abharrisson

Personally I don't think rates will get cut any time soon, nor do I think they will rise... if oil reverts to around $100 per barrell which I have long predicted it will then that'll see a lot of the infaltionary pressure taken out, equally I think we'll see lower growth and lower inflation in the emerging economies.... I don't think it will have much effect on where house prices end up as the cycle is so long but I am increasingly of the view that the UK has a chance , a good chance of dodging the bullet... bank shares are off the bottom and I think will rise expescially through the next reporting season, commodities will come off a bit alongside oil and I reckon that some of the hot money will look for some value in the debt banks are currently holding as a result.. they'll see better returns in some of those tranches than in oil, commodities, gold, or prehaps slower growth emerging economies. They'll have to smart as some of the debt is pretty toxic to say the least but some of it (so they say) presents pretty good value and the chance for some stellar returns (if and only if the prognosis is for a slowdown rather than a horrible bust). As I say I am much much more positive about the outlook currently... but not sure it will effect where house prices end up although it could feasably effect when they get there ( ie better the outlook the longer the correction, worse the outlook the faster the correction.... it'll take ages to feed into the numbers though and the first signs will be I suspect if purchase volumes start to show monthly rises.. albeit they are at historic lows currently) next year could yet be very much rosier than I had feared it could be.

Knew I should ahve done it sooner... never mind.. I'm a long term holder type anyway so its still a long term buy and hold opportunity at that level.

Whatever happens longer term is anyones guess, I am hoping that shorter term growth in china abates a bit and in india for that matter and I am hoping that they get a tighter grip on their inflation.... they will be dominant economies thats for sure, if not already, they have masses of growth to go... but for our own sakes I think we would be more comfortable short term with lower growth and lower inflation in china. I am hopefull that they may further reduce fuel subsidies and I am hopefull that some slowdown in exports will limit oil demand.... this may well see an unwinding of the current oil price (even though its already 10% off peak)... I have already said I think oil will go back to $100 and news of slowing growth, and reducing subsidies etc are part of the picutre thats needed for that to happen. if oil goes back to $100 then I am hopefull that something worse than a mild recession will be avoidable here. We'll see I suppose but any signs of slowing shipping activity etc which this post highleighted are postive based on my agenda.

I am not an expert on America but I opened a link to properties for sale in america a while ago that was being punted as an investment.. basically they were old wooden homes in buffalo (doesn't seem the most salubrious are) and going or $60k ish with rental coming in at around $7,000... all sounds great 10% plus yield etc, until you start thinking that a new kitchen and bathroom etc a few years down the track plus maintnance to the wooden faced structure and insurance etc is going to cost a bomb and I doubted at the time that capital values would grow (they clearly havent'). There are too many houses in America otherwise a lot (most by a long chalk) would have found a bottom before now through rental yields.. the example of house being bought for $110000 and then struggling to find a buyer at $5000 suggests its valueless and can't be rented... if it could be rented for say $500 per month then you'd reckon it would sell for around $60000 as a bottom price. Fortunately in england most of our housing stock would rent (as long as there are renters out there which I suspect there will be) so whilst we'll some drops (and some of the new build flats may drop stratospherically) there will be some sort of floor beneath it.. I would say at something like 10 times rental (which is probably a good distance below where things will actually end up).

Steve, had to listen to the second part... was hoping for a story of total recovery, but clearly its not that... you've survived and kept your family intact through some very difficult times which I suppose is the main thing.... just goes to show what can happen. As you said in the programme I expect many more will be exposed this time around perhaps not necessarily in the same way you were... but ordinary families.. home, job, mortgage, loans , cards.... they'll get exposed either by losing their income during the recession that might be round the corner or becasue their whole life was built on ever mounting debts which have quite suddenly been shut off bringing the whole deck of cards down.... there are countless thousands who are overly leveraged and will suffer in this way... I suspect loads of them like you will suffer long term... not just through HPC (although its a contributing factor) but through the whole sea change we have seen in the growth in debt and then the shutting off of the taps coupled with economic slowdown and a recession. Thanks for sharing it ... the best part for me was when you said you always want to know where the exit door is... I always take the same approach myself even though it means passing up on some opportunities along the way.

