Tailored Home Daily Brief in Association with Mercury-FX – 28/1/09
January 28, 2009, 9:41 am
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US EconomyWednesday 28th January 09
USA
• Traders will be paying close attention to the Fed statement, since the fed
funds rate target is already near zero and there is hardly room for more cuts. In its last meeting, the Fed signalled it would use its balance sheet to fund new lending and purchase programs. The Fed also said it was “evaluating the potential benefits of purchasing longer-term Treasury securities.” “The only way for Wednesday’s FOMC rate decision to hurt the dollar would be if the central bank announces they will be purchasing
long-term U.S. Treasurys in size or if they add more ingredients to their alphabet soup of new programs,” said Kathy Lien, director of currency research at Global Forex Trading in New York.
Figures out today:
1200 US Jan 23 MBA Mortgage Application Survey Market Composite Index 1195.3
UK
Figures out today:
0930 UK Nov Average weekly earnings
• View of the Day: Sterling sell off overdone – FT.com – The pound has taken a ‘hell of a beating’ but is far from finished, argues Paul Robinson at Barclays Capital. He says its was not surprising sterling fell last week given the huge amount of negative news surrounding the UK banking system and economy. “It has been an important, if
somewhat depressing, week with a lot of news,” says Mr Robinson. However, he expects the pound to rise significantly in the longer-term. Government measures to support the UK banking system may well free up bank’s capital, alleviating the credit crunch and leading to a less severe recession in the UK. Meanwhile, Mr Robinson says,
concerns over the UK fiscal position are overdone. “For all the press reports of fiscal policy being too loose in the UK, the government has gone into the crisis with a debt to GDP ratio that is not especially worrying,” he says. “It is markedly less than the eurozone average and well below that of France and Germany.” He says not only is the pound
undervalued against the euro, but he expects the huge increase in the US fiscal deficit to become an important negative for the dollar in the months ahead. “Our new forecasts in euro/sterling are for £0.92 and £0.80 in one and twelve months time, respectively, and $1.41 and $1.80 for sterling against the dollar.”
Europe
Figures out today:
0900 GER Jan Hesse CPI
1100 GER Jan Bavaria CPI
• Investors are testing the theory that the global economy has hit or is near the bottom. Amid caution, European bourses are seen rising at the opening Wednesday, with government debt little changed. The euro, oil and spot gold are higher.
• The euro is rising again Wednesday after the German Ifo data Tuesday raised hopes for a euro-zone bottoming out, dealers said. On Tuesday, the euro gained on a rise in equities, despite a brief flight to safety on record low U.S. consumer confidence data. The euro and pound were also supported by stronger-than-expected European data. Currency analysts say the lifetime of this latest revival of risk appetite depends on the outcome of the Federal Open Market Committee meeting Wednesday.
• Germany Said to Consider 70 Percent Stake in Hypo Real Estate: Jan. 28 (Bloomberg) — Germany is considering
buying a 70 percent stake in Hypo Real Estate Holding AG, the lender that has already been bailed out twice by the government, three people familiar with the situation said. That would mark the nation’s first bank nationalization in almost 80 years, according to Wolfgang Gerke, director of the Frankfurt School of Finance and Management. The
1931 collapse of Danat Bank was “our own homegrown Lehman Brothers,” Gerke said. “Sadly, we seem to have forgotten the lessons.”
Commodities
• Oil prices are higher Wednesday ahead of the U.S. Department of Energy’s weekly stockpiles report. New York’s
main futures contract, light sweet crude for delivery in March, rose 67 cents to $42.25 a barrel.
• Spot gold is up $4.10 at $901.80.
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HOME VALUES – THE TRUTH – Property prices have fallen by around 15 per cent in the last year, according to industry figures. Tailored Home asks whether buyers should still be nervous.
January 26, 2009, 11:52 am
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uk propertyAS HOMES become more affordable and banks start to lend, deciding whether to buy is the next step towards taking the plunge in 2009.
