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| The UK housing market: a bubble about to burst? |
c
by c
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#1000145
of 3278
 19 Jul 2002
07:51 AM |
I refer the Forum to an excellent article, "The paradox of thrift returns", by Samuel Brittan below:
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/ FullStory&c=StoryFT&cid=1026916468891&p=1012571727126
What it suggests is that global recession has been staved off by a buoyant world housing market. How long this can last is anyone guess?
In the opinion of little c, the world economy can continue to grow, as the dismal science of economics is far more unpredictable than the graph of property and equity values suggests.
As ever, please feel free to take issue with little
c.
[This message was edited by ftmonitor on 19 Jul 2002 at 01:33 PM.] |
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green belt charade
by dr. o. elgin
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#1000144
of 3278
19 Jul 2002
06:40 AM |
| According to Alan Greenspan, lack of available land is one of the reasons for the rapid increase in house prices. Planning authorities control the availability of land. Shortage of available building sites certainly accounts partially for rising house prices in the UK. Left, right and centre have adopted the ancient notion that access to land may be enjoyed only by a privileged few. Under the guise of ‘protecting the green belt’, a host of organisations ever greater numbers of children grow up without access to land or on land of questionable quality (socalled ‘brown sites’). This charade continues in spite of the evident fact that UK citizens find nothing disturbing about the German, Swiss or French countryside, where farms often consist of only a few acres and rural communities contain houses with one acre. For example, the architecture of Swiss rural housing fits the countryside and is selected to do so. UK citizens think nothing of having a second home standing on one acre in the French countryside. When it comes to the British green belt, however, the old custom that the great majority of British inhabitants have no rights to the land appears effortlessly. The fact is that the countryside economy would benefit vastly from repopulation of the land. Nothing prevents sympathetic repopulation of the countryside with affordable housing, if planners and designers understand the need to fit countryside architecture to the land. A vibrant rural economy, supported by a mix of tourism, intensive farming of various kinds, and professional services could emerge. This country needs it. |
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Property prices from 1996 - 2002 in Switzerland - data in the "NZZ" today
by Heidi
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#1000143
of 3278
18 Jul 2002
07:50 PM |
Though this forum is about UK prices, I thought this might be of interest. The "Neue Zürcher Zeitung" data covers two sectors, houses and apartments:
During the past 6 years, the biggest rise was around Lake Geneva where house prices went up by ca. 16% total from 1996 - 2002. Apartment prices rose by ca. 10% total in the same period. At the other end of the scale, in the eastern part of Switzerland, house prices fell by ca. 8% in the same period, whereas apartment prices rose 3%.
I would think that prices around Geneva rose so much due to the several Uno organisations employing thousands of (well-paid) foreigners, whereas they fell in the east of Switzerland because that is basically a farming region far from Zürich and impossible for commuters.
There is currently an oversupply of office property
(mostly due to the shrinkage of the IT/dot.com sector).
The borrowing rate here for
house purchase is 4% just now but banks will only lend max. 80% of the price (i.e. you have to put in 20% of your own money).
Foreigners are restricted re property purchase here, but in the UK they can buy as soon as they arrive in the UK, correct? Are Brits happy with that system? I suppose those who make money from having bought a house cheaply are happy when they sell at a profit later, but those who are earning low wages are not happy?
But anyway, I think the property market should not be a risky bubble market. |
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Salford
by Sir Christopher Wren
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#1000142
of 3278
18 Jul 2002
03:31 PM |
| I don't know-but surely Salford is only a tram ride away from the bustling commercial centre of Manchester-it sounds like a bargain to live there to me!! |
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Salford
by Comrade X
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#1000141
of 3278
17 Jul 2002
04:02 PM |
Comrade Sir Christopher Wren,
If my memory serves me correctly, in 1978 a three bedroomed terraced house in the Langworthy Road area would have cost around £8000. How many boarded up slums in that sad place can a speculator buy for £8K now?
Comrade X |
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Lily's Dilemna
by Sir Christopher Wren
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#1000140
of 3278
17 Jul 2002
01:09 PM |
| The fact that Lily almost killed her mother 6 months ago shows that she's already taking my advice!! What I find interesting here is that people think that a massive property crash would be a bad thing. Basically, it'll only be a bad thing for those suckers who've bought in the last 15% of the markets rise, and if we expect people to be responsible for their actions, they're no more deserving of sympathy than stupid dotcom day traders who are saddled with huge debts. Seeing as most people seem to buy property for investment purposes, rather than to live in, all you can say is.. you win some, you lose some, how about moving to Salford?? |
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Cutting the Cake
by Comrade X
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#1000139
of 3278
17 Jul 2002
11:09 AM |
Comrades,
Many years ago I had a conversation with a Civil Servant. He remarked how in the early 1950s the cost of a new small car and a modest three bedroomed house on the outskirts of Manchester was equal to his year’s salary. He was on the first rung of management. I suppose it would be regarded as Higher Executive Officer grade today.
