Property disaster

[electricaldave]

I wonder how this crash will affect certain deals that have been made.You think about the YEP building, YLC, Tetleys and plenty of others, and the reasons for closure/relocation were substantially based upon the percieved value of land holdings.This value has not yet collapsed, but it has severely delayed development, and the money that was to have been due was intended to fund the relocations and consolidations onto one central site.This is just an extension to what happened during the '80's when old manufacturing companies sold their land and rented units. the idea was that there was more efficient use of capitol by moving to cheaper and less cstly to maintain units and either sell off land or rent it out, thus making the property work for you while you rented.It's a return to the Thatcherite values of rent everything on high finance and own nothing, and its fallen apart again, helped along in no small part by de-regulation.I saw this crash coming over 4 years ago, there some brand spanking new houses built literally a hundred yards up the road from me and these would not sell, I don't even think they are all sold now and yet they should have been easy to offload.Mortgage loans used to be based on 2.5 times your salary plus 1 times your average annual bonus/allowance/overtime.That limited how much houses could cost, as soon as the financial institutions started to increase the multipliers that houses stayed the same, the people stayed the same, just the prices changed.There used to be a time when financial experts spoke of average wages, now they talk about average household incomes - a very differant thing. This was used to lend out more money to stoke up house price inflation.I have been saying ad nauseum to anyone unfortunate to have to listen to me, just who is going to buy houses in the £100k upward range when the generation inhabiting them have to sell? My income is decidedly average, there's simply no-one I know who could afford such a purchase on their wages. Those I know who have homes in this price range bought them years ago, before this mortgage bubble.With modest terrace houses going for over £90k and a low inflation economy, you can't rely on high annual pay rises to eat into the cost of the repayments. The banks will lend you, (maybe no longer) up to 5 times your income but that just means you are left in poverty for even longer, no wonder more young adults stay at their parents for longer.Trying to buy a starter home means you have to save around £7k to get a decently low interest rate, it means you have to take on a mortgage of around £70k and you'd then end up living in one of the least salubrious parts of Leeds. If you are lucky, you borrowed maybe 3.5 times you income as a younger person at the lower end of the market in the lower part of your earnings careers.If you price young folk out of the lower part of the market, everything else just has to stagnate, the chain is broken.So many of us have made notional money on our homes, but in reality it seems we have then saddled our children with high housing costs, large debt in the form of student loans, and stagnating incomes as wages stop still.It may not be comfortable reading, but the value of housing is far too high, not nice for someone who recently moved in. Apparently average house prices have fallen 16% in the last year, but that is total bunkum, as there have actually been so few sales that the numbers are highly distorted. What is really happening is that people are putting off trying to sell, older folk are seeing the value of their assets falling and instead of downsizing to supplement their pensions, they are staying put.The housing market gurus are too busy trying to talk up the value of property but all that does is help the financially blind to delude themselves into thinking their houses are worth more than they are.I'll substantiate that last sentence with a link to this website,http://www.home.co.uk/guides/house_pric ... n=leedsYou can see that the values quoted seem to state that the average house price in Leeds is close to £170k, but all I ask you to do is look at your last pay increase, is it really likely that you know many people who can afford £172k based on the percentage wage increases of the last year or so?You'll also note this is based on just 157 successful transactions last two weeks - this is an unprecedented low level of sales.House prices truly need to decline by another 30%, perhaps even more, only then will it start to move again.Large house price declines will further erode the viability of building societies and other organisations whose credibility depends upon land based asset values - you can expect further casualties in the next year.

[raveydavey]

Here's another angle on it. Not two miles from where I'm sat is a large development of 'affordable' housing. It was planned pre-credit crunch, but they only started actual building work in the latter part of last year. It's not in a very desireable part of Leeds - although it's not the worst area either.When the first billboards went up on the land, the 'affordable' houses were 'from £99,995'. In the last six months or so, that has dropped several times until now you can snap up one of these homes 'from £62,995'.Thats a difference of £28,000 - how th hell can the developer afford that unless they were grossly over priced in the first place? I know times are hard and the developers will no doubt need to have money coming in, but that sort of price drop suggests to me that the public have been charged way too much. A consequence of a free market economy perhaps, where many were so desperate to get onto the property ladder that they just had to buy anything?

