The House Price Crash Thread

[Jon]

(and for the record can you say who was one of the economic advisor's at that time - green and rides a bike are the clues ...

the Green Cross Code Man? :winkold:

[Awol]

I'll take your 20 bucks bet and loser pays to VT, any more for the Nick bet?

Can I have no election but another new unelected Prime Minister?

FWIW I think David Milliband may be the next Dear Leader..

[nrogers]

Nick from Bloomburg

New Zealand's economy is expanding at an annual rate of 3.3 percent and the central bank has boosted interest rates four times to a record 8.25 percent in a bid to cool spending and limit inflation.

Then Bloomburg is wrong, Interest rates are a 10.55% Ian

I suggest you look at the variable rate, you know the rate the affects the populas

ASB

[TrentVilla]

Yep I will, there will be pressure from the press and peers as GB will keep screwing the pooch.. it's gonna happen, mark my words, if I am wrong 20 bucks to VT!

20 bucks? Thats about 10 quid isn't it? Not that confident then?

$20 is quite alot, when interest rates are at 10.55% over here, guess what under a Labour Government... Tories will be back in here in the next election pretty much 100%... Nice...

As will happen in the UK.... GE in UK next 12 months definately!

Ok I'll match your bet Nick. Money goes to VT on there being a UK election within 12 months of today, start that clock ticking...

[snowychap]

Totally agree Jon. It is no different to the situation with the Conservative governments change in PM and your 100% correct when you say that there is no constitutionaly requirement.

Labour can effectively call a GE when they wish and I'm certain despite your belief Nick that in the current climate there is no chance this will happen in the next 12 months.

I'll take issue with that. It is.

There is no constitutional requirement for an election if thegovernment changes leader, I agree. When that government campaigned on the premise that the intended change of leader would not take place during the next term of office, I think there was a moral obligation to either see that through or ask the electorate.

[TrentVilla]

Totally agree Jon. It is no different to the situation with the Conservative governments change in PM and your 100% correct when you say that there is no constitutionaly requirement.

Labour can effectively call a GE when they wish and I'm certain despite your belief Nick that in the current climate there is no chance this will happen in the next 12 months.

I'll take issue with that. It is.

There is no constitutional requirement for an election if thegovernment changes leader, I agree. When that government campaigned on the premise that the intended change of leader would not take place during the next term of office, I think there was a moral obligation to either see that through or ask the electorate.

I was talking about legally not morally. Two entirely different things especially within politics so I stand bye what I said in the context in which I said it.

Further I may be wrong but I do not recall Labour campaigning on the basis that there would be no change of leader. They may not have said there would be but that is not quite the same thing.

[Gringo]

[Further I may be wrong but I do not recall Labour campaigning on the basis that there would be no change of leader. They may not have said there would be but that is not quite the same thing.

blair will serve full term

However the tories never said they would ditch the witch half way through her final term, so as such implied that the lady would go on and on and on and on ....

[TrentVilla]

[Further I may be wrong but I do not recall Labour campaigning on the basis that there would be no change of leader. They may not have said there would be but that is not quite the same thing.

blair will serve full term

However the tories never said they would ditch the witch half way through her final term, so as such implied that the lady would go on and on and on and on ....

I stand corrected, I don't remember that.

[Gringo]

We're all doooooooomed

Buy-to-let firm in administration

One of the biggest buy-to-let investment companies in Wales has gone into administration.

Cardiff-based A & A Property had more than 250 houses and flats on its books in different areas throughout Wales.

It is the first big casualty in the Welsh housing market since the start of the credit crunch, says BBC Wales business correspondent Nick Servini.

The National Association of Estate Agents in Wales believes more could go under as banks harden lending policies.

Like everywhere else in the UK, the buy-to-let property market has been booming in Wales in recent years.

I think it was bound to happen because there has been a great deal of investment in property over the past three or four years, particularly within the Cardiff area

Michael Jones, estate agent

A & A Property has been by hit by serious financial difficulties and administrator Grant Thornton has been called in.

Michael Jones, director of the Michael Jones Estate Agents in Cardiff, said the news came as no surprise.

"People who've bought at the top of the market and suddenly find that prices are falling, and of course there is a hole in their funding and the banks are starting to get very nervous about it," he said.

"With those numbers that [the company has] been buying, that's a huge amount of money.

