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How can employment rise when growth falls? Because of zombie companies

Report says decline in UK productivity is in part due to banks propping up debtor firms while declining credit to start-ups

http://www.guardian.co.uk/business/2013/feb/01/employment-rising-growth-falling-zombie-companies

A decline in real wages (earnings growth below the rate of inflation) had allowed firms to employ more workers than they otherwise would otherwise have done, the IFS said. Labour supply had been increased owing to falls in asset prices, pension reform and benefit changes that had encouraged people to seek work, and this had made it more difficult for those in jobs to protect their wages at the expense of those looking for jobs.

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Was that a news article or an advertorial....?

I'm certain I remember reading an article a few years ago which outlined that the penthouse/s was originally going to be marketed for circa £1 Million before the market dropped... I also think this was originally listed at £750k when being sold on release .. :-

http://www.propertypal.com/3-bed-duplex-penthouse-the-boat-custom-house-square-belfast/126566

The development has had an unbelievable amount of PR spin around it...

http://www.propertypal.com/the-boat-belfast/d747

I actually got the figures wrong, it was 500k not 600k. This was the one I'm talking about.

http://www.propertypal.com/3-bed-the-boat-custom-house-square-belfast/126564

She's looking a lot more than 60K profit.

Still with the car lift and square footage, I'm surprised she can afford the service charge.

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£300k guide price for hotel under the hammer

http://www.belfasttelegraph.co.uk/business/business-news/amppound300k-guide-price-for-hotel-under-the-hammer-16270210.html

Property consultants Osborne King described the hotel as a "ready-to-go business opportunity" and said Belleek was a "thriving border market town".

£1m to tackle NI dereliction and eyesores

http://www.bbc.co.uk/news/uk-northern-ireland-21319867

£1m is to be spent by the Department of Environment to tackle dereliction in a number of towns.

Fermanagh is to get a £380,000 boost in the run up to the G8 summit and Belfast will benefit from £300,000.

Edited by Shotoflight
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What's so great about climbing on a property ladder? It's about as safe as a wooden ladder with rungs missing.

I agree buying is not for everyone and many people, including myself rented at different stages of their life. However many people plan to own their own home (as outright) by the time , and hopefully well before they retire.

If that is the case it is best, in my opinion to commence your 25 year mortgage as early as possible. Naturally you need to be able to afford the repayments and have the employment to show for it.

many , many people were forced away from the property ladder by the high pricing of houses in 2006/07 and stayed out for some time. However after a massive 50% drop they may be considering trying again. Many will either choose to wait another while and many other, like those who got burnt in the 1990 in London will never again look at home ownership.

For those who are looking to start the 25 year Mortgage age is important. If you reverse back from 60 you need to be 35. If you would like to be mortgage free by 55 you need to start by 30. Or you cold look at 20 year or even 15 year mortgages if you can afford same.

Of course if you believe there will be further dramatic reductions in the next five years then of course it is justifiable in delaying. Its down to taking a view on what will happen over the short term and long term. We can look to other crashes for some kind of guidance on what happens but it can always be different.

Property moves in Cycles. As everybody now knows (which few seamed to in 2006) property will not always go up. We should all also know that it will not always go down and a ladder, without rungs is perhaps not a true metaphor for property.

The property ladder reference is not a reference to growing property prices but the age old, slow process of moving up to larger and normally more expensive houses as you both pay down debt and hopefully move up the pay scale in your chosen field. Many people in the past bought a house for life and you often hear of older people who lived for 60 years in a particular house. However, many people start with a small house and move up as family needs and career progression allows. Is that going to change? I dont think so.

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I agree buying is not for everyone and many people, including myself rented at different stages of their life. However many people plan to own their own home (as outright) by the time , and hopefully well before they retire.

Of course if you believe there will be further dramatic reductions in the next five years then of course it is justifiable in delaying. Its down to taking a view on what will happen over the short term and long term. We can look to other crashes for some kind of guidance on what happens but it can always be different.

Property moves in Cycles. As everybody now knows (which few seamed to in 2006) property will not always go up. We should all also know that it will not always go down and a ladder, without rungs is perhaps not a true metaphor for property.

The property ladder reference is not a reference to growing property prices but the age old, slow process of moving up to larger and normally more expensive houses as you both pay down debt and hopefully move up the pay scale in your chosen field. Many people in the past bought a house for life and you often hear of older people who lived for 60 years in a particular house. However, many people start with a small house and move up as family needs and career progression allows. Is that going to change? I dont think so.

