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TheCountOfNowhere

BBC R4: Are house prices about to crash.

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http://www.bbc.co.uk/programmes/p058gt99?intc_type=singletheme&intc_location=radio4&intc_campaign=radio4&intc_linkname=audioclip_fallinghouseprices_contentcard3

 

This us on the BBC news page tonight.

 

Dors anyone doubt the media/government/bankers are not expecting a collapse in prices and are preparing people for the bad news ?

Edited by TheCountOfNowhere

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39 minutes ago, TheCountOfNowhere said:

Does anyone doubt the media/government/bankers are not expecting a collapse in prices and are preparing people for the bad news ?

I can assure you that the government /bankers are not expecting a collapse (although both institutions are collections of individuals and do not think with a single brain). The media will print whatever it wants.

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9 hours ago, TheCountOfNowhere said:

http://www.bbc.co.uk/programmes/p058gt99?intc_type=singletheme&intc_location=radio4&intc_campaign=radio4&intc_linkname=audioclip_fallinghouseprices_contentcard3

 

This us on the BBC news page tonight.

 

Dors anyone doubt the media/government/bankers are not expecting a collapse in prices and are preparing people for the bad news ?

Ah so does he can assure us it's not coordinated not sure how ?

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9 hours ago, Ah-so said:

I can assure you that the government /bankers are not expecting a collapse (although both institutions are collections of individuals and do not think with a single brain). The media will print whatever it wants.

It certainly feels like there is a growing consensus amongst the well-connected that a crash will happen. What the intent of the news stories is, is not clear however: are they just honest reporting of that analysis, or is the communication being driven with the intent  of changing people's behaviour (either to allow us to make plans, or for some more manipulative reason)?

What I think is undeniable is that when (if) the crash happens, the powers that be will not be able to say "no one saw it coming". That is significant in itself, and opens them up to a lot more criticism compared to last time. The stories may be an attempt to deflect this by allowing the BoE to say "we tried to avert it", but it's a risky strategy, and I think the way blame will be allocated is going to be very different this time, compared to 2008.

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9 hours ago, Ah-so said:

I can assure you that the government /bankers are not expecting a collapse (although both institutions are collections of individuals and do not think with a single brain). The media will print whatever it wants.

An acquaintance recounted to me a meeting his brother in law (senior in housing firm) had had with various people who were either in finance or property, all millionaires at least, and discussing future if the property market. General consensus was that only plebs are buying now. No mention of crash explicitly, but talked of how the market seems strangely frozen and they weren't sure what would mark the tipping point. Implication being that we are very close. Third hand anecdote, obviously, but it rang true.

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9 hours ago, Ah-so said:

I can assure you that the government /bankers are not expecting a collapse (although both institutions are collections of individuals and do not think with a single brain). The media will print whatever it wants.

Put it another way then.

If those purely seeking profit out of the last two decades of speculative house buying are not out of the market by the time it starts snowballing and a real tangible drop is seen initially, and that will be a time where it will be impossible to sell, then they will have nobody to blame, they would have been given as much warning as was possible and choose to ignore.

I tell you why many won't though, because I am witnessing it from some numpties I know. If they percieve their profit at peak were £300,000, they feel robbed if it someone suggested it was nw £200,000, they will not take the Buddhist approach and say I still came out on top. It's laughable as they all want to come out on top on the peak, and in reality, and I am sure there is a formula for this, I bet less than 10% will, once that first say -5% fall is seen then that's it, no gimmicks will save the market this time.

I can even see a situation where these greedy speculative buyers become the exactly like the old HPC member if the worst happens and say my example looses his £300,000, they will be waiting a lifetime for thoses ame prices to return for his tragic little life to make sense again, now that would be ironic.

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17 minutes ago, Toast said:

It certainly feels like there is a growing consensus amongst the well-connected that a crash will happen. What the intent of the news stories is, is not clear however: are they just honest reporting of that analysis, or is the communication being driven with the intent  of changing people's behaviour (either to allow us to make plans, or for some more manipulative reason)?

What I think is undeniable is that when (if) the crash happens, the powers that be will not be able to say "no one saw it coming". That is significant in itself, and opens them up to a lot more criticism compared to last time. The stories may be an attempt to deflect this by allowing the BoE to say "we tried to avert it", but it's a risky strategy, and I think the way blame will be allocated is going to be very different this time, compared to 2008.

It's certainly an open secret in the construction industry that new build residential flats are not selling to anyone except institutional private rental sector businesses. Overseas investment has evaporated, cottage industry/amateur buy to let is a tiny fraction of what it was, and owner occupiers can't afford them.

There are a lot of deals going on behind closed doors to keep discounted sales off the land registry in order to keep share prices up. For example, each block in each development is set up as an individual company, a special purpose vehicle in order to set up a firewall between one development and the developers company as a whole. As an added bonus, the developer can now sell the SPV - a business which owns the flats - wholesale to an institutional investor at a discount. However because there is not transfer of title taking place, the entire transaction does not impact the headline prices of other flats in adjacent developments (which will also be in their own SPV's).

