BelfastVI
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Posts posted by BelfastVI
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I'm sure there are acres of rain forest been cleared as we speak, to discuss this topic in the future. Who do we blame? The answer is everyone who participated in it.
The person who bought his house at a reasonable price and sold it on to the highest bidder at the top of the market. (This is not a go at Belfast Boy) Did he do anything wrong - no. Is that any different to a share dealer, a car dealer or a land dealer?
He gained by buying and selling, probably unknown to himself, during an unprecedented boom in housing. But how did that leave the purchaser of the property.
There are three parties that I blame
1 The government who allowed this to get out of control
2 The government (planning) for withholding the supply of land for development that affected the laws of demand and supply. i.e BMAP should have been published in 2005, we are still in draft. With most markets if the demand rises the supply rises to meet this and brings the price back to equilibrium. Also when the price rises demand will usually fall, as we all know the exact opposite happens with houses so an even greater demand was placed on land forcing it up further. In the future when they ask the question ' why did house prices get so out of control? they will have to look at the whole aspect of release of land. I am not talking about the concreting of the country side but the actual release of that land proposed in the draft plans years ago.
3 The Banks, both in their lending to developers (epically FT Developers) and the mortgages they released. I have been amazed over the last few years, walking into auctions and walking out 10mins later with the prices opening well over my max price. Usually bought by someone who never developed before and a 90 to 100% loan.
I haven’t mentioned developers. With long term developers you have to place yourself in their shoes and ask yourself when do you stop buying land, employing your people and selling houses into a welcoming market?
When land goes to:
£100k per acre?
£250k per acre?
£500k per acre?
£750k per acre?
£1m per acre?
£1.5m per acre?
£2m per acre?
for your interest we stopped very close to the top of this list. Many didn’t, as you know.
I have no love of EA, never had. In my view they are one grade below second hand car dealers. But to say they duped people into this is a little naive. They get paid commission to sell houses. What do you expect them to do. Plus I don’t think they were dishonest as most of the ones I know bought a few houses themselves, ‘before they missed out’. The property programmes were a bit strange. Although on the few I did watch the inexperienced ‘developers’ seemed to give up their jobs and seemed to go completely over budget and were lucky to break even.
I think Belfast Boy hit the nail on the head with the last on his list, ‘the sheeple’, which was pretty much everybody who lived on expected future income rather than actual. Somewhere along the line we lost the ‘fear of debt’ that our parents had. I have a feeling I will become my grandfather warning the youngsters to shy away from debt.
I know people in their early 20’s who have £15k to £20k of credit card debt, spent on useless things. Up until recently this didn’t worry them. There was no stigma or sense of being stupid attached to it.
But at the end of it nobody could have done this without the easy supply of credit. Not the developers, not the BTL’ers , the FTB’s nor the sheeple. If the credit hadn’t of been available the rush of new developers (sheeple with designer suits) wouldn’t have pumped up the demand and price of land. Which is where the problem started. So something happened with the supply of credit. There was a cause which resulted in the free supply. Somewhere along the line there was a relaxation which, one day will be pinpointed as the cause.
Who’s to blame
The government for relaxing the flow of credit, whilst tightening the supply of land
The banks for issuing this credit
The Sheeple, including developers for taking this credit.
But it basically comes down to two things releasing credit and restricting land.
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Reading between the lines, the general consenus on here seems to be that the actions of the Department of Social Development are only designed to save the big (or small) nasty developers from going bankrupt.
Can someone tell me then what alternative actions the Department could have taken and how these actions would have been more benefical to people living in Lurgan who require social housing?
Good of you to join us Margaret
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Someone told me it could be a good idea to take up smoking just before you want to take your annuity.
And go into the interview stinking of drink.
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A Steve, definitely go the SIPP route because your own nous and interest in your funds and your ability to act on your knowledge instantly mean your investments should outperform the collective funds traditionally offered.
