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The Masked Tulip

House Prices: Pausing For Breath Or The Start Of Something Big?

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Nice article Dominic.

http://moneyweek.com/money-morning-are-uk-house-prices-falling/

Rightmove only has data up to May. Statements from agents and surveyors suggest the slowdown may even have got worse over the summer. It’s also worth noting that, at the same time, there is more property for sale than there was a year ago – in some cases stock has doubled. Vendors are attracted by the high asking prices.

For completions to increase, either more money needs to come from somewhere – be it in the form of cash or credit – or prices need to fall.

Given that foreign buyers are down, and regulatory measures such as the Mortgage Market Review (MMR) have led to a tightening of lending, my instinct is to go with the latter. Already, agents are reporting that asking prices have fallen by 6-10%. There is an excellent thread on the forum housepricecrash.co.uk in which participants are monitoring falls in London asking prices on a daily basis. We’re seeing reductions every day. This is not a crash – not by any means – asking prices have fallen from the insane to the dotty, nothing more – but they are coming down.

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We have yet to see all the measures that the government can employ, being used. How about a full FMAC-style government underwriting of mortgages? Or tax relief on mortgage debt?

As long as the dumb masses can be induced into taking on debt with interest rates repressed, providing a base, investors can pump their funds into property knowing that it represents the best return on capital. Speculators can gear themselves up to make big profits.

Sooner or later it will collapse in spectacular style but that could well be a few years from now. What are people going to do with their savings in the meantime?

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We have yet to see all the measures that the government can employ, being used. How about a full FMAC-style government underwriting of mortgages? Or tax relief on mortgage debt?

As long as the dumb masses can be induced into taking on debt with interest rates repressed, providing a base, investors can pump their funds into property knowing that it represents the best return on capital. Speculators can gear themselves up to make big profits.

Sooner or later it will collapse in spectacular style but that could well be a few years from now. What are people going to do with their savings in the meantime?

Just do a Bovey. Any gains are protected.

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Savills chart looks very like formations in the approach to Black Monday on 19 October 1987 when there was dispute whether it meant there was going to be a rally or a reverse. The saucer/inverted saucer is a fairly standard pattern and can result in sudden big movements. I wouldn't be buying shares in Savills with that pattern.

In the event the 1987 market totally crashed - but who knows what will happen this time.

Maybe the house price market (and the general market) is waiting for policy "initiatives" that might be announced during the conference season in the next couple of weeks or so. That and the Scottish result of course.

Edited by billybong

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I'm speculating its a pause before the BTL pensioner craze comes in next year creating another double digit rise in London. Then, 6 months later it pauses again as we enter the start the down hill slide once again.

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Denninger seems dead set the US wont ratchet up QE again, Germany issuing negative rate bonds.

All looking very condusive to stifling further asset inflation.

The pensioner thing is worrying...however perhaps bail-ins will thwart it :ph34r:

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Having a quick look over at the MSE forum I was suprised (not sure why) how many people are asking BTL advice and looking to pump there money into property.

Its quite interesting, you'll get a new thread started with 'I have X amount of money and want to invest in a BLT' as its seen as a much safer bet than other investments.

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Having a quick look over at the MSE forum I was suprised (not sure why) how many people are asking BTL advice and looking to pump there money into property.

Its quite interesting, you'll get a new thread started with 'I have X amount of money and want to invest in a BLT' as its seen as a much safer bet than other investments.

More lambs to the Slaughter.

Its one way of releasing their equity from them.

If prices start going south they may be frightened off before they jump into it.

Edited by awaytogo

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Its quite interesting, you'll get a new thread started with 'I have X amount of money and want to invest in a BLT' as its seen as a much safer bet than other investments.

Only for a day or so at most. After that the lettuce goes all limp and you'll have a bugger of a time finding anyone to take it off your hands at any price.

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I'm speculating its a pause before the BTL pensioner craze comes in next year creating another double digit rise in London. Then, 6 months later it pauses again as we enter the start the down hill slide once again.

I think you have it right sadly.

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I'm speculating its a pause before the BTL pensioner craze comes in next year creating another double digit rise in London. Then, 6 months later it pauses again as we enter the start the down hill slide once again.

Why would they invest in London where there is no yield? They need an income in retirement.

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I follow a couple of postcodes in the Midlands to keep my eye in.

In the last few months,whilst inventory hasn't risen much and is flattish over two years,the amount of houses not under offer on RM has hit highs I haven't seen before.

eg normally circa supply of 1100,normally not under offer and available is 800 or so.For the first time since I've been tracking it,last week it went over 900.

This is urban,rural postcodes seem more stable.

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I follow a couple of postcodes in the Midlands to keep my eye in.

In the last few months,whilst inventory hasn't risen much and is flattish over two years,the amount of houses not under offer on RM has hit highs I haven't seen before.

eg normally circa supply of 1100,normally not under offer and available is 800 or so.For the first time since I've been tracking it,last week it went over 900.

This is urban,rural postcodes seem more stable.

Around northampton it's all falling apart. Loads of sales falling through, loads of price drops, stuff that's been on the market and not foiund a buyer before April is not dropping their price ( not more buyers i'm afraid ).

The london effect is starting to ripple out if you ask me.

If you dont believe me, just look on rightmnove/property bee.

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I follow a couple of postcodes in the Midlands to keep my eye in.

In the last few months,whilst inventory hasn't risen much and is flattish over two years,the amount of houses not under offer on RM has hit highs I haven't seen before.

eg normally circa supply of 1100,normally not under offer and available is 800 or so.For the first time since I've been tracking it,last week it went over 900.

This is urban,rural postcodes seem more stable.

I'm in the North and also seeing a lot of SSTC. One property in particular had been on the market for over a year, no prices changes and had not not gone SSTC before until now. I think this must be the very finger tips of the "ripple" from London.

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I'm in the North and also seeing a lot of SSTC. One property in particular had been on the market for over a year, no prices changes and had not not gone SSTC before until now. I think this must be the very finger tips of the "ripple" from London.

Actually, just check - 18 months of nothing then SSTC.

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'Desposits' and 'tightenting'.

Not a lot to go on with their numbers, but I'm under no doubt there is tightening behind the scenes, as property mad ('at any price, not earning anything in bank so therefore money is irrelevant and would be seized in a hpc anyway, forever hpi growing population') take buying action.

"I've worked through three property recessions," Mr Pryor said. "You can usually only see one in your rearview mirror but this feels very familiar. Prices are determined by availability of credit. This is going to get tighter."

http://www.telegraph.co.uk/finance/economics/11103959/Mortgage-lending-slows-is-this-the-tipping-point-for-the-UK-housing-market.html

Edited by Venger

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