Bull Food Warning - Don't Miss Out After The Crunch

[interestrateripoff]

http://www.newsoftheworld.co.uk/lifestyle/...s-top-tips.html

ALTHOUGH it’s all doom and gloom in the property market at the moment, in about a year’s time we’ll be facing a different problem . . . a housing shortage.

For, with very few new homes being built and existing homeowners holding back from buying or selling, it’s led to “pent up demand”.

And when things DO start to get better—with house prices stabilising and mortgages becoming more readily available—everyone will want to jump on the property ladder again.

What happens then? You’ve guessed it—as everyone rushes out to buy, and especially with hardly any new homes to hand, there won’t be enough housing stock available.

Waiting

The shortage will mean that prices will go up again quickly causing a temporary “bubble”.

Of course, in places where there has been massive oversupply—such as some northern areas, where hundreds of like-for-like developments were built—things may be slightly different.

But generally speaking, brand new houses will be hard to come by in 2010, so putting them at a premium too.

With many, myself included, expecting house prices to cool by up to another 10 per cent this year, a lot of people are playing a waiting game—and hoping they don’t get caught up in the panic buying spree when the market finally recovers.

There is a way to stay ahead of the market.

But you do need to judge when it has hit rock bottom, and buy before everyone else cottons on.

It’s easier said than done, of course, but there are SOME key indicators to look for.

1. WATCH THE NEWS. You don’t have to be an economist, but when you start to hear consistently good reports that the financial markets are stabilising and unemployment is reducing, it’s likely that the property market will start to rally about nine months later.

Keep an eye on the interest rate too. As soon as it gets back to three per cent or more, things will have probably turned a corner.

And six months later, everyone will be trying to buy—probably because there will be more money sloshing around the banking system.

2. WAIT FOR THINGS TO GET WORSE. No, I’m not being a doom-monger, but it’ll get tougher before it gets better, with prices falling further. But, for a variety of reasons, some people will still need to sell. And if they need a quick sale they may well go for lower than market value offer.

So, if you look around carefully, you may be able to pick up a bargain. But it’s likely to be a limited window of opportunity.

3. BE AWARE OF PROPERTY VALUES IN YOUR AREA. If you’re looking for something specific, such as a three-bedroom semi in a certain part of town, do your research and find out what they are going for right now.

Then keep a regular eye on the property pages and websites to see what comes up on the market.

If you begin to see a pattern of properties going on the market for slightly more than previously, drive around, and check out the For Sale boards.

I thought I'd better post some proper bull food, all of this crash is getting depressing

Once more we get the "pent up demand" and limited "supply" tag line.

And we can expect a recovery in 9 months time...

Good job she has a good understanding of economics.

Edited February 8, 2009 by interestrateripoff

[time 2 raise interest rates]

Prices will carry on crashing untill all the banks start doing 100% mortgages again, this is all you need to

know, everything else is bullsh*t. sorry but it's true.

[Bloo Loo]

I thought the entire thrust of the recession and lack of sales was "banks not lending".

I guess they will be in 9 months time, to the 3 million unemployed and 250,000 bankrupts and IVAs, and the 6 million credit impaired.

[Prof]

"temporary" bubbles go pop.

[Prof]

Correction, all bubbles go "pop".

[time 2 raise interest rates]

Well the banks are lending as long as you are willing to sacrifice your deposit with their huge loan to values.

[Glenbo]

http://www.newsoftheworld.co.uk/lifestyle/...s-top-tips.html

I thought I'd better post some proper bull food, all of this crash is getting depressing

Once more we get the "pent up demand" and limited "supply" tag line.

And we can expect a recovery in 9 months time...

Good job she has a good understanding of economics.

Nobody ever mentions the massive pent up demand for sales from all the people that are waiting for this

guaranteed recovery, or the fact that affordability is the main driver for any asset in which there is a market.

If inflation gets into the system from the stimulus packages interest rates will very quickly rise making

houses unaffordable in no time even for those offered mortgages.

Any recovery in the near term would be contingent on free flowing credit returning and that is extremely

unlikely. If, on the other hand deflation gets into the system then house prices could keep falling for years

and would become a toxic asset for large sections of the population.

[Leonard Hatred]

Do these ****ers have no shame? Only 18 months ago they were shooting their mouths off about a housing shortage, but now there isn't a shortage, but there will be one because the amount of new building has fallen.

There never was a housing shortage; it was a lie concocted by investors to get you to part with your money. Hence when the easy credit dried up, the "shortage" suddenly went away and house prices crashed.

[Nicholas Cage]

There aren't many figures for property supply but rightmove show it as high

http://www.rightmove.co.uk/house-price-index.html

[Elizabeth]

http://www.newsoftheworld.co.uk/lifestyle/...s-top-tips.html

I thought I'd better post some proper bull food, all of this crash is getting depressing

Once more we get the "pent up demand" and limited "supply" tag line.

