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undersupply

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  1. The boom in my opinion really ended late 2004 for most of the south of england. The north's boom ended this year approximately may/june time. The crash is already taking place, albeit at a slow pace. CABMAN, look at how fast the prices were rising early last year - AT A STAGGERING 20% per year!!. And within a year this is down to only 2 odd percent! This is what is known as deflation. As soon as this decline continues into negative numbers, then the fun really begins. Keep your eyes open as the fun's just started.

    This is not deflation, it is inflation.

    The slowdown was artificially brought on by interest rate hikes, not by increasing supply, which is the normal way of price control in free economies.

    So interest rate cuts would start the party again.

    R so I believe

  2. Certainly an interesting read. It makes me laugh that these experts queue up explain why homes are more affortable now than in previous years. However, this quote tells you all you need to know.

    "According to Daithi Downey, policy analyst with Focus Ireland, one in five parents underwrite their children's attempts at house purchases to the value of over €75,000."

    Says it all really. Talk about bubble fueling the bubble. I guess you can't save people from themselves.

    Huge confidence in housing in Ireland due to no previous crashes, 2% interest rates. wage inflation, and peoples distrust of shares after the eircom fiasco.

    The bubble is so big and has gone on 4 so long, people have stopped saying it is going to burst.

  3. I guess they must be pretty desperate to be paying the 10% deposit plus whatever the ebay fees are on something over 200 grand.

    I wish them the best of luck but suspect the only offers they are going to get are from Nigerian scammers!

    Deposit £23,500 (A gift from me) :lol::lol:

    What a hero.

    Any chance I could just have the money, rather than the noose around my neck.

    £235,000 for a 2 bed on the 2nd floor, what a joker :rolleyes:

    You would have to spend a lot of time in the bar before that offer made any sense.

  4. Any ideas who is, Neilrich?

    Neil Foster, of Foster Maddison Estate Agents, said: "This is yet another indication that the market in the North is robust. While there appears to be oversupply in some sectors of the urban market, rural property remains in short supply.

    "Upward pressure on rural prices is unlikely to abate, with some local planning authorities exercising a moratorium on new-house building.

    "We envisage a situation where the falling rate of new building will fuel domestic house price inflation over the next few years.

    "The market relies on balance between supply and demand, and while demand had been extraordinarily high in recent years, during a period of unprecedented house price inflation, we are now experiencing the impact of excessive restriction on the supply of new homes in many areas.

    "We predicted that house price inflation in the North-East would run to around 5% for 2005, and these latest findings continue to support that."

  5. Thought some of you would like to read this from saturdays homemaker.

    Prices climb as market recovers Oct 8 2005

    By Karen Wilson, The Journal

    The North-East has bucked the national trend as house prices rose by 6.6% in the third quarter of this year, compared to a drop of 0.6% in the previous quarter.

    The annual rate of inflation in the region is up to 5.6% (from 4.9%) - almost 100% higher than the national average of 3%, according to the latest Halifax survey.

    Neil Foster, of Foster Maddison Estate Agents, said: "This is yet another indication that the market in the North is robust. While there appears to be oversupply in some sectors of the urban market, rural property remains in short supply.

    "Upward pressure on rural prices is unlikely to abate, with some local planning authorities exercising a moratorium on new-house building.

    "We envisage a situation where the falling rate of new building will fuel domestic house price inflation over the next few years.

    "The market relies on balance between supply and demand, and while demand had been extraordinarily high in recent years, during a period of unprecedented house price inflation, we are now experiencing the impact of excessive restriction on the supply of new homes in many areas.

    "We predicted that house price inflation in the North-East would run to around 5% for 2005, and these latest findings continue to support that."

    Chris Stonock, regional manager of Halifax Estate Agency, said the North had seen the biggest house price rises of all 12 UK regions over the past three years, with prices almost doubling.

    He said: "The slowdown in prices has brought renewed interest from first-time buyers who have started to creep back as properties have become more affordable."

    The strongest performer in the North in the past year was Barrow-in-Furness, with 28% growth, which ranked it among the best performing in the UK. Property prices have risen by 23% in Bishop Auckland, Redcar saw strong growth of 24%, prices in Sunderland increased by 13% while Newcastle has seen a 5% rise. The most expensive town in the North is Morpeth (£187,730).

