Boris gets serious!

Rightmove comments on stamp duty and the budget

Rightmove PLC, the UK ’s number one property website, issued a press release following yesterday's disappointing budget by Alistair Darling. According to Rightmove, the decision to maintain stamp duty thresholds at the current level, means that nearly 50% of the UK’s current housing stock on the market come with a stamp duty fee of up to £2,500 attached. Over 25% of UK properties currently for sale come with a fee of up to £15,000. Only 16% of all homes on the market are priced under £125,000, and exempt from from the tax.

Rightmove co-founder Miles Shipside suggested that the Chancellor missed a "real opportunity to help First Time Buyers" and suggested that the stamp duty exemption threshold should have been raised "by a mere 4% to £130,000". If this were to happen, Shipside argues that first time housing buyers would have had access to an extra 14,211 properties currently for sale.

With tightening mortgage lending criteria, First Time Buyers are finding it hard enough to get onto the property ladder. Some saving on Stamp Duty would have helped them raise the larger deposit that is now a necessary prerequisite of getting onto the housing ladder.
In the buoyant market of previous years, sellers would have benefited from being able to raise prices as a result of buyers having more money at their disposal. In the current flat market, First Time Buyers would likely have benefited from all the savings the Chancellor would have handed to them."

London Politics gets interesting

More big political news today as in London as "Gangsta Ken" suspends his "race adviser" "Gangsta Lee" Jasper.
Another gangsta move made by the mayor this week was the introduction of a £25 Congestion Tax on vehicles he apparently doesn't like, namely 4x4 SUV's (he aptly names them Chelsea Tractors) and high performance sport cars (a cock-blocking move if there ever was one - Gangsta Ken apparently can't drive so he doesn't own one).
These two types of vehicles represent at least 50% of all cars in central London on any given day. But according to the mayor:

"Nobody needs to damage the environment by driving a gas guzzling Chelsea Tractor in central London. The CO2 emissions from the most high powered 4x4s and sports cars can be up to four times as great of those of the least polluting cars. The CO2 charge will encourage people to switch to cleaner vehicles or public transport and ensure that those who choose to carry on driving the most polluting vehicles help pay for the environmental damage they cause. This is the "polluter pays" principle. At the same time, the 100 per cent discount we are introducing for the lowest CO2 emitting vehicles will give drivers in London an incentive to use the least polluting cars available."

Sounds good in theory, but in practice does it work? Brian Paddick, the Lib-Dem mayoral candidate rightly suggests in his response to Gangsta Ken's proposal that the congestion charge should

"do what it says on the tin: tackle congestion in central London. What Ken Livingstone is proposing is an emissions charge and it will do nothing to tackle congestion. Those who can afford Chelsea tractors, can afford a £25 ride into London. Allowing small vehicles to enter the zone will only add to congestion and bring London to a halt."

... which - based on the history - makes a lot of sense to me.

Barack Obama versus the US Economy

Barack Obama seems poised to be the next American president; certainly it appears that the Democrats will nominate him as their candidate. Hilary Clinton fired her campaign manager this week and the newspapers are full of praise for Obama's victories last night. But don't rule out Clinton yet. According to the 48 Laws of Power guy, Obama's campaign strategy is fundamentally flawed in that his strategy is "very much dependent on circumstance."

When times are good, people are in the mood for such an uplifting message. Then you can catch wind in your sails and even tack in certain directions, all carried away by your optimism. This worked brilliantly for Kennedy. In such times, people are more willing to take a risk on somebody new. ... When world events were at a relative lull, Obama was in a good position. When the worsening economy began to take center stage, his message did not resonate as well, and his options shrank. And considering the volatile nature of the times we live in, it would have been better to bet on problems and difficult times up ahead. His message remains consistent, rings true, but has less and less appeal when future problems loom more than future possibilities. [link]

And that is currently the state of the American economy today. With stock markets loosing over $5 trillion last month, the continuing deflation of the housing market, the ongoing costs of the Iraq war, Bush's desire to attack Iran, Escalating oil prices etc etc, things do not look good for America. So Obama's message of change sounds and looks good, it certainly is an uplifting message, one that sounds good in these times, sort of like a Baptist preacher. He may have the will to change but does he have the power to make the change? No doubt this will be the question on voters minds as the election approaches This may be when experience plays greater than change.

