BufferBear Bitcoin Bull
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Posts posted by BufferBear Bitcoin Bull
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1) Market view - Bear 40%+
2) Market postion - Prospective FTB
3) Area of Country - London (SW)
4) Occupation and Employer - Confidential
5) Highest Level of Education - Hons. Degree + Professional Qualification
6) Age - Thirty-something
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I too was suprised by Halifax's figures and even though they seem to go against what many of us expected, if they are using the same methodology as last month and the month before and the month before etc, we can't start getting upset because we don't like them!
These sort of contradictions in relation to house price indices are nothing new and typified the last crash. One must be less emotional about things.
A friend of mine reduced his asking price for his 3 bedroom house by 25k over the course of 6 months in order to secure a sale. We know what's happening on the ground and just listen to the confusion coming from the City.
As I have said before, one does not need to be an economist to see where we are heading and it will not be a pretty sight. All the bears just need to relax and show a little more patience.
BB. Don't worry you will get your house and garden for the little one:)
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I guessed earlier but just found this.
Glossary: House Price Index*
Updated for September 2004
Seasonally Adjusted All Houses (All Buyers) All Houses (All Buyers)
Period Index Mon Chge % Std Avge Price (£) Index Ann Chge % Std Avge Price Price/Earnings Ratio
2004
Aug 519.7 -0.6 160,565 522.9 19.3 161,565 -
Jul 522.6 1.1 161,466 529.2 22.2 163,505 -
Jun 516.8 1.2 159,685 524.2 22.3 161,968 5.62
May 510.7 2.2 157,785 514.9 21.8 159,103 5.58
Apr 499.9 1.9 154,449 499.8 20.4 154,433 5.40
Mar 490.4 2.2 151,509 484.9 19.0 149,816 4.94
Feb 479.6 1.7 148,183 471.9 17.9 145,820 4.98
Jan 471.7 2.3 145,737 459.9 18.3 142,105 4.88
My new and revised figure is -1.5%. It's started!
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Anyone care to make a guess at what tomorrows monthly national variation will be (last month -0.6%)? Gort offers a pint of fermented wheat produce to the winner!
-0.2
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My husband and I would like to buy a home for our expanding family. We have two children and live in London. We will need to save for a few more years, I reckon, which is not easy when you have 2 sets of nursery fees. In my part of London daily fees start from approximately £40.00 per day!
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"Mr Stansfield also said that London could be cushioned from the worst of the falls as prices in much of the capital have been stagnant for the past two years."
Echo's my own thoughts.
TTRTR,
According To Rightmove's figs. Wandsworth is down 8.3% since June from over 333k to 305k, which equates to over 27000!
The slide has already started. Stagnation is over!
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30% in London equals a fall of 75k bringing the average house price down to 175k. Average London income is about 35k (so they say
).In my borough, this would equate to approximately 90k, a fall to 210k.
I really expect falls of 40%+ but this makes me sound like a nutter so I try to be more conservative in my predictions. I've seen you all laugh at Bruno
Average London income=35k x 2 (for a couple) = 70x3= 210k.
I believe we will return to normal lending ratios and if you include the overshoot (another 10%) we are looking at 40%+. I guess you can tell I am not economist. Don't need to be. All one needs is common sense and there ain't much of that kicking around right now
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At least 30%
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BP
"Property prices have plunged" in some areas of London even though the Standard talked of a 5% drop. If you look at individual boroughs, according to Rightmove's Sept. 04 report, which runs from July 10th - 11th September, they have fallen as follows:
Wandsworth (my borough) is down 27491 8.3%
City of West. 42951 7.1%
Ham & Fulham 52228 11.5%
Ken & Chelsea 96309 14.1%
Richmond 25251 7.30%
Merton 22210 7.7
Also, my friend just sold his 3 bedroom in South Norwood for 218000 after reducing it four times, from 245,000 (overpriced) to 225,000. Ouch!
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I saw the headline 15 mins ago on Sky News. The article referred to the IMF. Didn't they say there was no evidence of price falls last week!!!!!!!!!!!!!!!!!!!!!!?????????????????
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Apparently tomorrow's Financial Times warns there is a risk of sharp falls in house prices. The momentum appears to be building.
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Why is such venom spat at individuals who work in the public sector? Please come up with something more original than the usual dross e.g they have cushy pensions, they are penpushers, they are lazy etc
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I have just been on www.crestnicholson.com following a story in the press re: reductions in prices on new developments as they clearly are not shifting. The story stated that, as a result, prices on some flats have been reduced from 445k to 399k.
Out of 5 developments in London, there are 69 properties (apartments/houses) for sale starting from around 400k, of which 12 have been reserved.
The site was last updated on 25.8.04.
I think this is more evidence of a significant slow down in HPI. Where do we go from here? Stagnation (yeah right) or .............CRRRRAAAAAAAAAAAASSSSSSH?
"What happens in London blah blah blah......................"
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Gavin, enjoy. When (if) you return, your old house will probably cost 30% less than what you sold it for. Good luck.
BB
P.s Don't forget to give Kirsty a call on your return. Maybe she can rent a room from you.
