First take a trip down Gavyn Davies way where he’ll explain that macro prudential controls are nothing new, that they’re making a comeback post-Greenspan and that they are aimed at stabilising the financial cycle rather than the economic cycle (not always mutually exclusive, of course):
The case for macro prudential controls is straightforward. During economic upswings, the behaviour of the financial system can become destabilising. Banks’ balance sheets are flattered by the expanding economy and low interest rates, so credit supply expands aggressively. This fuels the boom until risk taking becomes excessive, and even a moderate rise in interest rates produces a financial crash.Direct intervention in the financial system to head off these problems early, through increased capital and liquidity standards, seems to be justified.
Foxton’s made some changes to its award wining website this weekend. It may be coincidence, but they came after we asked the company about the ideas of a private investor who blogs under the name Anja Liszt.
We had thought that sellers of estate agency businesses were taking advantage of rising valuations and a nascent property boom, but the anonymous investor has another theory. Read more
Here’s a modest proposal for the prime London property boom: time-travel back and prevent the foundation of the British Empire. Given the post-imperial nature of who seemingly buys.
In the meantime, this is a nice scoop by Sky’s Ed Conway… Read more
Does £450/sq ft really count as ‘prime’ London these days?
We don’t know. But these were some interesting charts from Deutsche Bank nevertheless on Monday, about who’s been buying up London from abroad: Read more
It’s Help to Buy 2 launch day. Or, extend mortgages and warehouse them until the UK government supplies its guarantee for a portion of the money in January, launch day.
The scheme’s complete rules are here if you missed all 66 pages. Note the lending policy questionnaire.
So, reflecting on some HTB bits and pieces floating around on Tuesday… Read more
It’s “a reasonably sensible policy with some likelihood of success.”
What recent government initiative might Neville Hill and Steven Bryce, Credit Suisse UK economists, be referring to?
Why Help to Buy 2 of course. Read more
In contrast I am an optimist. I believe in free markets.
–George Osborne, Conservative party conference 2013
Details TBC, of course. But UK banks will be lending mortgages with a five per cent deposit in the very near future, under the rushed-forward Help to Buy 2 scheme.
And that means the UK government will be guaranteeing them — not the borrower — the next 15 per cent of mortgage value. Hence the fee paid by lenders for the guarantee (90bps for a 95 per cent loan to value, less for lower LTVs, apparently). Read more
Ever feel like you are slipping behind in the rat race? Well, Londoners now face competition from their homes as well. The average house in the capital is now earning as much as its occupants.
As we noted noted last week, London house prices are rising far faster than in the rest of the UK, up 9.7 per cent over the 12 months to July on ONS figures. Read more
If you laugh at this, then maybe a lot of macroprudential regulation is comical.
What to make of this startling call from UK’s Royal Institute of Chartered Surveyors, to the Bank of England’s Financial Policy Committee?: Read more
Today brought the ho-hum news, courtesy of the latest monthly Hometrack house price survey, of a 0.8 per cent decline in house prices in England and Wales. Similarly underwhelming was the Bank of England’s lending data showing that the number of loan approvals was just 47,185, a whisker down on September.
Thank goodness we have the Office for Budget Responsibility to liven things up. Read more
The latest Land Registry House Price Index was released today, recording a negative month-on-month house price change in October for properties in England and Wales.
The headline number is -0.8 per cent (bringing the average house price to £165,505). The fall is the biggest recorded by the index since February 2009, and narrows the year-on-year gain to 3.4 per cent. Prices are still higher than they were a year ago – but a slowdown cometh. Read more
From the latest monthly survey of housing by the Royal Institute of Chartered Surveyors (Rics) — highlighting the direction of change for house prices:
Readers will have heard the case against real-estate and commercial real-estate investments. But here, courtesy of Patrick Moonen of ING IM, is a more optimistic view on Wednesday:
Real estate outperformance could continue in 2011. ING IM says there are a number of supporting factors for this prediction – notably that many real estate listed companies have refinanced and that the underlying commercial property is at a turning point on vacancies and rents, while dividend yields in the developed markets are attractive. Read more