Your funds are covered by some sort of scheme but should be easy to establish the details.
These elements are ringfenced and therefore safe from the collapse of the pensions company unless you are invested in the with profits fund.
Then on retirement you get to use your fund to buy an annuity, a totally distinct product. The qud pro quo for the tax breaks on the pension funds are that unfortunately you have to use 75%plus to purchase an annuity, but it neednt be with the same company who provided the wrapper for your pension investments.
IMPORTANT: You need to seperate out in your mind the investment side of the pension from the annuity.
The annuity is where most of the risk lies as alluded to in this thread, this is why you need to check that your annuity provider has a track record and ultrasafe capitalisation. However you neednt choose the provider until you actually retire and you can hawk your massive SIPP fund round to see which provider gives you the best balance between annuity rate and reliability to keep paying your income the end of your days.
Can you split your 75% over different annuity providers to spread the risk
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There is not necessarily any agenda. (Although there may be, as with any story.) This is basic technique throughout journalism. For example they don't simply say x thousand die in tsunami, they do inteviews with folk who survived, or whose kin are missing. Makes the whole thing seem more real to the average viewer.
Basic lesson a PR agency will tell their client: the average viewer is thought to be incapable of working with facts and figures. So to get a journalist to see your piece as a 'story' its a good idea to illustrate what you say with anecdotes about real people.
Very frustrating journalism if you are somebody who likes to work with facts and figures.
Basic lesson in government PR is to condition the people for what is coming. Remove the sympathy
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They could have saved themselves the effort, I never had any.
.
ST
Ah' but the majority of repos will not be against silly cases like these. They will be against ordinary families, who didn't buy at the top and who have perhaps equity on the house but who fall behind in payments.
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Hmmmm... I've just had an awful thought. /tinfoil hat on/
Is the point of these stories to actually build up anger against these kind of folks and make the idea of owning any property abhorrent?
/tinfoil hat off/
No the point of the story is to foster the exact feeling in the general public that has just been expressed here. It is to remove any sympathy for the forthcoming mass of repossessions by the likes of Northern Rock etc.
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There was 30% off this year, so I can imagine at least another 10-15% off next year, if not 20%.
This thing is unravelling at scary speed if you ask me!
I agree, most of the drops have been in the new-build sector. Whilst we are starting to see drops in the resale (which represent 60%) of the market the majority of drops in that sector have yet to come. Will they drop as much as the newbuild?
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Inflation is now higher than interest rates.
Saving Account rates less tax is less than inflation.
Money falls in value in the bank.
Strange times
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Royal Bank of Scotland chiefs to be forced out under bailout deal
Royal Bank of Scotland will today clear out its boardroom as part of a shake-up, demanded by Government, for a state-assisted re-capitalisation of the bank.
By Jeff Randall
Last Updated: 9:54AM BST 08 Oct 2008
Royal Bank Of Scotland Group
Chief executive Sir Fred Goodwin and chairman Sir Tom McKillop are out. They are to be replaced by Stephen Hester, formerly of the Abbey, and Sir Philip Hampton, currently chairman of Sainsbury's.
As part of the deal with Government, there will be a future cap on executive pay and shareholder dividends.
The departure of RBS's top management comes the day after shares in the UK's second biggest bank fell 39pc over funding shortfall fears.
It coincides with a move by the government to throw a £50bn lifeline to Britain's battered banks, to be announced before the market opens this morning and expected to take the form of a taxpayer-funded capital injection in exchange for preference shares.
The emergence of an urgent need for capital had placed Sir Fred's and Sir Tom's positions under renewed pressure after the bank raised £12bn in the biggest rights issue in European history earlier this year and indicated that it would not need to come back for more.
Sir Fred, nick-named Fred the Shred for cutting 18,000 jobs after the NatWest takeover, has also been criticised for paying too much for ABN Amro, which was bought for £49bn at the top of the market last year.