Not sure its a workable idea in england though.. after all where do you draw the boundaries... is it only desirable seaside towns in the west of england... if so what happens to their economies when the number of beds to let drops like a stone... does it apply to everyhere else, if not why not, shouldn't everyone have the same rights, ie to be able buy a home in the place they call home (if they can afford it) which is after all what this is all about... how then do you justify someone having to pay a different sum in the west of england to kensington and chelsea... surely the person born in kensington and wanting to live in kensington becasue its his or her spiritual home shouldn't have to pay more than someone living in stIves.... you then get to the issue of mobility... if you work in london and want to retire to the west but want to maintain a house in london becasue you are going to work three days a week how will that work.... then get into the mechanics of it... how do you tell if someones doing holiday lets vs doing longer term lets, whats the sanction going to be, whos going to run it, how do you differ from letting your friends use the place etc etc. I am not against the principle of it, but to be frank I think it hasn't got a cat in hells chance becasue we are so far down the line with this already....... on another point how do you differ between a couple who are for the sake of argument seprated but not legally so who have two houses in an area, and how do you then police that against a couple who are for instance not seperated but claim they are and in that way have a home in the west and home in london for instance.

Yup, I'm aware of that, but to what degree have further writedowns been built into the price already... prices tend to correct in an overdone manner and rapidly and that may especially be the case due the uncertainty... in any event banks like LTSB have for instance precious little exposure to the american sub-prime problem, nor indeed to underwriting large corporate debt (beyond thier own normal commercial and business banking operations)... and yet their stock price is what 50% down.... ok they'll suffer from the usual malaise of higher credit defaults during a recession but have a pretty braod based earnings stream, and indeed their mortgage book is pretty secure having very very little 100% stuff on it, nothing where they have not fully verified income, and no sub prime and limited (vs their share of the market) exposure to BTL...... in other words its better than most and yet still they are down 50% and indeed that being within a situation where they have said they see no reason not to maintain their current dividend structure.. may be I'll wait till their next reporting, look at their bad debt accrual situation and earnings and interim position and make a decision from there... but thats one certainly in my view worth making a punt on as their risks are very much in the "known" rather than "unkown" category.

Personally I think a raise (if as you say you want it for HPC reasons) isn't going to make that much difference... prices are clearly on their way down.. and a 0.25% difference won't change much on that score I should think... however I do think it will have a bigger impact on risks for recession etc which is surely in no ones interests !... or is HPC the sole motivator.... personally I think prices will fall as far as they are going to with rates at 5.00%... and in any event mortgage rates don't have so much to do with BOE anymore since Libor became somewhat detatched.

I am looking at an extension at the moment... to be frank I'll probably do it although the cost is going to be around £85k and reallistically its going to add some value but I suspect when the property market reaches its bottom it'll only exacerbate the losses..... but I want to do it for quality of life and as I am going to stay here for ten years.. I figure lifes too short why not ?.... my numbers are going to be something like bought at 360 worth about 400, post 85 k its going to be worth around 450, post a 20% reduction itll be around 360 again..... so I would have effectively lost 85k.... without the extension property will be worth around 320 so would have lost 40k..... either way its only numbers as I will be staying there and to be frank if I did the other thing which would be to sell and spend the 85k on a bigger house, once I have factored in agents fees and stamp duty and finance costs and any intial redecorating etc to the new place I doubt it'd be achievable for an additional 85k... of course the chances of me being able to buy and sell in this market are precisely zero anyway. The wider problem of course is that with declining prices I can see a situation where builders are perhaps going to be seeing things as uneconomic to build when they get to the bottom of the cycle.... they may accept less profit, they may buy the land for less etc but building costs are rising massively I think while prices are falling (basically as I understand it the cost of the raw materials... steel, concrete, bricks , paint, nails you name it are all adversely affected by the price of oil so that some are up 30% in a few months or more.. I heard the other day sheet steel doubled over a few months but haven't confirmed it)..... the upshot of course may well be less new build houses being available at the bottom of the market just when all those who have been holding off and holding off want to start buying again........ I suspect it may lack of availablility may perversely re-ignite another boom once we get to the bottom of this little cycle.

I'm sure its not a co-incidence that the price is rising on the back of takeover news as "co-incidentally" its a good time for the underwrting banks to dump stock..... however it may just be that banking stocks have seen something like the bottom now... the city will have factored forward rising losses in for bad debts and repossessions etc already and the news from accross the pond seems to be levelling out a bit with banks reporting pretty much in line with expectations ..... I didn't have the guts last week to go in and buy some of these banks as I just feel that they have reached the bottom and if anything come off it... maybe I have missed the boat.... I'll dig deep and see if I have the courage to buy into them now.... if the future debts have been properly factored in then the prospect (with some big risks of course) is for a 10/12% yield on the pruchase price and the prospect of perhaps a 50% uplift over the next three years... giving a return of something like 80% over three years..... its eons since those kind of opportunities were last around.

Of course there was some impact from the plethora of shall I say "niche lenders" but many of these are still active.... eg buy to let, sub prime, self-cert etc , its just that rates are higher currently which chokes off some of the activity.... Just as a falling rate would have a positive effect on prices (I am not saying boom just fall curtailing) then a return of braod lending niches would also have an effect. Personally I think a cut in rates (which isn't really going to happen) would have an effect for average joe bloggs (most people) but there would remain a risk of crashing in those areas where there is real weakness such as the cancer swathe and those areas with an overbuild of 2 bed flats.

