Don't Let The Spin Get You Down

[crash 2005]

This has to be one of the worst VI spin days so far this year

ITV and BBC reporting that house prices are turning a corner and even hinting a rise,

AS FACT!!

This has been based on a single month report from a desperate institution called RICS, who if don't see a rise in property transactions will all be praying for their jobs

so if you were in there position wouldn't you talk the market up in order to stoke up interest and ultimately keep your job.

trouble is we have

1. rising inflation.

2. huge personal debt

3. Government with 11bN black hole

4. future tax rises looming

5. High streets on there knees

6. Unemployment rising

7. New Car sales falling

8. Energy Prices rising

9. FTB cannot afford to buy

10. A very shakey Stock Market.

I'm sure i've forgotten several,

What's on the upside?

CAN'T THINK OF ANYTHING SURPRISINGLY ENOUGH.

BUT I'M SURE YOU'LL ALL AGREE THE RICS REPORT JUST DOES'NT SOUND PLAUSABLE AT ALL

Houses are only worth what people are willing to pay/borrow, has'nt the past 12-18 months just proved that, what has changed?, if anything banks and building societies are getting tougher in order to protect themselves from bad debts.

Edited October 18, 2005 by crash 2005

[dog]

People are just getting more and more stretched. I believe that the longer they keep things aloft, the faster the crash when it comes.

[pdg]

good post, needs to be said to remind us and it is all absolutely true.

funny thing emotions - hearing this VI news and the spin this morning made me despair but it is all bullsh*t. The problem is the bullsh*t prolongs the change in mass sentiment which is what irritates especially when pressing personal concerns mean you just want the whole thing to collapse in on itself with a nice neat bow on top

[2005]

People are not that daft...this desperate VI sping could backfire on them as the public realise they are being fed a line and lose confidence in what they are being told.

Look at the phone in....didn;t hear too many people saying they agreed with this or that it was good news, or that they had made any money....just people saying that what they were seeing was the opposite...can't sell, can't get on the property ladder, fear for next generation etc.

You can tell people whatever you want but when they walk round their own streets, or can't sell their own homes, or hear similar stories at work and in the pub they will stop listening to the hype.

[Guest Riser]

This has to be one of the worst VI spin days so far this year

ITV and BBC reporting that house prices are turning a corner and even hinting a rise,

AS FACT!!

They are just p*ssing in the wind the market has turned the SELL signal is clear as day for those prepared to look

SELL signal for housing

[munimula]

People are just getting more and more stretched. I believe that the longer they keep things aloft, the faster the crash when it comes.

MEWing is still running at 4.2% of GDP (£8.7bn) and house prices aren't going up. That's some serious stretching still going on.

[Lord Lucan]

"This has to be one of the worst VI spin days so far this year"

Totally agree...best policy is to forget VI reports and use INDEPENDENT SOURCES and more importantly your eyes and ears.

For example just been out to a shopping centre in a South Coast Town.

Observations:

1. Many more TO LET boards up for long periods no takers...nice properties as well as student dives.

2. FOR SALE signs up for months SSTC or Sale agreed up for months also

3. Store chains closing down...number of shop units empty

4. New shops opening up - the poundland variety

5. Pawnbroker fully stocked and v busy - just spoke to him.

6. Number of renovation jobs being left unfinished

7. The number of people of working age just hanging about - not talking students

8. Number of cars - some decent for sale privately - seen any new ones?

Other observations.

1. A long time ago I subscribed to a business buy sell website and expressed interest on a number of sectors. Over the last two months there has been an explosion in both manufacturing and service sector businesses approaching direct for sale - some now priced at asset value.

2. Overheard a builder yesterday - living hand to mouth - ready to throw in the towel. Seems his job will remain unfinished too.

So beware the VI's they went overboard last time 89/91. Be aware of what's going on around you - it may save you a few quid.

Edited October 18, 2005 by Lord Lucan

[DTMark]

On the same day there's another thread about how the market is apparently emerging from 18 months in the wilderness and is set to grow now. This despite VIs talking the market up consistently during that time.

Thus, in one go, the lies and half truths of the past 18 months are immediately exposed.

So why believe - or even pay much attention to - the next set of lies, or at best, optimistic guesswork barely supported by the facts?

[undersupply]

good post, needs to be said to remind us and it is all absolutely true.

funny thing emotions - hearing this VI news and the spin this morning made me despair but it is all bullsh*t. The problem is the bullsh*t prolongs the change in mass sentiment which is what irritates especially when pressing personal concerns mean you just want the whole thing to collapse in on itself with a nice neat bow on top

The only VI's are on this site.

Youre saying Halifax, Nationwide, Rightmove, and now RICS are all lying to mess your crash up?

[AntiSpeculator]

The only VI's are on this site.

Youre saying Halifax, Nationwide, Rightmove, and now RICS are all lying to mess your crash up?

