May 2007 Archive
Wednesday, May 30, 2007 
Credit Crunch!
BBC: UK debt judgments at 10-year-high
The number of County Court Judgments (CCJs) against consumer debtors has reached its highest level in almost 10 years.
Lest there was any doubt about the Irish property crash......
RTE news: House prices dropped again in April
Average house prices fell again last month with buyers paying almost €2,500 less than buyers in March, as interest rate increases and continuing uncertainty about stamp duty reform impacted demand.
Little impact of previous interest rate increases showing in house price stats
Firstrung: House prices show one of the highest annual increases in two years - Land Registry
Although the rate of monthly increase is slightly less than the previous month, the change of 0.6 per cent raises the average house price to £179,935 in this month. The annual change in house prices is 9.1 per cent. The data for this month continues to show one of the highest annual increases in almost two years. A year ago, in April 2006, the annual price change was 4.1 per cent, less than half the 9.1 per cent annual price change in April 2007...
Eurozone mortgage lending slows
FT.com: Rate rises damp eurozone mortage lending
Mortgage lending growth in the 13-country eurozone has slowed to the lowest for more than three years as higher interest rates begin to bite, according to European Central Bank figures. [...] banks were also reporting declining demand for home loans, “reflecting a major deterioration in housing market prospects”. Unlike other central banks, the ECB gives money supply data a prominent role in its interest-rate decision-making.
Tenant demand dries up!!
Guardian: Landlords sell-off property as demand dries up
"Experts say slower employment growth and rising rental costs have scared away potential tenants, encouraging nervous landlords to sell up"... and if the experts say so...
BBC hanging on by fingernails to housing boom spin
BBC "News": House prices 'still accelerating'
In desperation the BBC has resorted to trumpeting about areas where prices have gone up, Brighton and Hove being the latest. They are loathe to mention "the rest of the country" where prices are declining according to estate agents. Those journalism graduates at in Television Centre in White City must be getting desperate ...
Another Chinese Market Article
Seattle Times: China's run-up echoes U.S. dot-com era
Chinese stock markets crash. Their companies search around for cash to try and keep Chinese investors happy... which has been leant out to fund the UK housing market. No more cheap loans.
Last interest rate did not make any effect on consumers confidence
1mortgagesuk: Consumer confidence not affected by last interest rate rise
According to latest figures the underlying growth in retail sales remains strong, with just a slight decrease in monthly sales in April.
Mortgage misery for young couples
Daily Mail: Nation of mortgage slaves among Britain's young couples
Massive mortgages are turning a generation of young couples into wage slaves, it has been claimed. A report warned that the spiralling price of housing means Britain is in danger of becoming the "grossly divided" society of have and have-nots not seen since Victorian times.
A bit depressing this from ‘the fool’
Fool.co.uk: Buy-To-Let Boom Isn't Over
I found this rather bullish piece a little depressing. I do hope they are being really foolish about their analysis here….
Looking for the exits
Yahoo News: Landlords look to sell as rates rises
Blinded by greed, these folk are now looking for the exit. I say let them take the loses rather than a legit home buyer...
Wait for the profit warning !
Daily Telegraph: Investec buys UK's sub-prime biggest mortgage lender
Investec, which is best known in the UK for its investment banking division, said that its "stronger balance sheet, access to lower cost of funding, and capital markets expertise, together with Kensington's recognised brand, established distribution, innovative product range, prudent risk management and track record for service excellence, create a strong combination for the growing non-standard mortgage marketplace."
Oh Dear - In for the long term then?
Daily Telegraph (Online): Rents soar as rate rises squeeze buy-to-lets
RICS economist David Stubbs said ... "with borrowing rates now at 5.5pc and rising, most buy-to-let mortgages were costing comfortably more than a landlord could hope to make from the rental." Say it all really. I wonder what will happen next?
Planners have the ultimate responsibility - so why do we live in souless places?
Daily Telegraph: Planners are ruining our cities
The article explores rationale behind the supply-side of the demand-supply equation in housing. Normally I would read it and not post it but there were so many comments about Planners and planning yesterday that I thought it would be appropriate. Scanning yesterdays comments on planning, the majority appeared to suggest a desire for less [none] involvement from planners and more freedom of the market to produce homes people wanted to live in. Faren__451's comments summed up nicely. But clearly we know nothing because we're not the unelected experts in Town Planning; the State will provide everything for us simple, ignorant, proles! How dare I suggest otherwise!
On the treadmill
Firstrung: First time buyers face being priced out and a life of 'economic serfdom'
Britain's housing crisis is threatening the future of younger generations, new research has found. Academics from Aberdeen and Loughborough universities discovered potential 21st century homeowners were more likely to stay with their parents for longer. The global credit boom and historically low interest rates have left many people in the UK facing either years of indebtedness or little hope of ever accessing the property market...
We need a housing market crash to sort thing out
Herald: Australian housing dream blown
The great Australian dream has never been more expensive, with housing affordability at a record low. New quarterly figures from Australia's peak building body show first-home prices have skyrocketed in the past year, taking affordability to its lowest level since records began 23 years ago.
Where will it end?
Herald: More people going broke
Personal bankruptcies are accelerating at twice the rate they were last year, despite a booming economy and record employment. Figures show individuals going to the wall at the rate of 30,000 a year -- up from 13,000 a year just 10 years ago.
Tuesday, May 29, 2007
This looks baaad!
Times: Mortgage slowdown triggers house price fears
It is going to be a landslide... a carnage... Fionnuala said: “In our view, the talk of rates climbing to 6 per cent are overblown and if implemented in the current climate, could be damaging to housing market stability" what s she talking about??... where is the demand, the short supply, the divorces, our tiny overcrowded island... awash with Russian money.... Fionnuala, the market is as solid as a brick, what do you worry about?