Yes they do both love their stats.

Not that I think we are likely to see the BOE cut rates or the LIBOR spread shrink quickly BUT if they did I am not so sure you are right... after all cheap credit fuelled the boom, and a credit choke off herallded the start of the fall... I suspect if mortgage rates (different from the BOE cutting their rate though linked in a complicated way) came down then we would see house price falls abate.... look at it this way... if someone introduced a ten year 0% fixed rate then I suspect there would be a rush of buyers ... so how much less would that rush be at 2% or 3% or 4% or 5% ?..... I'd agree that once house prices are set on a direction they are slow to change BUT the cost of credit will I am sure have an impact on how deep or long the current reduction goes.... in other words I disagree... if rates are cut it may well have an effect. But its semantics really as 0.25% here or there isn't really going to matter.

Where are your facts, you said I was wrong but apparently can't prove it... "spin" anyone... I really can't believe labour supporters such as yourself are actually trying to defend the governments record , its frankly appalling on just about every count.

Problem being of course good old bob took the farms from the white Zimbabweans, gave them to his cronies, havign carved out a little (few fields here and there ) for the local population... of course neither the locals nor bob's cronies know how to farm, maintain machinery etc so the whole thing goes pop and Zimbabwe moves from an exporter of foodstuffs and tobacco to being reliant on food aid.... bad plan, badly delivered. Little know fact... some white farmers remain... I believe the largest is one Nicholas Van Hoogstraten... the legendary slum landlord who having beaten off his murder conviction has gone out there to live on his 40,000 acre (or something like that) farm and indulge in his prediliction for young black women.

I would agree with you that IF a conservative government gets in we may well see a another boom in house prices (which of course will eventually lead to another bust)... having said that I don't think it has much to do with the government... personally I think lab,conserv,lib we would have had this boom currently... and the bust... and that whoever is in if the bust overcompensates then I suspect another boom will come along to pick up the latent value... now of course I suppose politicians could try and do something massive in policy terms to try and stabilise it... but I suspect market forces will find a way through it and we'll end up with the boom anyway and along the way we would have had to have some probably pretty blunt policy tool to suffer. For instance: Crudely banning say BTL would be difficult if not impossible as it would impact small developers in all probability, taxing second homes is all fine and dandy but what happens round the edges say when a couple split but don't divorce and have seperate houses, limiting borrowing amounts to salary sounds like a good idea but commercial banks would get around it, as would offshore banks and foreign banks, cutting off the allowance for BTL landlords to pay interest before tax would be next to impossible without changing the whole way small business' allow for expense, etc etc. (and probably many many more thoughts to either dampen demand or control credit etc). I think structurally controlling house prices is in the too difficult box so conservative, labour or lib we'll probably see market forces rule which will mean another boom after this bust. Probably the only party that would make a difference through controlling demand is the national front (called something else now), they want pretty much every immigrant out which will by its very nature I think control demand and therefore pricing.

And nor am I saying the health service isn't in better shape.... but the simple fact is that productivity has not risen anything like in line with increases in expenditure.... cleary you are not up to speed with this otherwise you'd not have been so crazy as to call me out on this... go do your own digging if you want to try and refute the point I have made... doubt I'll see you back with the hard eveidence that productivity and expenditure is not pretty much where I have said it is.... even the labour parites own figures are in that region... go talk to your new labour buddies and see if they can put a different "spin" on things.

Prat who hasn't bothered to check alert

Who knows.. I somehow doubt it as the cheap credit which fuelled the boom was driven by the wholesale markets as much as anythign... certainly it wouldn't have sat well with tories I should think to have introduced an upper limit say on the amount (as a multiple of salary) one could borrow and in any event I doubt that would have stopped it either. The things I hope they wouldn't have done are myriad but include: 1/ Not raising taxes in a stealthy manner as labour have done over 100 times... targetting taxes at usage or just straight income tax are in my view the best ways to achieve it. 2/ Not wasting the £bn's labour has done on the nhs, schools, etc.... I think the stas on the NHS are that funding has risen 60% but productivity 3%. 3/ Not damaging the schools system with the introduction of testing and sats etc going crazy to the degree that was once unreliable is now worthless. 4/ Not encouraging millions of young people to borrow money to take degree courses which result in qualifications which leave them no better off.... young people in massive debt, debt underwritten by the taxpayer at uncommercial rates, university standards drop, millions of places created for unnecessary degrees. Of course the conservatives would have done loads of things loads of people disagreed with but I would hope that the public finances would have been a little better run and the wastage not so extreme. Unfortunately every government has its bad points, Labours though have been abysmal, and they have been going in the worng direction for a very long time.

