Northern Ireland

[Belfast Boy]

I do not need to take advise for you, given your recently toiling on the brink with Messr Moody et al. Warned you's all before. tut tut

Woot? Not me m8. You have confused me with someone else

[md23040]

Woot? Not me m8. You have confused me with someone else

Sorry. It was a funny episode though. Btw CBW wasn't banned by it. Haven't heard from him on the posts?? That is Crash Bang??

Edited January 10, 2008 by md23040

[Belfast Boy]

MD23040 - One last question... did you actually answer any of my questions?

Yes or no will suffice

[md23040]

MD23040 - One last question... did you actually answer any of my questions? Yes or no will suffice

Straight answers on the internet are dangerous. It's best to be like a politician and talk out of both sides of the mouth. But in this case - Yes

Edited January 10, 2008 by md23040

[azogar]

Sorry. It was a funny episode though. Btw CBW wasn't banned by it. Haven't heard from him on the posts?? That is Crash Bang??

I was also wondering where CBW was this weather?

[talksalot81]

It seems to me that country wide, those pushing for IR cuts are those with the greatest VIs. The issue of inflation is most often a secondary concern for them because, without the cut, their business (or interest in general) will suffer to the point that inflation will be neither here nor there. They then try and justify a cut and basically confuse the life out of a regular person so that there is no way they can appreciate the larger scale effect.

It seems to me that IR cuts will lead to a weakening pound. Raise the rate and inflation comes down. Cut and it increases (or at least that is the case in the present economic environment - assuming you consider real as opposed to fictional (CPI) inflation). Increase inflation and you effectively increase the number of 'pounds' floating around the system. If everyone else keeps their money supply the same, we have more pounds per amount of another currency. It thus seems to follow that the pound becomes devalued as a result. Furthermore, imports (of which we have a great many) are priced in the other currency, so the reciprocal relationship holds. Decrease IRs and the cost of imports increases and thus we now have a double dose of inflation.

There does not appear to be anything all the contentious about that!

So, as I see it, cutting IRs is a short term fix. It may very well save businesses and be of good to the normal individual because he/she will keep her job. But on the back of this, the cost of living will increase due to inflation and that means every last one of us suffers as opposed to a minority who would have lost jobs had rates not been cut. Further down the line, people will start to have trouble living, businesses will not be able to afford to increase pay else they again run out of money. People will then look elsewhere (abroad) where they will get paid more (as a simple mathematical consequence of the pound inflating more than the abroad currency). Thus the businesses will start to lose the best people and become less competitive resulting in the need to either increase pay or lose a competitive edge and go under.

If we left rates to control inflation, then yes, we will lose some companies. But that, IMO, is evolution. Survival of the fittest. For a few years it is tough and there will be unemployment. But at the end of it, we have a bunch of companies which are stronger, streamlined and more efficient who have survived and have not had to live through all those inflationary woes.

In conclusion, cutting seems to be along the same lines as 'nobody is allowed to fail'. All it really achieves is that the very best cannot shine and those whose talents lie elsewhere end up under the illusion that they are capable. So I believe the short conclusion to be: Short term gain, long term pain or Short term pain, long term gain.

Edit: I noticed a bad metaphor earlier... the phrase is 'par for the course', it is a golfing metaphor. 'Power' is wrong.

Edited January 11, 2008 by talksalot81

[azogar]

Interest Rate Reaction: Housing sector furious at rate hold decision

http://www.citywire.co.uk/News/NewsArticle...ersionID=100057

The housing sector has reacted with dismay to the Bank of England’s Monetary Policy Committee (MPC) decision to hold interest rates at 5.5%.

Many analysts had been factoring in a 0.25% fall but fears over rising inflation numbers appears to have held sway over the weakening economic backdrop.

Chief executive of finance specialist to UK house builders Wolsey Mike Ratcliffe attacked the MPC for ignoring the weakening consumer back drop.

He said: ‘The decision is a clear sign that the MPC is not sufficiently in touch with the realities affecting UK consumers. While last month’s cut was a step in the right direction, failing to follow this up with a further cut will inflict pain on consumers and businesses and does not provide us with a positive outlook for 2008. ‘

He added: ‘The danger is that this apathy will increase the chances of the country talking itself into a recession.

