UK Property Market Stagnating

[tj]

[quote user="Gluestick"]

Whilst, no doubt estate agents are still suggesting to the gullible "Buy now folks, whilst they're cheap!", this morning's news from Wall Street simply adds to the case for us bears!

[:)]

[/quote]

 

They are not as cheap as the're going to be, the real financial situation will determine house prices for the foreseable future, and I see them quite easily dropping by half there current value, given the real factors involved, mortgage availability, demand, and of course the repossion stock which I understand is going to be rather large. memories of the late 80's. 

[homeagain]

As an average Jo, by the time I have read and understand the market and its twists and turns, the house will likely be sold, hoorah.  Better get reading

[Gluestick]

Agree completely about the downside potential, tj; I don't know that I'd make myself a hostage to fortune with a 50% deval, though!

Personally, I feel that when the recession hits, this time around (my memories include the early 70s - when I lost a bundle in spec property BTW! - as well as the late 80s), the sums involved are so immense - circa 60% of the TOTAL of the value of Great Britain's capital - that the properties at risk will create such an unprecedented capital danger to the UK that government, the B of E and mortgage lenders will have to form an action committee to create some mechanism whereby instead of foreclosure on deliquent mortgages, the lenders will become the biggest residential landlords in the history of the UK!

In the 80s, financially distressed borrowers sought relief through Housing Benefit: local authorities paid mortgage interest only after a six months waiting period, with no upper caps.

This time around, the obligations are so huge and the government so short of funds (£100 billion to bail out Northern Rock hasn't helped: anymore than the B of E dumping billions into the money market!), that the Housing Benefit route isn't viable.

Still that's what happens when a country allows itself to predicate its economy on importing consumer durables and semi-durables and mainly residential housing and the spin-out activities therefrom, rather than manufacturing things that can be mainly exported.

Try as one might, it's a bit tricky to export notional value!

That said, a hidden danger is that the growth of Sharia funds and the influx of "Hot" Asian money may well mean that bulging Islamic funds may well finish up this insane period owning whole chunks of the United Kingdom.

They have already been aggressively buying commercial property and REITs; (Real Estate Investment Trusts).

At the right price.........................

 

 

 

[Quillan]

Some of the other US banks are going wobbly, BBC3 News tonight Lehman Brothers are having the same problems and the US treasury are getting ready to step in. The American guy interviewed explained that money already injected made the situation on a par with the 1930's, does this mean one has to look up for people throwing themselves out of windows? I see the big UK banks also took a serious dip in their share values today. Making lending difficult will of course slow the UK housing market down quite a bit but that should boost the rental marked working on the logic that if people can afford the repayments but can't get a loan they can afford to rent.

[Alan Zoff]

Enoch almost got it right.

Unfortunate that he made it a black v white thing; otherwise, more people might have been prepared to listen and act.

As it is, the open door, multi-cultural policy in the UK has made it very easy for any determined group to establish itself and eventually to dominate. They even get charitable status and grants to help them do it! And if you draw attention to what is going on, you're a racist.

Powell predicted one day the black man would be master in the UK. Colour is not an issue as far as I'm concerned. But if the rulers are religious fanatics, imposing their superstitious dogma on the host nation, then that's another matter entirely.

[tj]

[quote user="Quillan"]Making lending difficult will of course slow the UK housing market down quite a bit but that should boost the rental marked working on the logic that if people can afford the repayments but can't get a loan they can afford to rent.[/quote]

thats just the point, they can't ! and rents are more than mortgage repayments, and sensible lending in the beginning would have certainly helped prevent the current situation.

 

 

[Gluestick]

Yes, I agree, Alan.

Influxes of "Hot" capital are not new: it's happened often in the past.

In the 70s, and 80s it was hot US funds. In the 70s also it was Japanese funds. I used to deal their funds for a time.

Arab petro-dollars were a phenomenon of the 70s, too.

The problem is that after the dust settles, we are not then, the masters of our own destiny.

Exciting times.

 

[tj]

[quote user="Alan Zoff"]

Powell predicted one day the black man would be master in the UK. Colour is not an issue as far as I'm concerned. But if the rulers are religious fanatics, imposing their superstitious dogma on the host nation, then that's another matter entirely.

[/quote]

its an absolute disgrace,

unfortunately theres nobody in government with the balls for the job that needs to be done.

[WJT]

Very scary past few days! Anyone here worried about the UK banks/ building societies?

[Sprogster]

The risk of a major downward correction in the UK property market has defnitely increased in the last few days.

The UK banks to protect their balance sheets will continue to reign in their lending to the point that house prices will fall because of the lack of available mortgages.

[WJT]

[quote user="Sprogster"]

The risk of a major downward correction in the UK property market has defnitely increased in the last few days.

