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BuyingBear

Our Bear In The Beeb

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I was listening to Wake up to Money on 5Live this morning and they interviewed a spokesman from Rightmove given the latest batch of "good news", and finally an journo that sees the wider picture!

The presenter, Andrew Verity, admitted he is a STR'er and bear, he pointed out that basic two bedroom 'apartments' are out of reach of even those on decent wages in all parts of the country, he also ripped into the notion of the property ladder and how it's essentially broken.

Have a listen - 25 minutes into the programme.

Here's a transcript of the interview :-

BBC: You don't expect estate agents to talk down the market, you represent estate agents, but how much can we read into these monthly figures?

RM: Well they've reached record levels but more interestingly it's the stock of properties that has fallen for the sixth consecutive month, time on the market has dropped back sharply as well and we've seen all regions of the country rise, these are quite unusual circumstances this early in the year.

BBC: What about the level of transactions; one of the noticeable things about the housing market last year was that it had the lowest level of transactions for I think 30 years, which is incredibly slow, is that picking up?

RM: Yes... back end of last year we did see a pick up in transactions, - very slow start to the year and that continuation of activity has carried through to January as well.

BBC: So is it still tough out there, basically?

RM: You've still got to price competitively, but first time buyers are coming back they've probably realised that buying if you can get a deposit together is actually cheaper than renting, parental help coming in, more flexible mortgage products as well.

BBC: Parental help coming in!? That's interesting but I do look at the prices, I mean I'm looking at London but all over the country really you're talking about £250,000-£300,000 grand for a two bed flat often in a pretty poor area; that's not something someone even on a good salary can afford so do you think the parental factor is coming in here a lot?

RM: Definitely, obviously they've seen their prices rise over the last five years so they can afford to release some of that equity.

BBC: So they're tapping their own equity on their house in order to help their kids afford the properties.

RM: That's right but the bottom end is also helped by downsizing divorcees, - high divorce rate, and they're obviously fairly well off from their own properties as well.

BBC: But is all of this sustainable, I mean first time buyers are coming in but they've not only got to mortgage themselves up to their hilt but borrow off mom and dad... that doesn't seem sustainable to me.

RM: Well a lot of them are going for fixed rates, 76% of people went for fixed rates in the last quarter so they're insulating themselves against future rate rises.

BBC: Miles, I'm a bit of a bear about this, I actually sold my place and I'm renting now in the hope that the market will come down and I will able to afford somewhere large enough to house a family, a lot of people are in the position now... don't you think we should stop talking about house price rises as good news, because they're actually very bad news for a lot of people aren't they?

RM: Particularly for first time buyers but a lot of them have been looking at prices, they have been stable, but once prices start to rise and rise faster than you can save, then that is the time to get on the housing ladder.

BBC: It's not just first time buyers is it? It's anyone whose next move in the housing market is up; because if the place you're buying is going to be more expensive than the place you're selling then the price rise is bad for you; you lose out from it.

RM: That's right, you only cash in at the final end!

BBC: Ok, but I suppose if the transactions are picking up at least the warnings about estate agents going to the wall are going to start to fade away are they?

RM: Yep, they're having quite a good time at the moment, so stocks of sell... sold properties on their books are improving.

BBC: Ok, January is always good for the property market but how much of this is seasonal factors do you think?

RM: You always have a degree of optimism this time of year, so let’s see if it runs out of steam. But the underlying factors are there; stable interest rates, relatively high employment and gently rising prices... I don't think we can go back to a boom scenario because prices are at record levels.

BBC: Miles Shipside from Rightmove thanks very much for that.

Well done to Andrew Verity for asking some original questions and pointing out some basic truths on the BBC for once, very refreshing.

Edited by BuyingBear

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I wrote to the bbc to ask why they were not using the rightmove reports when their reports were showing falls and they replyed "They do not consider rightmove to be a realistic representation of reporting".

Now they use it when rightmove are blatently trying to top the headlines prior to their floatation.

