UK and Australia, suggesting that similarly 'soft landings' may be in store for the US. So are they right to be this optimistic?
EU Gives Spain Two Months To Change Land Grab Laws
Place In The Sun: European Union Gives Spain Two Month Ultimatum Over Land Grab Laws
Spain's faltering housing market isn't being helped by the adverse publicity surrounding its land grab laws. Now the EU has given Spain its second and final warning before taking the country to the European Court over its land grab laws that have brought misery to thousands of property buyers, particularly in the Valencia region of Spain which includes the Costa Blanca. Buyers beware!
More Money In Property Abroad!
MSN: Invest Abroad For Property Profits Today
Well to all those property optomists - get out to countries like France, Australia, and the rest, to get profits in property - is this an admission that the UK looks over cooked??
Gordons, dept economy still on track!!
BBC News: Brown upbeat on UK growth outlook
The UK economy is set to surprise people who thought that 2006 would be "a period of low growth", Chancellor of the Exchequer Gordon Brown has said.
More IR warnings
The Independent: Jeremy Warner's Outlook: Excess liquidity keeps stock markets riding high, but what happens when it's withdrawn?
Periods of economic expansion rarely die of old age; instead, they are killed off by the anti-inflationary actions of central bankers. That threat has by no means gone away. Indeed, it may be more potent now than it was when these fears last got the upper hand back in May.
6% UK IR mentioned again
The Independent: Hamish McRae: If the US needs rates at 5.25% to check its housing market, what will it take in Britain?
People are more likely to borrow money if they think they will be paying back the loan in devalued currency A pause or a turning point? The Federal Reserve board duly decided last night to keep US interest rates at 5.25 per cent. The interesting issue, however, is whether this level will prove the peak of this interest rate cycle or will turn out to be a pause on the way to still higher rates.
Wednesday, October 25, 2006
US housing sinking faster and faster
advfn: US housing decline
Latest figures show biggest year on year decline in 40 years
Prices to rise by ONLY 34%
BBC News: London faces 'housing timebomb'
The average price of a London home is expected to rise to nearly £400,000 by 2011, a new study has suggested. House prices are set to increase by 34% over the next five years, said the London Housing Federation's report.
Overdrawn by a quid?
Firstrung: Overdrawn £1 for 1 day - how much will this cost you? Moneyfacts.co.uk investigates
Lisa Taylor, analyst at moneyfacts.co.uk, takes a look at how fairly customers are treated by their bank if they miscalculate and use an unauthorised overdraft. "Following the OFTs 'success' at reducing credit card default fees, they are now in the process of focusing their attention on similar penalty fees within the industry, with its next target set to be current accounts. But if the credit card market is anything to go by, this lost revenue will not be taken lying down, with providers searching for alternative methods to recoup this income.
Noose tightening!
BBC: Banks 'may raise overdraft fees'
Bank customers have been warned by financial information firm Moneyfacts that they may soon face stricter charges on unauthorised overdrafts. Lloyds TSB has announced that from 1 November it will no longer give customers a £50 "buffer" if they accidentally slip into the red.
London house prices will continue to outpace London salaries
Home.co.uk News: London house price 'timebomb' warning
London’s average housing price is set to soar by 34% over the next five years, reaching £400,000 by 2011, according to figures released today by the London Housing Federation. As a result, the federation warns, London is sitting on of a ‘housing timebomb’ with the gulf between house prices and salaries growing wider than ever.
I'm starting to think 'Would I actually want a house now?'
BBC: Tories warn over home inspections
People who refuse to let council tax inspectors into their homes could soon be fined £1,000, say the Conservatives. MPs are discussing new powers for inspectors in Northern Ireland, as part of the revaluation of its rates system. It could pave the way for English tax payers to be forced to admit inspectors checking on features which could increase house values, the Tories say.
GDP and Wealth ?????
Daily Reckoning: Big holes, big GDP, more wealth?
An interesting and amusing view of GDP and the falseness of modern housing wealth. "We mentioned yesterday what happens when a man pays someone to cut his lawn for him. If he did it himself, the GDP would remain the same. If he pays a neighbour to do it, the GDP goes up."
The other edge of the global sword...
BBC News: Australia braced for higher rates
Inflation is higher than expected in Australia and as a result an interest rate rise is imminent, more high rate talk.....
Don't panic the Tories will save us..honest..
Firstrung: How the Conservatives will help more people get onto the first rung of the housing ladder
Conservatives have accused the Labour Party of pricing a whole generation of low and middle income earners out of buying a family home - and in response have heralded a change in Whitehall rules to encourage the construction of more new houses with bedrooms and gardens for families - in place of dense blocks of flats.
The 'excitement' of the property market gamble
icNewcastle: Investors turn away from 'boring' cash
Millions of pounds of North-East property have changed hands in the biggest sale by a London auction house. Auctioneer Mr Walker said the outlook for interest rates had failed to dent private investors, who were riding high as the stock market hit record levels.He said: "Investors have done well out of property in the last few years. They see cash as boring and are saying, `Why put money in the bank at 4% when I can get 5% or more in property'?". Mr Walker said investors were "eliminating risk" as a consideration in the prices now being paid for commercial property at auction. He said: "People are buying on yields that are factoring in an expectation of further rental or capital growth. Four or five years ago, nobody would buy at yield equal to the borrowing rate, but people seem happy to buy and don't perceive the same risk as there has been in the past. "Whether or not they are right to do that, I wouldn't like to say."
Buy to let 'appetite' shows no signs of weakening
Firstrung: Buy to let landlords continue to invest based on stable yields and double digit returns
Buy-to-let investors are continuing to purchase additional rental properties, attracted by stable rental yields and strong overall returns generated by their investment portfolios. There has been no let-up in investor activity following the Bank of England's decision to raise interest rates in August, despite some concerns that rising borrowing costs might dampen activity in the housing market generally...
Still looking good for November...
Times Online: Inflation warning signals a probable rate rise
GLOBALISATION will make it harder for central banks to quell inflation, forcing them to act more aggressively to do so and making it more crucial that they act quickly to stem any sustained pick-up in price pressures, the Bank of England’s chief economist said last night. In a speech that will harden expectations that another interest rate rise next month is near-certain, Charles Bean set out a series of effects from globalisation that meant that inflation was now less affected by changes in the domestic economy’s growth rate
Is Britain really booming?
The Guardian: Cloistered metropolitan elite in denial about Britain
At the risk of sounding hopelessly pious, it's worth repeating some statistics: not just the fact that 12 million Britons live on or below the poverty line, defined in the case of a two-adult household at £180 per week, but some rather less-quoted numbers. In August unemployment hit a six-year peak of 1.68 million, spurred on by a big fall in the number of manufacturing jobs, now at an all-time low. Contrary to the idea that buying in and trading up are within everyone's reach, one in three of us still live in rented accommodation; according to the Joseph Rowntree Foundation, a third of all working households containing people under 40 "cannot afford to buy even at the low end of local housing markets" Thanks to crash-and-burn in the forums for this link
Tuesday, October 24, 2006
Many US Families Living One Paycheck Away from Disaster
MSN News: MIDDLE CLASS LIVING ON THE EDGE
The worrying practical analysis -- and one becoming all too familiar --that says there is "unprecedented" financial pressure on a growing number of middle class families who live "passing each other in the driveway" just to earn enough to meet basic expenses. Households are gradually losing their grips on economic security and, with little or no savings, finding themselves less likely than ever to withstand a financial crisis of illness or unemployment. Not so different it seems from their British cousins.
Fred Harrison on BBC Radio Five Live
Radio Five Live: ‘Boom and bust’ man disagrees
In contrast to our top story today we bring you news that boom & bust man economist Fred Harrison doesn’t think there is a soft landing at all – it will all end in tears with a damaging crash in – well – maybe 2010.
Land Registry launch Independent House Price Index
Politics.co.uk: Land Registry launch Independent House Price Index
This month (31 October 2006) Land Registry launches the first official, independent House Price Index (HPI). Using Land Registry’s comprehensive property data, the new seasonally-adjusted index will appear monthly, making average house prices available at national, regional, county and London borough level.
The Flood Gates Open
BBC: Reid outlines new EU work curbs
Loads of loop holes in the curbs on the Romanian and Bulgarian invasion next year so that we will be well and truly swamped. House prices will be pushed up as a result.
Yes Minster, tell us something we don't already know
Firstrung: Housing Minister sounds warning on future affordability for first time buyers
Yvette Cooper said: "If we don't build more homes less than a third of today's ten year olds will be able to afford a place of their own in twenty years time. Helping our towns and cities that want to grow can make substantial difference in delivering the new homes we need. "This gives local areas the chance to provide more jobs and homes with higher design and environmental standards too." New Growth Points will help to concentrate future growth at existing urban centres and present a significant opportunity for the new communities to become exemplars of sustainabilty by pioneering eco-development and encapsulating high design standards in parallel with meeting the housing needs of local communities.
My Home is my Other Pension
Lincoln UK: My Home is my Other Pension say 7.6 million
...or my only pension as seems to be the current vogue amongst the financially illiterate. “Of course it can be difficult building up other savings while paying off your mortgage and also investing in a pension. But it is potentially risky to believe that your home will provide for your retirement if your pension is not sufficient."
The HIP still on its way..
Firstrung: Buying with home information packs gets resounding vote of confidence
At the latest HIPs conference the audience and panel, made up of both leading proponents and opponents of the packs, unanimously said YES, they would prefer to buy a home with a pack.
The trade cycle
Googled: mechanism "expansion of credit": The Austrian Theory of the Trade Cycle
Interesting quote "If, on the contrary, the banks decided to halt the expansion of credit in time to prevent the collapse of the currency and if a brake is thus put on the boom, it will quickly be seen that the false impression of 'profitability' created by the credit expansion has led to unjustified investments"
Wish I'd bought shares early!
BBC: Boomtime for debt management firm
The debt management company Debts.co.uk has reported a 62% jump in its annual profits to £2.1m. The company is one of several that specialise in setting up individual voluntary arrangements (IVAs) for people who cannot pay all their debts. The sector is growing rapidly, and Debts.co.uk said annual sales rose by 79% to £6.1m in the year to 31 July.