David Newnes, managing director of Your Move estate agents accused the MPC of ‘fiddling while Rome burns’.

He said: The MPC should have cut rates. The economy is still reeling from the credit crunch. The property market is suffering severely - transactions have fallen and house prices are stagnating. We need resolute action - not dithering.

‘The Bank of England should be acting decisively to reinstate confidence across the wider economy. The property market, consumer confidence, and the wider economy are suffering while the MPC vacillates.’

The decision was made despite growing evidence of an economic downturn, highlighted yesterday by Marks & Spencer’s worse than expected Christmas trading and the British Retail Consortium’s (BRC) figures highlighting the worst Christmas trading on the High Street for three years.

BRC chairman Kevin Hawkins and Marks & Spencer chief executive Sir Stuart Rose had both called for a 0.5% cut in rates to stimulate consumer spending but fears over rising inflation appears to have won the day.

Despite the rate hold, ABN Amro’s head of interest rate alpha Jon Cunliffe said he expected rates to have fallen to 4.5% by year end.

He added: ‘While rising utility prices may put some upwards pressure on consumer price inflation, we feel that the disinflationary forces evident in the retail sector are likely to prevail.’

VI's getting hot under the collar

[talksalot81]

That sort of thing just makes my blood boil. Basically they are saying that people cannot spend as much because previous habits have led to too much debt and a credit crunch. So can you please make it easier for people to get into more debt.

Why can we not just accept that spending has been too high and make moves to return to sensible levels?!

[Jacko79]

I am no expert on interest rate policy, however something occured to me, just say the BOE did what the housing industry wished and reduced rates everytime there was a slow down in the market, would this not just continually reduce the level of rates that the UK could cope with? Kind of a deflation. We were able to cope (just about) with 10% IRs in the 90s, but there is no way at all that we could now, IRs of that level would totally distroy the country.

My point - would a policy of reducing IRs in response to housing market problems simply mean that more people borrow more money, meaning that the BOEs "window" of rate levels simply keeps on shrinking until, way in the future, it has to stay at close to 0% otherwise a country of people crippled by debt will go bust?

If this it true, then IRs should not be used as a method of reducing debt pressure on the population, as it greatly increases the chance of a crash in the future.

[azogar]

I am no expert on interest rate policy, however something occured to me, just say the BOE did what the housing industry wished and reduced rates everytime there was a slow down in the market, would this not just continually reduce the level of rates that the UK could cope with? Kind of a deflation. We were able to cope (just about) with 10% IRs in the 90s, but there is no way at all that we could now, IRs of that level would totally distroy the country.

My point - would a policy of reducing IRs in response to housing market problems simply mean that more people borrow more money, meaning that the BOEs "window" of rate levels simply keeps on shrinking until, way in the future, it has to stay at close to 0% otherwise a country of people crippled by debt will go bust?

If this it true, then IRs should not be used as a method of reducing debt pressure on the population, as it greatly increases the chance of a crash in the future.

If this does happen then the following outcomes may occur:

1) £ falls to record lows against Euro (assuming ECB hold / rise rates) http://www.guardian.co.uk/feedarticle?id=7214576

2) inflation goes above mpc's target (& inflationary pressures become amplified)

I have said it before - if I thought we we're entering a hyperinflatory stage*, I would borrow to the max and buy as many long-term income producing assets as I could

*I don't think this at present though - all IMHO of course

edit - forgot no. 3) The FTSE will continue in a downward trend as the 'value' of UK PLC is being eroded. All though, I would be less certain of this outcome than no 1 & 2. As I suspect some traders will see increased liquidity and more MEW related spending as a good thing? any thoughts anyone?

2nd edit - ps. I think NI HPs will continue going neg** whatever the mpc decides (in the short term at least)

**with reference to Nationwide data

Edited January 11, 2008 by prophet-profit

[tara747]

md23040, I am a renter (in answer to your question). Renting a lovely place in Stranmillis with the BF and very happy. Just saving away for the day when we eventually buy.

