Sunday, December 30, 2007

A fresh coat of paint will re-ignite the market

On the edge in 2008: will house prices bump along the plateau, or are they about to fall off the cliff?

The housing market boom has finally run out of momentum, and fears are being voiced in some quarters that our biggest financial assets could go into reverse in 2008. The financial trepidation with which we are tiptoeing into the new year is almost tangible. Few doubt 2008 is going to be a year of uncertainty, if not living on the edge, and this is especially true in the housing market. "Meanwhile, consider other ways of boosting the value of your property – perhaps an extension such as a loft conversion, or an upgrade to the kitchen"

Posted by jack c @ 06:49 PM (6412 views)
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14 thoughts on “A fresh coat of paint will re-ignite the market

  • it_is_going_with_a_bang says:

    “Meanwhile, consider other ways of boosting the value of your property –perhaps an extension such as a loft conversion, or an upgrade to the kitchen”

    So thats a new idea?
    More to the point why ‘boost the value’ of your property when you have no idea what the value may be.
    All of a sudden any one with half a brain cell and a sense of realism is a ‘doomsayer’.
    “Now may well be a good time for growth to pause for breath”
    Before it chokes and falls to the floor?

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  • Lombard as usual are quite on the ball, though I would reword this statement; “With the waning demand for mortgage credit and the waning lending availability, I expect prices to fall throughout next year by around 3 to 4 per cent”, by swapping availability for affordability. As for boosting the value of your property by spending copious amounts of dosh on it, forget it, you might sell it quicker in a falling market but it will not be the lucrative quick fix it once was and probably won’t be worth the effort.

    Sit tight and wait for the bottom.

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  • This article is a re-hash of the property news from the past month and gives no added value to the reader.

    “Meanwhile, consider other ways of boosting the value of your property –perhaps an extension such as a loft conversion, or an upgrade to the kitchen”. Why is there such a fixation towards adding value to the home?

    Wouldn’t it be better for The Independent to have told it’s readership that sucking all the UK’s disposable income into housing does little good for our industrial base?

    Do Independent readers really want this sort of article which tells them nothing new – surely there’s enough interesting news out there without the Independent publishing yet another article with the same information.

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  • “Meanwhile, consider other ways of boosting the value of your property – perhaps an extension such as a loft conversion, or an upgrade to the kitchen”

    by MEWing I suppose…..

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  • Sold My Soul To The Never Never Never says:

    We spent 30K doing up a property after buying it in 1989 – new kitchen & bathroom etc etc. – sold it in 1998 for 8K more than what it was bought for – you do the maths! Ah the glorious benefit of hindsight!!

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  • crash bandicoot says:

    I looked at the local houses on Rightmove the other day. There has been a sudden surge in the number of four bed semis on the market. This means extended three bed semis in other words. These folks realise that the golden rule of building an extension is not to spend more than the value added to the property. As the value of the house falls, the extension is starting to look costly – perhaps not worth the money spent on it. This is a sign of the smart folks leaving the market. Building an extension is the last thing you should contemplate at the moment.

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  • What is it about the so-called property ‘experts’ that none of them – and I struggle to find the exception.. – seem to understand that if the prospect of house price rises evaporates, a very large contingent of house buyers will not only vanish into the mist, but will also present to the market a huge number of properties to be sold.

    The notion of a ‘soft landing’ defies the most rudimentary analysis..

    ..anyway, I’m off to reap the rewards of my labours – goodbye English winter, hello Thailand! – my next posts (until mid March) will be from a tropical internet cafe..

    Happy New Year!

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  • Alan – “Wouldn’t it be better for The Independent to have told it’s [sic] readership that sucking all the UK’s disposable income into housing does little good for our industrial base?”

    Not to pick on you, but this is one of the silliest things people say on this website.

    To make it really simple, the best way of boosting the industrial base would be to *cut* interest rates massively to:

    – promote investment, rather than saving
    – have the pound depreciate against other currencies, thereby
    – making exports more competitive, and
    – Britain more attractive for foreign investment.

    However, wonder who here fancies a big rate cut? You can’t have it both ways. Those of you who’d keep rates high to make borrowing more expensive and increase the likelihood of a proper crash are also condemning the ‘industrial base’ to ongoing recession.

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  • I don’t even know why we are having this discussion.

    Let’s just watch what happens.

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  • first post

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  • ‘a good time for growth to pause for breath’ says Fionnuala. That’s one way of putting it. Another way would be ‘a good time to take a deep breath before the plunge’.