Commercial property sell-off
Ft.com: Investors go in one door and out the other
Large institutions and fund managers have released a lot of commercial stock in the last couple of years. Although the Swiss-Re "Gherkin" tower is up for sale, I wouldn't buy it! Yields have been appaling low for a while but may be as low as 0.2% above risk.
High fuel bills panel
BBC News: Inflation, what's that again?
British household gas and electricity bills have almost doubled in the last three years and now total more than £1,000 a year on average. Six people tell us how they are coping.
More on buying a house with friends
ThisIsMoney: Club together to buy a home
Clubbing together to buy property with friends is an increasingly popular way round the problem. HSBC bank says it has seen a 50% rise in applications for group mortgages. The most important aspect of a joint mortgage is that it is offered on a 'joint and several liability' basis. This means that all the borrowers are equally liable for repayments on the mortgage. If one borrower stops payments for some reason, the remaining borrowers are responsible for the shortfall. If someone wants to sell their stake, the other owners can choose to buy them out at the market value, or another buyer can be found. In these cases the person leaving will have their name removed from the mortgage. If a buyer cannot be found and the other co-owners cannot afford to buy out their friend then the lender may force a sale of the property.
Oooooh, but in Bulgaria why don't you....
MSN: Emerging property hotspots – a buyer's guide
I forget who it was who said he survived the 1929 Wall Street Crash because when the bellhop had started giving him stock tips in the weeks prior he knew it was tip to get out. These days bellhops seem to have property shows on C4 and columns for MSN. But they've been saying daft things for years and still..... Nevertheless when people are writing articles on buy to let in Bulgaria then doesn't that say to you things have gone seriously awry? Don't know about you but I'm getting fed up screaming 'The Emperor's got no clothes'....
Amex Slashes Cardholder Rates
This Is money: Amex Slashes Cardholder Rates
Amex has slashed the rates of thousands of cardholders, in some cases without warning. Could this be due to the increase in bad debts forcing an attempt to reduce losses?
Monday, October 23, 2006
Banks under fire for lack of online security
Firstrung: Despite warnings four out of seven major banks fail to patch their security problems
Four out of seven on-line banks have failed to secure their sites after being alerted over a month ago by Heise Security to serious security issues on their web pages for online banking. On 20th September heise Security published an article, demonstrating that many on-line banks were taking too few precautions to protect their customers from phishing attacks. Some have reacted positively to this and improved their sites, but others seem to have made no changes to their sites, and the responsibility for avoiding phishing scams is still left entirely with their customers.
Flavour of the month .........
The Telegraph online: Toxic loans that threaten us all
Remember those big tubs of Neapolitan ice cream - the ones with the three fat slices of chocolate, vanilla and strawberry flavours? Well, believe it or not, those tubs can tell us a great deal about the housing market.........Once again an interesting article from Mr. Conway. Let's just hope the whole damn ice cream doesn't just 'melt down' ......!!!!!!!
Higher rates in the States?
Bloomberg: Dollar Advances on Speculation Fed Will Highlight Inflation .
Money markets are gambling on further rate rises in the US, and you know what that means for us...
Raise the Interest Rate says Ernst and Young
Home.co.uk News: Rates must rise to check house price inflation
Great article on how inflation fire fighting must get cracking. “However, interest rates need to be raised again in November to stop credit expansion and asset price inflation spilling over into excessive demand and inflation. If house prices continue to accelerate, interest rates will have to rise further in 2007.”
When property investment goes bad.
USA TODAY: 10 mistakes that made flipping a flop
A cautionary tale from the US on how wrong it can go for inexperienced property investors.
MoneyWeek continues to see the case for higher interest rates
MoneyWeek: How to profit from higher food prices
An analysis of rising food stuffs will result in higher inflation, even though food is not a "core" item - people need to eat and so will demand higher wages. There are hooks into the great debt debate too.
80% of borrowers opt for fixed rates. Cheaper mortgages mean more home buyers keeping confidence in the market high
Firstrung: More buyers and competitive fixed rate mortgages continue to propel housing market - propertyfinder.com
A large new wave of homebuyers shrugged off the August interest rate increase and entered the home buying market in September and October. According to Propertyfinder's October survey 56% of home buyers had been searching for a month or less - up 8% from 48% in July.
Housing Slump in U.S. Poised to Worsen
Housing Slump in U.S. Poised to Worsen, Derivatives Trades Show: Bloomberg
The slumping U.S. housing market is about to get a lot worse, according to traders of mortgage-backed securities and the so-called derivatives on which they are based. The ABX index, which measures the risk of owning bonds backed by home-loans to people with poor credit, rose 30 percent since Aug. 9 to the highest since January. There are more than $500 billion of such notes outstanding.
Sunday, October 22, 2006
Stuff Like This Is Despressing BUT ...
Times Online: First-time buyers left stranded as house prices rise by 11 per cent
A depressing article for potential FTBs like me. However, the titainium shield of high house prices, economic performance, might have a crack in it afterall. See "The result is record prices but on a low turnover, as fewer homeowners can afford to trade up, which “is sustainable unless there is a serious economic downturn” meaning when there is a recession, house prices will not be sustainable. Roll on the recession.
Item Club Model Predicts Interests Rates Steady at 5% Due To Immigration
Item Club warns of £4bn black hole: The Groinean
Item Club uses the same economic model as the Treasury and predicts Interest Rates will not rise above 5%. Various reasons given but notably immigration will keep wage demands lower then otherwise.
Inflation - New car running costs 'rise £500' or 10%
BBC: New car running costs 'rise £500'
While we are told tha inflation is below 3%, we get more reasons to believe that inflation is much higher. Yet another example - car running costs. 10% increase in one year. What else you can say. Do we need to have shadow government which does serious job for people, not for government itself? What is really really real inflation?
FTBs a hot topic in the media this week as usual
Firstrung: Firstrung, first time buyers - the week in focus 22/10/06
Another interesting week for first time buyers? We'll let you be the judge of that statement. What is undeniable is that the subject of first time buyers has never been hotter. This weeks hot topics: At least 300,000 homes empty for over six months, the majority suitable for first time buyer occupation after refurbishment. Rightmove reporting asking prices up 2% in a month, 0.2% over the past quarter. Halifax report, suggesting Rightmove's conclusion that Chelsea and Kensington prices have risen by 66%, debunked by superior data from Halifax suggesting the rise is in fact only 2% YoY. Firstrung condemns the CML stats on first time buyers, they admit they simply 'create figures'. Northern Ireland prices explode over past year by up to 33%. Co-buying, if you can't afford a house why buy a quarter of something you can't afford? Industry warning over "insane" FTB salary multiples
Ireland and Spain are highest risk says Deutsche Bank
Deutsche Bank Research: US house prices declining: Is Europe next?
Strong price rises on most European housing markets. In the last ten years, house prices in Spain increased by 150%, in the UK even by 200% and in Ireland by as much as 300%.
Hamish Macrae - Independent - What planet is he on?
Independent: The mountain top is shrouded in mist: could rates have some way to climb?
"The Bank of England must try to avoid a housing bubble" This Guy's an A1 jerk. A reasonable article totally spoilt by denial of the most obvious factor regarding house prices. He obviously didn't watch the "Tonight" programme on Friday.
Saturday, October 21, 2006
.. The nation is blind to the risks ... Mad ...
The Scotsman: Savings slump deepens, with few looking to retirement
... the proportion of people saving has fallen over the past three months, but confidence in property as an investment class continues to be high. ..... of those saving regularly, only 46 per cent are salting cash away for their retirement. The majority are still looking to fund the short-term gratification of holidays and home improvements. But consumer confidence in property continues to grow. Buy-to-let property has jumped in popularity for investors, increasing by 23 per cent in the last three months. That makes it the second most popular savings class after consumers' own homes. The popularity of equities continues to fall ..... This suggests that, while people are prepared to take more of a risk by investing in property, they are reticent about taking on a higher level of volatility.
US house prices forecast drop
In2perspective: US house prices at "tipping point"
Will it be the same in the UK?
Where's the supply shortage?
Daily Mail: Controversial law means 300,000 homes could be repossessed
Three hundred thousand homes have been empty for at least six months, leaving them open to being commandeered by local councils. New laws, which came into effect in the summer, mean a property left standing for long periods can be grabbed for the homeless...
America's sneezing
Financial Sense Online: Dream Homes and Mortgage-Debt Nightmares
Sound blog analysis of the current state of play in the US housing market. Can the Fed hold it together until after the mid-term elections?
What a waste...
Firstrung: 300,000 potential first time buyer homes left vacant for over six months - Halifax report
New Halifax research highlights that there are 290,862 private homes in England that have been empty for more than six months, the government's preferred measure. This is equivalent to 1.6% of all privately owned dwellings in England. The number of private empty homes has fallen by 6% in England over the past three years.
Friday, October 20, 2006
ECONOMY GROWTH MAKES RATE HIKE 'A DONE DEAL'
The Independent: ECONOMY GROWTH MAKES RATE HIKE 'A DONE DEAL'
Interest rates were given another nudge towards 5 per cent today after it emerged the UK economy expanded by 0.7 per cent for a fourth quarter in a row. The provisional GDP estimate was 0.1 per cent higher than most forecasts, leading analysts to describe a hike in borrowing costs as a "done deal" when Bank of England policymakers meet on November 8 and 9. Reports Graeme Evans PA in the Independent 20Oct06
Chelsea up 66% year on year? Er no, more like 2%
Firstrung: London house prices on a different planet? Look again...
Kensington and Chelsea prices are actually up by only 2% year on year according to this survey, now taking the average price to £630,794. So you don't need the widely publicised million pounds to live in these areas after all, still what's a glitch of 400K, or 64%. The report still manages to disappoint with tired cliches in the form of "Olympic affect" quotations, apparently the growth in prices in Tower Hamlets owes nothing to the proximity of the area to City workers and the boom the banking industry has experienced over the past year
The MPC may be more independent and cleverer then previously thought
MoneyWeek ;-): Why the Bank of England is turning more hawkish
A summary of the UK's economic situation which suggests an Interest Rate hike in Nov 06 might not be the peak of the cycle. I would be grateful if "NpHPC" read this one and comment.