Yvette Cooper moves office

Following today's scandalous resignation of Peter Hain, the once highly respected and influential British Politician, It was also announced that Yvette Cooper, the current MP for housing and head of the newly created Department for Communities and Local Government (DCLG) will be moving office to the become chief secretary at the Treasury.
You may remember that Ms. Cooper replaced former Deputy PM John Prescott for housing last year after Tony Blair created the DCLG (or something like that, I don't really keep up to date with too much politics). Anyway the DCLG has been instrumental in providing critical and informative housing data. Ms Cooper will be replaced by Caroline Flint, who is currently Minister for Employment and Welfare Reform

Keeping up with American politics ...

is confusing. Nevertheless, I've found a great source of independent commentary ironically out of Barcelona. Gary Stewart, CEO of Goa Internet Services who produce Nuroa, the Euro property search engine offers excellent commentary focusing intently on the race between Barack and Hillary. Checking Huffington Post and Drudge Report, the two most influential blogs in American politics and it seems like the blog world are leaning towards Hilary, but then I just got back from Canada and watched a lot of American TV, and the mainstream media is definitely riding Obama's d_^k.
Of course Ron Paul's being blowing up our interweb for the past year. Unfortunately for him it seems computer geeks are just too lazy too vote, even though his politics seem to make a lot of sense to a lot of people.

Is Darling guilty of criminal negligence?

Certainly somebody in his department is guilty of something. As the head honcho, Darling ultimately has to take full responsibility. His gross mismanagement of the Northern Rock situation and now his department puts at risk 25 million members of the general public?
Brown needs to act quickly and decisively. If not he will prove himself to be an even worse prime-minister than Tony Blair. At a time like this, when the global economy is so unstable, we need competent political leaders at the helm to guide us through the storm.

Bloomberg makes the right move

By no way do I consider myself an authority on American politics, but I do believe it was a very smart move by NYC Mayor Michael Bloomberg to quit the embattled Republican party and reposition himself as an independant.
By politically disassociating himself with Bush and pals and furthermore, by not returning to his old party, the Democrats, Bloomberg positions himself strongly for the White House as a true independent. Bearing in mind that in 2001, right after 9-11, Bloomberg joined the Republicans when New York and the rest of the country was standing with Bush and Rudy. Now however, for the most part, the Republicans are a bunch of losers, and there really is nobody in the Democratic party that's looking much better either. So Bloomberg proves himself to be politically astute. Besides that, he's done a pretty good job in managing New York City these past 6 years. Just look at the Manhattan property market, when compared with the rest of the country.

OFHEO director comments on Federal Housing Finance Reform Act 2007

“We commend Chairman Frank and Members of the U.S. House of Representatives for passing a balanced bill that will strengthen the nation’s housing finance system by enhancing oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
H.R. 1427 gives the new regulator the tools necessary to ensure the safety and soundness of the GSEs so they fulfill their congressionally-established mission, especially affordable housing. It is noteworthy that there was virtually universal agreement by all Members of the need to create a new and stronger regulator for the housing GSEs.
We recognize that a few issues remain and we pledge to continue
working with the House and the Administration on those issues. We are hopeful that the Senate will act quickly on this important legislation.”

JAMES B. LOCKHART, DIRECTOR, Office of Federal Housing Enterprise Oversight (OFHEO)

Industry reaction to HIPs announcement

Association of Home Information Pack Providers (AHIPP):

“It is difficult to understand how RICS can claim that it is acting in the public’s interest by denying them this much needed reform, and the benefits of reduced carbon emissions as a result of the EPC."

RICS
"We support the introduction of EPCs – we always have.
The additional time should be used constructively to iron-out the problems. The practical implementation of HIPs must serve the best interests of the consumer."

