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"distressed Property Sales To Rise" - R I C S

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http://uk.finance.yahoo.com/news/distressed-property-sales-to-rise-on-bank-reform-reuters_molt-687c4f92e549.html?x=0

Distressed property sales to rise on bank reform
8:27, Thursday 5 August 2010
LONDON (
Reuters
) - More distressed property sales are expected in the next 12 months as changes to international regulations will likely raise the capital cost of holding commercial property on banks' balance sheets, an industry body said.
Growth in distressed property listings eased slightly in the second quarter of this year, but are
expected to worsen
in the third quarter, the UK Royal Institution of Chartered Surveyors (RICS) said on Thursday, based on the results of a survey of its members.
RICS defines distressed properties as those with foreclosure orders or which are advertised for sale by their mortgagee, and which tend to fetch lower prices than their market value.
Three European countries -- Portugal, Spain and Germany -- were worse off in the second quarter, reporting distress in their market had risen at a faster pace than in Q1.
"Despite the 'supposedly successful' European bank stress tests, worries over the health of the European banking system will continue to linger, propelling banks to manage down their problem loan books," RICS senior economist Oliver Gilmartin said in the report.

Surely if we are in recovery mode there will be less distress? Perhaps we are not in recovery mode? :blink:

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http://uk.finance.yahoo.com/news/distressed-property-sales-to-rise-on-bank-reform-reuters_molt-687c4f92e549.html?x=0

Distressed property sales to rise on bank reform
8:27, Thursday 5 August 2010
LONDON (
Reuters
) - More distressed property sales are expected in the next 12 months as changes to international regulations will likely raise the capital cost of holding commercial property on banks' balance sheets, an industry body said.
Growth in distressed property listings eased slightly in the second quarter of this year, but are
expected to worsen
in the third quarter, the UK Royal Institution of Chartered Surveyors (RICS) said on Thursday, based on the results of a survey of its members.
RICS defines distressed properties as those with foreclosure orders or which are advertised for sale by their mortgagee, and which tend to fetch lower prices than their market value.
Three European countries -- Portugal, Spain and Germany -- were worse off in the second quarter, reporting distress in their market had risen at a faster pace than in Q1.
"Despite the 'supposedly successful' European bank stress tests, worries over the health of the European banking system will continue to linger, propelling banks to manage down their problem loan books," RICS senior economist Oliver Gilmartin said in the report.

Surely if we are in recovery mode there will be less distress? Perhaps we are not in recovery mode? :blink:

It's referring to commercial property.

Edited by Dr Renter

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It's referring to commercial property.

Right.

If businesses are failing jobs are going to be lost and houses are going to be distressed as a result.

A wise old EA in the US once told me that the best barometer for a HPC is commercial property.

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It's referring to commercial property.

RB is making a subtle point here.

If commercial property becomes increasingly distressed, the banks are forced to foreclose and take losses on the loans. It was losses on property loans that led to the Credit Crunch of 2007 which in turn led to the Financial Crisis of 2008 and the economic problems we've been suffering since.

Remember banks these days package up and sell debt on in the form of Mortgage Backed Securities (Commerical Mortgaged Backed Securities in this case) which are traded right throughout the worldwide banking system. When these CMBSs have been sold as high grade debt but turn out to be toxic the whole system is jeopardised because nobody knows which bank owns what assets on their balance sheets, hence lending comes to a grinding stop and the money markets seize up. Nobody can borrow, hence no mortages for homes, hence a strong probability of a house price crash.

Loans on property are among the biggest any bank can make, so when they go wrong en-masse just sit back and enjoy the fireworks.

Edited by Dave Spart

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I know my first distressed seller, or soon to be distressed anyway. Has had his house up for sale for several months, couple of price drops but has just lost his job in the DWP. A victim of the fable job cuts! So he now says he has to sell FAST! But can't afford to drop the price anymore. Somethings going to give.