There are an increasing number of 'stamp duty paid' offers as well in the sub £1m market for owner occupiers.

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The ball has reached the top of its trajectory, and is more or less stationery.  It is highly unlikely to shoot up again, it is more likely to start falling - just how fast NO ONE knows.

The Media likes the subject as it is emotive, and they have space to fill.  To class the BBC other than trash is to do them a huge favour - I would not urinate on them if they were on fire.

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I like that analogy Wheatfield  and have used something like that myself because it is perfect.

I can visualise the peak on a cartoon pointy mountain high up, and there is a ball balanced perfectly on top with a slight wobble.

You just know  once it moves those first few stuborn inches and topples over and then it's to late Bong! Bong! Bong! to the bottom

Edited by Guest

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34 minutes ago, anonlymouse said:

There are a lot of deals going on behind closed doors to keep discounted sales off the land registry in order to keep share prices up. For example, each block in each development is set up as an individual company, a special purpose vehicle in order to set up a firewall between one development and the developers company as a whole. As an added bonus, the developer can now sell the SPV - a business which owns the flats - wholesale to an institutional investor at a discount. However because there is not transfer of title taking place, the entire transaction does not impact the headline prices of other flats in adjacent developments (which will also be in their own SPV's).

That is absolutely fascinating! If the purchaser and SPV were both publically listed companies, would there be enough information in the public domain to deduce (after some sleuthing) the effective mean sale price of the flats?

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11 hours ago, TheCountOfNowhere said:

http://www.bbc.co.uk/programmes/p058gt99?intc_type=singletheme&intc_location=radio4&intc_campaign=radio4&intc_linkname=audioclip_fallinghouseprices_contentcard3

 

This us on the BBC news page tonight.

 

Dors anyone doubt the media/government/bankers are not expecting a collapse in prices and are preparing people for the bad news ?

 

I suspect it's more the case that the public is being prepped for various 'extraordinary' economic measures .... to go on top of the existing 'extraordinary measures' which they have been employing for the best part of a decade now.

Seriously, since when do the mainstream media ever successfully predict economic crashes?

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25 minutes ago, Toast said:

That is absolutely fascinating! If the purchaser and SPV were both publically listed companies, would there be enough information in the public domain to deduce (after some sleuthing) the effective mean sale price of the flats?

The SPV will be a limited company and therefore have records available at companies house, but they will not be publicly traded companies i.e. the shares will be bought and traded privately.

I think you'd have to be an investigative journalist or forensic accountant or the like to really understand the process of how to track down the ultimate ownership. However the SPV's records ought to include at the very least abbreviated accounts which ought to give some kind of indication of the assets on the companies balance sheet.

As an example. here's the companies house listing for Tony Pidgeley, Director of Berkeley Homes, which shows how each development is set up as a separate enterprise:

 https://beta.companieshouse.gov.uk/officers/_v5GcjKZIJ3B2EfK_lEOEWQjxIs/appointments

 

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5 minutes ago, anonlymouse said:

The SPV will be a limited company and therefore have records available at companies house, but they will not be publicly traded companies i.e. the shares will be bought and traded privately.

I think you'd have to be an investigative journalist or forensic accountant or the like to really understand the process of how to track down the ultimate ownership. However the SPV's records ought to include at the very least abbreviated accounts which ought to give some kind of indication of the assets on the companies balance sheet.

As an example. here's the companies house listing for Tony Pidgeley, Director of Berkeley Homes, which shows how each development is set up as a separate enterprise:

 https://beta.companieshouse.gov.uk/officers/_v5GcjKZIJ3B2EfK_lEOEWQjxIs/appointments

 

I am either seeing no accounts filed as the companies are fairly new & accounts for a dormant company for the older ones. No info to extract,,,,,,,,,

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36 minutes ago, Toast said:

That is absolutely fascinating! If the purchaser and SPV were both publically listed companies, would there be enough information in the public domain to deduce (after some sleuthing) the effective mean sale price of the flats?

an SPV would not be a listed company and although the purchaser might be there be minimal disclosure in the group financial statements filed. However, if you know the  name of the SPV you can request copies of their accounts from companies house but do not expect it to be a 400 page doc detailing all and sundry. It would be the bare minimum disclosure.

Generally what happens is the price of the property is the purchase price of the SPV. However, there are adjustments to the final consideration since most companies are purchased on a cash free, debt free basis. Essentially adjustments are made for prepayments, accruals, debts etc.

An easier way if you really wanted to knock yourself out might be to look at the council tax bands on those new builds. 

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1 hour ago, LC1 said:

An acquaintance recounted to me a meeting his brother in law (senior in housing firm) had had with various people who were either in finance or property, all millionaires at least, and discussing future if the property market. General consensus was that only plebs are buying now. No mention of crash explicitly, but talked of how the market seems strangely frozen and they weren't sure what would mark the tipping point. Implication being that we are very close. Third hand anecdote, obviously, but it rang true.

