June 2008 Archive
Monday, June 30, 2008 
Going down - faster than ever before
Daily Telegraph: UK house prices in grip of slump that experts expect to deepen
An article describing everybodys views that this crash is faster, deeper and more structural than any before it - so say the estate agents. I can't say I'm surprised. It takes milliseconds to go around the internet, and anyone buying will be second-guessing every day. If you've not exchanged and don't need to - why should you? You WILL gain purchasing power by waiting - or more clearly - you will LOSE money if you buy anytime soon.
More spin suggesting now as a good time for FTB to jump in
The Bath Chronicle: Credit Crunch 'Could Help First-Time Buyers on to Ladder'
There is the usual bluster that things are different this time as IRs are lower and employment is lower. But I am heartened by the admission by the surveyor Stephen Morris of 10-15% falls since their peak last year. Even the worst statistics from the lenders don't reflect that (yet). More worryingly, it says of Richard Pullin, of Pullin Knight "His firm has teamed up with mortgage broker Network Mortgages to launch the Gifted Deposit Scheme, in which vendors can opt to pay up to five per cent of their buyer's deposit." Is this not identical to the allegedly fraudulent incentives offered by big property developers? Does it not amount to a 100% mortgage that the lender would be most interested in hearing about in these days of strict lending criteria?
How Low Can You Go
Telegraph: Lloyds TSB gives Visa cards to 11-year-olds
Lloyds TSB is sending the cards directly to children as young as 11 without informing their parents, raising fears that they are being used to buy cigarettes, alcohol and pornography over the internet. The cards are Visa-enabled and can be used any time a Visa sign is displayed.
BTL is UK's subprime
BBC World service: Analysis
All bubbles eventyually burst and when they burst there is lot of pain Highest debt consumer debt level in western world 30% fall on aution prices IMF says UK market is 30% over valued FTB buying now will be in negative equity High home ownership 80%. All counteries having high home ownership is having high falls 3rd most overvalued housing stock after Ireland and Netherlands Debt binge in the last 20 years. and we will pay for next 10-20 years BTL is UK's subprime. City centre and holiday homes loosing values fastest Cheap credit is over. No more 100% mortgages Higher interest rate and more deposit. Million people paid mortgage on credit card Etc. Etc
Here it comes - the final nail!
Telegraph: Trinity Mirror points to weakening jobs market
'For the first six months of the year, recruitment advertising was down 8.4pc in the regionals division, whose titles include the Birmingham Post and Newcastle's Evening Chronicle. Spool back to the first four months of the year, and recruitment fell just 1.7pc, suggesting a marked decline in May and June.' Here it comes, the final nail in the coffin!
Sub-Prime UK , a painful article
Bloomberg: Hadrian's Town Becomes `Slum' as Subprime Infects North England
Paul Quinn stands among furniture piled in a second-hand store in Wallsend, a town in northeast England where about half of mortgages are subprime. Demand for the chipped tables and cupboards is accelerating, he says. ``One time you couldn't sell, and now they're all buying,'' said Quinn, 57, who minds the shop for Alan Booth Clearances, the local removals company..."
£612k reward for costing British tax payer Billions
Teletext: Rock supervisor gets pay-off
Clive Briault stepped down as managing director of the FSA's retail banking division in April "by mutual consent". This monkey was getting £380k a year before he left 'by mutual consent' http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3586950.ece
WTF!!! Why am I not surprised....
Citywire: FSA directors took home 22% pay rise in year of the Rock
The Financial Services Authority increased the total pay of its directors by around 22% in the year it presided over the Northern Rock debacle.
Given the current state of the housing market, it looks like unlikely timing....
Citywire: Falling home sales prompt renewed calls for stamp duty reform
Plummeting housing transactions have prompted the Royal Institution of Chartered Surveyors to renew calls for reform of stamp tax, calling for a two-tier tax system in which no one would pay the tax on the first ₤150,000 of a house price. Under the institution’s proposals, above the ₤150,000 limit a 2.5% rate would be charged on every pound, up to ₤250,000, after which a 5% rate would apply.
Direct result of lenders bypassing brokers?
Telegraph: John Charcol axes 25pc of staff as mortgage market dries up
.....the broker said it plans to close its offices in Manchester, Guildford and Birmingham, and will lose 69 staff.
From the horse's mouth
Bank of England: Lending to individuals, latest release
This release used to be a frontline stat, but now you have to burrow to find it. They've also stopped showing a rather good graph. I don't know how to stick graphics into posts here, but if someone would like to go into the banks interactive database, type in the code LPMVTUV, output for the last ten years and create a graph from the data, you can see how lending has suddenly fallen off a cliff...
Latest predictions from buy-to-let lender Paragon, are, as always, optimistic
Citywire: The future of buy-to-let: boom or bust?
Latest predictions from buy-to-let lender Paragon, are, as always, optimistic. Paragon maintains that landlords are looking forward to an increase in tenant demand and the opportunity to increase rents. Signficantly there is virtually no mention of falling property prices. But this is at odds with figures from the Association of Residential Letting Agents where the latest survey reveals that in some areas, particularly those with a high proportion of new build flats, rents are actually falling. Moreover, in the face of falling property values, some buy-to-let investors are clearly bailing out. The results from recent auctions where a significant proportion of properties are former buy-to-let properties show that almost 50% are failing to meet their reserves.
Wimpeys lenders relax 'banking covenants'....!
Property Week: Taylor Wimpey confirms emergency fund raising
Housebuilder Taylor Wimpey confirmed today that it was in talks with investors regarding emergency fund raising plans.
Timber!!!!
Reuters: Crash worries grow over housing market
More gloomly figures, how much longer can the UK housing market take before it goes same way as US market, not long I think. What will be the final nail in its coffin?
How does being thrifty help a debt-based economy?
Belfast Telegraph: Viewpoint: Thrift needed to ride out economic slump
"It revealed that 42% of people here are spending more than they are earning. All pleas for people to tighten their belts in the current straitened economic climate are apparently falling on deaf ears." This to me sums up the conflict/joke/lie at the heart of our economy - do they really want us to be thrifty when curbing consumer spending leads to a recession? What happens if we become a nation of savers? Even if we 'spend within our means', is that enough for 'sufficient' economic growth?