BTL swansong?
Times: From a rich man’s game to retirement scheme for the masses
A disgusting piece of bad journalism still encouraging to invest in BTL for one's pension "the demise of the first-time buyer, as more young people are priced out of the property market, is good news for landlords" and "they are worth well over £120 billion, contributing £30 billion to the economy each year, according to ARLA".... are these b@****ds contributing to the economy???!??!?
Lost the lot
AGE: Bringing down the house
More than 20,000 small investors have lost almost a billion dollars in collapsed property schemes. Helen Westerman and Ben Schneiders report on the plague sweeping Australia.FOR many Australians, property is in the blood. Of all investments, it seems the most tangible, the most understandable.But waking to headlines heralding the collapse of Estate Property Group and its finance arm, Australian Capital Reserve, this week must have seemed like a recurring nightmare
The most read and commented article
Times: Thousands of buy-to-let face tax shock
The most read and commented article in the UK online press today was the piece on the HM Revenue and the BTL tax evasion. Read the 100 comments posted by readers!
Take the fun out of being young
SMH: First home payments hit $3000 per month
About half the increase is due to last year's three interest rate rises, which added almost $200 a month to repayments on a $400,000 loan. Mr Gallagher said bankruptcies had risen 12.5 per cent in the nine months to March."You could go back 10 or 15 years, when bankruptcy numbers were 13,000 a year, and now they are 30,000 a year," he said.
Fantastic. Brilliant. Words Escape. Just watch it
YouTube:http://www.longislandbubble.com/: Our Economy Right Now
Show this to all the "Bulls"-Hitters who believe that high house prices are a result of something other than monetarism.
Never ending story
SMH: Housing market slump lasting longer than predicted
But they face the reality that the recovery will not happen until at least 2009.
US Market Continues to Deflate
Bloomberg: S&P/Case-Shiller Home Prices Fell 1.4% in March, Index Shows
Nationally, home prices fell 1.4 percent in the first quarter from the same period last year, the fist decline since 1991.
US Housing Woes Continue
Bloomberg: Home Construction Bust May Last Until 2011, U.S. Builders Say
New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.
Mortgage demand is moderating
Firstrung: Higher interest rates subdue mortgage borrowing - BBA
April figures for high street lending show that mortgage demand is moderating in the face of rising interest rates.April's gross mortgage lending of £17.3bn was 12% more than in April 2006. This largely reflects 10% annual growth in house prices and strong re-mortgaging activity...
Inflation up Up UP!
BBC: UK businesses feel 'more upbeat'
Even though the majority of firms are upbeat about the future, KPMG said that two-thirds of the businesses surveyed would prefer interest rates to remain where they are. LOL... I love comments like that...they're great, and also very useful... Also German consumer confidence up... http://news.bbc.co.uk/1/hi/business/6691771.stm
Margaret Hodge and her 'unfortunate' comments
Firstrung: Immigrants not to blame for housing crisis - Shelter
In response to Margaret Hodge's comment on the allocation of social housing in the Observer "A message to my fellow immigrants" (20 May 2007), Adam Sampson, chief executive of Shelter, said:
A long-term investment is just a short-term one gone wrong
Firstrung: Why the economy is nothing like a brick, Soft landing? Wishful thinking
John Stepek - Moneyweek.com covers a lot of ground in todays' newsletter; the economy, interest rates, buy to let and the volume of negative property related articles in the mainstream press to name just four subjects. If there is a finer commentator than John, for explaining Economic matters in a simple non patronising way to our readership, then we've yet to find him or her. When John is on form he's a delight to read, nice work John...
More bear
Guardian: Gazing into the property crystal ball means looking as far away as China
Forecasting house prices, let alone averting a crash, is getting ever more tricky
He who hesitates........
Independent: BOE Chews over food prices in face of rising inflation
Another case where the BOE, hijacked by Blanchflower is loosing complete control of the economy.
HIGH-risk LOANS
heraldsun: Family investors lose $300m
A HIGH-risk property investment scheme has collapsed, owing mum and dad investors more than $300 million. Estate Property Group and its investment arm Australian Capital Reserve called in administrators yesterday.
Another Government policy that's failing - From Prezza!
Daily Telegraph (Online): For sale: too many flats, not enough houses
Funny old thing, a Government policy that has caused a balls up, this time from John Prescott. His policy has resulted in over supply of flats because too many homes had to be built per acre. More government involvement and more cock-ups. If the price of flats falls through the floor, will it drag the price of 3-bedroom houses with it?
Mortgage lending became slow in April
1mortgagesuk.co.uk: Mortgage lending slows slightly in April
According to figures released by The British Bankers Association mortgage lending went up by 5 billion in April. This figure is less than May which was 5.1 billion.
Planning focus on brownfield sites blamed for market failure
Telegraph: For sale: too many flats, not enough houses
The Torygraph blames a focus on brownfield sites for a lack of family sized units, for skewing the market. Would concreting the countryside make any difference to the market's current bias towards BTL investors who want small flats?
Bank of England and ECB shouldering more burden than they deserve.
Independent Newspaper: Stephen King: Defending the great prize of price stability
King argues that failure of other major economies, such as America and China, to take money growth into account will unduly effect inflation in places like Europe, where, he argues, it is given more weight. King says that Europe will raise interest rates regardless, because, whilst it isn't fair to be burdened in this way, Europe will not let price stability slip.
Monday, May 28, 2007
Oh Yeah!!!