[electricaldave]

You can call me cynical, and I am, but I wonder how many of these 'eco towns' will be built.My view is that they were never necessary in the first place, it was just a way to open up green belt land to get around planning laws so that the greedy swines who have ruined banks and building societies could lap up some more at the trough.You don't hear too much about the protests now do you? You hear nothing about a housing shortage either, not with all the empty town houses and flats.Amazing how the property crunch makes all these so called vital developments stop.How was it ever 'green' to build upon green land in the first place? Remember the saying used by the peacenicks a few decades ago?(Fighting for peace is like f***ing for virginity springs to mind here) Building 'eco towns' on green belt seems to be along the same lines.If you look at past images and maps of Leeds, you realise just how much empty space there is nowadays compared to then.Take a look at Richmond Hill, Nippet Lane right down toward Cross Green, loads of space that was formerly occupied by housing, you can do the same around Armley, Wortley and almost anywhere you can think of in Leeds. Yet they still pushed out further and further, because the evelopers were never interested in developing 'affordable' housing, it was a case of maximise profit by buying green fields cheap and polluting them with nasty suburbs of little character, then pump up the prices. Garforth, I'm looking at you, bet you can think of a few other such bland developments.Maybe all the lot of our glorious leaders had their trotters in the trough, after all, how did such a huge financial calamity sneak up on us so unawares unless everyone was deliberately looking in other directions and not scrutinising asset security in the way they were actually employed to do.I think the whole thing stinks to high heaven.

[Bramley4woods]

cnosni wrote: drapesy wrote: In the blurb about this programme they gave us the 'shocking' stat that " one in ten City Centre flats is unoccupied. Look it at the other way - 90per cent are occupied - that sounds pretty good to me! Agreed Steve,its a pretty good occupancey rate.Id like these places to work,i really would,but CD,River Island,are cut off from not only the city centre but also any other concentrated population,im not sure its what the developers had in mind.Im not interested in living in such a place myself,though i can see the attraction for some people,namely those at the younger single/couple end. The numbers don't add up.It would have taken 2 good salaries + a lot of savings at pre-crash prices. To get a good salary implies University qualifications, that can take 4, 5, or 6 or more years (employers now will not accept a first degree at face value because qualifications have been dumbed down, a "Masters" degree is required to dispense packets of tablets in a supermarket chemists for instance, or prescribe specs using an automatic machine, that's another 1 or 2 years more). Kids have also of late been encouraged to "Take a year out" bartending in Australia (to keep the jobless total down back here) so they can be nearly 30 before they receive any salary at all, probably 3-4 years before any of them get a "good" one and then there's all those loans to pay back.Women are also discouraged from starting a family after age 36 by the medics. So it looks as if it didn't add up before the crunch, and now it seems to me this model of society is broken altogether.

[String o' beads]

Excellent stuff electrical dave. Very insightful. And what I've long suspected.

[cnosni]