Rents are coming down
Essex County Standard: Landlords told to be realistic
‘ Landlords who hold out for inflated rents on their empty flats and houses have been warned they risk seeing their properties "sit in the wilderness". The warning comes from Richard Jones, manager of Letting Solutions: ”it is better to accept a lower monthly rent - which may not cover all the landlords' costs - than to have a void and no income at all.” ‘ - Pages 32&33 on the web (60 and 61 printed in the paper)
Staff fraud soars by 74pc
Telegraph: Staff fraud soars by 74pc
Fraud often increases in times of economic slowdown as people and companies become more desperate, but the sharp rise in recent months underlines the depth of the current crisis. But according to brown we are wealthy and dont have inflation..
This is hilarious - beyond satire
This Is Money: HSBC may repossess own head office
Last year, HSBC sold its Canary Wharf HQ building to the Spanish property group Metrovacesa for £1 billion, in a sale-and-lease-back scheme that allowed HSBC to remain in the building. This was the largest property deal in UK history at the time. Metrovacesa took on £800m of short-term debt to buy the building. It borrowed the money from.... you guessed it, HSBC. Now they are struggling to refinance the debt, as no-one wants to lend to them. HSBC want their money back, and Metrovacesa can't pay. HSBC may now repossess the building. Sweet!
Today's gold fix = $932.75/oz
Kitco: Today's gold fix = $932.75/oz
Given the amount that certain people talk about gold, I thought this might be of interest. Especially when viewed alongside this: http://www.housepricecrash.co.uk/newsblog/2008/04/blog-goldsilver-bull-not-over-12623.php?comment=added
Some gemstone quotes here
Telegraph: UK house prices fall for ninth straight month
Similar to Guardian piece but worth reading for the risible quotes: "At the weekend Professor Stephen Nickell, a leading housing advisor to Gordon Brown, warned that it would take until 2015 for the property market to start booming again. He also warned that the “severe rationing” of mortgages was preventing first time buyers from taking advantage of falling house prices, preventing affordability from improving." A peach that one. How many GCSEs do you have to fail to become a leading house advisor? Even better: "Richard Donnell ... said: “This drop in volumes was always possible as around half of all transactions in recent years have been driven by aspirational or non needs based movers, who are now sitting on their hands." " What shall we do this weekend. I know, let's move house.
It's All Different This Time .....
Guardian: Banks and insurers prepare to sacrifice jobs to protect profits
... Or is it?! The VIs suggest all will be OK - employment is solid. "More than 10,000 City staff face sack this summer Fastest fall in profits of financial firms since 1989" Ooopps.
BCE to increase rates... Mr King, Frankfuft calling!
Yahoo France: BCE will increase interest rates to ease tensions on prices
Jean-Claude Trichet will probably ask for the main rate to be increased to 4.25% following the Euro zone inflation figures for June (4%). This move appears as "almost certain and already integrated in the market" according to Stéphane Deo, economist at UBS. Will this show the way to the BoE?
Why we should be worrying about deflation
MoneyWeek: Why we should be worrying about deflation
"...even though prices are rising at a rate of knots just now, deflation is also a very genuine threat to Western economies. How it plays out remains to be seen, but a period of inflation followed later be a longer period of deflation does look quite possible."
Nationwide June House Price Index Missing In Action ?
N/A: June House Price Index
Anybody seen it today yet ? Final seasonal "smoothing" going on ?
Severely damaged banks being more conservative
BBC News: New low for UK mortgage approvals
''The number of new mortgages being approved for house purchase in Britain has dropped heavily for another month. The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago. ...
Why not "turn on, tune in, drop out...."
Firstrung: UK house prices fall for ninth consecutive month as house transactions begin to slump to 1970 levels
UK house prices have fallen for the ninth month in a row during June, to cost 3.2% less than they did a year earlier, figures released from today Hometrack have shown...The number of homes selling is now on target to slump to levels last seen in the 1970s as the credit crunch continues to take its toll on the market, the property information grouphas stated. The group said the average home in England and Wales lost a further 1% of its value during June to cost £170,500. Richard Donnell, Hometrack's director of research, said new buyer registrations were now down by 5.7 percent in June alone and have fallen by more than 50 percent since the credit squeeze began last August.
Banks to trample growth in rush to deleverage
reuters: Banks to trample growth in rush to deleverage
Those losses -- which are still mounting and being recognised -- have piled up faster than banks can raise new capital, leaving the system today more extended than it was before the crisis began. *******So what happened to all the tax payers money that was pumped in*********
Japan May housing starts -6.5 pct
reuters: Japan May housing starts -6.5 pct
It was the 11th straight month of falls.
BIS slams central banks, warns of worse crunch to come
Telegraph: The media's uber bear
A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate.
That's gotta hurt!
Times Online: Northern Rock borrowers face big jump in mortgage repayments
Hundreds of thousands of Northern Rock borrowers are facing huge rises in their monthly mortgage repayments because they are trapped in deals with the beleaguered lender. Thousands of Together customers have little option but to move on to the bank's standard rate of 7.49 per cent at the end of their fixed-rate deals. A homeowner who took out a £150,000 fixed-rate loan with Northern Rock at 6 per cent will see their monthly repayments rise by £186 on the bank's standard rate. Melanie Bien, of Savills Private Finance, a broker, said: “Unfortunately, people with 100 and 125 per cent loans who are coming to the end of the fixed-rate don't have much choice.”
Hometrack: -1.0% MoM, -3.2% YoY
Guardian: House prices fall for ninth month running
House prices in England and Wales fell for a ninth month running in June, leaving them 3.2 percent lower than a year ago, a survey by property research company Hometrack showed on Monday. The survey also revealed a rise in the length of time a property spends on the market and a smaller proportion of the asking price being achieved. Richard Donnell, Hometrack director of research, said, "In the short term it seems inevitable that prices will continue to post modest falls until such time as confidence improves."
Sunday, June 29, 2008
Strewth mate - the poms have had it
Telegraph: Australians leave UK to escape credit crunch
Australian authorities have recorded a 50 per cent increase in the number of their citizens returning down under since last summer. Growing numbers of migrants from Poland, India and Nigeria are also said to be leaving in the hope of easier times and more economic stability back home. The cost of raising a family is said to have jumped more sharply in the UK than in any other country in the western world. The departures are harming the building industry and businesses in the City in particular, which relies on seasonal workers from other countries, is suffering.