Going Green on Aviation
Guardian Online (this morning): UK seeks early entry for airlines in EU green plan
This gov going green on aviation to try to keep up with Cameron...........the point is an awful lot of holiday home owners will be stung badly paying for expensive flights to their weekend pads
Mortgage Misery
ITV1: Tonight with Trevor McDonald
OK, not really a news story, but housepricecrash.co.uk should get a mention in tonight's show. Originally due to be broadcast on Monday 16th, but was pulled at the last minute. "Interest rates look set to rise next month and figures show that hundreds of thousands of people are failing to keep up with their mortgage payments and risk losing their homes. Fiona Foster reports on whether the public is paying too big a price to get on the property ladder - is it time to give up the national home owning obsession? "
Finally credit records might be shared
Out-law: Government wants to allow data sharing on 40 million bank accounts without permission
In a move to counter what it calls the UK's over-indebtedness the DTI wants to share information on 40 million bank accounts to prevent their users borrowing too heavily. It will consult with industry on four plans, two of which involve ordering that debt data be shared.
OPEC aren't about to let oil slide...
Business Week: Oil prices up after OPEC production cut
OPEC have cut production by more than expected and member states have indicated more cuts may be on the cards...
Early rise in interest rates looks inevitable as inflation spreads through the economy
TimesOnline: Consumers recoil at nasty whiff of inflation
Inflation is showing its face in the high street forcing consumers to retreat from the shops. M4 money supply also rose at its fastest pace for 16 years will have MPC members on their toes ready to vote for an immediate rise in interest rates.
Roll up, roll up, buy to let mortgages for anyone..
Firstrung: Buy to let mortgages offered to 21 year olds by Bank of Ireland
The lender's Buy to Let (BTL) proposition has been given a significant facelift, with a range of improvements, namely: rental income has been reduced to 100%, the portfolio limit has been increased from £1.5m to £2.5m, up to a maximum of 15 properties, the max. individual loan is increased from £400k to £500k at 85% LTV, the minimum age has been reduced from 25 to 21, the requirement of 12 months BTL experience for borrowers seeking six or more (or £750k+) BTL loans with the lender, has been removed.
HMO landlords fallen sharply since legislation
Firstrung: Number of landlords who have invested in in multiple occupation houses, HMOs, has fallen sharply
With significant timing, the number of landlords in the Private Rented Sector who have invested in Houses in Multiple Occupation, HMOs, has fallen sharply. This is revealed in the latest quarterly Review and Index published by ARLA. The HMO share of the whole rental sector has dropped from nine percent to six percent over the last three months. This coincides with the requirement to register the properties with local authorities by last July and could represent a loss of as many as 75,000 properties to the multiple sharer market.
Thursday, October 19, 2006
My goodness - a voice of caution ....
MSN: Why student buy-to-let equals debt
Many parents who expect to become buy-to-let millionaires during their children’s time at university are likely to be disappointed. Experts warn that it is a medium- to long-term investment over at least 10 years that needs to be carefully considered.
Mortgage lending up or is it ?
BBC: Mortgage surge fuels housing boom
Down on the previous month - But up on the year. The BBC plugs it for all it's worth
Still no sign of that HPC.
FT: Lex - UK house prices
Residents of London’s Kensington and Chelsea are reported to have the highest life expectancy in the UK. This is fortunate, since they will have many years to enjoy some of the most expensive houses in the country. Property prices in the borough, according to website Rightmove, have risen by almost two-thirds in just 12 months. perhaps not a measure for the rest of the country, but sure looks like every last drop is being squeazed out to try and maintain growth in house prices. - it's only talking about asking prices as covered in other threads. But the comment at the bottom is funny, esp coming from the FT.
Interest Rates due to rise
Guardian Online (this morning): Bank Hints at Interest Rate Rise
Bank hints at rise in interest rates next month despite growing unemployment Larry Elliott and Angela Balakrishnan Thursday October 19, 2006 The Guardian The City was last night preparing for a November rise in borrowing costs after the Bank of England dropped a broad hint that it would shrug off growing unemployment and increase interest rates. Despite the number of jobless benefit claimants hitting a five-year high last month, the minutes of the last meeting of the Bank's monetary policy committee (MPC) strongly suggested that a tightening of policy was imminent. The two new members of the MPC - Andrew Sentance and Tim Besley - voted for an immediate increase in rates to 5%, and the minutes showed that most of the other seven objected to dearer borrowing only for reasons of timing. "Other members placed considerable weight on [the arguments] supporting a further rise in the bank rate, but thought there was no pressing need to raise rates this month," the minutes said. They added that it would be helpful to wait until the Bank's quarterly inflation report before making a decision. The MPC will next decide on rates on November 9. The minutes said the Bank's agents across Britain were picking up evidence of firms seeking to raise prices. A sharp drop in oil costs meant inflation as measured by the Consumer Price Index fell from 2.5% to 2.4% last month. But had it not been for cheaper petrol, inflation would have been 3.1%. Mervyn King, the Bank's governor, is obliged to write an explanatory letter to Gordon Brown when inflation deviates from its 2% target by more than one percentage point. "If any further confirmation that interest rates will rise in November was needed, the minutes to the October MPC meeting provided it," said Paul Dales, UK economist at Capital Economics. "But the subdued tone of the labour market data questions how far rates need to rise thereafter, if at all." Data from the Office for National Statistics showed that the number of people out of work and claiming benefit rose by more than 10,000 in September to just over 960,000. At that rate of increase, the total would pass 1 million early in 2007, but some analysts believe that a pick-up in growth this year will apply the brakes. The broader measure of unemployment - the labour force survey - found that numbers rose by 45,000 in the three months to August, pushing up the jobless rate from 5.4% to 5.5%. Figures for average earnings showed that wage pressure remained muted. Earnings in the three months to August were up 4.2% on a year earlier, compared with a 4.4% increase in the three months to July. Excluding bonuses, average earnings growth eased to 3.6% in the three months to August from 3.7% in the previous three months, the lowest rate for more than two and a half years. The data suggested that soaring utility bills and rising inflation had not yet fed through to wages, but economists said the Bank of England would still be worried about inflation risks. Employment also rose by 120,000 over the three months, taking the total to 29.01 million - the highest since records began in 1971. Yet the number of jobs failed to keep pace with a labour force swelled by immigration and more older workers. "The increasing slack in the labour market should help to contain wages growth and dilute the need for further interest rate hikes after the likely one in November," said Howard Archer, an economist at Global Insight.
Egg Card Sees Bad Debts Rising
BBC News: Egg Profit warning
Yet another lender seeing bad debts rise and people struggling with huge amounts of debt. When will the banks tighten their lending? Will they ever?
IVAs biting the finance sector
FT: Prudential blames IVAs for losses at Egg
Prudential on Thursday blamed an anticipated second half loss at Egg on a 20 per cent increase in individual voluntary arrangements in the third quarter, which the insurer said it had not anticipated when it increased its ownership of the online bank a year ago.
Quarter of FTBs can't get mortgage without parental help
ThisIsLondon: One in four first-time buyers rely on parents to buy a home
Spiralling living costs has led to young first-time buyers relying on "the bank of mum and dad" to get on the housing ladder, according to a report. Research from Skipton Building Society revealed that one in four 20-35 year olds are counting on parents to contribute to their deposit. Jennifer Holloway at Skipton Building Society, said: "Faced with industry figures which put the average cost of a house in the UK at nearly £200,000 climbing onto the property ladder must seem as daunting as climbing Everest.It is little wonder first-time buyers are looking to their parents for financial help. She added: "The reality is that, if you want to be a homeowner, you have to make the most of the money you have. Our advice for young people is to start saving as early as possible - even if it means forgoing the odd night out or new pair of shoes."
Experts surprised by drop in retail sales
BBC: UK retail sales show surprise dip
ONS state that sales fell 0.4% in September from the previous month. "Consumer spending is one of the main drivers of UK economic growth and there have been concerns that it could wane", the BBC report states.
FTBs 'mortgaging future'
Firstrung: First time buyers 'mortgaging their future' with interest only mortgages on ridiculously high income multiples
First time buyers 'mortgaging their future' with interest only mortgages on ridiculously high income multiples. As mortgage lending still increases month-on-month to record levels and property prices continue to defy gravity, do we see any let up or reasons for concern, or are some cracks beginning to appear...Colin Sloss is head of business development at The Exchange..
Warsaw Job Centre Plus Job Fair
British Embassy, Warsaw: Warsaw Job Centre Plus Job Fair
From 18-19 October Urząd Pracy (the Polish Employment Service), in partnership with Jobcentre Plus (part of the Department of Works and Pensions - UK Ministry of Labour), will be holding a job fair in Warsaw. The event will be attended by the British Embassy, Scottish Executive, the Trades Union Congress (TUC) and various UK employment organisations.
Wednesday, October 18, 2006
250 TVR job losses at Blackpool plant.
BBC news: TVR to move car production abroad
Sports car company TVR is to cease production in the UK, with the loss of 250 jobs at its factory in Blackpool.
Dollar, stocks reassured by US housing,CPI
Reuters: GLOBAL MARKETS-Dollar, stocks reassured by US housing,CPI
...investors took heart from strong housing figures...
Economy Broke
Yahoo: Jobless figures worst for six years
Jobless figures looking very bad despite miracle economy
Housing ladder out of reach for divorcees
Firstrung: A large proportion of divorcees never get back on the housing ladder
Divorcees tend to be older - 54 on average - and as such are nearer retirement than these other groups. Carrying a high debt burden at this late stage in working life leaves them much more vulnerable. Divorcees are also twice as likely to be unemployed than their married counterparts - 4 per cent compared to 2 per cent.
