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othello

Why We Are Not Seeing Are Recovery

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The current upturn may continue into the Summer but it by no means a 'recovery'. It is simply due to the Government's tactic of 'printing' money. This is a very short-term measure as if it were to continue it would lead to a complete trashing of the UK economy. No Government can afford to do that in the longer term and even if they did, house prices would continue to fall in real terms.

As I see it, once this upturn is over, which may not be until the autumn, the market will continue to fall until the economy as a whole starts to grow again. At the moment the economy is still shrinking and unemployment is still rising so house prices will continue to fall, albeit at a slower rate than the terminal velocity speed that they fell at last year.

When the Government has finished its short term work, probably after the election, the true state of the economy will become manifest: taxes and interest rates will rise, profits and personal wealth will fall and the property market will continue its downward spiral.

I have no desire to see it happen, but that is the way it is likely to be. The only way to avoid it is a complete change in policy direction, which will see faster falls short term but an earlier sustained recovery in a year or so. Can anyone imagine GOrdon Brown choosing the latter?

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what upturn?

QE is going to banks.. not to circulation.

banks are still tightening.....business loans are base+5to7%

taxes are rising.

failures are rife

unemployment is rising

wages are falling

PS is broke

PM is going

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What we have already had has been the fastest fall in the property market to date, this is a pause before a slower rate continues.

House prices are now at their long term trend and need to decline another 15 percent to get where they usually go during crashes, then static for a few years until they are 30 percent below long term trend, when they look cheap again and HPI starts all over again.

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What we have already had has been the fastest fall in the property market to date, this is a pause before a slower rate continues.

House prices are now at their long term trend and need to decline another 15 percent to get where they usually go during crashes, then static for a few years until they are 30 percent below long term trend, when they look cheap again and HPI starts all over again.

Im sorry, 6 times salary is NOT the long term trend.

in 1961, my dad bought a place....he was on about £900. he bought a place... a semi detached house for £3000.

today, with the average wage at About 25K, that same house is £220K

long term trend.....dont make me laugh.

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This is no recovery.

What you're are witnessing it a moribund housing market. Both supply of houses and demand from those able to get a decent mortgage are dragging along the floor together. Halifax report a -1.7% drop last month and a +2.6% rise this month! What does that tell you? Erratic data due to such low volumes as have ever been seen. Real, lasting, sustained trends don't turn around as fast as that. If anyone trades stocks/shares, etc, they'll know about the need of volume to confirm whether a move up or down is valid. Often you'll see what looks like a trend change, but because it was on such low volume, wasn't in fact valid, and goes right back the way it came once volume opens up again.

This is a dead housing market, and nothing for the bulls to celebrate because there is nothing healthy about it. Simply low supply matching up to equally low demand.

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In the words of Saruman, "There will be no dawn for men."

I note that saruman is an anagram of Mr. A Anus

I know grammatically it should be an anus but well in todays society.............................

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what upturn?

QE is going to banks.. not to circulation.

banks are still tightening.....business loans are base+5to7%

taxes are rising.

failures are rife

unemployment is rising

wages are falling

PS is broke

PM is going

I agree with all your points but don't be surprised if the current monthly increases continue on and off throughout the Summer. I am not saying this represents any kind of recovery, indeed I am making the point that the trend is stil down!

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Im sorry, 6 times salary is NOT the long term trend.

in 1961, my dad bought a place....he was on about £900. he bought a place... a semi detached house for £3000.

today, with the average wage at About 25K, that same house is £220K

long term trend.....dont make me laugh.

You are seemingly making the mistake of relating average price with average salary. This is wrong as on average most people are not first time buyers with 90%+ mortgages. Hence the average price will never be 3 times the average salary. If you think it wil be, you may be waiting a long time. <_<

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Im sorry, 6 times salary is NOT the long term trend.

in 1961, my dad bought a place....he was on about £900. he bought a place... a semi detached house for £3000.

today, with the average wage at About 25K, that same house is £220K

long term trend.....dont make me laugh.

2nd that. Our Gran bought around then for £2600, going now for likely £450k. She was on £900 a year as a teacher.

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You are seemingly making the mistake of relating average price with average salary. This is wrong as on average most people are not first time buyers with 90%+ mortgages. Hence the average price will never be 3 times the average salary. If you think it wil be, you may be waiting a long time. <_<

But that is what it was after the last crash, so "never" is a pretty big assumption to make, since they were that only 14 years ago.

When the figures were calculated at that time, do you think that most people were FTBers on 90% then?

Or is it conceivable that they might be approximately the same back then as they are now?

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Im sorry, 6 times salary is NOT the long term trend.

in 1961, my dad bought a place....he was on about £900. he bought a place... a semi detached house for £3000.

today, with the average wage at About 25K, that same house is £220K

long term trend.....dont make me laugh.