At their peak, RBS shares were trading at £5.97 each, but closed yesterday at 90p.
Stephen Hester is currently chief executive of British Land, a leading property company, which he joined in 2004.
For the previous 19 years he was at Credit Suisse First Boston, holding various Investment Banking roles until becoming Chief Financial Officer in 1996 then Global Head of the Fixed Income Division. He is a trustee of The Royal Botanic Gardens, Kew Foundation.
Sir Philip Hampton has deep experience of banking. He was the finance director of Lloyds TSB until 2004, but left after falling out with other directors over strategy.
The chief executive of RBS, along with the heads of Barclays, Lloyds TSB and HBOS all met Chancellor Alistair Darling on Monday night, as well as other senior financial authority figures, to discuss the crisis.
Shares in RBS, which owns NatWest, Direct Line and Coutts, fell by almost 40 per cent on Tuesday to a 15 year low. Its stock market value has now fallen by more than 80 per cent in the past year. On Tuesday it eventually closed more than 39 per cent lower, wiping more than £10 billion off the value of the business.
Concerns over the group have continued to dog RBS. Its troubles were compounded further when credit ratings agency Standard & Poor's cut its rating on the firm amid fears over its future earnings and write-downs.
The move effectively meant RBS was deemed a less safe institution to lend money to, making it even more difficult for the bank to secure funds at a time when interbank lending has already all but frozen.
Sir Fred had earlier this year been forced to assure investors he remained the best man for the job as he unveiled first half pre-tax losses of £691 million.
RBS is also thought to be facing difficulties integrating its portion of ABN without having to make more big write-offs.
It is reportedly struggling to find buyers for its Churchill Insurance and Direct Line businesses, put up for sale in April.
And there are fears it has large exposures to more toxic credit derivatives.
RBS's own assessment of its capital strength was fairly bullish in its most recent update, saying it was "comfortable" with the level of write-downs announced when publishing its half-year figures in August
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Any guarantee for recently bought houses is covered by the NHBC, they should arrange for any repairs required. I don't know about deposits/off plan purchases, that would depend on the contract.
If you have your NHBC Booklet (ie their cover note) they will fund the completion of the house.
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read more closely
"Northern Ireland's housing co-ownership scheme has secured £35m in private finance"
I wonder who stumped up the cash. Someone with a vested interest perhaps?
BoI
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The problem with the Nationwide report is that it is based on their own mortgage approvals. This is normally a good thing as it is more up-to date than reports on completions and more accurate than those based on actual asking prices (UUJ). However if you look back at those Fraser ads, you will see that the Nationwide were supplying the mortgages. So while I'm sure the latest report (NI part) was on a very small number of mortgage approvals, the vast majority of them was on the Fraser houses which based on what went previously were sold at quite a drop. Whilst allot of developers have followed suite, I don't see any evidence of a similar drop (further 30%) in price off the Fraser bench mark of £150k this quarter. Because of the low numbers of transactions and the fact the Fraser price seems to have been the benchmark the next report may show a far smaller drop. Whilst I have no doubt it will still be a drop you know how a slow down in the rate of price falls can be portrayed as a rise. I remember when price increases slowed from 30% pa to 20%pa and a newspaper portrayed this as a drop of 10% whilst prices had actually risen by 20%. The rate of increase had dropped by 10% but that's not the same thing. I can see the opposite happening here which could have a self fulling effect.
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our favourite dublin prof on the ball again
reckons we should be buying good aul irish bank shares!
pity about the kerry tax payer!
http://www.irishtimes.com/newspaper/opinio...2815457103.html
rock on!
He is spot on. Good Article
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A lot of talk on the news about how the B&B Nationalization is a massive blow to Buy to Let folk as they will now find it much harder to renew their BTL mortgages when they come off their 2 year deals.
As far as I can remember, the massive boom year was 2006. The people who bought up until Sep 06 will already have renewed their deals. So it'll be 2010 before this really hits them.