Jobless figure worst for six years
Yahoo news: Jobless figure worst for six years
Unemployment jumped by 45,000 to its worst level for six years, even though more people are in work, new figures reveal. A total of 1.7 million people were out of work in the three months to August, a quarter of a million more than a year ago.
Has she been lurking on the forum?
Split decision
BBC: Bank divided over interest rates
7-2 In favour of the status quo - According to minutes
Stagflation on the way?
Daily Telegraph: Black day on both sides of Atlantic
...Janet Yellen, head of the San Francisco Federal Reserve and a leading property expert, warned on Monday that the housing bust was creating "ghost towns" in the worst-hit regions. Mrs Yellen said over 80pc of all homes in pockets of Phoenix and Las Vegas were up for sale. "The market has seized up to some extent. It may not recover for several years," she said. Stephen Roach, Morgan Stanley's chief economist, said the property crash would override the effects of a $120bn shot-in-the-arm for US households from lower energy costs. "There is a much greater chance that global growth will surprise on the downside in 2007 rather than on the upside," he said. The Federal Reserve appears split between monetary hawks and doves, unable to agree whether the greater risk is incipient inflation or a sharp downturn caused by over-tightening. Mrs Yellen said the full effect of 17 rate rises since June 2004 was in the "pipeline".
November rate rise 'certain'
The Times: November rate rise 'certain' as core prices soar
A SHARP rise in core prices and the worsening risk of inflationary wage deals in the new year are likely to force the Bank of England to raise rates next month, despite the sudden drop in the cost of oil.
Price pressures point to interest rate rise - Sept RPI Highest since 1998
Financial Times: Price pressures point to interest rate rise
Price pressures point to interest rate rise An interest rate rise to 5 per cent next month appeared all but certain after the latest inflation figures on Tuesday showed that price pressures are more entrenched in the economy than the Bank of England had thought. The annual increase in the consumer price index in September was 2.4 per cent, down from 2.5 per cent in August, a smaller fall than had been expected. Petrol prices were lower, but prices rose in almost every other element of consumers’ expenditure. The retail prices index rose to 3.6 per cent, its highest level since June 1998, as the August rate rise increased mortgage interest payments, which are included in this index. By Chris Giles, Economics Editor Published: October 17 2006 22:03
Why?, continued imbalance.
Reuters: Just how hot is Britain's property market?
One of the hottest dinner party topics is back on the menu with a vengeance -- but with indicators varying, just how fast are house prices rising?
Tuesday, October 17, 2006
"It really doesn't make sense" - investing in property, that is.
The Scotsman: Low yields see DJ Alexander open the door to single-night tenants
"HISTORIC low yields on investment properties have led one of Scotland's largest independent letting agencies to start offering accommodation for as little as one night", according to the Scotsman. I'm not quite sure what to read into this, but it makes interesting reading.
Global Markets: Not waving but drowning?
MoneyWeek: Why cheaper oil is bad news for the economy
Stock market indices are surging to all time highs, driven by the belief that cheaper crude is just the boost that the global economy needs to avoid a US-led slowdown or worse. It may actually now be leading the economy down into a bust....
SAGA cruises, giving your kids deposits for new builds, or just surviving..
Firstrung: Not saving for retirement is people's biggest money worry
Not having enough money to retire with is people's biggest money worry, meeting monthly expenses is also high on people's money concerns list. This is hardly surprising considering the rises in council tax, gas, electricity and petrol prices faced by consumers this year.
Official CPI inflation stats for month
Bloomberg: U.K. Inflation Held Above Target for Fifth Month (Update3)
Rather unsuprisingly, confirmation that the goods which were offsetting oil price rises are now starting to offset the oil price falls so inflation is much unchanged month on month. Money markets are priced in at 90% for a November rise.
House price reports added up and divided = 8.1% growth year on year
Firstrung: Houseprices continue to climb - October 2006 Assetz
Assetz House Price Watch is the only inclusive summary of the major UK house price indices, providing a comprehensive overview of market activity...The six major UK house price indices show an average of 8.1% annualised growth for the twelve months prior to September 2006. This is a 0.6% increase on the previous month (7.5 %) and a 3.78% increase since the beginning of the year (4.32%).
Deja Vu?
David Wilson Homes: Holiday Offer
Ok, this is not a News article as such, but might be of interest. This is what new builders are doing near us now, we've had the cash backs, now the free holidays, I'm just wondering when they'll be doing the new Sports car. As you can see, new builders are so scared to drop prices to get a sale, there trying all the tricks the Yanks did before they crashed.
Official Inflation figures: 2.4
BBC: UK inflation eases on petrol dip
Apparantly down to 2.4 from 2.5 - RPI inflation (used for wage claims) is up to 3.6 from 3.4
Maggie's Kids or Nu Labour Kid's
BBC: Harsh future for 'Maggie's kids'
This report refers to the tough life ahead for those born between 1980 and 1995 as Maggie's kids but surely the hardship highlighted by this think-tank is the result of Nu Labour and in particular Gordon Browns so called economic miracle as opposed to Maggie's offspring.
First-time buyers (FTBs) will have to wait longer to get on the ladder
TimesOnline: First-time buyers left stranded as house prices rise by 11 per cent
The article just sums up how little thought goes into reports on the property market. Rightmove data would indicate house price inflation (HPI) has returned to double digit growth. The report then states that FTB will have to wait longer to get on the ladder. Spot the mistake? Now to my laymans understanding if the average house price is approaching £200K and seeing 10%+ growth and the average wage is around £25K seeing an increase in-line or slightly above inflation then HPI will continue to outstrip the other massively and the FTB will be extinct and no amount of waiting a little longer by FTBs will make a jot of difference.
Monday, October 16, 2006
Banks giving FTBs enough string to hang themselves
Sunday Times Online: Fears grow over housing boom
Lenders are relaxing their criteria to stop people being priced out of the market — raising concerns that it could all end in tears. Homebuyers and property investors are being driven to desperate measures to get into the market, as some analysts predict a return to double-digit growth next year. And the debt mountain grows... But it doesn't matter because the UK will never ever again suffer from high unemployment or high interest rates because the government will look after us and everybody will easily pay back their debts. Oh and it's lovely here in Cloud-cuckoo-land !
Experian report on insolvency
Firstrung: Experian explode the myths surrounding the rising tide of IVAs
"Insolvencies rose by two-thirds in the second quarter of this year, while IVAs, which make up almost half the total, soared by over 150 per cent. Our research shows that there are marked differences in the numbers and growth of IVAs and bankruptcies in different parts of the country and we have to ask ourselves why this is. There is evidence that consumers are being encouraged into IVAs without fully understanding the long-term consequences."
Still on for November rise
Reuters: Lower Sept inflation may not prevent UK rate rise
Lower Sept inflation may not prevent UK rate rise
tick tock tick tock
The Daily Reckoning: The US economy crisis
More summery of the US 'miricle' economy from Doug Casey.
Fears grow over housing boom
Times: Fears grow over housing boom
A good article that seems to sum it all up with good background material. I hope that those thinking of buying now will read this article and understand the message. Demand exceeds supply because of easy credit, but ultimately prices do not keep on going up. I bought my first house in 1988 when prices were running away and remember the feeling of having to get on the ladder, so have sympathy for FTBs. Bought for 68k, sold in 92 for 48k to an estate agent who no doubt thought he was getting a bargain. He sold a few weeks later for 44k!
New house prices down 1.1%in Sept., 0.1% year on year - smartnewhomes
Firstrung: New house prices fall 1.1 percent in September - smartnewhomes.com
The average price of a new home fell in September by £2,886, despite an earlier indication in August that the new homes market was picking up after a temporary slow down. However, the reported annual fall of 0.1% is well below price falls previously experienced at this time of year and is likely to be a result of the interest rate rise in August
Latest Rightmove survey shows prices on the up
Reuters: UK house prices up 11.5 pct yy in Oct
House prices in England and Wales surged an annual 11.5 percent in October, taking asking prices to a record high, a survey showed on Monday, in a further sign higher borrowing costs have not stifled demand. The Rightmove data is in tune with other surveys showing the housing market shrugging off a Bank of England rate rise to 4.75 percent in August. "We have never (before) had a sustained low inflation, low interest rate economy combined with widespread home ownership," said Miles Shipside, commercial director at Rightmove."These unique conditions help push prices higher and higher. However, supply of houses coming onto the market is dropping."
Sunday, October 15, 2006
The greatest financial train wreck in history
MoneyWeek: Why the US is heading for a currency crisis
The Washington elite and their compulsively clever counterparts around the world have set the US (and global) economy up for a currency crisis of gargantuan proportions.
First time buyers, the week in focus
Firstrung: Firstrung, first time buyers, the week in focus 15/10/06
Some bloke on Radio 5 managed to get air time suggesting there may be a crash in 2010, subsequently drowned out by the mantra of "high employment, low interest rates, low housing stock" the programme quickly moved on to Rooney's lack of form and Colleen's new 2mil book deal....The Firstrung team have selected various articles covering these and other issues, minus Colleen's book deal of course...
Council-tax payers money given to property speculators
The Observer: Loans plan to tackle scandal of Britain's empty homes
Kent County Council last week launched a £5m fund which will provide interest-free loans to landlords, developers and owners to cover the cost of renovation and refurbishment of about 9,000 empty properties in the east of the county. ...... the county is working with councils ...... to offer any owner of an empty property - or anyone considering buying one - interest-free loans for renovation or refurbishment......
Russian billionaires and the London house price bubble
The Observer: The Russians are here already. Damn
........For those of us looking for mortgages, a bullish housing market, if unchecked, spells the daunting prospect of a rise in interest rates. Astronomical debts and huge monthly repayments are just the kind of bad news we blame on the wave of wealthy Russian immigrants (just as, back in the Seventies, we could blame soaring house prices on the Arab influx and their petrodollars). It is the Russians' wealth and their ever-growing numbers that inflate house prices beyond our means.........
House price? Always goes up... Does it?
ADVFN: Forecast sees housing prices falling
WASHINGTON Housing prices slumping after a five-year boom, are projected to decline in more than 100 of the nation's metropolitan areas.