Seems suspicious to me.

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Vested interest Verses Vested interest. I like it :)

"it's the stock of properties that has fallen for the sixth consecutive month, time on the market has dropped back sharply as well and we've seen all regions of the country rise, these are quite unusual circumstances this early in the year."

*People taking their properties off the market in the hope of spring bounce.

_____________________________________________________________

"You've still got to price competitively"

*Yes, yes its a buyers market. So no more slapping on ridiculous increases now.

_____________________________________________________________

" Well a lot of them are going for fixed rates, 76% of people went for fixed rates in the last quarter so they're insulating themselves against future rate rises."

*So people generally know rates are going to rise then..... Thats going to hit houseprices to come down.

_____________________________________________________________

That's right but the bottom end is also helped by downsizing

*So the top is a lot of forced sellers then! TIMBER!

_____________________________________________________________

I don't think we can go back to a boom scenario because prices are at record levels

*So prices are going to break new records year after year? The higher we go, the more absurdly unstainable the beast becomes.

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"Anyone buying now is betting on the continuation of:

+ Ultra-lose lending,

+ Investors continuing to be enthusiastic buyers of low-yielding properties,

+ FTBers will to mortgage their futures and tap their parents"

The odds of their success is low. They'll need something very obscure for this to be sustainable for medium term - like another 9/11 terroist attack, or something out of the blue like a meteor or global diaster to rock the long term trends.

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"it's the stock of properties that has fallen for the sixth consecutive month"

Very strange.

In the 20 mile radius of my postcode, the number of available properties on RM has risen from 38,900 mid-November 2005 to 42,800 yesterday.

The mean average asking price has also fallen £3,500 in that time, and there have been 7,500 reductions in asking price.

None of these reductions in asking price are accounted for in RightMove's figures. This hardly reflects current trends does it?

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Well I've actually emailed Five Live commending them and Andrew Verity!

Even though I spend a fair ammount of time bashing the BBC I'm quite prepared to praise them when they actually pull thier fingers out and do some real journalism instead of reprinting EA/BS press releases. Positive reinforcement I think it's called :)

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One thing about this that I'm a bit puzzled about.

We're told we have £3.4bn of housing which has £967m of outstanding mortgage debt - so £2.4bn of "free" equity (numbers are from the Independent, and I'm just quoting them, not commenting!).

BUT, if lots of people are borrowing from their parents, then there is a huge under-recording of debt. The only mortgage debt that will appear officially will be that from official lenders. So say the parents MEW £40k and lend it to their kids. Kids then use this as a deposit. £40k appears in the official figures, but the nominal amount of debt created is £80k (two £40k debts).

The effect is to increase the buying power of the kids which props up prices thereby supporting that £3.4bn figure. The outstanding secured mortgage debt goes up by £40k. So everything looks good on the surface but underneath...

That £40k allows the bank to lend more money via the multiplier on the back of the increased value of their loan book. The £40k that goes to the house seller is recycled back into the economy with a further multiplier effect. So in the short-term the economy keeps on booming. But of course the parents are paying off that £40k as the kids don't have the money, while the kids are probably hocked to the eyeballs to pay the mortgage they have taken on. So reduced spending power all round in the future. Either that or the parents are cannibalising their equity when the hosue is eventually sold.

If this is correct then this parental loan stuff is a kind of "double whammy" that will increase the pain when it all goes wrong - and if the amount lent by parentst o their kids is statistically significant this coudl be a further distorting factor "on the upside", as we say.

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Ok, which one of you is Andrew Verity? :P

Yes, he is clearly a HPC aficionado. Well done that man. Hopefully this will be seen as a landmark moment in the reporting of the housing market.

It also shows how deep everyone's vested interest runs - it took an STR journo to ask the appropriate questions. What chance is there of the other 95% of journos who are mortgaged to the hilt or deep in BTL doo-doo asking these questions? Zilch.

