Friday, April 01, 2005

Uk's Property Slowdown Ongoing

The Hexham Courant has some more evidence of the slowdown occurring in England. "Miles Shipside said: 'Activity levels have been really low since summer last year. Just look at the recent Land Registry figures, which measure all transactions in the market. They showed a 24 per cent decline in actual transactions completed in the last quarter of 2004 as compared with one year earlier, and the lowest for six years, since 1998."

"In addition prices fell by over £5,000 or 2.7 per cent as compared with the previous quarter, a bigger decrease than had been measured by all other price achieved indicators."


At 11:46 AM, Anonymous Anonymous said...

Analysts are saying it takes 150,000 jobs a month just to account for population increases, so 110,000 means increased unemployment.

So, we have:
- rising unemployment
- rising interest rates
- bubious (at best) home financing
- dramatically increased speculation
- dramatically increased consumer debt
- a significant government deficit
- a significant trade deficit
- rising manufacturing input costs
- falling dollar
- foreign banks questioning their US$ purchases
- jobs moving offshore
- a staggering or falling stock market
- rising oil and commodity prices.

And people criticize me for being a bear ????

As far as I am concerned, people in this country are either extremely optomistic or completely niave !

At 12:00 PM, Blogger Ben Jones said...

Great points anon,
Only in a mania could these facts be taken to be a positive environment.

Its not optimism; hell I'm optimistic! I think we'll be alot better off after the bust, especially if we can lay the blame where it belongs..Thx for posting..Ben

At 12:37 PM, Blogger Van Housing Blogger said...

Great blog.

If it is a "mania", then this quote from John Kenneth Galbraith is worth reading:

"Although only a few observers have noted the vested interest in error that accompanies speculative euphoria, it is, nonetheless, an extremely plausible phenomenon. Those involved with the speculation are experiencing an increase in wealth-getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved."


At 1:16 PM, Anonymous Anonymous said...

BUY! BUY! BUY! england is an island, real estate can't fall on an island, they aren't making anymore island.

hahah- that was a joke.

seriously, we seem more and more like Japan every day, except they had more savings, we don't have much.

I recommend chapter 7(and all the chapters) of bill bonner's book- "financial reckoning day"

At 1:43 PM, Blogger Ben Jones said...

Hi Van Blog!
I really like your site and check it everyday; I highly recommend it. I read your Galbraith post(s) the other day.

(all wish to think that it is the result of their own superior insight or intuition)

Man, do we have a lot of that these days or what! Thanks for commenting, don't be a stranger..Ben

At 1:45 PM, Blogger Ben Jones said...

Hey anon,

(more like Japan every day,except they had more savings, we don't have much.)

If we get property deflation, we will suffer all the more because of the lack of savings. Good comment, thanks

At 6:25 PM, Anonymous Anonymous said...

Isn't the most likely outcome inflation of around 7-10% a year for a decade and a devaluation of the dollar to around 30-50 eurocents?

In which case the homeowners will be laughing as their debts and fixed debt servicing costs decline in real terms?

The folks who'll suffer the most are big creditors - mostly foreigners like Asian central banks.

Won't this seem like the most attractive outcome to US policymakers?

If this is really how things will play out, might housing still not be a good investment today?

At 3:30 AM, Blogger DrBubb said...

Good to see some attention on this overvalued market from acroos the Atlantic.

The real committed UK Bears, and their arguments have a home here on a website with a highly descriptive name:

At 9:33 AM, Blogger Ben Jones said...

(Isn't the most likely outcome inflation of around 7-10% a year for a decade..Won't this seem like the most attractive outcome to US policymakers?)

The Fed is running out of options, in my opinion. The problem with the housing bubble is that wages are not going up. Neither are rents. Something has to give and I think it will be prices.

Thanks for the link!

At 8:53 PM, Anonymous Anonymous said...

While the UK housing is now doubt overpriced, the deflation of the UK housing bubble will probably be much less painful than the US housing crash.

For starters, Brits save more and have more equity in their homes and overall less household debt.

Secondly, the BoE has plenty of room to lower rates from their current lofty levels of almost 5% (we're talking 200 basis points to be equivalent to US levels and 275 basis points to match the neighboring Euro zone). So the BoE should be able to slowly deflate the UK bubble causing a soft landing for the UK economy. Also, most UK homeowners have ARMs whose rates are pegged to BoE controlled rates, not the yields on 10 year government bonds which are set by the market.

So the UK looks to be much better placed than the US to weather the much-anticipated housing crash.

At 6:46 AM, Anonymous Anonymous said...

The Boe will not lower rates just to save the housing market. Have you not heard of our £1.1 trillion debt??


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