The number of people searching certain online phrases suggest some interesting trends. Readers of this blog may remember my buy-to-let barometer. Now for a new one that reflects the level of interest from all buyers.... the number of people searching 'stamp duty calculator'.
How the stamp duty barometer works
We're lucky enough to have the strength of our content recognised by Google. So when you search stamp duty calculator our stamp duty calculator is very near the top of the results. So if we measure the amount of people clicking on it, we can gauge British appetite for property buying.
November 05, 2009
Why mortgage borrowers are helping savers
We can't go back in time, so savers need to realise mortgage borrowers are helping them out and bury the hatchet.
If it wasn’t for these dastardly home-owning types, especially those unlucky enough to have been born too late to buy a reasonably priced home, the Bank of England wouldn’t have had to turn the base rate into a bargain basement rate of just 0.5%. And it should teach them a lesson by sticking rates back up.
However, this view – which I have simplified but is expressed with some regularity - does miss the point slightly.
Why house price bears shouldn't worry about immigration
Last month, I explained why I was selling my house and joining the legions of British renters.
Since then, I've been asked several times if I'm concerned about last month's 'forecasts' from the Office of National Statistics that the UK population will grow from 61m to 72m by 2033.
Surely this rise, a result of Brits having more babies but mainly due to immigration, would drive demand for property, especially in the south-east of England, where these migrants are most likely to find well-paid work.
Here's two reasons why you should treat this assumption with suspicion.
October 21, 2009
Banker bonuses: The impact on house prices
Rightmove said this week that average asking prices for London properties on its website are back to the peak of two years ago. The press has been littered with reports this week of bankers rolling up at estate agents, eager to spend their forthcoming bonuses.
The latest, today, is from Peter Rollings, formerly of Foxtons and now managing director of Marsh & Parsons estate agents in London. He said: "This is great for a London agent like us. Without a doubt, bankers' bonuses are positively affecting our business.
The speed of the rise in property prices this year is astonishing.
As a property market bear, it tests my faith.
I wrote at the start of the year that, despite falls of around 20%, the average UK home remained 38% over-valued against the long-term average for house prices vs salaries.
I also warned, however, that a return to the average or below the average, as has happened in previous property busts, was unlikely to be rapid. I warned that in the short-term cash-rich speculators may prefer property investments to pitiful returns from savings accounts; that sellers, still focused on peak prices, would rather withdraw their home from the market, creating a property shortage...
October 19, 2009
The interest-only mortgage timebomb
The chart below is hidden deep in the FSA's mortgage market review, which has been grabbing the headlines today.
It shows the rise of interest-only mortgages as house prices boomed from 2002 to 2007, from 13% of those taken out to 33%.
September 30, 2009
When did an £800k two-bed flat become a bargain?
Here's a gem from today's Homes & Property section in the Evening Standard. Now Homes & Property is a fairly aspirational section and being in London's newspaper, prices can seem fairly detached from the real world.
But this just goes to show the difference between them and us – the them being the people who can afford to pick and choose where they live in the capital.
In an article on where to find value for money property, Hampstead bargains are highlighted.
It says: ‘Hampstead has always been sought-after, but Peter Brookes, of Savills, says the recession has brought it in reach of more people. ‘The feeling is that now prices have dropped buyers want to have a go at this area.’ A ‘mainstream’ two-bedroom flat in the village will cost about £800,000.
Buy-to-let: Landlords get squeezed even harder
The property market may be being talked up in many quarters but buy-to-let landlords are finding it even harder to get a mortgage.
Buy-to-let specialist Paragon’s latest Trends research suggests more than half of the professional landlords surveyed have attempted to secure a new mortgage in the three months to the end of August and nine out of ten of them said doing so was getting tougher.
And this provides a vital counterpoint to all the stories of cash rich buy-to-let investors snapping up bargain homes, or landlords enjoying super-low tracker mortgage rates.
Paragon says there were just 196 buy-to-let mortgages available at the end of August – a colossal 94.4% down on August 2007 and a slip from the 218 available in May.
Why Britain's house price crash is far from finished
I love The Economist. I love it for many reasons, but the top one that has stood out in the Noughties has been its well-structured and early warnings of why the property market would crash.
As early as 2005, the magazine was pointing out that a glut of savings from emerging markets was leaving Western banks awash with cash and too eager to lend - the source of the current crisis. A cover story in June of that year [flashback] warned of impending doom for house prices.
But price rises kept on coming for another two years... and so did the warnings from The Economist, mainly through its quarterly review of house price indices.
Yes, selling in 2005 would have meant missing out on the final flurry of the boom - but some of the world's richest people made their money by selling too early (sadly on this occasion, I didn't).
The latest quarterly review was out on Friday and carries the latest stats on the performance of different countries (see right - source: The Economist). More importantly, it has succinctly captured why this crash is far from done:
'In Britain house prices remain 170% higher than they were in 1997, but average earnings have risen by only 55% in the same period.'
British wages are unlikely to grow in any significant way for several years - due to slow economic growth and rising unemployment - and those wages will face higher taxes.
So if the link between earnings and house prices is to be restored, as is usual, then Japan's long-term performance in the table (-35% over 12 years), which followed a consumer boom and banking bust in 1989, is the best guide for where we're headed.
Despite the market revival of recent months - which I said in February should be expected - I stand by my post from the start of the year, suggesting house prices remain at least 38% overvalued. In fact, the economic fundamentals are so compelling, it has helped persuade me, among other reasons, to sell and rent. More on that another time.
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