Another f'd company
Press Association: Taylor Wimpey to unveil emergency cash call
Beleaguered housebuilder Taylor Wimpey is reportedly finalising an emergency multi-million pound fundraising plan as it suffers in the face of a property market slowdown. The firm is said to be hoping to unveil a deal this week, possibly ahead of its trading update on Wednesday, that will see its biggest investors pledge up to £500 million to boost its battered balance sheet. Taylor Wimpey is also understood to be in talks with its banks to relax agreements on debt that it is thought to be close to breaching.
We've Crashed!
Capital Economics: June Housing Monthly
Get a load of this - what a difference a year makes!
America must institute sound monetary policy and stop wasting money war mongering to solve this, but they won't..
Infowars: As economy freefalls, Congress vacations
With reports of gas prices climbing towards $7 a gallon and a continuing foreclosure crisis, Congress is doing what polls show most Americans expect it to. Not a whole lot. So what has Congress been up to recently? Bill sent to President Bush for approval include $162 billion for next year’s war funding, $63 billion for the GI bill and $12.5 billion in renewed unemployment insurance for people whose 26-week benefits have run out, the Associated Press reported. Mexico welcomed a recent measure approved by Congress that sends the country $400 million to deal with a campaign against drug trafficking, Agence France Presse reported. President Bush expressed disappointment that the amount was $50 million less than he had requested. Meanwhile, 8000 homes fall to foreclosure each day!
This is command & Control economics. It is not capitalism!
NYT&Infowars: Mortgage Debt Is Snowballing
Debt is snowballing with some 2.6million in arrears. The government thinks it can solve the crisis by backing 30yr fixed rates and monetising household debt via the Feral Reserve system. Not everybody is behind the scheme. Some Republicans, like Senators Jim DeMint of South Carolina and Jim Bunning of Kentucky, say the proposal would use government subsidies to bail out reckless lenders and borrowers. They suggest that the housing market will correct itself more quickly if Congress does not intervene.
Phase 2: The capitulation of BuyToiLet
FT: Investors secure huge discounts on properties
"Residential property investors are securing discounts of up to 30 per cent on prime new-build developments as housebuilders rush to offload stock before prices fall further. They are finding opportunities in parts of prime central London and the south, typically where development began before the downturn in the housing market. Developers are increasingly desperate to find buyers and will negotiate large bulk discounts, according to agents" this is pretty much it
The Buy-Toilet problems deepen
ThisIsMoney: B&B bosses may pay price for 'stitch-up'
One source close to TPG warned that without the funding to be raised from the current scheme, B&B could face a Northern Rock-style crisis, with panicked savers queuing to withdraw their cash.
More confirmation of the good news ahead
Observer: UK housing sales plunge to record low
"...and he expects prices to decline by 15 per cent this year; by up to 12 per cent in 2009, and by yet another 10 per cent in 2010 - one of the most pessimistic City forecasts." and "...78 per cent fewer mortgage products available than at the pre-credit crunch peak last summer" But ... this is going take ages, how can we speed up the process ? Any ideas?
Er... it's the price stupid !
Observer: 'A conservatory, a Porsche, free flights - how can I tempt you to buy my house?'
"25 per cent more homes on the market now than at the start of the year" "... For most sellers, that means whatever they were thinking of asking, they need to take at least 10 per cent off.' Watch this space to see whether 10 per cent becomes 20 per cent before long."
US House Prices Forecast 2008-2010
The Market Oracle: US House Prices Forecast 2008-2010
The housing market trend suggests that the annualised rate of house price falls could bottom at minus-18% for the July S&P/Case-Shiller house price data, therefore suggesting a continuation of the weakening trend in US house prices for the next 3 months (May,June,July data), after which the pace at which US house prices are declining 'should' improve as the current momentum is unsustainable beyond July 2008 due to sharp declines from a year earlier factoring into the annualised house price figures.
American's held to ransom.
Timesonline: Saudis press United States to put an end to rate cuts
There is something called “the Fed family”. It’s not as shady as a mafia family, but far more powerful. Members include chairman Ben Bernanke and the six other members of the board of governors, appointed by the president; the presidents of the 12 regional Fed banks, five of whom serve on the FOMC; and several influential alumni who are frequently consulted by Bernanke and the White House, and whose public utterances Bernanke cannot ignore.
35% HPC - journey from denial through anger and depression to acceptance
Observer: A Victorian value we couldn't afford to lose
Economists at UBS have researched previous housing crashes around the world and concluded that they unfold in remarkably similar ways, over a three- to four-year period, a financial variant on Elisabeth Kübler-Ross's cycle of grieving. In a paper last month it judged too pessimistic to be released to the press, Capital Economics forecast a 35 per cent fall in house prices, with double-digit drops continuing through 2010 Also about the disdain for saving.
Saturday, June 28, 2008
The deleveraging of the UK housing market
Times: Homes hit as lenders slash values
Down valuations are putting further pressure on sellers who have already had to knock hundreds of thousands of pounds off asking prices. YEESSSSS. Tony Grounds, 50, a writer, first put his home at Broxbourne, Hertfordshire, on the market for £2.4m six months ago but was forced to lower the price to £2m. He later approached estate agents Knight Frank who recommended he drop the asking price to £1.795m a few days ago.