You will need to consider more than the possibility of continuing "further dramatic reductions" in the next 5 years. You should consider job security/availability, interest rates, cost of living/disposable income, quality of life and of course your own specific circumstances. Many people are still buying (but much less than used to), many are renting (more than used to). Some have made up their minds and some have their minds made up for them. With one in three living with negative equity, moving up the property ladder may be far from their minds and a lot slower than they expected. Some may never be able to extricate themselves.

There's no doubt however that if you could get a realistically priced house now and have the wherewithall to put down a decent deposit, have secure employment and can afford the repayments, you would be in a much better position than someone that bought 6 yrs ago.

Its not just about house 'prices'. As someone said before - Income, Interest and Inflation allied to Confidence, Sentiment and availability of Debt. Look at the bigger picture.

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You will need to consider more than the possibility of continuing "further dramatic reductions" in the next 5 years. You should consider job security/availability, interest rates, cost of living/disposable income, quality of life and of course your own specific circumstances. Many people are still buying (but much less than used to), many are renting (more than used to).

There's no doubt however that if you could get a realistically priced house now and have the wherewithall to put down a decent deposit, have secure employment and can afford the repayments, you would be in a much better position than someone that bought 6 yrs ago.

Its not just about house 'prices'. As someone said before - Income, Interest and Inflation allied to Confidence, Sentiment and availability of Debt. Look at the bigger picture.

I think we are largely in agreement here. and I totally agree that the availability of credit outweighs (and the deposit) almost all the other factors.

My own view is that the BOI interest rate will remain low for the next 5 years and then it will increase. It has quite a bit to rise before it catches mortgage rates but it will force them up. I dont think there is any doubt about that. People may differ on the timing.

In the US you can get a 25 year and even a 30 year fix. I would love to see that coming in here (25y fix I mean).

Unemployment rates are a problem. they are around 8%. You could say 10% if you allow for funny counting. There is ofcourse the other 25% economic inactive, but they were there when we were booming.

The unemployment rate was just under 5% during the boom. so since then a further 3 or 4% have become unemployed (the new unemployed). The other 96% have held on to the jobs, and if you can believe the figures they are earning the same or more (which I find strange). How much more is unemployment going to go up 2%, 3%. I don't know.

The difficulty I have is the high proportion of this 'new unemployed' that is under 25y. That is the worrying factor for me.

However if we return to the potential house buyer who is trying to decide whether to buy or rent. he/she will have to do one or the other, unless they stay at home with mammy. So it is either starting to pay down the 20/25y mortgage or pay rent.

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I think we are largely in agreement here. and I totally agree that the availability of credit outweighs (and the deposit) almost all the other factors.

My own view is that the BOI interest rate will remain low for the next 5 years and then it will increase. It has quite a bit to rise before it catches mortgage rates but it will force them up. I dont think there is any doubt about that. People may differ on the timing.

In the US you can get a 25 year and even a 30 year fix. I would love to see that coming in here (25y fix I mean).

However if we return to the potential house buyer who is trying to decide whether to buy or rent. he/she will have to do one or the other, unless they stay at home with mammy. So it is either starting to pay down the 20/25y mortgage or pay rent.

So it is either starting to pay down the 20/25y mortgage or pay rent and ride out the crash.

We have already seen how banks SVRs have decoupled from BOE. Average SVR is something like 4.8%. As for having a view on BOE rates over the next 5 yrs - the question is "would you bet your mortgage on it?"

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How this recovery from recession compares with those of the past

Why it is different this time.

http://www.telegraph.co.uk/finance/personalfinance/9849449/How-this-recovery-from-recession-compares-with-those-of-the-past.html

The UK economy is suffering its longest decline in generations.

The chart above shows exactly how bad this recovery from recession - or lack of it - has been.

The graph has been updated and republished throughout the financial crisis, since 2008, by the National Institute of Economic and Social Research and today it gives its latest reading and a prediction that the economy will not return to its former size, in real terms, until 2018.

When comparing economic growth for each Briton with inflation factored in - or real per-capita GDP, in the jargon - the NIESR says Britain is only half way to regaining the ground lost in the slump. In fact, it now suggests it has been the "slowest post-recession recovery in output in the past 100 years.”

In contrast, in the so-called "great recession" of 2008 and 2009, the economy shrank by 6.4 per cent. But recovery has been pitiful with the economy going on to register its first double-dip since the 1970s by returning to recession, albeit very shallow, early last year.

The difference, of course is that modern safety nets mean that the effects of recessions are felt less sharply as they were a century ago. However, the size of today's welfare state, some economists argue, is hindering recovery by piling state debts higher and preventing the economy from realising its full potential.

The relatively low level of unemployment, currently 7.7 per cent, has also surprised analysts. This has been put down, in part, to falling productivity and low wage growth - salaries have risen far slower than wider price rises in the economy in recent years.

