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What's the housing market like at the moment?

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Your advocation of 'sell up and rent for a couple of years' sounded like advice to me but is not logically thought out.

 

no, it was an alternative to 'living in a caravan' which Cyclone said was the only way to realise the gains made on your main residence in the last few years.

 

all i was saying was that if you sold up and rented for a couple of years, that was another way to realise gains in a falling market.

 

it wasn't advice and I'm sure is not an option for the majority. But then neither is living in a caravan.

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It's interesting isn't it?

 

I think there has always been a huge turnover in those properties, one of the reasons we moved away ironically. Last summer loads of properties on our road were on the market, maybe 15%+ of all houses as an estimate. lots of investment purchases by parents of students and lots of FTBs who are far more likely to relocate and there are probably other good reasons for high turnover.

 

The difference now is that there aren't the buyers for them, FTBs are priced out or scared away and parents can't see the potential for gain. None of them can get the mortgage terms they need anyway.

 

I have to agree with you Tricky. Me and my girlfriend have been trying to sell our 3 bed house in Crookes for the last year. It doesn't help when you get a poor valuation in the first place and then after slashing 40K off the asking price it now won't sell as the market has turned.

 

Mortgage rates are climing as per the Nationwide today and the BOE is being pushed to raise rates to head of inflation. He might as well really as the lenders are increasing their rates anyway!!

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A cogent view from TV's Phil Spencer and Kirsty Allsop...

 

 

Phil Spencer says:

I think that what is happening is that the press in general talks about ‘the property market’. But there isn’t just one property market - there are lots of property markets in different regions and in different towns. It’s important to accept that there are different ones around the country, and that what is happening in yours may not be happening in someone else’s in another part of the country.

 

I’ve just read a feature in a newspaper that deals with new builds in the Midlands, and of course I feel sorry for people who have lost money in this particular story, but the sad fact is that they simply bought the wrong thing – there was a massive over-supply of the same types of property in that area.

 

The property columns seem to have become obituary columns but markets never stand still and there are opportunities in both upturns and downturns. Recent Halifax figures show house prices fell by an average of 2.5 per cent last month, the biggest fall in a single month since 1992. However, they went on to conclude that average prices were still 1.1 per cent higher than they were 12 months ago.

 

It is negative equity which forces home owners to sell and it is only when the numbers of forced sellers reach significant levels that a market actually crashes. Using data from 80 per cent of lenders, Experian estimate 8,000 people are already in difficulty and more than 23,000 would be in negative equity if prices fell by 10 per cent. A 20 per cent fall would mean 78,394. Given that there are around 14.5 million owner-occupiers in the UK - I do not believe these numbers would bring about the type of market collapse being hyped up in the press. Yes - there will be pain felt in certain sectors, but it is by a relatively small number of people.

 

Conditions have been shifting on a fortnightly basis and the market is incredibly polarised; different postcodes and price brackets behave quite independently from one another. It is therefore impossible for mainstream press articles to offer more than an idea of general trend. Without a clear understanding of how each of the various statistics are collated, the relevance to your circumstances, and from which stage in the transaction process they refer to, the information is of limited use.

 

It always surprises me and my colleagues at Garrington when the market softens that so many people trading upwards fail to see a potential drop in price as a relative one, which can be more than recouped by purchasing under similar conditions. But that is precisely what ‘sentiment’ is all about and the reason why it affects activity to such a great extent.

 

There are risks for all sectors and just as everyone is repricing risk in the financial markets – so they will try to do so in the property markets. As we head into the summer, only time will tell whether the slowdown becomes more entrenched.

 

 

Kirsty Allsopp says:

All this talk about the credit crunch is a red herring. The problem is not falling house prices but falling transaction levels, down by 26 per cent nationally. If supermarkets suddenly sold 26 per cent less groceries what would that say about our economy?

 

To give you an example: my first flat had a £72,000 purchase price – with £720 Stamp Duty. At today's prices, that flat would be worth £325,000, so the Stamp Duty should be £3,250. But instead it is £9,750! This sum represents nearly a third of the minimum 10 per cent deposit insisted on by banks at the moment.

