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Realistbear

Panic Selling Grips Property Funds

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http://uk.biz.yahoo.com/23012006/323/panic...her-victim.html

Monday January 23, 06:56 PM
Panic-selling in German property fund sector claims further victim
FRANKFURT (AFP) - The snowballing crisis in the German open-ended property fund sector appears to have claimed another victim, with SEB Immobilien-Investment saying that one of its funds had also seen heavy withdrawals last week.
In response, the Bundesbank, the Finance Ministry and the financial sector watchdog BaFin issued a joint statement pleading for calm in the market following the high-profile closure of three such funds in recent weeks.

Germany is as good a place to begin the largest property crash in history? Unexpected, but not unpleasant news for a cold Monday evening.

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Guest muttley

http://uk.biz.yahoo.com/23012006/323/panic...her-victim.html

Monday January 23, 06:56 PM
Panic-selling in German property fund sector claims further victim
FRANKFURT (AFP) - The snowballing crisis in the German open-ended property fund sector appears to have claimed another victim, with SEB Immobilien-Investment saying that one of its funds had also seen heavy withdrawals last week.
In response, the Bundesbank, the Finance Ministry and the financial sector watchdog BaFin issued a joint statement pleading for calm in the market following the high-profile closure of three such funds in recent weeks.

Germany is as good a place to begin the largest property crash in history? Unexpected, but not unpleasant news for a cold Monday evening.

Has anyone told dogbox yet?

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IMO largely commercial property taking a substantial beating. Many buildings/offices could not be rented out over the last few years, and many properties are now being revalued. Not related to residential property.

I have mentioned this before once or twice. Can't find the other thread (it was a while ago).

http://www.housepricecrash.co.uk/forum/ind...showtopic=22680

...edited for spelling

Edited by Plastic Elastic

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You know what they say about buy at the bottom and sell at the top !

Wait till the £ takes a beating and then a little bit longer for UK house prices follow and then tell me about Germany being a bad place to park cash.

I know I would buy in Germany long before I buy anything in the UK

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http://uk.biz.yahoo.com/23012006/323/panic...her-victim.html

Monday January 23, 06:56 PM
Panic-selling in German property fund sector claims further victim
FRANKFURT (AFP) - The snowballing crisis in the German open-ended property fund sector appears to have claimed another victim, with SEB Immobilien-Investment saying that one of its funds had also seen heavy withdrawals last week.
In response, the Bundesbank, the Finance Ministry and the financial sector watchdog BaFin issued a joint statement pleading for calm in the market following the high-profile closure of three such funds in recent weeks.

Germany is as good a place to begin the largest property crash in history? Unexpected, but not unpleasant news for a cold Monday evening.

Here's another article that talks about this property fund problem in the larger context of minimally capitalized investments with higher risk being very illiquid in times of panic Liquidity Fire Trap?

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You know what they say about buy at the bottom and sell at the top !

Wait till the £ takes a beating and then a little bit longer for UK house prices follow and then tell me about Germany being a bad place to park cash.

I know I would buy in Germany long before I buy anything in the UK

Quite. This is the sort of story that marks an absolute bottom. Elsewhere the German economy is picking up. The DAX has been performing very well and business confidence stands at around a five and a half year high.

It seems like the place to be. :)

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Thats one big signal to buy in germany :) go dogbox :P Silly investors getting out too late just as the german economy is picking up...

Germany has had falling prices for many years now...

Edited by moosetea

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Thats one big signal to buy in germany :) go dogbox :P Silly investors getting out too late just as the german economy is picking up...

Germany has had falling prices for many years now...

They may be running to cash as the US economy looks shaky and when America catches a cold........

We are long overdue a recession as Al and Gordon delayed the last one with HPI--now HPI is over its time to account for all that spending on credit. The whole world will be affected.

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I'm sure Hitler said the same thing once and look where that got him? A cold damp bunker with some mingy old tart as company. No wonder he shot himself... B)

Wow Whoops you seem to have a real problem with our friend Justice....For the record i always find him an interesting read which ever forum you find him on...........and No i am not a racist but employ flexible thinking.....

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Germany is one of the worlds biggest manufacturers, a house is ultimately a manufactured good. Since the price of almost all other manufactured goods is fairly flat or falling why should the houses go up in price?

From what I understand even with the low prices of houses they've still been building a ton of houses in Germany.

I take the view that a house is a manufactured good, the price of manufactured goods is going to fall through the floor to about the cost of materials and energy used for construction.

