Does anyone think that UK house prices are overvalued?

Cantor have started a house price market at www.spreadfair.com. If you look under financial bets you'll see it.

stockdog.

Your observation about your london street being 30% down in 18 months. What area are you in, if you dont mind me asking?


Thats a hell of a drop!

MaxK

N7 Tufnell Park - nice street etc
from Land registry adjacent prices went up to 750k+ and are now around 540k.
It can happen - the higher end always more extreme than the lower/mid strata , IMO.

SD

I agree with most of what has been said. I live in Edinburgh which has the highest property prices in scotland. One thing I have found is that valuations are wildly higher at present than you could ever expect to get if you sold i.e. properties go on at a fixed price then sell for 10% or so less than that price. Problem is people are using the valuations to remove all the equity from the property and take 100% mortgages almost instantly going into negative equity. I own a flat (my first) so i have no experience of previous property bubbles but I just cant see how with such a glut of overpriced property on the market and no sign of it shifting that there cant be some kind of price correction. Unless the basic rules of supply and demand dont apply to property? I dunno. I think if people had sold at the peak of the market (in edinburgh that was about 12-14 months ago) then rented then were looking to re-buy now they could really hang the sellers out to dry. I hear "gazundering" (as they are calling it) is becomming widespread, where you agree a price with the seller then (hoping they have agreed a subsequent move) you lower the offer price substantially at the last minute leaving them in limbo. All's fair in love and war I say. In any case, as i say i aint experienced in the property world and have stretched myself as it is so could quite happily stay where i am for the next 3-4 years if need be.

PS. On another matter - my father bought property in Florida off plan a while ago and is awaiting completion. Any predictions on how the dollar will perform against the pound over the next year or two. I know this is an aside but any advice would be greatly appreciated. I am just interested. Cheers.

Property in Florida appears to be going through its final, lunatic, upward acceleration phase prior to the most almight bubble popping - I hear they are day trading properties there currently!!! Be very, very careful, if a financial investment, unless your Dad plans to enjoy its use long term (10 years +).

Dollar continues its decline for the foreseeablke, but so does Sterling and the Euro - go long on Yen, I dont think so. So it's gotta be gold.

SD

Fundamentalist
yes agree for every seller ther is a buyer but point i was trying to make is that solicitor said he was not dealing with many chains ie like myself i have sold and am now renting and he said this is happening alot this year

Shit now hitting the fan!


Personal bankruptcy hits record

28% annual rise pushes insolvencies to a fifth higher than 1990s peak

Charlotte Moore
Saturday May 7, 2005
The Guardian

The number of people going bankrupt reached record levels in the first quarter of this year, official figures showed yesterday, highlighting the economic problems facing the new Labour government.
With consumer borrowing now standing at more than 1 trillion, the recent rises in interest rates have led to a growing number of individual insolvencies. The Department of Trade and Industry said the number of bankruptcies jumped to 13,229 between January and March, up 1.6% on the previous quarter and 28% higher than a year ago.




The insolvency figures follow the publication last week of record numbers of mortgage repossessions.
Personal bankruptcies are now more than a fifth higher than during their peak in the early 1990s, when the economy was emerging from recession and almost a million households were in negative equity. Economists warn that there is worse to come.

Vicky Redwood, a UK economist at Capital Economics, said it was unlikely that the numbers had peaked. "We estimate households are paying the equivalent of 21% of their disposable income on interest and debt repayments, the highest since 1990," she said.

Since interest rates are likely to be very close to their peak, household debt servicing costs are unlikely to rise much further. However, in the early 1990s, bankruptcies continued to rise for a full three years after debt servicing costs hit their peak, Ms Redwood said. Even though interest rates 15 years ago were higher than they are now, the cheaper cost of borrowing has encouraged consumers to take on record levels of personal debt.

UK economist John Butler, at HSBC, said: "[The rise in bankruptcies] seems to support our analysis that households' high level of indebtedness has made them more sensitive than in the past to small changes in interest rates."

Economists were also concerned about the high level of bankruptcies, despite employment being at record levels. Only a third of those declaring bankruptcy were unemployed, suggesting that even those with a regular income are running into financial difficulties.

In recent years, consumers have been cushioned from the reality of high debt by rising pay and a strong housing market, allowing them to withdraw equity. But rising tax and fuel costs have put a dent in disposable income and a flat housing market has led to drop in equity withdrawals. As a result, people are now struggling to pay back their loans.

"The data support our view that with households suffering under record indebtedness and the delayed effects of higher interest rates, on top of a weakening housing market, the recent slowdown in household spending growth is here to stay," said Ms Redwood.

