frog_in_a_tree
23 Jul 2018
A graph for contemplation Hello Hardcore, it is easy enough to put labels on chart but they do not tell the whole story. You could just as well put Right to Buy on at 1980 as that was the start of the decimation of social housing along with the prohibition of reinvesting social housing sales receipts in building new social housing. Equally you could put a flag on at 2012 with the Help to Buy policy which arguably made housing more expensive as prices went up to take advantage. Perhaps more illustrative would be to overlay a further graph illustrating the national housing shortage over the years. Certainly your explanation is part of the story but not the whole of it. Cheers, Frog in a tree
Sara_Racano_HardcoreUproar
23 Jul 2018
A graph for contemplation
Sara_Racano_HardcoreUproar
21 Jul 2018
Chloroprene, cancer alley Not sure how this article was placed here!
Sara_Racano_HardcoreUproar
21 Jul 2018
Chloroprene, cancer alley If any of you are in any doubt how toxic oil refineries are, check out this example. They may be no better than nuclear power stations. The example of the French factory that makes the chemical for natural gas. There was a leak, the winds were southerly, this could be smelt across large swathes of southern England. CNN Toxic tensions in the heart of 'Cancer Alley' The EPA says this Louisiana town has the nation's highest risk of developing cancer from air toxins. The plant emitting the toxins says otherwise. Locals are outraged.
malj1
17 Jul 2018
Number of homes put on market rises 8.6% The thing with RM is to read the no.s but skip the commentary. RM price trends give a pretty close read what will emerge out the ONS about 6 months hence. A good forward indicator. I always have a good laugh when I read the commentary. Repeat exhortations to sellers to ‘price appropriately.’ Well it’s the agent who usually sets the price. As the agent is reliant on a speedy sale, without which no income in a v low transaction market, the vendor is always being told to set a low price in order to feed his agent! Hmmmmmmmmm …
malj1
17 Jul 2018
The land of reality, frog Not in the build industry. Career = 20 years in corporate planning for a range of co. (pharma, retail & fmcg, tech - arguably building is v big ticket retail) & then 20 years as a private investor running my own money. Past decade I return +23% cagr which, though I say so myself, is a stellar performance & trumps any of the funds highlighted in the Sat Torygraph review of star funds. If folk can’t buy then builders can’t sell & thus builders won’t build. Hence h2b - without this the UK would be running at a build rate of ca 120k units pa (which was the norm in about 1880). New build site pricing is set by benchmark reference to the existing property in the site locality. I know of no industry that will glut the market with product & thus drive it’s own asp down. The builders still have far too little land to achieve an industry output of 300k pa (& 400k pa as I believe is necessary is a pipe dream). The industry is bottle necked on every front - cash to buy the land, speed of applications through the planning process, materials supply, availability of labour. The housing supply shortage is here long term & going to get a lot worse. At best the Westminsterati just rearrange the deckchairs.
oceanfree
16 Jul 2018
Number of homes put on market rises 8.6% You certainly find some ridiculous articles to reference, Sara The Headline - UK house price slump blamed on surge in sellers The text - Annual price growth slowed to 1.4% in July, down from 1.7% the previous month. West Midlands and Scotland showing strong price growth and busy sales activity, while London, the south-east and east of England are recording flat or falling prices in Scotland, asking prices are up 8.5% over the past year, rising 1.5% in July alone, In the West Midlands, prices are up 5.6% over the year Although, in the capital, asking prices are down by 1.7% over the year That doesn’t sound like a slump to me. Slump to me is a 10/20 pct drop. Just like bubble burst would be 50/75% drop. And interest rate hike - well something much more than 1/4pct increase… Slopping reporting. Mind you the Guardian begging note also says "The Guardians independent investigative journalism takes a lot of time, money and hardwork to produce " - maybe thats why they didn’t bother in this instance.
malj1
16 Jul 2018
Number of homes put on market rises 8.6% The price dynamic for July is no different from the standard performance over the past decade post CC. Selling houses is a form of retail. Whereas putting a house up for sale is a one off move, buying involves footslogging around properties. It’s axiomatic the current heatwave will kill footfall as it always does for the duration of the weather spell. Then it reverts to catch up/game as normal. Nothing new here.
Sara_Racano_HardcoreUproar
16 Jul 2018
Number of homes put on market rises 8.6% A surge in homeowners putting their property on the market – just as buyers melt away in summer – is depressing house prices, according to the biggest property website, Rightmove. DiNK5hsW0AIP8j7.jpg781x437 66.7 KB Today´s Guardian the Guardian – 16 Jul 18 UK house price slump blamed on surge in sellers Number of homes put on market rises 8.6% but there has been no increase in buyers
frog_in_a_tree
16 Jul 2018
The land of reality, frog Hi Malj A good post from you. Are you involved in the house building industry by any chance? I will argue with you on whether Help to Buy has actually expanded house supply. There is quite a lot of research that indicates that it has been very ineffective in this aim. Here is an example: British Politics and Policy at LSE – 19 Jan 18 Who is helped by Help to Buy? What’s not to like about a policy which can expand home ownership and boost the supply of housing? Geoff Meeks and J.Gay Meeks recount some of the doubts about the efficacy of the government’… It seems that the main beneficiaries have been housebuilders who have taken the extra funding into account when determining prices. While H2B can only be used for new build houses, if builders have been up-pricing on account of this extra funding, then this feeds back into the price of existing properties. The LSE blog also comments that builders effectively control supply in order that oversupply doesn’t lower the selling prices they can achieve. Housebuilding is an area that requires direct government intervention to eliminate the shortage and in particular by building affordable rented homes in the social housing sector… Frog in a tree
malj1
16 Jul 2018
The land of reality, frog Final para that shd read ‘no worse than …’ Oops. Typo!
