Monday, September 21, 2009

RM’s Latest

Better house price numbers mask pain in most of the UK

"Mr Shipside added that he believed the market had reached a crossroads. "Confidence is up, stock is down and the number of people searching is high – there are lots of positives, but too few buyers can put down the 40 per cent deposits that are needed in order to secure the best mortgage deals," he said. "Finance greases the wheels of the property market and it is anybody's guess when we might see the necessary level of competitive funding return."" Well Miles Shipside's guess last month was that it would be YEARS before funding would return and approvals would still be down at 2006 levels in 2013

Posted by sybil13 @ 08:45 AM (1179 views)
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5 thoughts on “RM’s Latest

  • Ah Independent left out the vital part of what Miles Shipside said:

    “Finance greases the wheels of the property market, and it is
    anybody’s guess when we might see the necessary level of competitive funding return. Frustrated homehunters
    should note the expected ten year timetable to wind up Lehman Brothers, giving a clear
    indication of the time required to rebuild the banking system.””

    10 YEARS

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  • Housing stock, as with any commodity on the planet, if drip fed at such low volume, to a willing and eager (dare I say ‘pent up’) market, will always cause a rise in value. The question is; what, if anything will trigger a potential mass unload and result in an accelerated price fall Tsunami?

    I see absolutely nothing on the near horizon that may cause this to happen, can you?

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  • @smugdog

    You are probably right and wrong. The government has basically protected the feckless by legislating against reposession and the Bank of England has bascially protected the feckless by giving them a very low opportunity cost of doing nothing (ZIRP).

    However this strategy of avoiding the necessary pain has some nasty side effects which ultimately will be far more painful than a short sharp shock. This is how the lost decade is created – avoiding the difficult decisions, kicking the problems further along.

    Think about it – imagine if the current levels of transactions are actually permanent. And the current anaemic growth (or negative growth) in house prices is permanent. Welcome to Japan’s property market circa 1992.

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  • Miles Shipside

    Great website – welldone, now we can all see houses that can’t sell for years. You have exposed the myth that houses are a great investment. When you need to sell, you can’t.

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  • @ Paul, excellent chart.

    My favourite bit of nonsense from Milesy is this: “Finance greases the wheels of the property market”. D’oh! Finance IS the property market. House prices = smallish deposit plus finance. In the absense of any mortgage finance whatsoever house prices would drop by about half.

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