Times: Thousands of buy-to-let families face tax shock
HM Revenue & Customs has identified 80,000 landlords who may have claimed too much tax relief or have failed to declare the amount of rent they receive from the property, or a capital gain made on the sale of the property.
Possible crash in house prices
YouTube: BBC London Special Report Part 1
More food for thought..
1,000 in 05 to 4,000 in 07
BBC: China's stock market hits record
A correction is due?!!
MPC defending their actions?
Reuters: Blanchflower says another rate rise not certain
"I felt it was important to let people know that we were on the case and that inflation expectations have to remain anchored." At last
Hometrack reporting slowdown in prices and activity
Firstrung: House prices grew slightly in May as interest rate rises begin to bite - Hometrack
"The steady ratcheting up of interest rates was bound to take its toll eventually, we expect the headline rate of growth to slow relatively quickly over the rest of the year towards 4% as affordability pressures put a continued squeeze on purchasing power and more supply comes onto the market."
Boomers get their own good press
Firstrung: Boomers contribute billions to society
Far from being a drain on society, older people are huge contributors to the economic and cultural wellbeing of their nations, according to the third annual HSBC Future of Retirement study...Conducted with Oxford University's Oxford Institute of Ageing, The Future of Retirement project surveyed 21,000 people in 21 countries and territories.
Costa Thames, Leeds, nottingham etc.etc.etc.
Daily Mail: Costa catastrophe
"When Steve and Cate Biddle attended a seminar run by property expert Inside Track, they thought they had found a way of paying off their mortgage before they retired in five years' time. It did not work out like that. This week they will put their home on the market in a desperate attempt to clear their debts." Unfortunately for Steve and Cate might want to read the following "This increase [in homes for sale] comes at a time when there are signs of wavering demand in the face of higher interest rates," said Richard Donnell, of Hometrack. "And it raises the question as to just how saleable these properties will prove to be." Oh dear, we shouldn't have been so greedy should have we!!!!
reduced prices
propertysnake: 161,000 reduced prices
interesting website probably trawls rightmove?....not sure..anyway does also show that there are affordable properties in uk albeit places you might not want to live
Tide has turned (but so far only in The Daily Telegraph)
Daily Telegraph (Online): House prices on their way down
I recall the comments on May 13 which 'gonged' the start of the decline in house prices or perhaps it was the empty cheap red wine bottle being dropped? Either way, this article is the first I recell which reports prices ARE declining, as opposed to those which report they MIGHT BE declining. I wonder if we are at a false-cliff, caused by the failed introduction of HIPS, and which will be ignored over the next months? Time will tell but an article worth reading to remove those Monday blues.
Sunday, May 27, 2007
The party is over!
Times: Housing market appears to be slowing sharply
Where are the buoyant demand and the scarce supply, the planning restrictions, the immigrants and the divorcees? Evaporated in a second... obliterated by the IR rises! “We expect the headline rate of growth to slow relatively quickly over the rest of the year towards 4 per cent as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market. Hometrack reported that an increasing number of homes were coming on to the market as vendors in London and the South East sought to cash in on strong market conditions"
UK housing market hits tipping point
Guardian Unlimited: UK housing market hits tipping point
Britain's property market is now at a turning point, according to research by property website Hometrack. It says house prices have stagnated or fallen in almost two-thirds of UK postcodes this month, as rising interest rates squeezed cash-strapped buyers out of the market.
Is it me or are things starting to heat up in here?
Times Online: Prepare for mortgage rates at 8 per cent
Rising interest rates
Reposted in its own thread
The Times: Because we're worth it
The boomers have poisoned the wells and ploughed salt into the fields. Their post-war idyll is over; the world is returning to its default mode of confrontation and violence, now made more ominous by looming catastrophes like global warming. In the midst of their success and greed, the boomers forgot Edmund Burke’s most imperishable insight – that society is a contract with three interested parties: the dead, the living and the unborn. Their children are paying the price of their amnesia. For the moment, they seem resigned, but, soon enough, they’ll want their world back.
A balanced view?
Sunday Times: Hell is buying a house
The Organisation for Economic Cooperation and Development has warned that UK property prices are among the most stretched of any major world economy, and that the housing market in Britain is overvalued by up to 65%. Surely something’s got to give because how - and where - are people supposed to live?
BTL mortgage lender turns bear
Mail: Warning over 100% buy-to-let
"Specialist buy-to-let broker Landlord Mortgages has said that only experienced landlords with substantial portfolios should GAMBLE on a property where rent only just covers the mortgage" A lender recommending caution? Using the G-word? But we all thought property is the safest bet!?
Economics editor of the Torygraph peers into the future of the housing market and predicts doom
Torygraph: Word on the street
You may remember I predicted that this would be the year the housing boom came to an end. More specifically ...
our house parody
Another nail in the mortgage coffin
Times: Mortgage rate blunders cost borrowers thousands
Sure banks used to rely on these "innocent mistakes" to round up their profits... expect increased lending spreads and upfront charges... end of cheap credit? Look at the comment in tomorrow's Times "Dirty, rotten banks"... wow! what a headline!
How long can this be sustained?
The Sunday Times: Buy-to-let: do the sums add up?
Banks are raising the threshold for would-be landlords, in effect pricing them out of the market,
A rather crushing article that places all recent evidence together to reach a damning conclusion
Independent Newspaper: Hamish McRae: Inflation has gone global - and hiking our interest rates won't make much of a dent
"it (Data coming in) would certainly be consistent with another rate rise next month or the month after. Assuming that happens, expect some heat to come out of the housing market." (Quote)
This won't surprise many of us
Financial Times: Rate rise puts brakes on investment property sales
Anybody who has done the calculation on BTL recently will know that its very hard to justify renting the average £250,000 1 bed flat in London. £375/week required on a 6% mortgage with 30% slack for voids and maintenance, given that there are plenty of rental flats for 200 to 250/week. Add the risk of interest rates and the investment is fanciful. There are some bargains still to be had, but tend to be limited to local authority. Eventually these will also be unviable if house prices keep rising.