So that leaves the people who bought after Sep 06 - they'll be looking to remortgage now.
Just wondering, was the BTL boom still going on in the 1st 6 months of 07? I can't fully remember. I know things had stopped by end of summer 07.
If the boom was still going then, it means there will be a lot of people who bought overpriced BTL properties who are going to be remortgaging over the next 9 months.
It went on until Easter 07. Should have stopped in Sept 06 but peace broke out, remember that, and there was a big peace dividend
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Mean, median or mode?
Try the average of the three, just to be safe
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Price range (1000s), Items for sale, Percentage of range total Difference Percentage Change
0-30 583 2.0 -4 -0.69%
30-50 16 0.1 -2 -12.50%
50-100 645 2.2 54 8.37%
100-150 5404 18.1 213 3.94%
150-200 7960 26.7 14 0.18%
200-250 5175 17.4 -60 -1.16%
250-300 3249 10.9 -35 -1.08%
300-350 1819 6.1 -53 -2.91%
350-400 1648 5.5 2 0.12%
400-450 713 2.4 -17 -2.38%
450-500 800 2.7 -23 -2.88%
500-550 283 0.9 -4 -1.41%
550-600 378 1.3 1 0.26%
600-650 203 0.7 -3 -1.48%
650-700 228 0.8 -4 -1.75%
700 693 2.3 -5 -0.72%
Range Total 29797 100.0
25/09/08
Full Total 27439
Some interesting movement this fortnight - the 100-150 band now has more properties than 200-250 for the first time since I started recording the falls.
There are also drops almost across the range, when the price is more than 200k.
50-100k showed the biggest change again, with there being almost twice as many properties in this bracket than just 18 weeks (or about 4.5 months) ago.
It's clear that lots of house prices are falling to between 50-150k, with 150-200k still holding the bulk of the houses.
The total properties has also increased slightly, by 100 or so.
Can anyone, more intelligent than me, work out what the average asking price on Propertynews.com is.
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Be careful of statistics. The average earnings figure is not the same as the CML's average FTB salary. As house prices rise and move out of the reach of lower earners the average of the salaries of those who can complete on a first-time mortgage increases. It is entirely possibly that the average salary in NI is £20K (example only) but the average salary of an FTB is £30K.
Simplistic example:
2006 House price = £125000
5 buyers
£15000 (8 time salary on 125% I/O mortgage)
£20000
£25000
£30000
£35000
Average Salary: £25000
2007 House price £175000
Only 3 Buyers now possible
£25000
£30000
£35000
Average salary £30000
This represents a 20% rise in the average salary for the first time buyer - however this does not mean that average salaries have risen by 20%, only that the lower end of the market has been priced out.
That's a very good point, and one I had never realy though of. There used to be 70% ownership in NI, which was higher that Europe and the USE. That figure is likely to fall as more people delay purchase and rent instead. Some may decide never to purchase but rent for life.
The 65% or 70% that do own their own home probably come from the top 70% of earners. Therefore the average income of this 70% is likely to be much higher than the overall NI average. As prices went up this pool should have decreased only the bank foolishly compensated by increasing the multiples involved.
I'd love to get my hands on these figures.
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http://www.cml.org.uk/cml/filegrab/Norther...et.pdf?ref=4840
Can anyone point me to where I can accurate 'average earning' figures for NI. I have tried a number of places but with no luck. The table above from the CML shows an average FTB Sal of £30k+ for 2007, which couldn't be right.
No doubt someone here has the correct link to hand.
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Not going to set the world on fire with these articles
http://www.newsletter.co.uk/3425/PROPERTY-...sing.4492092.jp
Who is this guy?
Amid calls for the Assembly to help struggling property developers, Tax Alliance campaigner Mark Wallace explains why cutting VAT is right way to aid buildersNo he doesn't
instead of bailing companies out and as a result raising taxes, which risks spreading the financial problems to other taxpayers and businesses, the Government should cut taxes, particularly VAT, on the building and property development industry.And that wouldnt remove money from the revenue?