[azogar]

just a thought - with all of this discussion re. possible falling / steady UK IR's vs possible rising /steady Euro IRs impacting on the £ losing ground against the Euro....

NI HPs would have fallen by 10 - 15% for Eurozone buyers since August (using nationwide data on NI HPs and Forex data).

OK what use is this to the majority of FTB's here? not much unless you saved your deposit in Euros etc.

but... the worry (as I inferred in another thread - so I will stop clogging up this one soon ) must be that a falling £ will in effect bring down UK / NI HPs in relation to the rest of Europe with the majority of UK / Residents being frozen out. A double kick in the proverbials if you like.

Sorry for sounding like the harbinger of Doom, but is this how it will happen? will the HP falls here (and all UK etc) be only moderate whereas the real fall was in the currency?

the next directional change in UK IR's (not holds) will be telling

Edited January 11, 2008 by prophet-profit

[ratatat]

PropertyNews started ticking up again - just reached 21,900.

And we have 22,000. Should see loads appearing with those that were told to hold off until new year.

[Sour Mash]

just a thought - with all of this discussion re. possible falling / steady UK IR's vs possible rising /steady Euro IRs impacting on the £ losing ground against the Euro....

NI HPs would have fallen by 10 - 15% for Eurozone buyers since August (using nationwide data on NI HPs and Forex data).

OK what use is this to the majority of FTB's here? not much unless you saved your deposit in Euros etc.

but... the worry (as I inferred in another thread - so I will stop clogging up this one soon ) must be that a falling £ will in effect bring down UK / NI HPs in relation to the rest of Europe with the majority of UK / Residents being frozen out. A double kick in the proverbials if you like.

Sorry for sounding like the harbinger of Doom, but is this how it will happen? will the HP falls here (and all UK etc) be only moderate whereas the real fall was in the currency?

the next directional change in UK IR's (not holds) will be telling

You're essentially talking about the possibility of only slight falls in house prices due to Sterling inflation. If we see strong inflation it's certainly a lot more likely that houses will hold their notional cash value better even though they're actually falling sharply in real terms.

I can see a fall in the 'worth' of Sterling happening even now. I'm lucky enough to hold some foreign currency savings as a result of working abroad for many years and I've seen the Sterling value of those savings appreciate by more than 10% in half a year simply due to the price of Sterling dropping vs that currency (Stg has fallen badly across the board, except against the dollar which itself has plummeted).

However, I foresee large drops in real prices anyway. Houses are simply obscenely overpriced in NI and there isn't going to be massive inflation to prop them up in the short term.

As for investors in the RoI, many of them will be looking to get out of the NI market before their Sterling-valued property assets depreciate even further (both in terms of price and exchange rate). That'll tend to push the market down.

Like many on the main board, I anticipate price inflation in basic necessities paid for in cash (food, clothes, energy) but deflation in expensive things one has to borrow money to buy (cars, houses). It will be interesting to see where rents go, I reckon they'll hold up or maybe even rise a bit simply because a roof over your head is not an option and a lot of BTL will go out of the market. People will find themselves having to pay more rent just like they will have to pay more for food and to keep themselves warm.

[pod]

Job losses in Belleek

"This is worrying news for the area because, even though the numbers may not be very high in terms of the total workforce, the reason given is the downturn in the vital US market."

http://www.u.tv/newsroom/indepth.asp?id=86936&pt=n

[tara747]

I am no expert on interest rate policy, however something occured to me, just say the BOE did what the housing industry wished and reduced rates everytime there was a slow down in the market, would this not just continually reduce the level of rates that the UK could cope with? Kind of a deflation. We were able to cope (just about) with 10% IRs in the 90s, but there is no way at all that we could now, IRs of that level would totally distroy the country.

My point - would a policy of reducing IRs in response to housing market problems simply mean that more people borrow more money, meaning that the BOEs "window" of rate levels simply keeps on shrinking until, way in the future, it has to stay at close to 0% otherwise a country of people crippled by debt will go bust?

