Pablo-silver or lead?

Finale Death throws of El Grande TORO! All bull markets come to an end, normally the harder they run the harder they fall. Take the Florida market. In Florida average annual property inflation is 4%. Always has been probably always will be (suckers have been buyin swamps there for 300 years). So when in response to 9/11 the fed reduced IR to 1% a little more HPI crept in. 2002 = 11% double the average 03= 15% nearly four times the average 04= 18% nearly five times the average It is now generally accepted that in response to the Feds controlled and consistent tightening (increase in IR) the Florida bull market peaked around Aug/Sept 05. Despite this the HPI figure for 2005 in Florida (Orlando) was a whopping 34%! Once sentiment turned the market stopped dead in its tracks. The bulls said “a much needed 10% correction is required and underway”. What they failed to understand was that 2003 to05 HPI was only driven by artificially low IR. Therefore annual HPI % gains that were so disconnected from the long term average, not only could not be supported by the fundamentals but could disappear as quick or quicker than they arrived! This is now happening as the buyers disappear and the seller rush for a rapidly receding exit. In the UK the bull was given a new albeit temprorary lease of life by the MPC in 2005 when they reversed their policy of controlled IR rises and cut by .25%. This will come to be recognised as a misjudgement that will now require a series of rises to get back to where they need to be. The effect of last years .25% IR reduction and a torrent of VI spin has sucked in naïve FTB, amateur BTL’s and a few cracked bears at the top of the market. The stats show the UK bull staggering back to its knees. By the end of 2006 early 2007 the Matador leading the picadors on the MPC will do the correct thing and raise rates to where they need to be. The more this thing is delayed the more victims they’ll be, that’s a fact! Pablo Silver or Lead?

"When a person with money meets a person with experience, the person with experience gets money and the person with money gets experience." There are 64,000 Reale Estate Licensee's in Florida just waiting to help Brtis with money/debt gain experiance! A place in the Sun or Money to Burn! The Miami condo market is the biggest bubbble in the US and it's about to pop. Pablo Silver or Lead?

25 thousand Brits have bought a place in the sun in Florida and they've made a kiling? I recently posted this on a British Florida Property owners forum. No one disagreed with the prognosis for the Folrida market. However one respondent also pointed out that even if they could sell they had also taken a 15% hit on the exchange rate. "Some of the most successful and respected Real Estate professionals are talking of a -25 to -30% correction in Central Florida house prices. When you set the 2005 +34% Central Florida house price increase (inflation) in the context of the 4% long term average, it looks like an aberration. During the period 2001 to 2004 the house price inflation figure grew from around 4% up to around 18% in 2004. This is of course not real money (it’s an assumed amount of equity at a snap shot in time) unless you crystallise the gain by selling. All owners that feel a degree of comfort due to the assumed amount of equity they have in their property should factor in the following. US interest rates are going up property prices are coming down. The number of serious buyers out there has dropped dramatically. The number of villas for sale, especially on sub divisions aimed at STR have increased dramatically. Because of the lack of informed due diligence by many buyers who have entered the market, many owners are losing money on an annual operating basis (annual running costs exceeding revenue). Add to this house price inflation (which previously provided a comfort blanket) has turned into deflation and there will be an increasing amount of distressed sales chasing the market down. It’s worth noting the amount of assumed equity being eroded as a % of the assumed value decreases quicker than it increases as a percentage of the assumed value i.e. A 200k property increases to 300k = 50% property inflation (say over 3 years). That 300k property only has to decreases by 33% (not 50%) to drop back to 200k. Another example of how things can change quickly: A 200k property bought 5 years ago increases 80% = 360k. I’m rich! 360k – 10k cost of buying = 350k. I’m rich! 350k villa drops 30% from peak prices (don’t forget that is only one year’s inflationary froth from 2005). 350k – 30% = 245k. I’m not as rich as I thought but I’m still up on the deal, I’m gone sell whilst I can still come out on top. 245k – 10% selling costs = 220k. I’ve made 20k for doing nothing. Hold on in the 5 years I’ve owned with a 160k mortgage and only rented 16 weeks yr1, 20 weeks yr2 and between 22 to 26 weeks over the last 3 yrs I’ve actually just broken even. Blimey I’m glad I had the cushion of 80% capital growth! I should have put the 50k (40k deposit = 10k buying costs in a footsie 100 tracker fund great return and no stress. Two things keep ringing in my ears “Property only goes up in price!” and “I’ve not bought it (my place in the sun) to make money, I just don’t want it to cost me anything!” Pablo Silver or Lead?

it's probably BTL's feeling guilty about 'all the money' they've not made, Mew/leveraging to big up their portfolios further. It's going to end in tears. Incidently the US market arround Orlando Florida (25,000 brits own holiday homes there) is tanking. Some of the most respected and succesfull US Real Estate people are predicting a 30% correction over the next 18 months to 2 years. Currently nothing selling and massive reductions. Pablo Silver or Lead?