Employers, it seems, have felt it more appropriate to keep as many people on the books as they can, be it because they want to retain skills. Maybe it's just become less socially acceptable to order mass redundancies that may have been more common less in generations before: companies are certainly more atune to corporate responsibilities and protecting their image.

The measures deployed to fight the crisis have also eased the burden for many, with the UK Bank Rate kept 0.5 per cent for nearly four years keeping borrowing rates lows. But this has merely passed that pain across to those reliant on savings for income and those looking to buy a pension income: the low-rates policy has pushed rates on annuities to a record low.

The effect, then, has been that the pain of recession has been spread more broadly than in recessions before, hitting those who may have thought they would escape its worst effects.

Edited by Shotoflight
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You're never supposed to say " this time it's different", because it never is.

However, I"d say it's different this time.

I take the view you can look to what happened previously for a guide but it can never be the same each time. Others here have argured both ways on this one.

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The effect, then, has been that the pain of recession has been spread more broadly than in recessions before, hitting those who may have thought they would escape its worst effects.

A fair point - TPTB have chosen to shove as much of the burden as possible onto the prudent making things a lot more bearable for the fools.

However the full effects of money printing have yet to show on the wider economy. Lots of people predicting major problems with Sterling once the bond bubble bursts (it has already had a crash in the last five years and we've already seen stubborn inflation in a recession) - let's see if it comes to pass.

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Commercial property - similarities with residential?

Premises can be turned around by local operators

http://www.belfasttelegraph.co.uk/business/business-news/premises-can-be-turned-around-by-local-operators-29051819.html

Although the process of bank deleveraging started in the Northern Ireland market last year there were fewer properties offered for sale during 2012 than had been anticipated.

Against a relatively benign economic forecast for the region, the reality is that another challenging year is in prospect for the property market in Northern Ireland in 2013.

However, we expect to see more property assets being traded this year as the process of deleveraging picks up pace and owners become resigned to current values and the likelihood that there will be no recovery in values in the short term.

Due to pressure on some locals who may have over-borrowed, we expect to see a notable increase in the volume of Northern Ireland hotels, pubs, off-licences and leisure properties coming to the market over the course of the next 12 months as banks focus on deleveraging in this sector. Once sufficient write-downs have been factored in and the pricing for these assets is realistic, in our experience there are plenty of buyers for viable businesses, with local cash and bank-supported purchasers being most active.

Pricing will need to be realistic for transactions to materialise, particularly for secondary properties for which demand is thinner, but there are successful local business operators well able to turn around the fortunes of licenced premises.

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Home ownership falls to lowest level since 1987 UK

Official figures reflect a large increase in renting has Britons locked out of home ownership amid the tough economy.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9856095/Home-ownership-falls-to-lowest-level-since-1987.html

Shelter recently produced a report which argued that the private rental sector has outgrown its role in primarily providing accommodation for students and young professionals.

The charity said that families have become stuck in the "rent trap" as rents have soared due to strong demand, which has left tenants with little cash to be able to save for a mortgage deposit.

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How house prices have risen 43-fold since 1971

A carton of milk would cost £10 and a roast chicken would be a £51 price tag if food costs had risen in line with house prices.

http://www.telegraph.co.uk/finance/personalfinance/9853747/How-house-prices-have-risen-43-fold-since-1971.html

Shelter's chief executive Campbell Robb said: "The high cost of food is already a real concern for people, so if prices reached these levels there's no way we'd accept it.

"Yet when it comes to the huge rise in the cost of buying a home over the past few decades, somehow this is seen as normal - even welcome - despite the impact it's having on a generation desperate for a home of their own.

Shelter said that it had also recently found that 59% of adults who did not own a home believed they would never be able to afford to buy in their local area.

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Light at the end of the tunnel?

http://www.belfasttelegraph.co.uk/business/business-news/light-at-the-end-of-the-tunnel-29055917.html

While the 2013 outlook for the economy in Northern Ireland "does not look overly optimistic", Mr Mallon said things were going in the right direction for Danske Bank.

"By 2015 I would be comfortable that we will see higher profitability than impairments," he said. He added he believed land and property values – the collapse of which accounts for the majority impairments of Danske and other banks – had bottomed out. "We are closer to the upturn than we are to further downturn," Mr Mallon said.

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How house prices have risen 43-fold since 1971

A carton of milk would cost £10 and a roast chicken would be a £51 price tag if food costs had risen in line with house prices.

http://www.telegraph.co.uk/finance/personalfinance/9853747/How-house-prices-have-risen-43-fold-since-1971.html

Shelter's chief executive Campbell Robb said: "The high cost of food is already a real concern for people, so if prices reached these levels there's no way we'd accept it.