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Germany is one of the worlds biggest manufacturers, a house is ultimately a manufactured good. Since the price of almost all other manufactured goods is fairly flat or falling why should the houses go up in price?

From what I understand even with the low prices of houses they've still been building a ton of houses in Germany.

I take the view that a house is a manufactured good, the price of manufactured goods is going to fall through the floor to about the cost of materials and energy used for construction.

You make a good point. However, (and this is the irony) all this house price inflation stuff isn't really about houses at all, it is about land. It is land that increases in value.

Take a UK property worth 500K. If it burnt down tomorrow, it would perhaps cost £150k to rebuild. I'm sure some builders may correct me on the figure, but the point is that over the last 10 years, the rebuild cost has not increased by anything like the cost of the plot it sits on.

Edited by Flash

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You make a good point. However, (and this is the irony) all this house price inflation stuff isn't really about houses at all, it is about land. It is land that increases in value.

Take a UK property worth 500K. If it burnt down tomorrow, it would perhaps cost £150k to rebuild. I'm sure some builders may correct me on the figure, but the point is that over the last 10 years, the rebuild cost has not increased by anything like the cost of the plot it sits on.

about 100k for a big house and everything inside it, a normal house costs about 60k

Talking to a uk builder i met in greece..

Edited by moosetea

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I take the view that a house is a manufactured good, the price of manufactured goods is going to fall through the floor to about the cost of materials and energy used for construction.

A view I hold but, unfortunately, in many countries other factors conspire against this.

We all know these factors and it seems to suit the economic structures of those countries that the irrationality attached to property should continue. Indeed one might argue that now, even more than in the past, this irrationality is essential to some economies.

One element you forgot was labour. Of course we have seen, in the UK, that whilst we are not yet getting Chinese workers in we can have lower cost labour from Eastern Europe so that cost can reduce too.

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You make a good point. However, (and this is the irony) all this house price inflation stuff isn't really about houses at all, it is about land. It is land that increases in value.

I realise people say that you can't make more land so land has to always increase in price, but that's simply not true. Over 90% of the land in this crowded country is not used for buildings now, the population has not increased by 100%+ in the last few years. It is trivially possible to create more useful land by adding floors to a building.

The area of land you need to use need only be as big as the largest room you want plus the space needed for stairs or a lift, even if you want a big garden it is possible to put it on the roof. For example the Empire State building sits on a 50,000 sq ft plot and has 2.5 million sq ft of usable land, I walked past it last month, it's actually pretty small at ground level.

The arguments for the high current prices and ever increasing prices have huge holes in them.

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In order for property prices to rise, people would have to start borrowing more money from banks to finance these purchases. It is after all this phenomenon which would account for a large part of the increases in house prices some people may be expecting, regardless of the economic cycle etc.

For this to happen banks would have to start lending more money, higher multiples etc, and people would have to want to borrow more money. Without this house prices would remain stagnant.

The last time German residential property prospects were discussed on this forum a poster mentioned that German banks are quite conservative, and also quoted reasons why this is likely to remain the case - possibly legal reasons restricting how much banks are allowed to lend. Can't recall exactly what was said.

Anyway, the point remains that just because Germany has sufferred a slow economy with flat HPI for years, it doesn't necessarily follow that HPI is about to rocket. Especially if banks are not about to change their lending criteria, or peoples attitudes to debt aren't about to change.

If anyone knows more about German banks lending policies, or the debt culture in Germany that would be useful.

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Germany is one of the worlds biggest manufacturers, a house is ultimately a manufactured good. Since the price of almost all other manufactured goods is fairly flat or falling why should the houses go up in price?

From what I understand even with the low prices of houses they've still been building a ton of houses in Germany.

I take the view that a house is a manufactured good, the price of manufactured goods is going to fall through the floor to about the cost of materials and energy used for construction.

Land is not a manufactured good. Apart from bits of Holland etc.

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Land is not a manufactured good. Apart from bits of Holland etc.

A good point.

One could argue though that the availability is "manufactured" by means we are all familiar with.

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The arguments for the high current prices and ever increasing prices have huge holes in them.

I completely agree, but that doesn't stop it happening. The high house prices are as a result too much credit chasing too little resource.

It is about greed and fear.

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Land is not a manufactured good. Apart from bits of Holland etc.

As I mentioned in a previous message land as in a usable area you can stand on and do stuff in is manufactured, if you aren't on the ground floor of your building you are using what is effectivly manufactured land.

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I completely agree, but that doesn't stop it happening. The high house prices are as a result too much credit chasing too little resource.

