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boom_and_bust

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Everything posted by boom_and_bust

  1. Hi, Also, rising house transactions do not mean rising prices in a falling market. Check the land registry transactions records for between around 1991-1994. The market was in sharp decline but house transactions were moderately increasing. As prices fall to newer lows, new buyers are tempted back in until equilibrium in wages-prices is approached, accompanied by gazundering. A lot of stats contradicted themselves during the last crash, one of the reasons it took so many people by surprise. But then it wouldn't be a crash if it was that easy to read, right? Boomer
  2. Hi, http://www.darwinawards.com/ Hope to get Property_guru's name on this site in the next few years then.
  3. Hi, Hummmm, rightmove are off to the stock exchange soon to float the company in the spring. And they will be coming up to year end statements and profits in the spring. Now, if you were rightmove, flogging off your business in the next couple of months, you would want to present a healthy market picture, wouldn't you? Or am I overly cynical? Boomer
  4. Hi, Yes, I am pretty convinced about that, compared to other nations. I have been through the French property market before which has similarities to much of the rest of the national housing systems over the channel. If you try to flip property in under two years, you get stung by big capital gains taxes (there are some exemptions but in the most part, flipping property will present you nice big tax bills at the year end). You need to hold property for 5-10 years before you walk away from resale taxes. You also have higher setup costs and the estate agents are legally bound to be neutral, not to be acting solely in the sellers iinterest (of course, it's never tht perfect but a noticeably more pleasant procedure than dealing with uk agents). There is a lot of bureacracy for sure but it does help cut down the rampant boom and bust cycles (at least out of the big hotspots like central Paris and CdA). I wonder how long before Gordy goes looking for more tax revenues on housing resales?
  5. Hi, What's you're "everything into account"? The flat trend, if predicted within the long term trend posted, would be coming out at around 20 years of stagnation. Sounds a bit like the last gasp days of the soviet block countries and they didn't seem to care much for that. The things I take into account is that every historical reference to inflation surges (houses here), high personal, international and trade indebtness and wildly beyond trend house prices have always lead to dire, wider economic and sometimes social consequences, whether that be deep recession-depressions, out-and out HPC (the most common) or social-political upheaval (town planning and land-rights reforms, inner city rioting etc., usually with knock on economic consequences). You're up North. Yorkshire? Land registry showed a nice 12% fall last year. That's a big saving! Let's say, £36K on a 300K house plus all the setup costs and the extra costs compared to renting a better property at a lower costs that the mortgage interest rent you would be paying to the bank. Shall we say £50-60K? That's a successful year already!
  6. Hi, Ah! Holland. Amsterdam. Such a lovely place, so many fond memories. Firstly, flip over to the Kadaster (Dutch land registry - there's no English Language available but you can follow the figures). There has been no calamatous crash. Prices have been gently falling since mid 2003 (a few percentage points at most). Now, have a look at the ECB central interest rate for the Euro zone, remembering that that dutch house prices started stagnating around 1999. What do you see? Just at the point that HPI started to level (1999-2000), interest rates then (mid 2000) fell from 5.5% to 3.0% (key Marginal lending rates) in three years. ????!!!???? So, could you imagine the equivalent in the UK? That is to say, BoE started to slash 1% a year off the interest rates for three more years until we got down to 1.5%. Even the most ardent, rabid bear would have to concede, their would be no way on hell's earth that house price crash would occur in those circumstances. Behind that, there