Tuesday, Jun 26, 2007
This is MISLEADING information
Reuters: Property investors double money
"The eastern European country has retained its place at the top of Assetz quarterly property investment tracker, giving a total return on cash invested of 100 percent in the past year." "As a buy-to-let investment location, Britain also continues to prosper, lying in third place behind Poland and Bulgaria, with gross yields of 6 percent and a total return on cash invested of 68 percent" But... "The five major UK house price indices point to average annual house price growth of 11 percent" Well, yields of 6% is a pipedream, amd were returns 68% or 11%? The answer is that Assetz has assumed investors put down 25% equity, and so the "cash returns" become (11%+6%)/ 25% . What b@s..ds!! The FSA should regulate this market, and Reuters should know better!
14 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. royston said...
"We have them surrounded in their tanks" - Comical Ali, former Iraqi Minister of Information.
Ahh, the Art of Spin!!!!!!!!!
2. confused76 said...
this may have been posted already, a great article
http://www.moneyweek.com/file/31286/the-trouble-with-interest-only-mortgages.html
Take, for example, the good folks at the recent “Great Housing Debate“, run by PR consultancy Wrigglesworth. “House prices look set to continue to rise at an unstoppable rate for the foreseeable future, experts have said.”
That headline on aboutproperty.co.uk put paid to my ropey theories all right.
But, not content with foreseeing the foreseeable future, aboutproperty went on. “At the Great Housing Debate… lenders, economists and housing industry experts agreed without major economic decline house prices would keep rising.”
They continue: “‘A serious correction in the housing market traditionally occurs as a result of a sharp economic downturn, which looks extremely unlikely. It would take a reversal in recent increases of income multiples or a considerable tightening in lending criteria by banks, for there to be a serious downturn in prices,’ commented Nigel Terrington, Paragon Mortgages chief executive.”
Don’t you just love the property market? It never goes down it always goes up forever.
The chaps at “The Great Housing Debate” even had a proper expert to explain it all. “Our expert, David Miles, Chief economist at Morgan Stanley said: ‘Public expectations regarding house price growth is key to the market's stability. Growth would need to fall successively for a number of months before peoples’ expectations, and therefore prices, were seriously impacted.’”
And finally, just in case we didn’t get it, they finished with a bit of financial voodoo: “…experts also agreed keeping homes affordable would be down to offering mortgages with more income multiples. ‘Focusing on income multiples alone is not helpful – they must be considered instead in the context of affordability,’ said Michael Coogan, director general of the Council of Mortgage Lenders. He added ‘income multiples of six or seven could be a possibility in future.’”
So, what they’re saying, in other words, is that the price of a home itself has become irrelevant in the property market as long as the means exists to match it. That doesn’t seem a sustainable basis for rising prices – but then what do I know?
3. Scott said...
"Don't worry investors, something will turn up. "
That's what general custer said, "Something will turn up", and he was right; another bloody load of Indians.
4. Bangybongo said...
Why DOESN'T the Financial Services Authority regulate the one biggest financial transaction that we all are likely to make in our lives?
5. p. doff said...
The market does seem unstoppable. Last week I mentioned that 3 agents had reported a slowdown on sales after a busy period taking on houses before the June 1st HIPs original deadline. As anticipated, the same 3 agents (and others) are now telling me that things have taken off again. Our survey office remains extremely busy - of todays 6 valuations, 3 were BTL, 2 were owner occupation purchases and 1 was MEW. The two other surveyors here did similar amounts/proportions. There is therefore no obvious trend to support a slowing market (in this part of North Wales at least).
I guess the majority of buyers aren't aware of this site and couldn't care less about global liquidity, carry trades, sub-prime losses, the personal & national debt mountain, negative equity, City bonuses, Cycles, K-waves, USA crashes, the Yen, interest rates, China, CPI, RPI, MPC, spin, vested interests, affordability etc. All they see is prices continually rising, and the chance to make some dosh, or the chance to buy before prices escalate further.
The market is totally underpinned by sentiment, and the sentiment of the average Joe Bloggs will not change IMHO until the tabloids consistently report horror stories about falling prices, the property porn TV programmes show novice would-be 'developers' making substantial losses for a change, and/or interest rates reaching crippling levels.