malj1
16 Jul 2018
The land of reality, frog Meanwhile in the land of reality. H2B has increased new build output by about +50% from the CC nadir. This has diluted not accelerated hpi. QE pumped raw cash into the banks. Yet they didn’t really boost mortgage lending. NML since the CC has ticked along in v low single digits - latterly little more than +2%/+3% yoy. All the banks have done is largely recycle their existing mortgage loan books. This is not a mortgage credit boom. It’s hard to argue flattish NML creates major hpi. So we’re back to housing supply vs embedded demographic need. 25 years pre the CC UK consistently undersupplied housing relative to demographic need. At the post CC nadir early 09 the UK was running a 21st century society with a sub Victorian level of supply - no wonder when the CC dust cleared hpi boomed. An even bigger hit is about to come. Ca 2000-2012 UK fertility rate rose almost +25% (ca 1.6 children per family to almost 2 children per family - & no this isn’t all about foreigners!). Consequently 2010-2018 the gov’t increased primary school places +800k & 2015-2018 has so far increased secondary school places +440k (clearly there’s ca another +400k to go). Consequently somewhere around about now there’s going to be a massive increase in +18 yr old wanting to leave home, go to uni, work etc. This on top of the other societal changes playing out (high separation levels, increasing lifespan etc). The demographic need for housing is going to exponentially accelerate no matter what. New build supply is struggling to maintain its recent return to the pre CC level of ca 190k pa (20 yrs ago the gov’t thought the min supply should be ca 300k pa & I reckon in the coming decade demographic need will rise to min 400k pa - this is just the annual run rate, not redressing the cumulative deficit to date). Any gov’t that fails to address this will be committing suicide. So I can’t see credit taps being tightened, but I expect further major policy to facilitate new build (especially also for retirees). Obviously for those who think hpi will implode, in the way it hasn’t done in the past decade, then you steer clear of builders etc. But if you think hpi will do worse than flat line then builders are being given away. I’d also observe with the sector being massively ungeared they’re not likely to go bust. In the event of a panic they just operationally tread water, diminishing supply & wait for hpi to kick in again. Barring an asteroid hitting planet earth this looks the best play in the FTSE. As ever we shall see!
frog_in_a_tree
15 Jul 2018
The land of reality, frog I just came across this on the LLOY board which might be of some interest folks: Bloomberg.com London House Prices Extend Decline as Demand for Property Wanes London house prices extended their decline last month amid slumping demand in the capital, according to the Royal Institution of Chartered Surveyors. I think Hardcore has explained that it is not a drop in demand that has caused this but rather a reduction in the monies available to fund mortgages. Cheers, Frog in a tree
frog_in_a_tree
15 Jul 2018
The land of reality, frog Yes…hard work indeed! To some extent we are talking a bit at cross purposes. I agree that the availability of credit enables larger loans to be made but that is not the only driver on house prices. Supply and demand is a bigger factor, in my view. If my salary doubles I am not therefore going to pay twice what I did previously for my tin of Heinz beans. If there is a shortage in supply of Heinz beans I might compete for available supply by being prepared to pay more. The same goes for housing. We have a shortage of houses and it is this that has forced prices upwards. Eliminate the shortage and prices will fall as sellers have to compete for buyers. The law of supply and demand. Your points about the availability of mortgage funds and the effects of low interest rates on affordability are true in so far as they facilitate the purchase of expensive property but thay are not the main cause of increasing house prices. However, we might agree that were those available funds to reduce and if interest rates were to rise then this would most likely have a deflationary effect on house prices. We might also agree that any over-rapid normalisation of interest rates could cause problems with defaults as could a recession. Perhaps we should leave it there? Cheers, Frog in a tree
Sara_Racano_HardcoreUproar
15 Jul 2018
The land of reality, frog but house prices have risen mainly on account of shortage…old fashioned supply and demand Jesus! This is hard work. No! No! No! House prices rise & fall on the availibility of credit. 1990, it would have been very doubtful that any bank would have leant 3x income now they might go to 5x. Take your 100% mortgages that fuelled that last boom. Added to the fact the BoE droped rates to virtual 0% which was another huge stimulas UK house price growth since 2013, has been done through QE, nothing to do with demand/supply. The BoE have created a gigantic bubble which should have been turned off a long while ago. Notice in Australia/Canada where they have had similiar housing bubbles, house prices are going into reverse. Wait until prices start to fall, buyers suddenly disapear,