have been some large localised falls, particulalry in Rotterdam although the capital town, Amsterdam, has fared well. This year, transactions have fallen yet again, although at the begining of last year, there were infact some modest (2% or so) recoveries in prices. It's patchy, localised, some falls, some rises, gentle declines with a broadly flat profile declining gently. Kadaster anticipate 2% growth or so for 2006. Now the other side of the coin. Despite the near halving of interest rates at the point the Dutch property market started to stagnate, the Netherlands have just endured one of the deepest, longest lasting recessions in living memory. Over five years infact. Remember also that the Dutch economy was a star of ninetees, entering the house price stagnation from a point of trade surpluses, booming economy, balanced budgets and low debt levels. About five years on, the UK entered the similar market condition except with massive trade and government defecits, stagnating economy, rising unemployment, record bankruptcies, rising repocessions, a vulnerable currency (and a real prospect of interest rate rises), record oil prices, record debt levels - largest in the EU, bigger than the combined debts levels of many of the EU nations added together (??!!??). The dutch have avoided out and out crash thanks to EU membership and dramatic interest rate cuts at the price of the deepest recession in living memory. They may get away with it still yet! Although, ECB rates are rising, house sales transactions have started to fall again and repocessions are on the increase. We will see. Their timing has been good so far but it is difficult to draw direct comparisions with the UK. We have entered a stagnation at a time of economic uncertainty in the world, rising energy costs and interest rates, record debts, defecits and economic faltering. The dutch timed their housing slump at a time that world (and EU) interest rates were near halving and the world economy boomed, they came from a position of economic strength when factors came to their aid to support. Boomer (Special thanks to Mark - my British-Dutch expat on the inside)
  7. Hi, Well .... not quite. I saw this week that Foxton's founder Jon Hunt has just cashed in a huge (£4m) share dividend in his firm. That is interesting in itself because it is pretty standard to make one big milking of the cash cow at the end of a cycle but, given their high exposure to the US and their business model, that relies on aggressive, low sale commissions and high volume sales, it has been conjectured in the business press as to how Foxton's might cope in a falling market, particularly with a period of sustained, low volumes in the housing market. Here is an article section from the CNN business section for US realtors a few years back, at the height of the boom, that summarises the situation. Perhaps it was quite an astute analysis of the Foxton business model and the housing cycle? Perhaps Jon Hunt is calling the market himself and sees more difficult times ahead in a falling market, cashing in now. The 2% Solution If you believe Foxtons' omnipresent ads, the discount brokerage will change the way real estate is sold. But can it survive a fast-cooling housing market, 948,000 angry Realtors, and its own hubris? CNN Business By Julie Sloane October 1, 2003 http://money.cnn.com/magazines/fsb/fsb_arc...3/10/01/353423/
  8. Hi, Yes, and will house five people in India or China. So the wages are cheaper. So the business is more competitive. So British Industry continues to decline and the trade defecit continues to escalate to record levels (that is what is happening in the UK at this time, start a separate thread and I will debate it more). Britian is living in fantasy land at the moment. She can't pay her way in the world, mostly because of the macro-economic affects of house prices. The last few examples of similar levels of house prices and debts? Britain in the late eightees-early ninitees (infact less then), the Netherlands (five years of recessions and a falling house market) or Japan in the ninetees (a decade of recession and 50-70% house price falls). You will not find one case in history of a nation indebting itself, both internally and internationally, to these levels that haven't paid for it.
