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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Mike da bear who wrote (636)	2/25/2004 2:16:33 PM
From: mishedlo	Respond to of 116555

The whole thing is drivel. Neither Bush nor Kerry can produce jobs. Right now my stance is ABB so any drivel that anyone believes is quite fine with me. M

To: Mike da bear who wrote (636)	2/25/2004 2:25:42 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UK Housing Bubble? Soaring prices force first-time buyers out of the market despite low interest rates The number of first-time buyers has dropped dramatically over the past decade as soaring values have priced young people out of the housing market, new research showed yesterday. First-time buyers are finding it 33 per cent more difficult to get a foot on the housing ladder compared with 10 years ago. The Council of Mortgage Lenders (CML) said the number of first-time buyers entering the market fell to 29 per cent last year, from 50 per cent in 2001. At the same time buyers were paying an average of £96,000 for their first property compared with £42,000 10 years ago. London was even more extreme, with the price paid by a first-timer rising to £165,000 from £58,000 over the past decade although incomes had only doubled to £40,180 from £20,000. Bernard Clarke, from the CML, said anecdotal evidence suggested that first-time buyers were depending more on their parents, either by living at home for longer or relying on them to borrow against their own homes to fund the deposit. "Affordability is an issue but we have to remember that interest rates are at historically low levels so we feel that mortgages are still generally quite affordable for first-time buyers." But Durlacher, a City stockbroker, said the shortage of first-time buyers was a sign of a speculative bubble it believed would burst, sending prices tumbling by almost a half. It said the number of buy-to-let investors would overtake first-time buyers for the first time this year. "Our analysis suggests the housing market now represents a bubble," it said in a 22-page report on the health of the housing market. "A significant proportion of mortgage borrowing is for speculative activities and buy-to-let transactions will exceed first-time buyers this year." The report said the crash would be triggered by a rush by homeowners to sell at the top of the market as profits on buy-to-let investment started to fall, banks tightened their lending criteria, interest rates rose and regulators cracked down on "dodgy" lenders. The report predicted that house prices would fall by 30 per cent from their peak, with falls "sharper but shorter than in the 1980s", and added that there was a risk prices might fall as much as 45 per cent. However other experts dismissed the report. John Wriglesworth, an economist for the property website Hometrack, said the report was nothing but "headline-grabbing claptrap". "The analysis is fundamentally flawed. It seems to ignore logic and reason and basic fundamentals such as low interest rates," he said. A spokeswoman for Halifax, the UK's largest mortgage lender, said: "The market is underpinned by three fundamentals which are high employment, low interest rates and good affordability and we see no reason why this should change." 'IT WILL BE FIVE YEARS UNTIL I CAN EVEN CONSIDER BUYING' Kim Pilcher, 21, is living with her parents in Sevenoaks in Kent, but dreams of buying a first home in London. She said: "House prices start at about £200,000 for anything larger than a shoebox. You have to live so far out of the centre of London to be able to afford property, that the cost of commuting is unbelievable." She graduated from Nottingham University in June 2003 with a degree in politics. She has been working in media advertising for the past year, but cannot afford to put a deposit down on any property in London. "It will be five years, at least, until I can even consider buying a property," she said. "Graduates come out of university with heavy student loans. I'll be paying back my debts for years yet, and cannot take on a mortgage until I've got them under control. My friends from university are in the same position. The only ones who have been able to buy property have had help from parents and I don't think my parents are going to take pity on me. People are moving in with their partners before they would like because they cannot afford to live alone. My boyfriend and I would like to live separately, but will never be able to afford to do that." money.independent.co.uk