Is it a V? Is it a W? Which road of recovery are we heading?
I'm blown away by the number of articles on house prices this week and ask 'Are prices really rising or just lack of supply?' There's definitely a rise and it's helping to boost confidence, but be warned the economy maybe subdued due to mortgage availability.
Should the FSA quit before they're forced to leave? It seems they are doing everything they can to slow down the economy. Banks are told to keep large reserves to satisfy the new FSA policy. What this means to you is a lack of funds for lending. Not great when you should be making money from low house prices.
And recovery, is it a V or a W? Find out what's confusing the economists and why they would rather sit on the fence.
And finally, YPC Wealth is now fully regulated to offer you a complete range of financial services. To celebrate this great news, we're offering you free remortgages on your property for Life. For more information call Nick on 01522 507 897.
As always if you have any questions or want to have a chat about current opportunities call the team on 0207 812 1255.
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Brett Alegre-Wood
Transcript of video 'Is it a V? Is it a W? Which road of recovery are we heading?'
Hello and welcome to this week’s Property News Update with Brett Alegre-Wood, your source for everything that’s happening in property in the UK, Australia and around the world.
Hey guys and welcome to Weekly Property News Update. I’m Brett Alegre-Wood and this is Wednesday the 7th of October 2009.
So today we’re going to cover: Lack of supply or recovery. Which is it? Is it either/or or perhaps something totally different? We’re going to look at what the papers are saying in terms of prices rising everywhere. We’re going to look at house prices up, house prices down. So which one is it? What’s happening with them; where are they heading; that sort of thing. And then we’ll look at Australia raising interest rates and what that means for the global economy and in particular the G20 – the 20 largest economies in the world. And then we’re going to look at the new offer that we’re giving for all the property that we sell, the free re-mortgages for the life of the property and how that works.
So my thoughts for the week: Look, everything is still up in the air. You know ask 10 different economists and they’ll give you 10 totally different answers from one end of the spectrum to the other end. You know it’s amazing to see such disparity and actually you know nobody even knows. So you know is it a V, is it a W? I’m tending more towards the V but the V with a slow recovery; but I think the most important thing is the reason nobody knows is because there’s so much change in terms of government policy, the FSA saying banks liquidity – you’re going to have to change all the liquidity. So you know they’re looking at implementing that. They’re saying they’ll regulate buy-to-let mortgages which is another thing. You know you’ve got all these different things that are happening out there or people are talking to stop the next boom-bust but actually they should be worrying about getting us out of the recession first or getting us on the road to recovery then looking at these things, not implementing now because that’s just going to destroy confidence and stop things from getting back on track. So let’s get started.
So this in an article I wrote a couple of days ago actually: Are prices really rising or is it just due to a lack of supply? Now bottom-line for me: Are prices really rising? Yes, they are but actually not enough for you and I to actually recognise it. We’re not actually believing that this rise or these rises we’re seeing is actually going to put money in our pockets. Yes, it gives us a bit of confidence that things are you know bottoming out or continuing to drop but it’s not actually money in our pockets so it’s not real, we’re not actually really believing that it’s going to make much of a difference, so it’s sort of an artificial thing. Is it due to lack of supply? Yes, I think it is. You know, yes I think there’s lack of supply because most people, because of low interest rates can afford to hold a property, they’re not putting it on the market, so therefore that’s what’s propping things up and I think things will start to slow down over the Christmas period as I’ve already spoken about. So let’s move on to the next thing.
This is just, this is one hour, what this is the cml.org.uk website has a thing What the Papers Say. So they just look at all the various papers and articles relating to mortgages and house prices and things like that and effectively people look at his in one hour: House prices rocket again. House prices rise for third month in a row. House prices surge 1.6. House prices surge a further rise. House prices continue to rise (in September). More signs of house price rises. Okay? So in one hour that’s just a snippet of what things are talking about, about house price rises. But tapered with that, or put aside to that is this undercurrent that says: Hold on a sec, we’re not into recovery yet. We’re not into a fully blown recovery. We haven’t got through this yet. Yes, the worst may be over but we still could dip a little bit more, that sort of thing. So and I think the last sort of two months I’ve been talking about this so hopefully you’re getting an inkling of this, you’ll start to see a lot more of the prices going to drop and that sort of thing come out now. So just continuing on with that.
Will house prices continue rising? Now interesting and I mentioned this before actually. Most experts are sitting on the fence. Alright? You’ve either got these people who are sitting on the fence going: I don’t know! And I’m one of those people. Really, really, really? I’ve got no idea! There’s that much changing and there’s that many fundamentals policies changing that how can I say because I’m not the one making those decisions. But there are guys that are well and truly at this end and guys that are well and truly that his end – you know, so I’m sort of sitting on the fence on this one. Personally I’m tending more towards this side because I think we’ve had enough of the downside. Whilst affordability and that are issues I don’t think there is bigger issues and I think that stuff will come back and there’s a lot of factors at play there. We’ll see that we’re not going to drop too far. Okay?