If the BBC has that headline, you can be sure that the smart money has already left town. As you say, those still in the game might end up losing their shirts. 

As many forecast on HPC. The crash would be driven, primarily, by the ending of cheap lending and IR rises. Looks like both are happening now. 

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7 minutes ago, anonlymouse said:

The SPV will be a limited company and therefore have records available at companies house, but they will not be publicly traded companies i.e. the shares will be bought and traded privately.

I think you'd have to be an investigative journalist or forensic accountant or the like to really understand the process of how to track down the ultimate ownership. However the SPV's records ought to include at the very least abbreviated accounts which ought to give some kind of indication of the assets on the companies balance sheet.

As an example. here's the companies house listing for Tony Pidgeley, Director of Berkeley Homes, which shows how each development is set up as a separate enterprise:

 https://beta.companieshouse.gov.uk/officers/_v5GcjKZIJ3B2EfK_lEOEWQjxIs/appointments

 

This is extremely common and is not done as a way of hiding the purchase prices of the properties. It basically protects the parent building firm should a project go disastrously wrong. As it's a separate legal entity with limited liability it could, worst case, just walk away and put the Company into Voluntary Insolvency. 

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2 minutes ago, adarmo said:

This is extremely common and is not done as a way of hiding the purchase prices of the properties. It basically protects the parent building firm should a project go disastrously wrong. As it's a separate legal entity with limited liability it could, worst case, just walk away and put the Company into Voluntary Insolvency. 

I highlighted in my original post that their purpose is, as you say, to create a financial firewall between a development and the whole company.

However the existence of the SPV does give an alternative route for a transaction if an entire block is being purchased en masse. This is how many of the blocks at Nine Elms are being shifted and it is being done to obscure the collapse in the number of purchases from individuals.

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1 hour ago, wotsthat said:

I like that analogy Wheatfield  and have used something like that myself because it is perfect.

I can visualise the peak on a cartoon pointy mountain high up, and there is a ball balanced perfectly on top with a slight wobble.

You just know  once it moves those first few stuborn inches and topples over and then it's to late Bong! Bong! Bong! to the bottom

TOO late!   NOT "TO late" ffs...

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3 minutes ago, eric pebble said:

TOO late!   NOT "TO late" ffs...

Really? Of all the things on this thread to get het up about... :lol:

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59 minutes ago, Sour Mash said:

 

I suspect it's more the case that the public is being prepped for various 'extraordinary' economic measures .... to go on top of the existing 'extraordinary measures' which they have been employing for the best part of a decade now.

Seriously, since when do the mainstream media ever successfully predict economic crashes?

Actually RTE broadcast their famous show with Professor Morgan Kelly correctly predicting the massive fall in Ireland, and TV3 heard the same from Economists david McWilliams in the run up. The Irish Times also was printing the doom-laden predictions of Prof Kelly before the crash. Denial was everywhere even when these shows were being aired. 

If you want an eerie read, have a look through some of the Irish media quotes from the GFC Irish property crash.

I love the ones which try to bring the conversations back towards the theme of "positive thinking"(i.e. HPI forever).

http://quotesfromthebubble.blogspot.co.uk/2009/07/?m=1

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After the election result its clear those who feel left behind , can't afford to buy a home are now a growing section of society which now means should house prices fall its more likely to be seen as a positive thing rather than negative and thats why the gov can allow it to happen now. It will be fun in a situation of house price's falling to see Labour who campaigned on affordability then attack the government for houses becoming more affordable:blink:

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Similar anecdote to LC1 - a friend was speaking to the senior manager of one of London's largest estate agents last week. He didn't use the word 'crash' but said it was really bad in the London market. No sellers and no buyers. Reckoned some of his rival agencies had not sold a property in 12 months. The market was particularly bad for new-builds. Commercial and rental property were just about keeping his businesses ticking over.

What this says to me is that speculative investors are looking elsewhere as the London market has become too overpriced, too unpredictable (Brexit) and also perhaps faces a less benign political climate too (fancy having your investment requisitioned by Corbyn?). As for the media narrative, they are doing a good job scaring off prospective foreign buyers, but I think that it's also got to the point where is difficult to see how anyone can make any more money out of London property without a significant correction.

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27 minutes ago, Thorn said:

Actually RTE broadcast their famous show with Professor Morgan Kelly correctly predicting the massive fall in Ireland, and TV3 heard the same from Economists david McWilliams in the run up. The Irish Times also was printing the doom-laden predictions of Prof Kelly before the crash. Denial was everywhere even when these shows were being aired. 

If you want an eerie read, have a look through some of the Irish media quotes from the GFC Irish property crash.

I love the ones which try to bring the conversations back towards the theme of "positive thinking"(i.e. HPI forever).

http://quotesfromthebubble.blogspot.co.uk/2009/07/?m=1

Thanks for posting, my fav quote:

"No... I don't think any government can afford to let [a property market] crash happen. A levelling off is what we are seeing."

Strangely this is what many members of this forum are spouting at the moment, which I can understand to some extent.

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