I was referring to the long run average as shown on the graph on the home page of this website (derived from Nationwide data?).

You may note that I consider that house prices still have 15% further to fall and then will stagnate for three years until they are effectively 45% below trend in five years time.

However, I don't think that the average house price will get anywhere near £100,000.00, certainly not near anywhere people actually want to live.

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The bulls are out looking for bullfighters but nothing they say makes sense to a bear of little brain. If property prices are due to go up any time soon (current UPs by the lenders own admission are only blips due to low stock), then why :

1. Are lenders on the whole reluctant to lend more than 75% LTV and apparently are valuing 30% below peak , 40% for remortgages ?

Halifax, Britain’s biggest lender, has been accused of undervaluing customers’ properties when they come to remortgage, forcing them on to more expensive deals. Brokers have been alarmed to see the value of clients’ homes on Halifax’s online valuation system — which is pegged to its house-price index — slashed by tens of thousands of pounds in a matter of days. Brokers say borrowers may see as much as 40% wiped off the value of their homes, although prices have fallen by an average 21% from their August 2007 peak, according to Halifax’s own house-price index.

2. Why did Rightmove say the increases in ASKING price were "more bad news than good"?

Why does RM and Hometrack say things such as:

Some sellers are still pricing wishfully high, though it is encouraging that elements of the market have adapted relatively quickly to find a new price floor at a discount of around 25% from peak. "

"Until banks get their own houses in order, the active minority of sellers and agents who have drastically adjusted pricing will remain frustrated by the limited functioning of the financial services sector."

So, after its initial optimism the Rightmove index enforces the realisation that the UK property market recovery hinges on two things: vendor realism and mortgage availability. The latter more than likely hinged on a recovery to the wider UK economy, which in my opinion is also necessary to increase buyer numbers sufficiently to bring vendor realism

Richard Donnell, director of research for Hometrack, said: “Overall levels of market activity are well down on what would constitute normal market conditions. The willing purchasers that are returning are largely confined to the more wealthy areas of the country and limited to those buying with cash or who require low loan-to-value mortgages.â€

3 . Did the BOE and CML say "the green shoots have no roots"? And why do I keep reading about mortgage lending, now dependent on dwindling deposits , continuing to be limited? Even this week

CML economist Paul Samter commenting on this week's lending data from the Bank of England said :

"It looks almost inevitable that May approvals will be higher than a year ago for the first time since early 2007. However, activity remains at extremely low levels on any historic comparison – and weaker than at any point in the early 1990s. Limited lending capacity and the impact of further job losses are likely to act as a ceiling for how far the improvement can continue, although there could be further modest rises in the coming months."

4. Why did the BOE official warn Darling, Don't Try to Stop the Housing Crash :

A top Bank of England official today warned the Government against trying to prevent the housing crash.

In a controversial call, Markets Director Paul Fisher said it would be ‘dangerous’ for policymakers to try to stem the relentless slump in the value of property. In testimony to the Treasury Committee, Mr Fisher said: ‘I think the most important thing for the housing market is that prices should be allowed to adjust to a level at which people can afford to buy houses.’ .............

............In recent years potential buyers were unable to get onto the property market because ‘houses were just so expensive,’ he went on.

‘We have to allow the housing market to find a new level at which people can afford to enter it.’

Britain has seen one of the deepest property slumps of any advanced nation since the onset of the credit crunch.

I could go ON and ON and ON but the point is if anyone has a VI in the market going up it would be the lenders would it not if they thought it was possible yet they seem to be talking the market down even when it look like it is going up.

Nationwide & Halifax have said this week that the increases are down to lack of supply if the supply went up HPC would resume.

The survey of building societies said there was agreement on an average of at least 10% further falls this year.

FSA and Moody's would not be stress testing for 50 - 60% falls if they were expecting the market to bottom any time soon would they? :

Moody’s said it had changed its assumptions about UK house prices in the past few months. It also stress-tested the mutuals’ commercial loan portfolios, where it expects the performance to worsen during the next few years.

Marjan Riggi of Moody’s said: “What’s different is the loss expectation is higher than it was three or four months ago looking at the economic forecasts on housing.

“Last year we were looking at mortgage lenders and stress-testing a 25 per cent fall in house prices. In the past three or four months that assumption has changed to a 40 per cent fall, which is a considerable difference.â€

On Wednesday Adrian Coles, director-general of the Building Societies Association, said Moody’s had stress tested for 60 per cent fall in house prices,

All I seem to see is bear food.....but the path towards sustainable property values seems to be festooned with bullsh@@

Edited by Sybil13

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Britannia

Fresh in today Sybil.

Interesting. Not on their website yet.. best they have there ATM is 85% LTV at 6-7% +fees. I expect 90% weill be even higher.

Not a great deal to be honest.. might hook a couple of fish.

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