An instant classic: David says it is not overvaluation
TimesDavidSmith: Time to ease the loan stranglehold
Steve Nickell, head of the government’s National Housing and Planning Advice Unit, believes that current developments will exacerbate medium and long-term housing shortages. Prices may be falling now but the long-term trend is “relentlessly upwards”, he said in introducing a new report last week. If the market overshoots down now, it will overshoot up again next time. It is hard to see that is in anybody’s interest. What’s going on? It may be a bit of “can’t move, will spend”... BAHAH
Easy or hard, there's no profit to be made
Times: No more easy profit in the BTL market
Something odd is happening in the buy-to-let market. House prices are falling but landlords are prospering. The mere suggestion that landlords are suffering was enough to prompt a public relations offensive cleverly claiming that the real victims are would-be first-time buyers who are being squeezed by surging rent rises — all of which is music to the ears of buy-to-let investors. Letting agencies are apparently crying crocodile tears at queues of homeless couples begging to rent and being gazumped into even higher rents by landlords overwhelmed by demand. But costs are rising, and it may take only a couple of bad tenants or a long vacant period to turn profit into loss. Above all, it is vital to avoid selling if at all possible in the next few years
Rental market booming - for tenants
FT: Landlords told to lower unrealistic rents
"Estate agents are rejecting landlords looking to rent out properties or advising them to lower their prices as a rush of new instructions, particularly in London, has far outstripped demand from tenants." Today I have seen the first EA closure where I live. The premises is being filled by another agent - a lettings agent (lots of local people wanting to let their house). A local EA says the housing market is the worst he's seen for 30 years.
House prices do (not) fall in prime central London...
Financial Times: Investors secure huge discounts on properties
Residential property investors are securing discounts of up to 30 per cent on prime new-build developments as housebuilders rush to offload stock before prices fall further.They are finding opportunities in parts of prime central London and the south, typically where development began before the downturn in the housing market. Developers are increasingly desperate to find buyers and will negotiate large bulk discounts, according to agents.
Well Hoorah!
FT: Public has firmer faith in housing market
"People have lost the belief that house prices would rise indefinitely. Three-quarters think prices are falling..." Good old British public. There's no fooling them.
Don’t bank on buy-to-let
MoneyWeek: Don’t bank on buy-to-let
More than two-fifths of buy-to-let landlords are still bullish. But with some investors so close to the wire already, repossessions are a distinct possibility....
World stock markets: worst performance in 26 years
Financial Times: Global markets reel after first-half carnage
The FT gives a damning overview of the falls in worldwide stock markets over this year: "worst first-half performance in 26 years"
Ah diddums!
Ah diddums!: Lenders put greed above need
They're not charities, you know!
Quick ... Book Your Place
Mortgage Introducer: Property Investor Show
"Nearly 300 exhibitors will be on hand to provide visitors with the best advice for investing in the current market, both at home and abroad, as well as providing guidance on mortgages, finances, legal advice, commercial developments and the process of buying and selling a property." Now where's the stall that says 'Don't Buy Yet, as Buying in a Crash can Seriously Damage Your Wealth!'.
the m3 money supply
Telegraph.co.uk: Has the Fed really flooded the world with dollars?
This rise is almost entirely due to a “bearish” flight from stocks and suchlike. Nervous investors have parked their wealth in money funds for safety until the crisis blows over. These money funds are distorting the M3 data (as Prof Goodhart also recognizes). “Everybody keeps saying the Fed is dropping money from helicopters and flooding the economy with liquidity, but it is not true. All that is happened is that the precautionary demand for money has gone up. That is not inflationary in any way,” said Mr Ashworth.
Residential land market down by 25% so far in 2008
Telegraph.co.uk: Berkeley Group calls bottom by buying land
"Although the housebuilder stressed there could be further price falls to come it said it was starting to see value in the market after 25pc falls in the price of land so far this year." This is a statistic they have been keeping to themselves!
B&B: Sorry! No Beds or Breakfast Available.
FT: B&B shares plunge as Resolution walks away
Bradford & Bingley on Friday endured a 20 per cent fall in its share price and a further deterioration in its relationship with leading shareholders after Clive Cowdery, the financial entrepreneur, pulled the plug on his proposed rescue deal. Mr Cowdery, backed by a number of B&B’s biggest shareholders, had wanted to carry out due diligence on the UK’s biggest buy-to-let mortgage lender in advance of any deal. He had been blocked, however, by the bank’s board, which is already planning to raise £400m through a £258m rights issue at 55p and a £179m investment from TPG, the private equity group.
That's right Barclays 1 + 1 = 5?
FT: Barclays faces questions over balance sheet
Barclays faced renewed questions about its balance sheet on Friday as one of the City's leading analysts forecast that the banking group would need more capital than the £4.5bn it is raising through a share issue. Banking analysts at Citigroup pointed out that Barclays would need to raise £2.5bn just to bring its balance sheet ratios into line with those of Royal Bank of Scotland, its nearest rival. They also argued that the bank would have to take further writedowns if it valued £7.5bn of loans to private equity groups on its books in line with market prices.
More depressing news.... Still soon we will have the first birthday party of the credit crunch and NR bank run to celebrate!!!!
Guardian: Dow Jones index becomes bear bait after dire month
Wall Street is teetering on the brink of a bear market after a bad day of trading completed the worst June since the Great Depression. A new clutch of warnings about the health of banks, together with a $142 oil, sent the Dow Jones down. Concern about the credit crunch's effect on profits at banks continues to dog financial markets. Lehman Brothers suggested that Merrill Lynch could write off $5.4bn in credit-related losses during the second quarter. Elsewhere, Moody's said it might cut Morgan Stanley's credit rating. Gloomy stuff. Still any suggestions for how to celebrate credit crunches birthday? I thought HPC could hire the Millennium Dome! Remember that? There was a time when we thought nothing of giving £789,000,000 to our leaders so they could buy a tent to party in!!
Are people really carrying on as though nothing has happened?
What Investment: Ignoring the credit crunch
A significant number of people are not concerned by the current economic climate and still have their sights on property as a good investment, according to life insurer, Zurich. Less than a third of consumers have reviewed their finances in light of the credit crunch and a fifth of people claim it is a term that has been created by the media. Worryingly, more than a third of people don’t believe that the credit crunch will affect them, in spite of the talk of the housing market downturn, the difficulties of obtaining credit and the rising cost of living. Tony Solomon of Zurich UK Life, says, ‘It is worrying to find that less than a third of people have reviewed their finances in light of the credit crunch. If IR go down will these people buy start buying over priced houses again?
IR going down? Will people return to reckless borrowing?