Id just like to point out that the term "Working Class"in this message does not have any politaical connatation whatsoever.Its the best way i can describe my personal social background,and that of my peers, without sounding like some left wing ,Marx reading, condescending T*at or some right wing polo playing inbred idiot (i hope i have covered enough social stereotypes in that statement)Well perhaps the Leeds council burghers are taking the right step.They want to start building council houses again.This is,to me,the definitive first step on the ladder for any new occupier.Affordable,quality accomadation is the bedrock upon which most of us were brought up in.Our kids need this to be able to make their way in life.The property market has been manipulated by those seeking a profit ie those involved in selling.I bought my house late in life,in 2000.By 2005 i was told that the same pile of 1930's semi detached was worth just short of 3 times what i paid.The trouble is that all those above me in the chain were told the same about their respective properties,and when they came to sell they pitched their price accordingly.The market is now "adjusting" itself to a more realistic level.Unfortunately this level is bad news for recent purchasers and we will now see the same [edited for content] we had in the early nineties.The right to buy your own council rented home was actually a good thing,but,and its a big but,the restrictions then placed on councils prohibiting them from being able to build more social housing then f*ucked the whole ethos of empowering working class people to eventually be able to buy their own homes.Affordable quality housing for all will enable anyyone to live in decent conditions whilst being able to save up to pay a deposit on an affordable mortgage.Ive been a bit of a critic of the council and Leeds MPs in the past ,but i think they are beginning to make the right noises (Arena/Trolleybus/HSR2).Lets see what happens.

[chameleon]

Just a thought, if more Council ('social') houses are built and the right-to-buy persists, what happens in a few years time to the next generation of peopls needing a home they can afford?

[cnosni]

chameleon wrote: Just a thought, if more Council ('social') houses are built and the right-to-buy persists, what happens in a few years time to the next generation of peopls needing a home they can afford? Well one of the reasons why there is a shortage of council housing is because succesive governments prevented councils from building new council homes.The monies from tose sales were frozen.The amount of homes the council are talking about are relatively small,but nonetheless needed.

[electricaldave]

The problem with getting more council houses built will be down to politics, and the very nature of people themselves.You walk around certain estates and wonder why certain individuals should be housed at all in publicly financed housing. The leeches in them have no intention of ever contributing to society and appear to do their best to ruin these good homes. There should be some sort of duty to live in a way that does not overtly affect neighbours or property, it seems just too difficult to evict such people - the ASBO council crowd sometimes appear in the YEP and you often find their evictiion is the culmination of years of abuse of the housing and neighbours.It's an aspiration for many living on these estates simply to get away from the lowlifes. I have come across folk living in places such as the Bayswaters who would absolutely not accept a house on a large council estate.Add to that, why should someone who has worked, made something of themselves, why should they pay council tax to subsidise other who will not go out and buy their own house?There are some who have reasonable incomes, who prefer to live in subsidised housing off the backs of the rest of us.Maybe there needs to be some change to the rents to discourage this, with the lower paid getting rent rebate whilst the better off pay the full market rate, no idea if it would work or not, but you can see how it would play in the media - maybe this 'dog in a manger' attitude is what comes fo the type of housing system we have in the UK where ownership is everything.Private rent landlords cannot make up the gaps, so what will happen to the empty developments in Leeds centre?

[electricaldave]

The problem with getting more council houses built will be down to politics, and the very nature of people themselves.You walk around certain estates and wonder why certain individuals should be housed at all in publicly financed housing. The leeches in them have no intention of ever contributing to society and appear to do their best to ruin these good homes. There should be some sort of duty to live in a way that does not overtly affect neighbours or property, it seems just too difficult to evict such people - the ASBO council crowd sometimes appear in the YEP and you often find their evictiion is the culmination of years of abuse of the housing and neighbours.It's an aspiration for many living on these estates simply to get away from the lowlifes. I have come across folk living in places such as the Bayswaters who would absolutely not accept a house on a large council estate.Add to that, why should someone who has worked, made something of themselves, why should they pay council tax to subsidise other who will not go out and buy their own house?There are some who have reasonable incomes, who prefer to live in subsidised housing off the backs of the rest of us.Maybe there needs to be some change to the rents to discourage this, with the lower paid getting rent rebate whilst the better off pay the full market rate, no idea if it would work or not, but you can see how it would play in the media - maybe this 'dog in a manger' attitude is what comes fo the type of housing system we have in the UK where ownership is everything.Private rent landlords cannot make up the gaps, so what will happen to the empty developments in Leeds centre?