The cost today of a new car and a house in the same locality as that of my friend would be around £8000 for the car and £60000 for the house. So, an HEO in today’s Civil Service would need to be paid £68K to have financial parity with his ancestors. I believe the current rate for the job is around £22K.
Interestingly enough, at that time, Members of Parliament shared the same salary scale as my acquaintance. I hope you find it reassuring to know that our MPs have not had to worry too much about their income while making decisions of national importance.
An additional factor in this equation is that there are more Civil Servants today than there were fifty years ago. A case of same cake – more slices?
I trust Comrades Blair & Brown are about to address this issue with some of the latest public spending.
Comrade X. |
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Take the money and run
by Doc
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#1000138
of 3278
17 Jul 2002
10:22 AM |
Think I'll get a massive loan from some shark and blow the lot! (hee hee!)
Right on Lily - back to the seventies. Go for it!
"They got the money, hey
You know they got away
They headed down south and they're still running today
Singin' go on take the money and run
Go on take the money and run"
Take the money & run - Steve Miller Band 1976 |
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#135 Negative equity
by Shareholder
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#1000137
of 3278
17 Jul 2002
09:47 AM |
Post 135 has got it spot on!!
The negative equity problem for buyers in the last 1/2yrs will be horrendous should prices fall by a significant amount, defaults would escalate out of all proportion.
Since very uncertain employment times are round the corner ( Stock market falls precede such things). The future for many could be disastrous.
So no one wants the prices to fall , including Gordon and the BoE. |
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No Right to Buy.
by Comrade X
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#1000136
of 3278
17 Jul 2002
09:40 AM |
Comrades,
New labour market entrants and similarly the Minimum Waged may well have the expectation of becoming owner occupiers but that doesn’t confer the Right to Buy.
In this sense the difference between expectation and reality is greater than the gap between affordable and unattainable.
Perhaps Comrade Blair will consider buying a few votes at the next election by sanctioning the cheap sale of some publicly owned properties to sitting tenants. He could perhaps take advice from the remnants of recent Tory governments.
Comrade X |
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house prices
by dr. o. elgin
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#1000135
of 3278
17 Jul 2002
08:10 AM |
| the bank of england will do everything it can to prevent a fall in house prices. increases in house prices are part of Gordon Brown's strategy to support consumer spending. What this short term approach did not factor in is social unrest. blotting out young people's future (a modest house price in oxford e.g. costs about 18 times the annual income of a new labour market entrant). Yet, now, a fall in house prices can lead to negative equity the likes we have not seen before. Consequently, expect government strategy to attempt to sharply cool the housing market, while preventing a large drop in prices. |
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For Sir Christopher...
by Lily
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#1000134
of 3278
16 Jul 2002
03:50 PM |
Dear Sir,
Thanks for your kind words. I moved in with my mum for 6 moths a few years ago - we almost killed each other (instead , she had to buy a new dinner set when I moved out!). My dad lives in Frankfurt, so that ain't really an option. Anyway, I just got told I'll probably be redundant by January, so who cares??! Think I'll get a massive loan from some shark and blow the lot! (hee hee!) |
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A special question for Sir Christopher Wren
by c
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#1000133
of 3278
16 Jul 2002
03:13 PM |
Are you planning to build any more domes? Or bubbles? If the bubble is about to burst, why is there such a shortage of good housing on the market?
As ever, please feel free to take issue with little
c. |
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Lily's Dilemna
by Christopher Wren
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#1000132
of 3278
16 Jul 2002
03:10 PM |
| My advice to Lily is either kill a wealthy relative, move back in with your parents, save money and wait for the property crash, or find a rich sexual partner and marry him or her. One thing you must never do is borrow some ridiculous multiple of your salary offered by some rapacious bank at a Rachmanesque interest rate!! |
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House!
by Lily
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#1000131
of 3278
16 Jul 2002
02:23 PM |
| I think the days of the traditional 3.5 salary multipliers for mortgages should be numbered. My neighbour and I live in identical 1-bed flats. She was lucky enough to get a substantial lump sum from a family will, and was able to get the flat by using it as a deposit. Her mortgage is approximately £320/month. Although I am lucky enough not have suffered a bereavement, I pay over £500/month for the same property. Whilst she invests in her new home, I am left throwing money down the drain month after month, because I cannot afford to get past the first hurdle. As nice as my landlord is, I don't particularly enjoy handing over more than half my monthly income to line her pockets, when I want to be investing in my own future security. I'm young, fit, in a steady job - won't someone realise I am a good bet and offer me the chance?? (PS> I'm open to donations!!) |
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