Sunday, November 18, 2007

Mwaahhha hahahhah uahah ahhhahah

Buy-to-let crisis hits UK housing plans

Uuuuuuuuuuuu... cannot believe the blackest weekend for the BTL crowd (to date, only to date) ends with this great news: there is no supply shortage! on the contrary, it is a true supply glut of "luxury apartments" and the only minor tiny tiny problem is that “The recent tightening of lending criteria by the major building societies has had a material impact on the buy-to-let market". But of course there is not enough "affordable" properties. Stuart Law, dont worry, there'll be plenty affordable after the crash!

Posted by confused76 @ 08:50 PM (1469 views)
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13 thoughts on “Mwaahhha hahahhah uahah ahhhahah

  • To state the blindingly obvious; ‘A growing crisis in the buy-to-let sector is leading builders to “mothball” city centre developments until investor demand picks up.’

    Through sheer greed developers have built properties people do not want, ‘investors’, (suckers), have kept the ball going until Joe Public finally realised that apartments or not that great and are chronically overpriced.

    One shyster developer near me in Warrington has even tried marketing tiny 1 bed flats as ‘crash pads’ or ‘chick pads’ to the local numpties, no doubt with Northern Rock mortgages in the past whilst the town at the last count had around 2400 empty existing and new-build ‘apartments’. It’s not nuclear physics to work out that the whole scene doesn’t mathematically and financially add up, the trouble is that most of the plebs do not have the knowledge or ability to work it out for themselves until they have been suckered into buying one.

    Buy a house, even a little old terraced one because flats are BAD NEWS.

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  • This is one of my favourite confusions. They say there has not been enough in the developers’ land banks for years (even though these have been at record levels), yet, now they just want too stop building. If a lack of supply has been driving up the market, then demand would always outpace it and so what is their fear (note of sarcasm).

    I know this has been a liquidity driven boom, but this “confusion” highlights the fact that it is also to do with financial markets as a whole i.e. developers are cutting building to maintain margins. The people in these areas that are now in trouble as the areas they bought in are suddenly dodgy, were no doubt told by the same VIs (that are now saying the problems are “area specific”) just 6 6 months ago what these areas were gauranteed.

    To put it another way, I doubt the people seeing drops (across the country and house types) thought at the time I want to buy something that will fall in price, obviously and particularly in the case of BLTers.The vested interest of course said there are still plenty of opportunities, but at I hope someone makes a point of highlighting the fact that this kind of story proves that the argument about a lack of land has been a red herring to a large extent i.e. 50% of the increase has been liquidity driven.

    Are big BLTers really willing to cross-subsidise rents and capital losses on previous properties by buying new ones? That seems like an odd business model.

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  • If I can I’ll buy a small terraced house but more likely one of these flats. However that will be when they go down to a affordable level and only a decent size one. I have a friend who is vertically challenged and he visited some newbuild flats recently. You know that these flat are far too tiny when he says they are too small. 🙂

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  • the northerner living in oz says:

    What would be great fun is is few people get together and make load’s false really low bid’s 50,40, 30 % of current asking price
    On the overpriced rabbit hutches.
    Just generally waste the Developers & BTL Parasites time.
    you can be sure they and there frends have been making false offers to ratchet up the prices.
    over the last decade.

    Is this too cruel?

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  • Don’t care what happens to the UK (property market or anything else). Just bought another farm (rubber plantation this time) in Isan and 1.2 acres in Bang Saray (Eastern Seaboard of Thailand) over-looking the Gulf of Thailand upon which I shall now build my retirement house. Have a very small flat in South West, going to skip the bit where you are supposed to be mortgaged to the hilt with a 3 bed semi.

    Crash or no crash, it’s all over for me in the UK. Thank God!

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  • northerner,
    (reply to a previous post)

    K-theory has moved on from the 1980s saying it is 54 years for a complete cycle.
    The cycle is getting longer as life expectancy grows.
    The k-cycle is now 70 years long (1929 to 2000 between stock market peaks).

    The debt cycle has similarities to the k-cycle but they are slightly different.

    The traditional view is there have been 4 k-cycles with k-winter ends of 1844, 1896, 1949 and 2020??
    See graph

    The debt cycle has only had 3 phases with debt peaks of 1831, 1933 and 2012??
    See graph

    IMHO K-waves, like Elliott waves, are fractal and k-wave no.2 (1845-1896) is at one level lower than k-wave 1, 3 and 4.

    K-waves 1 and 3, in this new explanation, are expanded to be 1784-1864 (80 years) and 1864-1949 (85 years)

    The stocks graph
    maps well to the debt graph
    with 3 waves (not 4 waves) clearly visible

    The debt peaks are
    1831 150pc GDP
    1933 270pc GDP
    2007 340pc GDP (expected to be 450pc by 2011)

    The debt cycle is between 75-100 years, but it all depends on how fast the debt is built up.
    The debt cycle 1831-1933 took 100 years because we had k-wave no.2 to delay the debt build up.

    The current debt cycle (80 years) is about 10 years longer than the k-wave (70 years) because the US avoided a depression by creating the housing bubble in 2003. This time there is no escape.

    Hope this is clear.
    It is quite complicated

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  • In the US its an oversupply of houses : in the UK an oversupply of flats.And look what happened in the States. To prevent mothballing you need to impose a full-rate property tax on empty properties to bring them to the market.Because there is arguably an undersupply of houses you need a Land Value Tax on mothballed land so developers can’t sit on it ,as the Royal Town Planning institute allegeds to keep house prices up. All the best .Why the anonymity? DBC Reed

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  • S2R, I like the k-waves explanation, but could we also say:

    Lots of easy credit = house price bubble.
    No easy credit = house prices fall back to long term average.

    Net result = 20% to 40% reduction in nominal prices.

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  • Funny that they’re mothballing developments until existing ones sell, considering demand is outstripping supply. (Or so we’re being told)

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  • So s2R if we are yet to arrive at the debt peak, doesnt this imply that the debt bubble isnt over yet or are we talking about the debt bubble in Dollar terms? And what type of debt -public sector or private borrowings?

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  • ..Or is GDP expected to contract?

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  • voiceofreason – having read lots and lots of posts on the news and the forum, I think you sum up it all the the best – voice of reason indeed!
    Although I am hoping ( and it is hope rather than expectation) of a bigger fall! say 50%.

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  • voiceofreason,

    As techieman said the other day, the previous HPCs of 1974 and 1992 should be seen as corrections in a long term bull run.
    This HPC is the bear to finish up that bull run.

    The debt levels as a % of GDP will peak up to 2 years after we have entered a recession (2010-11 maybe).

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