Saturday, May 26, 2007
Irish market to roll over
Finfacts: Irish house prices to fall
Another bullet proof housing market in the process of tipping over. I hope you lot are keeping an eye on the US market, its getting worse and worse......
Notorious optimist turned cautious
Times: End of house price boom is in sight
David Smith is hedging his bet "If I’m right that a housing slowdown is in the air, then what we will see in the coming months is a sharp slowdown in house-price inflation, in direct response to the interest-rate hikes we have seen, and in prospect"
Dé·jà vu
Telegraph: Prices to hit 12-year high says CBI
Economists have put the chances of 6pc interest rates this year at one in three, after fresh signs emerged that the Bank of England has lost control of prices and the Organisation for Economic Co-operation and Development (OECD) said Britain has the worst inflation problem in Western Europe. Enough said.
FT podcast on BTL
FT: Is BTL still a good investment?
Interesting but very biased. I am also posting other more balanced FT links in a comment.
Direct economic impact of a fall in Chinese share prices maybe modest
The Economist: The great wall of money
China's economy may be less vulnerable to a bursting of the stockmarket bubble than it appears
The only possible way most low to moderate earners are going to get on to the property ladder?
Firstrung: Is shared ownership the only way onto the firstrung for many first-time buyers in the future?
Shared equity and part-buy, part-rent schemes will be the only way many of tomorrow's first time buyers will be able to afford a home, according to a group of housing experts who met in Manchester recently. The National Housing Federation is calling for the government to invest more resources in flexible home ownership schemes to help people on salaries of around £25,000 to £30,000. Speaking at the conference of Affordable Home Ownership Providers, Helen Williams, assistant director, National Housing Federation, said: "To hope for a fall in house prices is unrealistic in the current housing market. Shared equity deals or part-buy, part rent schemes are the only possible way most low to moderate earners are going to get on to the property ladder
house prices overvalued by 65%
daily mail: house prices 65% overvalued
good article showing economists talking reality economics.demand is speculative and supply is NOT a problem for home dwellers-just speculators.House of cards
Way of fiddling the figures?
Rightmove: Living in the Garden of England (Thanet Excluded)
Check out the first entry on the Rightmove database for Kent. Just a mistake, or one of the ways that estate agents can claim house prices only ever go up? I'm not surprised if houses like this are included in the figures?
Bad news keeps on coming in the US!
BBC: US home sales figures fall back
Existing homes sales in the US dropped by 2.6% in April, making it the ninth month in a row that the volume of non-new build homes fell. The National Association of Realtors (NAR) said that the pace of monthly sales, at 5.99 million units, was the slowest since June 2003.
HPC spokesman on national radio
Jeremy Vine on Radio 2: Housing market crash
Jonathon Davis, aka 'Financial Planner' (the founder(?) of HPC.co.uk and a regular on the forum) talks to Jeremy Vine about HPC and even the guy speaking up for property investors agrees that (a) prices go 'up and down' and that it's a good time for buyers to wait..! Fast forward one hour and start listening after the 1pm news.
Friday, May 25, 2007
Lessons from recent past
CNN: Homes: U.K. went cold; U.S. could too
Market sentiment can change in a matter of days, weeks... a vintage article from 2005 shows how volatile the UK house market perception is, seen from the other side of the pond. Folks, the party has only been postponed, but no doubt crash will be!
House prices 'are 65% too high'
This is Money: House prices 'are 65% too high'
The housing market in Britain is up to 65% overvalued and needs further interest rate rises to cool it, say international economists...
Inflation is up to 2.9 in May
FT.COM: UK growth endorses rate rise UK growth endorses rate rise expectation
The UK economy grew by 0.7 per cent in the first three months of the year compared to the previous quarter, the Office for National Statistics confirmed on Friday. The second reading of UK gross domestic product, which includes estimates of expenditure, was in line with forecasts. It supports the Bank of England’s assumption, expressed in the minutes of its May monetary policy meeting released this week, that the UK economy is enjoying robust growth. Compared to the first quarter of 2006, the economy expanded 2.9 per cent, revised up from 2.8 per cent.
USA 2008?
The Observer: Iran interest rate cut sparks panic selling
Yes Mr Bush this is what happens when you cut interest rates when inflation is on the up and your is currency weak. Just thought you'd forgotten how an economy works that all.
Kiss the house market bye bye!
Guardian: Petrol to hit £1 a litre within weeks as oil supply strains show
The last hope by the MPC to avoid further IR rises is gone with the oil prices going back to the levels of 2005. The good thing is not so much that rates are going up, but that they will stay high for a while.
More bad news for BTLers
Times: Back to the ’burbs
Apart from London, city centers are saturated with BTL properties, yields s@ck and properties do not sell. Is this the end of the BTL craze? BTW, I noticed the Times has a new email address buytolet@sunday-times.co.uk Are they advising BTLers? Do they have a similar service for FTBers?
More 'bear food', prices don't go down in London though eh?
Firstrung: London house prices to be hit by over supply Savills
The anticipated increase in supply could hit prices in some parts of London, according to research by Savills. Whilst a very limited supply of unsold new homes in inner London has pushed prices to new levels, Savills' London Residential Development Survey suggests that the anticipated increased supply levels, particularly in the East could have an effect on future values...