And we can expect a recovery in 9 months time...

Good job she has a good understanding of economics.

In Australia, rather than give money to banks, the government is handing out a thousand a piece to every tax payer (OK so its only $950, but its close enough).

Even people who might previously have considered paying down their debts are now seriously considering spending this on their own enjoyment as a 'national duty'

This crash will continue to be depressing in the UK becasue the government will continue to tinker with 'welfare', give nothing to taxpayers and fund major corporations to run themselves badly out of taxpayer's pocket (if we work we deserve nothing - if we live on surplus from Labour we just get more - its a grim life when you 'eat, work, die'). Basically this whole country is a rort run for the ruling class by the British Serfs Party otherwise known as NuSerfs.

What am I saying her. Being miserable and serious is not the only way to tackle a global crisis

[1929crash]

Good job she has a good understanding of economics.

Yes, like she has so taken into account the retail, manufacturing and employment collapses.

[interestrateripoff]

Yes, like she has so taken into account the retail, manufacturing and employment collapses.

This does appear to be a minor oversight in the article.

Perhaps the jobless will blow the redundancy on a house and the banks will start to lend to people on welfare. Perhaps with the right checks and balances it might work, we know what went wrong in the US so this time we can do it right?

[joconme]

Prices will carry on crashing untill all the banks start doing 100% mortgages again, this is all you need to

know, everything else is bullsh*t. sorry but it's true.

The banks haven't stopped doing 100% mortgages. Factor in the negative equity trap and they're all still doing 100%, 115%, 120% and rising.

[Timm]

This is excellent.

A "bullish" article that says hold on for at least 9 months before buying!

[InternationalRockSuperstar]

The shortage will mean that prices will go up again quickly causing a temporary “bubble”.

given there's more than a million empty houses in this country, I very much doubt it!

[swissy_fit]

The banks haven't stopped doing 100% mortgages. Factor in the negative equity trap and they're all still doing 100%, 115%, 120% and rising.

Yes.

Albeit inadvertently.

Anyone who bought with a mortgage of anything more than 75% LTV since 2005/6 is already over 100% LTV now IMO, though most of them don't realise this.

[PotNoodle]

This is the helpful advice given by Louisa Fletcher in October 2008 :-

“The first glimmer of hope is returning for the housing market”

But, as I write, it seems the first glimmer of hope is returning. The Chancellor has called all the lenders together for a ‘little chat’ over breakfast this morning to tell them in no uncertain terms that the have to pass the rate cut on. Of course, some are already obliged to do just that – under the terms of their £37billion government bail-out, they have to pass rate cuts on to the taxpayer. So for the likes of Bradford & Bingley, Northern Rock and the Royal Bank of Scotland, there won’t be any wiggling.

Other lenders have also tossed their hat in the ring by passing on the cut to their existing customers – HSBS were, as of Thursday afternoon, offering a 3.99% Tracker deal to new customers, with existing borrowers rubbing their hands in glee at the massive reductions in their mortgages which have been passed on immediately.

But the real indicator though that confidence is returning is LIBOR – the London Inter-Bank Offered Rate. In other words, the rate of interest banks charge each other to lend money. For the last twelve months or so, since this whole credit squeeze started, there has been a large gap between the BoE rate, and the LIBOR rate which explains why, even though interest rates have been, in the grand scheme of things, reasonably low, mortgages have been expensive and tricky to get, especially for buy to let investors.

The LIBOR decision, which has literally just been announced as I write this, shows a reduction from 5.56% to 4.49%, which indicates that the lending fraternity are finally a bit more confident (along with having their arms severely twisted by Mr Darling). This will be a blessed relief for us all. And once the ‘blockage’ has cleared, it’ll be easier for anyone looking to secure a mortgage to have a sensible discussion about borrowing. And what a window of opportunity that will bring with it

“Nearly half the normal amount of property transactions have taken place so far this year”

Why? Well, many people have put off buying in the eighteen months. Nearly half the normal amount of property transactions have taken place so far this year alone, according to Land Registry figures. And for the average first time buyer or family who are also feeling the pinch having seen their living costs rise dramatically over the last few months, even though mortgages might be increasingly available (and hopefully, after yesterday, cheaper) over the coming months, it’s going to take a while for confidence in the UK housing market to become buoyant enough that the average first time buyer or owner-occupier will take the jump and seriously consider buying again.

“...the right time to add to your property portfolio could be just around the corner.”

However, if you’re an investor, this represents a golden opportunity as, if you are smart about what you buy and when, you’ll be able to take advantage of the raft of deals that lenders will inevitably have to launch soon in order to get business through the door – and also, because Gordon says that they have to! – yet be able to pick and choose from property on the market at a lower price than we’ve seen for the last few years.