Daily Telegraph: Credit crisis: mortgage market may be over worst, say experts as banks cut rates
C&G is cutting the cost of its tracker mortgages by between 0.2% and 0.26% from Monday. The move will leave a two-year tracker deal for someone who has a 30% deposit at 5.99%– a full point better than the average rate, which broke through the 7 per cent barrier this week. A&L, which had withdrawn its most generous deals over the last few months, yesterday launched a new two-year tracker at base rate plus 0.98% – equating to 5.98% at today's rates. The deal is for any home owner with a 25% deposit and looking to borrow up to £1 million. Will we see the return to reckless borrowing or will banks now limit advances to 3 -5 times certified salary? Or will these products be withdrawn on Tuesday due to excessive demand?
The housing market has lost its grip on reality
The Times: The struggle to rent a flat in London
I feel that the whole housing market seems to have lost its grip on reality. Young people are naturally attracted to jobs in London, and I do wonder how any of them can afford to live there any more. In an age when we naturally deplore seeing young people sleeping on the streets, I find myself wondering who is to blame.
Friday, June 27, 2008
Yay - something we actually excel at ... debt
Telegraph: British household debt is highest in history
British households are now more indebted than those of any other major country in recorded history, it has emerged. Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Oh how the 'experts' change their tune
Telegraph: House prices won't recover until 2015, ex-MPC expert warns
The housing market will not return to its pre-credit crunch health for at least six or seven years, an expert adviser to Gordon Brown has warned. Families must wait until 2015 for the property market to start booming again, according to Stephen Nickell, who heads up the unit which advises the Prime Minister on housing planning.
Newbie BTLers face major pwnage.
Telegraph: New buildflat prices getting hammered
New-build flats have been hardest hit by the property downturn. Over-building in some areas, leading to a glut of properties competing for buyers, and tenants, has sent values and rents spiralling downwards. "There is no such thing as a free deposit," says Mr Sandeman. "The lucky ones are those who got repossessed last year. Those who are being repossessed now, at current auction prices, will still owe vast sums to their lender." The low prices these flats are getting at auction are due to the market softening, but if you add in fraud or overoptimistic valuations that is going to cause big drops in the value.
Yet More Mortgage Expense
This Is Money: Halifax launches £245 mortgage 'entry' fee
Halifax has risked the wrath of mortgage borrowers by introducing a £245 charge for new customers - accused of being the return of the mortgage exit fee under a different name. The so-called 'mortgage account fee' will effectively end the bank's fee-free mortgage range as it will apply even to those who choose to pay a higher interest rate to avoid arrangement fees.
Roll up, roll up only £7,699 to reserve your mortgage!! Yep you heard it, it's a bargin!!
Fool.co.uk: HSBC 'Rescue' Mortgage Is Now A Rip-Off
The maximum loan available under HSBC Rate Matcher is £250,000** and the minimum rate HSBC will match is 4.79%. If you were to borrow this amount at that rate, the booking fee will set you back a staggering £7,699!
Is HP's clock still ticking?
Tiscali news: Labour 'should consider sacking PM'
Labour should "seriously consider" ditching Gordon Brown following the Henley by-election drubbing, the party's former chief fundraiser Lord Levy has said. How long before the 'prudent one' is asked to fall on his sword? Next local elections are 7th May 2009, but may be move back to coincide with the 4th June 2009 European Parliament elections.Will he be out after that......can't see that he will survive until May 2010? www.communities.gov.uk/news/corporate/812676
NR MkII?
Times Online: Resolution drops £400m Bradford & Bingley bailout plan
Keep watching ... if the others pull out, start queueing up at your nearest branch.
Operation Astapa - nets corrupt officials and businessmen...
The Oliver Press: New costa corruption scandal
From the 18th June... 20 arrested as Costa del Corruption investigation begins again this time in Estepona. A NEW corruption investigation has engulfed the Costa del Sol. The multi-million euro investigation in the popular resort of Estepona is understood to centre on real estate corruption.
Very short article, statistical sleight of hand ever present
Times Online: House sales fall 50% as prices shrink
As we come over the summit of the house price high, expect the comparison time frame to lengthen. Now we are hitting the point where property pundits can say that house prices are unchanged since a year ago, while completely ignoring the subsequent rise and dramatic falls in between. In fact, the likes of A Ashworth and D Smith will probably claim that prices are rising as compared with 1 year ago, then 1.5 years ago, then compared with 2 years ago etc. etc. Anne Ashworth's salary is paid for by property section advertising. Others on the Times Online should know better (but don't).
...
Motley Fool: Profit From Property Price Falls
It is a truth almost universally acknowledged... that property prices are falling. Despite debate about the extent to which house values will drop -- will we see a ‘crash’, a ‘correction’ or just a small ‘dip’? -- most experts now agree prices go down, rather than up in 2008.
The level of money they cream off must be dwindling fast!
Motley fool: The Worst Property Rip-Offs Ever!
It was the keys that saved me. The keys, and the parking tickets. Without them, I think I probably would have gone insane.
Phew! Relax everyone, they know what they're doing!
Mail On Sunday: Earth will not be gobbled up by black hole during big bang experiment, reassure scientists
The Earth is not at risk of being sucked into a black hole, a safety report into the world's most powerful particle physics experiment has found. Scientists at Europe's CERN lab plan to use the Large Hadron Collider (LHC) to smash highly-energised protons together at super-fast speeds to produce miniature versions of the Big Bang. The collisions will create temperatures more than 100,000 times hotter than the heart of the sun.
Are stock markets waking up to reality?
MoneyWeek: Are stock markets waking up to reality?
The economic outlook is gloomy. World stock markets continue to plummet and oil remains stubbornly high. And in the UK there is no respite, as people swim in debt they are struggling to repay...
That's all right then.....NOT!
BBC online: Royals cost taxpayer '66p each'
'The Queen and the Royal Family have cost each taxpayer 66p during the last 12 months - up 4p on the previous year, Buckingham Palace accounts have shown. The total amount spent on maintaining the monarchy in the year to 31 March rose by £2m to £40m, figures revealed.' According to Forbes she has a personal wealth of £280 billion (give or take a million or two).....so why the free housing, and a £40 million per annum handout!
How come? Perhaps a lag in data!
BBC news: House prices 'unchanged in May'
House prices in England and Wales were unchanged in May and up 1.8% over the year, the Land Registry says.
We've had a look done the sums and it turns out everything is ok... No problems with the house prices..No.. Honest !!!
