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House Price Crash Forum


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Everything posted by Shotoflight

  1. We must end this addiction to debt as the engine of growth There has been no serious attempt to get to grips with the financial cycle, which requires moving away from debt as the engine of growth http://www.telegraph.co.uk/finance/comment/jeremy-warner/10936887/We-must-end-this-addiction-to-debt-as-the-engine-of-growth.html And now its warning lights are flashing red once again – about the disconnect between buoyant financial markets and underlying economic realities, about a recovery which is too dependent on debt and unconventional monetary stimulus, about the depressing lack of productivity growth, about companies that prefer to downsize and buyback their own shares to investing in the future, about developing asset bubbles and the risk they pose to financial stability, and about the cowardly propensity of policymakers to take the easy option, rather than the tough decisions necessary to create a durable recovery.
  2. No mention of co-ownership (run by DSD) - was this part of the problem? Also no namecheck for HPC????? surely a trick missed there!! http://www.dsdni.gov.uk/rtf-initial-evidence-paper.pdf Possibly reflecting the popularity of buy- to-let (BTL) mortgages, interest only (IO) loans represented 41.7 per cent of all loans during the period of rising prices The qualitative evidence suggests that over indebtedness through second charge and unsecured loans is a particular issue amongst "homeowners" who exercised their ‘right - to - buy’. Despite a reliance on credit, borrowers often lack basic financial literacy skills. Within NI,17 per cent of borrowers do not understand the terms and conditions of their current mortgage; this proportion increases to 28 per cent for lower income households and 29 per cent for 61 to 70 year olds
  3. Detailed Northern Ireland bank lending figures released (ie Debt)http://www.bbc.co.uk/news/uk-northern-ireland-28128654 Detailed figures on how much banks are lending to households and businesses in Northern Ireland have been published for the first time. At the end of 2013 total outstanding loans were just over £24bn while deposits amounted to £18bn. The information released by the British Bankers Association (BBA) includes data from Ulster Bank, Danske, First Trust and Bank of Ireland. It also includes the lending from Barclays, RBS, HSBC and Santander to small and medium firms in Northern Ireland. Households had borrowings of £7.3bn, the vast majority of which - £6.5bn - was mortgages. Deposits held by households amounted to £10bn, of which £6.9bn could be withdrawn on demand. Businesses had borrowings of £16.5bn; that consisted of £2bn in overdrafts and the rest in loans. Business deposits were £8bn. The service sector, which accounts for about 50% of Northern Ireland's economic output, had 35% of total business borrowing, which amounts to £8.5bn. The sector with the next largest borrowing was construction, which had 15% of outstanding loans amounting to £3.5bn. The figures show that in both the third and fourth quarters of 2013 net borrowing by households and businesses fell. However the BBA said the figures also show that new lending to small and medium firms was up by an annual rate of around 40% in each of those quarters. Taken together those figures suggest that both businesses and consumers are still trying to reduce debt but that growing companies are able to borrow.
  4. Sir Jon Cunliffe: House prices 'biggest risk' to UK economyhttp://www.bbc.co.uk/news/business-28140588 Bank of England deputy governor Sir Jon Cunliffe has told the BBC that the housing market poses the "biggest risk" to the UK economy. Sir Jon indentified "prices rising faster than people's incomes" as a particular threat. "That leads to... a big increase in the amount of debt in the economy," he added. Last month, the International Monetary Fund (IMF) warned the government that accelerating house prices were the greatest threat to the UK's economic recovery. It said rising property values could leave households more vulnerable to income and interest rate shocks, and called on the Bank of England to enact policy measures "early and gradually" to avoid a housing bubble. Mark Carney, the governor of the Bank of England, has also previously warned that the rapid rise in property prices could be detrimental to the UK's economic stability.
  5. Repossessions taskforce findings due to be publishedhttp://www.bbc.co.uk/news/uk-northern-ireland-28129490 Northern Ireland suffered a huge housing bubble followed by a crash which saw prices fall by almost 50%. As a consequence, rates of negative equity are much worse than elsewhere in the UK. Earlier this year, the mortgage service firm HML calculated that 41% of mortgages taken out since 2005 were in negative equity. In contrast, the figure for the UK as a whole is just 8%. Households in negative equity are usually unable to to move their mortgage or get any sort of discounted deal. That means they will be stuck on the Standard Variable Rate (SVR) and will not have the opportunity to get onto a fixed rate deal ahead of interest rate rises. Meanwhile, the number of new repossession cases started in the High Court in 2013 stood at almost 3,700. That is below the peak in 2009, but is still well above the pre crash level of around 2,500 new cases a year.