    Another survey, from Propertyfinder.com, suggests that the gulf is closing between unrealistic, stubborn sellers and bargain-hunting buyers.

    The website's research shows that the gap was almost completely closed in September, as buyers were offering an average of 4.5% below asking price, while sellers said they would accept 4.3% below.

    Sales had hit their lowest point in January when the gap between buyer and seller expectations was widest - but now it would seem that buyers and sellers are more prepared to negotiate on price.

  6. I think you might be refering to Quaypoint, key worker and student accomodation, a development which shall have over 700 dwellings!

    How come you know so much about Metier?  Is there something that you would like to declare? Such as a vested interest in either the company or the Lime Square development.

    Just through property news on the ic chronicle website, they have a search function, put in lime square & all is revealed. No conspiracy.

  7. My favourite bit is simply 'we hope', interesting how the companies involved are both Irish!

    Sorry UNDERSUPPLY I just could not resist having a dig.

    Metier are Manchester based, and its director Aidan Murphy is a geordie, although with a name like his, he would certainly get plastic paddy status. :D

    Dig away NR :P,

    BTW, I was walking down along the Quayside on tuesday and saw a huge development, around the Tyne Tees TV area which I hadn't noticed before, overlooking the river.

    It was one of the biggest apartment complexes I have ever seen and I hadn't noticed it before.

    Was I hallucinating in the september sun? or did you spot it in the helicopter?A redbrick job.

  8. Is that a prediction? I would not put money on it! Are they still offering the FREE Mini Cooper S with the purchase of a property at Lime Square?

    I would not believe anything you read in 'The Journal', it's just SPIN fed to them by the likes of Sanderson Young and the Developers, I'd imagine that Sanderson Young is a very good customer of The Journal!!!  Even if it were True, 25% still unsold, how many of the 75% that have been purchased off plan are now For Sale and on the market?  :lol:

    The first phase block d looking on the council flats will complete in october.

    Here is the article from the journal just 4 u neilrich, the eye in the sky B).

    I havent been up in my helicopter to look at them yet, waiting 4 the fuel price crash :rolleyes:

    Cool plans for an ice factory Sep 7 2005

    By Nigel Stirling, The Journal

    Trendy Ouseburn Valley's development is poised to receive a major kick-start with two multi-million pound mixed-use developments.

    Developer Metier, which is shortly due to complete a £20m mixed residential and office development with Irish property company Howard Holdings at nearby Lime Square, has received planning permission to develop 112 apartments as well as 6,000sq ft of leisure and 2,500sq ft of retail on the site of a former ice factory bound by Hume and Maling Streets.

    Building work on the £22m development, close to the Ouseburn's outlet on to the River Tyne currently occupied by a number of vacant 1970s industrial units, will start in the second half of next year.

    In the meantime, Metier will submit plans for a second multi-million pound development next to the ice factory site for 35 flats and a five-storey office block which will provide 35,000sq ft of office space.

    Metier's schemes are just a selection of 80 development schemes which Newcastle City Council sources say are either at pre-planning stages or nearing practical completion along the banks of the Ouseburn.

    The former industrial area in recent years has become a focal point for creative industry in Newcastle, with up to 90 businesses, including media, information technology and other creative business at the head of the queue, according to council sources.

    The area will also get a boost with the construction of a £1.5m tidal barrier - a lock at the southern end of the Ouseburn - which will regulate the tributary's water flows and mitigate odour from exposed mud at low tide.

    The Department for Transport is currently considering submissions on the European and Government-funded scheme and is due to decide next month if it will be allowed to proceed or go to public inquiry.

    Metier director Aidan Murphy said: "We feel that we are at a point where we hope the Ouseburn Valley will continue to evolve and we are able to offer a development which will not be matched by anything else in Newcastle in terms of cultural activities and high quality buildings."

    Mr Murphy said the new developments followed on from the successful completion of Lime Square where 75% of the development's 110 residential units, which range in price from £99,000 to £450,000 each, have been fully let.

