Just taking stock

treliac

mrposhman wrote: »

See the above points and realise that your post was not as balanced as some would have you believe. It is clear that you are on the side of "its still got way further to fall and I'll ignore any potential good signs because I don't want to recognise them".

My post was a reflection of the issues I believe have to be dealt with before recovery can take place.

Of course I don't know how many are yet to lose their jobs but feel it is naive to suggest that there might not be any more redundancies. You, no more than I, have a crystal ball. So let's wait and see shall we?

The same with bankruptcies. We hear that they are soaring. We know that people have taken on levels of debt that are not manageable. I personally know of such situations and read of many similar. Just take a look at the Bankruptcy board on MSE for example.

Being in negative equity doesn't mean you can't make your mortgage payments and, if you are able to and don't want/need to move, then no problem. However, we know that's not always the case. It may be difficult for anyone in NE to remortgage if they need to and if they are forced to sell a property worth less than they owe, they will still be left in debt. An even worse problem if the property is repossessed - and we hear that repossessions are showing every sign of continuing to rise.

By 'edge of affordability' I mean those who have got by in recent years by ever increasing their levels of debt in order to get by, e.g. mewing, credit cards, etc. If that financial 'flexibility' rug is pulled out, small increases in stress could tip them too far.

You may 'never have seen the logic of bringing average house prices into a statement about FTB's' and this is very good of you, especially when you are the only one of us to have referred to 'average house prices.'.

You are fully entitled to take a different view to me and I don't mind being quoted, but prefer not to be misquoted. I also fail to see what your point is, other than to be confrontational.

treliac

chucky wrote: »

it suits peoples agenda to always refer back to the early 1990s house prices plateau.
good thread Graham!! :beer:

Possibly because it's the only one most of us can personally remember.

mrposhman

treliac wrote: »

My post was a reflection of the issues I believe have to be dealt with before recovery can take place.

Of course I don't know how many are yet to lose their jobs but feel it is naive to suggest that there might not be any more redundancies. You, no more than I, have a crystal ball. So let's wait and see shall we?

The same with bankruptcies. We hear that they are soaring. We know that people have taken on levels of debt that are not manageable. I personally know of such situations and read of many similar. Just take a look at the Bankruptcy board on MSE for example.

Being in negative equity doesn't mean you can't make your mortgage payments and, if you are able to and don't want/need to move, then no problem. However, we know that's not always the case. It may be difficult for anyone in NE to remortgage if they need to and if they are forced to sell a property worth less than they owe, they will still be left in debt. An even worse problem if the property is repossessed - and we hear that repossessions are showing every sign of continuing to rise.

By 'edge of affordability' I mean those who have got by in recent years by ever increasing their levels of debt in order to get by, e.g. mewing, credit cards, etc. If that financial 'flexibility' rug is pulled out, small increases in stress could tip them too far.

You may 'never have seen the logic of bringing average house prices into a statement about FTB's' and this is very good of you, especially when you are the only one of us to have referred to 'average house prices.'.

You are fully entitled to take a different view to me and I don't mind being quoted, but prefer not to be misquoted. I also fail to see what your point is, other than to be confrontational.

I'm not aiming to be confrontational, I have a different view to you.

I have not misquoted but assumed that what you were meaning by stating FTB's was in relation to average house prices like most do on these boards ignoring the fact that FTB's usually operate from the bottom end of the market. If this was not what you meant then I apologise but otherwise it is difficult to quantify your point really. The point of a deposit is obviously more of an issue than the price of housing available to FTB's but that is not necessarily due to housing slumps or booms but more to do with the spend, spend, spend society that we have got ourselves into.

I see that you have mentioned this and agree that those that you have stated that borrow, borrow and borrow some more will clearly struggle as they would in any downturn, and in all likelihood in the boom years too.

What I do know is that there are green shoots of recovery appearing that are all too often shot down on these boards, if you and graham are not in that group then I sincerely apologise but I know that there are plenty that do hold these opinions and its quite annoying to be honest.

I mean if I felt even slightly suicidal I think this forum would push me over the edge.

Thrugelmir

treliac wrote: »

The banks are not yet keen to lend money.

The lending binge over the past 15 years is over. The wholesale markets that funded Northern Rock, GMAC, Abbey National, Bradford and Bingley and HBOS have gone. The foreign banks have closed their mortgage lending books and retreated home.