If we’re looking at: Second slump could strike says bank boss. So this is the boss of HSBC mentioned that. You know and he just says that he’s cautious about the level of capital banks might be required to hold by regulators. This is the FSA that are changing all the rules around how those Basel ratios… And of you haven’t been on to the website go to recovery.yourpropertyclub.com and that website will explain to you what I mean about Basel ratios or banks liquidity, or when we talked about propping up the balance sheets of the banks. It will explain that in detail to you there. And what they’re looking at doing is fundamentally changing what banks can call liquidity. Okay? And by doing that it means they’re going to have a lot more money held back (if you like) which means it will slow things down and this is one of the problems I see with the FSA. I think realistically we should get rid of them because they’re not doing their job and you know financial stability – Nah! Not really! But anyway.
House prices. So basically house prices… What you’ve got are: House prices rise but economists remain cautious. And the point I want to make here was just this: Although market analysts agree that prices are unlikely to fall back to their April lows the muted outlook is a result of concern. Unemployment levels and lack of access to mortgage finance. Now I think there are two biggies here. You know unemployment is still rising but unemployment always has a lag effect. Okay? The second aspect is the fact that access to mortgages and that’s obviously a big thing and if we cant get that liquidity back into the banks then they’re not able to do lending, we’re not going to be bale to grow the economy so it’s going to keep the economy subdued. Okay?
Another one: Recovery on hold? Hopes hit by new data. And what they’re talking about is the manufacturing output. They’re talking about how in June and July it was up, then August it dropped off. And look at the end of the day that is what’s going to happen, August we all go on holidays so what they do is they build up the production that they need to see themselves through August so we’re going to see always it go up and then drop down and then we’ll see it level out. But artificially? Well you know if you put a trading three months look on that, then we could probably get an average there.
Confidence is back claims Tesco Chief. Now this is actually the Tesco Chief saying: Hey, consumer confidence or shoppers’ confidence is back, things are looking good, the worst is over. Okay? So again it’s all this up and down, who knows what, okay? The good thing is that it’s not all down. If it was all down then we’d be worried. The fact that it’s this in-between really I think is we’re bumping along the bottom and I’ve been saying that for a while. One country has actually come through this and obviously my fellow countrymen (the Australians) they’ve actually avoided the technical recession so they haven’t actually had negative economic growth. They are suffering, they are suffering from unemployment levels, all these sort of things that go on with a recession but technically they’ve been going good and what they’ve just done, they’ve surprised everyone, they’ve just said that 1 in 20 people, or 1 in 20 economists predicted they’d raise the interest rates but they actually didn’t. So you know, for them their economy is looking reasonably strong, certainly a lot stronger than the UK. So don’t think that this is going to translate into our interest rates rising.
So finally what I’ve done is I’ve sort of looked at, and we’ve got YPC lock, now YPC Wealth is regulated by an appointed representative of Personal Touch Financial Services Ltd. who are a regulatory body of the FSA. So they regulate the members of our business. We’re allowed to sell all sorts of products that YourPropertyClub wouldn’t be able to in a regulated environment. So we’re able to do that now 100% - you can call Mick up in the office at YPC Wealth, actually I’ll chuck his number on here, but also too the important thing here is what I’ve done to sell that, because we can now do our own mortgages. Okay? So because of that I had a think about what is it that is missing from our mix (if you like). You know we guarantee the properties but what we do after that first initial let, you know there’s sort of no guarantees. Sure there’s relationship and we build that with you, but actually what this does is it locks us in for the long term with you and I think that’s the key to this, is locking you in. So look some people are mortgages… To get your own mortgages or re-mortgages done on a property you know everything from 3% through to 1%. So what we’re saying is actually: No, just come in and use us, we know you, we’ve got your details, you know, just use us, we’re not going to charge you our broker fee. So effectively you’re saving any form of broker fees for the life of the property. Now that may change because there’s a financial services review of retail services review in 2012 so we may have to adapt that through time but you know there’s conditions there but the spirit of it is that if you want to re-mortgage your property so you can take advantage of any capital growth that’s going to be coming in the next few years.
So guys, thank you very much and next week I’m actually going to introduce you to the new office. So we’ve actually taken another floor in the office so we’ve got our existing office and another one. So I’ll be introducing you to that. So have a great week and we’ll see you next time.
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