[snowychap]

Gringo, do we infer from this that there is actually a bit of a prob in the buy to let area?

Or that this was just a badly managed firm?

If it's the former then it puts the other side to the CML optimism.

[Gringo]

You can't really tell unless we had a breakdown of their portfolio. 250 houses in Wales isn't really that big a portfolio, gonna be about 25m worth, probably mortgaged to t'hilt at 85/89% mortgages, and a blank patch of 10% would have killed them. Just a speculator that got his risk analysis wrong. But, and there's always a but,

But there will be a lot of similar investores conned by the property clubs who will have bought similar shoebox in the sky investments and who are going to go to to the wall. A&A had the foresight to do it through a limited company, take the last three months rent, don't pay the mortgages, and then go for administration - 3 months rent on 25m, should clear 30-40k.

People who have all their mortgages in their own name will have a tougher time escaping the fall.

[snowychap]

A&A had the foresight to do it through a limited company, take the last three months rent, don't pay the mortgages, and then go for administration - 3 months rent on 25m, should clear 30-40k.

That doesn't sound as though these are actions consistent with the sort of behaviour trying to be promoted by the Insolvency Acts. :winkold:

[leviramsey]

Gringo, do we infer from this that there is actually a bit of a prob in the buy to let area?

Or that this was just a badly managed firm?

Doesn't necessarily matter, does it?

It would seem likely that a block of 200-plus BTL's will go on the block at fire-sale type prices. If there aren't problems in the Welsh BTL market, that kind of action would seem likely to create them.

[snowychap]

Gringo, do we infer from this that there is actually a bit of a prob in the buy to let area?

Or that this was just a badly managed firm?

Doesn't necessarily matter, does it?

It would seem likely that a block of 200-plus BTL's will go on the block at fire-sale type prices. If there aren't problems in the Welsh BTL market, that kind of action would seem likely to create them.

Fair point.

Though if it were the latter reason and that area of the market wasn't in too bad a shape then this one-off flooding (maybe at an auction specifically for these properties) might not have as detrimental effect as if the buy to let area were already not in good condition (where it would just exacerbate the problem already there).

[Gringo]

Property prices fall in February

House prices fell in February by 0.5%, says the latest survey from Nationwide.

The fourth consecutive monthly fall in property prices pushed the cost of the average UK home down to £179,358.

The annual rate of house price inflation fell from 4.2% in January to 2.7% in February, the lowest since November 2005.

But the building society warned against gloomy predictions for the housing market, claiming that recession was "a remote risk for the UK economy".

Trend continues

It is the first time since 2000 that the Nationwide has recorded four monthly price falls in a row and the pace of decline seems to be speeding up.

Prices in the December to February period were down 1% from the previous three months, a steeper decline than the previous three-month on three-month figure of -0.4%.

Various surveys have charted a decline in the housing market since last summer, with figures released on Thursday from the Land Registry also showing a slowing in the annual rate of house price inflation.

However, Nationwide said its own figures were overstating the situation because house price growth was particularly strong in January and February last year.

[snowychap]

Land Reg reports prices up in January

January figures from the Land Registry reveal a 0.9% increase in house prices in England and Wales.

The increase takes the average house price to £186,045.

However, the data shows a decline in annual house price changes, from 6.7% last month to 6.4% this month.

London experienced annual price growth of 13.1% with the average house price for January standing at £357,976.

The largest monthly growth was seen in the North West with an increase of 2% taking the average house price there to £139,362.

The volume of transactions was down on the same period last year, with an average of 100,648 per month in the months August to November 2007, compared with 117,173 per month from August to November 2006.

Nicholas Leeming, client director of propertyfinder.com, says: "January was better for the housing market than people feared and prices rose, albeit slowly. The foundations of the housing market are solid – there is still an undersupply of family homes and the labour market is strong so we are not seeing forced sales.

"But people want much greater clarity on the outlook for interest rates and they want mortgage lenders to pass any rate cuts on. The rental market is where the main activity is to be seen."

Ross Bowen, managing director of Connells Survey & Valuation, adds: “This modest increase in house prices reflects the slight improvement in mortgage demand. It is likely we will see monthly rises and falls in prices in the first half of the year.

"Our data shows mortgage approvals for house purchase rose 3% in January to 75,300 from their December low of 73,000.

