False Rally in UK Housing Market

[Tim]

http://www.bloomberg.com/apps/news?pid=20601087&sid=anMtj3n3RftE

It's good to know that the UK housing market has stopped declining, as this together with the US house market can shore up sentiment to property globally, however this may be a false dawn according to the article.

Tim

 

[Bill.L]

Hi all,

Usually the first rally after a decline is called "a false rally", with every excuse under the sun. The second rally will probably be stated as prices getting beyond the real economic environment, the third rally.....

Just when the media report that we look to have huge upside potential, is when you should really worry.

bye

 

[Tim]

Hi all,

Usually the first rally after a decline is called "a false rally", with every excuse under the sun. The second rally will probably be stated as prices getting beyond the real economic environment, the third rally.....

Just when the media report that we look to have huge upside potential, is when you should really worry.

bye

Or in other words when you read "no end in sight" in means the end is very near, or when you read "has a long way to go" means its almost there...

Tim

 

[kum yin lau]

Hi, my 2 cents worth.

The UK 'decline' needs to be taken with a lot of salt.

London properties rose from the pits in 95 [I almost bought a place in Bayswater 122000 pounds] Rue the day I didn't. Another property in Knightsbridge was bought by someone related to someone I know. The asking price was 1.1M pounds [I tried to form a group to buy it] That property was resold to a developer for >4M & it formed one of the Thames embankment projects.

My cousin's son bought a house in Soho.

My brother bought a small house in Gloucester, then upgraded & renovated the house himself. Today it's worth 200000 pounds.

Those properties have not dropped in value.

UK property decline? A lot of people will be flabbergasted. What decline?

KY

 

[kum yin lau]

Hi again,

BTW, I missed the UK boat because my own financial circumstances weren't right for me to invest. I couldn't pull together the necessary funds.

I didn\t miss the Aussie boat or the NZ boat. The us boat is there for the taking but I'll pass on that one.

KY

 

[Aaron Sice]

i still think we are looking at a severely cycled real estate and sharemarket rallies and downturns now.

i think my grandkids will be the ones to see a "normal market" again - but it'll be "abnormal" by then.

now to watch trends and buy / sell accordingly.

 

[boz]

here is another view of "false dawn"
this bit has got some interesting number:

And, adds Ms Mehta, prices have been pushed up by cash buyers; surveyors report bigger rises in London and the south east than elsewhere. But, she says, this is only a temporary boost. In the longer-term, prices depend upon mortgage financing - which remains frustratingly scarce.

One symptom of this is that lenders aren't offering big loan-to-value mortgages. As a result, the average first time buyer in the second quarter had to pay a deposit equivalent to 121 per cent of their annual income. At the peak of the boom in 2006, deposits were less than 70 per cent of income.

And, adds Melissa Kidd of Lombard Street Research, banks are refusing to lend big multiples of income. This is an especial threat to the market because although interest rates are low, prices are still high relative to incomes. Lloyds Banking estimates that, in August, the average house price was 4.39 times average full-time male earnings. That compares to a post-1985 average of 4.04 times.

I like the idea of measuring deposit with income more then the common price of home/income

 

[Aaron Sice]

Lloyds Banking estimates that, in August, the average house price was 4.39 times average full-time male earnings. That compares to a post-1985 average of 4.04 times.

*gasp* you mean in twenty years - the average loan is 15% more geared?!?!

oh my gosh - where's the credit coming from? oh no! the world is unsustainable in it's current cycle! sell! sell! sell! get out while you can!! if you can't get out, jump out your nearest window!!!

we're all gonna die!!!! won't somebody think of the children?

what were YOU earning in 1985 versus now? are you SERIOUSLY pointing to this as a reason or is it a just another random post of figures?

 

[boz]

*gasp* you mean in twenty years - the average loan is 15% more geared?!?!

oh my gosh - where's the credit coming from? oh no! the world is unsustainable in it's current cycle! sell! sell! sell! get out while you can!! if you can't get out, jump out your nearest window!!!

we're all gonna die!!!! won't somebody think of the children?

what were YOU earning in 1985 versus now? are you SERIOUSLY pointing to this as a reason or is it a just another random post of figures?

I guess we agree UK home prices are not too much overvalued anymore, infact after the drop in prices and devaluation of the pound they are much cheaper then australia. Might be a better investment for australian property investors

 

[Aaron Sice]

i wouldn't touch the UK with a 6000 nautical mile barge pole.

 

[HiEquity]

i wouldn't touch the UK with a 6000 nautical mile barge pole.

I'm sure there are some quality assets among the general junk that would be very lucrative to own - finding them may take some work though!

 

[kum yin lau]

Hi Bluecard, neither would I.

I'd maintained before and continue to say it, the gold is here in our own backyard. Four months ago, our shares made good buying, now there's still some rough diamonds in our backyard.

KY

 

[Bill.L]

Hi all,

Boz,

I guess we agree UK home prices are not too much overvalued anymore, infact after the drop in prices and devaluation of the pound they are much cheaper then australia.