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  • @James
    I wouldn’t feel like investing in Japan if I thought the yen was going down in value, but I would invest if I thought the yen would appreciate over time. So I don’t see how sterling losing value with the prospects of further falls in the future would encourage UK investment. Surely the main consideration is when it stops getting cheap. You could equally say that when house prices fall they increase demand, but of course they don’t if there is an expectation of further falls. Same for the UK currency. If sterling is expected to slide down over 5 years, then maybe we can look forward to investment at the end of the 5 years but certainly not now. The returns on the investment fall also. I think people look for increasing value or stable currencies as a home for investment. Nobody is arguing that the yuan will fall soon but China is an investment hotspot, precisely because people think the value of the yuan is going to go up.
    As, dependant on the UK gov. , sterling will either have inflation or deflation, so regardless of the advantages to the investor they take a risk just owning sterling let alone buying something valued in the currency. Which is why so many are getting out. So basically I disagree, I think cutting interest rates excessively does none of those good things. With the exception of making the labour component of exported goods cheaper, and, as has been pointed out many times we don’t have a manufacturing base to export anymore so this is of no use.
    On another point, Brown is in charge of a financial system that cannot cope with falling prices aka deflation, in that position he must be careful to allow prices to increase slowly at a real pace. Given that he has encouraged and abetted a distortion in housing, would be fine, apart from the fact that gov. policy fails due to the fact that the financial system structure cannot handle deflation at all, or the effects of deflation upon debt holders. Therefore he is a complete twonk.

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  • This is my first posting -hi everyone,and forgive me for going off at a tangent.
    I’ve been following this site for about ten months now,and have been impressed with the quality,and accuracy,of most of the contributors.
    I am one of those dreary people who have attempted to live within their means-so no debts.I think perhaps when you get to round about fifty you realise that an endless spree of buying toy’s with borrowed money is self delusional in terms of happiness.As an ex-Psychiatric staff nurse my perception (however bizarre it may seem) is that great swathes of the population in Britain, suffer thinly disguised clinical depression-hence the levels of drug,and alcohol abuse,violence etc-and would include the almost maniacal self harm inflicted as people attempt to ‘purchase’ an elevation of mood -utilising a drug with a nasty side effect called APR .As someone whom spends as much time on the continent as possible,I just do not ‘feel’ the levels of gloom,as I do here.
    I really do think the problem is that the simple,basic quality of life is very poor in this country.
    To get back on topic,I own a small house-but am frankly repulsed by the property ‘equity’ greed that seems to be consuming British society like a cancer.
    That young people buying modest accommodation will have to impoverish themselves for a large part of their lives is obscene.Any decently run society would exclude a basic need such as somewhere to live, from being exploited by the grubby grasping fingers of avarice.
    I note that at the beginning of 2007 some posters were dismissed as being overtly gloomy.I think events are proving them right.
    I you will all indulge me-here’s my prediction,as I want to get it in now.

    Browns phoney economy begins to collapse at an exponential rate, as the singing ringing money tree is pruned to a stump,and the unhealthy spurious nature of a great deal of UK employment becomes evident-I say three hundred thousand more unemployed over the next eighteen months.
    BoE interest rate-3% and won’t make a scrap of difference.
    A heavily ‘massaged’ RPI figure to keep wage demand down.
    Houseprices down 25% over the next eighteen months-directly allied to the failing job’s market.
    An acceleration in the amount of those indigenous British moving abroad-and those being of the quality the country can least afford to lose.
    Oil $ God know’s but up.
    Pound = one euro fifteen…as the pound weakens-and the politicians make a case for joining the Euro.

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  • But stillthinking – we *are* talking about manufacturing rather than a financial investment. My post (and Alan’s comment) were concerning the ‘industrial base’. For a financial investment, I agree entirely with your argument, and (one of) your conclusions, that Brown is a complete twonk.

    To restate, for a multinational choosing where to locate a plant a depreciating currency is unambiguously a good thing – manufacturing is a cost centre. If Nissan are building a new plant, UK wages, building costs, will look comparatively low if sterling is weak. Whilst a UK manufacturer won’t have the same currency arb to do, goods priced in sterling will be relatively cheaper on the international market, promoting export growth. When I say ‘promote investment’ in the first point, I don’t mean holding financial assets, I mean investment in factories as lowering IR makes the ROI from a factory comparatively more attractive than leacing cash in the bank.

    Point being, you can’t claim to care about the UK’s industrial base and simultaneously call for interest rate hikes to promote HPC. In IR terms, what’s meat for one is poison for the other.

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