BBC News - The Ministry of Information: House prices 'unchanged in May'
House prices in England and Wales were unchanged in May and up 1.8% over the year, the Land Registry says.
but renting is booming???? lol
Times: Vacant Office Space in City Nearly Doubles
Falling demand from the financial sector has led to the volume of vacant office space in the City of London nearly doubling over the past 12 months.
Have your say
BBC News: What do you think of Brown's year in office?
I've certainly said my piece, including my thoughts on his time as Chancellor rather than just restricting my comments to the last disastrous year - in summary: OUT! OUT! OUT!
Housing Market Problem "home grown"
BBC: Question Time
56 mins in. I now only trust the Lib Dems; everyone else is ignoring the housing disaster . Evette Cooper "... but, but it's the global credit crunch that ate our homework ... interest rates are only 5% ... blah blah" yawn.
pensioners were being forced to choose between eating and heating.
Western Daily Press: SOMERSET OAP KILLED HIMSELF IN 'BUDGET PROTEST'
A Somerset pensioner was so tormented by rising household bills he electrocuted himself after the latest Budget, an inquest was told. The daughter of 92-year-old war veteran George Mechan told a hearing she found him at his home in Mark, near Burnham-on-Sea, slumped in an armchair on March 13, the day after Alistair Darling's House of Commons address. He had taped wires to his fingers and killed himself surrounded by newspaper articles about the Chancellor's economic blueprint, the hearing in Taunton was told. The widower had become increasingly concerned about the rising cost of living and his family believe the Budget in March was the final straw.
Victor Meldrew's generation stole my future
BBC: Britons feel 'socially immobile'
Nearly three out of four Britons feel either worse or no better off than their parents, a survey suggests. Three quarters of the people asked said they believed that the gap between rich and poor was too big. and I bet the majority of those asked were under 60...
What was is that The Badger was saying ...?
The Times: HSBC charges up to £9,999 for 'rescue' mortgage deals
Nice one HSBC!
The future of credit
Telegraph: Pawnbroking goes high-end
Consumers buckling under the strain of higher living costs are returning to the Victorian age in a bid to get their hands on some cash – they are hot-footing it down to their local pawnbroker. And it is not just those on low incomes who are pawning bits of jewellery and small family heirlooms. Some brokers report City whizz kids and professional footballers offering cars or Rolex watches worth tens of thousands of pounds in return for a loan. This is priceless. But seriously Pawn Brokers look positively moral in comparison with high street banks. They have *real* assets backing the money they lend. Wait a second I think they just got upgraded to Angels of light -- they have 100% backing for their loans with real stuff. Wow. They don't do fractional reserve pawn broking, hahaha
Developers deserting the sinking ship.....?
Property Week: Castlemore abandons £275m Leeds scheme
Castlemore has pulled out of a £275m regeneration scheme in Leeds city centre, saying it is reviewing its ‘appetite’ for large scale schemes in the current market.
Final stages of the oil bubble
The Telegraph: Oil price surge rattles global stock markets
Global stock markets were under pressure today as the soaring price of crude oil darkened the outlook for economic growth.
Meltdown time is close
The Telegraph: Barclays warns of a financial storm as Federal Reserve's credibility crumbles
Another mega bearish article from Ambrose
Kick 'em when they're down
Guardian: Halifax comes under fire for bringing in new mortgage fee
The Halifax came under fire yesterday for introducing a new £245 mortgage fee, making buying a home or remortgaging even more expensive. Britain's biggest mortgage lender was accused of "sneaking in" the fee, which will apply to all new Halifax and Bank of Scotland mortgages taken out from Monday. The move could put the bank on a collision course with the chancellor, Alistair Darling, who urged lenders this week not to take advantage of borrowers by imposing huge home loan fees.
Working for the Treasury
Adamsmith.org: Tax Freedom Day
Tax Freedom Day shows just how long we spend working for the Treasury, rather than ourselves. Overall, the government takes more than 40% of national income. This means that the average UK resident has to work a full five months of the year solely to pay that tax bill.
Happy Anniversary Gordon
Times online: Labour finish behind BNP in election humiliation
Labour came a humiliating fifth place behind the BNP and the Greens last night in the Henley by-election caused by Boris Johnson’s election as London Mayor. Gordon Brown’s first anniversary as Labour leader began with the party securing only 1,066 votes, losing its £500 deposit, and having its working majority in the House of Commons cut to 65, as John Howell, the Conservative candidate, succeeded Mr Johnson in the Oxfordshire seat
Time to sell the holiday home!
Global Property Guide: The end of the global house price boom
Only 13 countries in which dwelling price indices are regularly published saw prices rise during the year to end Q1 2008, while 21 countries saw dwelling prices fall in real terms, i.e., after adjusting for inflation. The biggest house price fall was in Latvia (Riga), down -38.2% by May 2008 from a year earlier. The cause of the downturn is blamed on the boom, inflation and bad regulation of banks.
Shares in fluffy white cats rally.
The Times: Echoes of Great Depression as Dow takes another dive
The Dow Jones dived a further 350 points yesterday, giving America’s key economic benchmark its worst June performance since the Great Depression, as oil hit a record and analysts said that the fallout from the credit crunch was far from over. Citigroup’s shares fell by $1.18, or 6.26 per cent, to $17.67 in New York, their lowest since October 1998, after William Tanona, a Goldman Sachs analyst, tripled the net loss he expects the group to make in its second quarter to 75 cents a share, or $3.75 billion (£1.9 billion). Shares in Merrill Lynch tumbled by $2.41, or 6.8 per cent, to $33.05, as Brad Hintz, an influential analyst with Sanford Bernstein, changed his second-quarter forecast for the group from an 82 cents a share profit to a loss of 93 cents a share, or $832 million.
Following on from Citi's recent warning.
Daily Telegraph: Barclays warns of a financial storm as Federal Reserve's credibility crumbles
"This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond. Shares in fluffy white cats rallied on the news.
