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Ash4781

U.k. Housing Prices Are 15% `above Fair Value,' Lehman Says

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http://www.bloomberg.com/apps/news?pid=206...Wk&refer=uk

May 28 (Bloomberg) -- The U.K. housing market is about 15 percent ``above fair value,'' according to a report by economists at Lehman Brothers Holdings Inc.

In spite of that estimate, the economists predicted house prices to gain as much as 4 percent in 2008 and said the overall economy was unlikely to slump.

4% surely means FTB's can afford to wait!

Edited by Ash4781

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unfortunately the report also doesnt envisage a slump- so although hpi may not be as great as in previous months- buying a house is still out of reach for us FTB :angry:

Maybe it will drive BTL from the market.

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Maybe it will drive BTL from the market.

if a BTL has a fixed rate for 2+ years- they're less susceptible to rate changes- i have a few friends who bought recently and have currently got tennants living in their flats- they've all secured 2+ year fixed rate mortgages.

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these guys know about as much as we do when it comes to a 'slump'

Just look at the headlines from the last crash and you will never heed the words of 'economists' again.

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That's a very bullish valuation - only 15% above fair value.

The Miles report reckoned on well above that.

Mr Miles, who was asked by the chancellor to review the mortgage market in 2003, calculates that a little over a half of the rise in house prices has been driven by speculation that prices would continue to rise rapidly.

See HPC link

And there was 65% from the OECD. See page one of today's forum.

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Only 15% my ass.

They are about 100% overvalued in my opinion! (i.e I want them to half in price).

If it is only 15% and you are renting then you might as well buy now. I guess Lehman are wanting a soft landing and 15% would be a soft landing in my opinion.

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Only 15% my ass.

They are about 100% overvalued in my opinion! (i.e I want them to half in price).

If it is only 15% and you are renting then you might as well buy now. I guess Lehman are wanting a soft landing and 15% would be a soft landing in my opinion.

What's 'fair value' of a property ?

Edited by Ash4781

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An earlier prediction by Alan Castle.

"Alan Castle of Lehman Brothers “A situation in which the MPC is unable to cut interest rates to stimulate domestic demand because of elevated inflation pressures. This scenario is unlikely to be driven by second-round effects on wages from high oil prices but more likely to be driven by a very rapid depreciation of the exchange rate.”

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What's 'fair value' of a property ?

Good question. It's the value if you take out any speculative element.

Or, normal people buying normal houses on normal salaries at normal wage/price ratios.

Or, when rental yields are high enough to make being a LL a viable business without the speculative element of rising property prices.

Edited by redwing

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What's 'fair value' of a property ?

Average UK salary is about 24k.

Lets say 4 times salary for the average house. So average house price to be around 96k. The average house price now is about 190k so a halving of price seems reasonable and would take us back to about 2001/2002. That seems fair to me.

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VI or what? <_<

http://www.risk.net/public/showPage.html?page=343547

Bear Stearns, Citigroup, Lehman Brothers, Merrill Lynch and Morgan Stanley have all acquired UK mortgage lenders over the past six years, mainly in the non-conforming sector of the market (Risk February 2006, pages 36-38). Non-conforming lenders provide mortgages to customers that traditional lenders tend to shy away from, such as those with impaired credit ratings.

http://www.dailyii.com/pdf/pressRoom/press...inal_021505.pdf

BNP Paribas, Citigroup and Lehman Brothers are vying to be named Securitization Firm of the Year in the Inaugural Securitization News Awards.

"Please keep on buying our Mortgage Backed Securities; they're a bargain, honest"

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Average UK salary is about 24k.

Lets say 4 times salary for the average house. So average house price to be around 96k. The average house price now is about 190k so a halving of price seems reasonable and would take us back to about 2001/2002. That seems fair to me.

a fair percentage of households have 2 incomes- around 50k i would think. 50k *4=200k about right- i'm just trying to see justify how morgage companies might be thinking

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a fair percentage of households have 2 incomes- around 50k i would think. 50k *4=200k about right- i'm just trying to see justify how morgage companies might be thinking

Maybe we could get jobs for kids in the evening too. That could increase income to 60k per year. Kids could do overtime and raise it to 70k per year. All the family could have beans on toast for every meal, take no holidays abroad, and turn the heating off and have cold showers. Then house prices could be around 350k. Fantastic, what a great country we live in. This will put the Great back into Great Britain.

Cant wait for this fooking crash, it makes me so fooking angry what is happening in this country. Even though I am not that bad off really because I dont have any kids to look after so only have to look after myself, so I can get by cheaply. I am gonna jump for joy when this crash takes places, and the likes of Saaya Begg, Konnie Huq, Steve & Cate Biddling can go take a run and jump, I hope they go bankrupt, the fooking scum bags. I mean fair play to them if they became rich by working hard in their chosen career, but by becoming rich by fleecing people is immoral. The banks are scum too, I am just glad I found ths site so I didnt become a debt slave.

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Surely fair value should be the cost of land plus house building costs.

£150k for a 3/4 bed detached and £75k for a flat.

Remember, low wage inflation equals no ladder, so it's not reasonable to think that someone only just needs to get a foot on the ladder. No-one should consider maxing out for a mere flat.

When I suggest these figures to some, they laugh, but they would have winsed only 6 years ago.

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Guest d23
Surely fair value should be the cost of land plus house building costs.

£150k for a 3/4 bed detached and £75k for a flat.

Remember, low wage inflation equals no ladder, so it's not reasonable to think that someone only just needs to get a foot on the ladder. No-one should consider maxing out for a mere flat.

When I suggest these figures to some, they laugh, but they would have winsed only 6 years ago.

yup, people should build houses for free with no thought for profit as a charitable gesture to us priced out FTB's

nice thought but unlikely to happen

where in the country do you base your 150K land + building costs from?

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What's 'fair value' of a property ?

Fair value should be what it costs to build (approx £80 per square foot ) a sensible sum for the land ( this is the hard part ) and a reasonable ( say 10% ) profit for the developer.

I know people say a house is worth what someone will pay for it but we don't price anything else that way. Can you imagine going to the corner shop for a pint of milk and a newspaper - "How much will that be ?" Shop Keeper " Well sir, the asking price is £1.50 but I have had an offer of £1.60 and the shop around the corner just sold a pint of milk for £1.99p"

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if a BTL has a fixed rate for 2+ years- they're less susceptible to rate changes- i have a few friends who bought recently and have currently got tennants living in their flats- they've all secured 2+ year fixed rate mortgages.

Yes, but only until the fixed rate ends! And in two years time inflation will have increased and their new fixed rate will be 7-8%.

Tenants or no tenants, it is going to be a bumpy ride for them, especially if no lender will lend to them as prices will be falling, so they'll be on the extortionate variable rate with their existing lender.

Oh dear, I really genuinely do feel for your friends. They like you seem to be oblivious to their oncoming predicament.

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