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I know my first distressed seller, or soon to be distressed anyway. Has had his house up for sale for several months, couple of price drops but has just lost his job in the DWP. A victim of the fable job cuts! So he now says he has to sell FAST! But can't afford to drop the price anymore. Somethings going to give.

She canna take any more Captain. She's going to blow!

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I did an IT contract several years ago for a water utility company whose senior execs saw themselves as a property company first and foremost - how nuts is that.

They were busy buying up land all across the UK & Eire and had begun venturing into Europe. They would build an office or a shopping mall on it and then sell it on. Money for old rope it transpired.

I often wonder if they got away with it or whether the company is now in huge debt. I shall have to look them up online and see. The problem is that the boys and girls doing this in the early part of the decade probably got large bonuses on top of their salaries and then a pay-off to go I suspect.

What I mean is, win win for the people involved in the bubble but lose lose for the share-holders, customers and the banks that lent them the money... and probably the tax-payer also.

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I did an IT contract several years ago for a water utility company whose senior execs saw themselves as a property company first and foremost - how nuts is that.

They were busy buying up land all across the UK & Eire and had begun venturing into Europe. They would build an office or a shopping mall on it and then sell it on. Money for old rope it transpired.

I often wonder if they got away with it or whether the company is now in huge debt. I shall have to look them up online and see. The problem is that the boys and girls doing this in the early part of the decade probably got large bonuses on top of their salaries and then a pay-off to go I suspect.

What I mean is, win win for the people involved in the bubble but lose lose for the share-holders, customers and the banks that lent them the money... and probably the tax-payer also.

At the peak of the recent mania Porsche saw themselves as a derivatives trading operation with a car company bolted on the side. <_<

Edited by Dave Spart

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I did an IT contract several years ago for a water utility company whose senior execs saw themselves as a property company first and foremost - how nuts is that.

I read a while back Ferrari made more money on the stockmarket than selling it's cars :blink:

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I know my first distressed seller, or soon to be distressed anyway. Has had his house up for sale for several months, couple of price drops but has just lost his job in the DWP. A victim of the fable job cuts! So he now says he has to sell FAST! But can't afford to drop the price anymore. Somethings going to give.

I wonder just how many people are going to end up in this very same boat. Need to sell but do not have enough equity to be able to sell at the true market price. I also wonder what the government will do to help these 'hard working families.'

There is a shitstorm coming that much I do know...

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Right.

If businesses are failing jobs are going to be lost and houses are going to be distressed as a result.

A wise old EA in the US once told me that the best barometer for a HPC is commercial property.

Around the time of the last crash I worked with a certain firm who had a large property wing. Our property VP said exactly the same thing and indeed that's what we saw play out. Good call RB.

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I did an IT contract several years ago for a water utility company whose senior execs saw themselves as a property company first and foremost - how nuts is that.

They were busy buying up land all across the UK & Eire and had begun venturing into Europe. They would build an office or a shopping mall on it and then sell it on. Money for old rope it transpired.

I often wonder if they got away with it or whether the company is now in huge debt. I shall have to look them up online and see. The problem is that the boys and girls doing this in the early part of the decade probably got large bonuses on top of their salaries and then a pay-off to go I suspect.

What I mean is, win win for the people involved in the bubble but lose lose for the share-holders, customers and the banks that lent them the money... and probably the tax-payer also.

Also the Tchniguez chap tried to take over Sainsburys, simply because he viewed Sainsburys as a property company. They own the stores so he could have flogged them off and then Sainsburys pay rent to the new owers.

Thank god all this kinda off malarky has stopped for now.

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Also the Tchniguez chap tried to take over Sainsburys, simply because he viewed Sainsburys as a property company. They own the stores so he could have flogged them off and then Sainsburys pay rent to the new owers.

Thank god all this kinda off malarky has stopped for now.

It's classic asset bubble stuff..

There was a period of time (2002-2005) where the monthly increase in the price of my house was greater than my take home pay. So from a balance sheet point of view I was a 'property investor' who did a bit of software development on the side.

Which is fine as long as you treat real estate price increases as fairy gold.

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  • 259 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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