The mortgage market may finally be finding a floor after months of decline caused by higher interest rates, the reduced supply of credit from mortgage lenders and the lack of consumer confidence.

"We should not read too much into one month’s numbers, this is still the weakest market in 13 years and the ongoing impact of Home Information Packs following full implementation in December is unknown.”

Why is such a shockingly stupid measure as the AVERAGE house price used?

[snowychap]

Bank set to keep rates at 5.25%. Well, we'll find out later on.

The Bank of England's rate-setting committee is forecast to keep interest rates at 5.25% later on Thursday, amid growing signs of inflation.

Most analysts are expecting rates to stay on hold after the central bank reduced rates in February by a quarter of a percentage point from 5.5%.

The bank faces the twin threat of a cooling economy while prices rise.

Data showing that that prices firms are paying and charging have risen has increased worries over inflation.

The Bank is set to announce its decision at noon.

Tight lending

Figures released on Wednesday showed strong new service sector growth in addition to rising costs, according to a monthly index from the Chartered Institute of Purchasing & Supply (CIPS).

"These indicators seriously challenge the case for more aggressive interest rate easing at this stage," said Alan Clarke, UK economist at BNP Paribas.

The Bank of England's inflation report in February hinted that the scope for interest rate cuts was limited because of the need to keep inflation in check.

Food and energy prices keep rising and look set to increase further, thereby fuelling inflationary pressures.

Vicky Redwood of Capital Economics said: "The combination of faster growth and stronger price pressures shown in February's [bank of England] report undoubtedly supports the case for the Monetary Policy Committee (MPC) to be cautious about how quickly it cuts interest rates."

All the members of the bank's MPC, which sets rates, voted for a cut at the previous meeting in February.

MPC member David Blanchflower had favoured an even greater cut of half a percentage point, rather than the quarter point cut that came into effect.

With banks facing higher costs and finding it harder to access credit, individuals are also seeing difficulties in getting access to mortgages.

"Corporates are suffering too," said Jonathan Loynes, head economist at Capital Economics.

"Not only have banks tightened their lending conditions for companies, but the cost of raising funds in the capital markets has begun to rise too," he added.

[snowychap]

Buy-to-let boom may be stalling

The buy-to-let housing boom may be about to stall, according to a survey from the Royal Institution of Chartered Surveyors (Rics).

Its survey of residential lettings says the number of new instructions from landlords fell towards the end of 2007, for the first time since 1998.

Rics blamed recent restrictions on mortgage lending to would-be landlords.

But this contradicted recent figures from mortgage lenders, which suggested the buy-to-let market was thriving.

"Access to the buy-to-let market became harder for would-be landlords as mortgage products became scarce," said Rics.

"One per cent more chartered surveyors reported a fall than a rise in landlord instructions [in the last three months of 2007] compared to the previous quarter.

"The credit crunch has restricted the number of buy-to-let mortgages approved, as well as the number of mortgages available to investors," Rics said.

Contradiction?

Last month the Council of Mortgage Lenders (CML) reported that in fact the number of buy-to-let loans went up by nearly a quarter last year, taking the number of such mortgages in existence to 1,038,000.

Have buy-to-let blues begun?

The CML also said lending had picked up in the second half of the year, despite the credit crunch reflected in the near-collapse of the Northern Rock bank.

"Our figures are based on just the last quarter of the year, by which time we believe mortgage lenders had started to tighten their lending criteria," said a Rics spokesman.

Whatever the current difficulty of borrowing to become a landlord, there is no shortage of tenants.

The Rics survey found that demand from tenants was still buoyant, though not quite as strong as before.

"While banks remain cautious about offering loans, demand for rental property will continue to increase, with many would-be-buyers unable to make the jump to home ownership," said Rics.

"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents," it added.

Seems their ain't any concensus from the experts.

[Jon]

Stagflation?

Inflation during a period of stagnation in the economy?

TBH i think there will be a little cooling in the economy and housing market, but medium term i think both will recover, but i think we could be in for year or so of belt fastening.

S'pose it could depend on what happens to the States over the next 12 months or so?

[TrentVilla]

Well I would imagine the forth coming presidential race and eventual new candidate will see the introduction of measures to help turn around the American economy and also give a substancial boost in confidence to the nation at large.

There may be a blip in the road ahead but little more than that although the days of easy borrowing are perhaps gone for a little longer.