Property: FTBs struggle but the number of

15th August 2011

When compared with the same three months last year the rise in the number of properties is nearer to 10%.

Unsurprisingly the majority of the properties were on sale in London, 44.5% of those on sale were in the capital.

According to The Telegragh collectively, the homes were worth over £47.76bn, with an average price tag of £2.24m.

The counties of Kent, Hampshire, Surrey and Hertfordshire accounted for a large share of the rest.

However only last week a report compiled by property portal Rightmove found that most of the UK was a blackspot for first time buyers.

Andrew Smith, research director at, told the Telegraph that it was international buyers,who were keeping the top end of the property market afloat.


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45 thoughts on “Property: FTBs struggle but the number of”

  1. anteos says:

    Hi Shaun,

    this is the bit I find incredible:

    In the five years since the end of 2008, the funded balance sheet has
    been reduced by £487 billion and total assets by £1,191 billion.

    massive deleveraging.

    1. dutch says:

      To be fair,they’ve cut 0% credit card transfers from March I believe.

      I think the most interesting part of their balance sheet to look at would be the Ulster Bank mortgage book.

      When the housing ponzi scheme in the UK unravels RBS are going to be back up poop creek sans paddle methinks.

      1. Anonymous says:

        This IMHO is why the state will not “unleash the beast”. If those things hit the market they are marked to market and oh dear. I’ve put this as a top-level question to Shaun and will be interested to hear what he thinks.

    2. Anonymous says:

      Hi Anteos

      It is when you consider that at the end of 2013 the balance sheet was £1,027 billion. So it has more than halved! Also where has it gone? I do not know about you but I fear the profits being stripped bare again and then one or two new owners potentially ending up in the hands of the UK taxpayer.

  2. Anonymous says:


    RBS actions on bankrupting SMEs and profiting from firesale assets also needs to be added to possible illegal activity on libor, forex, & rights issue etc!

    1. Anonymous says:

      Hi Chris

      I completely agree and the often shameful and bullying behaviour towards SMEs (small and medium sized enterprises) needs to be added to their weasel words about lending to them.

  3. Anonymous says:

    Excellent post, Shaun. My wife and I know someone who was working on mortgage-backed securities for the Royal Bank of Scotland,in their Connecticut office. He is on holiday now but will move to another firm when he gets back. Anecdotal evidence is always dicey but I wonder if RBS may be having difficulty now holding onto good people. Andrew Baldwin

    1. Anonymous says:

      Hi Andew

      Actually investment banks have always had that problem as in my time there they usually struggled to differentiate between the really good and others. This is harsh but one of my former employers had a dealing room where 40 people made the money which the other 160 then mostly lost via costs and outright losses.

      So contrary to the hype even in the good times the concept of a “market rate” was flawed.

  4. Pavlaki says:

    Apologies for once again not commenting on the topic but something else I thought may be of interest. Reports in the Spanish press that the president and CEO of Banco Pastor (subsequently taken over by Banco Popular) are being investigated for fraud. They are accused of covering up realeastate losses and making it look as if the bank was solvent. My Spanish banking contact has told me that this practice is widespread which makes me wonder if the forthcoming EU stresses tests are going to uncover the true picture in Spain? If there is collusion to cover up then it will be hard for the auditors to get the true picture.

    1. Dutch says:

      Mish Shedlock has covered the scandals of Spanish bubble lending well over the years.The bad bank has found that some addresses were used for multiple first charges and sometimes,they were only hotel rooms.
      I don’t think you have to be a cynic to believe that the worst is yet to come in Spain.

    2. Anonymous says:

      Hi Pavlaki

      Its okay as “They are accused of covering up real estate losses and making it look as if the bank was solvent.” is en vogue with today’s RBS figures is it not? Actually RBS reminds me of Bankia in many ways.

      Also Spain had a nudge downwards in its GDP revision today with Q4 of 2013 revised down to 0.2% growth making the year on year number now -0.2%.

  5. forbin says:

    Hello Shaun,

    So to put it frankly we’re going to be bailing out the banks again ?

    By a different name of course .


    1. Anonymous says:

      Yes, repeated bailouts ad infinitum.

      Any chief of a SOE will always ask for taxpayers money in preference to lowering pay in line with productivity.

