UK housing market falling faster than last recession, says Bellway - Telegraph

[Damian George]

The housing market is deteriorating at a much faster rate than it did during the recession of the early 1990s, Bellway said, as expectancy grew in the City that some UK house builders could be forced to raise capital to shore up their balance sheets. Bellway said that the spring season - traditionally a strong sales period for house builders - failed to take off and a restricted supply of mortgages was exacerbating the problem. It now expects volumes to fall by 10pc-15pc this year.

 

[benho]

IMHO, the market correction will always happen.

However, East London is still a good buy when then regeneration work is completed and get ready for the Olympics. I bet the market will be pick up again in 2010.

 

[dave99]

MK noted as best place for investment on TV

MK (Milton Keynes) noted as best place for investment on TV.
.

 

[Rentoroni]

Well that is just exciting news... Inflation, pensions, economic slow down, service sector is a mess, and things just keep on getting a bit worse. I wonder when it will start going up hill again.

 

[Damian George]

Just to make everyones day a little more rosey!

Lehman Brothers say the UK economy is likely already in recession
08 July 2008, 09:21:34

Britain is edging closer to recession, economists warned yesterday, after two bleak reports showed that activity in the country's vital services sector has slumped to its lowest level since 2001 and the credit squeeze on businesses is worsening.

A UK recession is now more likely than not, according to Lehman Brothers. In the stock market the FTSE 100 fell 67.8 points to 5,358.5 in early trading - a fall of 20pc since last June and into bear market territory - before recovering to close up 50.3 at 5476.6.

Stock market historian David Schwarz said: "History tells us that long bull markets in the UK are virtually always followed by bear markets where shares fall by at least 25pc."

Lehman Brothers joined those predicting an economic slump. Peter Newland, the bank's economist, said recession this year is "more likely than not" due to the "broad-based contraction in activity". His comments were echoed by Capital Economics, which declared that "the economy has ground to a halt [and] seems to be heading for recession".

Full story at The Telegraph

 

[ArmchairInvestments]

Yes, there will almost certainly be further drops in house values - but also a good opportunity for astute investors to pick up bargain properties and a good time for first time buyers to get on the ladder...

 

[solutioninvestments]

Yes, there will almost certainly be further drops in house values - but also a good opportunity for astute investors to pick up bargain properties and a good time for first time buyers to get on the ladder...

True, but the key is being able to call the bottom, I think that would be very difficult to do at the moment!

 

[ArmchairInvestments]

agreed...

I agree - particularly at the moment, it is hard to say when liquidity will be restored in the banks. I think there are buyers out there but most people are finding it hard to get the finance in place...

 

[jessicatam]

I'm up north, and it's amazing the differences between areas. There are still areas you can get a good price for, but I feel very sorry for first time buyers at the moment.

 

[Damian George]

We are far from the bottom.

Watch mortgage approvals! that is the key. If people cant borrow they cant buy! At the moment the Banks havent the funds to lend to individuals.

How many poeple if they have had a mortgage approved have had the mortgage valuation come back 10/20% lower than the agreed price?

Personaly i would right off 2008 and look to buy in summer 2009.

 

[Damian George]

More Gloom - dont Banks realise to get out of the problems they are in they need to lend money. If they dont lend money otherwise prices will fall and send investors/homeowners to the wall and the risk of default sky high.

Basic Economics

The BoE reported today that mortgage approvals fell to 36,000 in June from 41,000 in May, a third of the level a year ago and the lowest since comparable data were first published in 1993, according to the FT. “In June, mortgage lenders extended £3.1bn net new mortgage credit to households. This level of net lending was half the rate in the previous six months and brought the annual growth in net mortgage lending down to 7.5 per cent from 8.2 per cent in May. Net mortgage lending had been growing at double-digit annual rates for the whole period between December 2001 and December 2007.” Rates are not coming down proportionately to the key benchmark rates.

if you want to read more please visit Rockefeller Treasury Services

 

[lewi]

that shropshirehouse site thats selling tickets could sort out one person's housing problems
£15 a ticket

 

[neustria]

Another update on the unfolding crisis:
***********************************


LONDON (MarketWatch) -- The average British house price saw a monthly decline of 1.9% in August, mortgage-lender Nationwide reported Thursday. Prices have fallen by 10.5% compared to August last year, marking the first double-digit decline in the annual rate since the fourth quarter of 1990, Nationwide said. Consensus expectations were for a 1.6% monthly fall and a 9.9% annual decline, according to a Dow Jones Newswires survey of economists.