If this it true, then IRs should not be used as a method of reducing debt pressure on the population, as it greatly increases the chance of a crash in the future.

Yes, scary thought!

just a thought - with all of this discussion re. possible falling / steady UK IR's vs possible rising /steady Euro IRs impacting on the £ losing ground against the Euro....

NI HPs would have fallen by 10 - 15% for Eurozone buyers since August (using nationwide data on NI HPs and Forex data).

OK what use is this to the majority of FTB's here? not much unless you saved your deposit in Euros etc.

but... the worry (as I inferred in another thread - so I will stop clogging up this one soon ) must be that a falling £ will in effect bring down UK / NI HPs in relation to the rest of Europe with the majority of UK / Residents being frozen out. A double kick in the proverbials if you like.

Sorry for sounding like the harbinger of Doom, but is this how it will happen? will the HP falls here (and all UK etc) be only moderate whereas the real fall was in the currency?

the next directional change in UK IR's (not holds) will be telling

No, I think that house prices will still fall dramatically in nominal and real terms.

And we have 22,000. Should see loads appearing with those that were told to hold off until new year.

Yes, watch the floodgates open now and again in April (CGT changes).

You're essentially talking about the possibility of only slight falls in house prices due to Sterling inflation. If we see strong inflation it's certainly a lot more likely that houses will hold their notional cash value better even though they're actually falling sharply in real terms.

I can see a fall in the 'worth' of Sterling happening even now. I'm lucky enough to hold some foreign currency savings as a result of working abroad for many years and I've seen the Sterling value of those savings appreciate by more than 10% in half a year simply due to the price of Sterling dropping vs that currency (Stg has fallen badly across the board, except against the dollar which itself has plummeted).

However, I foresee large drops in real prices anyway. Houses are simply obscenely overpriced in NI and there isn't going to be massive inflation to prop them up in the short term.

As for investors in the RoI, many of them will be looking to get out of the NI market before their Sterling-valued property assets depreciate even further (both in terms of price and exchange rate). That'll tend to push the market down. - yes, totally agree - this is going to accelerate the stampede!

Like many on the main board, I anticipate price inflation in basic necessities paid for in cash (food, clothes, energy) but deflation in expensive things one has to borrow money to buy (cars, houses). It will be interesting to see where rents go, I reckon they'll hold up or maybe even rise a bit simply because a roof over your head is not an option and a lot of BTL will go out of the market. People will find themselves having to pay more rent just like they will have to pay more for food and to keep themselves warm. - I have argued this point also - inflation is likely to rise for lots of things e.g. food and energy, but houses will deflate so your deposit will buy more house, even if your wages buy less food.

I don't think that rent will rise at all. At present there is a huge rental supply but BTLs are being squeezed. We are probably seeing a huge exodus from the market right now - as they become forced sellers house prices will reduce, thereby enabling FTBs to buy, thereby reducing the pool of tenants and so on. So the ratio of supply-v-demand for rental will stay about the same. Rents are not going up imho.

Edited January 11, 2008 by tara747

[Sour Mash]

As properties go from rental (BTL) to owner occupied I think the end result will be a shifting of the supply:demand ratio towards the demand end.

The reason? Because rental properties tend to be multiple-occupancy (every bedroom used) whereas OO properties tend to be just the owners, leaving bedrooms empty. So every BTL property that gets bought by an OO represents an increase in demand for the remaining rental stock.

Of course I could be wrong and there might be less rental demand vs supply. There could be a bit of an exodus of immigrants too, which would lessen demand. There are lots of factors but leaving all that aside it still represents a worsening of conditions for renters as there's every chance their landlord might have to sell up.

[tara747]

As properties go from rental (BTL) to owner occupied I think the end result will be a shifting of the supply:demand ratio towards the demand end.

The reason? Because rental properties tend to be multiple-occupancy (every bedroom used) whereas OO properties tend to be just the owners, leaving bedrooms empty. So every BTL property that gets bought by an OO represents an increase in demand for the remaining rental stock.