The UK banks to protect their balance sheets will continue to reign in their lending to the point that house prices will fall because of the lack of available mortgages.

[/quote]

I'm not sure if that was in response to me but my question was in regards to the confidence of keeping savings in the banks/building societies at the moment. I have read that there could be a few that are vulnerable.

[jon]

So who is in a more comfortable position?

The young man working for Meril Lynch in the City of London, the couple in their fifties who have a few buy to let properties[he has retired early to write a book"how to make money in Shoreditch"]the working class couple;she works part time in Tesco and  [whilst the kids are at school] and he is a buider working for a large company of developers....or finally the couple who have moved away to France to open a gite and riding school in Landes..she was a teacher in uk...speaks 3 languages .[no mortage to pay and savings].

Is it going to be crazy to have savings in uk?

Better to invest in a property......for rental?

[ali-cat]

[quote user="WJT"][quote user="Sprogster"]

The risk of a major downward correction in the UK property market has defnitely increased in the last few days.

The UK banks to protect their balance sheets will continue to reign in their lending to the point that house prices will fall because of the lack of available mortgages.

[/quote]

I'm not sure if that was in response to me but my question was in regards to the confidence of keeping savings in the banks/building societies at the moment. I have read that there could be a few that are vulnerable.

[/quote]

Thanks for the alert on this WJT.  I've just checked and our bank is one of the vulnerable ones.  How much can we trust their reassurances that they are "not another Northern Rock" - and are offshore subsidiaries (IOM) covered by the UK depositors' guarantees?  Worrying times - but what IS a safe haven now that transferring funds to euro-land means an immediate 'loss' and all the insiders have already bought up the cheap gold?

Mr Cat

 

 

[Pads]

Ali cat Hello.....

Where did you check to find out if you bank was one of the vulnerable ones?

Am I right in thinking if you keep less than 30,000 in each bank you are safe  from any loses?

[Gluestick]

With all monetary deposits, it is firstly critical to check whether the deposit taker (Banker's jargon for bank or financial institution which takes in funds from external depositors) is Authorised or not.

Only authorised Deposit Takers will be covered by any guarantee scheme.

When using any offshore bank, just because it happens to share the name of its major parent, is not guarantee! Invariably, these banks are wholly owned subsidiaries, registered in that offshore jurisdiction and therefore regulated and authorised by it: not the United Kingdom or (e.g.) USA.

Caveat emptor!

As an example:

Extract from Isle of Man Bank's terms and Conditions.

Deposit products, savings accounts and current accounts

Copies of our most recent audited accounts are available for inspection on request

Deposits made with branches of IOMB in the Isle of Man are covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991, as amended.

IOMB is not an Authorised Person subject to the rules and regulations made under the UK Financial Services & Markets Act 2000, and therefore deposits made with branches, all of which are outside the UK, are not protected by those rules and regulations covered by the UK Financial Services Compensation Scheme. As at 31 December 2006, the paid-up capital and reserves of IOMB exceeded £145 million.

Meaning of "Guaranteed" or "Capital Protected" in relation to Capital Protected Products. The use of the words "Guaranteed" or "Capital Protected" in the name of any product advertised anywhere in this website refers only to the ordinary contractual obligation of IOMB to repay your capital (and where appropriate any minimum return) in full. Our products are not guaranteed by any other party and your rights to repayment upon liquidation of the bank are the same as for any other unsecured depositor of the bank.

[Quillan]

[quote user="tj"]

[quote user="Quillan"]Making lending difficult will of course slow the UK housing market down quite a bit but that should boost the rental marked working on the logic that if people can afford the repayments but can't get a loan they can afford to rent.[/quote]

that's just the point, they can't ! and rents are more than mortgage repayments, and sensible lending in the beginning would have certainly helped prevent the current situation.

[/quote]

Well have a search on UK rentals and there are still loads rentals for between £500 and £800 (depending on area). The problem is that you won't get 100% mortgages anymore and the down payment will increase probably back to the old days like 20% down, rest on mortgage. People joining the housing market just won't have that sort of money for the down payment and if you have nobody 'buying in' then nobody can move up.

On BBC news this morning the number of people contacting the Citizens Advice because they can't pay their mortgages for the first 2 months of 2008 was 400k, the highest once the early 90's.

It will be interesting to see if UK banks regain any ground (share wise) after their dramatic downward run yesterday.

If you have a shed load of Euros buy sterling and stick it under the bed and forget about it for the next 12 months.

[dragonrouge]

Dear Quillan we are a little fortunate in that when we sold in Normandie we sold to Belgians and they just paid the asking price so we have not insignificant sums with our bank here in France but in a variety of savings accounts.

Would you seriously ship the euros back home?

Surely currency dealing is for the big boys?