Sad old VI truisms being trotted out again
Telegraph: It's cheaper to buy than to rent
According to new figures from Abbey people are increasingly better off buying rather than renting. The Bank says it is now more than £10,000 cheaper to buy a house than to rent in many parts of the country - six months ago, it was just £5,800 cheaper to buy than rent over 25 years. The greatest savings depend on where you live. In the South East, you will be almost £60,000 better off by paying off your own mortgage rather than your landlord's. Phil Cliff, director of Abbey Mortgages, said: "The housing market has changed. A person is better off, in terms of the payment cost, by getting on the property ladder in all but three of the UK's regions."
Interest Rates worked against inflation. Can it work against Stagflation this time around? Discuss
BBC/YouTube: Pandora's Box
Here is an old documentary by Adam Curtis (of "Power of Nightmares" fame) talking about how technocrats, scientists and politicians tried to "make Britain great" again by growing the UK economy only for their efforts lead to Stagflation (and begging for money from the IMF in 1976 - so much for being Great Britain). If there is anything this video achieves, it is a SOBERING reminder of what Stagflation really means not just for house prices. Would appreciate comment.
Thursday, June 26, 2008
A credit downturn should be familiar territory for banks. Think again
Economist: Tread carefully
THE credit crunch has been an alien landscape for many banks. Exotic products, new accounting rules and an unprecedented liquidity freeze have left them groping for handholds. Banks are also dealing with new types of borrowing. In Britain untested areas of specialist lending, such as buy-to-let and self-certification mortgages, are coming under stress for the first time. HBOS, the country’s biggest lender, revealed in June that arrears in these asset classes had risen much faster during the first five months of the year than among prime borrowers.
Buy-toilet 2
ThisIsMoney: Hammered! Buy-to-let unravels
"We've all read the headlines about the property crash. But what's it like to see your buy-to-let nest-egg auctioned off for less than half you paid for it" Uh uh uh
Buy-toilet
MoneyWeek: Don't bank on buy to let
Already, those who do have significant leverage can’t afford any voids at all now. A full 17% say they have already missed a mortgage payment. What was truly shocking was that this was up eight percentage points in the three months since December. That means that in the first quarter there was an annualised 32% rise in delinquent BTL borrowers. Earlier this month, Bradford & Bingley confirmed as much when they revealed that in the first four months of the year, the number of BTL loans that were at least 90 days in arrears had jumped by 52% to more than 3,000
No Money No Supermarket - Just a Cornershop
Guardian: Moneysupermarket.com adds to housing market gloom
Price comparison website Moneysupermarket.com added to gathering gloom in the housing market today, warning that the mortgages and loans market was deteriorating. Although the company – which aims to help consumers choose the right services in areas such as finance and travel – said its first-half results would meet expectations, it painted a gloomy picture of the wider housing market. In a trading statement today, it said trading conditions at its money division, which accounts for roughly half of its revenues, "remained extremely challenging, especially in loans and mortgages, which on a monthly basis continued to worsen throughout the second quarter".
The Anne Ashworth Show
Times: Country piles and crash pads hold their appeal
The mortgage drought has forced many would-be buyers of flats to rent them instead - a boon for buy-to-let investors who neither overextended themselves nor misjudged the tastes of prospective customers.
Handle with Care!! Fragile Homeowner
FT: Majority of MPC ‘considered rate rise’
A majority of the UK’s interest-rate setting monetary policy committee considered raising interest rates at their June meeting, it emerged from a parliamentary hearing on Thursday. In remarks that made clear that if there is to be an imminent change in interest rates, it will be an increase not a cut, five of the nine MPC members expressed concern over rising fuel and food prices.
B&B: Breakfast not included?
FT: B&B faces flak from investors over Cowdery
Angry shareholders on Thursday bombarded Bradford & Bingley with calls to express their concern that the bank had refused to open the books to Clive Cowdery, the financial entrepreneur who wants to carry out due diligence for a deal. Resolution, the company owned by Mr Cowdery, on Thursday claimed that 40 per cent of all institutional investors on B&B’s register were demanding that the bank’s board open its books to Resolution.
Between a Rock and a Hard Place
campaignforliberty.com: Ron Paul, commentary on Fed's decision to keep rates at 2%
Ron Paul challenges the legitimacy of the Fed and explains that rates will go up after the presidential election, when a real recession will occur. The UK is in a similar situation, albeit further from an election.
"Adjustment" is more severe than in the 1990s
London Evening Standard: Builders on slide after 'worse than Nineties' warning
"Kate Barker, who is the Bank's monetary policy committee's lead expert on housing, said: "I don't think it's particularly good news. Conditions are different to the 1990s. The housing market adjustment is more severe than in the 1990s"
Nowts even selling at auction
London Evening Standard: See houses get hammered
4th Neil Collins article down: "It's horribly fascinating, this new sport of watching the housing market collapse, and now you can see it happening before your very eyes. "
Stil no end in site for oils rise.
Bloomberg: Crude Oil Rises as Dollar Drops, Libya Warns of Production Cut
June 26 (Bloomberg) -- Crude oil jumped above $140 a barrel to a record as Libya threatened to cut production, OPEC's president said prices may reach $170 by the summer and the dollar weakened. Libya may curb output because of a U.S. law that allows terror victims to seize assets of foreign governments as compensation. OPEC President Chakib Khelil said oil may surge on a European interest rate rise, France 24 reported. Oil, gold and copper climbed today as the dollar dropped because the Federal Reserve gave no signal of higher interest rates yesterday.
housing vision
Mortgage Solutions: Scottish Government sets out housing vision
Deputy First Minister Nicola Sturgeon made a statement on housing to the Scottish Parliament yesterday. Commenting on its Firm Foundations plan which was announced last year, which included plans for “more houses of all tenures, built to higher environmental and design standards, meeting the needs of those on lower incomes and contributing to the creation of sustainable, mixed communities” she said the Government wanted to raise the rate of house-building to 35,000 new houses a year by the middle of the next decade.
Get your filthy hands off my gherkin!
Telegraph: Allotments thefts rise as credit crisis causes vegetable crimewave
Allan Rees, chairman of the National Society of Allotments and Leisure Gardening, is concerned the problem could get worse as the economic outlook worsens. "Families are getting poorer and this is one way of putting food on the table," he said. "I believe they are being sold on. Thieves stole potatoes from my own plot and put the stalks back in place so it was two or three days before I noticed."
Top Dollar for faulty new rabbit hutches - whatever next !
