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Harbringers Of The Apocalypse

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I have recently been noticing a few things recently that might suggest all is not well and good in the housing market. I know that rationality suggests this party should have been over a long time ago, but until recently I'd heard little to suggest that the rosey picture of rampant HPI wasn't entirely accurate. I thought I'd post them here, and others can add their own, or even flat out contradict my observations.

A month or so ago, I took a train ride from Bangor (North Wales) to York. Along the way the railway passes through Chester, Warrington, Manchester, Leeds. From a train you often get to see an elevated view of the brownfield sites around cities. Not only that, but from a train you can get a good look at what's going on in the massive redevelopment happening on these sites. Predictably, I could see masses of new flats built in the last few years. It was a rainy Sunday evening, and yet despite this, very few of the flats that were finished appeared to have any lights on in them. It was certainly the sort of day, that if you were home, you'd be sat in front of the TV, with the lights on. So, either the residents were out enjoying urban living, or just maybe, occupancy levels in these new builds were pretty low. It wasn't just the odd block, but many of the new builds (and there are a lot of them). If BTL on new build flats is really so good, you'd not have expected to see this repeated over and over again. And, even if these all these newish flats were occupied, you could see masses of new unfinished flats being constructed, so there didn't seem to be much shortage of supply.

The second thing I noticed, was last weekend driving around York passing Polar Ford (a large regional car dealer) and seeing bright yellow signs advertising the latest offers to tempt you into buying a new car. One of those signs said 'Negative Equity OK'. Is that the same negative equity you get on a house I wonder, or is this some other use of a very loaded term? The sign is still there this week, so it wasn't me imagining things.

From those two observations alone, I'm starting to think that in the north at least the housing market is not looking good. Massive overbuilding of flats and the term negative equity re-entering the vocabulary in York (which has comparitively few new build flats and is quoted as being a hotspot) makes you think the rotten smell is starting to get hard to ignore.

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I have recently been noticing a few things recently that might suggest all is not well and good in the housing market. I know that rationality suggests this party should have been over a long time ago, but until recently I'd heard little to suggest that the rosey picture of rampant HPI wasn't entirely accurate. I thought I'd post them here, and others can add their own, or even flat out contradict my observations.

A month or so ago, I took a train ride from Bangor (North Wales) to York. Along the way the railway passes through Chester, Warrington, Manchester, Leeds. From a train you often get to see an elevated view of the brownfield sites around cities. Not only that, but from a train you can get a good look at what's going on in the massive redevelopment happening on these sites. Predictably, I could see masses of new flats built in the last few years. It was a rainy Sunday evening, and yet despite this, very few of the flats that were finished appeared to have any lights on in them. It was certainly the sort of day, that if you were home, you'd be sat in front of the TV, with the lights on. So, either the residents were out enjoying urban living, or just maybe, occupancy levels in these new builds were pretty low. It wasn't just the odd block, but many of the new builds (and there are a lot of them). If BTL on new build flats is really so good, you'd not have expected to see this repeated over and over again. And, even if these all these newish flats were occupied, you could see masses of new unfinished flats being constructed, so there didn't seem to be much shortage of supply.

The second thing I noticed, was last weekend driving around York passing Polar Ford (a large regional car dealer) and seeing bright yellow signs advertising the latest offers to tempt you into buying a new car. One of those signs said 'Negative Equity OK'. Is that the same negative equity you get on a house I wonder, or is this some other use of a very loaded term? The sign is still there this week, so it wasn't me imagining things.

From those two observations alone, I'm starting to think that in the north at least the housing market is not looking good. Massive overbuilding of flats and the term negative equity re-entering the vocabulary in York (which has comparitively few new build flats and is quoted as being a hotspot) makes you think the rotten smell is starting to get hard to ignore.

Is this a wind up or did you actually give some thought to the post?

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Popped into local car supermarket this aftenoon. More balloons on teh outside than punters on the inside, sales staff doing jigs round car with blaring car stereo and (something I'd never seen before) nearly a good third of the lot totally devoid of cars and what seemed like a lot more space around the ones that were there.

More competition? Have they had a huge splurge of sales and run down their full stock list? Doubt it somehow, didn't give out that sort of vibe.

As for flats, well toatl mismatch betwen supply and demand, the only supply that has been fulfilled is the supply of maximum profit housing for the developers and easyily floggablr stuff to ignorant investors. There is no planning at a central level that looks at the housing needs of the country and the supply of the appropriate classes of houses/flats, total, utter shambles. The brownfield/density rigging of the market is going to have huge repercussions.

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Drove past the local Ferrari garage last week for the first time in a couple of months; only it's not there anymore, it's been knocked down to be converted into flats. In a town that's already infested with them and half of those that have been built appear to be unsold or empty.

This is absolutely insane, before long there will be no businesses left in the town other than estate agents and banks... just flats, flats and more flats.

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Drove past the local Ferrari garage last week for the first time in a couple of months; only it's not there anymore, it's been knocked down to be converted into flats. In a town that's already infested with them and half of those that have been built appear to be unsold or empty.

This is absolutely insane, before long there will be no businesses left in the town other than estate agents and banks... just flats, flats and more flats.

Hmm, well they did close a Jaguar dealership down in Docklands (near the old London Arena, opposite Harbour Exchange) and that now has high rise apartments on it. I keep meaning to cycle around all these new apartment in Docklands at night to get some idea as to how occupied they are.

Also I suspect Rightmove must understate the availability. If for example a new development comes available, I assume RightMove will just have a listing for each type of dwelling ie: studio/1 bed/2 bed rather that list several hundred identical flats?

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Glasgow is chocka with unoccupied new build flats and more are being built. The crucial question in my mind is how long will the owner (whether a private individual, commercial firm or bank) keep hold of them when the prices start drifting downwards? Who wants to hold a depreciating asset that yields no income?

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The second thing I noticed, was last weekend driving around York passing Polar Ford (a large regional car dealer) and seeing bright yellow signs advertising the latest offers to tempt you into buying a new car. One of those signs said 'Negative Equity OK'. Is that the same negative equity you get on a house I wonder, or is this some other use of a very loaded term? The sign is still there this week, so it wasn't me imagining things.

Polar Fraud do not have a very good reputation around town - average service and sky-high prices, basically. If you want a new or nearly new car, the chances are that going to one of the car supermarkets on the Clifton Moor estate will save you four figures compared to Polar's prices. Their servicing costs are main dealer prices and then some. I maintain my own car (an 01 Fiesta which now has 170k miles on the clock, so it's got to the stage at which major parts are needing replacing), and buying parts from Polar is a last-resort option I dread. They charge eye-watering prices and always give me a stern lecture about how their cars should be main-dealer serviced, because that's the 'safest' option. Latest examples: £18 for an ECU temperature sender unit and £22 for a relay (last month). If I'd looked around I could have got them for around half that, but I needed the parts quickly and so coughed up. So if any car dealer or servicing centre is going to be the first to suffer from a recession, it'll be Polar. I suspect that their only significant trade is from corporate fleet users - no private motorist in their right mind would pay their prices.

Agreed on the flats issue, though. The former hotel next to the one I rent in Bootham Crescent was sold up and converted into flats a couple of years ago. Judging from the lights on at night (over a long time period), only two of the 13 flats have ever been permanently lived in. There have been at least two 'For Sale' or 'To Let' signs outside the building ever since the conversion, and sometimes as many as six. Some of the flats will have been bought as 'buy to mothball', but I suspect a lot are unsold. There are four signs up at the moment - one went to a 'Sold' last week: it'll be interesting to see if it stays that way.

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