With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

It may be sad, but it is now very true.
We have an economy based on stealing the washing from each others lines. We produce very little except reports and beaurocracy.

we have no resources or main industry left......its just aberdeen thats keeping uk afloat! lol.....population of 200,000 keeping 61 million brits up.

Short Bellway (BWY):

If one was going to short a housebuilder at the moment it would probably be Bellway purely on the basis that a 460p share should have further to fall than one below a 100p like Barratts. A similar near term descending price channel in place from early last month, one that has its resistance line at 465p. Below this on an end of day close basis one would be tempted to go short for a new leg down towards the lowest intraday levels of the year sub 350p.

LONDON (Reuters) - House prices crumbled at record rates and consumer confidence hit historic lows, data showed on Thursday, fuelling fears that a consumer-led slowdown could tip the economy into recession.

The Nationwide building society said house prices fell by 1.7 percent this month, leaving them 8.1 percent lower than a year ago -- the biggest annual fall since the series began in January 1991.

House prices have now fallen by nine percent in nine months from the peak hit last year, an even sharper fall than during the property crash of the early 1990s.

The combination of falling house prices and rising household bills is weighing increasingly heavily on consumer morale. The GFK NOP consumer confidence index fell five points in July to -39, the lowest reading since the survey began in 1974.

The figures flag the threat of a sharpening consumer retrenchment and the uphill struggle facing Prime Minister Gordon Brown if he is to regain public support before the next election, expected in 2010.

"The combination of weaker consumer confidence and sharply slowing house prices will take its toll on consumer spending and the broader economy throughout the remainder of this year," said George Buckley, chief economist at Deutsche Bank.

This is a fairly astonishing chart.

The housing market is still far too over-valued...expect more downtrend.

Precisely. I see no bend at the end yet! ;-))

See page 1...when I started this thread, they all said I'm talking thrash. Well, those people have shut their mouths now

hlyeo - I was right with you all the way. I think at some point I stuck my neck out and said 40% drop from the peak. I'm sticking with it. This thing ain't een started yet.

I know a couple who have 4 flats, even remortgaging their own house to buy more last year. They are really nervous.

uck me Scotty ... thank fcuk for Aberdeen

If anyone out their has the time. will you explain to me how a person buys a house then re mortg it to buy another and the same again, they only started with the deposit for the first house and now has 4 small houses all let

Very easy mojo.
You buy the first as a BTL. Assuming you buy it at slightly under market value, with a decent deposit, you then buy the second as the start of a portfolio of property where the LTV is on an aggregate basis.
For instance, the first property is worth 100k. You buy it as distressed sale for 90k with a 15k deposit. You owe 75k on 100k value.
You then see a property very similar, worth 100k and buy it for 90k. Aggregate lending is 165k on 200k. ie less than 85% so the portfolio lender requires no deposit.
In a rising market this is very easy because the value of the earlier properties keeps on rising and therefore the available equity keeps rising. In a falling market there are many more properties available under value, so each one adds to the available pot of equity, though you have to move faster.
The alternative is gifted deposit lending.
I know of properties for sale where the sale price is about 75% of the true value. The selling agent arranges the deal so that you borrow 85% of the true value. The deposit is gifted so that you pay no actual money and the 10% balance comes back to you as a cashback.
There are other ways, but these are the simple and most oft used ones.
Alan

And with gullible/greedy lenders therein lies the problem.

yes i can see that but how and when do they pay the mort. the mort on say 100k is about 700 a month with insuraces etc and the rent is only just that so in fact she doesnt own anything i think she might be just paying the interest off, so infact the building society still owns them. i think this is a big risk. am i right or just scared

Depends on your timescale.
Medium term there has never yet brrn a bad time to buy property, but it is illiquid and short term it is high risk stuff.
For taxation purposes, most landlords claim the most efficient strategy is to pay interest only and ensure that you are maxed out on the LTV. Rents will continue to rise, but mortgage payments are fairly stable so in the medium term you start to make money, and then as prices rise, you make a capital gain too.
Take the point, Partridge, but as we have discussed before, surley it is the investors who are the greedy ones, and just because it is property not shares, are they really different to us. Particularly those on here who leverage through spread betting and CFD's.

Agree Alan. Gearing up in whatever asset class enhances both potential reward and potential loss. Key point in your summary is "pay interest only" - if the borrower can keep the interest paid, then the lender (whether greedy or not) will usually be happy and history suggests all will be ok in the medium term. Problem comes when voids or falling rents in the short term mean interest cannot be covered and the lender sees little option but to foreclose.

Should have added of course that rising interest rates can also kill off highly geared businesses of any kind fairly quickly.

Home sales fall 14% at Bellway

LONDON (ShareCast) - Bellway (LSE: BWY.L - news) sold 6,556 home in the twelve months ended 31 July, 14% less than the year before, while reservations slumped around 45% in the second half.

The average selling price fell by 4,300 to about 169,000 as 20% of the completions were to housing associations. The group's order book of future sales at the end of July was 370m versus 594m last year.

"Restricted mortgage supply and a lack of customer confidence had led to lower levels of activity," it said.

British Land property valuations slide
MoneyAM
British Land, Britain's second-largest real estate investment trust, said the value of its multibillion pound property portfolio slipped 5% in the three months to end-June as gloomy economic portents continued to depress the UK property market.

British Land said the value of its net assets had fallen to 6.3bn and its net asset value per share had dropped 10% in the quarter to 1,212p as Britain's year-old property correction continued.

In a statement, British Land said subdued leasing activity had started to hit office rents, but retail rents were still growing, albeit at a slower rate.

As a result, it said it would continue to review the timing of a major City of London skyscraper office development project at 122 Leadenhall, known locally as the Cheesegrater, pending an uptick in occupier demand.

British Land described investment markets 'as thin, nervous and negative in tone' and said it saw long-term value for UK prime property in the yield range of 5%-6%, contrasting with sub-4% property yields regularly seen at the peak of the last boom cycle.

'Our prime property assets will see out many economic cycles with a dependability few businesses can match,' CEO, Stephen Hester, said in a statement. 'As spring follows winter, so too will property markets, in due course, see better times again,' Hester said.

The company posted a 23% rise in underlying pretax profit to 74m in the quarter and chalked up like-for-like rental growth of 6.3% versus the industry benchmark of 3.3%.

August 16, 2008

Lehman Brothers in talks over sale of $40bn real estate assets - Suzy Jagger in New York


Lehman Brothers, the Wall Street investment bank, is understood to be in talks to sell its entire $40 billion (21.5 billion) real estate portfolio in a move to stem losses incurred during one of the worst property slumps since the Great Depression.

The bank whose stock has fallen 69 per cent since the credit crisis erupted just over a year ago is believed to be prepared to take a $5 billion hit on the sale of the assets and securities.

Lehman is believed to have begun sale negotiations with firms such as Blackstone, the private equity group, and BlackRock, the fund manager.

However, it is thought that Lehman is optimistic about the price it might secure for the portfolio even though both residential and commercial real estate assets have collapsed in value. Some mortgage-backed securities which are collateralised by residential real estate are so untradeable, they are effectively worthless.

Worryingly, Lehman said that many of the British mortgage-related assets on its books had become virtually impossible to value. This is in marked contrast with its first quarter, when the assets had been fairly easy to value, according to Erin Callan, Lehmans then chief financial officer.