Rumour Drives Prices Lower
BBC News: Killer banana rumour grips China
"A rumour spread by text message has badly hit the price of bananas from China's Hainan island.....The messages claim the fruit contains viruses similar to Sars". It reminds me of a rumour I heard about how you can get AIDS from having a mortgage - so, don't buy property!
Guardian goes bearish
Guardian: Online
Guardian warns against possible HPC from monetary tightening
I like their numbers!
London Evening Standard: Houses 'are priced 65 per cent too high'
The housing market in Britain is up to 65 per cent overvalued and needs further interest rate rises to cool it, international economists have warned. The Organisation for Economic Co-operation and Development revealed that UK property prices are among the most stretched of any major world economy.
Newsnight's "Do we need a housing market crash?"
BBC Newsnight: Newsnight's "Do we need a housing market crash?"
In case anybody missed...........the Newsnight programme on "do we need a housing market crash?". The politicians predictably tried to pass the blame to each other - the Labour minister says that Tory councils restrict planning - the Tory spokesman says its a government strategy failure - Yawn! Two things struck me while watching this programme. 1. Stephanie Flanders' comment about the current bubble merely "transfers resources from people who would like to have owned houses in the future to those that own them right now......or from people who don't vote to people who do". 2. the estate agent's assertion that their job is to get the "most amount of money" for their clients. As I see it, current wannabe homeowners have left themselves without a voice, and are getting screwed as a result.
Home inspector tells of the financial pain of Hips delay decision
BBC News: Hips delay could hurt the pocket
Delay to Home Information Packs could cause serious financial problems for people training to be home inspectors. One home inspector explains what the delay could mean for him and his fellow inspectors.
Debt is weighing down the consumer
The Telegraph: The very real dangers of over-compensating
Interest rates tend to take between 18 months and two years to have their full effect on the economy. This means that we are still feeling the effects of the Bank’s controversial decision to cut rates from 4.75pc to 4.5pc in August 2005.
No one doubts that inflation remains a significant threat to the economy, but there seem to be very few voices warning that the Bank is in danger of overcompensating and lifting borrowing costs that little bit too high.
The biggest risk of all is, as ever, the housing market. One tweak too many will send many households into the red, and could topple property prices. Economists are always loth to mention it, but the threat of a housing market crash is still as real as ever
Newsnight discuss houseprices
BBC Newsnight: Newsnight Homepage
Interesting report and debate on the problems and causes of high houseprices in the UK. You can watch it on this link by clicking on "latest programme" though you have to sit through the Tony Blair interview first! The comments on the discussion board a worth a read too.
So Blair & Brown reckon that nuclear will shield us from peak oil?
Reporton Business: What's the meltdown price for uranium?
A little known fact is, that nuclear, like oil, is peaking, i.e. supply is falling below demand, and total world stocks are are reaching a point of decline. This has a very long term impact on inflation and gives insight into how the world economy as a whole, rather than just sectors like oil, are unsustainable. Governments are still relying on old economic models, which are outdated once the planet's resources become depleted. This inflation problem has the issue of sustainability and environmental limits at its core. It questions those who think that the current period of fiscal tightening will recede by 2009. We all know that house prices can't sustain their current level if interest rates remain high for more than couple of years.
The Mail wades in
Daily Mail: Two more interest rates on cards 'by August'
Let's hope the Mail, for once, is right!
And so does the Mirror....
I'll believe it if it happens (and cheer)
Telegraph Online: Prices to hit 12-year high says CBI
Edmund Conway reports BoE has lost control of inflation and quotes the OECD "Britain has the worst inflation problem in Western Europe." I still don't believe this dose of reality and suspect the MPC will not raise interest rates beyond 5.75% this year because the outlook for inflation will show it returning to 2% +/- 1% and Crash Gordon won't let them. Question is, when should I cash in my PEPs/ISAs and put the money in an alternate investment vehicle - don't want to get caught by the falling stock market.
Sooner the better for the US economy
www.cbsnews.com: Bush: If Iraq Says Leave, "We Would Leave."
President Bush said today if the Iraqi government were to ask the United States to leave Iraq, he would grant the request. "We are there at the invitation of the Iraqi government. This is a sovereign nation. Twelve million people went to the polls to approve a constitution. It's their government's choice,’’ the president said during a Rose Garden news conference. "If they were to say leave, we would leave."
Why is everybody so surprised?!
Guardian newspaper: Petrol heads for £1/a litre
The data is coming in thick and fast now.
Thursday, May 24, 2007
YOU HAVE TO LAUGH , WE WILL BE TAXED TO GO TO THE LOO NEXT
TELEGRAPH UK: Fines for families who throw out too much
Large families who fail to recycle most of their rubbish will face a "fine" of £30 a year under Government plans to cut waste unveiled today. The Government is looking at introducing lockable dustbins to prevent "waste wars" between neighbours dumping rubbish in other people's bins.
Hubble Bubble Toil & Trouble
tt.com: US fears over China long-range missiles
The US is increasingly concerned about China’s deployment of mobile land and sea-based intercontinental ballistic nuclear missiles that have the range to hit the US, according to people familiar with an imminent Pentagon report on China’s military China is moving at a pretty rapid pace to becoming a military contender,” said a senior US official. “The pace has impressed people [in the US].”
Danger Danger
BBC News: Oil price at $71 nine-month high
So, Mervyn expected in his calculations that oil would settle to around $40/barrel, well, I'm not an economist, and even i thought that was barmy, news is coming in thick and thin now about how commodity prices will shape economic prices for a good while yet. Maybe the bank should hope for the best but plan for the worst. It seems that they have planned for the best and hoped that the worst wouldn't happen.
Things getting grim up North
this is money.co.uk: What next for city house prices?