National Association of Estate Agents:
‘total chaos’

Rat and Mouse
"Clarity to everyone"

Council of Mortgage Lenders
"This cannot be an appropriate way to make policy."


RUTH KELLY'S STATEMENT

HIPs delay?

UPDATE:
delay till August, but HIPs will now be phased in, starting with large home sales. The delay comes after a legal challenge from the RICS

Ruth Kelly to make statement

Software threat to HIPs Launch

According to The Times:

... faulty software has thrown many of the training programmes for energy inspectors into disarray. It emerged yesterday that IT programmes to measure home energy ratings have failed to analyse the correct data.
One estate agent told The Times that a huge number of energy inspectors will have been trained on faulty software. Although two suppliers have had their software approved, two others — Property Tectonics and Northgate — are said to be still waiting, two weeks before the deadline on June 1.
Critics, including the Consumers Association, said yesterday that pilot schemes to test the packs had not been evaluated and that the proposal should be delayed for at least a year.
The Government is facing a legal challenge over the plan after the announcement by Royal Institution of Chartered Surveyors (RICS) that it was seeking a judicial review regarding a lack of consultation.
The latest problems came amid reports of a row between Ruth Kelly, the Communities Secretary, and Yvette Cooper, her deputy, over the Home Information Packs. Mrs Kelly wanted to scale the proposals down, but this was strongly resisted by Ms Cooper, the Housing Minister, who reportedly threatened to resign.

Yes, there is such a thing as a zero-carbon house

last week, in his annual budget speech, UK Chancellor and soon to be Prime Minister Gordon Brown, announced to the nation that from October 1st 2007 all new zero-carbon homes costing up to £500,000 will pay no stamp duty and zero-carbon homes costing in excess of £500,000 would receive a £15,000 stamp duty tax reduction.
Unsurprisingly, Browns announcement was greeted with heavy skepticism and nobody I spoke with seemed to had ever seen or even heard of a zero-carbon house; but alas, we can reveal that - yes - there is indeed such a thing as a zero carbon house!
Spotted this weekend at the Birmingham Property Show, the "Eco Pod" boasts that it can "reduce energy requirements and costs by up to 90%, producing virtually no CO2 emissions"

But wait ... there's more ...

According to the website, the Eco Pod does not need planning permission "in the majority of cases" , yup, you heard right; all you need is "a flat firm (hard standing or concrete) level surface ... and we will do the rest."
And at prices starting at a meager £45,000 (waay under stamp duty), the EcoPod may be the answer to a lot of problems, or may indeed be the creation of a whole new set of problems, depending on who you speak to ... who knows, maybe the guy who invented it will build a £500,000 model, so we can at least get some satisfaction we're beating the government, whoopee, cant wait for that to happen !

Is "Global Warming" bullshit?

According to this documentary it is, with scientists freely admitting to having a "vested interest in creating panic". nice try Al Gore

mySociety launches Neighbourhood Fix-It

From the people who brought you the very useful TheyWorkForYou.com (check out the Nestoria implementation), mySociety launched the impressive Neighbourhood Fix-It earlier this week.

How it works

Basically Neighbourhood Fix-It uses maps supplied by Ordinance Survey enabling people to report, view, and discuss local problems in their neighbourhood and also to report problems to their local council by simply locating them on the map. The service is post-code specific, free to use and currently available only in the UK. As a registered charity, mySociety is accepting donations, however Neighbourhood Fix-It was developed via a grant from the Department for Constitutional Affairs Innovations Fund.

Expert predictions for 2007

So many different opinions on the current state of the property market and where it's headed in 2007. In the UK for example, the FT reports that most analysts are predicting the housing market will cool next year; but given that so many of them were wrong about 2006, it's hard to know what to expect or who to believe going forward. The big story in the US is this years "housing bubble" which hasn't burst yet; and seems to have the experts dumbfounded and confused as to whether or not it will happen. Here's a few predictions:

....

US BUBBLE

Mauldin: When Will the Housing Market Bottom?