    Around 5,500sq ft of offices at the development adjacent to City Road are still to be sold, which is being marketed at £185 to £200 per sq ft.

    Mr Murphy said: "We have decided to push on with the third phase of our development of sites in the area."

  9. Sorry I should have been clearer. The price they paid is roughly what its for sale at (i.e. they purchased it for £148,000 with a 10% offplan discount and are trying to sell it for £148,000 or so).

    2 for sale here

    http://www.daft.ie/united_kingdom/property_for_sale/

    The 2 bedroom one is quite good value at 250 per sq foot compared to Sanderson Youngs prices.

    An irish speculator unable to get a mortgage maybe?

    These will complete in october

    25% are still unsold according to an article in the journal.

  10. The dictionary definition of axiomatic:

    adjective (FORMAL) obviously true and therefore not needing to be proved.

    I think that it is an axiomatic fact that house prices will crash.

    It is an axiom and perhaps you should be called the axiom.

    If axiomatic is the adjective, is axiomatically the adverb or axiomaticly

    Like magicly or magically?

    Pedanticly or Pedantically ;)

  11. Why oh why do people persist in referring to TB as "a Socialist". The man is not, and never has been, a socialist. He's about as Socialist as Rupert Murdoch. He's a career politician, a manager, not a social reformer.

    Ah yes...a socialist....

    Someone who has nothing and wants to share it with everyone :P

  12. At present 1£ - 1€ = 1.4119. When  £ = € = 1 that will be a drop of 30% from the current exchange rate (sorry for the error).

    If £=€ everybody holding euro account will be able to buy UK house for 30% less than it is worth now.

    Most people who earn euro and buy property in uk are advised to get sterling mortgages, to guard against currency fluctuations the other way, this despite lower interest rates in euroland.

    So,it would only benefit people with large euro deposits saved up, I think or high risk gamblers.

  13. Undersupply welcome aboard.

    The lowest interest rates in over 50 years is not a sign of a strong economy.  I don’t buy the supply and demand argument especially in our region where the supply of housing in and around Newcastle upon Tyne has actually increased substantially over the past five years.  Unfortunately the demand for housing has been significantly distorted by the BTL bubble, this shows in Newcastle with the significant oversupply of properties available To Let and falling rents.

    As a nation over the past five years we have taken on an additional £500 billion of additional personal debt, too many people are now living way beyond their means and this can’t continue.  How can we continue to grow our economy against all the deflationary pressures of globalisation whilst at the same time having to pay back all that debt?  It just isn’t going to work!

    I think the major shock that you are looking for will be recession, the bursting of the BTL bubble and people defaulting on their debts, it was only this last week that ‘Money Week’ warned ‘British Debt Bulge threatens banks’.

    I hate to say it, but as a nation we appear to have learnt nothing from the Japanese where interest rates of 0.1% failed to stop the recession and the 15-year decline in House Prices.  The supply and demand argument did not help them either and they don’t come more over populated than Japan.

    I say again why should anybody pay anything above year 2000 prices for a house in the UK with the the current economic climate/outlook?

    JAPAN IS A CAPITALIST COUNTRY, JUST LIKE THE UK.THIS MEANS THE RICH GET RICHER, RELEASE EQUITY ON THEIR INVESTMENTS TO REINVEST IN FURTHER PROPERTY OR SHARES TO BECOME RICHER.

    THIS IS THE LADDER OR THE PYRAMID SCHEME.

    THIS IS WHY WE HAVE A SCENARIO OF LANDLORDS AND TENANTS, WHERE FTB'S CAN'T GET ON THE LADDER

    YOU NEED TO TAKE RISKS TO GET ON THE LADDER, BUT ONCE YOU ARE ON, YOU WILL WIN AS LONG AS YOU CAN PAY YOUR MORTGAGE. NEGATIVE EQUITY ONLY AFFECTS THOSE WHO HAVE TO SELL.

    WAITING FOR PRICES TO FALL IS LIKE WAITING FOR MOBILE PHONES TO DISAPPEAR OR PEOPLE TO STOP DRINKING BOTTLED WATER.

