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House Price Crash Forum


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Everything posted by DrBob

  1. Are these the last days of the Oil Age? http://www.timesonline.co.uk/tol/comment/c...icle2080497.ece http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article2080497.ece' rel="external nofollow">July 16, 2007 Oil ruled the 20th century; the shortage of oil will rule the 21st. There is now no doubt about the rising trend in oil prices. In 2003 a barrel of Brent crude sold for $29; in 2004 it rose to $38; in 2005 it rose to $54.50; in 2006 it rose to $65. Last Friday the price closed at $77.50. Some dealers expect it to test the $80 level quite shortly. Those of us who remember the 1970s and early 1980s know how damaging the oil shocks were. They postponed the economic hopes of more than a decade, from 1974 to 1985. The rise of the oil price led to global inflation ; at one point, around 1980, it looked as though global inflation could tip over into global hyper-inflation. Investors were caught in a trap of rising nominal values but falling real values. In the property market, house prices rose, but the general price level rose even faster . For the first ten years of the inflation, gold proved to be a hedge and a protection; but this was followed by a period when the real purchasing power of gold was falling. Most people became poorer, except for those with access to oil money, but some became much poorer, much more quickly... All this happened at a time when the supply of oil was being artificially restricted by the Opec oil cartel. There was no absolute shortage of oil, though analysts already knew that the oil peak would happen eventually. Now the situation has moved from a political problem, open to political settlement, to an absolute geological shortage. For the future, oil supply will be a zero-sum game. Some nations will be “haves” but others will be “have nots”. The world is coming to the end of the age of oil, which produced its own technology, its balance of power, its own economy, its pattern of society. It does not greatly matter whether the oil supply has peaked already or is going to peak in five or 12 years’ time. There is a huge adjustment to be made. There will be some benefits, including higher efficiencies and perhaps a better approach to global warming. But nothing will take us back towards the innocent expectation of indefinite expansion of the first months of the new millennium. So rising oil prices (reduced discretionary spending), rising inflation (requiring higher interest rates), struggling economies (in net oil importer countries, which includes Britain in a few years' time) - not altogether conducive to continued house price inflation.
  2. I'm sure many UK homeowners are also in negative equity (anyone who got a 110% mortgage or bought a new-build in the last 12 months, for instance). They just don't know or won't admit it yet.
  3. Drinking a glass of wine before a night out clubbing, posting here while I wait for my partner-in-crime to come over, I was wondering how many of you post after a drink or two? Judging by some of the posts, I reckon quite a few! I'd say that a large glass of vino lubricates the mind and assists the HPC thought process. What's the consensus? Disclaimer: Please enjoy drinking sensibly!
  4. Come on! You can buy it without borrowing, you know the area, it's what you and your wife want. Just buy the place! The crash will come, but much of it will be in real, not nominal terms, and there will be a great deal of regional and local variation. If you're financially secure and would be happy to stay put for 5-10 years, then buy and get on with your life. If you can add some value to the place then all the better! I don't know about hedging in detail, but I'm sure you could put some sort of spread bet on the housing market. Just remember that if you get involved in spread betting, you should put stop-losses in place.
  5. There is very serious point here: There are 356 labour MPs and 109 ministerial posts (junior and senior) - many labour MPs do not want to be ministers - many labour MPs cannot be considered for ministerial posts because of their voting records or prior comments/adverse publicity - many labour MPs cannot be considered because they are 'anti-Brown' This means the 'talent pool' for ministers is incredibly limited. The assumption that ministers are competent or have gained their posts through merit is wrong. A lot of ministers are just there because they are the least unacceptable candidate. This is the reason that Brown has been trying to get liberal MPs into the labour cabinet - not out of some fundamental desire for 'big tent' politics but because there aren't enough good ministerial candidates amongst the labour MPs. I hope this worries you as much as it does me! This isn't pure speculation - a friend of mine works for a large govt department and has some knowledge of the machinations.
  6. Yuck! Do you think one of their kids designed this as part of a GCSE project? It's charmless - I can't imagine buying somewhere like this, wine cellar or not.