Unpaid water bills (those over 12 months) in 2005-06 was £446 million
Firstrung: Water companies have £446 million of unpaid household bills in 2005-06
Ofwat's head of consumer affairs Sue Cox said: "Once a customer's debt slips over a year old, the next year's bill will become due which can make the problem worse and make it difficult for them to get back on track"
Now there's a surprise!
BBC News: Key worker housing 'is mis-sold'
Subsidised flats meant for nurses and teachers in London are ending up in the hands of well-paid professionals and top executives, the BBC has discovered. An investigation by the BBC's Five Live Report centred on Chelsea Bridge Wharf by the River Thames, where a two-bed luxury flat costs more than £500,000.
Saturday, October 14, 2006
CML defends 'the math' on first time buyers
Firstrung: First time buyer 'stats.' defended by the CML
Whether or not the CML appears rattled by their recent admission that their published data on first time buyers is severely compromised is irrelevant. This press release, issued to defend their position, still falls a long way short of an explanation as to why the CML proclaims, with such confidence, that their data on the first time buyer market is accurate enough to put firstly a number on first time buyer mortgages, and secondly to see fit to quote an exact figure as to the multiple of salary required in order to climb onto the first-rung.
"No boom and bust"....yeah right...
Firstrung: New Labour's crime: house prices out of control - UKIP
Perhaps one of the most obvious lies/spin from New Labour has been Gordon Brown's "end to boom and bust" line. The phrase was delivered to reassure the public that Labour would not make the same mistakes as the Tories over the economy when, in reality, they have succumb to the same temptation; the tempation to let a boom run too long than is economically safe because they do not want to "end the good times".
Friday, October 13, 2006
Academetrics say house prices up
My Finances: House prices up 0.5% in September, FT index finds
House prices rose 0.5% in September, according to the FT/Acadametrics index Click here to request mortgage adviceHouse prices increased 0.5 per cent in September, according to the FT house price index. The FT survey - compiled by Acadametrics - is one of the most complete available on the UK market, taking account of prices at estate agents, mortgage valuations, and official data on completed sales.
Rics V Harrison
Assetz Property news: Property boom tainted by bust claim
Continuing positive news for the housing market has been marred by a debate over whether the UK will see a crash in property prices in the long-term. Surveys released today from the Royal Institution of Chartered Surveyors (Rics) and Nationwide both showed that homeowners are gaining rapid returns on their properties and that the price increases look like they are in no mood to slow anytime soon.
A little Armageddon for the weekend, Sir?
HoweStreet: Another Stealth Depression in the Making
As the good times continue to roll, this educated US blog article may make people pause for thought. "First, I would like to call your attention to the Total U.S. Debt to Income (GDP). Note that it is now at 304% of annual national income. That is considerably higher than before the stock market crash of 1929." You get the picture...
Are you listening MPC?
Financial Times: FT index shows sharp rise in house prices
House-buyers in England and Wales have shrugged-off August’s rise in interest rates, according to the FT house price index. After a strong spring, house prices levelled off at the beginning of the summer, but have bounced back to rise by 0.5 per cent in September alone.
BTLs smugness levels will go thru the roof!
Telegraph: England faces population boom
England's population will rise by more than six million within 25 years, official figures predicted yesterday. Every region will see an increase. By 2029, the Office for National Statistics predicts there will be 56.4 million people in England, confirming it as one of the world's most crowded nations. England's population passed the 50 million mark in 2004 and now makes up about 83 per cent of the British total of more than 60 million.
Banks Count the Cost of Consumer Debt
Financial Times: Banks upset by reluctance to rein in insolvency deals
Banks were dealt a blow on Thursday night when Jim Fitzpatrick, trade minister, signalled the government’s reluctance to impose tighter regulation on companies that offer insolvency agreements to help consumers offload their debts. The biggest banks have been concerned about the rise in individual voluntary arrangements, which jumped from 5,000 in 2002 to an estimated 40,000 this year. Reported By Jane Croft, Retail Banking Correspondent, Financial Times Published: October 12 2006 22:30
LONDON'S FINANCIAL MOUNT EVEREST GROWS EVER HIGHER
Times: London's Mountain of Money
A choice bit by Camilla Cavendish who muses over the perils of the City's middle classes who are gradually losing their grip on long-accustomed lifestyle and comforts...with the advent of the foreign super-rich in London, who are charging up the economic ladder here, gobbling salaries, bonuses, homes, and posh private school places faster than you can say "property crash." Whereas five years ago twenty professions were represented as "comfortably affording" school fees that number, boys and girls, has narrowed to a mere nine, mostly including various descriptions of bankers and lawyers. And, as if that weren't bad enough, these bankers are SO rich, they really can't enjoy London to the full anyway [aaaaaaah], and have to live in Monaco nearly year-round just to avoid paying UK taxes. Well, back to that can of dog food I was warming for supper.....
Minister rejects banks’ debt demand
FT: Minister rejects banks’ debt demand
Government in having spine shocker?
High-street banks’ demands for tougher controls on companies that help consumers offload bad debt have been rebuffed by the government, which on Thursday said lenders had only themselves to blame for the rise in personal insolvency agreements.
Nationwide says prices rising, especially in London and N.I.
The Times: House price growth gap reappears
THE sharp divide between North and South in English house price growth reappeared in the third quarter, while prices in Northern Ireland roared ahead to break all records, according to data from Nationwide. The building society said that the average rate of growth of prices in London, the South East, East Anglia and the South West was 6.2 per cent in the three months to September. Prices elsewhere in England rose by only 3.8 per cent, its data showed. Nationwide also said in its Quarterly Regional Review that house prices in Northern Ireland rose by 33.4 per cent in the year to September. http://www.nationwide.co.uk/hpi/historical/Q3_2006.pdf
Thursday, October 12, 2006
What planet are these guys on?!?
BBC: New MPC men see inflation falling
Cooling global oil prices should help reduce UK inflation in the coming months, according to the Bank of England's two new policymakers.
BBC (good, never bad..) news
BBC News: House prices 'still accelerating'
The BBC loves to tell us how good things are... Funny how they don't seem able to carry any serious analysis of the situation.
Prices up, prices down ... what's the truth?
Home.co.uk: Asking prices stable and rising
Asking Prices for homes in England and Wales rose this month by 0.5%, but fell 0.6% over the last year (ca.3.1% below the CPI, ca. 4.0% below the RPI and ca. 4.3% below the AEI). Greater London Asking Prices rose by 0.4% this month.
Card spending up 50% since 2001
Firstrung: Credit card spending in the U.K. reaches new high, up 50% since 2001
Despite a testing 12 months, a new report from independent market analysts Datamonitor, reveals that total spending on payment cards in the UK market once again reached a new high. The combined value of transactions made on charge, credit and debit and private label (store) cards was £470 billion in 2005, up 50% on the level in 2001.
Chancellors coffers to be hit by house price crash
Firstrung: House price crash 'may cut €3bn off tax take'
What a revenue driver this house price boom has been, not just for the Irish, but also for UK residents. That extra cash coming back will be missed..
The final phase of the boom
The Times: House price surge suggests more than mini-boom
HOUSE prices have staged a remarkable recovery and are now rising at a faster pace than at the peak of the last property boom, a survey suggests today.
House prices at 4-year high
Bloomberg: U.K. House-Price Index Rises to Four-Year High
An index of U.K. house prices rose to the highest level in four years in September as more buyers chased fewer properties, the Royal Institute of Chartered Surveyors reported. The number of real-estate agents and land surveyors reporting higher home values outnumbered those showing declines by 45 percentage points. Sellers appeared to feel less pressure to put their property on the market, RICS said. The stock of unsold property on agents' books fell to 66.9 in September, the lowest level since August 2004. `With stocks of property low and buyer enquiries on the increase, sellers remain in pole position to benefit,'' a spokesman said.
Brown ally backs record bank profits
Financial Times: Brown ally backs record bank profits
As long as banks can make money like this who cares about inflation?
Wednesday, October 11, 2006
CML invent first time buyer figures
Firstrung: Shocking admission from the CML- first time buyer figures invented
This is truly shocking, the irony is that the Firstrung team were just penning a piece querying why the CML data suggests that the FTB figures are at 25%+ and yet the NAEA, as recently as yesterday, confirmed that their figures suggest only 11% of the market is comprised of FTBs. Quite frankly if they (the CML) cannot be trusted to deliver facts on such an important issue then their data and morevoer their opinion, in relation to the rest of the wider market intelligence, is rendered worthless....
BoE on another planet
Guardian: Demanding better wages will push up interest rates, says King
The Bank of England, despite getting paid 150,000 for 30 hours work spread over a year, want everyone to stop asking for money. Apparently it doesn't matter if you're paid enough to survive or not - if you ask for more money, they'll have to raise interest rates - and you wouldn't want that!
Comparison of indices
In The News: How much?
We take a look at the most recent property price indicators to let you know the current state of the British housing market. The market is continuing to accelerate as high demand overpowers the dampening effect of August\'s interest rate rise
Rate rise still on for November
The Times: King warns on inflation despite fall in oil prices
King highlighted factors likely to keep the door open for another rate rise, singling out attempts by businesses to offset the profits squeeze from energy costs with higher prices. He pointed to a Bank poll that found half of firms intended to raise prices. While pay pressures had “so far been subdued” despite record energy prices, he said it was not clear that wages had been “sufficiently restrained” to prevent a squeeze on profits. Companies and individuals needed to recognise that dearer energy — as well as a recent rise in import prices relative to those for UK exports — meant that incomes must decline in real terms, he said. The Governor also cited an acceleration in overall cash spending across the economy, and rapid growth in money supply, which was now rising at its fastest since 1990....
Still looks like 5% in November
BBC: Inflation fears persist for King
Inflation is still a threat to the UK's economic health despite recent falls in the cost of oil, Bank of England governor Mervyn King has warned.
I've heard it all now!
