What are your thoughts on the UK housing market?

Article from this week...

http://www.independent.co.uk/money/mortgages/a-million-frozen-out-of-mortgage-market-1805609.html

On the housing debate....
If I've got this correct theres 10 million homes with a mortgage and 26 million homes in the UK. This is hardly a situation where everyone is struggling with payments and many will have reasonable/affordable situations..
Given that banks and building societies have tightened up lending to the point where they should have been in the first place then its going to be a long time before theres any noticable increase in house prices...if any.??
Theres always demand for houses as everyone dreams of a bigger and better place but if you can't borrow the money then something has to give. Three times salary isn't going to buy many people a home and that seems to be the general rule..??
It doesn't matter if theres a million people admiring your home you'll not sell it if they can't or won't borrow the money...
Lets see if the chart below plays out...

http://forum.globalhousepricecrash.com/index.php?act=attach&type=post&id=4222
 
SAINT said:
“This stock market looks awfully like a bubble to me again,” he said. “Where’s the evidence in real economy, where are the firms that are hiring folk?” Blanchflower said.
Click to expand...

Quite. One thing the experts all agreed on is that this crisis wouldn't be over until deleveraging was finished - well it's probably about half way through. Unemployment lagging into mortgages and consumer spending is still to throw into the mix too.

People who believe that QE = rampant inflation and GDP growth need to do three things - look at Japan, read about money supply, and read the latest money supply stats - quoted below.

"The Bank of England's preferred measure showed money growth shrinking by 0.9% in September - compared with anaemic 0.1% growth in August - despite efforts to pump in £175 billion through quantitative easing (QE).

Money growth is also falling at an annualised quarterly rate of 1.7%, the biggest drop since the Bank's records began in 1998. "


So where has the 175bn gone? Bank balance sheets, stock market, assets etc. What happens when printed money gets put straight into assets rather than lent by banks? That should be obvious to everyone by now.
 
in the nineteen eighties Margaret Thatcher came to power
and she decided to sell council houses to people who had lived in them a long time and that was when buy to let started to pick up , because there was a housing shortage, and we had a very good run , house prices kept going up , and in no time at all it was paid for and then we would buy an other one , and we all know what happened then, I will not go on

the point I want to make is, that councils are starting to build council houses again in my home town , houses to rent in town are about £550 per month but a council house to rent is only £300 per month
every one is on the housing list and waiting for a cheap council house
a lot of houses are being rented out because they cannot find a buyer
soon the pool of people who want to rent will start to diminish
and I think that prices will go down, or at least stabiles
and there will a surplus of places to let
well that is the case in my home town now

a very old friend of mine , who had been in business for 60 years
said to me ,
iT HAS BEEN MY EXPERIANCE IN LIFE , THAT WHEN EVERY ONE IS GETTING INTO THINGS
ITS TIME TO BE THINKING OF GETTING OUT

I am in no rush to buy a house to let
I will only buy a house ,if inflation take off , to protect the value of my money
I always try to think outside the box
you try it
hornblower
 
Xeno said:
So where has the 175bn gone? Bank balance sheets, stock market, assets etc. What happens when printed money gets put straight into assets rather than lent by banks? That should be obvious to everyone by now.
Click to expand...


This begs the question - what is the transmission mechanism that feeds the supply of money into the economy.

I'm not sure anymore what is obvious these days?
 
Xeno said:
People who believe that QE = rampant inflation and GDP growth need to do three things - look at Japan, read about money supply...
Click to expand...

People who believe that rampant inflation cannot happen in the UK need to read about Argentina and Zimbabwe.
 
Agree the sale of the council houses doesn't look a good move today as waiting lists are lengthy due to the lack of affordable homes...
According to this link below buy to let took off around 10 years ago but its not clear why.?
Perhaps a few factors...stock markets failing to deliver private pensions will be one..
Cheaper money buying homes which cost less than half todays prices combined with new financial packages from the banks etc..
Maybe a bit of the TV shows with their obsession on the DIY front convincing the viewers it was easy to make a fortune..

http://www.housepricecrash.co.uk/graphs-buy-to-let.php
 
People who believe that rampant inflation cannot happen in the UK need to read about Argentina and Zimbabwe.
Click to expand...

The government is relying on high inflation to erode their debt in my view.


Paul
 
poborsky said:
People who believe that rampant inflation cannot happen in the UK need to read about Argentina and Zimbabwe.
Click to expand...