Looks like Sunderland is not such a sunny place afterall. £200k for a 2 bed room flat, would you Adam and eve it?
Interesting! But when to jump in - that's the question!
Times online: US house sales soar on dive-bombing prices
Number of new American homes sold booms in April but only after the biggest drop in prices since 1970 housing crisis Sales of new US homes rose a higher than expected 16.2 per cent in April, but only on prices which fell a record 11 per cent, their fastest decline in 37 years, according to a government report today. The figures the fastest rise in numbers sold in 11 years, showed that house builders were having to offer massive discounts to offload unsold homes.
Could China cause a global depression?
financial sense: Why a Chinese monetary tightening could be followed by a global depression
China is facing the essentially same dilemma today as America did in 1929. The United States in the 1920s flooded the world with liquidity in order to hold down a fundamentally strong dollar and prop up a weak pound at the behest of Britain’s central banker, Montague Norman, and a Treasury Minister named Winston Churchill (who failed at everything he did in public life before winning World War II). China has been similarly accommodative until recently to support the weak U.S. dollar, despite making heroic efforts to “sterilize” these dollars. But some of the liquidity inevitably found its way into the Chinese and global economies, helping to bring about torrid (and probably unsustainable) double-digit percentage growth in China
Mortgage lending & house price slowdown
Financial Times: UK mortgage lending growth slows
UK house price rises and mortgage lending growth is moderating as recent interest rate increases take their toll, reports released on Monday showed.
Prices on the up
FT.com: UK manufacturers optimistic on prices
UK manufacturers’ optimism that they can force through price rises is at its highest for 12 years, the CBI said on Thursday. The employers’ body said that its latest survey of industrial trends showed the balance of producers who expected to push up prices over the next three months was 25 per cent in May. This was up sharply from a balance of 16 recorded in April and was the highest reading since March 1995. Analysts said the evidence of rising prices at the factory gate would be of concern to the Bank of England.
US house builders discounting houses to shift them
BBC News: US home sales up as prices slump
Sales of new houses in the US in April rose to a 14-year high, according to a government report. The number of single-family homes sold leapt 16.2%, ahead forecasts and making an annual rate of 981,000 units.
Inflation, inflation, inflation
FT.com: OECD warns on risk of higher inflation
The world’s central banks should “err on the side of tightness” in the face of inflationary pressure, the Organisation for Economic Co-operation and Development said on Thursday. In its twice-yearly Economic Outlook, the Paris-based organisation urged central banks, with the exception of Japan, either to raise interest rates or take their time before cutting them, because of strong domestic demand which had increased the the risk of higher inflation.
Newsnight is requesting our views on the housing market for tonights show
Newsnight: Do we need a housing market crash?
In his 1997 budget speech Gordon Brown said, "I will not allow house prices to get out of control". Ten years on and they have spiralled leaving thousands of people unable get onto the first rung of the property ladder. So do we now need a crash in the housing market to level the playing field once more? Are crazy house prices creating a new generation of renters unable to buy? Send us your experiences - have you been priced out of the market? Or have you done well out of the boom and long may it continue? Let us know below and we'll discuss the issues and put some of your points to the government and a select panel on tonight's Newsnight. Please post your comments and questions directly to their blog.
Up down merry-go-round
Bloomberg News: US New Home Sales in April Jump by the Most in 14 Years
Purchases of new homes in the U.S. unexpectedly jumped in April by the most in 14 years, a sign low lending rates and incentives may be reviving demand. Sales rose 16 percent to an annual pace of 981,000 last month from an 844,000 rate the prior month that was less than previously reported, the Commerce Department said in Washington. The supply of unsold homes at the current sales pace dropped.
Sydney's Housing Disaster
Financial Sense: Sydney's Housing Disaster
This long, but appropriate, article highlights some important issues overlooked by many people amid rising house prices. Central is the way the author questions the idea that people suddenly all feel more rich because the house at the end of their street sold for a premium. Unrealised gains are just that.
“Trading hours coincided with my shift so I gave up my cab,”
times: China's rocketing markets
China’s stock markets are roaring to record levels as millions of small investors bet their savings in a frenzy of speculation. But there is a danger the markets may overheat and even crash with unforeseeable consequencesThe mania for shares among Chongqing taxi drivers is likely to rattle western investors, who remember that the temporary slump in Chinese equities on February 27 set off a global rout in capital markets at a cost of more than £1,000 billion. “Trading hours coincided with my shift so I gave up my cab,” Lin Huaqiang, a driver, told a local reporter who discovered that more than 100 cabbies had followed his example.
markets catching chinese flu
Times Online: OECD warns of danger of Chinese stocks collapse
OECD warns of danger of Chinese stocks collapse Influential global think-tank says it will be hard to limit effects of 'marked correction' to the country's stock markets alone The warning came on the back of Chinese stock market that has risen 55 per cent since the start of the year and more than tripled in the past 17 months. It followed remarks night by Alan Greenspan, the former US Federal Reserve chairman, who warned of the risk of a "dramatic correction" in Chinese share prices and said recent gains were unsustainable.
ITS JUST THE BEGINING
moneyweek: Get ready for a 6% UK interest rate
Last night, we got an email from Capital Economics outlining when the bust will begin. The economics consultancy, headed up by Roger Bootle, had previously foreseen a gentle slowdown. But it now reckons that “the commercial property market is no longer likely to avoid meaningful falls in capital values over the next few years.” The group thinks prices will fall by 4%-6% in both 2008 and 2009, with further falls in 2010, meaning that, over those three years “total returns at the all [commercial] property level will be approximately 0%.”
The Kitchen sink!!
The Times: Government considers £1bn sale of waterways
The Government is considering a billion pound-plus sale of the country’s canals and waterways.