 

The market simply cannot continue to be used as a bottomless pit of money by the government, it is being milked dry and the resulting stagnation is bad for everyone. No one can afford to move house anymore, this is not just about first time buyers it's about everyone.

 

The cost of moving from Edinburgh to Manchester if your home was worth £300,000 would be £20,000 and over half of that money is tax, Stamp Duty and VAT on fees. If we reduce Stamp Duty, transaction levels will rise, prices will stabilise and the revenue due to the government could actually go up!

 

So, what’s my advice at the moment? Don’t sell if you don’t have to. Your house isn’t worth less than it was, but people aren’t buying. There’s a difference between needing to and wanting to move. If you don’t need to, don’t. People aren’t buying unless they need to buy – all because people have lost their confidence. It takes a certain amount of confidence to sit it out.

 

And if you do decide to buy a house, bargain hard and aggressively - it’s a fantastic time to try to be cheeky.

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Tony - hi, correct me if Im wrong but you are one of the bulls on the property situation arent you?

 

Phil and Krusty - hmmmmm, definitely vested interests there to talk up the market

 

How about the Bradford and Bingley then???

Bit of a shocker in the last hour

http://news.bbc.co.uk/1/hi/business/7430460.stm

 

It looks like landlords and people who bought in the last 3 years are in for an 'interesting' ride this year and next

 

Good luck!

 

Deepak

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Not really Deepak S7, I'm just a realist who tries to see the wider picture. I agree with quite a lot of what is written in the article, but the one factor that cannot easily be accounted for is peoples stupidity, and we've seen a lot of that recently from all sorts of places.

 

B&B? Well times aren't good for them or any other institution, but I think that it's best to stick with the facts rather than the headlines. In actual fact they have made a real profit of £56m in the last four months.. but that doesn't make sexy headlines does it? ;)

 

The 'loss' headline comes from a paper write down of the value of certain asset holdings, not from real hard cash. The write down is a part of the restructuring package that is seeing a quarter of a billion pounds being invested in the company. That isn't to say that it isn't important, but it needs to be seen in context. B&B have large BTL assets and they are suffering from overenthusiasm and general stupidity from themselves and their customers, but they still have assets, and those assets still produce income. It's important to remember that.

 

Time will tell if they are resiliant enough, but somebody who is clever enough to have a spare £179 million and the ability to raise another £258 million seems to think that they are worth a punt.

 

Rather than take the BBC's skewed viewpoint, here's what B&B actually said this morning.

Key Highlights

 

TPG Capital (“TPG”), a leading global private investment firm, has agreed to invest approximately £179 million and become a major strategic investor owning 23% of the Company upon completion

 

 

A Restructured Rights Issue will raise approximately £258 million and, together with TPG’s investment, will raise additional capital of approximately £400 million, net of expenses. All shares will be issued at an offer price of 55 pence per share

 

 

Difficult economic conditions have led to a decline in net interest margin and increasing arrears. Underlying profits for the first four months of the year amounted to £56 million compared to £108 million in 2007. The trading update highlights a more cautious outlook for the year

 

 

Steven Crawshaw has stepped down as Group Chief Executive with immediate effect as a result of serious illness. Chairman Rod Kent has become Executive Chairman

 

Rod Kent, Executive Chairman said:

 

“The last few weeks have been challenging for Bradford & Bingley, and this is a disappointing trading update reflecting a more difficult market environment. I understand shareholders’ disappointment. Nevertheless, I am delighted to welcome TPG as a major strategic investor in Bradford & Bingley. With a strengthened capital base and the skills that TPG will bring I am sure we can develop the business to exploit the opportunities available in our markets in the medium term.”

 

Matthias Calice, a partner at TPG said:

 

“Bradford & Bingley has a longstanding established franchise in the UK specialist lending market. We believe that the Company’s superior market position, coupled with this injection of capital provides the platform for potential growth and profitability. We are very supportive of Rod Kent’s appointment as executive chairman and look forward to working with him and his team to support the Company’s growth strategy.”