Look at this very interesting chart from one of my favorite analysts, Professor Robert Shiller of Yale. This chart tracks housing prices, adjusted for inflation, since 1890. This is on existing houses and not new construction. It is easy to see that the recent boom is a bubble. Since 1997, the index has risen 83%. Shiller talks about housing regressing to the mean over time. That could mean a lot more than a 20% drop in housing prices and another 12 months to the bottom. A drop to the mean could be over 40%. That is rather hard to imagine.


Jain: Has Housing Bottomed In the US? Data and Fifth Grade Math Says No

"Look at this figure, a sad example of what lies ahead for the housing mess. Yes, it is a one big mess, maybe the biggest mess ever that I know of. Now, you never want to make the mistake of ever getting such a graph out to the public. You keep this to yourself and find some other facts that you can spin. For example, Housing Scams are up, permits are down 30%, and housing starts are down 26% from year earlier. Then, summarily claim that the housing is in the process or bottoming or has already bottomed. You never want to give a number for what the current rate of the housing demand is, unless you can quote someone's false claims about the demand. Use vague phrases like demographics, immigrants, to give a sense of demand far greater than the actual demand shown by the survey data."


Schiff: Sub-Prime Disaster in the Making
The main problem is that the majority of these loans were made to people who really cannot afford to repay them and were collateralized by properties whose true values were but a fraction of the loan amounts. Once the music stops and prices return to earth, borrowers who put little or no money down may decide to simply mail in their house keys rather than make additional mortgage payments. Why would anyone stretch to spend 40% of his or her monthly income to service a $700,000 mortgage on a condo valued at $500,000, especially when there are plenty of comparable rentals that are far more affordable?

NYT: Dow Hits New High as Sales of New Homes Pick Up
While the housing market has been in the midst of a sharp slowdown in recent months — some economists are calling it a full-blown housing recession — the damage to the economy has been limited so far. The decline in residential construction during the summer months knocked more than a full percentage point off of the nation’s gross domestic product growth, pulling it down to 2 percent in the third quarter.
But strength in other areas of the economy — consumer spending and commercial construction, for example — has helped to keep growth from stalling.

Bloomberg: New-Home Sales Rise More Than Forecast
Sales of new homes in the U.S. rose more than forecast last month as lower mortgage rates and more incentives helped builders reduce inventory. The figures add to evidence that the slowdown in construction may take less of toll on the economy early next year than it did last quarter. Even with the decline last month, the number of unsold homes remains near a record high, making it less likely homebuilding will strengthen outright, limiting economic growth, economists said.

NY Observer: Gaze Into the Crystal Ball of Housing in 2007, and Shrug
A federal government report on Wednesday showed stronger-than-expected new home sales nationwide in November over October. And a report out on Thursday shows existing home sales were also stronger in November than in the month before. Mortgage applications, too, have been up since the summer, rising as much as 12 percent from August through this month, according to a new report from a leading trade group.
These statistics have buoyed the spirits of some, including likely suspects such as brokers and sellers. But the optimism is often - and rightfully - tempered by variables, such as: Will interest rates go up? Will energy costs rise? Will home construction ebb, allowing inventories of unsold homes to dwindle? Will any national statistics ever truly matter to some local markets, like Manhattan's?
Unfortunately, for these questions, only time will likely tell.

UK PREDICTIONS

FT: Visions vary on the fortunes of property
The message is clear: if you want to gain an understanding of how the market will perform next year, be prepared to keep a close eye the latest projections for growth in gross domestic product.

Walayat: Interest Rate Forecast for 2007 - Bank of England to do Battle with Inflation
I am sticking with the earlier forecast of UK interest rates hitting 5.25% by March 2007 and possibly even going as high as 5.75% during the 2nd half of 2007 as the Bank of England is forced to reign in inflation as it hits the upper boundary of 3% (CPI).
The risks to the forecast are a sharp drop in the UK housing market or sharp slowdown in the UK Economy, though thus far the rise to 5% has failed to have an impact on either.

