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Freki

Market's wind is picking up

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Soft signal, but a good one:

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The number of home valuations being requested by homeowners has risen by 26% this spring despite the uncertainty in the market created by Brexit and tomorrow’s General Election.

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Calls from landlords requesting valuations also cranked up, rising by 13%, reflecting recent ARLA Propertymark figures which revealed that a third more buy-to-let properties were being sold by landlords per member branch.

https://thenegotiator.co.uk/more-people-asking-for-home-valuations/

I hope this will cheer some people up after the slightly disappointing Halifax index

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More valuations is like "putting the sails out"

For the wind to pick up there needs to be better completion numbers.

 

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8 hours ago, Odin said:

More valuations is like "putting the sails out"

For the wind to pick up there needs to be better completion numbers.

The problem is that BTLers, possibly without realising, created the market price for the kind of properties that FTBs might have bought in the distant past. Now they, and their lenders, have effectively priced their properties beyond the borrowing and affordability of FTBs. 

Safe lending can't support the market and those completion number won't increase till the valuations reflect that fact.

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It cant go on and therefore it wont go on, its just a question of when.

If I could predict the start of the HPC I wouldn't still be working at 52 YOA.

That said, with all of the uncertainty not only in the UK but the ROW, it cant be too long now.

This election result has taken a very difficult task (the most important political process in this country's post war history) and made it dam near impossible.

Those at the head of many large corporations who control billions of dollars and make generational strategic decisions will soon decide that UK is one above a Banana republic and decide to weigh anchor.

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1 hour ago, Roman Roady said:

It cant go on and therefore it wont go on, its just a question of when.

If I could predict the start of the HPC I wouldn't still be working at 52 YOA.

That said, with all of the uncertainty not only in the UK but the ROW, it cant be too long now.

This election result has taken a very difficult task (the most important political process in this country's post war history) and made it dam near impossible.

Those at the head of many large corporations who control billions of dollars and make generational strategic decisions will soon decide that UK is one above a Banana republic and decide to weigh anchor.

Traders were already treating sterling like an emerging market currency even before this week's events, so profound is the scale of the economic crisis that envelopes the UK.

One above the status of banana republic, as you say.

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“The pound is the purest expression of investors' fears about political risk in developed markets,” Nicholas Spiro, partner at London-based Lauressa Advisory, a London-based macro consultancy firm, wrote in a note to clients on Monday. “While the Mexican peso — the most liquid emerging market currency and the most reliable gauge of 'Trump risk' — has given sterling a run for its money this year, it's the pound that has become a proxy for politically-driven volatility in markets.”

While developed-country government bonds typically benefit from safe-haven buying during bouts of market nerves, the dynamic is now in reverse, with the pound and government bonds falling in tandem, and the UK 10-year note yielding 0.98 percent compared with 0.52 percent in mid-August. While global bond markets have sold off this month, amid expectations of tighter monetary policies, UK yields have outpaced rises in the US and euro-area countries.

The correlation between the pound and two-year gilt yields — which move inversely to prices — is at the lowest in a decade.

Gilt market underperformance, combined with the pound sell-off, suggests that UK markets aren't enjoying the benefits that accrue from the pound's reserve-currency status, says Jordan Rochester, FX strategist at Nomura Holdings Plc.

“Since reserve-currency countries enjoy investor confidence and there's a lack of a liquidity premium, FX markets look to buy government bonds when yields rise. But the sell-off in UK rates markets, leading to a weaker currency, is reminiscent of the dynamic in emerging-market countries,” he says. 

An “upward shift in inflation expectations,” driven by the falling pound, combined with “big long-term fiscal questions” posed by the UK's future outside the EU, justify the synchronized sell-off in currency and rates markets, says Daiwa's Scicluna.

Given rising price pressures and jittery foreign-investor sentiment amid a current-account deficit that widened to a two-and-a-half-year high in the second-quarter at 5.9 percent of GDP, the Bank of England's limited room to cut rates this year “is another indication of the UK's emerging-market style” macroeconomic challenges, Scicluna concludes.

http://www.independent.co.uk/news/business/news/pound-sterling-behaves-like-emerging-market-currency-traders-mexican-peso-a7356231.html

 

Edited by zugzwang

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4 hours ago, Blod said:

The problem is that BTLers, possibly without realising, created the market price for the kind of properties that FTBs might have bought in the distant past. Now they, and their lenders, have effectively priced their properties beyond the borrowing and affordability of FTBs. 

Safe lending can't support the market and those completion number won't increase till the valuations reflect that fact.

Indeed - the issue is that there won't be much happening transaction wise while the period of price discovery is on going

Edited by koala_bear

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6 hours ago, Blod said:

The problem is that BTLers, possibly without realising, created the market price for the kind of properties that FTBs might have bought in the distant past. Now they, and their lenders, have effectively priced their properties beyond the borrowing and affordability of FTBs. 

Safe lending can't support the market and those completion number won't increase till the valuations reflect that fact.

Yep. It either ends with a crash now or it ends with a political revolt by the priced-out and a crash later. 

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