mushroom

the last post touched on this but for such a huge asset as property, future exchange rate movements are arguably just as important as future interest rates and future house price movements.

CalgaryBlade

Really?, historically the stock market has way outperformed the housing market.(11% per year since 1918)

I've traded out of the UK housing market twice (1992 and 2004) and in the early 90's avoided the downturn, IMHO I'm doing the same now. If it looks like it's going back up I'll buy but I don't see that happening for a while.

SANDRAPAUL

The housing market in the UK is distorted out of all proportions and I doubt that the trend over the last 20 years will last long-term. We are now seeing a good % of the population saying to themselves...'hey why am I killing myself to keep up'

Mrs Thatcher has created in a very short while a whole country of property owners - or rather property borrowers through the 'right to buy' scheme. 100,000's of council tenants saw this programme as an opportunity to better themselves which is what it all started out to be. My parents were one of the first in our run-down village to do so, and everyone thought they were mad. That situation of right to buy was a major profit market for banks and building societies who soon got to grips with offering the earth in exchange for long term committments from borrowers. The recent (last 10 years) has seen this industry ballon out of control backed by Estate Agents who are only interested in selling for commission sake not caring about the outcome...who can blame then.

But the error of the ways is that we now have little interest in the governement looking after the needs of the low paid as Council run property is far and few between. Instead most rental is run by private landlords or housing associations that have little or no brakes on them. All this pushes the home user towards the concept of buying which has fuelled the market toa frenzy. What we are seeing now is panic buying at the arse end of the slowdown as they are worried that prices will rocket again (its called spin) which is why certain household names can claim that prices are rising. In some pockets they are - market towns especially. The overall trend is down.

Household expenditure is currently 135% of income as an average across the country. Bankruptcies are at record levels and Banks and Building Societies are increasing their levels of debt managment which whilst not out of control is at a pivotal stage.

The 1.7% growth - if that is the level which I doubt, is mainly down to large corporates with overseas investments bringing in good returns. High street spend is at a low not seen for 28 years. Why....because people are not being as rash as they were.

Therefore anyone investing in property as of the next few years would be in most economist's opinion MAD.

As regards stability and profit one needs to look at those countries with healthy

A) Export market
B) Stable economy
C) Balance sheet

The UK has none of these.

Growth in the UK housing market will slow at best. Crash if the slowdown presists. We are still only 18 months since the slowdown began. The Oil tanker is not yet at zero knots. It will take sometime to either stop and longer if it goes into full reverse.


Borrowing to invest. This is just another term for borrowing to survive.

Example.
Company borrows to pay salaries as the balance sheet shows a deficit. How long can the company survive. Answer - as long as a money lender sees it as a good long-term bet. The IMF, Worldbank, UN, EU have all said the UK has to stop borrowing. Outcome - civil servant list shrinks (shame for Brown as this reduces the turnout of voters for new labour), unemployment rises, housing crisis deepens, recession gets into full swing.

Germany quite easily slipped into recession which it might well be seeing the light at the end of the tunnell. Why on earth does the UK think it can escape - because it's arrogant.

On a recent survey the UK personality was deemed to be the most dismissive of debt and its repurcussions.

By the way. The concept of 'Right to Buy' was a good one. Commerce has just messed it up through greed and opportunity. But then again no one makes anyone buy property.

Daveyboy_The_Red

Twoddle!

theres a real big bank over here called halifax which do all sorts of house price research... take a look at their website today.

the housing market here is falling, its risen 5% in 6 months. FACT.

Yes there are a lot of folk leaving the country partially on the back of high property prices (which have been driven up solely by greedy, agressive sellers not estate agents - agents are governed by laws, the sellers are not!) but the UK remains a huge economic draw for imigrants from the rest of Europe, places like France and Germany where the unemployments rates are more than double what they are here and it is still viewed a 'land of promise'.

SANDRAPAUL

If you think it's twaddle good luck to you. You have mentioned the one name I would not trust with a barge pole. They are NOT impartial.

Daveyboy_The_Red

ok, so check out the Land Registry figures they same the same. Or perhaps you don't believe that either after all, the Government is probably behind that..

SANDRAPAUL

A recent excerpt from an economist's magazine.

A BLOATED PUBLIC SECTOR - If there’s one thing Gordon Brown is good at, it’s employing people. Since 1998 the number of public sector jobs has increased three times as quickly as the private sector. Right now one in four people works for the state. The Chancellor boasts about unemployment being at a 30-year low, but YOU’RE paying for it in higher and higher taxes.

Bottom line: You’ll keep on paying. The forecast is for public spending in 2008 to be 40% higher than it was in 2000. And according to Sir Christopher Gent, “the last budget planned for the tax burden to increase each year of the next parliament, reaching its highest level in 25 years in 2009.”

A HOUSING MARKET ON THE BRINK - During the election, Labour boasted that mortgage rates were at their lowest in 40 years. Not strictly true: interest rates have risen 30% in 2 years, so mortgage rates were A LOT lower 2 years ago than they are now. Chances are, despite the recent cut, oil-driven inflation will mean interest rates will keep rising. This will not help an already suffering property market… where house price inflation is now at its lowest level in nine years.

Bottom line: Will house prices crash in Labour’s 3rd term? Quite possibly. According to James Carrick, UK economist at ABN Amro, house prices are set to fall a further 10% in just the next 6 months.

A STRUGGLING STOCK MARKET - Since May 1997, the markets have swung wildly as the internet mania sent stocks soaring, then crashing. But over the eight years as a whole, a modest advance of less than 10% has left equity investors distinctly underwhelmed. In fact, figures from Thompson Financial show that from 1 May 1997 to April 2005, the FTSE is up just 9.2% compared to 45.2% for the Dow Jones Industrial Average. And while their economies were struggling, Europe’s big stock markets have easily beaten Britain for stock market returns. Over the same period, Germany’s Dax index is up 23%, and France’s CAC40 a hefty 50.1%.