Telegraph: Bankers buy homes on future bonuses
Rich bankers are being invited to take out huge home loans based on their annual bonuses, before the payouts have even been decided. Woolwich, which is now part of Barclays Bank, has launched a "City Bonus" mortgage aimed at those who are expecting big bonus payments in the new year but who want to buy a new home now. Only those wishing to borrow more than £500,000 need apply."Most people expecting a large bonus in January or February will already have a good idea if they are going to get one," said Andy Gray, the head of mortgages for the Woolwich
It all has to be repaid!
Telegraph: Household wealth is squeezed
British disposable wealth has fallen below £40,000 this year as house price inflation fails to keep pace with the explosive rise in home equity withdrawals.
Stealth taxes hurting FTBs - The Tories
Firstrung: First time buyers suffer under Gordon Brown - Conservatives
Gordon Brown's stealth taxes are making it increasingly difficult for first time home buyers to step onto the property ownership ladder, the Conservatives have claimed. Shadow Local Government Secretary Caroline Spelman has warned that families who have worked and saved to invest in a home are now being "taxed to the hilt" by the Labour Chancellor.
Tuesday, October 10, 2006
What he (Gordo) gives with one hand.....
Firstrung: First-time buyers struggle as more and more pay stamp duty, reveals CML
The proportion of first-time buyers paying stamp duty has leapt from 48% to 56% in the space of just a year, according to the Council of Mortgage Lenders\' latest monthly statistics. And only 15% of home movers escaped the tax in August, compared with 21% a year earlier.\r\n\r\n
House sales down
Firstrung: House sales down 6.6 percent in September - NAEA
The property market in September slowed after a phenomenally strong August according to the National Association of Estate Agents (NAEA) today. Buyers and sellers on estate agents books\' were down from levels reported last month and marginally less than the same period last year, despite this sales were encouragingly up from September 2005.
US CPI seems disconnected with reality
Financial Sense Online: The Core Rate
It's becoming quite fashionable to snigger at inflation figures as being out of line with the punter on the street. It seems that disconnection with reality is questioned in the United States too.
Public sector to get a little slimmer
Independent: British Waterways to axe 180 jobs
The organisation in charge of Britain's canals and rivers is to lay off 180 workers after the Government slashed its budget, it was reported today.
Too skint for Boreham Wood? Try Beijing
Daily Telegraph: Britain 'Can't Compete'
Buy to let isn't an investment it's an addiction, or perhaps just a disturbing example of crowd psychology. If you can't afford to pay £1700 psf in West London try buying in an exotic location where you don't know the laws, understand the culture or even speak the same language as your tenants. All I can say as someone who lives in Malaysia and knows something of the market here is more fool you if you jump in without knowing intimately every aspect of the market you're buying into. I think 'piffle' is the kindest word I have for Knight Frank.
US First - UK 2nd !!!
MSN: Why The US is Heading For A Fall
This tells us the US is in big trouble with the housing 'bubble' !!! Well at least they are honest over there and admit it is a bubble. The UK is the same and we are just behind them. Inflation here is up - debt is saturated - and rates have not even moved. The Govt is having to paint much faster to cover the cracks these days... one day the paint is not going to work.
And now, inflationary pressures are easing ...
FT.com: UK inflationary pressures easing
First inflation is set to rise and in the next minute it is set to fall. Can anyone find the holes in this article or are pressures starting to tail off? I get quite fed up trying to understanding why House Prices are continuing to climb when many indicators are suggesting they should be falling. Having read this Blog for the best past of 2 years - where is this sodding HPC then?
Interest rate rise removed 10% of buyers from the market
Home.co.uk News: Homebuyer confidence remains strong
This article, originating from the Yorkshire Bank, is full of the usual VI spin, however a 10% reduction in buyers due to such a small IR rise must indicate that the market is finely balanced. A further rise, therefore, might have a much greater effect.
Poor Build Quality - Low Yield - Row over lack of luxury at apartments..
ICBirmingham: Row over lack of luxury at apartments
Muppets are today reported to be up in arms becuase they were told they could make a mint from Birminghams plushest and tallest residential block. Recently completed Beethem Tower has been hit by a number of complaints such as poor build quality, and claims that investers were misled. At least six people who signed contracts to buy flats in 400ft Beetham Tower say the standard of the completed accommodation does not match claims in sales literature. David Turley is considering legal action to recover the £27,700 deposit he paid for a two-bedroom flat which had he had intended to rent out.He said he was told by sales agents to expect a monthly income of £1,200, but two-bedroom flats at Beetham Tower are currently available for £850 a month. Hard not to laugh.
Monday, October 9, 2006
Will oil prices rise again later this year?
Lew Rockwell.com: Gasoline Price Manipulation Before the Elections
Is Goldman Sachs manipulating the gasoline futures market to push prices down before the November elections? It sure looks that way........
Is there no end in sight for increased London prices?
Firstrung: London house prices continue relentless march upwards - haart estate agents
The latest data from haart estate agents reveals that the average London house price has risen to its highest level yet, exceeding a quarter of a million pounds as the gap between supply and demand widens due to shortage of stock. The average price of a property increased by 1% in September to £250,907 from £248,580 in August, placing the increase in prices since the start of the year at just over 6%.
No need for IR rises, inflation is all under control now...
The Times: Rate hike in doubt despite strong house prices
There was more potential good news for homeowners as official inflation figures showed weaker oil prices lessened inflationary pressures in the manufacturing sector in September, a move economists said raised doubts over an expected rate hike next month Manufacturers' core input prices, which strip out volatile factors such as food, tobacco and petrol, fell 0.5 per cent on the month, driven by lower import prices and a stronger pound. John Butler, the HSBC economist said: "Manufacturers may have struggled to pass through higher costs but in September they quickly passed through the downward pressure." Mr Butler said: "Overall, inflationary pressures have eased. The MPC has changed its story in recent months and now expect any drop in oil and commodity prices to boost real income and, hence, drive core inflation higher. So far there is still little evidence that core inflation has responded." Howard Archer, chief UK economist at Global Insight, said: "An interest rate hike in November looks by no means a done deal at the moment."
Potential financial penalty awaits homeowners
Reuters: Average house prices set to break IHT barrier
Average property prices are set to surge past the inheritance tax threshold in less than a decade, research showed on Monday. If the growth in property prices and the inheritance tax (IHT) nil rate band continues at current levels, the average UK homeowner will be liable for the tax in eight years' time, Stroud & Swindon Building Society said. Paul Chafer, sales director at Stroud & Swindon, said many "ordinary" consumers still assumed they had insufficient assets to be liable for IHT -- originally intended to hit the super-rich. But he said the expected upturn in the number of estates being liable for the tax -- charged at 40 percent on assets over the threshold -- would see the amount of money flooding into the government's coffers surge by a "huge amount".
Irish house price crash imminent?
Sunday Times: Ireland: Prepare for a bang when the property bubble bursts
YOU know an asset bubble is just about stretched to its limit when the people who have made the most money by inflating it insist a “soft landing” is a sure thing.........
House prices up again...DCLG
Firstrung: House prices up 1.9 percent for owner occupiers, 1.3 percent for first time buyers in August - DCLG
The UK house price inflation rate rose from 6.0 per cent in July 2006 to 7.7 per cent in August 2006. Prices rose by 1.6 per cent between July and August, compared with almost no change over the same period last year. The rise in UK prices between July and August can be attributed to rises in average prices for bungalows (5.1 per cent) detached houses (3.2 per cent), flats (1.6 per cent), and semi detached houses (1.0 per cent).
People are running out of money
The Scotsman: Available cash to spend falls as rising cost of mortgages hits home
"THE amount of money available to be spent by the typical Scottish household has plunged by more than one-quarter in just six months", or so it says. Apparently it's been caused by "homeowners taking on larger mortgages that had outstripped the growth in house prices.". Well, there's a surprise.
Let the Inflation & wage spiral begin
BBC: Pay rises 'to accelerate in 2007'
Suggestion that private sector pay will rise by 3 to 4.5%. Not if there is a squeeze on jobs.
Sunday, October 8, 2006
£10 million pounds for a car park in Edinburgh
Scotland on Sunday: Scotland's most expensive land is a tiny car park worth £10m...
A 0.8 acre car park is reputedly sold for £10m pounds - to a developer who wants to build "upmarket flats" of course.
Big Bonuses Boost House Buying Figures
Times - Property: Keep on bankrolling
London’s estate agents are already salivating at the prospect of another wall of money. “Bonuses are definitely the hot topic of this autumn,” says Lindsay Cuthill, head of Savills’s Fulham office and regional director for southwest London, who estimates that more than 45% of sales in the past 12 months in his area were bonus-related.
Big rate rises on the cards!
Mail on Sunday: Stretched to the limit
"Lenders have an alarming new ploy to boost their profits. If you are struggling with card repayments, stand by for a big rise in rates"
Credit crunch?
The Observer: Debt mountain hits plateau
The British are still Europe's spendthrifts, but there are signs of a more responsible attitude - among both borrowers and lenders....
Saturday, October 7, 2006
Credit Action warns of over indebted home buyers
Home.co.uk News: Frothy temptations in the housing market
Homebuyers are being tempted into taking out mortgages which they may not be able to sustain, warns a money education charity. Calling the housing market ‘frothy’, the charity Credit Action warns that in their eagerness to buy properties, people may be committing to more than they can afford. According to the charity, conditions in the housing market are starting to mirror those of the early 90s when thousands of people had their homes repossessed.
And I wanna be a country gal again......
Save our village: Telegraph
As protests grow at the Government's plans to build thousands of homes in the South-East, Sarah Lonsdale visits Bapchild, in Kent, where residents fear for the future of the English country life. The small Kentish village of Bapchild has, on paper, everything it needs to be the perfect community: a beautiful medieval church, a thriving primary school, a pub, a strong parish council and an idyllically situated cricket club surrounded by orchards and meadows. How quaint ! Lets get back to reality. Yes - it's a shame that these beautiful villages have to be filled with Barratt boxes, but WE HAVE A HOUSING SHORTAGE !!!!! Every single city in the UK started out as a small village at sometime.