I'll be interessted to hear the second part... how you dragged yourself back up the hill... tough story.. wouldn't wish it on anyone. It's interresting that Steve who is a regular on here posts his story which is a tough one and there are loads of people who say what I think are the right things and show some empathy and sympathy... and yet I remember my first post on here after reading HPC for while... It went something along the lines of people on here seemingly wishing for a HPC (for obvious reasons) and yet at the same time showing zero or worse sympathy for those caught up in the storm.. repossessions, lost jobs, family break ups... in fact I did say that many took the "serve them right" or worse view.... the result was truly amazing... some said they reserved their worst wishes for BTL'ers (modern day steve) only... and others said they couldn't give a stuff for any homeowner they all had it coming to them... there was as I recall hardly a single concern for those who will be hurt most by this... even though of course as I pointed out by far the most likely camp to be damaged are those on lower earnings who are already the hardest pressed of our society . Personally I have sympathy for pretty much all those who will have their lives destroyed by this.... in the same way that I have sympathy for the situation Steve went through..... many will go a stage further and marriages will break up, children will grow up in less stable environments..... but still there appear to be huge sections of those on here who want only one thing and are willing to cheer it to the rafters regardless of who gets hurt in the process. Even though I suppose there are VI's for HPC's being the cheerleader to that degree does amaze me. I'll be interessted to hear the second part .. hopefully it will be a heart warming but difficult tale of recovery. When Steve was going through that I had recently started work in london and was going like a train, benefitting career wise from more expensive people being taken out above me, and in 1992 bought my first flat in London, which had been on the market for a couple of years and if my memory serves me right cost £120,000 vs an initial price about £200,000 before the crash started. Completely opposite experiences of that time to steve... but maybe the tough times will come for me this time around for me.

Well student debt is cheap when compared to other forms of debt so theres no point in paying it down if you have other debts, pay those first it'll be cheaper. At the rates you are quoting you can get savings rates in excess of the amount your student debt is costing so tax to oneside your savings are working quite hard for you, or should be. From lenders perspective they look at your credit file which I think does not include student debt, and many exclude student debt from their calculations when doing affordabilty. From your own perspective you need to make sure you can afford any debt including your student debt. Personally I'd keep the student debt and build up savings... if when you buy things have changed you can pay off the student debt using savings... in the meantime the debt is at a lower rate than savings and cheaper than any other kind of borrowing so I'd keep it running alongside your savings. The felxibility may be of benefit down the tracks. Your student should also reduce over the next two or three years when housing should have reached bottom.

If the article was written in 2001 then prices then seemed to still be running below the trend line which a lot of people on here view as the holy grail.... in other words the price in 2001 certainly wasn't unsustainable but perhaps they were commenting just on the rate of the rise being too steep... unfortunately in a boom-bust cycle thats what always happens... bubble- over correction- bigger bubble- overcorrection etc..... people here seem to be saying with one voice that they expect (and want) prices to overcorrect vs trend and yet with the same breath seem to be saying they want stable prices.... if theres an overcorrection then as sure as eggs is eggs there will be another bubble at the back end with prices rising very rapidly indeed.... it may well take a few years to happen but thats what will occur. If you genuinely want stable prices then at some stage either the downward correction or the upward swing needs to fall out of pattern which is very difficult thing to achieve (actually I think there was a chance of doing this in 2005 but the owers that be blew it with the rate cuts.

Interessting post... I did say on here last year when many HPC'ers were wishing evil on anyone with a house and especially anyone with more than one that they ought to be carefull what they wish for... I also pointed out many "innocents" even in their eyes would get hurt... mostly I got the same response which was "f**k em". To answer your question, I think pretty much everyone will be negatively effected by this, whether it be just awkward, whether it be life on hold type of upset or whether it be financial problems... pretty much everyone will be effected somehow.... there will be and I am sure are some pretty sad personal stories out there.... most sane people would have sympathy with them, but I am not sure that the hard core HPC'ers will have developed a sympathetic feeling yet... they appear simply motivated by a "f**k everyone until prices drop so I can afford a house" type mentality... they'll regret it I am sure.

Of course you are quite correct.... it shows as I said that lenders are getting a little more competitive becasue they need to.

Personally I think your assessment of the announcement is over done. Whilst I will agree that the market is hardly close to being as competitive as it was... believe me when I say lenders cutting rates is pretty big news... it illustrates amongst other things: That they have money to lend (albeit on constrained terms from where they were) That they want to lend that money That they are struggling to lend it bearing in mind current transaction levels And most importantly for some lenders at least that they are perhaps BEGINING to be a little more competitive than they were. The article perhaps overegged the competitiveness point but your response to it was equally unbalanced... but maybe thats normal in a HPC VI board.