Jimmy_James

PricedOut get a quote in the Guardian in a pretty sceptical story http://www.guardian.co.uk/uk/2011/mar/23/budget-2011-first-time-buyer-scheme

Quote on the front page of the http://www.pricedout.org.uk/

PricedOut just put a quote out: "The interests of First Time Buyers are not being served by this new assisted deposit scheme announced in the budget." "When independent economists are predicting a 10% fall in house prices this year, having the government encouraging First Time Buyers get onto the ladder using a 5% deposit looks foolhardy at best and, at worst, pretty irresponsible. "The reason why banks aren't lending to First Time Buyers without a large deposit is because banks know they have a very large funding gap, and that house prices are likely to fall further. Having the government using tax payers money to encourage vulnerable consumers to take on a very large debt burden, when house prices are highly likely to fall, is not something we should welcome" "George Osbourne is behaving like a shop keeper trying to shift overpriced stock by offering a clever financing scheme. Consumers would be wise to be sceptical and steer clear, the big problem is that prices are still far too high". "It's main purpose appears to be to help bail out the house building sector - which is suffering from buying too much expensive land at the peak of the boom. We saw plenty of these schemes under the Brown government, and it is depressing to see the coalition continue to connive with the building industry and act against the best interests of consumers."

Hi all, PricedOut are looking to help set up a story for a couple of days time, a budget follow up piece. Have been approached by a respected journalist, they want to see 'what happened the last time the government did an assisted deposit scheme' - particularly seeing if they can interview one of the lucky few (ahem) who bought near peak an inner city one bed room flat using a previous shared ownership / shared deposit type scheme. To see whether they are in negative equity / regret their choice. If anyone knows anyone, then please get in touch by e-mailing us at: press@pricedout.org.uk We've also put out a quote on the new scheme, which will hopefully get picked up Cheers! JJ

Hi there, Just posting from PricedOut. We've been approached by a journalist looking to run a story on First Time Buyers priced out of the West Midlands market for next Tuesday (the 29th Feb) - after hearing us on You and Yours. Would anyone be happy to talk to them from here? Would be good to get an informed First Time Buyer's view - including one who would like to see prices fall a bit more. If you could get in touch with us via press@pricedout.org.uk and we can give you the background Cheers JJ From the PricedOut Team

Quick update on Bristol market tracking Have been doing this for 14 months now - so have a good annual record to compare. We are now out of the New Year dip, and supply is rising again healthily. Supply in my area is over 30% more than it was at this time in Feb last year (pretty much to the day). Is at the level of well into spring bounce territory last year (early May) Interestingly lots of multiple roomed houses coming on (landlords bailing out) at prices well below the OO equivilant. If you want to get a better price on houses, then bailing landlords are the place to go - they calculate by rental yield, which gives values well below the hopes of most aspiring Bristol home sellers

Nice comment piece in today's Guardian http://www.guardian.co.uk/money/blog/2011/feb/15/first-time-buyer-summit

http://www.guardian.co.uk/money/2011/feb/11/house-prices-fall-first-time-buyers-plummet Including:

Good to see PricedOut get a quote:

£598,000 for a cramped two bed appartment with crappy finish in a city with an average income of 25k - but that has "been tastefully finished offering a large versatile living area with polished concrete columns" Here The developers have been in negotiations with their creditors for some time, I wonder why?

Interesting. Couple of things jump out for me on this Think we are moving back to having more 'forced landlords' over the winter period as sellers try and cut their losses after a long period with their house out to market while life events move on. Would add downward pressure on rents, as these landlords would be more interested in any cashflow rather than that which ties into a decent yield. One of the agents marketing your flats was 'medics on the move'. A good example of how parts of the Bristol job market are going to be driving sales as a necessity - as Bristol NHS employees (GPs, hospital staff - particularly higher up the chain) get employment opportunities elsewhere. GPs and NHS consultants are a bit like academics - good career openings are rare and often very location specific (i.e. they have to leave Bristol for them).

That's nothing - in the same development a 2 bedroom flat for £598,000..!!!! The only added advantage to this flat is that it has a balcony you can throw yourselves off once you've realised how much money you've wasted. You could buy a nice 3/4 bedroom Georgian house in BS6 for that money. Mental. The developers must be underwater - and the creditors must realise they are not going to realise any cash on these pricings.

Sorry, I was being a bit rude, as I had only been looking at houses. I think the rental argument has more validity in the flats / lower priced property level. Here mortgage cost vs rental costs are closer - in fact you can argue that BTL calculations are in some parts driving this market (the real injustice and trajedy for FTBs). FTBs have the rough end of the stick, as pricing is now geared much more tightly becuase of BTL. The one question here is availability of finance for BTL - which isn't there (although it's not really there for FTBs either). If you have enough for a 25% deposit I think it is worth holding on for a bit more, because you probably have better financing than BTL which mean the market has to keep coming down. For houses the calculations totally break down - as you just can't rent them out for a high enough price. House prices in this bracket seem now completely aspirational based upon having some buyer with a lot of equity from a completed sale and not much sense. Again, not too many of these about. Maybe you will see a narrowing of the rungs as houses come down closer to their true rental value?

