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Realistbear

Telegraph: Houses Still Very Seriously Overvalued

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http://portal.telegraph.co.uk/money/main.j.../ixcitytop.html

The British economy is still being threatened by
over-valued house prices and energy costs
, despite having successfully battled through the toughest year in a decade, the International Monetary Fund has warned.
"The
slowdown in real GDP growth
and the rise in inflation were sharper than in other G7 countries, presenting a dilemma for monetary policy," it added.
The economy grew by 1.8pc last year but while Mr Brown continued to borrow to fund spending, he raised North Sea oil taxes, helping balance his Budget.
But despite no longer urging the Chancellor to raise taxes, the IMF indicated that the closely watched "golden rule" had
lost some of its credibility
after the Treasury changed the dates of the economic cycle on which the rule is judged.
The warning will cause added concern to analysts, since households have become even more dependent on their homes as a store of value in past months, with evidence that they are
transferring billions of pounds of credit-card debts on to their mortgages
.

SUMMARY:

1. UK Housing is overpriced.

2. UK no longer has GDP growth to support the most expensive houses in the world (P/E-wise).

3. Brown has used his last "lifeline" and will not be able to move the goalposts a second time to cover up cracks in his "miracle economy."

4. Transferring billions of pounds of debt onto home mortgages is not a good reason for those same houses to rise in value.

There is nothing left to underpin the overpriced state of UK housing. It has one way to go: to correct to the level where prices ARE sustainable. The reason why crashes occur in cycles.

Edited by Realistbear

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How can someone lose some of their credibility?

Good question. One conjuring trick like Brown pulled and its all gone. The true miracle is that the sheeple believed in Gordon's "wealth from borrowing" policies. Its a good thing the IMF don't believe it.

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1. UK Housing is overpriced.

Buyers disagree.

Everything is now selling like hotcakes here (herts).

No one I talk to mentions affordability.

Flats (non newbuild) are selling for 10% more than 2 years ago.

This is a classic capital growth spurt period. Ive always maintained that capital growth comes in defined spurts rather than a steady trickle.

Spurt - tastic ;)

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Buyers disagree.

Everything is now selling like hotcakes here (herts).

No one I talk to mentions affordability.

Flats (non newbuild) are selling for 10% more than 2 years ago.

This is a classic capital growth spurt period. Ive always maintained that capital growth comes in defined spurts rather than a steady trickle.

Spurt - tastic ;)

Sadly, for sellers nothing is happening around here (Stratford-West Midlands). Tons of "new prices" in today's property rag. New Builds offering instant savings of 5% without haggling plus indemnity for stamp duty and legal fees. Flats down about 15% from last year and detached about 10% down and sticking on the market for months. A few Sold STC signs appearing but nothing actually moving. Sellers listing quite a few "No chain" properties which may indicate a BTL bail-out, emigration or a wanna-be STR (too late now).

According to the BBC website property drops picked up to around 2% last quarter which is a healthy rise from the annual drop of only .4%. Momentum is moving in the right direction at least!:

http://news.bbc.co.uk/1/shared/spl/hi/in_d...s/html/44ue.stm

Stratford-On-Avon

Average Cost: £258,172

Detached: £358,070

Semi-detached: £228,162

Terraced: £190,975

Flat: £149,176

Change in last quarter: -2.0%

Change in last year: -0.4%

Sales: 544

Herts shows the steepest decline in the last Q in relation to annual increase which suggests your area is having the sharpest downward correction:

http://news.bbc.co.uk/1/shared/spl/hi/in_d...s/html/26ud.stm

Hertfordshire

Average Cost: £264,109

Detached: £448,591

Semi-detached: £261,487

Terraced: £204,954

Flat: £161,117

Change in last quarter: -1.1%

Change in last year: 5.1%

Sales: 803

If you look at the list of cities in Herts you will see some very sharp declines in the last quarter making the idea that prices are going up this month somewhat suspect:

ST Albans: down 0.9%

Three Rivers: down 2%

Hertsmere: down 5.4%

Dacorum: down 6.2%

Surprised Herts is booming given declining employment and severe affordability issues and general pessimism in the market??

Edited by Realistbear

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Surprised Herts is booming given affordability issues and general pessimism in the market?? Maybe Herts is alone as being the one area that would not come under the IMF warning?

The South East and London were first to slow 2 - 3 years ago. No surprise this new period of capital growth has begun here.

IMF are a bunch of muppet economists and academics. The biggest lesson Ive learned in my life is to more or less discount most expert opinion. Even a recent brush with the NHS revealed most Doctors (an example of experts) really havent a clue and fail to spot the big picture.

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Guest Charlie The Tramp
The warning will cause added concern to analysts, since households have become even more dependent on their homes as a store of value in past months, with evidence that they are transferring billions of pounds of credit-card debts on to their mortgages.

Leaving less disposable income to pump into consumerism adding to the downturn in retail with its knock on effects.

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Where does it say house prices are SERIOUSLY overvalued (as indicated in your headline)

The IMF said that despite the recent slowdown in property inflation, "house prices are likely still overvalued".

Doesn't read as 'seriously overvalued' to me...

