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kenneal - lagger
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Joined: 20 Sep 2006
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PostPosted: Mon May 09, 2016 5:56 pm    Post subject: Reply with quote

House price falls would be bad for the banks because a lot of their loans which are "sub prime" would go into negative equity and default. There is a delicate balance to be had here between building a lot more houses and keeping the house price steady for the foreseeable future or dropping a few percent and building a lot more houses and seeing the house price drop drastically.

If they built a lot of houses to rent by Housing Associations, paid for by government printing money instead of borrowing it, it would remove some of the pressure on house prices as it would remove much of the buy to let market beloved of our *ankers with their bonuses. Shame!! This would remove much of the steam in the market and with a bit of wage inflation over the next ten to fifteen years would bring houses back into the realms of affordability.

Banks and *ankers wouldn't like it though.
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raspberry-blower



Joined: 14 Mar 2009
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PostPosted: Mon May 09, 2016 7:24 pm    Post subject: Reply with quote

PS_RalphW wrote:
Yet the Remain campaign are saying that Brexit would cause interest rates to rise, and house prices to fall, which is a 'bad thing' tm.


More scare mongering tactics that don't have any basis in reality.

The problems that caused the crash of 2008 have not been addressed - primarily because it is systemic - and we are back to where we were in the lead up to said crash.

If there was any rate rise - even by 25 basis points - there would be numerous business insolvencies because they are leveraged to their eyeballs and beyond. However if/when there is another crash, I strongly suspect we will see interest rates heading closer to/into negative territory.

The housing bubble will burst regardless of whether interest rates rise or not - although if there is an interest rate rise it would certainly speed up the process
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raspberry-blower



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PostPosted: Mon May 09, 2016 8:37 pm    Post subject: Reply with quote

Whilst on the topic of house prices, there is already evidence that they are "softening"

City AM: House sellers are dropping their asking price - the discount is rising
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kenneal - lagger
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PostPosted: Tue May 10, 2016 2:55 am    Post subject: Reply with quote

House prices in the Thames Valley have been said to be "gaining" from the Cross Rail effect as the completion of the new rail line to Reading nears. Prices might might be gaining but purchasers are losing.

The *ankers are going after another stash of wealth which is the Bank of Mum and Dad who's pension pots are being raided to provide deposits for their children's houses.
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raspberry-blower



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PostPosted: Wed Jul 06, 2016 10:34 am    Post subject: Reply with quote

So it begins in earnest:

Zero Hedge: Three UK Property funds freeze £9 billion in assets, more to come

Quote:
Good luck, because as Emma Bewley, head of funds at Connection Capital in London told Bloomberg, “the potential impact of a high-profile liquid fund suspending redemptions shouldn’t be underestimated, particularly given the uncertain environment. While asset managers will seek to avoid suspending redemptions, they may have to use additional liquidity facilities” such as lines of bank credit."

In other words, half a year after the junk bond mutual fund scare, and just months after most central banks unleashed the strongest salvo in the global race to debase yet, the global financial system finds itself in dire straits yet again.


The impact of declining UK Commercial property sector will impact elsewhere, and could become a positive feedback loop. One that could ultimately cause a run on the UK banking sector.
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PS_RalphW



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PostPosted: Wed Jul 06, 2016 11:23 am    Post subject: Reply with quote

I hope to sign my new employment contract tomorrow - the news keeps getting worse for my new employer... and I have an inheritance stuck in probate and I am getting nervous the banks could implode before I get the money out.

Mad
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raspberry-blower



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PostPosted: Thu Jul 07, 2016 1:02 pm    Post subject: Reply with quote

Zero Hedge: 6 now frozen assets; Aberdeen slashes property fund by 17%

This is becoming a severe liquidity crisis in the property sector which is not a very liquid sector in the first place. Any panic here will have severe impacts elsewhere.

I hope you've managed to sign your employment contract, Ralph
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johnhemming2



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PostPosted: Thu Jul 07, 2016 1:06 pm    Post subject: Reply with quote

Property is always illiquid. What they are saying is that if people want to take their money out from a fund now they have to take it at a discount. That is probably a better option than simply closing the fund. However, capital property always will be illiquid because transactions take so much time. (and often even in good time fall apart).
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raspberry-blower



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PostPosted: Thu Jul 07, 2016 1:15 pm    Post subject: Reply with quote

johnhemming2 wrote:
Property is always illiquid. What they are saying is that if people want to take their money out from a fund now they have to take it at a discount. That is probably a better option than simply closing the fund. However, capital property always will be illiquid because transactions take so much time. (and often even in good time fall apart).


The point you are missing here, John, is that there has been an investor "switch" and they are moving out of UK Commercial property - en masse. It's when this happens everything then gets amplified which can potentially morph into a full blown liquidity crisis.
Expect to see other UK property fund managers either slash their valuations or "temporarily" suspend trading
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johnhemming2



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PostPosted: Thu Jul 07, 2016 1:23 pm    Post subject: Reply with quote

I have just checked the zerohedge post and all 7 dominos are funds, not underlying property.

It doesn't take much to cause a liquidity problem with a property fund.
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kenneal - lagger
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PostPosted: Thu Jul 07, 2016 4:36 pm    Post subject: Reply with quote

Can a property fund not actually hold any property like a gold fund can sometimes not actually own any real gold?
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raspberry-blower



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PostPosted: Thu Jul 07, 2016 9:27 pm    Post subject: Reply with quote

kenneal - lagger wrote:
Can a property fund not actually hold any property like a gold fund can sometimes not actually own any real gold?


I'm not sure of the rules governing funds that deal in property nowadays - it is years since I worked in financial services. This is how it was structured from speaking to a friend who worked for a large Investment firm:
The way these funds are/were structured they can be co-holders of their property portfolios so theoretically they can be not the outright owners.

It is not the same as the gold Unit Trusts - or any Trust that is PM orientated. They hold pieces of paper that says they are possessors of X amount of gold/silver/other PM. When they actually don't because they have been rehypothecated to infinity and beyond..
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PS_RalphW



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PostPosted: Wed Aug 10, 2016 12:22 pm    Post subject: Reply with quote

Return on UK government bonds turns negative

http://www.bbc.co.uk/news/business-37031793

Not sure what this means or portends financially, a 5% shortfall sounds
more symbolic than critical, but then all Ponzi schemes depend on show not content.
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johnhemming2



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PostPosted: Wed Aug 10, 2016 1:11 pm    Post subject: Reply with quote

The 5% shortfall is that they tried to buy £1.17bn at a price, but could only get 95% of that.
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raspberry-blower



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PostPosted: Wed Aug 10, 2016 10:06 pm    Post subject: Reply with quote

johnhemming2 wrote:
The 5% shortfall is that they tried to buy £1.17bn at a price, but could only get 95% of that.


Zero Hedge: BOE suffers stunning failure on second day of QE

This was not supposed to happen Shocked

If the BOE cannot find enough bidders for a bond auction then this does not bode well for the bond market
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