BBC: Seven in 10 new houses 'faulty'
Seven in 10 buyers of newly-built homes found faults with the property, according to a study by the Office of Fair Trading (OFT). But most of the problems were only minor issues with decorating, glazing, plasterwork or appliances and did not cost the buyer anything to fix. Those whose moving-in date was delayed faced heavy costs, the study into the state of the homebuilding market said. The report also looked at allegations of firms hoarding land to boost profit. There was a scarcity of sites, and holding land could increase profits, the early findings concluded.
Just for fun....
Youtube: Property Ladder (mick take)
Property ladder p1ss take...
To buy oil futures?
Property Week: Institutions sell out of £1.8bn of property
Institutions sold out of a record £1.755bn of property in the first quarter of the year in a sign of the plummeting sentiment in the market. A lot of investment money washing around looking for a place to go.....into futures, hedge funds, and other forms of legalised gambling!!!!
Wouldn't it be much much cheaper and less risky to send little Johnny to a private school?
Telegraph: House prices soar near top London school
House prices are soaring near a top school in London - with parents willing to pay almost £1m more to move into neighbouring homes, according to estate agents. If you bought a more modestly priced home then that extra £550,000~£800,000 could fund a private education with money to spare (or has the world gone MAD!)
Biggest bank in the world goes pop
Reuters: Citigroup sinks to 10-year low, Goldman urges short sale
"Citigroup Inc (NYSE:C - News) shares fell to their lowest level in nearly a decade after a Goldman Sachs & Co analyst said investors should sell the largest U.S. bank's stock short as losses mount from troubled debt.". I guess the CEO's assertion, not long ago, that the worst of it was over was a little off the mark. That's a potential 350,000 people who's jobs would be at risk if it went down.
Concluding part 2 of 2
ITV: Beating the property slump
Last time he renovated it - now he's trying to sell it.
who do you think talks the most sense, the wealthy guy or idiot in fed?
CNN: Buffett vs. Bernanke: The inflation showdown
Buffett, the billionaire investor behind Berkshire Hathaway (BRKA, Fortune 500), fingered "exploding" inflation Wednesday as the biggest risk to the economy. "I think inflation is really picking up," Buffett said on CNBC. "It's huge right now, whether it's steel or oil," he continued. "We see it everywhere."
tongue in cheek.
Newsbiscuit: http://newsbiscuit.com/article/governor-of-bank-of-zimbabwe-forced-to-explain-inflation-of-1-000-003
Many a true word spoken in jest
No surprises..
BBC: Fed keeps US rates steady at 2%
Looks like the Fed are stuck between the rock and a hard place... I won't bother sticking a post on this one, because the number boffins will have a closed group discussion. tip- if you have no banking history, don't expect a proper reply in this blog. Your valid leymans argument will be completely ignored..
Hamptons latest - true or false?
mortgagestrategy: Hamptons see 40% rise in capital's rental stock
Residential agent Hamptons International is seeing a marked increase in available rental properties across the capital with a 40% rise in rental stock. Areas such as Chelsea and Tower Bridge are seeing rental stock increase by up to three times as much as the levels experienced this time last year. Hamptons says rental stock is soaring as a result of would-be buyers renting out their property while waiting for the sales market to pick up.Kate Whotton, regional lettings director at Hamptons International, says: “The aftermath of the credit crunch has caused some interesting changes to the lettings market.
something to aspire to?
daily male: what credit crunch
i guess some are just beyond the tentacles of hpc uk
The Understatement of the Century
Telegraph.co.uk: Mervyn King: Expect a 'one-year pause' in living standards
Bank of England Governor Mervyn King warned Britons to expect a "one-year pause" in the growth of living standards as rising energy and food bills continue to tighten their grip on household incomes. Mr King also signalled that this year's jump in petrol and food prices left the Monetary Policy Committee little room to cut interest rates from 5pc, and that rates may need to rise should inflation spread across the wider economy, particularly to wage demands.
A rigged market in oil?
Casey Research: Where have all my commodities gone?
Assuming that the 7.3 million new car owners in 2008 each drive 5,000 miles a year, and they achieve 40 miles per gallon, the result would be an additional 45.6 million barrels of crude demand, equivalent to 125,000 bbl/day. In other words, new Chinese drivers will devour 25-30% of the recently promised Saudi production increase in a single year. To those predicting an imminent decline in world oil demand, we say: don't bet on it.
Home-price declines will eat into boomer retirement nest eggs: report
MARKETWATCH: Housing crash hits baby boomers
The collapse of the housing bubble will likely have drastic implications on the wealth and retirement of certain baby boomers, according to a report Tuesday by the Center for Economic and Policy Research. The picture gets even worse if real home prices fall more. If prices, adjusted for inflation, fall 10% by 2009, the median household would see a 35% drop in wealth compared with the same age group in 2004; and if prices fall by 20%, there would be a 46% difference. Plus, many of these boomers are "going to be facing a mortgage payment well into retirement," Baker said. That's a shift from past generations: The major asset that most middle-income families in years past would bring to retirement was their home - and it was often paid off, the report noted.
City Boy unmasked
BBC News: City gossip columnist unmasked
For almost two years a City insider used a London newspaper column to dish the dirt on the life of excess enjoyed by many of his colleagues. Geraint Anderson, a former top stock analyst at a major investment bank, spoke to BBC Breakfast about his alter ago City Boy.
The country will be turned inside out by higher energy prices.
daily reckoning: Boneheaded Miscalculations
Life on the edges of suburbia is beginning to feel untenable," says the Times. Like it or not, Americans are being forced to park their cars. This spring, they cut back on their driving at a sharper pace than anytime since 1942. But it's hard to stop driving when you live far from work and far from shops. The confidence level of suburbanites falls with their house prices. We have no proof, but our guess is that no houses are falling more than those built most recently, most far out. That's where homeowner equity is likely to be lowest…and where the increased price of commuting hits hardest. That is where house prices ought to be most vulnerable. Potential buyers will simply add up the costs of commuting - in time and money - and subtract it from what they are willing to pay cont.
More on the Supply side to add to the slump in prices
Sky News: Millions Planning To Sell Their Homes
About one in eight homeowners are planning to sell their property in the coming year despite the current housing market downturn