Friday, April 30, 2010

Like to some balance restored, but can the political spin keep it going?

Is the value of your house about to drop?

What’s more, the ratio at which they are outnumbering buyers is increasing too – the net balance of new sellers reached 21% in March, up from 16% in February, while the number of new buyers didn’t budge.

Posted by happy mondays @ 08:26 AM (1808 views)
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17 thoughts on “Like to some balance restored, but can the political spin keep it going?

  • happy mondays says:

    Forgive the title not making sense, i am still only on my 3rd coffee!!!

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  • or drugs not kicked in yet lol

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  • Author writes: “I bought my first home last February, and with the benefit of hindsight it looks like I got the timing pretty much spot on”

    Time will tell.., I suspect he’s a bit optimistic with that

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  • The article states: “But it’s not hard to see a situation where house prices start to fall again. With all of the major parties promising significant cuts following the General Election, it doesn’t take Mystic Meg to see that unemployment has a decent chance of rising by the year’s end. A hung parliament (and subsequent second election) might also spook the markets to the extent that everything is thrown up into the air once more.
    Add to that the fact that interest rates can only go one way…”

    Just about sums it up really. The costly 500bn+ party labour created is now coming to an end. Anyone who doesn’t have an ‘adding value to the economy’ job should really be worrying right now.

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  • happy mondays says:

    @ mark, Day after the night before…
    If the housing market stays up after the threat of cuts & implementing cuts, it really is a miracle economy, like a housing market on Viagra..

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  • or the day after the night before the day after the night before the night and after the day

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  • Little bit on the Beeb early this morning about the Irish housing market – mentioned that there has been so much speculative building in recent years that there are now five houses for every four households, and that prices are continuing to crash..

    ..can’t help thinking that some people in the UK – especially those of Irish descent – are going to be tempted across the water..

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  • hash browne says:

    “The problem for first-time buyers isn’t house prices, it’s lenders. In many areas rents are about the same level as mortgage repayments, so buying would not stretch their budgets on a monthly basis that much.”

    Where do they get these mathematically illiterate morons from?

    I rent a 2bed flat which my landlord bought for £240k. Assuming a 10% deposit is put down the mortgage repayments at say 4% would be £1140/month.

    My rent is £700.

    Even interest only would be £720 and thats at only 4%! What happens when rates go up?

    I’m starting to get really angry at the lies that are being told to people by these charlatans, especially after that parade last night!!

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  • mark wadsworth says:

    What hash brown says.

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  • happy mondays says:

    @ ut, yes i saw that, house prices down by half there value & ghost towns appearing..But that would never happen here, supply & demand! would it?

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  • “like a housing market on Viagra..”

    That’s good!

    There was a question on housing for our leaders last night which brought out all the usual stuff about forcing the lenders to lend and shared ownership. Nothing about affordability, or what more positive uses we might find for our money if we weren’t being pressed into spending 50%+ of our outgoings on housing. Who knows some of it could support British industry.

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  • Hash Browne,

    Your landlord invests £240k in property.

    In general terms, setting aside the arguments as to whether we currently have a property bubble or not (- yes we have..) – property as an investment can be considered more risky than Gilts, but less risky than shares.

    Given that level of risk, an appropriate investment return would be inflation + 4%. The property itself, properly maintained, can be expected to track wage inflation, which tends to exceed price inflation by a small degree; so the landlord needs a nett return of about 3% of value.

    – Nett return..

    For every £100 of headline rental yield, roughly £10 needs to be set aside for void periods, £15 for management costs, £4 for letting agents fees, £15 for long and short term maintenance costs, £2 for periodic gas and electric inspections, £2 for bad debt, and £2 for accountancy and legal costs.

    So around half of the headline rent goes on expenses.

    This means that for the rent to be economic, your landlord needs a return of 6% value on your headline rent, or £1200 per month.

    That you are able to rent for just £700 per month shows what a bunch of deluded, starry eyed muppets the UK’s landlords have become..

    ..but don’t expect it to last!

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  • 11. uncle tom said…
    This means that for the rent to be economic, your landlord needs a return of 6% value on your headline rent, or £1200 per month. That you are able to rent for just £700 per month shows what a bunch of deluded, starry eyed muppets the UK’s landlords have become..

    ‘To be economic’…..meaning presumably to acquire this home for no net outlay, or for nothing, in otherwords. Leaving aside the question of whether this basic human necessity should be allowed to be traded as an ‘investment’ (I believe tax disincentives are morally right in this instance), I’d say to acquire this asset that for the £500 that the landlord is currently adrift still makes some economic sense. There is the possibility of great inflation rearing up, and should that feed back into the housing loop the landlord could cash his chips and walk away.
    Houses are tangible physical assets that have trounced the supposed RPI for donkeys years – don’t expect any change in the casino’s clientele, while the disincentives remain a theory…..and let’s be honest the 70% who are in the game don’t give a toss about this or the coming generations membership fees.