Dedicated to the BTLers
Guardian: Barclays profits jump 15%
Sweat hard, risk your pensions, live in a dream... but have no illusions, it is not you who are profiting from it!
Squatter gets £3million property
The Times: Tramp wins a Hampstead Heath home
A tramp who squatted for 20 years in one of London’s most expensive suburbs has been awarded the deeds to a plot that could be worth £3 million. Harry Hallowes, 70, now owns the 60ft-by-120ft site on Hampstead Heath in North London, after a three year legal battle. He has lived there in a tiny shack since 1986. Mr Hallowes said: “This has been my only home for 20 years. I absolutely love it here. I always expected to be given the deeds."
Reginald, Those Accounts You Filed...
Times UK Business: Uk's biggest sub prime lender set to accpet cut price bid
What have we here? I do suppose that those accounts are a true and accurate reflection aren't they?
Pleeease don't put interest rates up!
Times UK Business: Hawkish MPC minutes put 6% interest rate on cards
Well about time too, now my savings will get a better rate of return - if the banks pass it on of course and they will have a lot of bad debts to provide for. .
Laughable HIPs mess!
Telegraph: Four-beds become three in HIP fiasco
Estate agents said that they would be recommending all sellers of four bedroom houses to re-market their homes as three-bedroom properties with an extra study or reception room. This would allow them to avoid paying for a £600 pack and save the time tracking down one of the few qualified inspectors.
Going Ballistic
Safe Haven: The Hard Facts about Parabolic Spikes
On April 16th Greg Weldon, of Weldon's Money Monitor, cited a report from the People's Bank of China revealing the largest growth of commercial lending in China's history. In the fourth quarter of 2006 China's commercial loan volume was 425 billion Yuan. During the first quarter of 2007, it topped 1, 423 billion Yuan, a 335 percent increase in 90 days! How likely is this performance to repeat for several more quarters?
Forget about China keeping the world economy going when the US stalls
US Policies Promote Inlfation Despite Fed's Rectoric
The Asian Times: A strong dollar and US interests
A readable article which suggests the US policy toward the dollar truly is disconnected between what ought to be in the country's interest and what current policies promote. Policies are promoting a weaker dollar and higher inflation; one idea why is Bernanke's desire to avoid deflation, see " ... the Fed is rather concerned that a credit contraction combined with high levels of consumer debt could create a Japanese-style deflationary spiral; to avoid having to deal with deflation, the Fed should induce inflation." Higher inflation will erode debts for the US - convenient. Will inflation come to the UK? If it does, will the MPC choose to erode debt too? Author is Axel Merk, a portfolio manager of the Merk Hard Currency Fund.
Barker said... the obvious
BOE Barker: Low Rates Key Reason For UK House Price Gains
"You wouldn't immediately assume that a fall in interest rates would make housing less affordable," Kate Barker said. "It would, of course, raise prices, but given people wouldn't have to pay as much for their mortgages, they'd still be able to afford them." Disgusting example of "Labour-nomics". The sooner we rid of these jokers the better.
China Crisis?
BBC: Greenspan fears China market fall
Exponential speculation or un-tapped wealth?
Winds of change are blowing in The Indepedent
Independent: Hamish McRae: Don't blame MPC for steering rates up, global liquidity is the backseat driver
This is the first time I can recall Hamish McRae stating the garden may not be full of roses afterall. An interesting article which highlights the need for higher interest rates due to global pressures.
Takeo Fukui: 'we thought the UK was in Europe'
telegraph.co.uk/money: Honda tells UK: join euro- zone or else
Honda's president Takeo Fukui has threatened to cut off future investment in Britain unless the country joins the euro, admitting that the Japanese car producer had made an "error" building its car plant in Swindon.
No more upstairs downstairs , the maid is out trading
TELEGRAPH UK: Chinese maids play the markets
This analyst - whose name I know but have agreed not to mention, largely because he is afraid of upsetting his wife - is among the more respected commentators on China's markets, but while the benchmark Shanghai Composite Index was soaring 130% last year, he saw a personal return from his share portfolio of just 5%. Worse still, among the millions of Chinese who were playing the markets and winning, our analyst found himself outperformed by, of all people, his family's maid.
WHERE THERES MUCK THERES MONEY FOR THE GOVERNMENT
Telegraph: Microchips in dustbins spy on three million
Britain is the only major European country not to have separate charges for refuse collection. But there are fears that any new system could cost an average of £20 a month for each home. massive concern over the disappearance of traditional weekly refuse collections. The Daily Telegraph revealed last month that about nine million people now had to put up with collections every two weeks.
Wednesday, May 23, 2007
Can anyone lend me a fiver?
mwhodges: US Total Debt 48 trillion
Total US debt in 2006 was $48 trillion (460% of national income); the debt ratio in 1957 was 186%.
These figures are higher than other estimates - but the message is the same
Why should we take cheap food as granted?
FT: Fears over food price inflation
Retail food prices are heading for their biggest annual increase in as much as 30 years, raising fears that the world faces an unprecedented period of food price inflation. Prices have soared as the expanding biofuels industry, climate change and the growing prosperity of nations such as India and China push up the costs of farm commodities including wheat, corn, milk and oils. Food companies have started passing on these increases to consumers, but the prospect of sustained commodity price rises means the industry’s profits could be hit as it is forced to absorb the higher costs itself.
Boom boom boom
The Times: Banks' bonus boom time looms again
It seems the super size mortgage slaves have now been long forgotten by the MPC who must now concentrate all of their efforts on the City to control inflation and cheap credit which is driving private equity deals and hedge funds etc. The property market seems to be a sacrificial lamb. Mint sauce anyone!!
