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doommonger

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About doommonger

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  1. In my part of rural Suffolk there have been a number of properties for sale for months which have just sold (post interest rate reduction). Partly this is the summer (it is a seasonal area) and it will be interesting to see if they move to sold.
  2. I personally have sold my house and liquidated my shares. Will not repeat the housing market arguements. My view on the equity market is that it looks toppy. With a large part of the index made-up with banks (with high exposure to commercial and residential property and consumer lending) and oil (reliant on China). I personally am happy getting 5% gross a at the building society.
  3. IMHO this is a very interesting profit warning. McCarthy & Stone was supposed to be different from other housebuilders because it focused on the retirement market. What the City forgot was that people have to sell their old home to buy a sheltered flat. Average prices are holding up simply because older people do not want to discount the price of their old homes - hence transactions take the pain. My guess is this could go on for some time.
  4. If the housing market (UK and most other English speaking markets) has a speculative element (BTL, FTBers stretching themselves, home owners trading up to larger places than they would otherwise buy) then the catalyst for prices to fall is flat capital growth. There was no catalyst for the end of the dot com bubble, apart from share prices not going up anymore. All the stuff about interest rates etc misses the point.
  5. If house prices fall sharply and unemployment rises (the two are linked) this will increase bad debts, reduce housing transactions and therefore High Street spending. The stock market is dominated by banks, retailers etc. Hence over the medium term the market will underperform. The proceeds from my house sale are in the bank. Getting gross 5% is actually very good with zero risk. Property, equities, bonds look pretty expensive unless Gordon Brown is a genius.
  6. I do not believe interest rates are the key factor this time around. This is mainly because the Bank and all commentators are focusing on them based on the experience of the early 1980s. I would argue that sentiment is much more important (particulalry for BTL and the most obviously speculative part of the market) . Therefore, the decline in prices could be long and slow. This is not disimilar to the end of the tech boom in the equities market. What was fundamentally different in April 2000 to March 2000 (the peak of the market). Absolutely nothing. The peak of the housing market appear
  7. Actually the historic evidence suggests people in effect do just wake up one morning and start saving. Historically the triggers have been economic uncertainty (and better returns). I would argue there is wider economic uncertaintly. The flip side of more saving is less borrowing. The falls in unsecured lending suggests increased saving is on its way. By the way the savings ratio is very misleading. The ratio rises if borrowing slows down because of the way they calculate it
  8. I have followed these surveys for a few years. In 2003/early 2004 they rang true because not only did people put faith in property they were increasing their exposure to it. Now however they remain faithful but are no longer acquiring many additional properties (witness the BTL broker survey last week). These people will not sell until they either have to or have witnessed capital losses. Absolutely no different to tech equity punters in 2000/1 (albeit property is much more illiquid). My conclusion is that no expanding portfolios is the first sign all is not well
  9. With REITs the idea is to parcel up commercial properties and then sell what are effectively shares. This could be bought by a SIPP. However, CML themselves have said REITs will have no role in residential property.
  10. I head him give this presentation at the back end of last year. He is very convincing (in an academic way). It was very funny because he was speaking at some stuffy West End surveyors and the audience was full of the great and the good of the wider housing industry. They were all mighty pissed off. In the gents afterwards one old codger said to me that "that they should not invite Marxists along"
  11. Illogical as it sounds the main reason people remortgage is NOT to get a better rate. The main driver is actually extracting additional cash for home improvements. A lot of people happily sit paying SVR... Hence the bad news on retail sales in DIY sheds will weaken remortgaging. Remortgaging as a % of total lending has only risen because lending for house purchase is so weak.
  12. If you can get a quick sale at a price you consider reasonable sell it. If not I would be tempted to keep it. The costs of selling and Stamp Duty on the way back in mean those with a long term view (oh God I sound like Paragon) should at least match cash (deposit rates of 5%+ are not sustainable through the forthcoming downturn) But... if you think there is a chance you will lose your cool when prices drop 30%, sell then do it now.
  13. You can make a lot more on the way down as when prices are rising for the simple reason there tend to be less buyers. However you need nerves of steel..and cash + a bank that trusts you. IN practice this means nearly everyone will not make anything in the falling market. Over the last cycle rents did rise (although not much in real terms). The proble is rents do not rise enough (or prices fall enough) to make the yields attractive (including the risk of holding property)
  14. Phil mentioned its a 'buyer's market' about 10 times and managed to negotiate a decent bit off the asking price (which was already reduced). COuple should be up before the Hampshire style police - fancy wanting to move to Hampshire and only wanting a new build. Oh my God they have a weather station in the garden
  15. You can get pretty gloomy looking at the charts. If housing as with all markets overshoots on the way down then drops of 40% (and 50% at a pinch) are possible in inflation adjusted prices. This would kill the economy dead
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