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  • vacuouspolitician says:

    What amazes me is some of you paying these vast sums of money in rent. You then moan about house prices while you service the whole buy-to-let ponzi scheme. Some of you need to understand that it is YOUR actions (paying high rents and not finding out who you landlord is) that are contributing to the continuation of high prices. If you continue to do this then live with the consequences. Get smart – find out who your landlord is and don’t play their game…
    …now for some sunshine.

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  • 6. uncle tom said…Little bit on the Beeb early this morning about the Irish housing market

    I saw that too, but the Irish had a cunning plan. They set up an asset management agency referred to as NAMA, which took over developers debts at the banks in exchange for the property. They intend to sit on them for as long as it takes for prices to recover (so that the taxpayer gets their money back!!) – so don’t expect too many bargains. Some housing estates in low demand areas might actually be demolished. See extracts below :-

    NAMA is, first and foremost, an asset management agency, established with the aim of transferring key property-related exposures from the balance sheets of the participating financial institutions in return for Government-guaranteed securities. It will manage these loans with the aim of achieving the best possible return for the taxpayer over a 7 – 10 year timeframe. Replacing these property-related loans with
    Government Guaranteed Securities will remove uncertainty about the soundness of banks’ balance sheets, provide the institutions with much needed liquidity and make it easier for the institutions to access capital (for some) and liquidity (for all) in the
    international capital markets. Financial Institutions cleansed of risky categories of property loans should be free to concentrate on their core business of lending to and supporting businesses and households.
    Much has been made of our ability to make a certain amount of funding available to allow projects to be completed. Let me state quite clearly that NAMA will take a strictly commercial view of unfinished projects and we will not sanction their
    completion for completion’s sake. NAMA will only make funding available if it makes commercial sense to do so. We have to be realistic about the portfolio of assets NAMA is acquiring. As an involuntary purchaser it has to take what it is given. However, when one examines the types of assets or indeed travels through the country we can all see land and half-built developments which should never have been
    contemplated as it hard for anyone with an objective view to see how they made sense even at the top of an overheated property market, never mind today when the market has collapsed. Inevitably, NAMA may well be faced with the very difficult decision
    of perhaps knocking down certain developments and this will incur costs but unfortunately there is no avoiding this. However, the taxpayer can be assured that the price NAMA will pay the financial institutions for these loans will reflect this reality.

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  • tenyearstogetmymoneyback says:

    re the earlier comments on rents etc.

    Personally I think that you have to asume that the landlord has paid cash.
    In my case the property was his mothers so he didn’t really pay for it at all.

    In that case (given the “safe as houses” theory) you have to compare the return on the
    property with what you could easily get in the Building Society.

    My biggest worry is not Mortgage Rates going up but savings rates reaching a level
    where the Landlord would be tempted to sell up.

    As for Vacuouspoliticians comments, Land registry data shows that prices have fallen
    about £20K in this road over the past couple of years. That is a lot of rent.

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  • Head Shake says:

    Uncle Tom – “… can’t help thinking that some people in the UK – especially those of Irish descent – are going to be tempted across the water.”

    Well, prices may have crashed in Ireland, and it might seem like a great deal for those of Irish descent to go back to Ireland and pick up a great deal. HOWEVER, change their British ££££ and because of its devaluation, suddenly Irish house prices have not really dropped at all for buyers on British currency. How do I know? I’m Australian who came to the UK 10 years ago, when the £ was fetching over $3 to a pound – now it’s half that. So, although I’m in London and it may seem like house prices have not really fallen here, they have – it’s just that the government turned on the printed presses with some £200 billion thrown about, which meant that the currency is devalued, maintaining the ‘paper assett prices’. We have already had a house price crash – people just don’t realise it, because by devaluing the currency, people look at their house prices and think that ‘mine was worth 300K in 2007… it’s still worth 300K now’. Great for the government, as they know that this clould of deception allows them not to lose so many votes. So, like the Irish folk, I won’t be returning to Australia anytime soon because I can’ t afford it, as all my savings are suddenly now worth half if I move them out of the UK. For anyone outside of the UK, house prices are now a bargain, as they are getting mega ££££ on the exchange. Basically, speaking on Australian $$$$, what would cost for one house in London, you can now get 2 for the same price! Silly me, I sent all my A$$$ here years ago, so I’m now stuck in the UK:). Yep, I’m now an average Brit being shafted. It’s how it works.

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