      The sooner we cut our losses, the smaller our losses will be.

      1. forbin says:

        true Expat

        but we’re tied to the Banks by the fact that our “leaders” all get jobs there …..

        375 Billion in QE wasted , up in smoke , gone …

        I guess if any of here reading this could have got something back for that money

        ah yes they did, a nice little earner when they leave no.10


  6. Just a thought says:

    Hi Shaun,

    Could we conclude that a viable bank is a bankrupt bank???

    1. forbin says:

      a viable bank is a bank that ‘s viable

      What we have is bunch of politicos spivs selling us a one careful lady owner moth eaten camel with chalk teeth…..

      what could go wrong ?

      1. Just a thought says:

        “what could go wrong ?”

        The plebe’s awakening … lol

    2. Anonymous says:

      Hi Just a thought

      If the description “viable bank” is given by an official or politician then yes the financial lexicon for these times view is that it is bankrupt.

  7. Anonymous says:

    Hi Shaun,

    what would happen if RBS was wound up? Would they not have to hand over their mortgage book to other banks? Would a large part of this be unsellable, or if it were bought would it be at risk of generating a large number of repos?

    Are the UK govt holding onto RBS because otherwise it would release a deluge of toxic mortgage sludge which would deprecate housing putting other banks at risk?

    1. Anonymous says:

      Hi Progrock,

      If RBS was wound up, a liquidator would sell the assets and attempt to pay a proportion of the liabilities (debts). In this case, the mortgage book is a valuable asset – even under water mortgages have a positive value.

      Derivatives present a much greater problem. Derivatives can incur large positive or negative payments based on the market price of something else at sometime in the future. Valuing these now is not possible. An RBS derivative liability will be another bank’s asset. if RBS is bankrupt, other banks need to write off more “assets” – hence the fear of contagion.

      1. Anonymous says:

        Ok, so let’s say the book has a +ve value, I’m sure you are right. But on the private sector obtaining these would they not seek to monetise them? At this point the govt looses control over whether the new owner repos or sits on the loan. A falling market could see private owners rush for the exits, whereas right now RBS and Lloyds are being told by the govt to forebear.

        I agree that the collapse of RBS would be the UK’s Lehman moment, potentially. But even a controlled winding down is undesirable for reasons I’ve posited in the first para.

        1. Noo 2 Economics says:

          If the new owners of the RBS mortgage book repo they would, as you say force property price down and in the process risk putting their own balance sheet in the mire as mortgaged property they already hold on their book threatens to go under water as a result of the general market fall they create in repoing the newly acquired RBS book.

          They definitely wouldn’t repo but monetisation, hmmm now thats a different matter, even though it led them to here last time around they will have forgotten by now and if they remember they will gamble they can get out before the brown stuff hits the fan.

          1. Anonymous says:

            Also the bets made are by institutions but the rewards are given to individuals. Heads I win tails you loose.

            The point is if this exists as a risk the state cannot allow it as price discovery on housing is anathema to the UK establishment.

        2. Anonymous says:

          Hi Progrock

          ExpatInBGg got their before me but I want to add that I have been troubled all along by the derivative book (my old stomping ground). Derivatives can have many values at the same time and the spread needs to be taking into account whereas I think we know what values are being used right now.

          1. Anonymous says:

            Mark to fantasy?

            I take both of your points on this, I don’t know much about derivatives and my interest was more on the loss of control of a mortgage book which could then lead to price discovery of a non-manipulated mortgage market.

          2. Anonymous says:

            As to the mortgage book there is the issue of where it would go in what is a capital limited world for banks right now. It is in fact one of the arguments for nationalising it as at least (hopefully) we will be able to get a grip on the state of play.

          3. Anonymous says:

            So they want to nationalise to get a grip on the size of the problem? Sorry my brain is running slower after c++ 🙁

        3. Anonymous says:

          A mortgage is a contract, the new owner needs grounds
          (like arrears) to foreclose – hence I think large scale repossessions are improbable.

          Let’s look at an under water mortgage on brokebank’s books. brokebank advanced 240,000 for Mr Dodgy to buy a house valued at 200,000. Say the property value has declined to 175,000 and Mr Dodgy is in arrears.