New build is, and has been exempt from VAT for 30 years. The only VAT is on the washing machine and fridge. He gets a whole page and hasn't a clue. Went to his web site. He and his mates are not too happy that this place gets 30% more government funding that the rest of the UK. They have started a campain to remove the Barrent Formula (forgive spelling). Hope nobody here works for the state then.
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On the news today the Bank of England has pumped £5bn into the Financial Markets. Don't believe there will be much debate on this use of the tax payers money. This I understand is more that the entire budget for NI.
Thank goodness they didn't waste, even a tenth of this in buying cut-priced housing for those on their waiting lists. Better to wait and build them themselves at usual government efficient prices.
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I calculated an NI drop of about 50% would be needed to restore prices to this long-term trend. The risk of an over-correction giving a 65% drop would be a better replication of what happened in the 90's than the rather hopeful flat-line you have suggested in your graph.
Er' there was a 3 year flat-line after the 90's crash. Prices basically remained the same for 3 years after the drop.
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BelfastVI - that graph of yours gave me a good laugh. I much prefer my signature graphs and I have a great quote which applies to you.
Geroge Bernard Shaw, "If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience."
As you can see in 2 of the graphs in my signature - the prevous UK housing bubbles have started from the same base point - roughly 3 to 3.5 times income. The next bubble will most likely start from this base point too. At todays incomes that would be between £63k - £74k for Northern Ireland. Less than half of the base that you have showed on your graph at £150k.
Or may be you really think history will not repeat itself, because it really is different this time. Many men have made that mistake in the past.
The only unexpected thing which has happened is the size of the Northern Ireland housing bubble. Even then, bubbles of this size have happened on rare occasions before. The size of the correction will match the size of the bubble.
... anyone can see that you are not going to get it right.
I did't put this forward as my projection. If you read what I said you will see that I said the recovery rate was too high. I simply took the pramaters from the 90's crash (not the percentages) to plot something on a graph. Without a doubt it is wrong as why should this crash be the same as the last, for one thing we never had one before and the boom has been much greater. I was just inviting people to plot the next ten years on a graph and give reasons for their projections. If people use the game graph it makes it easier to compare.
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This is a first attempt at the projections.
I have taken the latest Nationwide figures and added an 8% growth line. *% has been mentioned before and seems to fit well up until 2004.
I have then looked at the parameters from the 1990' crash ie:Notes: 8% Growth rate [Red} seems to fit with graph up until 2003/04
Prices to fall over 3y to that 14mts prior to peak - that was 20% in 1990 36% in Northern Ireland, using this method.
Flat for 3 years
20%(seems high) recovery over following 2 years.
Interestingly when you look at the graph the prices fall until they hit the long term growth line of 8% and flat line (which keeps it under) before it returns to the line.
The 8% yoy growth, whilst working well for 30 years does start to look steep. That's compounding for you. But I guess if you look at the price of food or wages they compound too.
I have said before I cant see us getting back to peak prices in nine years (don't think anyone wants too). As so many people got their fingers burnt here it will be another generation before people ever let this run away again.
This is only a first attempt. Bassed on 1990. I would be interested to see other attempts and perhaps someone very clever will be able to post all the serious projections on a combined graph and lets see who gets it right.
" Mirror, Mirror On The Wall, Who's To Blame Most Of All?"
in Northern Ireland
Posted
Overcroulding is a problem. There are between 6bn and 7bn people on this earth now. By 2050 there will be over 9bn (WHO figures). So in 40 years, bar the tinfoil hat brigade are correct, we will have 50% more people to share this place with. So if we don't build up(more skyscrapers anyone) we must build out. If we don't allow expansion into the greenbelt then they will have to be crammed into existing brownfield sites. Belfast has not got that vast wasteland of industrial buildings to rebuild.