  7. Sparse post, Kilroy, but you're right - it is a great article on credit tightening: Lenders lift the pass mark on applications http://www.ft.com/cms/s/a41f0110-3130-11dc-891f-0000779fd2ac.html' rel="external nofollow"> http://www.ft.com/cms/s/a41f0110-3130-11dc...00779fd2ac.html http://www.ft.com/cms/s/a41f0110-3130-11dc-891f-0000779fd2ac.html' rel="external nofollow">Last updated: July 13 2007 18:07 Growing numbers of borrowers are being turned down for mainstream deals and forced to apply for costlier sub-prime finance as lenders take a much tougher line with consumers in the face of rising interest rates. Credit reference agencies, which supply lenders with the information needed to make borrowing decisions, say financial institutions are now taking a deeper and broader look at credit histories, resulting in more applications being turned down. Among the areas where lenders have clamped down is County Court Judgments (CCJs). Whereas a few years ago, black marks of this sort may have been discounted after say two years, this period is being stretched back. Lenders are now not only taking into account red flags such as missed payments, defaults and IVAs, but also borrowing behaviour, such as withdrawing cash on credit cards, which may indicate cash flow problems. Multiple applications for credit are also likely to score down an application, as the individual, who may have taken advantage of zero per cent balance transfer deals or innocently applied for finance many times when buying new furniture after a house move, could be viewed as too “credit hungry”. Consumers who are refused finance by a prime lender have little option but to go to a sub-prime lender which may have less strict criteria, but whose rates will typically be 1 to 2 percentage points higher. Credit agencies say there’s a growing trend by lenders towards “rate for risk” pricing, whereby an applicant is offered an interest rate which increases as their credit score worsens – meaning that only those with the best credit reports get the headline-grabbing rates. I can see two very important consequences for the housing market: 1. The pool of potential buyers is reduced (mainly at the lower end of the market) as their credit history precludes a mortgage 2. Many people who bought 2 years ago will be seeking to re-mortgage as their fixed/discounted rate ends. If they've been late with any payments, tried to be a credit-card 'rate tart' or picked up any CCJs in the interim, they won't be able to get the new fixed rate bargain they've been hoping for. Some will have to stick with their current lenders' punitive SVRs, and will get further into trouble... Will repossessions be hitting the front pages later this year?
  8. Well, in so far as the BBB- bonds have already fallen to <50% of book value, they're technically right. Even if they become worth nothing, the worst of the fall is over! Source: http://www.markit.com/information/affiliations/abx (accessed 13.07.2007)
  9. So we're 48th on the population density league. I don't think that's so bad. We have a lower population density than South Korea, Netherlands, Belgium, Japan and India, and are only marginally higher than Germany. Still some space to build the odd house, I suspect. Position. Country (Population per km2) 1. Monaco (23660) 3. Hong Kong (6407) 7. Malta (1271) 11. Bangladesh (985) 19. South Korea (480) 23. Netherlands (392) 29. Belgium (341) 30. Japan (339) 31. India (336) 40. Israel (302) 46. Vietnam (254) 48. UK (246) 50. Germany (232) 89. France (110) http://en.wikipedia.org/wiki/List_of_count...ulation_density
  10. Depends how much risk you're willing to take. Why not put £3000 in a cash mini ISA? I'd suggest the Direct ISA from National Savings & Investments. You'll get 6.3% tax free and it's safe as houses safer than houses! You could put the rest (up to £4000 in the same tax year) in a self-select mini-ISA with e.g. Iweb Sharedealing (part of HBOS, so shouldn't go bust). This way you can have some fun dabbling in the stock market. Any profits you make will be tax-free. You could try buying some gold (e.g. GBS), take your chances with oil stocks (e.g. BP.) or go for an exchange traded fund dealing in food commodities (e.g. AIGA). This is just one suggestion - I offer no guarantees that it will make you any money (and you might lose)! You'll find a huge range of opinions on here.
  11. How about a local neighbourhood where every 5th home has been repossessed? Cue TV News footage of empty gardens, boarded-up windows, angry neighbours frustrated that they can't sell their homes and that the area is now racked with crime... (much like in the US at present). Any guess as to where this neighbourhood will be?
  12. This is great news from a HPC perspective! Some of the lenders must be bricking it right now. They'll be tightening up their lending criteria and refusing to lend without solid proof of income and of ability to repay. Credit tightening = reduced demand = falling prices...
  13. Do you think the tax system for investments and housing is regressive? - If you are a homeowner (and have been for some time), you will have seen enormous capital growth in your asset. This is completely exempt from capital gains tax. - If you can't afford to buy a home and are saving money in shares/bonds etc, you have to pay capital gains (for any money outside of an ISA). - If you are a landlord your mortgage interest is tax deductible. - If you hold debt privately, your interest is not.