 

[Property Developer]

I agree - particularly at the moment, it is hard to say when liquidity will be restored in the banks. I think there are buyers out there but most people are finding it hard to get the finance in place...

One way to invest into repossessed properties is through a collective investment vehicle which makes it suitable for pension investors e.g SIPP or SSAS.

The lending is done throught the fund which is non recourse to the individual and does not affect any of the individual's credit rating or ability to gain finance in the future.

Typically a fund or private property syndicate that raises £1.6 million can purchase upt to £5million worth of repossessed property and gives a nice hands off investment into the current market.

I believe we have another 6 months of opportunity before things start to stabilise and pick up.

Tony

 

[renterstoolkit]

Let s say you bought a BTL 2 years ago for £200K at 95 LTV, 5.5% fix for 2 years, rents just break even (around £1000pcm, which is a 5% yield, standard for year 2006...)

Let s say the market has taken a plunge of 15% (which by end of year is a near sure thing).

Then when your mortgage gets to expiration of the 2 years, you have the choice between:

- remortgaging : today s best rate is around 7% for 75% LTV ; new value of property = 170K ; new possible mortgage = £127,500 ... OUCH !!! you have to find around £70K to be able to remortgage the exact same property as 2 years ago... so you surely don't !!!

- continue with this mortgage : yes but it has shoot up because BoE+1.75, so now it s 7.5%, which is 2% more, which is basically more than £300 more than the previous arrangement...

Conclusion: you have the choice of having to fork out £300 each month to subsidise your tenant in the property (that is when you are lucky to have a tenant) or to sell and take a hit of around £35K... Well, it may not be good times to burn £300 a month, and many new-landlords may just find it impossible to cope with, and sell...

Conclusion of the conclusion: in the coming 24 months, I would not be surprised to see massive sell out of recent BTL buys... which will make the property market plunge even more

 

[Njackie]

but still its noted as the best place for investment, its just because of the economic slow down over all i think the market is not that bad compared to the rest of the world

 

[Damian George]

Hi All,

Just to dump more gloom on this topic

The Council of Mortgage Lenders reports that Sept lending fell 16% m/m to a mere £17.7 billion, the lowest gross lending number since Jan 2005. Rightmove says home sellers reduced their average asking price by 4.9% y/y in October. They tried to raise their prices by 1% over Sept, but it didn’t work. The year-over-year drop is the biggest drop in the history of the survey.

The Ernst and Young ITEM Club says the UK economy is already in recession and will contract by 1% in 2009. Worse, it will contract for another three quarters before bottoming out in the second half of 2009.

for the full story visit Barbara Rockefeller's Currency Blog

 

[Olly]

While we're all waiting for house prices to bottom out and pick up the best bargains, thought fellow forum readers might welcome a piece of good news for a change.

Hot Tip & Secure...recently picked up on an agency which is offering an Investment Program approved by the FSA - Financial Securities Authority -where the Investor can place from £1,000 to as much as £1M and receive between 4% & 6% per month. Your capital is fully secure. I am starting from next month.

The compound rate if I leave the funds in situ, is anticipated at 79.5% p.a. This is really a good way to accelerate your funds while house prices are still falling and makes a nonsense of bank payouts, etc. Will also provide greater surety for the lender when applying for any type of mortgage.

Anyone interested, contact me and I’ll pass on the details.

Olly

 

[Damian George]

Gordon Brown has shaved 2.5% off the VAT - this should save the property market!!!!

 

[Rishek]

Hi, it's my first time on this forum so I'm a little unsure of how it all works. Apologies if I've come through the wrong channel.

I'm moving from Auckland, New Zealand to work for my employer in London for the next 5 years commencing April 2009. Probably living somewhere in Oxfordshire and travelling to work in Slough, West London.

My wife and I own 2 houses in Auckland with a loan to value ratio of 66%. One is negatively geared whilst the other is cashflow positive. Total value of properties is 1.2million NZD (ie.425,000 pounds). Total borrowings are 810,000 NZD (ie. 287,000 pounds).

We have an overdraft loan available from our NZ bank of 60,000 NZD (ie. 21,000 pounds).

It seems cheaper and smarter to take on a mortgage given our 5 year stay in the UK rather than simply renting. The monthly payments are similar but will it be a difficult exercise trying to obtain a mortgage if we can only put down a 5-10% deposit?

Could we even find anything around 200,000 pounds in one of the villages in Oxfordshire?

My UK salary will be 40,000 pounds per annum and my wife is an ESOL teacher and would probably work part time (ie. 10,000-12,000 pounds per annum).

What would you suggest?