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Barnsey

Revisiting news articles from 07/08

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August 2007, bang.

Historically, we're "due" another recession. I know I know, it's different this time. But let's look back and remind ourselves of the build up and chaos of the last GFC, almost 10 years ago. What happens this time when rates can't be lowered? Prime London falling on record low 0.25% rates, weak GBP, student debt, massively overpriced stocks, BTL crackdown, stagnant wages, record personal debt (credit cards, cars), Brexit, Corbyn, Trump, China, Qatar, Italian Banks. Ideal time to buy?

Property market: Review of 2007

http://www.telegraph.co.uk/finance/property/investment/3360078/Property-market-Review-of-2007.html

Quote

January:
Year begins with a shock for homebuyers as Bank of England unexpectedly rises interest rates to 5.25 per cent. Council of Mortgage Lenders announces repossessions in 2006 hit 17,000, the highest for five years. But there is no stopping the party - for the moment. A dreary, three-bedroom bungalow on the Sandbanks peninsula in Dorset is put on the market for £1.6 million. The Nationwide predicts house prices will rise by 8 per cent in 2007. Savills says 7 per cent, Knight Frank 6, the Halifax 4 and the Royal Institution for Chartered Surveyors 3.

February:
In another high tide mark for the booming London market, the Candy brothers let slip that they want £84 million for each of the four penthouses at One Hyde Park, which will be equipped with bullet-proof windows. The Department for Communities and Local Government says the average house price in England has passed £200,000 for the first time. How do we all afford it? The Royal Bank of Scotland reveals it has relaxed its lending criteria and will consider offering 52-year mortgages to 18-year-olds. Northern Rock says it will lend 5.9 times a borrower's salary.

March:
The housing building industry is in bullish mood. George Wimpey and Taylor Woodrow merge, while Persimmon increases its dividend by 72 per cent. This time the Bank of England resists a predicted rise in interest rates.

April:
Rightmove says the renewed housing boom is spreading beyond London, with asking prices rising by 3.6 per cent in March alone. It is not such a good month for investors in Spain. Shares in construction companies plunge as the Bank of Spain says Spanish house prices are 35 per cent overvalued - which it blames on years of cheap credit following the introduction of the euro.

May:
Interest rates rise to 5.5 per cent, as the Royal Institution of Chartered Surveyors reports a robust market. In a sign that the housing market may have peaked, however, Jon Hunt sells his 97 per cent stake in Foxtons for £370 million. There is bad news for wannabe home inspectors: the Government delays the introduction of Home Information Packs, which had been planned for June 1. Four-bedroom houses will now have to have packs from August 1, and they will be phased in for smaller properties after that.

June:
Nationwide reports prices are up 1.1 per cent month on month and warns that interest rates may have to rise to 6 per cent to rein them in. A one-bedroom flat in London's Eaton Place goes on the market for £3 million. There is trouble in the sticks: the Commission for Rural Communities reports that house prices in rural areas are now 14 times local wages, prompting the Cornish National Liberation Army and the Popular Liberation Army for Westmorland to declare war on second-home owners.

July:
Interest rates rise to 5.75 per cent. The Bank of America says that UK house prices are 20 per cent over-valued and that there is a one-in-five chance of a "severe crash" in the housing market. Homebuyers are certainly not listening in Belfast: Northern Ireland house-price inflation reaches 50 per cent. There is growing evidence that the downturn in the US property market is evolving into a slump: Prince Bandar bin Sultan, the former Saudi ambassador in Washington, complains that he can't sell his 56,000 square foot mansion in Aspen, Colorado, which has been on the market for nine months at £67 million.

August:
The National Housing Federation warns that the average UK house price will reach £300,000 by 2012. Or will it? The global credit crunch strikes, leaving the UK housing market teetering. In the first half of the year, 14,000 homes were repossessed - 30 per cent up on the same period in 2006. One repossession, a flat in Ipswich, sells at auction for half of what it sold for new a year earlier, rekindling memories of the early 1990s property crash. Home Information Packs are finally introduced for four-bedroom properties, leading to a dearth of such homes coming on to the market.

September:
Never mind the risks to bricks and mortar, millions are left wondering whether even their bank and building society savings are safe: queues build up outside the Northern Rock as savers rush to get their money out following the announcement that the bank has had to seek an emergency loan from the Bank of England. The Bank of England holds its base rate steady, but mortgages go up anyway as the banks find it harder to borrow on the money markets. Things are worse in America, however: house sales slide by 21 per cent over a year and prices are down 7.5 per cent. Prime London prices are up 36 per cent in a year, according to Knight Frank.

October:
There couldn't be a clearer "sell" signal: the Blairs are caught house-hunting again. This time they view Winslow Hall, a £3 million, Grade I-listed Wren house near Chequers. The British Bankers Association reports that mortgage lending has fallen 27 per cent over the year. The Halifax says house prices are down by 0.5 per cent, but perversely the Nationwide reports a monthly rise of 1.1 per cent. Capital Economics says UK house prices will slide by 6 per cent in two years. Alistair Darling cuts capital gains tax on second homes and investment properties from 40 per cent to 18 per cent.

November:
RICS confirms that house prices are falling: 27 per cent more surveyors report a fall than a rise. Mortgage broker Charcol says there has been a 50 per cent rise in property purchases falling through. Russian oil tycoon Leonard Blavatnik is unconcerned by continuing bad news from the US: he buys a £75 million apartment in New York. Estate agents put on their usual rose-tinted spectacles and predict a healthy market in 2008. Savills tells the world prices will rise by 3 per cent. The stock market takes a different view: Savills shares have plunged by 58 per cent since the spring.

December:
The Bank of England responds to a chorus of bleating by consumers and businesses and lowers interest rates to 5.5 per cent. Many homebuyers are to be disappointed, however: many lenders decline to reduce their mortgage rates because they need the cash. The Halifax confirms that house prices have fallen for three months on the trot. Rightmove reports that asking prices fell by 3.2 per cent over the month, with a fall of 6.8 per cent in London. A third of this fall is attributed to a flurry of one- and two-bedroom properties coming on to the market in advance of Home Information Packs becoming compulsory for all properties. The credit crunch finally derails the buy-to-let bandwagon: Hamptons reports that the proportion of mortgages which are taken out by investors has plummeted from 44 per cent to 18 per cent over the course of the year.

Anyone got some juicy articles either from the mania or the aftermath of 07/08 they'd like to post to remind ourselves that maybe it isn't so different this time, or is it to be QE to infinity and beyond forever?

Edited by Barnsey

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I begin to think "this time is really different". Carney can always put the IR to -2%, print £200bn and force banks to distribute the money to home "owners"... what could possibly go wrong?

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