"Yet when it comes to the huge rise in the cost of buying a home over the past few decades, somehow this is seen as normal - even welcome - despite the impact it's having on a generation desperate for a home of their own.

Shelter said that it had also recently found that 59% of adults who did not own a home believed they would never be able to afford to buy in their local area.

Here in NI they have risen 12 fold from 1973, which compares rather well.

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Home ownership falls to lowest level since 1987 UK

Official figures reflect a large increase in renting has Britons locked out of home ownership amid the tough economy.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9856095/Home-ownership-falls-to-lowest-level-since-1987.html

Shelter recently produced a report which argued that the private rental sector has outgrown its role in primarily providing accommodation for students and young professionals.

The charity said that families have become stuck in the "rent trap" as rents have soared due to strong demand, which has left tenants with little cash to be able to save for a mortgage deposit.

It is an interesting point this. My view is there is a time to rent and a time not to.

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It is an interesting point this. My view is there is a time to rent and a time not to.

There is no doubt it is a good time to buy in Northern Ireland if you intend to live in the house.I don't gamble so I don't do investment properties.

Personally, I have no idea why anyone would want to be a landlord. Hell is other people. No amount of future profit could compensate me for having to deal with people who have a legal right to demand my time and energy. It would be like getting married over and over again to random people

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I agree. The difference between other investments and BTL at the minute may make becoming a landlord look attractive, but I think of it as a second job. Bank accounts and shares require little work, BTL requires a lot. The difference in return is payment for a 6am Sunday morning phonecall about a broken boiler.

Or some other recent examples I've heard-

Call from police on Sunday morning to say they had to break down a BTL property's door to arrest the tenant. Fixing it not included in the service.

LL noticed rent payment had stopped. Couldn't contact tenant. Went round and house was destroyed and most appliances had been removed and probably sold. £5000 bill.

If someone owns a carpet they vacuum it. If the Landlord owns it they pee on it.

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It is an interesting point this. My view is there is a time to rent and a time not to.

Same story

Home ownership collapses to its lowest level for 25 years: Millions of families and first time buyers priced off the property ladder

http://www.dailymail.co.uk/news/article-2275386/Fewer-home-owners-25-years-ago-Millions-frozen-property-market-cost-buying-home-soars.html#axzz2KPJuyAA4

Just 65.3 per cent of households in England are homeowners, the lowest level for nearly a quarter of a century. It peaked at 70.9 per cent in 2003.

The report also reveals:

The number of families who are privately renting their home has risen to its highest level since 1960s with 3.8million living in homes owned by their landlord, not themselves.

Nearly 60 per cent of people who privately rent their home hope to buy their own home ‘at some point in the future’.

Only one in ten homeowners are under the age of 35, a sign of how a few members of the younger generation can fulfil their dream of homeownership.

Of those who own their home without a mortgage, nearly 60 per cent are aged 65 and over, with many benefitting from the house price boom having bought their home decades ago.

For the first time since the 1960s, the number of households who are privately renting equals the number who live in social housing.

Duncan Stott, a spokesman from the first-time buyer campaign group Priced Out, said the fall in homeownership will ‘continue to wilt away’. While many of today’s homeowners bought in their 20s, their children and grandchildren might not buy until they are in their 40s. He warned: ‘Until house prices move back to a level that first time buyers can afford, homeownership will continue to wilt away.’

The ‘English Housing Survey’, from the Department for Communities and Local Government, suggests people are moving home less often than they used to. Nearly two-thirds of homeowners have been ‘in their home for at least ten years’, with many put off by the crippling cost of moving up the ladder.

It has fuelled a trend for ‘improving, not moving’, that is to extend a current home, such as doing a loft conversion or digging out a basement, rather than buying a larger home. The high cost of stamp duty also puts off people from moving.

On average, people move once every 25 years, compared to once every 12 years in 1988, according to the property information firm Hometrack.

Edited by Shotoflight
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I disagree with the "there's no doubt now is a good time to buy if you intend to live in the house". It obviously is compared to 2007 but such a broad statement needs to be put in context. No doubt implies absence of doubt, the current macro and micro environment are both filled with doubt.

Just my opinion. If you want to own a house, not an investment, then today is a great time to buy. It is always hard to time a market, but interest rates are low and house prices have dropped significantly since 2007. Houses are never going to be free (well, perhaps those hideous tower blocks like Obel). You will be paying rent anyway, so why not just buy a house? I believe the rent/mortgage ratios are looking great in Northern Ireland. But I am willing to be proved wrong - anyone have any actual data?

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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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