I'm pretty sure ShitShape was caught off guard by that little confrontation. The media seem to have a little game with housing industry VIs whereby they appear in the media on the understanding that no questions are asked, and that the media bows down to their superior inside knowledge.

I would imagine that Andrew Verity's card is now marked...... <_<

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I would imagine that Andrew Verity's card is now marked...... <_<

Well make sure you let the BBC know what you thought of his performance, we need to support the journalists out there who actually have a brain and are capable of free thought.

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One thing about this that I'm a bit puzzled about.

We're told we have £3.4bn of housing which has £967m of outstanding mortgage debt - so £2.4bn of "free" equity (numbers are from the Independent, and I'm just quoting them, not commenting!).

Sorry to be a pedant but these figures need to be increased by a factor of a thousand. (!!!)

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mental.... I thought this was the guy from last night at about 1 in the mornin.... he was hitting an estate agent with a barage of questions along the same lines....

Two bears on the beeb in 12 hrs? Unbelievable

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surely if the only way to get on the ladder is to borrow from your parents then we are effectively at the japanese point of a few years ago of cross generation mortgages, this of course was just before it all crashed there.

what about people that dont have rich parents, or most likely parents that wont take out a second mortgage to help there kids on the housing ladder.

how come we seem to be the only people to find this way of buying a first house completely insane and un-sustainable.?

its the kind of situation that says if you dont start out with family wealth, then you will never ever obtain wealth, in which case the capitalist system is surely broken and we have a system of inheritantace wealth and lending power carrying the market.

it also means that many people that should have gained wealth in this bubble infact have just increased debt, by taking out loans to help there kids.They have gained nothing, and there kids have had to suffer the indignity of begging money from parents that in every argument will remind them who helped them buy a house.

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"That's right, you only cash in at the final end!"

Hmmmm - unless you're an estate agent of course - they seem to have been cashing in all the way through this ridiculously overinflated 'boom'....

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BBC: Parental help coming in!? That's interesting but I do look at the prices, I mean I'm looking at London but all over the country really you're talking about £250,000-£300,000 grand for a two bed flat often in a pretty poor area; that's not something someone even on a good salary can afford so do you think the parental factor is coming in here a lot?

RM: Definitely, obviously they've seen their prices rise over the last five years so they can afford to release some of that equity.

So let's go over that one more time: House prices are going up because people can generate the money from their parents' houses. And their parents houses are generating money for them because house prices are going up. Hang on.......

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I wrote to the bbc to ask why they were not using the rightmove reports when their reports were showing falls and they replyed "They do not consider rightmove to be a realistic representation of reporting".

Now they use it when rightmove are blatently trying to top the headlines prior to their floatation.

Seems suspicious to me.

Why not write to complain again and ask them why if they refused to report Rightmove before, why is it now reported as their top story under their business pages and have they changed their reporting policy?

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Going back to the Bank of Mum and Dad, it would be useful to know the proportion of parents using MEW to help out their kids (as opposed to those digging deep into their own pockets). Are those that MEW able to declare such a deed as a gift for the purposes of reducing inheritance tax later on in life or can this be achieved only with their own (for want of a better phrase) "cleared funds"?

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Ok, which one of you is Andrew Verity? :P

He could well be one of us. If he's an STR and done his homework, he must have at least visited as a guest.

We come from all over, from various backgrounds, professions and echelons of society - all thrown together in a sort of hyperspace version of Fight Club.

Seriously though, I'm sure the site is visited by a few Journo types. Not least because it is the best place to read the news about the property market "as it breaks".

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I'm sure the site is visited by a few Journo types.

This site is visited by an awful lot of journalists - most, like us, thoroughly cross at not being able to afford a home

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So the UK housing market is dependent upon parents re-mortgaging to get their kids a home and people divorcing - what a 'profession'!?

It's known as the cannibalization phase, first it destroys the hopes of an entire generation now the market needs to ruin millions of marriages in order to sustain itself, insidious little beast isn't it?

In the real world, the level of divorces has remained static for 25 years.

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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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