Fionnuala Earley, Nationwide Group
The number of estate agents reporting an increase in new buyer enquiries fell back sharply in November, and while this is a more volatile indicator of house purchase approvals, it does lend some support to the view that we will soon see the start of some weakening in demand.

Savills: UK Residential Research Bulletin
There is no housing market bubble - yet. Only a severe external economic shock or very unpleasant inflationary surprise could cause prices to reduce substantially from current levels. Few housing market analysts now use historic levels of house price
to income ratios as an indication that the housing market is overheated. Those that do come rapidly, and erroneously, to the conclusion that house prices must fall substantially in order to correct this anomaly.

FTAdviser: Britain saving badly
Almost one in three UK adults failed to save a penny this year, according to research from Alliance and Leicester. Encouragingly, the survey revealed that most people earmarked 2007 as the year they will begin to adequately save, with 31% saying that they have realised the implications of not building up savings.

STOCK MARKET/CURRENCY

Nathan Lewis: The End of the 1972 Bull Market
Housing valuations today are WAAAAY higher than in 1972, when they were still in recovery after being crushed in 1970. ... If there is one good thing today, it's that tax brackets are adjusted for the CPI, thus minimizing "bracket creep," a big source of effective tax hikes during the 1970s. Also, capital gains, though still not CPI adjusted, are taxed at much lower rates than they were then (35%-50%).
Thus, based on this analogy alone, we can create some hypothetical "back to the 1970s" scenarios for 2007:

1) The dollar [vs gold] will sink below its previous low of $730/oz. and head quickly to $1000/oz.

2) The stock market will begin to decline when the dollar makes new lows vs. gold, if not a bit sooner (maybe the $680/oz. region).

3) The Fed will eventually have to react to this monetary situation with some rate hikes, possibly taking the Fed funds rate to 7% or higher by the end of 2007. However, the Fed would like to remain easy-peasy, so it will generally be "behind the curve" in its actions.

4) "Goldilocks" will be dead as an investment hypothesis.

5) The S&P 500 will at some point be 20% below its high point for the preceding bull rally, but it may close the year down only 12% or so. In terms of ounces of gold, however, the losses for equities will be enormous (50%+).

6) Monetary order will be disturbed as the dollar makes new lows against foreign currencies in 1H07, Other governments will at first be willing to let the dollar sink. However, pretty soon (2H07) they will take action to prevent their currencies from rising too much against the dollar, with all the trade consequences that implies. Thus, all governments will effectively devalue their currencies alongside the dollar, producing worldwide inflation.

The thing that would really cinch a "back to the 1970s" outcome is new highs for gold vs. the dollar ($750/oz. or higher), setting off a very quick move to $900+. I think this is fairly likely going forward, although there are no certainties.

Sprott: The Downfall of the Dollar
Much has been made of the Dow being up 15% this year, but when measured in other currencies (especially the “real” currencies, gold and silver) the performance of the Dow has been far from stellar. In Euro terms, the Dow has gained an unimpressive 3% this year. Against gold, the Dow is actually down almost 6%. Against silver, the Dow has lost over 26% this year! Is there really a bull market in US equities? These facts often get lost in the over-exuberance that is mainstream financial media. The weakness in the dollar is making things look better than they really are from the perspective of Americans who, to date, have suffered little from the debasement of their currency. Whether this continues to be the case next year remains to be seen, but we believe time is running out. We consider this the critical issue for financial markets going into 2007.

POLITICAL ECONOMY (Middle East/Iraq)


Newsweek: Iraq's Economy is Booming
Civil war or not, Iraq has an economy, and—mother of all surprises—it's doing remarkably well. Real estate is booming. Construction, retail and wholesale trade sectors are healthy, too, according to a report by Global Insight in London. The U.S. Chamber of Commerce reports 34,000 registered companies in Iraq, up from 8,000 three years ago. Sales of secondhand cars, televisions and mobile phones have all risen sharply. Estimates vary, but one from Global Insight puts GDP growth at 17 percent last year and projects 13 percent for 2006. The World Bank has it lower: at 4 percent this year. But, given all the attention paid to deteriorating security, the startling fact is that Iraq is growing at all
[interesting comments to this article on Kudlow's blog]