  9. Hi, The work of Shelter was also the basis of the recent Johann Hari article in the independent, posted and debated here just a couple of weeks ago. Yes, we have reached record number of homless faimlies and families living in temporary accomodation. In my experience of life, children, for the VAST majority of people, signals a change of priorities. I think you will find that many would love the opportunity to access to an affordable, secure environment they can call home. Unfortunatley, not all of them will be rocket scientists, BTL magnets, premiership footballers, big brother celeberaties, city traders, plumbers, etc.. How are vast majorities of families in this country going to support a faimly we then ask? Remember, the BoE and Treasury HAVE to keep wage inflation down. It is their stated aim at the moment to keep non-house inflation down (any other kind of inflation is fine, apparently). We cannot have wage levels to support the current level of house prices for the vast majorities of people. Seemingly, we also seem to lack the land (most of the country is not built on, the population is not really any bigger than 10-15 years ago when overpopulation was not been discussed, of course because it is a myth of estate agents and mortgage lenders), the entrepeunrialship skills or will to provide the majority of these people a chance to aspire to stable family homes. Does that sound like progress? Does that sound like the country has become wealthier in the last decade? Now ask yourself where then, is all this miracle GDP economic growth? It's been discussed often enough here and elsewhere. Boomer
  10. Hi, Working to an older age was addressed - in practicality terms - in the Kargil review committee report just a few years ago but doesn't receive much coverage on the point that, while longer working is desirable, it may not be practical. The uk is a very ageist society in comparision to mainland EU - workers over 50 in Britain find it far harder to secure work than other countries in the EU. We also have a propensity to bring in younger immigrant workers more readily anyway, so it is not altogether viable that those jobs may even exist. Yes, their is some unfairness to the younger generations under this boom if it were not to bust (it will, I lived through two before, it feels no different this time). The real issue of unfairness, as I see it, (leave aside free health care, education fees, job security, company pensions, etc., that existed before) is that Tony and Gordon engineered a housing boom for votes but nothing much structurally, economically changed to finance it. Productivity didn't increase, we weren't running continual, massive trade surpluses, nothing at all really. Most of the growth and GDP of particularly the past five years was house price valuations growth, mortgage-equity withdrawal and credit cards and government spending. Your classic government induced inflation scenario. Now it has to be paid for by someone - Gordy hasn't told us his master plan to eliminate the debt and increasing housing, transport and productivity problems. I have a sneaky feeling that he may try to shoehorn the UK into a single currency entry at some time just before a massive devaluation of sterling to walk away from the debts, either way, the Bill at the moment is going to be picked up by HPI virgins until the slide more generally enters the national phsyche. I personally would tell him to bugger off and use your head.
  11. Hi, Yes, it doesn't matter how many times that can be reminded, estate agent, the Times, BBC, lenders et al will always trot it off from their hymn sheet. And as the middle of the eightees showed (and definitely compared further back, into the seventies), 10-12% was a fairly neutral interest rate back then. Just a little dip of a few percentage points drop for a year or three and everything went beserk. They were lowish interest rates for that era, things like 4% or 5% or 6% would have been unimagineable, just a different era. The link in the UK - and the stats have been posted enough times on here, fool, economicsuk, - is quite startling when you look at it on graph paper. House boom, credit crunch, slump, recession and recovery. And flipping back to the original thread question, in context of Britain's debt and credit boom in the past decade, a nice analogy that can be used was summarised by the excellent Mr. classixuk on the SPig ; Oh Gordon! What HAVE you done?
  12. Hi, The problem is his arrogance. I don't know if anyone follows eu events but for the past several years, in Brussels, he has been crowing about Britain's Economic prowess and the terrible state of European economics, particularly Germany and France. (Germany, the EU's largest economy that just 15 years ago swallowed a decaying, bankrupt country the size of England back into it's borders, that just recently has shown strong economic growth and a massive trade surplus. Or France, one of the world's highest standards of living, one of the best universal health care systems in the west, a world rival to the US in Aircraft, Aerospace and high technology, the world's leader in renewable energy research). For several years they were saying back in the press that Gordon's economic performance is built on debt and borrowing and that he has lost control of the UK's housing markets and trade defecits. THEY WERE RIGHT. They were saying it back in the late ninetees. He also said that he would never let the housing market boom and bust again and risk the future of people's homes. That was coming into power in 1997 for the party, when many people had emerged, ravaged by a housing crash years earlier and sick to death of the Tories. Now, the UK housing market is structurally setup for boom and bust for eternity