Simply put. Yes.

It is well established folklore that estate agents are liars but people have somewhat forgotten this in recent times. People are going to start remembering more and more why they got this reputation in the first place.

Countrywide group - the largest estate agent group in the country admitted to shareholders that profits were down 90% year on year in the first half of 2005 because the market was so slow. That was a massive blow to their profits and an indication of distress in the market.

I remember this time well. I visited a lot of estate agents (including one owned by countrywide that is now set for closure due to dismal results - 33 offices to be closed) and all of them told me that "the market had slowed a little but recently had picked up and things looked good for the future" or words to that effect.

Why should we suddenly believe them now?

Edited October 18, 2005 by AntiSpeculator

[Flash]

Good post Crash 2005.

My guess is that the spin will keep average Joe feeling that all is well up to Xmas. After that, the retailers will begin with store closures and unemployment will jump. The media's capacity to spin into that will near impossible.

5. Pawnbroker fully stocked and v busy - just spoke to him.

Spot on. London listed pawnbroker Albermarle and Bond has been trading very strongly. Check out the chart

(I'm not a holder so this isn't a ramp)

ABM

[Losing Faith]

This has to be one of the worst VI spin days so far this year

ITV and BBC reporting that house prices are turning a corner and even hinting a rise,

AS FACT!!

This has been based on a single month report from a desperate institution called RICS, who if don't see a rise in property transactions will all be praying for their jobs

so if you were in there position wouldn't you talk the market up in order to stoke up interest and ultimately keep your job.

trouble is we have

1. rising inflation.

2. huge personal debt

3. Government with 11bN black hole

4. future tax rises looming

5. High streets on there knees

6. Unemployment rising

7. New Car sales falling

8. Energy Prices rising

9. FTB cannot afford to buy

10. A very shakey Stock Market.

I'm sure i've forgotten several,

What's on the upside?

CAN'T THINK OF ANYTHING SURPRISINGLY ENOUGH.

BUT I'M SURE YOU'LL ALL AGREE THE RICS REPORT JUST DOES'NT SOUND PLAUSABLE AT ALL

Houses are only worth what people are willing to pay/borrow, has'nt the past 12-18 months just proved that, what has changed?, if anything banks and building societies are getting tougher in order to protect themselves from bad debts.

and don't forget that the new pope didn't do anything to help either

[back to the old house]

House prices have continued to rise unabated in this area (North West) throughout the alleged price falls of the last 14 to 18 months. In fact haven’t the price falls been falls in the amount of increase as opposed to actual decrease? I’m sure that I will be put right on that if I’m incorrect – and even if I’m not!

Inflation has risen by less than the expected amount.

Major firms’ profits are down but they are still making a profit, not a loss, so panic will not ensue.

The £11billion black hole in the economy is little in comparison to the nations total finances and will have very little, if any, noticeable affect. Consider that the rate of overpayment of benefits is £3billion per year and overall we fork out over £100 billion just to welfare state recipients.

Christmas shopping is likely to bring a small amount of relief to the high street.

There has been a change in the line up of the MPC (http://news.bbc.co.uk/1/hi/business/4352022.stm) that is likely to reduce the chances of interest rate rises in the near future.

The jobless total rose slightly in the last reported figures but the jobs market remains buoyant. In fact I personally know of many work colleagues who are taking voluntary severance packages safe in the knowledge that they will get a job when they leave.

Unless interest rates rise significantly – i.e. up to about 7% to 8% - and there is a huge increase in unemployment then I can’t see a fall in house prices. Until then people will adjust to small increases, tightening their belts accordingly and not worry about having to sell the house as a result of job loss and accompanying debt.

[jellybean]

You dont think it could be a transient effect of the interest rate cut then? Where I live, a village in the Scottish Borders about 20m from Edinburgh, work has been stopped for the last month or so on the 20 or so Luxury Villas (housing scheme to you and me) they were building because they cant sell them. A pattern repeated in several Border towns.

[Guest Riser]

House prices have continued to rise unabated in this area (North West) throughout the alleged price falls of the last 14 to 18 months. In fact haven’t the price falls been falls in the amount of increase as opposed to actual decrease? I’m sure that I will be put right on that if I’m incorrect – and even if I’m not!

Inflation has risen by less than the expected amount.................

Unless interest rates rise significantly – i.e. up to about 7% to 8% - and there is a huge increase in unemployment then I can’t see a fall in house prices. Until then people will adjust to small increases, tightening their belts accordingly and not worry about having to sell the house as a result of job loss and accompanying debt.

Prices in the Northe West are 55% above the long term regional average,they will be going negative HPI soon, this crash, unlike the last one is going to hit the region hard.

NorthWest going negative soon so expect 40% falls in 2 years

[Guest]

Riser: Number of posts: 3, Number of posts: 2

AWWOO......Excuse me folks, phone's ringing...