LloydsHBOS through its operations now has 30% of the mortgage market alone. With the current state of the property market on a commercial level you would imagine that the board to consider this sufficent exposure.

The effects of the lack of funding have yet to be felt. I'm sure that some on this board remember mortgage rationing. Whether it be from a building society or a bank. There are only limited funds available. By their nature mortgages are long term loans to be be repaid over a long period. This requires high levels of capital funding.

The banks are going to have to compete with government for capital deposits over the coming years. To raise money, rates will have to be attractive to investors. It will be borrowers that will suffer.

Whilst as individuals a lot of us are comfortable in our lifestyles with savings, pensions and equity in property accumalated. The next generation is going to pay for our party. The UK economy is in a shambles. Not only higher unemployment , higher interest rates but also higher taxation.

I agree with other posters about the value of average house prices etc being of any value in assessing the market. Their are so many variables in the property market. Two identical looking semi detached houses could have different values depending on the interior condition alone.
If I buy say BP shares I am holding the same item as thousands of other investors. This doesn't apply to property.

What will be interesting is whether the next generation view property in the same way. Renting may become the norm. With tenancies on long term agreements akin to the continent.

Ultimately property is a market driven by the willingness of buyers to buy and sellers to sell. Always expect the unexpected though.

Rather than forecast the bottom of the market. I would turn the question round and say what factors are required to require to lift prices. As in most markets as long as negatives outweigh the positives then prices will naturally drift downwards. As property is a slower moving market. The brakes may be on but there are still a number of unknown factors which could yet cause the market to dip sharply.

dervish

treliac wrote: »

My post was a reflection of the issues I believe have to be dealt with before recovery can take place.

Of course I don't know how many are yet to lose their jobs but feel it is naive to suggest that there might not be any more redundancies. You, no more than I, have a crystal ball. So let's wait and see shall we?

The same with bankruptcies. We hear that they are soaring. We know that people have taken on levels of debt that are not manageable. I personally know of such situations and read of many similar. Just take a look at the Bankruptcy board on MSE for example.

Being in negative equity doesn't mean you can't make your mortgage payments and, if you are able to and don't want/need to move, then no problem. However, we know that's not always the case. It may be difficult for anyone in NE to remortgage if they need to and if they are forced to sell a property worth less than they owe, they will still be left in debt. An even worse problem if the property is repossessed - and we hear that repossessions are showing every sign of continuing to rise.

By 'edge of affordability' I mean those who have got by in recent years by ever increasing their levels of debt in order to get by, e.g. mewing, credit cards, etc. If that financial 'flexibility' rug is pulled out, small increases in stress could tip them too far.

You may 'never have seen the logic of bringing average house prices into a statement about FTB's' and this is very good of you, especially when you are the only one of us to have referred to 'average house prices.'.

You are fully entitled to take a different view to me and I don't mind being quoted, but prefer not to be misquoted. I also fail to see what your point is, other than to be confrontational.

I will certaibnly drink to all that!

I think people who are brazenly talking the market up when all indicators are showing otherwise are shameful and callous.

They know fine well that FTBs and novices come here looking for tips and advice and they spew out this crap simply to feather their own nests and therir BTLs.

Generali

Graham_Devon wrote: »

I have seen mortgage lending rising again today, rose 19% last month, 4% this month.

I'm begining to believe that we could now be approaching the bottom for house prices, for the forseeable future (1-3 years). Maybe another 10k to go from the 150k figure.

So I will be the first to admit, that at the moment, my prediction looks wrong. I'm just getting that in here, right now, to try and stop this thread degenerating.

So say this is the bottom and prices just stagnate and drop tiny fractions each month. My question is, honestly, bulls and bears, please put differences aside for one moment, what will happen once:

- QE stops.
- Interest rates rise.

I ask this question as one minute someone is saying QE is a success as more mortgages are going through, but the next minute other people are saying QE has been a failiure. While others say it's nothing to do with QE at all, it's people can now see value and are jumping in with their deposits and buying.

So, I'm looking at this, not from a prediction point of view, not a bull / bear point of view, but a look at where we are today, and where we are heading, not in terms of house prices, but in terms of fiscal stimulus.

QE cannot go on forever, interest rates this low cannot go on forever.