  6. "Stable growth", as the average worker gets poorer, lending is tightened and interest rate rises forewarned. Price stats seem all over the place, perhaps the dust will settle soon?
  7. London house prices up 25% in rise unequalled since 1987, data showsAverage house price in capital breaks through £400,000 barrier – double UK average – reports Nationwide http://www.theguardian.com/money/2014/jul/02/leap-london-house-prices-unequalled-nationwide When compared with the same period of 2013, prices were up strongly across the board, with Scotland recording the lowest increase, at 5.4%. In Northern Ireland they were up by 8.4%, but the average of £117,150 is still around half the level reached in 2007.
  8. UK Tough new lending rules act as a brake on mortgage approvalshttp://www.belfasttelegraph.co.uk/business/news/tough-new-lending-rules-act-as-a-brake-on-mortgage-approvals-30395499.html
  9. Couple with two children 'must earn £40,600 to meet basic needs'Report by Joseph Rowntree Foundation finds amount needed for acceptable standard of living has risen 46% since 2008 http://www.theguardian.com/money/2014/jun/30/couple-two-children-earn-basic-needs A couple with two children needs to earn £40,600 to have an acceptable standard of living, almost 50% more than before the recession, according to a report that highlights the squeeze on families from soaring energy bills and benefit cuts. The Joseph Rowntree Foundation (JRF) said its latest research into what the public considered essential to reach a minimum acceptable standard of living showed a growing gulf between what people needed to earn and their actual incomes. While the amount needed to cover a family's basic needs had risen 46% since 2008, average earnings had risen only 9% in that time, the charity said. On top of that many families had lost out because of changes to tax credits and benefits. JRF warns that even if real wages start to rise again this year, low-earning families with children are unlikely to be able to close the gap between their income and their needs, because of low pay, rising prices and reduced government support. "People have talked a lot about wages falling behind the cost of living but this really lays bare the challenge to make up lost ground. This isn't just falling short, it's falling behind," said Katie Schmuecker, a programme manager at JRF. "We can't simply rely on wages improving as the economy recovers to solve the problem." The research, carried out by Loughborough University, found that the cost of a minimum basket of goods was up 28% since 2008, higher than the official inflation rate of 19%. Three big culprits were singled out: food was up by 26%, domestic energy by 45% and bus travel by 37%.
  10. EU addresses concerns over fair competition and value for money. New European Commission rules could impact NI jobs growthhttp://www.bbc.co.uk/news/uk-northern-ireland-28095426 Europe is changing the rules because it was concerned big companies on the continent - particularly in the automotive sector - were getting too much help. It felt the status quo went against fair competition and value for money. This could have been much worse as at one stage, all aid to large companies seemed like it would be banned. As it is, Invest NI can still chase foreign direct investment from big companies thinking of first time projects here. It is follow-on expansions which will become more problematic. In the past three years Invest NI has offered taxpayer funds to companies totalling £430m. Almost 30% of that - or £124m - has been in the form of regional aid. This will likely reduce in the years ahead but rather than money being lost it will be redirected. Expect more funding for research and development projects and smaller-scale local companies as a result.
  11. Don't rely on housing market bounce, Bank of England boss Mark Carney warns Belfasthttp://www.belfasttelegraph.co.uk/business/news/dont-rely-on-housing-market-bounce-bank-of-england-boss-mark-carney-warns-belfast-30390721.html This week, the Bank of England announced measures to restrict mortgages – including not allowing lenders to lend any more than 15% of residential mortgages at more than 4.5 times a borrower's income. The bank's aim is to stop the UK's housing market from overheating – especially in London, where prices have jumped by nearly 19% in the past year. But in Northern Ireland, house prices have only just started to recover from the crash of 2008, when prices fell up to 60% on prices up to 2007. Could those new measures harm the embryonic recovery in Northern Ireland? Mr Carney said: "We calibrated them (the measures) intentionally to ensure that markets such as Northern Ireland and similar markets across the UK can continue their recovery. "It's not just a question of prices. And by the way, we don't focus on prices but levels of activity and how many homes are built and how many people move and the risks associated with indebtedness around that. "The way we set these measures is for responsible lending and there is responsible lending now in Northern Ireland and there's room for that lending to grow. "Obviously having lived through the terrible experience of the last few years what we all want to avoid is a market that grows with a very rapid rise in debt." Q. Typically the media and homeowners celebrate when house prices are rising – is that the right attitude? A. The aspiration to own your own home is natural and entirely understandable. What we can do as the Bank of England is make sure that people take out mortgages to buy homes that they can repay for the life of the mortgage. And a consequence of that – for everybody whether they own their home or rent or live with their parents – they still have an economy that's going to grow and not because of a short-term boost that comes from a bounce in the housing market because of long-term fundamentals that are consistent with stable growth.