Looks like the plates can be kept spinning for a while yet!!!
6. dobber said...
p.doff,
"I guess the majority of buyers aren't aware of this site and couldn't care less about global liquidity, carry trades, sub-prime losses, the personal & national debt mountain, negative equity, City bonuses, Cycles, K-waves, USA crashes, the Yen, interest rates, China, CPI, RPI, MPC, spin, vested interests, affordability etc. All they see is prices continually rising, and the chance to make some dosh, or the chance to buy before prices escalate further"
Take a look at the share prices of the major UK house builders (Persimmon, Barratt Developments, George Wimpey etc). The market is always right, and the market has marked them down significantly already, and this is just the beginning!
7. talking rot said...
The public will only become aware of this site once the decline in property prices has gone on for some time; it will be one of a number of sites used to identify the bottom of the market.
That's if house prices ever decline! For all our objective analysis and intellectual reasoning, there has yet to be a general decline in house prices. I think Gordon Brown will try every trick in the book to prevent such a decline this side of the general election. So, 2011 could be an interesting year .......
Personally waiting is not a problem as I can't buy anyway.
8. talking rot said...
Hmmmm.
The Times reports a standby for an election in 2008 due to the appointment of an election coordinator. This could mean Gordon knows the economy is about to go pear-shaped or it could be a ruse to get the word referendum out of the papers. Personally I'd opt for the latter.
9. enuii said...
Confused76's quote explains the phenonema,
'Public expectations regarding house price growth is key to the market's stability.'
It's all down to basic psychology, the potential buyer once convinced his purchase will rapidly appreciate in value ignores common sense and puts the thought's of 'can I really afford it' at the back of his mind and either lies to the lender or goes 'interest only'. After all if he later cannot afford the house he can always sell it and take the profit.
The whole assumption is that the market will always go up and the estate agent will not indicate anything to the contrary, hence ever higher board prices. It will consequently take stories of falling prices on the 6-o'clock news or similar main stream media to convince the punter otherwise.
10. p. doff said...
dobber. I should have included share prices of UK house builders in my list of items the average Joe Bloggs housebuyer doesn't consider. The majority of the sheeple just aren't that clued up.
11. japanese uncle said...
This is not a misleading info, but disinformation.
12. Batterychicken said...
To quote Confused67:
"So, what they’re saying, in other words, is that the price of a home itself has become irrelevant in the property market as long as the means exists to match it. That doesn’t seem a sustainable basis for rising prices – but then what do I know?"
Fundamentally, yes.
If the banks are prepared to give money then people can pay ever increasing prices. We might think this is somewhat irresponsible lending but from their point of view - prices only ever rise and interest rates will never rise to 15% again so what can go wrong? If the home-owner defaults they can always repossess and recoup their losses.
My former-EA friend noticed this in the late 90s. I think then it was self-cert mortgages fueling the rise.
Can I point out that I don't necessarily believe that house prices will always rise or that interest rates won't go ever higher! I am merely trying to express what I believe is the banks' attitudes.
13. nearly30 said...
enuii - your right - it's like the psychologist / consultant that goes into an office and finds out that the workers complain about not feeling in control of their workspace, in particular, they have no control over the temperature of the office. As a solution - the consultant recommends fitting dummy temperature control dials near to their desks - they don't know the dials don't actually work and that they still have no control - but they feel a bit better - everyone's a winner!
Also the boiled frog analogy is a good one too!
14. wiltshire said...
Enuii - you're right, to a degree. Don't forget though that house prices are on a knife-edge and there are cracks appearing (i.e. not all areas are seeing the same level of HPI as in recent years, infact some areas are already edging into negative HPI I believe). Although talk of a crash on the 6 O'Clock News would be a big psychological knock for the housing market I also think we need to bear in mind there are massively increasing numbers of people in dire financial straits. These people are in very single city, town and village across the land, they come from every part of society and there's more and more of them daily. Also, don't forget one price on a street can set the benchmark (high or low) for the values on the rest of the street - and surrounding streets. So, the News can have an impact but so can people's every day experiences of what they see happening to family, friends and neighbours.