Edited October 18, 2005 by megaflop

[DTMark]

I've posted on various occasions about the market in Blackpool. If I trawl back through to the first one regarding properties on the market for a year, then updated later - same properties on the market 18 months - then fast forward to now:

Those same properties are still all for sale. Except two: One sold. The other was withdrawn.

I'm aware of only 3 sales in this immediate area in the last couple of years. This immediate area hardly represents the whole of the North West. But the idea that prices are rising in Blackpool is laughable.

Round here the latest round of price cuts are going on now. Prices really are dropping and almost nothing ever sells.

I keep meaning to find the time to post a stack of real examples, like the private ad for the flat next to the airport (lovely) still trying to get 209k, when others are 129k (down from around 149k last year) or the Barratt new build ads with discounts and offers you'd never have seen last year: as long as you complete within a month - they're not interested in people stuck in chains.

Or the new build flats 249k off plan which won't even sell for 169k now, not surprising since that buys you a 3 or 4 bed house, though this particular phenomenon seems to be nationwide as people realise they are just.... er, flats. Try 115k. If you really thought a flat in Blackpool with a view of only the local Blockbuster video shop was ever worth anywhere approaching 249k, you'd be one of the mugs who fuelled this in the first place and you've lost half your "investment".

Or the development in Poulton of new flats cut from 179k to 129k. And so it goes on.

In Blackpool a reasonable 3 bed semi for 115k will sell. That's about the limit of sale activity. An exceptional 3 bed semi might fetch more eventually: a really nice one on the market for two years (really) was cut from 195 to 157 and lo and behold it's now sold stc, it might even complete. But it takes a long, long time.

Some of the prices are just risible. The owners of these need do no more than imagine "If I were the buyer, and I had this much to spend, what could I buy" and have a look at Rightmove to find out why they're not getting any viewings.

The owners of the 3 bed places on at 249k (2004's price) might see that the reason they're not selling is because excellent 4 bed places can be had for 199k. Even though they rarely sell.

The owners of 4 bed places on at say 279k could find out at a stroke that their neighbours are asking 225k for the same thing. And they're not going anywhere either. They cut their price and ... nothing. Still not the right price level yet. Try 195k perhaps.

It's a bit like the morning after the night before, nobody seems quite sure what has happened. 10k off here, 20k there, 50k there (really) and it just isn't making the slightest bit of difference unless either the property is the cheapest in its particular category or is absolutely exceptional - and then, still reasonably priced - it won't sell.

In this respect prices are fairly irrelevant if nothing is actually selling. You could also argue that they were overpriced to start with, but then you'd be arguing that virtually everything was overpriced to start with. And you'd probably be right.

It's hardly rocket science: the 3 bed semi owner is waiting to get 185k so he can move into the 4 bed detached on at 249k. He just can't find a buyer, as the 2 bed terrace owner might hope to get 90k and that's a huge jump. If he cuts to 115k, he's "lost" 70k. If he tells his vendor he's taking 70k off the offer, it falls through and back to square one.

I guess that eventually the right "price level" will be found. But asking prices are most definitely not going up in Blackpool - must be other parts of the North West tipping it and Blackpool is an exception here. Or perhaps the stats are a little bit out.

[back to the old house]

Thanks for your reply. It is particularly Blackpool that I have been looking at (but also Kirkham and St. Annes - forget Lytham of course!). It is asking prices that appear to continually be on the up, I've got no evidence on selling prices. Vendors expectations, obviously encouraged by EAs and the media, are still way too high. Semis that would have been up at £140k 6 months ago now appear to be pushing the £200k mark -in Blackpol for goodness sake! (for the sake of people unfamiliar with the town there are very few decent areas to live, it has no decent shopping area unlike places such as its near neighbour Preston, it has no 'major' employers (except the relatively low-paid civil service) and being a sea-side town has attracted a number of un-desirable potential neighbours (I've lived next door to some of the worst!).

I agree that some properties are lingering on the market. A small number I noticed last Christmas are still on the market but the asking prices haven't moved much, obviously overpriced. I hope that there will be a visible drop in prices but as with my view on ghosts and aliens, I will not believe it until I see it.

Again, interest rates and unemployment are at very low-levels and only a 3% rise in mortage rates is likely to change matters.

[Prude]

Again, interest rates and unemployment are at very low-levels and only a 3% rise in mortage rates is likely to change matters.

Where do you get this 3% figure from? This would equate to a rise of 70% or so in peoples mortgage interest payements over current base rate. Surely a much smaller increase than this would make life very difficult for many already overstretched budgets. Imagine the impact on the current very shakey market of say three 0.25% rises. TIMBER!

[sign_of_the_times]

In fact I personally know of many work colleagues who are taking voluntary severance packages safe in the knowledge that they will get a job when they leave.

crikey, how safe is your job ?