  12. Larkspur Rise apartment owners object to £7,000 wall repair billhttp://www.bbc.co.uk/news/uk-northern-ireland-28009046 A group of apartment owners in Belfast have been threatened with losing their homes unless they each pay £7,000 towards the cost of repairing a wall. They are among 31 residents at Larkspur Rise who have received bills to meet the overall £200,000 cost of replacing a wall that collapsed two years ago. All are members of a management company they had to join when they bought in the development. The firm said by signing a lease, they were liable for the communal grounds. So far, some of the 31 apartment owners have paid, but others have not. There was a failed attempt to get the cost of replacing the wall through an insurance policy. Gateway NI then proposed that an "ad hoc levy" of £7,000 should be paid by each apartment owner towards the cost of the wall.
  13. up 2.6% in last yr (ONS) just about matching current (RPI) inflation. unlike wages. http://www.bbc.co.uk/news/uk-northern-ireland-27887272 House prices in Northern Ireland rose by 2.6% in April, according to the Office for National Statistics (ONS). That was the lowest increase of any UK region - the UK average was 9.9%, but that was skewed by a rise of almost 19% in London. The ONS index suggests the price of a typical house in NI is £132,000, a figure that has barely changed in two years. The ONS index is based on data from mortgage completions. It is provided by the Council for Mortgage Lenders. The most comprehensive house price index for Northern Ireland suggested that prices rose at an annual rate of 7% in the first quarter of 2014. The Northern Ireland Residential Property Price Index, which is produced by Stormont's statistics agency, records the details of all sales. It calculates the average residential property price to be £102,000.
  14. Households just 27 days away from being on breadlinehttp://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/households-just-27-days-away-from-being-on-breadline-30356474.html Northern Irish workers: huge wage divide compared to UK peers doing same jobhttp://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/northern-irish-workers-huge-wage-divide-compared-to-uk-peers-doing-same-job-30356587.html
  15. Northern Ireland housing market 'could face collapse' after council reformshttp://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/northern-ireland-housing-market-could-face-collapse-after-council-reforms-30344321.html
  16. Continuing to get poorer - on average. Strong jobs growth continues as UK unemployment rate falls, but wage data show prices are rising much faster than pay packets againhttp://www.telegraph.co.uk/finance/jobs/10891589/UK-unemployment-falls-to-five-year-low-but-wage-growth-slows.html However, the data showed prices are rising faster than wages again. Average pay including bonuses grew by just 0.7pc in the three months to April, compared with 1.9pc growth in the three months to March. Between April 2013 and April 2014, the Consumer Prices Index (CPI) - the Government's preferred measure of inflation - increased by 1.8%. The data were distorted by a single month drop in bonus payments of more than 25pc in April, compared with a rise of 47pc in April 2013. Last year's figure was boosted by companies delaying bonus payments until the new tax year to help staff benefit from a cut in the top rate of income tax to 45p, from 50p. However, pay excluding bonuses grew by just 0.9pc over the quarter, suggesting that while jobs growth remains robust, household spending power continues to be eroded by inflation. “Britain’s jobs market is booming everywhere apart from in most people’s pay packets," "This is a jobs recovery like never before, loads more work but no greater reward, an economy that looks much healthier but feels little better in the workplace.”
  17. Self-employment: First choice or last resort?http://www.bbc.co.uk/news/business-27397993 The latest jobs figures from the Office for National Statistics (ONS) show that there are now 4.54 million self-employed people. That is about 8% higher than a year ago. In fact, there are now 780,000 more people in employment than there were this time last year, and 40% of those are self-employed. Over the longer term, the biggest rise in self-employment has been seen in the number of older workers. According to the ONS, self-employment among the over-50s is up 36% on 10 years ago. The Resolution Foundation reckons that average weekly earnings for the self-employed have tumbled by 20% since 2007, compared with a fall of just 6% for employees over the same period.