It is about greed and fear.

Land has been Mans first priority since collonising N West Europe.

People grouped into tribes and communities in order to deter outsiders from grabbing thier precious land, and that was when populations were tiny. The value they attatched to land was fundamental from the beginning.

I would argue land is far more valuable when compared to anything manufacteured by the mind of Man.

Our planet is a miniscule dot in the vastness of empty space, less than a grain of sand is to the Sahara.

Berlin prices fell by an average of 70% as a result of the chaos of re - unification and the huge new numbers of unemployed resulting from mass state industry closure.

Nothing lasts forever. The Germans are just as capable of enjoying a boom as the rest of Humanity.

Unlike us, the Germans actually manufacture stuff (worlds no. 1 . honestly), so imagine the proportions thier boom might reach given this solid base from which to proceed.

Edited by dogbox

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Unlike us, the Germans actually manufacture stuff (worlds no. 1 . honestly), so imagine the proportions thier boom might reach given this solid base from which to proceed.

The Japanese, Anericans and probably Chinese and Indians manufacture more.. The Germans are the biggest exporters :P

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Land has been Mans first priority since collonising N West Europe.

People grouped into tribes and communities in order to deter outsiders from grabbing thier precious land, and that was when populations were tiny. The value they attatched to land was fundamental from the beginning.

I would argue land is far more valuable when compared to anything manufacteured by the mind of Man.

Our planet is a miniscule dot in the vastness of empty space, less than a grain of sand is to the Sahara.

Berlin prices fell by an average of 70% as a result of the chaos of re - unification and the huge new numbers of unemployed resulting from mass state industry closure.

Nothing lasts forever. The Germans are just as capable of enjoying a boom as the rest of Humanity.

Unlike us, the Germans actually manufacture stuff (worlds no. 1 . honestly), so imagine the proportions thier boom might reach given this solid base from which to proceed.

While most would rather have a huge mortgage and a strip of "their precious land", I would rather have no land and a flipping great wedge in the bank. :)

I hope the Germans do turn it around. I think Europe would be much better for it.

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I realise people say that you can't make more land so land has to always increase in price, but that's simply not true.

Agreed.

The thing that makes land expensive is its proximity to industry (and therefore money).. In particular this is due to what I call Wulufs Property Axion I, which is

"The need for people to live within commute distance to where they work"

This drives property prices.

If this was no longer true then property prices around the globe would change significantly.. In the UK it would no doubt result in a downward move.

How do we break that Axion I.

1. Tele-working becoming more common

2. Star-Trek like transporter technology

3. Robotic avatar remote control.. (my own concept)

something else...

I know if I no longer had to to live in Europe to work in Europe I would leave tomorrow.. And probably many others.. :)

Edited by Wuluf

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As I mentioned in a previous message land as in a usable area you can stand on and do stuff in is manufactured, if you aren't on the ground floor of your building you are using what is effectively manufactured land.

I read those points but I don't accept them.

Transport and other infrastructure considerations limit practical or desirable population densities in cities and this is particularly true of land for residential use. Ironically those few places where it is possible to build really high rise buildings also have the highest land prices - not what you would expect if your postulation, that land can be created simply for the cost of additional floors on buildings, were correct.

Edited by BoredTrainBuilder

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(...)

The last time German residential property prospects were discussed on this forum a poster mentioned that German banks are quite conservative, and also quoted reasons why this is likely to remain the case - possibly legal reasons restricting how much banks are allowed to lend. Can't recall exactly what was said.

Anyway, the point remains that just because Germany has sufferred a slow economy with flat HPI for years, it doesn't necessarily follow that HPI is about to rocket. Especially if banks are not about to change their lending criteria, or peoples attitudes to debt aren't about to change.

If anyone knows more about German banks lending policies, or the debt culture in Germany that would be useful.

1) Banks have indeed legal restrictions on how much they can lend. I also think you need to put down a substantial deposit (i.e. 20%) before you can buy. Never heard of interest-only mortgages.

2) Debt is not as widely accepted as it is here. You get by without credit cards very easily. Making large purchases in cash is not uncommon (maybe not houses though but I paid in cash for three used cars).

3) Tenancy laws are much more regulated which provides security for landlords and tenants. Long leases (i.e. twenty years + x) are very common.

4) Mentality towards renting/owning is very much different from this country. This, and the above, might prevent many people from becoming short-term speculants on the housing market. Having said that, I don't think buying a house in Germany is necessarily a bad investment. I just wouldn't expect an impending boom.

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  • 301 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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