    REMEMBER THE ONLY REASON THE BANK OF ENGLAND RAISED INTEREST RATES WAS TO STOP THE PROPERTY BOOM, THIS IS AN ARTIFICIAL STOPPER ON THE FREE PROPERTY MARKET, AND THE NEGATIVE EFFECT ON THE ECONOMY MEANS THEY CAN NOT PERSIST WITH THIS EXTERNAL DAMPNER.

    ALL THE OUTLOOK IS GOOD FOR THE NORTH EAST, PEOPLE HAVE JOBS HERE NOW AND A LOT HAVE HUGE EQUITY IN THEIR HOMES.

    UNDERSUPPLY HAD TIPPED AUGUST AS THE MONTH THAT INTEREST RATES WOULD GO DOWN AGAIN, AND AFTER THURSDAY HE IS EVEN MORE CONFIDENT THAT THIS WILL BE THE CASE.

    THE FED DROPPED INTEREST RATES AFTER NINE ELEVEN TO SHOW THAT TERROR COULDNT DAMPEN THE US ECONOMY, AND I WOULD NOT BE SURPRISED IF MERVYN GOES THE SAME WAY.

    HOUSE COMPLETIONS IN 2003 WERE 183000 VIRTUALLY THE SAME FIGURE AS 1993. ONLY INCREASED SUPPLY WILL RESTORE EQUILIBRIUM TO THE MARKET, UNTIL THEN BORROWERS ARE CONDEMNED TO A CYCLE OF HOUSING BOOMS FOLLOWED BY POLICY INDUCED CORRECTIONS.

    AS FOR JAPAN, THE ARTICLE BELOW FROM THE INDEPENDENT 2002 WILL GIVE SOME INSIGHT INTO THE LEVEL OF RISK THE JAPANESE ARE/WERE PREPARED TO ENDURE TO GET ON THE LADDER.

    Katherine Klinger has a 30-year mortgage, and is looking forward to the day when she might stretch that to 40 or even 50 years. Rising house prices this week prompted a leading mortgage broker to predict that Britain could move towards Japanese-style mortgages, which can last 100 years, handed down from parents to children.

    Ray Boulger, senior technical manager at Charcol, part of the Bradford and Bingley financial group, says: "UK house prices are continuing to rise in excess of earnings, so people are looking for larger loans to buy these properties. If this continues, the only way repayments can remain affordable is by increasing the term of the loan."

    As interest rates have fallen to 40-year lows, so lenders have been willing to offer mortgages equal to five or more times borrowers' incomes, compared with the old-style multiple of three. That has enabled borrowers to bid higher prices for houses, but lenders are conscious that interest rates might soon rise, forcing higher mortgage interest payments.

    Mr Boulger adds: "An extreme example of this shift has already been seen in Japan, where despite zero per cent interest rates, sky-high property prices have made housing unaffordable to the majority on a 25-year repayment term. This in turn has led to the development of mortgages with longer repayment terms, some as long as 100 years.

    "With these products borrowers pay only interest on the mortgage, and never own the property outright. The consequence is that the children inherit the mortgage as well as the property."

  14. I beg to differ: -

    [some good points

    oh quiet one.

    this is from your mortgage magazine

    Remember prices in the north have gone up 160% since 1995 compared to 250% in London.

    After 2006, says Your Mortgage, prices mostly begin to recover again- with huge regional variations in the pace of recovery.

    In many inner London boroughs, 2009 prices will be 8% ahead of where they are today. Outer suburbs like Barnet ( 8.3% up) and Merton, in South London (7.9% up) will also thrive.

    Hampshire in 2009 will be more or less back where it is today, while Milton Keynes will be 5.1% ahead. Tonbridge and Malling, in Kent, could have prices 12% cheaper in 2009 after big falls in 2006 and 2007, while Bath and North East Somerset will be 3.9% cheaper in five years' time.

    Cheltenham will be 3% cheaper in 2009, while Guildford in Surrey will be 2.4% down. Exeter will be 1.7% ahead.

    However, the biggest gainers will almost all be in Northern England: in many areas of the North-East, including Newcastle-upon-Tyne and Gateshead, prices will between 10% and 12% ahead of where they are today.