Of course I could be wrong and there might be less rental demand vs supply. There could be a bit of an exodus of immigrants too, which would lessen demand. There are lots of factors but leaving all that aside it still represents a worsening of conditions for renters as there's every chance their landlord might have to sell up.

Thanks for the reply. Fair point about multiple v single occupancy - but don't forget the hidden increase in rental supply from OOs advertising for lodgers. Also, single childless renters can always go back to the parents for a while. And you mentioned the immigration-reversal factor - could be significant if the economy takes a downward turn. All in all, I do think that rental supply is going to exceed demand for a good while yet.

Edited January 11, 2008 by tara747

[md23040]

It seems to me that country wide, those pushing for IR cuts are those with the greatest VIs.

If anyone could work out the mathematical formulae for controlling inflation in tandem of balancing the economy, would become rich in record speed. You have argued very well on both sides of the interest rate debate versus inflation that can equally cause problems both ways. Interest rates are being dropped in the UK IMO mainly to salvage the economy and as a life saver to large companies including retail, with any housing prop being a secondary effect. Confidence in the commercial sector remains essential to the tax take for the government as is consumer confidence to tax take too. Inflation in a nutshell has been caused by usually high levels of monetary activity and printing over the last several years. Which unusually again has been controlled by decreasing import prices of cheaper goods from India and China. These countries although pegged to the dollar are adding inflation in their own right.

Stuart Rose summed up the view of the UK economy on Wednesday describing his company, Marks and Spencer as the barometer of UK sentiment. "The next 18 months are going to be tough and very challenging". The MPC have to take notice of the most successful retailer in trouble and get real. The alternative to not stimulating growth through cuts, will be deflation only. IMO the inflation pressures will be absorbed by the retailers with pressures put on the supply line. For instance Marks and Spencer know that discretionary food sales in its stores are falling except for South East England. The company isn't going to wait for the BoE to create conditions. It will discount its good margins to maintain sales but profitability will be affected. That is why it shares dropped so much this week, analysts hate corporate profitability problems. All other retailers in the UK will have to follow suit and absorb costs of any currency weakening.

Devalues in the currency, can be good in one way, it make exports cheaper. It has helped to significantly to stimulate life back into the America's with exports increasing 19% in Q3 2007. UK should get a similar bounce, but admittedly other sectors will be affected in reverse. A currency devalues against the major six only correlates to inflation in an indirect way, but not directly or proportionally. That is if Sterling devalued 10% against the major currencies equally, inflation would not rise by that equal amount. The weighting basket includes many other types of goods some rise some fall. But as I say many companies will absorb rather than pass on the costs – if Marks does not then it will be Asda’s gain etc, so on so forth down the retail chain of target group shoppers switching to lower socio-economic targeted shops. As far as VI in my books, I'd prefer rates in UK to be 10% and ECB 0%. I have a large sterling reserve that needs immediate conversion to euro but lady luck is not on my side. Consolidation for me instead, without borrowing. I'll be damned to commit swaps above 70p, although short term it will travel to 80p. This scenario for ROI of strong euro against dollar and sterling is an unmitigated nightmare!!

In short the MPC has the room or scope to cut interest rates without affecting the economy. What interest rates control are under control and regardless of interest rates external price pressures remain. MPC have IMO the room to move .75% in 2008 and given the way the economy shapes, I would be very surprised if at year end rates are not at this level [4.75%]. American rates are tipped to fall by up to 1% during 2008.

Sorry for the long speel but interest rates is so complicated and a social rather than exact science.

md23040, I am a renter (in answer to your question). Renting a lovely place in Stranmillis with the BF and very happy. Just saving away for the day when we eventually buy.

I lived there 15 years ago. My favourite bit of Belfast. Has it still got charm? I hope developers haven't spoiled it, with apartments etc. Btw, you are right about UK gov being broke. Current account deficits in Q3 2007 now passed £20bn. This is much worse at 5.8% GDP than anything in the ailing USA books. The whole Labor government are twats. Please elect a non-interventionalist party, next time [even though there are none].

As properties go from rental (BTL) to owner occupied I think the end result will be a shifting of the supply:demand ratio towards the demand end.