Cedric Muhammad: How Iraq Could Have Been Stabilized
There can be no unity when inflation rates touch 70% as has been the case in Iraq as recently as August. With inflation rates still over 50% and an exchange rate that is operated by the Iraqi central bank under an impossible managed peg regime, the case has now gone from the evidence of 2003 to a state of proof three years later, that fatal mistakes and errors were made early-on in the planning (and lack thereof) laying the ground work for economic development and growth. It is hard to imagine that the United States government believed that everything depended upon an oil revenue grab, but the evidence suggests a second thought wasn’t given to other important economic basics.


Brenner: The Economics of the Rise of Ahmadinejad
Power is dispersed within democracies, and democracies are always weakened when more money flows through government hands. This is true even when the facade of democracy persists. When more capital sifts through the government, more groups depend on government handouts and have less access to sources of capital that are independent from the ruling political parties.
Conversely, when capital markets are opened, the risk that one-party states will emerge diminishes. As independent sources of capital surface, political power is dispersed and lasting prosperity follows. Thus, it is a mistake to promote democracy without first establishing the ground for letting people have access to capital and collateral — or at least coordinating such access with political change. After all, prosperity is the result of matching people with capital, while holding both sides accountable.
What happens when societies either do not have or destroy their financial markets?
That’s how one-party states such as Ahmadinejad’s Iran emerge: People bet on crazy ideologies when their customary ways of living suddenly crumble and capital markets close. Capital markets are the unique feature of the West, and their democratization is the key to the civilizing process and the best insurance against the emergence of one-party states. Indeed, that’s what the U.S. should have been “exporting” all along in the Middle East, coordinating the promotion of capital markets with the necessary political changes in Iraq.

....

There's certainly a lot of food for thought in these articles and while I can't honestly say I agree with or even understand some of what these experts are saying; I can pretty much make one prediction for 2007, with a fair amount of accuracy: no matter where you are or what you're doing in the new year, one thing's pretty much certain that real estate / property will no doubt have an even greater impact on our lives in 2007. But of-course, I could be just saying that; I am after all the RealEstate Enthusiast!
Happy New Year everyone.

Govt pledges £45 million to regenerate Birmingham

Housing and Planning Minister Yvette Cooper announced nearly £45 million in funding to regenerate some of Birmingham and Sandwell’s most deprived areas through the Housing Market Renewal programme. A major programme of renovation and enhancement in the Lozells area will also be taken forward over the longer term:

“These local communities in Birmingham and Sandwell need our support to tackle deep rooted problems caused by economic decline so that they can reach their full potential and create clean, safe, healthy and attractive environments in which people can take pride.” according to Ms. Cooper

Ipswich Murders

It's amazing that with all the CCTV cameras, Congestion Charge camera's and British people being the most watched on earth, that something like this is happening. Maybe if the government spent a bit more resources monitoring the streets instead of policing parking tickets, we could avoid these tragic events from happening.

Bush uses "tha Google"

Poor sod can't remember the name of the program, but "likes to look at the maps"

Americans set to buy London City Airport

American International Group, GE Capital, and Credit Suisse are reportedly putting the finishing touches to contracts to purchase London City Airport for £750 million after Madrid based Sacyr Vallehermoso pulled out of the deal, late last month. City handled almost 2 million passengers last year, compared to Heathrow's 70 million and in related news, London mayor Ken Livingstone is reportedly `close'' to a £10 billion funding agreement with the UK government over Crossrail; a railway system that would connect the West End, City and Docklands with Heathrow. We reported last month that London business leaders were eager to see Crossrail developed; many expressing frustration that Gordon Brown had not yet resolved the project's funding. This is seen as an urgent transport priority and has been the subject of concerted lobbying by the capital's business leaders.
Mayor Ken is apparently planning to ``bust a gut'' to see that Gordon Brown, replaces Tony Blair as the UK's next prime minister, when he steps down as party leader next year.