I never said it couldn't happen. Just that it's much more about credit and money supply than the simplistic QE = inflation that you hear about ten times a day.

At the moment, the QE has not led to the expansion in credit that is necessary for inflation. If asset prices crash again, a significant quantity of that printed money will disappear again. People who believe that money is always out there once printed need to ask themselves what actually happened to the trillions destroyed in the last couple of years.

Again, I'm not saying it can't happen - personally I don't agree with QE beyond the extent of guaranteeing credit to solid businesses and consumers - just saying a more balanced view with more of the facts is sensible.
 
Atilla said:
Interesting write up on the transmission mechanism which touches on a number of points... with some blogs...

http://duncanseconomicblog.wordpress.com/2009/04/23/money-credit-quantitative-easing/
Click to expand...

It's a good blog. Key quotes for my points would be:

Special Purpose Vehicles (SPVs) [...] have the effect of inflating the numbers – even when it will have no effect on economic activity in the traditional sense.

the crucial variable is credit, i.e. lending. It is lending that drives economic activity not money.

the bank lending channel is one of the more important ways that monetary policy effects the economy. I also suspect that the bank lending channel is currently blocked. If I am right, QE will see an extra £75bn pumped into the economy (as gilts are taken out and cash put in through central bank purchases) and, probably, a £75bn rise in the money supply. The worry is that this will have little effect on the actual economy.
 
In my opinion buy to let ( of the new properties at the current prices) is and will be dead for several years to come, and there are several reasons for it to be so. That does not mean that some will not buy some properties to let, but the overall risk is much grerater now since the ratio of return to the current asking price is not that good. One can buy cheapper properties in "wrong" letting areas, and one is buying a bad debt. Prices in more desirable letting areas are high, making the returns not worthy the original investment. I live in one of the best letting area in the UK, but many sensible landlords are not buying now, and have not done it for several years. Some that bought late regret it, as their late purchases did not improve the well being of their portfolio. Thare always will be some exceptions, but the ovelall picture is to hold to the sensible portfolio, and see what will come around. There is also much less credit facilities atm, preventing some selfinflicted severe financial injures. Housing has been politisied and there are ever grater demands placed on private landlords, if you are private landlord, you would know the situation, if you are not, just keep trading well and enjoy the peace.
If and when the prices come down, I shall endevour to help my kids to purchase some properties, as there is no reason (due to inheritance tax) anymore to do it in my own name. Last time it has taken several years from the initial Wall St drama to be translated into falling house prices (1987 to 1994/5) and there is no reason to believe that this time around it shall be any differnt, in fact in percetage terms it might be even worse. Patience and soberity shall pay dividents, as they always do. The lack of selfpreservation of the crowd always amazes me, but I suppose that is the reason the market exists.
 
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2be said:
In my opinion buy to let ( of the new properties at the current prices) is and will be dead for several years to come, and there are several reasons for it to be so. That does not mean that some will not buy some properties to let, but the overall risk is much grerater now since the ratio of return to the current asking price is not that good. One can buy cheapper properties in "wrong" letting areas, and one is buying a bad debt. Prices in more desirable letting areas are high, making the returns not worthy the original investment. I live in one of the best letting area in the UK, but many sensible landlords are not buying now, and have not done it for several years. Some that bought late regret it, as their late purchases did not improve the well being of their portfolio. Thare always will be some exceptions, but the ovelall picture is to hold to the sensible portfolio, and see what will come around. There is also much less credit facilities atm, preventing some selfinflicted severe financial injures. Housing has been politisied and there are ever grater demands placed on private landlords, if you are private landlord, you would know the situation, if you are not, just keep trading well and enjoy the peace.
If and when the prices come down, I shall endevour to help my kids to purchase some properties, as there is no reason (due to inheritance tax) anymore to do it in my own name. Last time it has taken several years from the initial Wall St drama to be translated into falling house prices (1987 to 1994/5) and there is no reason to believe that this time around it shall be any differnt, in fact in percetage terms it might be even worse. Patience and soberity shall pay dividents, as they always do. The lack of selfpreservation of the crowd always amazes me, but I suppose that is the reason the market exists.
Click to expand...

I can get a rental yield of over 8.0% in a desirable up and coming area .... Is this that bad, particularly given cash in the bank earns so little interest?
 
spreader_legger said:
I can get a rental yield of over 8.0% in a desirable up and coming area .... Is this that bad, particularly given cash in the bank earns so little interest?
Click to expand...