          Now new bank acquires the mortgage, without liability for 240,000. It can foreclose and sell the house at auction, net of fees it gains 150,000 profit. Good mortgages will run to term with new bank receiving 1500 or whatever each month for upto 25 years.

          1. Anonymous says:

            We had large scale repos when rates went up in the 1980s. If rates rise even a little people will be in trouble and as we’ve see the BoE cannot set a floor on SVR. It’s happened before…

  8. Anonymous says:

    The same darling brown balls team told us we’d make a profit on RBS, unfortunately it’s the same people who claimed to have ended boom and bust

    If we’d given 4.8 billion to Wimpy homes, Redrow, etc we could have bought over 24,000 state houses. The net reduction in housing benefit costs offers a far better ROI for the UK.

    The part I find most incredible is that the political party responsible still attracts over 30% of the vote – in many other countries they’d be history.

    1. Mike from Enfield says:

      What’s more we could have taken optical fibre to every home in the land with the small change! But infrastructure is always left to the next government.

      1. Anonymous says:

        That is a good idea.

        MIT estimated a 1100MWe pebble bed reactor would cost 2.2B USD (circa 1992)

        They could have resolved the UK’s pending generation crisis and reduced CO2 emissions by building reactors in preference to enriching failed bankers.

      2. Anonymous says:

        Yes but this isn’t real money nor is it commensurate with real effort. Let’s go back to 1997 and imagine funding fiber-optic to every home. We would need lots of energy, trained staff, raw materials etc. It would be a big undertaking. Note I’m not taking a position on whether the idea of supplying fiber to every home is good or bad.

        Now let’s replay what really happened. UK banks created credit essentially out of nothing (yes there are deposits but as they ramped up the leverage it was essentially just numbers in a computer). They then gave it out like confetti, forcing up the price of housing in the UK three fold. Some of that money went to RBS staff, some of it went out to people downsizing, some went to estate agents and some went to people MEWing.

        The key point about the last part is that very little actually happened. All we have is some siphoning off of real wealth thanks to misallocation and the opportunity cost of doing real work instead of messing around with numbers.

        What we are left with is far more insidious. The state are attempting to keep the fake asset bubble inflated to avoid the realisation of reality which will show us to be much poorer than we are already. They are trying to roll over the day of reckoning by getting the next generation to buy into housing at the new cost, allowing olds to monetise and forestalling a (lack of) pensions crisis. But this itself will have a drag because new buyers need ultra low rates forever which itself hurts pensioners. If rates rise slightly disposable income goes down. They are painted into a corner. They know this. It’s simply delaying the day of reckoning.

        But this must come because messing around with money is not real wealth. No cables have been laid. No houses built. And it’s already happened so it cannot be avoided.

        1. Anonymous says:

          They have wasted 5 years, but we still could benefit from some New Deal type infrastructure investment.

          1. Anonymous says:

            Oh I agree, discussing the merits of this wasn’t my point.

            But there is a double hit to be taken. First we have to acknowledge that we have misallocated capital and that our asset values are fake. This means people loosing out on “savings” they thought would be there for retirement. Then we have to begin to behave correctly which will cost time and effort that will not show rewards for a number of years.

            If we choose to continue to fake asset prices resources that could go into infrastructure will instead continue to be lost to misallocation, plus the ongoing opportunity cost which sees living standards drop and productivity stagnate.

            The hit of this will be huge. RBS is the tip of the iceburg in the fake world of “wealth” that is the UK. The fear is it will take the UK under, decimate the establishment and transform the face of the UK. They will not take this choice. It’s not going to happen.

          2. Anonymous says:

            The 3 big political parties have either created or continued this farcical mess, so they might lose face backtracking on it.

            However there is an opportunity for an outsider to upset the establishment, if enough voters realise just how badly the big 3 are managing the economy.

          3. Anonymous says:

            IMHO it won’t happen. Politicians understand housing is a mess. Any party who says “I’m going to sort out housing (read tank housing) and focus on infrastructure and jobs” won’t be around to enact their changes. We’ve seen for 15 years now voters love house price rises and bribes. This will only change in another 15 once all the boomers are dead.