BCIS launches useful price guide
Firstrung: Calculating the cost of builders - RICS
The Property Makeover Price Guide, launched at the Autumn Ideal Home Show, by BCIS the Building Cost Information Service of the Royal Institution of Chartered Surveyors, is packed with useful costs and advice about how to budget for repair, improvement, alteration and extension work.
Shame the BoE doesn't share the Fed's sense of purpose!
BBC: US Fed issues inflation warning
Federal Reserve chairman Ben Bernanke has warned that inflation is still too high in the US. Inflation is "above what we would consider price stability", he told the Washington-based Economics Club. However Mr Bernanke gave no indication whether interest rates would be raised further. A housing market correction would continue to dent growth, he said.
Timely Warning For Overseas Property Buyers
Irish Examiner: Overseas property buyers warned to check rental markets
Before you get carried away with glossy brochures promising guaranteed rentals and long rental seasons for overseas property, The Irish Examiner offers this timely warning. If you rent out for six weeks in a year you are doing well.
Friday, October 6, 2006
Surely this is in no-one's interest?
BBC News: Graduates face home ownership woe
More than half of all graduates say they cannot afford to buy a home, a Scottish Widows survey suggests. High house prices combined with student debts are pushing property ownership out of the reach of many. Of the 3,500 people surveyed, 10% believe they will never be able to afford their own property.
Why the Bank of England should have raised interest rates
MoneyWeek: Why the Bank of England should have raised interest rates
The war against inflation continued with no surprises on the interest rate front yesterday. As expected, the European Central Bank hiked again to 3.25%, while the Bank of England stayed on hold at 4.75%....A rate hike this month would have been just the sort of fiscal slap that might have brought investors and property buyers to their senses without too much longer-term fall-out...
"Moral hazard" or 'moral cowardice'?
Firstrung: Why the Bank of England should have raised rates
Economists call this 'moral hazard'. In effect, letting people believe that someone will step in to stop them from failing encourages them to take more risks. A good example was the decision to coerce private banks into helping out hedge fund LTCM in 1998 rather than let it collapse. That decision may have convinced some banks and funds that it's fine for them to take ever-larger, riskier bets on the basis that if they go wrong, they too will be deemed 'too big to fail'
Moral hazard or moral cowardice?.....
Firstrung: Why the Bank of England should have raised rates
Economists call this 'moral hazard'. In effect, letting people believe that someone will step in to stop them from failing encourages them to take more risks. A good example was the decision to coerce private banks into helping out hedge fund LTCM in 1998 rather than let it collapse. That decision may have convinced some banks and funds that it's fine for them to take ever-larger, riskier bets on the basis that if they go wrong, they too will be deemed 'too big to fail'
They have a right to be worried...
Firstrung: 73 percent of 18-24 year olds fear for their financial future
Research out today, from financial services company Scottish Widows, suggests nearly three quarters (73%) of 18-24 year olds are increasingly worried about their financial future. In contrast 61% of the over 55s are happy they are financially prepared.
Tell us something we don't already know!
MSN: House Prices Un-Affordable!
Here it is in black and white - why house prices will not survive at current levels. Yet the party still goes on - and the BOE still keeps playing with people's lives. It is the duty of any GOVT or Central Bank to ensure that all aspects of 'inflation' are considered when setting IR's and the UK has failed the population in a huge way.
Tell us something we don't already know!
MSN: House Prices Un-Affordable!
Here it is in black and white - why house prices will not survive at current levels. Yet the party still goes on - and the BOE still keeps playing with people's lives. It is the duty of any GOVT or Central Bank to ensure that all aspects of 'inflation' are considered when setting IR's and the UK has failed the population in a huge way.
Why the recent fall in Gold prices?
Telegraph: Bank of France blamed for gold sell off
More fishy goings-on in the markets. This being the Torygraph, the French are blamed. Worth a read though....
Thursday, October 5, 2006
Consumer confidence still down
Firstrung: Expectations for future house price rises falls - Nationwide consumer confidence survey
The Nationwide Consumer Confidence Index partially recovered following its dramatic 11 point fall in August. The index rose by 6 points in September taking it up to 89, but it is still below its two year average of 98. All four consumer Confidence Indices improved in September, suggesting that the slump seen in August was a general response to the bad news seen that month which included the surprise rate change.
At least someone has a brain.
BBC News: Eurozone rates increased to 3.25%
Interest rates across the eurozone have risen again by a quarter point to 3.25% as the European Central Bank (ECB) moves to keep inflation in check.
No wonder there's no houses left for us
National Statistics: Labour Market Trends October 2006
There were 1.5 million foreign nationals working in the UK in 2005, 5.4 per cent of the employed population, according to an article in the October issue of Labour Market Trends, published today by the Office for National Statistics. It is likely that 2005 saw the largest ever entry of foreign workers to the UK.
It is different this time round (but for all the wrong reasons)
MoneyWeek: How the US became a bubble economy
Those believing high house prices are sustainable often claim that life is different this time around. This article supports that claim but predicts this time around the difference will make the after effects more brutal and painful. Brutality and pain will occur because the fundamentals of the world's largest economy have changed. I should add, that it only makes sense if you believe high house prices are only possible when people are rich [and stupid] enough to pay inflated prices. If you believe high house prices are a result of excessive demand, then it does not make so much sense. Personally, I thin it doesn't matter how much people want to buy a house [potential demand] if they can't afford one, then they can not buy one - so the argue of excessive demand is pants.
UK rates left unchanged at 4.75%
BBC: UK rates left unchanged at 4.75%
UK interest rates have been left unchanged at 4.75% following the Bank of England's latest meeting. The move was widely expected although borrowers and the markets had been jittery over the prospect of another rate rise.
More Misery For Spanish Property Buyers - This Time Near Alicante
Place In The Sun: More Spanish Properties Face Demolition - This Time In Catral, Alicante
The Spanish authorities are continuing their promised crackdown on illegal housebuilding - 1,200 properties near Catral in Alicante province are currently under threat of demolition.
Rates decision 'in the balance'
BBC: Rates decision 'in the balance'
"The Bank of England is expected to keep interest rates at 4.5% - but a rise is expected before too long." Check the headline "4.5%" just goes to show they regurgitate the same old drivel every month. They have corrected themselves in the main story but this is a true indicator of the level of journalism currently being employed at the BBC.
Wednesday, October 4, 2006
Just Split Your Sides Reading This Rubbish !!!
BBC - Business: Buy a house for your student child?
Buy a house for your student child? Are you considering buying a house for your children to live in while at university?
Get 'em up
Business week: Analysts expect ECB rate hike
As many suspected the ECB seem set to move in October.
Booming? Stagnating? Falling?
The Independent (Online): Boom fear fades as households borrow less against property
If house prices are not booming, they must be stagnating or falling. No evidence of falls yet so they must be stagnating. Stagnation means no one is feeling wealthy any more and so they aren't keeping the economic engine going by conuming; is stagnation that brief interlude that separates boom times with hard times?
Will the Bank of England raise interest rates?
MoneyWeek: Will the Bank of England raise interest rates?
Read the first part of the article. Then ask yourself what is stopping the BoE from raising interest rates tomorrow. Do you like the answer?
Too poor to have kids
Guardian: Finance biggest deterrent to having children, report says
Too many factors are making it financially difficult for couples to consider having a family. Debt and house prices being two of those factors.
US house prices: you thought we had a problem?
No Monkey Business: US house prices: you thought we had a problem?
An interesting perspective from America. It's relevant because if helps us understand our situation but also because a US price crash could pose just as much risk to the UK economy as does our own housing market. It comes from a speech back In February by Robert Schiller, author of the book 'Irrational Exuberance' about the stockmarket bubble at the end of the 90's. He contrasted the bubble correction in stocks with the new irrational exuberance in the US housing market. Professor Schiller, who uses long data histories to speculate on theoretical explanations of investor and asset class behaviour, found he needed to create his own historical index of real house prices. This is the same use I make of the Nationwide index (in items on my blog - search for 'No Monkey Business' on this site for Forum entries). US prices showed no real growth from 1950 to 1997 and have jumped 50% since then. Schiller points to easier access to land that suppressed real growth before, easier access to credit that sparked the boom and wildly unrealistic expectations that then fed it. It's America's lack of experience of big price cycles and those unbelieveably crass expectations that leave you thinking they can't avoid a crash.
House prices going up...really...read it again..
Firstrung: Halifax report house price inflation falling for third successive month to 8.0%, the lowest rate since April 2006
Commenting, Martin Ellis, Chief Economist, said: "House prices rose by 1.0% in September. The annual rate, however, eased for the third successive month to 8.0%, the lowest rate since April 2006. We expect increased utility bills and higher interest rates to curb housing demand over the coming months, causing annual house price inflation to ease between now and the end of the year."
Mixed housing scheme a success in Liverpool
Firstrung: Housing market renewal development successfully launched
The first residents to move into a Liverpool Housing Market Renewal (HMR) new-build development have been officially welcomed by the developer, Gleeson Regeneration. The Clevedon Park development in Toxteth is the first HMR scheme in Liverpool and offered family and starter homes at affordable prices at the heart of Liverpool 8.
Voters counting cost of the spiralling debt burden that has driven the economy throughout Brown's tenure
Firstrung: Britain is more in debt than ever before, sinking in a sea of red ink
The chancellor's unpopularity with voters is rooted in the spiralling personal debt caused by his economic policies, argues Graham Turner. Gordon Brown is no longer seen as the automatic choice to succeed Tony Blair. That may seem puzzling. The prime minister routinely lauds his neighbour as Britain's best ever chancellor, and yet fails to endorse his succession.
Confused? Don't worry, auntie will tell you how it's done.
BBC: House price surveys explained
Every other day seems to bring a fresh house price survey, but each often appears to contradict the last. BBC News asks how house price surveys work and which ones should you trust?
Prices keep going up
BBC news: UK house prices show strong rise
According to Halifax prices have reached a plateau. Has that ever happened before ?
Lower Energy Prices May Save Struggling Home Owners
Times Online: Gas spot-price plunges as pipeline floods UK
Oil has fallen to $60-ish a barrel. Now we have gas flooding the UK network which will [should] result in lower prices. This may offset increases in inflation and provide, through lower energy bills, a life line to hard pressed home owners. Does this mean there will be fewer forced sales - in fact so few there will be no HPC?