The property market currently features a small, cross section of the millions of homes that appear to have fallen hugely in value. But what’s the reality?
According to Government figures, the average UK house price in November, 2008, was £199,732, after falling from £208,892 in the previous quarter.
In November 2007, the figure stood at £218,865 – 8.6 per cent higher. (Five years ago, in November 2003, the average house price was way down at £159,480.)
Regional variances
While current, national statistics tell us something about the general market, they reveal less about the regional variances and, more importantly, the historic context of the current market.
England ranked highest on the homes value list in November 2008 with the average house costing £206,161(£226,544 in November 2007).
Northern Ireland ranked at number two with the average price at £191,401(£225,863 in November 2007), while Scotland properties were selling for £156,770 in November 2008 (£165,019 in November 2007).
Wales topped the lost of affordability in November with an average house price of £150,123, (£168,383 in November 2007).
National markets
The decline in value of the four national markets shows English and Welsh properties falling by 8.7 per cent and 10.1 per cent respectively, according to the same Government figures, published by the Department of Communities and Local Government. Scottish homes fell by much smaller proportion at 3.9 per cent, while in Northern Ireland the reduction appeared to be a near landslide with a 16.2 per cent reduction values.
The banking sector disagreed to some extent with the Communities and Local Government statistics.
Nationwide puts the average house in Wales at £136,174, the average house price in Scotland at £138,941 and the average house price in Northern Ireland at £147,833.
What is not challenged is the relative affordability of buying into Wales rather than England.
A study of the Government’s own figures reveals further local variances.
Cheapest in England
For instance, according to the Communities and Local Government statistics the North East was the cheapest place in England to buy. The average house price dropped from £142,443 in August 2008, to £138,378 in November 2008, although five years ago, in November 2003, prices were even more attractive at £101,493.
The North West of England at £150,008 in November 2008 is the next cheapest, while homes Yorkshire and Humberside, are only valued a little higher at £150,567.
London of course remains the most expensive UK location into which to buy, with average prices at £314,045 in November 2008. A year ago they were £337,632.
Although more than £20,000 may seem a significant drop over 12 months, London experienced the lowest fall in house prices in England between November 2007 and November 2008, with a reduction of just 7.0 per cent.
What does it all mean? Well consider the reality of these long term Government figures.
UK house prices ten years ago were more than 100 per cent lower than they are today. The average home sold for £81,774 in 1998. Ten years earlier in 1988 it was very nearly 100 per cent lower again, at £49,355. And between 1978 and 1988 they rose more than 200 per cent from £15,594. In 1969 prices were at £4,344 and in 1958 – fifty years ago – houses went for a modest £2,390.
Cause for concern?
Is a 10-15 per cent price drop in 12 months really cause for such concern when butted up against gains over the last half a century? You decide.
For 2009, the value is understanding and researching whether you are buying into a local market that is still falling, steady in the long term or has potential to rise very soon is the key.
Location, location, location has been the rule since before cave dwellers set up home alongside fresh water and shelter.
But if you’re tempted to start studying the market, cast your eyes further than the borders of the parish boundary.
Find a home to fall in love with, consider whether you can take advantage of some good local scenery and then sit tight for a decade or two.
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Type in UK or Overseas Property in any search engine and you will be presented with thousands of websites, some good some bad. However, most will supply you with a list of properties and after that you’re on your own. We are different. We remember that you, the customer come first. The team behind Tailored Home have several years in experience in UK and Overseas property and have excellent relationships with housebuilders and estate agents worldwide.
The concept is simply this – either call us on ++ 44 (0) 845 838 7143 or email info@tailoredhome.co.uk let us know where in the world you want to buy, what your budget is, if you have a preference for brand new or resale property, if you require legal, mortgage, foreign currency, insurance and tax advice (we use a panel of independent financial advisors). And that’s it. We will take your brief and source the property to your requirements. But that’s not all – we will be with you every step of the way. We act as your intermediary between the developer or agent to make the purchasing process as smooth as possible.
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