            Loose face is a big understatement. It will change the UK forever. Why do you think they are pumping housing? They *cannot* create growth. They know it’s bad but like a fat man at home in his underpants on a Friday night they have another burrito. Voters asked for this and they will ask for it again. They love it. I have 15 years of examples to back it up!

            What you are seeing is the efficient allocation of resources. They are being taken from the UK who waste them and given to other countries.

        2. Paul C says:

          Prescient words, I agree painted into a corner but I am sure that their plan is can kicking through generations. There are comments that it is the political parties who are entirely responsible but the state of affairs has to be shared with the voters and boomers who through greed and self-interest have happily been stoking their own property asset investments.

          The mechanism for transfer is inheritance, thereby the next mature inherit-tees seek to protect their “golden property” by perpetuating the what the boomers started. As long as there is story board and trough then those voters will happily scoff away.

          What is unfortunate to behold is the unfolding decrepitude of the infrastructure and indeed most of the housing. This is only evident if you are able to raise your head above the trough indeed forced to do so when your posterior is cold and dark, or perhaps when you travel abroad and see fast developing countries, maybe even just notice on TV.

          I cannot envisage an inflection point or a black swan event correct this mis-allocation. At the moment we have rich folk, politicians, bankers and property owners all rooting for more of the same. I cannot see how the remaining demographic can do anything about it.

          I heard guidance today that interest rates will stay low (for property owners I suggest) right up until the election next year. Interest rates for pay day loans will also be unchanged!

          1. Anonymous says:

            Agreed. You have one vote: your feet. The young should emigrate.

            I’m not so sure regarding a black swan event. Might be they cannot defend GBP at some point.

          2. Paul C says:

            I am getting on a bit but have considered leaving UK, but as a protest this is pointless. Note: 212,000 net immigration announced today, almost as if those folk invested in the can-kicking really do not care if they lose indigenous brits as long as other bodies turn up fill their boots and perpetuate the over-demand for housing.

            Intrigued by your suggested play on using fake money mis-allocated in property to be kinda “wrung-out” of property in a “dribble” to fund the boomer’s care plans (those who felt they have “earned” their wealth)

            What a perverse and dystopian future, where the young are whipped and carrot-ed to look-after the old on the promise of a care-based income when in reality the elderly will consume their property gains, finally returning the stock once squeezed of value (in a heap of dilapidated bricks ) in a great “un-wind” operation.

            Of maybe I mis-understood your prognosis?

          3. Anonymous says:

            I’ve left, not as a protest I don’t care what they think, but for my kids.

            The establishment don’t care about looking after the old, if it were up to them they’d kill everyone over working age. They are doing it to present the appearance of solvency as part of the managed decline of the UK. They benefit from the status quo and the longer they can keep it up the better.

            Yes the young are I believe working as the last entrants to a pyramid scheme. They won’t be able to monetise the fake gains because we are at the upper limits of the model as we hit ZIRP.

            It’s like a badly designed airplane prototype that works as a paper plane but as you scale it up the weight of the wings make it sag and it just won’t take off. It doesn’t scale through several iterations. Or really even one. How many successful generations of modern pensions have we had? One! How many generations of house price windfalls? Two. And it’s over.

            The fake credit has to be printed internally where the govt can control the supply of land and the availability of credit. Even here we see the govt has had to become the direct lender through help2buy as banks which are international won’t take the risk, except RBS and Lloyds which are no doubt told to lend like mad and forebear.

        3. Noo 2 Economics says:

          What’s “Mewing” ? Don’t tell me people are turning into cats!!

          I’m afraid I agree with the rest of your post (the bit I understand) and as interest rates on Gilts go up which they will even more so the Government will continue lending to the banks at 0.5% and pass the bill for the difference to the taxpayer. Expect future tax rises but you’re OK in Canada and I’m envious.

          1. Anonymous says:

            Mortgage equity withdrawal.

            They will buy up a larger and larger % of gilts to avoid price discovery. Including legislation changes to make pension schemes buy even more plus more QE etc all spinning faster and faster until it pops. Perhaps they are right to double down now, past the point of no return?

  9. therrawbuzzin says:

    Darling is an habitual liar, as anyone unlucky enough to be caught out by this knows:—liar
    This willingness to lie means that anyone who believes a word he ever said, or says, on any issue, is being naive, shall we say?

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