The UK property market as a single entity lead by London/SE is a broken model, be warned by that. London and the south crashed ahead of the north last time because the prices in the south were hugely inflated relative to the north. That why when you look at the stats for last time average UK prices fell about 20%, 40% in the south, 10 to 15% in the north. This time the north has piled on more HPI than last time. This time there doesn’t need to be a London crash to trigger one in the inflated northern markets. Liverpool/NW and Newcastle NE will lead the crash. Whats going to stop the overstretched northern house prices falling and falling big time? Pablo Silver or Lead?

There certainly is an EA that has to sell property (in a tough market) to eat, is more likely to value it accurately than an RICS bod, who gets paid to value it! Pablo Silver or Lead?

All the people I know with villas abroad (Florida and Spain) are losing money on them. Both on opex/cashflow i.e. The cost of owning/running them is higer than the rental income and on capital appreciation the prices are falling. A real double whammy and not great retirement planning! Pablo Silver or Lead

We get one every X mas. Slow roast basted in slightly salted, peppard garlick butter. Served with 4 veg, roast potatoes, sage & onion stuffing bread sauce and cranberry. We always pay cash and eat it befor it depreciates. Pablo Silver or Lead?

IR on hold March, April, May, June, July, Aug, Sept. IR increase .25% in Oct or Nov 06 and again .25% in March or April 07. IR at 5% within 12 months. Too little Too late, so they may have to go up to 5.5% to 6% by early 2008. not high, in fact historically low. However high enough to shake the tree hard enough to loosen the grip of the feckless, greedy and foolhardy,who took on too much debt underpined by hope alone. Pablo Silver or Lead?

Undersupply London does not lead the UK property market. It’s the most expensive UK market due to being a leading International city with lots of well paid jobs. It is, as the price increases in the north over the last 2 years have shown (whilst London stagnated) uncoupled itself. The UK property market as a single entity lead by London is a broken model, be warned by that. London and the south crashed ahead of the north last time because the prices were hugely inflated relative to the north. That why when you look at the stats for last time UK average prices fell about 20%, 40% in the south, 10 to 15% in the north. This time the north has piled on more HPI than last time. This time there doesn’t need to be a London crash to trigger one in the inflated northern markets. Undersuplly/Seamaster and other northern bulls, apart from naïve hope over the law of market forces beyond any of our control, what going to stop the overstretched northern house prices falling and falling big time? Pablo Silver or Lead?

They must be insane. When the market turns in the NE, NW and Scotland and it will, As sure as God made little apples, anyone that has paid a silly price Will see substantial drops. For the first time in history prices in northern areas not traditionally hot, expensive areas such as Harrogate, York and the Wirral, are the same as the south? This is because many areas in the south have had no increase in prices for a couple of years whilst prices in the north continued to rise. “But it’s different this time”. It certainly is. Many estate agents in the north (that have been in the business for more than 10 minutes) when you look them in the eye and have a grown up conversation, admit it’s totally unsustainable. Dose anyone have an intellectually rigorous argument to say this time the North Will not see drops of circa 35%+. Pablo Silver or Lead?

Anyone paying those prices for those properties are looking to loose a lot of money. Nothing has changed in the fundimentals to make these prices sensible/sustainable. The next 12 months is going to be interesting. 730K is Surrey prices not South Yorkshire. The natural balance (market) will be restored shortly. Pablo silver or Lead?

Give it a week and the back door will be kicked in to be replaced with an amoured steel one guarded by two pit bulls. The front window will be painted out from the inside. How much crack you want? Boscombe the Dorset Riviera? There's flats just down the road for 600k and the average local retail/catering wage is £12.5k Their could be trouble ahead! Pablo Silver or Lead?

Plenty of people leaving funded by UK property and driven by, UK no good, Spain, France, Australia and USA great, grass is greener. Plenty come back with at lot less money but a new found appreciation of the UK. It's a big decision especially if you have imediate family! Pablo Silver or Lead?