with the current structural conditions. To be fair, it would take a generation to create a calmer housing market in the UK but he could have prevented it from ever getting this bad. Even if you don't agree that the bust is here, the boom bit happened at a level never seen before, not backed by a trade surplus or massive increases in productivity but debt. And this is a Labour government who are meant to be socially conscious. And what is worse, he encouraged it for votes and stood crowing about it when it was obvious at least five years ago that he is at the printing presses. He said nearly a decade ago that productivity is the economic yardstick of developemnt and growth. Compared to other nations we have gone backwards in the past decade. Other western countries see high technology and service technologies as the competitive future against India, China and Brazil as we pay our way in the world. What does Britian have? It seems to think it's stock of land and bricks is vastly superior to bricks and land found in other nations. However you dress it up, look at the figures behind GDP growth. House price rises and personal and gvernment debt have been behind the vast majority of growth. That is the legacy for future generations to pay off. He never read La Fontaine's 'Ant and Cricket'. His economic handling is close to incompetent. He lost control of the housing market and of the money supply. He tried an experiment, from his advisors to abandon demand or supply side management in favour of inflation targeting. He then dropped everything that is inflationary out of the headline figures and allowed public, personal and trade spending to esculate out of control, spinning all along the way to create this facade of economic heroism. All the way though it he has been happy to accept the plaudits for economic miracles and prudent management which is a complete fraud, as we are seeing. And he has no solution forthcoming. Infact, the last occassion that the country faced debt levels of ths scale was during the 70's when Britain had to seek assistance from the IMF and world Bank. In much the same way Argentina had to a few years back. It's the man's arrogance and poor performance that is the issue. God help us when he gets in and he doesn't have Blair to reign him in. He has shown so far that he will do and say anything to spin his way into the top job. Do you think he is a socialist, wracked with pain and determination to provide decent shelter and comfort to his citizens? Like ****. He is a career politician, nothing more, nothing less. (I would have trouble voting for any of the others as well but it would be a choice between the other two, for sure).
  13. Hi, Hummmm indeed. The more I think about it, the more EU entry looks like the get out for the miracle economy. If we were pegged to the ECB central rate sometime in the future, well, there would be little scope for a rise in rates beyond the current BoE central lending rate. And if you priced much UK housing 1:1 in euros overnight, the bubble could all but be elimated if we entered at somewhere around 0.6-0.7. Gordon taking over no. 10 and Tony heading off to a Euroland post? (Assuming wage rates are rounded up in the switch over and a new orgy of debt is not unleashed by lower rates, as was the Irish experience).
  14. Hi, It is an older article but commented by several emminent economists or pundits ; http://www.moneyweek.com/file/2276/uk-prop...roundtable.html In some ways, the summary of UK economist James Ferguson makes a lot of "broader picture" sense to me. We often focus on small details and stats month to month, it's an inetresting, longer term proposition about the uk economy, the importance of housing to UK people and it's link to economic-recessionary cycles. He also did an interesting followup article recently showing how stats and figures are being skewed by lenders in an attempt to hide the bubble and shoehorn in the soft landing scenario. I'll try to dig up a link if it's online, i know the scotsman publication did a commentary on the subject just recently in their business section.
  15. Hummmmm.....Phil's liver with some fava beans and a nice chianti.
  16. Hi, I don't think that is cynical at all. In the 2003 budget Gordy devoted a lengthy section to exploring a move towards Americain and European, fixed rate mortgages. The thing is, quite a few building socities and banks have had a stab at it before but always withdrawn after a while because British personal finance markets are very dynamic (I think more in the Enron sense of the word) so that mortgages are switched very easily to different lender incentives, derivative base or even foreign financing. So without heavy penalities, the lenders have found it a costly venture and with heavy penalities, they have been even less likely to attract punters. I remember around that budget report the Council of Mortgage Lenders had complied a fairly lengthy synopsis, as well as BoE. The CML were quite negative about it. Soooo, maybe Gordy is dangling a carrot in the background to kick start a fixed rate mortgage market. Although the cycnic in me still thinks there has to be something more in it for the banks in terms of internal, future rate and economic predictions. Unless they are thinking in terms of future deflation in the wider economy and house prices. In which case, could make sense. Problem being, the UK is on the alert for inflation in many ways though, the very opposite. Fixing yourself at historically low rates woould be a really bad move in that case (for the bank, even if they have issued bonds to cover it). I do hope my tax pounds are not going to fund speculative bank property-lending-indemintees for Gordon 'fanny mae' Brown. Humm, bit more digging ahead I think.