Bottom line: The stock market has been a distinct underperformer since Labour came to power. Expect the FTSE as a whole to keep struggling under the current leadership.

A CRIPPLING PENSION CRISIS - Many private pensions are in serious trouble, or at least underfunded. Precious few of us are saving enough for retirement. But it’s the public sector schemes that spell trouble for all. Public-sector employees receive relatively generous final salary pension schemes, so the recent swelling in their numbers means this hefty bill will have to be met by YOU!

Bottom line: Blair and Brown managed to shift the issue of the black hole in the UK pension system out of the limelight during the election. It won’t stay that way for long…

A PUBLIC HOPELESSLY IN DEBT - High Street banks have been ‘binge lending’, and consumer debt in the UK is now £1 trillion… around 135% of household income. Compare this to seven years ago when UK households earned as much as they held in debt. No wonder bankruptcies are soaring, up 28% on the previous year.

Bottom line: A monumental debt crisis is looming. Over 14,000 bankrupt so far this year… and according to accountants Grant Thornton, this will reach 50,000 by Christmas!

In short, New Labour has blown it!

Gordon Brown inherited an economy in good condition. But the statistics clearly demonstrate that, under his stewardship, things have gone dangerously off the rails.

SANDRAPAUL

Yes I beleive they probably are. During the last crash reposessions and severe arrears were counted into the overall figures and general state of the market. They are now not. So we do not see the prices that the homes actually achieve when they are sold off by the banks and building societies.

As everyone is now aware spin and downright lies are at the heart of the seat of power. Those believing what they are told from

A) Any government related source

or

B) Anybody who can make a buck out of making a bad situation look good

sadly is at the behest of those they trust.

Daveyboy_The_Red

I think you mis-understand. The Land Registry now shows the actual price a particular property sells for and the date. not really something that can be tampered with too much..

SANDRAPAUL

No misunderstanding here or with the many Estate Agents I know.

But.... matter not either way as we are out of the UK property market so it makes no difference to us.

But..ask yourself one question. If property is unaffordable in many areas of the UK, especially the south, and especially the youngsters coming out of college or starting a new family just what is good about property rising by whatever you think it has in the last few months.

That's a soul searching question.

Secondly as regards the company you named I watch reports coming out all day long. Over the last few months I have seen the supposed increases change to stabilisations and slight drops occur within hours and all from the same source. And that is especially true when a competitor brings out a different set of figures at the same time.

Its like today on MSN. On one page Construction activity has increased by up to 6% in quarter 3. On another link on the same web host I found another report stating Construction had unchanged in quarter 3.

Spin.

Either way the last 2 years has opened my eyes to the fact that the UK is not much different to anywhere else.

The Empire has died but no-one likes to talk about it.

One GOOD thing with prices rising for the government is that it makes the GDP growth for 2006 supposedly look healthier - just more debt piled on..that's all. And the good thing for those pedaling mortgages means that more people think its safe to get into more debt.

Daveyboy_The_Red

I actually agree with you, there is no real benefit from high house prices except for those of us lucky enough to be moving out of a high market to a cheaper one and yes yes of course, lies damn lies and statitics. i am in the industry and have been for many many years. i've seen the ups and downs first hand and at present people are still buying, but with far more sense than a couple of years ago so hopefully it is somewhat more stable.

however the trend of peoples attitudes who are leaving the uk seems to be very very negative on this subject. don't forget our little uk economy is part of a far larger picture, if house prices fall here theres a very very good chance they'll be falling elsewhere too...

MarkG

So the Land Registry figures include the '10k cash back', 'stamp duty paid' and other schemes that sellers are using to avoid reducing their prices?

The bigger problem with all house price sale figures is that they're based on the prices of houses that sell. If there are ten 100k houses in my village and one 200k house, and one year five 100k houses sell, the house price index is 100k. If next year the 200k house sells for 150k and one 100k house sells for 52k, the house price index is 101k even though the sellers have cut their prices by 25-50% in order to get a sale. Now, they can try tricks to remove such changes by trying to compare houses today to similar houses last year, but there's a huge margin of error in such comparisons which easily wipes out claims of a few percent growth.

The simple reality is that interest rates are still near historical lows, house prices are near historical highs, and the average person today would be hard-pressed to buy the house they currently live in if they had to pay today's prices. That's unsustainable, and either prices will have to drop by 30-60% or wages will need to double.... I think it's clear which of those is more likely.

Heck, just look at the difficulty people here are having in selling their houses if you think that prices are rising. A few are getting fast sales as they run into one of the remaining eager buyers, the rest are waiting months and cutting prices to get any buyers interested.

Daveyboy_The_Red

I take it you're leaving soon...?

MarkG

I don't know, that's all down to CHC. The rate they're going I'll still be here at the end of next year.

But personally, if I did own a house right now I'd sell it for whatever I could get.

According to the news reports I've read they're falling in Australia and New Zealand, and I strongly suspect they're going to be falling soon in America. Which is a good thing: high house prices are a huge drain on the economy, almost all of us would be better off if we could buy a decent house for a fiver.

SANDRAPAUL

And if we got paid the same as those in India and China we would be 'COMPETITIVE' - who's stopping that?

The cost of living.

Who governs that.

PLCs that run up huge profits year on year.

Who can alter that.

A decent government.

(I have said it before. We now have, under a socialist government, a wider gap between the rich and poor than was the case during the Victorian days - now that is worrying!)