8% return is very nice
and with a bit of luck you may get some capital growth as well ,

in my part of the impoverished part of the uk people cannot sell property so they are renting houses at lower prices then normal just to let let them
I have some flats I just cannot let at the moment , they are nice flats all modernised
new carpets , and all that
in my local paper there are large number of flats, and houses to let , some the 1st month free!!
there is a large pool of property to let and not enough punters to rent them
all the estate agents have 10 or 12 houses and flats to let , so what dose that tell you ?
over supply, thats what !
so I am just going to wait ,

I must confess that I am on my own on this ,several of my friend are saying buy now while property is cheap , but if you buy a house cheap and then you cannot let thats no good ( as 2 of them have )

I am comfortable with being the odd one out , i have been out on a limb several times in my business career , and have been prove correct several times

in the 1980s , they said buy property it can only go up ,but it cannot keep going up said i
2 years down the line , and it was crashing down, the banks wanted there money back
around that time i confess i did pick up several properties at bargain prices ,
the bank was ringing me up , they just want to get there loan money back
I had my pick , and what was most satified was I bought a property that one of my friends owned ( he was one of them who told me prices could only go up, and i was a fool not to jump in)
Cash is king at the moment
I like to think out side the box, so i will wait a while and see what happens
an old friend of mine always said , when every one is piling in , thats the time to be getting out

Warren Buffet likes to buy cheap and so do I
Hornblower
 
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hornblower said:
8% return is very nice
and with a bit of luck you may get some capital growth as well ,

in my part of the impoverished part of the uk people cannot sell property so they are renting houses at lower prices then normal just to let let them
I have some flats I just cannot let at the moment , they are nice flats all modernised
new carpets , and all that
in my local paper there are large number of flats, and houses to let , some the 1st month free!!
there is a large pool of property to let and not enough punters to rent them
all the estate agents have 10 or 12 houses and flats to let , so what dose that tell you ?
over supply, thats what !
so I am just going to wait ,

I must confess that I am on my own on this ,several of my friend are saying buy now while property is cheap , but if you buy a house cheap and then you cannot let thats no good ( as 2 of them have )

I am comfortable with being the odd one out , i have been out on a limb several times in my business career , and have been prove correct several times

in the 1980s , they said buy property it can only go up ,but it cannot keep going up said i
2 years down the line , and it was crashing down, the banks wanted there money back
around that time i confess i did pick up several properties at bargain prices ,
the bank was ringing me up , they just want to get there loan money back
I had my pick , and what was most satified was I bought a property that one of my friends owned ( he was one of them who told me prices could only go up, and i was a fool not to jump in)
Cash is king at the moment
I like to think out side the box, so i will wait a while and see what happens
an old friend of mine always said , when every one is piling in , thats the time to be getting out

Warren Buffet likes to buy cheap and so do I
Hornblower
Click to expand...

Hi Hornblower,
Yes there are some parts of UK where there is very small demand for rented properties, and I think that some landlords are under considerable stress.
The ratio of yield to cost (the cost of the property to you) is very important, and I will not go below 10% net, gross about 12%, as doing that for me translates to buying a low grade debt, studded with antilandlord legislation, a liability I would rather not have.
I look for the residual income, and the capital appreciation is not my primary objective.
Capital appreciation is a double edged sword, and it piles tax liability in case you sell, or donate the property to your kids or in case of an inheritance tax. I do not plan to sell, so my kids will have to deal with what remains. For me the important thing is that every property works and brings profit. I am a middle aged landlord (just over 20 years at it) and my avarage gross yield is above 20%, after my expencies the net should be above 15%. I have been conservative and keep over 75% positive equity in the properties
neddless to say I am not buying atm and have not been buying for the last several years. Eventually when I buy I shall buy it for the kidds, as I am not preparred to grow the pile of inheritance tax, and one needs only a certain amount of resources to live on.
It always amazes me when people buy badly, but that is the market, and as traders we should now that even better. Property is just a different instrument and as long as there is a healthy demand for renting, private renting sector should do well, especially in places of high demand. In spots of high demand properties have retained their value, making it not economic to buy atm, but times shall change and there might be a window of apportunity within the next few years. If not, well, trading shall become even more important! I am involved with other private landlords in our area, and if you need some assistance pls not hesitate to PM me.
 
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