When the music has stoped playing, don't get caught holding a studio flat. It will be unsellable. Studios are one below the bottom rung and in a stable, not increasing drastically, moving sideways, bouncing along the top type of market and are hard to shift. In a tanking market hand back the keys as it will be unsellable, as plenty of people have found in the past. Pablo Silver or Lead?

Get out now! Pablo Silver or Lead?

IMupNorth and anyone else who seriously thinks UK IR wont go up. For the avoidence of doubt they can and they probably will. US rates are now 4.75% This is historically low (in the context of US growth/inflation). Many US experts and the FED themselves are structuring both expectations and investment policies towards several more .25% IR rises. The US economy although fundementaly fataly undermined by Fed/individual debt, has a remarkable capacity to consume. The culture of greed, sell sell sell and fake it till you make it, will drive growth and inflation. US rates will probably top out at 5.25-5.5% over the next 7 months, maybe sooner maybe higher. For anyone in the UK to seriously believe there is no upside potential to UK rates, they must be, naive, stupid or inexperianced. I would wager most of the Bull talk on here is by people that are exposed to the market and bricking themselves. Hope over reality is quaint but generally ineffective. I would also wager most of the brighter bulls on here stoped buying property some time ago. Talking stupid is one thing acting stupids another. Pablo Silver or Lead?

IMupNorth base rates going from 4.5 to 5% in 2 x .25% moves in the next 10 to 12 months is not only possible but probable. If the next move in rates is .25 down we could see rates as high as 5.5 to 7% within 18 months. Not historically high but with so many highly leveraged property positions, it'll be a problem for many. Pablo Silver or Lead?

Let’s assume the members of the MPC are independent of political influence and have the intellectual capacity to understand what’s really going on in the UK/Global economy. If they believe that real inflation has increased or is increasing they should for the good of the country increase IR. They will probably have to wait for the fudged Gov figures to show this again before they act, say from 1.9 to 2.1/2.2%. Having lowered rates .25% last year, irresponsibly in my and the Gov BOE opinion, it has made it harder for them to make a reverse "stitch in time". If people keep on borrowing because interest rates remain artificially low and the lenders keep pushing a wall of debt at them. Whilst at the same time seeing their earning capacity (pay rises) shackled by low inflation headlines and their free cash flow getting squeezed by higher gas/elec/water/petrol and council tax. Then they and we are heading for a correction that will make last time seem mild. JMO Pablo Bread and Water?

Maybe they're going to do a mini series "How to make a small fortune out of Property". With the obvious answer being "invest a large one in city centre flats at the peak of the biggest bull run in history". Time and not too much of it will tell! Pablo Silver or Lead?

Cornwall Sceptic why not e-mail and call RM. the contact re their metodology/stats ic Charlotte Wheeler, her contact details are charlotte.wheeler@right move.co.uk Tel 0845 4568439 They are a PLC now and I'm sure they will do everything possible to justify the disconnect you highlight. lets us know how you get on. Pablo silver or Lead?

GY hopefull the 20k was never on to come off for those that haven't sold and realised the gain, thats the way it works. CrashedOutAndBurned Watford stagnant second half 04 and all 05. Spring 06 show an increase. IMO this will not last long soon both asking and selling prices will be falling in Watford, probably 25 to 30%. Pablo Silver or Lead?

Where are all the bulls when you need them. According to the NAEA and Rightmove, Property is selling like hot cakes and flying off the shelves? Leeds City Centre. 1. Bed Flat 170K 2. Bed Flat 600K What my upside HPI in the next 3 years + 20, 30 or 40%? I need advice. Pablo Silver or Lead?

Myth Number 2. Low interest rates increase affordability for hard pressed FTB and also allow the low paid to get onto the first rung of the property ladder and therefore the country and the property market needs lower rates now! All the ‘artificially low interest rates over the last 5 years have achieved is to suck millions of people into borrowing sums of money which are incompatible with their earning capacity. This has left them a hostage to Global Economic forces that they don’t understand and that their elected government and lender have no influence over. Pablo Silver or Lead?

The Market Will Out. Sentiment is changing from Buy Buy Buy to Hold to Sell. When sentiment in an iliquid market such as properties changes indicators such as asking prices, price differentials and percived values become corupted and therfore give conflicting readings. A generation of Product Marketing people in Financial Institutions and their customers have grown up with historically low IR. This has resulted in debt levels (mort/Short term credit) that will be a disater as IR rise and rise they will. For all their faults I don't blame EA or even greedy, stupid vendors for anomolistic pricing. The people who now have the real controll are the buyers, use it wisely and the correction that is underway will gain a self fullfilling momentum. Pablo Silver or Lead?