 

regards

[Quillan]

[quote user="dragonrouge"]

Would you seriously ship the euros back home?

[/quote]

Not back to the UK unless I wanted to buy there, which I don't. But the current difference between when I bought in France and the  value of the pound now means that I have made a 30 cents profit on every pound I spent and that is lot of money. But then that's only if I wanted to sell now and I don't.

As I said it's like betting on horses. If you think the pound will get better in the next couple of years by about 20 cents to the pound then buy some sterling and put it under your French bed then in a couple of years change it back to Euros. So if you are a betting man/woman it's up to you if you think it's worth a punt.

[quote user="dragonrouge"]

Surely currency dealing is for the big boys?

regards

[/quote]

If your brave enough then no. I had a chap of chinese extraction working for me back in the mid 70's. He used to buy currency, put it on overnight deposit then flog it a few days latter. I guess in today's money we would be looking at between £1000 and £2000 outlay a go. He used the profit for his annual trip back to China with his family. Very canny chap he was.

Another alternative if you don't fancy the paper stuff is to buy gold. I see on the TV this morning you can buy from 1/16th of a gram upwards.

As I said before, I'm not a gambling man so I (like you) have my money in the bank. I'm probably not getting as much interest as I could somewhere else but the chances of my bank going down the tube are a lot less than other forms of current investments.

Talking of money under the bed, there was a plumbers merchant near Sutton in surrey. The guy used to do a lot of 'cash' business and kept it upstairs where he lived. The place caught fire, it took 5 men to restrain him. The fire brigade thought that there was a trapped person because of the guy's desperate attempts to get inside. Apparently the sum involved was the equivalent of the cost of a 3 bed semi at the time. So he may have saved a few bob tax wise but it cost him a lot more in the long term.

At the moment my biggest worry by far is my pension plan back in the UK which I am keeping a very close eye on not that I can do anything about it. Perhaps I should have moved that to Euro Land when I had the chance.

[Hoddy]

Pads, I'd heard that £30k per bank thing too and was very reassured by it until yesterday when it was pointed out that some of the smaller banks are under the 'umbrella' of a bigger bank and that you can only have one £30k.

Hoddy

[Russethouse]

With two adult children still at home (UK) I'm beginning to wonder if they will ever be able to afford to move out ? [:'(][:'(]

[Alan Zoff]

A salesman from the bank that took over what's left of my Equitable Life pension keeps writing to me to say he thinks it would be a good idea for us to meet to chat about things. I somehow doubt that he would still think it was a good idea if we ever did meet. I'm not a great shot but I reckon he would have to move pretty quickly to escape intact.

[Quillan]

[quote user="Alan Zoff"]A salesman from the bank that took over what's left of my Equitable Life pension keeps writing to me to say he thinks it would be a good idea for us to meet to chat about things. I somehow doubt that he would still think it was a good idea if we ever did meet. I'm not a great shot but I reckon he would have to move pretty quickly to escape intact.[/quote]

With 1% growth (only just) last year you can get in queue behind me mate [;-)]. Mind you a friend of mine has one through the Abbey, I think it's a pension mortgage actually and it has grown by exactly 0% over the last three years AND the blighters had the audacity to charge him for administrating it, not a happy bunny.

[WJT]

[quote user="Hoddy"]Pads, I'd heard that £30k per bank thing too and was very reassured by it until yesterday when it was pointed out that some of the smaller banks are under the 'umbrella' of a bigger bank and that you can only have one £30k. Hoddy[/quote]

I haven't heard about other banks being protected under one umbrella so makes it even more worrying, we were going to look at this over the next few days. [8-)] But I had heard if the bank were to have problems, the £30k guaranteed (I thought it was £35k) potentially would not be accessible all at once. Possibly the government only allowing withdrawals in small amounts such as £500 a week.

[ali-cat]

[quote user="Pads"]

Ali cat Hello.....

Where did you check to find out if you bank was one of the vulnerable ones?

Am I right in thinking if you keep less than 30,000 in each bank you are safe  from any loses?

[/quote]

Hi Pads

I just typed my bank's name and "vulnerable" into google and it brought up the gory details.  As I understand it the UK scheme covers 100% of the first £2000 and then a percentage (90%) thereafter up to a maximum of £35,000 compensation.  Offshore accounts in IOM, Jersey, Guernsey are not covered by the UK scheme. IOM offers cover of 75% up to £20,000 (£15,000 total compensation) with lesser schemes in Jersey and Guernsey.  I believe the guarantees relate to each depositor and if you have seperate accounts in banks that all belong to the same group you may only qualify for the £35,000 max rather than £35,000 for each account.

Mr Cat

 

 

[Russethouse]

http://www.moneysavingexpert.com/savings/safe-savings

Hope this is useful