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Dames,
Same here but the last time I looked, which was ages ago they were £500!
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I passed a year old block of 12 flats today, which were built in partnership with a local housing association (probably shared ownership). Anyhow, out of the 12, 5 are up for sale and one is waiting to be let. What is going on? Were these bought and sub-let to make a fast buck or are people just moving on?
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Sorry for posting the entire story. I don't know how to post a link
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Fasten your seatbelts and prepare for the property market to land
Ashley Seager
Monday August 30, 2004
The Guardian
Can anyone afford the house they are living in? Or, put another way, could you afford to buy your house or flat if you had to buy it right now at today's price? The question might sound odd but it is worth asking after a seven-year period in which property prices have tripled.
It is likely that for the vast majority of people, the answer would be a resounding "no", especially because the Bank of England has raised interest rates five times since November to the current 4.75%.
There are many other measures showing that houses have become too expensive, including the good old house prices to average earnings ratio, the house prices to GDP per head ratio and so on.
All of them point to an overvaluation of anything from 20% to 50%. But, even without those methods, common sense dictates that rises of 20% and 30% year after year cannot continue for ever, especially when inflation has been running at 2-3% a year all that time. This is not rocket science.
Now, however, after years of gravity-defying rises, the day of reckoning appears to be with us. If truth be told, we knew this would happen at some point.
After all, first-time buyers packed up and disappeared early last year. Without them to prop up the market, it was just a matter of time until it ran out of steam. In some ways the only surprise is that it took this long.
At the height of a boom, data are often muddled and inconclusive but the most recent numbers are showing that the tipping point has been reached.
Last Thursday's mortgage approvals data from the British Bankers' Association - a good guide to activity in the housing market - fell back 20% in July from June and were 20% lower than the same month a year earlier. Nasty.
A monthly survey of estate agents by Hometrack showed a small monthly fall of 0.1% in prices, with demand dropping sharply.
The Royal Institution of Chartered Surveyors reported earlier in the month that the market had ground to a halt after the spring surge which looks to have been the last gasp of the great noughties housing boom.
True, the major indices from the lenders Halifax and Nationwide are still showing monthly price rises, and may continue to do so for a little while yet. But their underlying, three-month on three-month rates of increase have eased back too.
So the million pound question is where do we go from here? Do we stand on the edge of the abyss, the great noughties housing market crash, or will house prices behave sensibly and just remain stable or dip a bit over several years, allowing inflation and average earnings to catch up? To use the jargon, will there be a hard landing or a soft one?
In terms of expert opinion, there is little better than that of Bank of England governor Mervyn King. But, as he said recently, he has no idea and nor, he added, does anyone else.
But Mr King did warn that one of the key "downside risks" in the monetary policy committee's inflation forecast was house prices and their potential effect on consumer spending.
Mr King is not just an observer like the rest of us, though. His role in topping out the housing market could be talked about for many years, rather as Alan Greenspan's "irrational exuberance" speech of 1996, about the dotcom boom, still is today.
Mr King, having spent the past year issuing unheeded warnings that the pace of house price growth was unsustainable, said in mid-June that those prices had risen so far there was a danger they could even fall.
That sent a shudder through the market, from which it has not recovered. Estate agents everywhere say the warning chased buyers out of their offices in droves. Mr King's words could go down in history as the pin that pricked the bubble.
Mr King is walking a tightrope. His aim was to deflate the housing market gently rather than have the bubble burst spectacularly. Apart from wanting to prevent a burst destabilising the whole economy, he is aware of the damage it could do to the Bank's credibility.
A soft landing is not only in the Bank's interest. It is also crucial for the Treasury. Gordon Brown, having won years of praise for handing responsibility for rates to the Bank, could see the decision come under scrutiny again. There is a general election coming up next spring. A housing market collapse would hardly endear the Labour government to the middle classes.
So how likely is the soft landing that the authorities, and homeowners, would like to see? Most housing market experts think it is the most likely scenario.
This is because, they say, there is no obvious trigger to set off the sort of sharp falls in real, or inflation-adjusted house prices that the country suffered in the early 1970s, early 80s and early 90s, even though we are in the early 2000s and a pattern looks alarmingly established.
The previous three slumps, say the optimists, were preceded by very sharp interest rate rises and coincided with periods of economic slowdown and rising unemployment. None of these conditions is in place this time, they say.
The soft-landing camp also says house prices have risen a long way but partly because they had fallen a long way after the slump of the early 90s. Add in the fact that we moved in the early 90s to a period of low inflation and low interest rates, some sort of one-off shift upwards in house prices was entirely logical.
They point also to the London market, much of which has been steady for the past two to three years while prices in the north have been rocketing.
Yeah, yeah, yeah, say the pessimists, that's all very well but this is a bubble like any other and will burst like any other. The dotcom share boom did just that at the turn of the millennium without any obvious trigger such as a recession. Shares dropped by half.
The claim from the soft-landing camp that it is different this time is typical of the overoptimism that sets in during bubbles, they add.