 

Landlords? Well, as long as they have adequate cover on their outgoings where is the problem? Some will suffer if they have got it wrong, most won't. It's always been that way. Perhaps it is a good thing if a few of the more precocious, unprofessional, amateur landords get out of the rental business?

 

It's all pretty much in line with my 'prediction' back in December but it just feels weird when it happens. I'm still expecting two or more of the larger institutions to merge in some way, shape or form, and probably before the summer is out.

 

I probably speak to more financiers, bankers, investors, speculators than most on SF, and it's fair to say that there is quite a bit of worry about how things will shape up over the coming months, but nobody is jumping off the top floor just yet.

 

It's important to keep up to speed and remain realistic in view of changing circumstances, but I don't see the need for more doom and gloom than is neccesary. Circumstances change and we should try hard to adapt to suit.

 

 

 

 

Edit: For the sake of completeness I think that it is worth saying that I believe there will be a bit more of this financial restructuring in the next few months, but I view that as a positive thing as the institutions get to grips with hard reality, find their feet again and get the money moving around once more. However, each bit of news will be reported as a disaster, and SFand the press will be full of how we are all going to hell in a hard cart, which will just serve to prolong the discomfort. My summation? Get off your arse, sort it out and get on with the future.

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Surely a price correction is actually a good thing in the long run.

Prices are unsustainably high, they are no longer in touch with the earning potential of most people. So if the whole market falls, apart from people who end up with negative equity, it's a good thing. And even that minority are okay so long as they can afford repayments and don't have to move.

 

What Phil said

so many people trading upwards fail to see a potential drop in price as a relative one, which can be more than recouped by purchasing under similar conditions

Is true. But whilstever the market is still falling why would you move unless you had to? The longer you wait, the further that relative drop goes and the smaller the gap to the next rung gets. So long as your salary isn't falling at the same time you end up better off by waiting.

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but, but, but........if everyone waits, what will Phil and Kirsty do for a living?

 

Sorry, silly me, they have everyones best interests at heart with their opinions. If they thought the market WAS going to collapse, they would tell it like it is.

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but, but, but........if everyone waits, what will Phil and Kirsty do for a living?

 

Sorry, silly me, they have everyones best interests at heart with their opinions. If they thought the market WAS going to collapse, they would tell it like it is.

 

Im sure they would. As respected TV personalities they have a duty to tell things as they are.

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Im sure they would. As respected TV personalities they have a duty to tell things as they are.

 

Yes, you're right. there has been absolutely no evidence in the last few months of the public being misled on TV programmes.

 

None.

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Not really Deepak S7, I'm just a realist who tries to see the wider picture. I agree with quite a lot of what is written in the article, but the one factor that cannot easily be accounted for is peoples stupidity, and we've seen a lot of that recently from all sorts of places.

...

Edit: For the sake of completeness I think that it is worth saying that I believe there will be a bit more of this financial restructuring in the next few months, but I view that as a positive thing as the institutions get to grips with hard reality, find their feet again and get the money moving around once more. However, each bit of news will be reported as a disaster, and SFand the press will be full of how we are all going to hell in a hard cart, which will just serve to prolong the discomfort. My summation? Get off your arse, sort it out and get on with the future.

 

What you are calling 'peoples stupidity' [sic], is the strange and wonderful/awful world of market forces. You weren't complaining when people bid more and more over previous years' values for properties, in the expectation that those values would keep on rising at an astronomical rate. And in a self-fulfilling prophesy, they did.

 

Now the expectation is that those values will fall and, just as in all markets, those expectations will be realised.

 

And to address your summation, people are sorting it out. They are making astute financial decisions based upon expected future property values, inflation, job security, etc.

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Im sure they would. As respected TV personalities they have a duty to tell things as they are.

 

:hihi::hihi::hihi::loopy::hihi::hihi::confused:

 

Are you trying to be funny. If so, it's brilliant.

 

If you were serious, then you need your head examining.

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Im sure they would. As respected TV personalities they have a duty to tell things as they are.

 

 

 

 

Without a shadow of doubt this is the best post I have ever ever ever ever ever ever ever ever ever ever read on the internet

 

Ever

 

Deepak

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