Normally within HPC's as sentiment changes people hold off buying and opt to rent. Many BTL properties can come off market too in repossession scenario’s or tenants kicked house in bid to sell. Builders restrict development during downturns as one of the other threads alludes to, this curtails housing supply. With capital appreciation no longer available for investors, yields become a more important issue to them and rise. Typically in most HPC scenarios rents always rise. I am living in the UK, temporarily for now but plan to move jurisdiction. I rent too presently but will start building next year as labor rates decrease. Luckily land was bought years ago by my wife at a very good price. Country only for me. I would never live in the city again. London, New York, Dublin, and Belfast – you eventually tire. But love travel.

Edited January 12, 2008 by md23040

[YoungFTB]

I lived there 15 years ago. My favourite bit of Belfast. Has it still got charm? I hope developers haven't spoiled it, with apartments etc.

I have found that a lot of family homes in the center of Belfast have been turned into apartments which I feel is a real shame. I've found this to be the case in many of the housing areas in the center of Belfast, I feel that these tiny apartments will fall the most in value because very few people are going to want to live in them.

Country only for me. I would never live in the city again. London, New York, Dublin, and Belfast – you eventually tire. But love travel.

Any advice for someone wanting to buy in the center of Belfast? I'm thinking about renting a place in the center of Belfast for a while to see if I like the lifestyle, what do you think? Why did you tire of living in the City?

Btw I enjoyed reading your post above, some good info

[Mr Mephisto]

I’m sure all of this has been discussed before so I apologise to anyone who is well and truly bored with the subject, however has anyone any updated views on PPS 14 and building in the countryside? I know that there was a legal challenge to the policy statement which was judged “unlawful” by Mr. Justice Gillen on 7 September 2007. Arlene Foster Minister of the Environment N.Ireland subsequently released a statement on the 25th of October 2007 where she decided to “reissue the policy provisions of draft PPS14 and to continue to apply them to planning applications received after 16 March 2006 until we have completed our review and developed new policies. I will publish a new draft PPS14 within six months and this will be followed by a period of consultation”. As this review was to take 6 months, she should in a position to publish her findings by April / May of this year. Does the forum have any views or information on the likely decision? Are the rules likely to remain as outlined in PPS 14? I know that many of the political parties promised to challenge PPS 14 in the assembly. When is such a debate likely to be tabled, and what are the likely outcomes? Are the assembly likely to keep PPS 14 largely unchanged or are they likely to open up the planning once again? What does the forum think about the existing value of individual building sites in the countryside? Are thy likely to hold up or do the forum see them falling like the rest of the market. Obviously our very slow, bureaucratic and inefficient planning service has been partly to blame for massive inflation in this particular sub-market. I presume it all falls back to basic supply and demand rule of economics. In know that supply has been cut off by the current planning laws (for now), however is the demand still there in light of the current cooling in the property market, now the feeding frenzy and panic buying has left the market?

[YoungFTB]

Thanks for the info Lagansider

I don't have much interest in buying an apartment in the center of Belfast, I was just sorta mentioning what I had found in my research of housing in the center of Belfast.

I'm interested in a 2 bedroom house (maybe 3 bedroom) in the center of Belfast which is freehold, the leasehold element of apartments concerns me a great deal.

I won't rule out buying an apartment completely but it would have to be a lot cheaper than a small townhouse, plus it would have to be a building with a very limited number of apartments because of many of the factors you have mentioned above. So that criteria limits me to about 2 or 3 apartment blocks in Belfast that I'd even consider.

I've heard some really bad reviews about certain apartment blocks in the center of Belfast like The Bass Building, I think it's a case of doing your research and knowing as much info as you can about an area.

I really enjoyed reading both your posts about apartment living, thanks again for the excellent info

[pod]

YoungFTB, are you from the States?

[YoungFTB]

YoungFTB, are you from the States?

Northern Ireland born and bred

Just curious, why do you think I'm from the States?

[pod]

Just curious, why do you think I'm from the States?

I noticed you use the American English spelling "center" as opposed to the British English spelling "centre".