  18. United Airlines to suspend flights to New York from Belfasthttp://www.bbc.co.uk/news/uk-northern-ireland-27801890
  19. Investing in property... with £1,000UK (prices a bit "toppy") http://www.bbc.co.uk/news/business-27606802 The company will continue to rent the house out, says Frazer Fearnhead, the managing director of The House Crowd. The truth is when they have tried to do quick do-up and sell-on jobs in the past, they did not turn out to be the get-rich-quick schemes investors had hoped. "It didn't work, to be frank," he says. "We've sold one property for a decent profit. Another one is just about to sell now, but we've had five offers fall through on that property. "That will make about a 24% gain when we sell it, so not bad, but it's taken a long time to do that. And then three others that we intended to do that for, we couldn't do and are now being rented out." But even if you were to consider it simply as an income-only investment, 7.5% on that sounds rather ambitious. The national average rental yield is about 5%, according to the Association of Residential Letting Agents (Arla). Rental yields have been falling as house prices have been rising faster than rents, Frazer Fernhead concedes, but he thinks his company has got a strategy which will continue to give investors good returns. "Most of our tenants are on housing benefit". Pitfalls There are other potential pitfalls investors should be mindful of, according to Justin Modray, from the Candid Money website. He points out the charges associated with this sort of scheme, which are not insignificant. Property Moose, for example, charges 5% of the amount that is invested upfront. It then takes a 15% fee from the annual dividend and final sale. And how do you get your money out? This certainly is not "easy access", like an Isa, Mr Modray says. "If you want to get your money back, you could end up waiting possibly even a year or more in a bad situation, and if it relies on them selling the property, that could take many months before the money actually materialises," he says. "If the property market falls - and there's every chance it could do given prices look quite toppy at the moment - then you could actually end up losing money." Getting your money out is simply a question of finding another investor willing to buy your share, Frazer Fernhead says, and that is something that has always worked out fine so far. That might be relatively easy to do in a rising market, but would surely be much more difficult in a flat or falling market.
  20. Northern Ireland Asking Price Index - last August NIHE http://www.nihe.gov.uk/northern_ireland_asking_price_index.pdf http://www.nihe.gov.uk/index/corporate/housing_research/completed/recently_completed.htm It is noteworthy given the extent of the price correction in the residential sector across Northern Ireland that with the exception of the second half of 2012, the NIAPI is consistently higher than achieved prices (NIQPHI). This serves to highlight the complex nature of asking prices allied with unrealistic seller expectations particularly in the re-sale market, which in part at least can be attributed to a hangover from the mid-2000s house price bubble and an initial resistance on the part of home owners to ‘crystallise’ the decline in the value of ‘their’ property. Unsurprisingly, the longer term trend shows that, overall there has been significant decline in the average listed asking price reflecting the difficulties in the property market since 2007. Asking prices gradually declined in a smoother fashion, in tandem with achieved prices until mid-2012 when there was a sharp decline until the endof the year, at which stage the listed asking price fell below the average selling price for the first time in almost 4 years. The fact that the average sale price surpassed the average asking price in the second half of 2012 provides tentative evidence that the market has ‘bottomed out’. This trend suggests that it has taken 4 years for the resale market sector to correct itself in respect of seller’s expectations of asking price and provides supporting opinion of the erosion of price sentiment and potentially the psychological turning point in the market for sellers in the second half of 2012. Figures for the first quarter of 2013 show an uplift in average asking price, bringing it back into equilibrium with achieved average selling prices. The second quarter of 2013 is characterised by continuing uplift in the average asking price which may be related to stabilising market conditions and confidence.
  21. a good little repository of info - worth a look. http://www.wilson-nesbitt.com/news-updates/35/Remortgaging
  22. UK Homebuyers underestimate repayments by £500 a monthhttp://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10880632/Homebuyers-underestimate-mortgage-repayments-by-500-a-month.html
  23. Corporation Tax: Northern Ireland is walking into a disaster of its own makinghttp://www.belfasttelegraph.co.uk/business/news/corporation-tax-northern-ireland-is-walking-into-a-disaster-of-its-own-making-30327024.html
  24. Belfast the home of worst traffic jams in UKhttp://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/belfast-the-home-of-worst-traffic-jams-in-uk-survey-30323070.html
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