    Newcastle-upon-Tyne will deliver an 11.6% rise by 2009 most of Northumberland shows an 11% rise, and Chester and Macclesfield will both be 9% ahea

  15. Welcome undersupply.  Here are my comments on your post.  I've tried to relate them back to the region: -

    1 - This isn't London!  There is an undersupply of AFFORDABLE property up here.  Look round this city and you'll see loads of new builds half empty - Newcastle hasn't been overpopulated for generations

    2  - Interest rates may not be lowered to just save housing.  Newcastle is at the bottom of the pile salary wise, so things could get proportionately tighter up here before national stats show a major downturn and by then things could be too late.  Major inflationary risks like oil haven't worked through the economy yet and a drop in interest rates would play havoc with the pound, which dropped when the Fed recently RAISED rates in the US (this is something to discuss further on the main board rather than this thread).

    3  - I think the key to market value holding up over time now comes down to confidence about the future.  The region is always the first to feel the pinch in a downturn and there seem to have been loads of announcements of local lay offs recently alongside all the high street slump stuff in the papers.  So it's looking like a lot of major shocks at a micro level are happening now, which could slowly add up to one big one for the economy in about a year.

    4 - Although prices in Holland haven't fallen, isn't their economy officially in recession and prices are falling in real terms?  Again, this is one for the main board and has been discussed there.  I can't see stagnation happening in Britain.  up here myself - people will want  to get shot of any secondary BTL flats if they start to lose value and I know loads of people who have one or two.

    Please tell me why I'm wrong undersupply.  Do you see something in the local economy I've missed?  :unsure:

    Have a look at this below from the london evening standard

    Houses are affordable in the north east.

    The only people in trouble are FTB with no deposit and poor wages.

    Newcastle has plenty of students to rent to, large medical and dental schools, lots of hospitals etc

    Why do you think Pattison is recruiting, because they can't sell houses at these"inflated" prices?

    Dream on!!!

    There is nearly full employment in the region for the first time ever.

    There has been huge investment in newcastle property from parents of students, speculators from the soft south and ireland.

    Local job losses are the bottom of the market jobs and these people can find work relatively easy.

    16.2% of income spent on mortgages says it all really-the lowest in England.

    6% of workers who live in Jesmond earn over 60K, that was in the journal last year.

    If ure on 15K u can borrow 70k on a 34 year interest only mortgage.it will cost 300 a month, which is less than a third of your after tax income.

    Affordability is not a problem in the north east relatively speaking.

    FROM STANDARD

    But during the month the amount of income people in the South East are spending on their mortgage rose to 18.9% from 18.7% the previous month.

    The group attributed this to a relatively high number of people remortgaging after coming off very low fixed rate deals.

    It added that people were also remortgaging to unlock money from their home to fund improvements rather than move, which was also leading to higher mortgage repayments.

    Across the rest of the country homeowners in Yorkshire and the North East saw their repayments rise to new highs for the current housing market cycle of 16.5% and 16.2% respectively.

    In the South West the cost of servicing a mortgage fell by 0.3% to 18.2% of take-home pay, while in the West Midlands the amount spent on a home loan was also 0.2% less at 17.7%.

    Mr Gray said: "With the exception of the blip in the South East all the other regional figures seem to be moving as is expected.

    "There is still some house price growth in the North hence the rise in mortgage costs in the North East and Yorkshire, but we still expect a general reduction in the mortgage burden to happen in the coming months."

  16. I agree and can't understand why anyone would even consider buying into the current market. Anyone foolish enough to be considering such a move should ask themselves the following;

    Is the UK economy stronger and better placed Today than it was 5 years ago? Consider the significantly increased levels of debt, globalisation, the prospect of a recession and the ever increasing price of oil! Now why would anyone be foolish enough to pay anything above year 2000 prices for a house!

    Because its 2005, not 2000 now.The economy is strong, there is undersupply of housing 150,000 units per year compared to 80,000 for 4 million in ireland, and because interest rates will be lowered if prices start to fall. Eurozone interest rates are 2% and they are talking about lowering them. Sweden have lowered theirs. House price crash will only happen if there is a MAJOR shock to the economy and I can't see it happening.We will probably have a situation of zero growth for 2-3 years like Holland has had with prices going down one month and up the next.

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