Mr Butler agreed: "The vulnerability of the household sector is acting like a timebomb which will ultimately cast a shadow over the UK's medium-term outlook."
http://www.guardian.co.uk/business/story/0,3604,1478530,00.html

Fundy, I may be a seller (want to sell), but just like for a while before the bottom of the market, there are not enought buyers to keep the price up.

"I" am told that "we" need a bigger house, but again I am waiting for a drop in prices before I buy again.

The talk on houses for the last 4-5 months is similar to the talk before the Tech share bubble burst in March and Sept 2000. Half saying it wouldn'd happened and half saying it would. The MMs narrow the NMS and chaos reigned for a while.

I notice that, in my area, the new official owners of repo'd property i.e. The Halifax or LloydsTSB etc. aren't knocking them out in auction as they used to do. Instead they seem to be carrying them and feeding them through normal channels (i.e. estate agents) at the same price as others in their range. Remember, the insurance company will pay off the difference between what they are owed and the selling price so there's no direct financial benefit to the lenders (Lloyds etc.) in doing this.

I'm guessing but suspect they're scared of spooking the market as a modern, 4 bed detached would almost certainly fetch 15 to 25% less at auction than in an agents window at this moment in time.

i heard from a mate today who works in the morgage industry that there is a lot of worry within the industy about the amount of personal debt and that alot of morgage payers do not have any personal savings to fall back on in case of emergency which is prob why the halifax etc are doing their best to talk up the market and not send propertys to auction etc which would only push the prices down !!

I'm not sure how they collect their data but...

LONDON (AFX) - Fears of a sharp slowdown in the UK's housing market may ease
with news today that house prices rose in March.
The Office of the Deputy Prime Minister reported that house price inflation
rose to an annual rate of 12.6 pct in March from 10.5 pct in February.
It added that the mix-adjusted average house price in March stood at 183,346
stg compared with 179,491 stg the previous month.
In addition, it said the annual rate of house price inflation in London rose
to 9.8 pct in March from 7.1 pct in February.
The government's findings echo those from the Halifax, the UK's biggest
mortgage lender, and the Nationwide, the UK's largest building society.
Today's news may ease concerns on the rate-setting Monetary Policy Committee
that a sharp fall in house prices may prompt an equivalent drop in consumption.
It is unlikely to prompt another rate hike later today though.
The MPC has not raised interest rates since last August as evidence emerged
of a slowdown in the growth of consumer spending, particularly in the housing
market, and the economy appeared to come off the boil.
Between November 2003 and August 2004, it raised its key repo rate a quarter
point on five occasions, taking the base rate up to 4.75 pct.

The ODPM data is always out of date. I tend to find the Halifax and Nationwide data to be better as it is based on mortgage approvals data rather than house completions.

Good to see interest rates have been held again ......

Land Registry said just 159,116 properties changed hands from January through March, down 35 percent on the 243,914 in the same period one year ago.

That is not surpising as this time last year the market was booming and now it has just stabalised.

Jan to March Land Registry figures are for contracts made six to eight weeks beforehand so are rather out of date. Accurate, but old.

ratios of house prices to incomes in the south have reached record highs.

Does this apply to a couples joint income or individual incomes?

Sorry to be contrarian - but I think we are in a temporary "soft patch" in the housing market, and over the next few years prices will head considerably higher. Income multiples may be stretched, but in the Irish Republic they are nearly twice as high as a result of the 2% European base rates - and hence prices have soared much higher than in the UK.

It looks now as though interest rates have peaked in the UK. I notice Roger Bootle (who's he!) predicting interest rates here of 3.5% in 12 months time.

In the world according to gallick, oil prices will surge to perhaps $100 per barrel over the next 3 years. This will lead to high inflation (infact stagflation). The MPC will be unable to put up interest rates as they will not want to damage the housing market and thereby trigger recession. We may well end up with negative real interest rates. House prices go up with inflation (so do wages), so it will be a no brainer to borrow money very cheaply and sit back on the sofa whilst the value of your property rises at a faster rate than the cost paying your loan.

rgrds
gk

I have to agree, I'm to the west roughly of stockdog.
You just can't buy a studio rabbit hutch round here
these days for less then C100,000 (C=carrots) and that's for a small
one in hooded fox infested territory.

Now a nice glade-like location, quieter, less litter etc, with
entry-phone etc for your more executive hutch dweller, easy C160,000
go from a studio to an actual one bed hutch of the multi-storey
variety (like your flats) and well C200,000 easy.....

What they go for round by stockdog I hate to think......
;>)

What effect will the new SIPP legislation allowing property into pension funds do?
I am split between thinking that either the effect on the market will be neutral, i.e. those who own `buys to lets` will merely move them into SIPP`s
and not buy more, or the effect will be a humungous rush to buy property, with the consequent price jump.But there again the latter might cause a glut of buy to lets, causing a sell off.
Basically totally confused, no change here then.