This 'renting will save the market' argument for BS6 and BS8 is crap. There is currently no relation to rental prices and asking prices in these areas - asking prices are delusionally high above what rental prices would achieve. Your argument can only work if there is an easy substitution between the cost of a mortgage for the owner and the income they would get from renting it out. Only then can an owner wishing to sell switch to renting and be in the same financial position. There isn't. There are lots of properties on at BS6 and BS8 at the moment where it is both up for rent and up for sale. To take an example, there is one in BS6 where they are trying to rent it out at a rental price that would translate to a repayment mortgage on a £300,000 property. They have it on the market for sale at £650,000 This isn't an exception - rents are often around half the rate of what it would cost to own the place. How is the rental market going to prop up these prices?

Now seeing some big falls (25k to 80k) in asking prices at the top and middle of the market round my way. Asking prices now heading southwards of 2007 for those in a mood to sell, and the drops are increasing in size and frequency. Think Bristol sellers are finally starting to blink, and EAs are clearly encouraging them. Think the pressure is going to keep building through spring 2011. I'm calling the Bristol turning point, and about time!

This is my favourite 'cash buyer' property out there at the moment - check out this beauty! It kind of make you wonder who used to live there - surely even crack crazed squatters with spectacularly bad personal cleanliness would leave it in a lot better state than this? Check out the quality of decor and the beautiful garden. All for a mere 14 times average income! But odds on that no mortgage company would touch this.

There is always a seasonal tail off of supply at this time of year, and it doesn't take a genius to guess that it's going to keep going up to Christmas. But supply is still significantly above where it was in 2009 though. As you say, this is because of lack of sales. The fact that it is lack of completions keeping supply relatively high is important. In 2009 it was both lack of new supply and a significantly higher level of demand keeping prices elevated. The demand has gone, but the supply side is staying, and come spring I strongly suspect will bounce up again. And Bristol is going to take a kicking in 2011 - which will hit the incomes / ZIRP 'stalemate'. Was chatting with someone involved in restructuring Lloyds TSB and RBS in Bristol at the weekend - he thought there were going to be around 3,000 jobs going in 2011. He also thought commercial property was shafted - big drop offs in demand that will be compounded by public spending cuts. And the Comprehensive Spending Review was badly structured from a Bristol perspective - the departments that got it in the neck the most have a lot of Bristol employment: the arts and social sciences in higher education, the quangos of DEFRA and CLG and local government cuts. And the welfare cuts are going to hit a large swathe of disposible income and rental income accross the city. It's pretty grim - and no one, bull or bear, can be happy about it. It's going to be a tough few years for Bristol - in some ways HPI is a pretty minor distraction, but it's not something that is going to help vendor optimistic pricing that's for sure...

Thanks Montesquieu, very interesting post. Matches my view of the huge disjunct between rents and sales prices - houses for sale are completely detached from any sense of possible rental income. Which presumably puts a significant limit on how long potential sellers can 'make do' on the rental income when hoping to rent out and then sell 'when things improve'. Will be interesting to see what happens when the dawn of recovery doesn't appear in spring 2011. And yeah, rural estate agents... in the boom years one of the few viable small business models for many in these smaller towns - who have much tougher headwinds in most other sectors (retail especially). Difficult to see how they can last with the ongoing slump in transactions.

Hi HPCers, PricedOut here Heads up - there is a Buy to Let critique on Channel 4 news in ten minutes, we helped feed into some of it , worth watching and commenting on their discussion board Cheers JJ

In case you haven't seen it, you can see the whole Channel 4 segment again here Includes a quote from the good folks at PricedOut

Sorry, I'm pretty crap at technology - could someone else do? Cheers!

Hi all, In contrast to the Beeb, Channel 4 news put together a good package last night, including a quote from PricedOut (which is nice to see). Watch the clip here There is another clip in which Faisal Islam gives some good analysis of a "monster drop" Cheers JJ

Just found a great US article on this topic - fingering Larry Summers, plenty of others and the economics profession in general.. 'Larry Summers and the Subversion of Economics'

It may be a radical suggestion - but have you ever thought of investing your money in something productive, rather than seeking a capital gain via rent seeking activity? There are lots of bright companies out there that need start up capital, and other investment options via the stockmarket or other funds. They almost certainly have a larger upside in terms of profit, given the piss poor state of yields in Bristol, but they also have far fewer social downsides - like screwing those who cant afford to buy at current prices when competing with BTL. The future generations of Britain will thank you for it.

Good choices! Kaltksey (sp?) has reinvented himself a little, saying that all his past predictions were wrong and that he is now a guru for the post crash capitalism. Not too sure on what basis he has earned the guru thing... Seltzer as far as I can tell is so knee deep in cigars and money (and patronage) doesn't feel any need to feel his tune - and just talks to people who agree with him, or want to hear what he says. Any idea what has happened to David Smith - HPC used to regularly torment him on his website - has he admitted he was wrong yet? Is he still in pundit land?