  14. Another point: whenever I search on Findaproperty, a lot of homes are listed as 'sold'. How long do these remain on the site for? If they are being left on for longer, this might explain part of the rise in numbers.
  15. To be fair, a rise in the proportion of customers in arrears by one fifth would put the proportion up from 10% to 12%, not 20%. Two things concern me most about this: 1. This 10% proportion is of customers 90 days or more in arrears (not just by a few weeks)! Surely those who are 3 months in arrears should be facing repossession orders? 2. How have they reduced this proportion? I'd suspect they've reduced/stabilised the proportion in arrears by pushing through more repossession orders (rather than by making payments more affordable or choosing better customers). If Kensington believe that the housing market is peaking, they will know that their best strategy for customers significantly in arrears is to repossess and sell the property on ASAP (before prices fall).
  16. Remember - oil price risks aren't all on the upside. If this is the year for a bird 'flu pandemic, oil prices will plummet for 6 months or so.
  17. Isn't this what the US wanted all along? A weaker dollar to reduce the size of the deficit?
  18. Hmm, Datamonitor have waited until July to post the 2006 sub-prime data. I suspect subprime lending has fallen off substantially in the last month or so (after the FSA investigations were announced). But we'll have to wait until July 2008 to hear about that...
  19. Good stuff! When written in hysterical capitals, MORTGAGE looks like a rather unpleasant word, doesn't it? MORTICE, CAGE, GAG, RAGE, AGE are all words that litter the subconscious when you read it (and yes, I'm aware of the french 'death pledge' origins).
  20. It's already here. Be afraid. Be very afraid : Peninsula Medical School http://www.pms.ac.uk/pms/undergraduate/week.php http://www.pms.ac.uk/pms/undergraduate/week.php' rel="external nofollow">Problem-Based Learning Structure Session 1. Read case, brainstorm issues - what do we need to know? Independent learning using resources and community experiences. Session 2. Ideas brought back to group. Discussion. New ideas identified. Independent learning using resources and community experiences. Session 3. Feedback and assessment. Self-Directed Learning Although you will be given extensive support and direction, you will be expected to take responsibility for your own learning. Objectives are set to enable you to assess your progress and you will be supported by an Academic Tutor and other School staff throughout your period of study. It's the same story at some other medical schools (St George's springs to mind). Most of the educationalists who put these programmes together are the failures who couldn't stick the real medical world. Now they're in charge of the curriculum.
  21. Let me feed this into my mortgage approval predictor: (Steady pay - (Rising food costs + rising fuel costs + rising council tax + rising loan repayments)) ^ credit tightening factor = lower mortgage approvals Yup!
  22. Top floor "PENTHOUSE"??? Do they mean attic room? I can't imagine the views from that window are very panoramic once the tree has leaves on it.
  23. "We need to reduce volatility", do we, Darling? Well perhaps we should have noticed the tripling in house prices over the last 10 years and considered doing something about it then? Perhaps we should have regulated the mortgage market, encouraged tighter lending criteria, taxed buy-to-let and the purchase of second homes, improved tenants' rights or built more homes? But no - no government wants to spoil the party. Better to wait until the market is already peaking and then start a house building programme. I'm sure that will reduce volatility. Idiots.
  24. More corporate whinging about rising interest rates. Sorry M&S, but the interest rate is not high! Here's a graph of interest rates since 1987: Here are the options the BoE faces: BoE lowers interest rates: The pound tanks, imports become more expensive, inflation rises dramatically BoE keeps interest rates on hold: The pound falls, imports become more expensive, inflation rises above 3% BoE raises interest rates to 6.25% by year-end as per market expectations: The pound keeps its value, house prices crash, inflation stabilises at 2% target The role of the BoE is to control inflation. Which option will they choose?
  25. It's crazy, really. My understanding is that NZ has one of the most cyclical housing markets in the world and has worse affordability than even the UK - a big fall is on the cards there. Inflation is still roaring away in NZ, so the central bank don't have any scope to lower rates. I can't see a way out except to induce a house price crash followed by a recession. Then interest rates can be lowered, the carry trade can unwind, the NZ dollar can depreciate and the whole cycle can start again. Sounds eerily like the UK!
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