Of course, eventually, given a year or so, demand for property will rise again, and because finance will be more available, we’ll see prices stabilise, if not increase in some areas. But, for investors who are, like me, confident in the long term prospects for the UK housing market and happy to sit it all out for five or even maybe ten years, the right time to add to your portfolio could be just around the corner.

http://www.iapglobal.co.uk/cgi-bin/iapg.cg...ws&db_nid=2

Thanks, Louisa.

[jonb]

I thought the entire thrust of the recession and lack of sales was "banks not lending".

I guess they will be in 9 months time, to the 3 million unemployed and 250,000 bankrupts and IVAs, and the 6 million credit impaired.

The lack of sales is because banks are not lending. The lack of purchases is because house prices are no longer going up. Even when the banking problem is sorted out, there won't be people buying to make a 20%+ annual gain on their property. Also, part of sorting the banking problem out is that they won't be lending > 3.5x earnings or > 90% LTV.

Also, a lot of the Poles have gone back home, leaving more empty houses behind.

[Sybil13]

The banks haven't stopped doing 100% mortgages. Factor in the negative equity trap and they're all still doing 100%, 115%, 120% and rising.

I believe lenders ARE lending but lending sensibly now, why would they not be lending? Most have started to lend at 4 x's loan to income (but I believe this is going to drop soon to the median 3.25) and 60% LTV to take into account the 40% + drop in property prices that are needed if lenders are going to continue to lend sensibly which they ARE because the UK cannot afford for them not to.

SO HOW ANYONE CAN BELIEVE THERE IS GOING TO BE A PROPERTY BOOM at any time in the future heaven only knows!

After the property prices have come down to a sensible affordable (by some ) level, property prices WILL ONLY GO UP in line with increases in wages. US property prices only inflated 75% are now down nearly 50%. UK prices up 190% in 10 years, it will take a long long time for property prices to go anywhere near their 2007 levels.

There has ALWAYS been a DEMAND for property for homes, if we can STOP the property for investment there will be enough homes. If the government are concerned that there will not be enough property perhaps they should STOP all the overseas investors buying into the UK housing market in the belief that property prices MIGHT boom again!

Its not the lack of lending its the affordability of property now that lending has returned to sensible and sustainable levels.

[bobthe~]

If I was a bank and had committed to lending Gordon's Billions, I would be looking at the FSA's "Treating Customers Fairly" (TCF) rules.

Well not Rules, but guidelines where the FSA can come down on companies like a pound of feathers if they think that customers are not being treated fairly.

After a year of non lending, I would be reporting back to Gordon and say that lending irresponsibly is not treating our savers fairly so we didn't want to break FSA rules.

[winkie]

I'd like to bet any one of you.

Once the banks lend again you will see HPI.

This is the only thing in the way of the housing market. People dropping prices now are just mugs. It's not about price it's about mortgages.

What is your problem Sibley? The banks have never stopped lending, anyone can get a mortgage if they meet the criteria and have a decent saved deposit...you might want to sell your home and there may be many that would like to buy it, but they will not buy it with a 100% mortgage those days are over...and if they do save a good deposit they will probably think twice about buying it, OK losing someone elses money not quite the same thing losing your own hard earned cash.

[eightiesgirly]

I'd like to bet any one of you.

Once the banks lend again you will see HPI.

This is the only thing in the way of the housing market. People dropping prices now are just mugs. It's not about price it's about mortgages.

No Sibley, it was about affordability. Unless banks can return to copious flows credit at low rates the buying boom of the last few years is very over.

The only way they were able to do this in the past was to underprice risk and sell the mortgages on. The market for these products no longer exists.

[Winston Wolf]

given there's more than a million empty houses in this country, I very much doubt it!

I bought some shares in Barrats / Persimon / Bovis and Redrow yesterday.

I like this thread. Maybe they will suceed! People do win the lottery!

[InternationalRockSuperstar]

Once the banks lend again you will see HPI.

well given that they're insolvent...

This is the only thing in the way of the housing market

no, it's the credit (and DSS rent) that got in the way of house prices.

now that the credit (and soon welfare rent) is being removed from the market, house values will return to a sensible level.

I bought some shares in Barrats / Persimon / Bovis and Redrow yesterday.

I like this thread. Maybe they will suceed! People do win the lottery!

best of luck!

[spivT]

Keep an eye on the interest rate too. As soon as it gets back to three per cent or more, things will have probably turned a corner.

what kind of a prat writes this stuff. There won't be scope for the central banks to raise interest rates beyond 2 percent for a long time. There will be plenty of temporary bull traps before we get to 3% ir's.