Also, says Ed Stansfield, a leading bear at consultancy Capital Economics, interest rates may have risen from 3.5% to the relatively low level, in historical terms, of 4.75% and look to be close to their peak. But that is a 35% rise and if they go up to 5.25% by early next year, as many economists think, they will have risen 50%.
That would hurt borrowers who took the biggest loan they could afford when rates were rock bottom.
The London market may have simply stabilised at the top of a boom and held there because strong rises in the north of England were keeping the Nationwide and Halifax numbers in positive territory.
Pessimists are also unhappy with the idea that houses are different from shares because they are not so easily traded and people will just sit in their house and not move if there is talk of weaker prices.
In fact, house prices are set by the 7-8% of the housing stock that is sold each year and some people will always have a reason to sell. If they have to cut their price sharply to do so, they will cut their offer price on the property they are moving to.
This brings in the other type of property owner, the buy-to-let landlord. This person bought in the hope of capital growth and might well sell if prices start to fall, putting further downward pressure on the market. These are the people who can succumb to the old market drivers of fear and greed.
The Bank of England has identified this as its key worry. It got its regional agents to survey landlords this summer and concluded that most buy-to-letters were financially sound, had relatively low loan-to-value ratios and were in it for the long term, suggesting they would not panic sell in a downturn. "But this conclusion is by no means certain," the Bank said.
Figures show that, contrary to popular belief, the buy-to-let phenomenon has not increased the stock of homes to rent in recent years because commercial landlords have been reducing their holdings. The private rental sector is still only about 10% of the housing stock.
But the buy-to-let craze is fading, anyway. The growth in buy-to-let mortgage lending has slowed, which is no surprise given the collapse in rental yields - the value of the property divided by the annual rent - to, in most cases, below the level of interest rates. In other words, rents are no longer covering mortgages. Without the promise of capital gain, buy-to-let no longer adds up.
Another problem that worries the bears is that previous adjustments in real house prices back to their long-run relationship with average earnings have been disguised by high inflation. House prices in nominal terms have fallen somewhat over a two- or three-year period but high inflation has made up the difference.
In a period of very low inflation, such as now, an adjustment in real terms could require a much bigger fall in nominal, or actual, house prices than in the past. And that would be painful.
The next couple of months are likely to be crucial in determining whether we get a soft or hard landing. There is usually a back-to-school pick-up in buyer interest in September and that could recur, especially if people take on board the Bank of England's recent hint that rates are close to their peak. But if that does not occur, and the major Halifax and Nationwide indices start to show monthly falls, judgment day may be nigh.
As Darren Winder at UBS bank in the City says: "There is clearly going to be a correction. How big it will be, Lord only knows."
What goes up must come down.
I know where I am placing my bet
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Sorry for posting the entire story. I don't know how to post a link
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I posted a while ago about a house on my road that had a 'sold' sign up for over 4 months. I wasn't confident that it would complete but it has. I understand the vendors got their full asking price of 460k and have sold it to a management company. The day after they moved out, a 'To Let' sign went up (2 weeks ago) but as yet, nobody has moved in. The weekly rent is 450 p.w
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In my defence, I do not have 6 years worth of property papers but a small selection from 1998, which represents the last 6 years in my local area. If I did, I would be worried
I am happy to be chief nerd, though
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Glad you pulled it off. Congratulations!
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Yeah, we have another nerd here. I have local property papers from 1998 when 3 bedroom houses went for 85-95k. Currently, they fetch 250K!!!
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I saw this story on another site. Hilarious
Property prices plummit by an average £4000 in one month
Source: UK Construction.com - 19 August 2004
Despite Kirsty Allsop of London Tonight and Location Location Location claiming that "There isn't going to be a market crash", estate agency Rightmove.co.uk report some properties loosing up to 8% in their value in one month, this being around £60,000 wiped off the price of the property.
Rightmove's House Price index is compiled from the asking prices of properties coming onto the UK Market, they have 5,700 estate agents, the data they produce is factual data of actual house prices rather than a survey.
Only last month a respected economic forecasting group has warned The National Institute for Economic and Social Research "House prices are currently around 30 percent above their equilibrium level (and) it is possible that they might fall rapidly, as they did after the last two house price bubbles, rather than moderately as is our baseline forecast,".
Many home owners could find themselves with negative equity if a 30% drop in house prices were to occur.
Watch this space for more information
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I think the downturn started after Easter. RM's figs. are quite similar to LR's and think there is definitely a pattern developing. I believe we will only see negative growth in London for the foreseeable future. I don't find these figures suprising at all. Who ever believes prices will stagnate are simply kidding themselves. One does not have to be an economist to predict what will happen next. Commonsense is all that is required
- HPC SALARY SURVEY -
in House prices and the economy
Posted
1. Basic Salary: 26k
2. Non-regular/other annual income (Bonuses, Commission,etc) 2k
3. Income from Dividends 0
4. Annual Rental Income (if landlord) 0
5. Income from other investments
6. Capital currently in property 0k
7. Capital currently in shares 5k
8. Capital currently in commodities 0
9. Capital currently in other investments 0
10. Cash in bank, savings, ISA, 20k
11. Annual gross interest earned on savings (if significant, e.g. STR's) Not enough!