Tuesday, October 3, 2006
South-east house prices to 'soar by 40%'
Guardian: Average house prices in the South-east will soar to more than £322,000 in five years, according to new research.
Average house prices in the South-east will soar to more than £322,000 in five years, according to new research.
Government invests £230m to help just 20,000 home-buyers
Telegraph.co.uk: news
The Government is spending £230 million on a project that will help just 20,000 people on to the property ladder, and they think that the scheme could even make the problem of housing affordability worse, by stimulating the lower end of the market.
Hoo Boy! More Debt diary...
BBC News: Debt diary: Creditor offer
She gets some good news this week.... thanks to all the exposure from the BBC: "Apparently after reading my diary, HBOS, the parent company of Halifax and Birmingham Midshires, both companies I owe money too, get in touch. I get a call from HBOS's Head of Specialist Secured Collections. She offers to help out. She explains how there is no common policy or procedure across the different brands to deal with my request, but HBOS, as the parent company, can help out. She offers to freeze my interest payments until January and even to refund my charges. I am delighted. "
BBC report 'downbeat' figures!!!
BBC: Mortgage debt 'more of a burden'
For those of you who have commented about the BBC's upbeat stance...tide's turning?
The evidence is building...
First Rung: One person’s repossession is another’s bargain, clock ticking for BTL investors in Docklands
Adam Stackhouse, head of sales at Chesterton's Tower Bridge office, estimates 25%-30% of properties on his books are repossessions, most originally bought by investors.
Knight Frank's 'prime property' report
Firstrung: Knight Frank witness prime central London residential prices increase by 23 percent year on year
Pinch of salt time, please read the instructions on the label of this report before becoming too disillusioned. The report refers to property with a typical ticket price of 1.5mil +. That hasn't stopped the headlines of "London prices racing ahead" etc. appearing in the mainstream media
First time buyers, nearly 30% of gross income on mortgage
Firstrung: Mortgages payments - are you better off than 10 years ago?
Andrew Hagger, Head of news and press at Moneyfacts.co.uk comments: "The net effect is that mortgage payments take a much bigger chunk of our income than they did in 1996. This statistic looks gloomy enough in its own right, but when you factor in additional increased expenses such as higher council tax and utility bills, it is no surprise that the UK is now faced with the current personal debt crisis".
Debt Diary
BBC: Debt diary: Creditor offer
Her Diary is working with leniency being shown by some of her creditors as a result. I believe Miss Beg has beautifully used the BBC to her own advantage, one smart cookie. She must have known that this would be her best chance of retrieving her dire finances, why else would she sign up to the BBC to do this in the first place? I wonder if she will use the tragic loss of her father for a little more compassion from her lenders? This last comment may seem harsh but this is the sly game she has been playing. What has become of the BBC!!!
Let the demolition begin
The Times: The end is upon us, real-estate brokers look terrible - and forget the canapés
Just a few months ago, “open houses” in LA were like orgies. Real estate brokers would lay out tables of finger-food, while throngs of potential buyers would swoon over the stainless steel bathroom fixtures, fantasise about the remodelling potential (we can fit a hot tub in the back!) and, most importantly, jostle to outbid each other. These days the ahi tuna canapés are gone, the brokers look ill and the only buyers are professional vultures, offering 30 per cent below listing.
Don't have a BTL portfolio? See what you're missing...
thiismoney.co.uk (aka The Daily Mail): Rise of buy-to-let millionaires
"THE booming property market has created an army of buy-to-let millionaires with a portfolio worth an average £1.5m each." They speculated in a rising market - geniuses all.
Monday, October 2, 2006
Sydney under pressure
Smh.com.au: South-west first to crack with debt load
Parts of south-western Sydney are starting to crack under the pressure of high petrol prices, big debts and falling house prices. The jobless rate in the Fairfield-Liverpool region has shot from 5 per cent to 10 per cent in the past year. Unemployment in that area is now double the national rate of 4.9 per cent and well above the NSW rate of 5.7 per cent.
Latest UK Debt Statistics
Credit Action: Debt Facts and Figures - Compiled 2nd October 2006
Total UK personal debt in September will have exceeded £1 ¼ trillion for the first time. At the end of August 2006 the total UK personal debt was £1,247bn. The growth rate increased to 10.4% 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 August 2006 it stood at £1035.4bn. This has increased 11.2% in the last 12 months.
House prices still affordable and set to rise!
Telegraph: A new way of viewing house prices
House prices are still affordable and will rise rapidly over the coming year, according to research commissioned by The Daily Telegraph. It reveals that although housing is close to being its most expensive since before the crash in the early 1990s, it is nowhere near the level of unaffordability that would trigger a crash. This index differs from conventional measures because it takes into account the important change in households in recent years, with a dramatic rise in the number of two-earner households. It compares the level of interest rates with earnings and house prices, rather than comparing earnings to prices. It points towards strong price growth next year. _____ Silly graph here: http://www.telegraph.co.uk/money/graphics/2006/10/02/cnhouse02big.gif
Interest rate rise could happen on Thursday
Financial Times: Industry survey boosts rate rise prospects
A survey published by the Chartered Institute of Purchasing and Supply and the Royal Bank of Scotland showed its index of manufacturing activity at 54.4 in September. This was above the downwardly revised 53 for August and means the sector has now managed 14 consecutive months of growth. Sterling jumped on the news as traders reckoned the stronger-than-expected numbers provided further evidence that the economy was enjoying a period of solid growth and that this would increase the likelihood of the Bank of England raising the cost of borrowing to cool demand in order to contain inflation. Most analysts still expect a quarter percentage point rate hike in November, to 5 per cent, but have hedged their views in recent days, suggesting the Bank could justify moving when it meets this week against a background of over-target inflation and buoyant growth.
Oh hello - will 2006 be "An Interesting Year" for the wrong reasons?
The Independent: Surging house prices 'signal the start of a fresh boom'
An alternative view to those typically held at this Blog. Prices look firm based upon good fundamentals. Do you ever get the feeling that you're a lone voice in the wilderness?
Another government disaster in the making
guardian: Keyworkers to benefit from HomeBuy scheme
"Under the initiative, homebuyers take out a mortgage for 75% of a property's value with one of a group of selected banks and building societies. The lender will also provide the borrower with a 12.5% equity loan and the government will also lend 12.5%, making a total deposit of 25%." So that means that for essential workers who can't afford a property, they will be lent 100% of the value - of the property they can't afford. How does this help? When nurses are killing themselves in desperation from debt problems where are they going to find replacements?
house prices still affordable shock
Daily Telegraph: Housing Affordability
This Telegraph article suggests that in comparison to earlier periods, housing isn't that expensive when prices, earnings and interest rates are taken into account. There's an interesting graph, too.
See, I knew we were all wrong really
Daily Telegraph: A new way of viewing house prices
Lombard Street Research and the Telegraph have got together to produce research saying that actually £250,000 ex council houses are still a steal and prices will rise. The Torygraph's generally pretty balanced Economic Editor Edmund Conway goes along with it but I detect a note of scepticism in there. Basically those of you feeling the pinch - stop wingeing, you're either imagining it or not pinching hard enough.
More pointless schemes
BBC News: Housing boost for 'key workers'
Housing boost for 'key workers' Affordability remains a major headache for public sector workers Extra help for up to 20,000 key workers looking to get on the property ladder is on offer from Monday.
"Landlords being left vulnerable to huge fines of up to £20,000 and legal action from tenants."
Firstrung: Landlords begin to flood market with property to avoid new laws
A survey of National Association of Estate Agents (NAEA) members into the effects of the HMO legislation has revealed that 63% of agents have seen landlords reduce the number of tenants in their properties in order to avoid the HMO licence. In addition to this 35% of members reported an increase of properties onto the market that would otherwise have been classed as HMOs.
40 percent of agents not 'signed up' yet
Firstrung: Ombudsman for estate agents finally has teeth as from October 1st
People buying or selling a house are to be offered clearer information by estate agents as a strengthened code of conduct is introduced for the industry. From 1 October the Ombudsman for Estate Agents (OEA) code will oblige its 2,380 member firms to be clearer on charges and give more information to buyers
Fresh Boom Starts Here...apparently
The Independent: Surging house prices 'signal the start of a fresh boom'
Surging house prices 'signal the start of a fresh boom' The housing market is on the brink of a new boom, according to reports today showing London prices rising at the fastest pace since Labour came to power and the sales volume hitting record levels across the UK. Central London property prices grew by 23.5 per cent in the 12 months to September 2006 - the highest rate since June 1997, the previous peak marked by Tony Blair's first election victory. By Philip Thornton, Economics Correspondent, The Independent Published: 02 October 2006
Sunday, October 1, 2006
London still outperforming not-London
Hometrack: House Prices Rise by 0.4% in August - impact of recent interest rise yet to come
A lack of housing for sale is certainly playing a major role in sustaining the scale of growth in London with agent’s property listings falling over the last quarter. In contrast, the supply of housing for sale has continued to see above average growth in the regions where price rises are low. The Hometrack survey also highlights longer sales periods in the lower growth regions as well as buyers having to accept slightly larger than average discounts on asking prices.
In 1982 interest rates reached 15.2%
Firstrung: 1982 - the last time homeowners spent so much income on mortgages
Ongoing interest-rate increases are seriously eroding the sizes of mortgages being offered to first-time buyers. New borrowers will only be offered 75 per cent of the mortgages that they qualified for last December, if rates continue to rise at current levels.
Fear of Crash from Derivatives Market...
Observer: Fears of crash put focus on the City's dark arts
Fears of crash put focus on the City's dark arts Concern is mounting that derivatives, hedge funds or private equity firms could spark a crisis, writes Richard Wachman. Regulatory bodies in Europe and the US appear to be getting twitchy about areas where there is less transparency than in the comparatively simple business of trading shares via brokers and banks. .Sunday October 1, 2006 The Observer