Totally disagree. Can you show 1 property that is similar to this....

http://www.realestate.com.au/cgi-bi...r=&cc=&c=22655310&s=vic&snf=rbs&tm=1253230405

,that is less than 30km from London on 900sqm, 4X2, and under 180,000 pounds???

Find one, just one, and post it if you are to have credibility with your assumption that our property is more expensive.

bye

 

[boz]

Hi all,

Boz,



Totally disagree. Can you show 1 property that is similar to this....

http://www.realestate.com.au/cgi-bi...r=&cc=&c=22655310&s=vic&snf=rbs&tm=1253230405

,that is less than 30km from London on 900sqm, 4X2, and under 180,000 pounds???

Find one, just one, and post it if you are to have credibility with your assumption that our property is more expensive.

bye

I trust bloomberg andits sources, here it is:

The average cost of a home in England and Wales rose 0.1 percent from July to 155,800 pounds ($253,000), the London-based property research company said in an e-mailed statement today. The increase, the first since July 2007, left house prices 6.7 percent lower than a year earlier, the smallest annual decline in a year.

At today exchange rate it makes the average home in england and wales at less then 300K AU$, the latest national home price for australia is 477K AU$ link
London has got 3 times the population of melbourne, doesn't make much sense comparing suburbs at same distance from the city centre, Hopper crossing is prety much at the outside limit of melbourne ( infact there are heaps of empty land around hopper crossing) and should be compared to the outside limit of london

 

[kum yin lau]

Hi boz, not only are there oranges and apples in the comparison, there are some strawberries as well.

Average prices mean rubbish & articles like that could be taken out of context.

I can sell you a house in Wales for 60000 pounds if you want to live there. Not a bad one either. It belonged to my sister in law's mother who had passsed on and now belongs to my sister in law and her brother.

KY

 

[boz]

Hi boz, not only are there oranges and apples in the comparison, there are some strawberries as well.

agree

Average prices mean rubbish & articles like that could be taken out of context.

I can sell you a house in Wales for 60000 pounds if you want to live there. Not a bad one either. It belonged to my sister in law's mother who had passsed on and now belongs to my sister in law and her brother.

KY

I don't want to buy a house in UK, I think they are less overvalued then australia not that they are cheap. In any case I think we are talking about investment, not that you have to live in UK.
In any case average income in UK shouldn't be much different then australia (at least in the long term), so, people in Uk in the long term should be able to afford similar property prices then australia and similar amount of rent. So when I see the average price 40% cheaper I see more potential of making money in the long term (or less likely to lose a lot of money)

 

[Aaron Sice]

but then that doesn't explain the GIGANTIC difference in rents payable for similar properties. that - and nearly that alone - discredits any argument that the UK and Australia's apparently similar incomes are the reason for the multiplication factor of wages/house prices.

it just doesn't add up - now feel free to post figures.

 

[Bill.L]

Hi all,

Boz,

Firstly 155,800 pounds at current crossrates is ~$A295,000.

Secondly, don't link an article on 'average'. I showed a property 4x2 on 900 sqm of land within 30km of a major centre. Like I asked before, please show one property, just one that is comparable in size land content yet cheaper.

Don't bother showing a pokey little 2 bd flat as the comparable average as it isn't.

bye

 

[boz]

Hi all,

Secondly, don't link an article on 'average'. I showed a property 4x2 on 900 sqm of land within 30km of a major centre. Like I asked before, please show one property, just one that is comparable in size land content yet cheaper.

Don't bother showing a pokey little 2 bd flat as the comparable average as it isn't.

bye

I agree with kum yin lau and "not only are there oranges and apples in the comparison, there are some strawberries as well." it is so different that is pointless comparing land prices in hopper crossing with land price in UK and europe, there is probably no property left in UK on 900 sqm land, a bit like in australia there is no property at more then 30km from a trillion of flyes or within 30 km from a 400 year old historic building.
Look, for decades, even centurys, UK average home price was higher then australia, this is untill last year (or the year before at most), infact untill end of 2007 average home in uk was well over 400K AU$, did you see many 900 sqm block then? Are the long term fundamental of UK so much worse then australia to justify 40% chaper home on average? what are people in uk going to do with extra money they'll save compare to australia? (cheaper homes, cheaper rent, cheaper mortgage rate, same inflation). I think long term people in UK are going to spend a similar amount of money then australia on housing. This can happen also with a currency rate adjustment wich would make money to australian investor in uk

 

[Bill.L]

Hi all,

Boz,

"not only are there oranges and apples in the comparison, there are some strawberries as well." it is so different that is pointless comparing land prices in hopper crossing with land price in UK and europe, there is probably no property left in UK on 900 sqm land

That is my exact point, they are different. The climate is different here, people appreciate the outdoor experience and are prepared to pay for it. Houses on land here are cheap compared to in Europe plus there is more amenity in having that yard. Also the houses are larger and you would expect to pay more for the space. I'd love to see the sqm of the 'average' property when doing these comparisons, as then there might be a little more meaning.

bye