UK has 2nd highest debt in the known world.
Firstrung: Britain takes the silver medal in 'debt Olympics'
UK $8,280,000,000,000 from 66 Million People US $10,040,000,000,000 from 300 Million People World $44,610,000,000,000 from 6.6 Billion People Oh Yeah!!!
words fail...
Firstrung: HIPS debacle; "a mess, farcical, ridiculous, madness" - Ministers credibilty destroyed
Mike Ockenden, director general of the Association of Home Information Pack Providers, says: This latest decision is at the cost of the consumer and the environment. It appears to have been RICS, through their call for a judicial review, which has ultimately derailed this vital house buying and selling reform, so soon before its planned implementation. Consumers will have to endure the existing, broken house buying and selling process for at least a further two months, costing them time, money and unnecessary stress.
How would they have coped with HIPS?
Firstrung: Ombudsman of Estate Agents (OEA) see complaints increase by 41% in 2006
The number of enquiries about estate agents to the Ombudsman for Estate Agents rose to 8,472 in 2006, an increase of 41 per cent from 2005. This resulted in 586 cases being referred for formal review and resolution, an increase of 18 per cent over 2005 in a year that saw OEA membership rise by 52 per cent to 7,666 offices, but still below the peak of 615 in 2002, when membership was only 4,251 offices
It could have been..
FT.com: Bank considered half-point rate rise
Chewing over what might have been, but at least they considered it: The Bank of England discussed a 50 basis point increase in interest rates at this month’s monetary policy committee meeting, minutes released on Wednesday showed. “This is a hawkish set of minutes that point firmly to another interest rate hike before long. Even the persistently dovish David Blanchflower was convinced of the need for higher interest rates in May,” said Howard Archer at Global Insight. The minutes showed that some committee members thought that because a 25 basis point increase at the May meeting was considered a given by the markets it may be necessary to deliver a firmer jolt in the form a one half of a percentage point.
Another classic property U-turn form the government
MoneyWeek: Another classic property U-turn from the Government
Home Information Packs have now been delayed until the beginning of August. Could it be that Gordon Brown wants to delay any disruption to the housing bubble until after he becomes PM?
No doves in the MPC for last vote
BBC News: UK rate rise decision 'unanimous'
The Bank of England's decision to raise interest rates by a quarter of a point in May was unanimous, minutes of the rate-setting meeting show. Lingering inflation risks prompted the unanimous decision to hike interest rates to 5.5% - taking the cost of borrowing to six-year highs this month.
Deluded FTBs
Telegraph: First-timers feel 'the big squeeze'
"We have had seven years of renting, which means seven years of dead money, so it is nice to know we are working towards something solid, our own bricks and mortar"... bet they are paying much more in bank interests now, without taking into account the forgone interests on their 10k deposit. "Yet they count themselves hugely fortunate to be just-haves"...?!
Austrian School of Economics says Fed will cut rates soon
Safe Haven: DEARTH OF CREDIT
Since the high of 5.18% on February 23 the 3-month treasury bill has plunged to 4.74%. This is beginning to look like rather a fast move that senior central banks will dutifully follow.
As we noted in December 2000, interest rates going up indicates that the boom is on and that falling rates indicate the boom is over.
What's more, the bigger the boom the more dramatic the decline in short-dated interest rates.
Tuesday, May 22, 2007
Private Equity Under The Spotlight!!
FT: Private equity elite to face grilling by select committee
5 of Europe's top buy-out execs face a public political grilling on June 20 after being summoned to appear before the influential Commons Treasury Select Committee inquiry into private equity.
Utter chaos!!! ...piss-up / brewery anyone?
BBC: Home info packs 'to be delayed'
The introduction of controversial Home Information Packs is set to be delayed by Communities Secretary Ruth Kelly.
HIPS delay will cost some companies millions
Firstrung: LMS ready to roll out HIPS having pre-sold 150,000 packs
LMS has revealed it has pre-sold more than 150,000 Home Information Packs (HIPs) ahead of the 1 June implementation date. The provider claims the packs are in strong demand by brokers, lenders and estate agencies keen to be ready for 'H Day'...
Prices tanking in most of the country!
Times: Interest rates put brake on house prices
Article by property cheerleader, Judith Heywood, tries to find some bright spots in a pretty gloomy market. "Slower growth in these areas is being masked by the continued outperformance of the London market, up 1.4 per cent to 24.8 per cent in a year" "Chelsea rose only 3.4 per cent in that time, although over a year it has been the capital’s star performer, with prices up 75.7 per cent." Judith, wake up... it's all over!
The evidence keeps piling up for further rate rises
Reuters: Faster UK money supply growth bolsters rate hike bets
"Britain's broad measure of money supply rose at its fastest annual pace in six months in April, boosting expectations that interest rates still have further to rise" It's not the only factor the BOE look at when setting rates, but it's got Mervyn's attention...
Location key as London scout hut sells for £400k
Hot Property: Location key as London scout hut sells for £400k
Apparently sold more for the land than anything, but there's also a few links to other crazy prices for things entering the market: "A luxury house boat with panoramic views of the Thames recently entered the UK Property market for £650,000." Well, if it's *luxury* it must be worth it...
properties flooding market pre HIPS
Firstrung: A staggering 884,000 people claim to have put their properties on the market in the past three months in order to avoid paying for a HIP
New research from Spring, a home information pack (HIP) and property information provider, reveals that a staggering 884,000 people claim to have put their properties on the market in the past three months in order to avoid paying for a HIP. These become compulsory from 1st June 2007. The company warns that this rush of homes on to the market could lead to an increase in property prices.