Are these "green shoots" thanks to QE, interest rate rises, people seeing value in the market, or a mixture of all of those, and which will hurt most the moment the plug is pulled? Or will we not even notice the interest rate rises, and not notice when the QE tap is turned off?

The housing market has 'stabilised' at a new lower level, one I suspect is incapable of even supporting house prices where they are at present. For the house market to function normally we need to see about 70,000 mortgages going through each month.

It'll be interesting to see what will happen when base rates rise - that will have a very nasty impact (presumably) on Government finances and also (again presumably) on some individuals. My suspicion is that any nascent recovery will be choked off as inflation rises.

StevieJ

dervish wrote: »

I will certaibnly drink to all that!

I think people who are brazenly talking the market up when all indicators are showing otherwise are shameful and callous.

They know fine well that FTBs and novices come here looking for tips and advice and they spew out this crap simply to feather their own nests and therir BTLs.

And quite simply you are either a sockpuppet or a !!!!!!!! :rolleyes:

StevieJ

Generali wrote: »

The housing market has 'stabilised' at a new lower level, one I suspect is incapable of even supporting house prices where they are at present. For the house market to function normally we need to see about 70,000 mortgages going through each month.

It'll be interesting to see what will happen when base rates rise - that will have a very nasty impact (presumably) on Government finances and also (again presumably) on some individuals. My suspicion is that any nascent recovery will be choked off as inflation rises.

Why do you need 70k , why are base rates increasing If they do increase why are most people any worse off than they were before the drops Why is inflation going to rise

Generali

StevieJ wrote: »

Why do you need 70k ,

Because AIUI, that's the level of mortgages that equates to a normally functioning market.

StevieJ wrote: »

why are base rates increasing

They aren't right now but when the economy starts recover, inflation should take off pretty rapidly given base rates at 0.5% plus 'printing money'. Base rates will have to rise in the face of rising inflation as Gilt yields will have to rise and you can't have a massive disconnect between short term Gilt yields and the base rate.

StevieJ wrote: »

If they do increase why are most people any worse off than they were before the drops

Because they are going to have a huge amount of extra Government debt to service through their taxes plus also in many cases people will have lost a job in the family or seen overtime, bonus and/or commission payments fall

StevieJ wrote: »

Why is inflation going to rise

See above.

tomterm8

mrposhman wrote: »

The first move towards gaining recovery in our economic system is ensuring that it doesn't collapse completely and that we have a stable footing for the future. We may well be moving closer to that and many companies are paying down debts which is all good but looked on unfavourably by many on here.

mrposhman wrote: »

Once this has occurred then the real hard work begins which should lead to policies occurring both politically and regulatorily (if thats a word ) in order to ensure that these problems will not happen again.
.

The problem is exactly the same as in Japan. While stopping the plunge is very important, the decisions needed to actually fix the regulatory system are very painfull. They involve essentially destroying part of the ruling elite. The banks are too powerful in our society, and need to lose quite a large proportion of their power. They need to be made boring.

That's one of the main policies of the IMF: destroy the ruling elite that caused the problems. Its what maggie thatcher did to the Unions. It's what we should be doing to the banks. If we don't do that, we have created a perverse incentive for any future too big to fail bank to risk our financial system.

It's very profitable to the banks to bet the house on the way up, and there's nothing to stop them if the taxpayer will pay the piper on the way down.

Ultimatly, banks are chock full of very intelligent people. I don't see how regulations are going to stop them blowing up the financial system again. Because ,well, that didn't work the last five times did it?

What you need is a situation where if banks bet the house, they lose it. And their staff are unemployed, and their board of directors are stacking shelves at tesco's.

I do see that allowing banks to fail, to be nationalised, to remove the ability of the senior management to get another job in banking and split up the bank into small, fallable sized chunks, would remove the perverse insentives that are the essence of our financial system.

Japan's banks have been insolvent since the late 90's. They are still insolvent. The Japanese government is planning to buy up equitities because japan's banks bet the farm on the stock market. They keep on failing. There has never been the political will to destroy the elite.

And it will never happen in circumstances where the economy is not in crises.

Now are there good things to come out of this? Yeah, the general public is paying debt down at an astounding rate, and the savings rate is also increasing. The average british person is doing the right thing. Also, the manufacturing sector is now actually competative. In many ways we are doing much better than we have a right to expect.