  17. Hi, It is an interesting tactic, I wonder what is the underlying factor in the offer, from their perspective? The one thing that comes to mind is the plethora of limited, fixed deals 1-5 years around 2000-2001. Not long after that, interest rates tumbled quite a bit (you would have made significant savings if you had been on a variable rate. The lenders made quite a profit on all those fixed deals). Such a move isn't made without some benefit to the lender. And the lending market is not far removed from a cartel on the broader perspective, they nearly never make individually, competitve moves, it usually seems to be a collective move by smaller or niche lenders against the bigger players. The markets aren't really pricing in rate cuts in the forseeable future, so that is puzzling then. I think we need to dig deeper into "what's in for me" perspective from the point of view of these group of lenders and work back from there to guestimate exactly what is the basis of their longer term hunches, inside knowledge, etc. The larger lenders often seem to hold back from new financial products in advance of the smaller lenders. I shall do a bit of digging myself over the next week I think - it is certainly an interesting development in terms of future guesses-directions of the economy.
  18. hi, The figure I am trying to track down is comparative stats for %months in arrears - or something close, given that market shares ahve shifted now and there are many more lenders and different kinds of lenders. I remember Bubb posting a figure of 12+ months mortagee arears very close to the repocession levels for last year, according to the CML. Now, I know for a fact that 10-15 years ago, you would be out on the streets with your suitcases for that length of time so the lenders must be holding back on orders, compared to previous years. It makes me wonder also if it can be connected to the large over hanging chain sales that many of the builders and agents were reporting in their year end summary's. In which case, the market picks up and saves the day (just), or it runs out of time and the lenders have to repair their balance sheets.
  19. Hi, No, you see the upper end of the Boomer generation get a subsidy-tax break for the accomodation in the developers package. They have to agree to sell to over retired-minimum 55+ groups to qualify, they get a 30% tax break for their trouble. ( please don't shoot me, I'm just the messenger). Boomer
  20. Hi, Do you like open view then? How about this, in the french countryside with big garden and several bedrooms. Made of bricks! £17, 000. http://www.fnaim.fr/recherche/resultats_de...e=0&transac=201 Or maybe you like the spanish countryside? A whopping £28, 000 http://www.countryestatespain.com/php/list...?listingID=2350 Or if you really are hell bent on timber construction, why not try the Ontario countryside from £20, 000 to £50, 000 for faimly size homes with land and mod-cons. http://www.queenswood.com/barrysbay/resident.htm So who said there was a housing bubble in the UK? Nonsense, all perfectly sane. Boomer
  21. Hi, This is true. It's a problem, mind, when they are 27 and 31 though.
  22. Hi, Now just a minute! That sir, is a tad ignorant if ....... oh wait a minute. Ignorant Steve. I get it now.
  23. Hi, I don't know. You'll have to ask Johann Hari. Wow! You read the article very quickly, I must say.
  24. The Independent Commentary 06.05.2006 http://comment.independent.co.uk/columnist...ticle343415.ece It's a bit lefty and touchy-feely and is dealing rather with social housing issues but it does highlight some interesting perspectives on NuLab's distortion-making policies within the market. Record numbers of families with 'no-fixed-abode' living in B&B accomodation, the government having earlier promised in a pre-election manifesto to rectify the problems of social and affordable housing for these groups by 2010. Hummm, haven't started yet and 4 years to go. Gordon Brown managing the finances, Prescott managing the land, NuLab spin machine relying on promises of ever-increasing HPI for votes. Not much hope for this group of people then.
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