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Where does it say house prices are SERIOUSLY overvalued (as indicated in your headline)

Doesn't read as 'seriously overvalued' to me...

"as indicated in your headline" is correct.

As we have discussed on this site a few times, bears will see things differently to bulls and one person's view of what is "serious" may differ from the next. IMHO (oops, forgot to preface my post with this disclaimer!) the situation is serious, in fact, "very serious" would have been more accurate. Things can't get much more desparate than it is with debt paying off debt. In fact, "extremely serious" should have been used--I will try to amend.

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"as indicated in your headline" is correct.

As we have discussed on this site a few times, bears will see things differently to bulls and one person's view of what is "serious" may differ from the next. IMHO (oops, forgot to preface my post with this disclaimer!) the situation is serious, in fact, "very serious" would have been more accurate. Things can't get much more desparate than it is with debt paying off debt. In fact, "extremely serious" should have been used--I will try to amend.

I don't have a problem with you having an opinion. Just remove "Telegraph:" from 'your' headline.

Otherwise it implies that the headline the opinion of the Telegraph rather than yourself.

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I don't have a problem with you having an opinion. Just remove "Telegraph:" from 'your' headline.

Otherwise it implies that the headline the opinion of the Telegraph rather than yourself.

It is comment on the Telegraph article. Had I used quotes then I could see your point.

More helpful to readers on this site would be any counter arguments to the substance of what the IMF had to say and the Telegraph's interpretation.

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The true miracle is that the sheeple believed in Gordon's "wealth from borrowing" policies. [Realistbear]

Alas, not just the sheeple...

'Sir Menzies is hungry for power' by Bill Rodgers:

http://www.telegraph.co.uk/opinion/main.jh...3/03/do0302.xml

Gordon Brown has been a remarkable Chancellor of the Exchequer and he deserves an innings at Number 10.

[...snip...]

  • Lord Rodgers of Quarry Bank was leader of the Lib Dems in the Lords, 1998-2000.

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The South East and London were first to slow 2 - 3 years ago. No surprise this new period of capital growth has begun here.

IMF are a bunch of muppet economists and academics. The biggest lesson Ive learned in my life is to more or less discount most expert opinion. Even a recent brush with the NHS revealed most Doctors (an example of experts) really havent a clue and fail to spot the big picture.

Did they miss your acute case of verbal diarrhoea? :lol:

"as indicated in your headline" is correct.

As we have discussed on this site a few times, bears will see things differently to bulls and one person's view of what is "serious" may differ from the next. IMHO (oops, forgot to preface my post with this disclaimer!) the situation is serious, in fact, "very serious" would have been more accurate. Things can't get much more desparate than it is with debt paying off debt. In fact, "extremely serious" should have been used--I will try to amend.

Realistbear - as much as I appreciate the hard work you put in to bring us the latest news and analysis, I do find your spin a little counter-productive. We bears now have to fight through the bulls spin and yours to get to the heart of a story! :ph34r:

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Did they miss your acute case of verbal diarrhoea? :lol:

Realistbear - as much as I appreciate the hard work you put in to bring us the latest news and analysis, I do find your spin a little counter-productive. We bears now have to fight through the bulls spin and yours to get to the heart of a story! :ph34r:

The "heart of the story" is also a matter of opinion. The problem is with semantics. Every opinion is "spin" as we all come to issues from a different perspective. One person's overstatement may be another's understatement.

My "spin" was to say that the IMF were looking at the UK problems as "very" serious. "Very" really has no meaning other than to act as emphasis much as underlining or italicizing would do. If I had said IMF were "not" taking the situation seriously then that would be outright spin as the original meaning is completey lost.

The only way you are going to get spinless information is by gathering it yourself and leaning unto your own understanding as to what the data means--but then you may fall into self-deception by believing what you want to hear. In other words, news is perhaps the most highly subjective data there is. In the great Bears vs. Bulls battle each side is going to accuse the other of "spin" or misrepresentation of facts through exaggeration, ommission etc. But what are you going to do? Even the great man himself, Mervyn E. King, said that house prices are just opinion (unlike debt which is real) and opinions vary like the weather--snow brings a winterwonderland or its brings winter misery depending on perspective.

Edited by Realistbear

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Affordability

: 6.2 Australia..

: 6.0 Ireland....

: 5.9 New Zealand

: 5.5 U.K. ......

: 4.6 U.S. ......

: 3.6 Canada.....

"We are only two turns of the credit screw away from a Crash:

The first will put HP inflation into reverse, and the second will be a more severe credit tightening, which will be a reaction to all the problems thrown up by the first. When the tightening is done, BTL loans will be back down to a maximum of 60-70%, and a price slide will be well underway."

NUFF SAID

Affordability in some "local" markets in the US are as high as 11. My former hometown of San Diego is already seeing a sharp downturn which was inevitable with the median price of a home at 11 times average income. I find it hard to believe the UK is as low as 5.5 but then the figures are probably including existing OO's who have either no mortgage or the remains of an old one that is being paid off. The ones who will suffer most in the next crash will be BTLs and people who bought into the cycle late. IMHO nearly all the VI stats we have been seeing are wildly optimistic with the LR figure perhaps being the only reliable guide.

Edited by Realistbear

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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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