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One percent

Houseprices to fall 40 percent

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There is a lot of denial in the comments there. "40% is too much". When you realise that is how much they have risen in some places in the SE in 2 years, it is way too little.

The 'wealth' flashed about in my old neck of the woods earned from nothing more than waltzing into the local Halifax branch and being at the right place, right time needs to be hacked down quicker than an unwelcome Japanese knotweed infestation. Nobody in the current gubbermint has the balls to do it though.

 

 

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9 minutes ago, spunko2010 said:

There is a lot of denial in the comments there. "40% is too much". When you realise that is how much they have risen in some places in the SE in 2 years, it is way too little.

The 'wealth' flashed about in my old neck of the woods earned from nothing more than waltzing into the local Halifax branch and being at the right place, right time needs to be hacked down quicker than an unwelcome Japanese knotweed infestation. Nobody in the current gubbermint has the balls to do it though.

 

 

I'm not sure they will be in control of it when it blows. Once sentiment changes and people start to realise that a house (or even a flat with massive service charges) is a liability rather than a cash cow, prices will drop like a stone, whatever tptb try to do

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3 minutes ago, One percent said:

I'm not sure they will be in control of it when it blows. Once sentiment changes and people start to realise that a house (or even a flat with massive service charges) is a liability rather than a cash cow, prices will drop like a stone, whatever tptb try to do

It makes you wonder if those who moved away under the 'white flight' lie, many of them from your neck of the woods One Percent I believe, will move back if prices crash. Where I used to live in N Kent / SE London borders, most of that old tribe has been systemically wiped from the face of the Earth or ended up in fucking Jaywick at the behest of 3rd world savages and their Labour concubines. If the prices drop they may move back - although I doubt it.

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42 minutes ago, spunko2010 said:

It makes you wonder if those who moved away under the 'white flight' lie, many of them from your neck of the woods One Percent I believe, will move back if prices crash. Where I used to live in N Kent / SE London borders, most of that old tribe has been systemically wiped from the face of the Earth or ended up in fucking Jaywick at the behest of 3rd world savages and their Labour concubines. If the prices drop they may move back - although I doubt it.

I don't think so, london is lost. A few enclaves of cockerney geezers but getting less by the day. 

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I've said for years that all the talk of sentiment and supply and demand is irrelevant tosh to explain the rises.

People buy the best house they can afford, and afford for houses means meet the monthly mortgage payment rather than writing a cheque for the price tag.

If mortgage rates double, as is highly likely, then the amount the same person on the same salary will be able to pay for a house with the same monthly mortgage repayment will halve.

After allowing for cash buyers this will mean big drops, 30% if not 40%.  And as with other crashes even if you are in a position to take advantage you should still sit on your hands for at least five years because that 40% will be realised as something like 15% year one, 5% year two, 5% year three etc. until 40% has been achieved at which point it will bump along the bottom for several years.

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2 hours ago, Frank Hovis said:

I've said for years that all the talk of sentiment and supply and demand is irrelevant tosh to explain the rises.

People buy the best house they can afford, and afford for houses means meet the monthly mortgage payment rather than writing a cheque for the price tag.

If mortgage rates double, as is highly likely, then the amount the same person on the same salary will be able to pay for a house with the same monthly mortgage repayment will halve.

After allowing for cash buyers this will mean big drops, 30% if not 40%.  And as with other crashes even if you are in a position to take advantage you should still sit on your hands for at least five years because that 40% will be realised as something like 15% year one, 5% year two, 5% year three etc. until 40% has been achieved at which point it will bump along the bottom for several years.

I agree, but do you really expect the gimp to raise rates? Not a chance on his watch. So we are looking 2021 at the earliest for the first 0.25%.

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9 minutes ago, Green Devil said:

I agree, but do you really expect the gimp to raise rates? Not a chance on his watch. So we are looking 2021 at the earliest for the first 0.25%.

America are beginning to raise rates. If it continues he won't have a choice 

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13 minutes ago, One percent said:

America are beginning to raise rates. If it continues he won't have a choice 

 

22 minutes ago, Green Devil said:

I agree, but do you really expect the gimp to raise rates? Not a chance on his watch. So we are looking 2021 at the earliest for the first 0.25%.

Basically what One Percent said.  We need to sell our gilts and bonds into a world market; if the successful economy that is the US is selling twenty year bonds at 5% then no-one will be buying our bonds at 3.5%. So gilt and corporate yields will rise, which dictates the rate at which people borrow and lend.

I also expect BoE base rates to go to 0.5% in mid 2018; though all these will be doing is following the gilts and swaps curves upwards.  This is a huge rise in symbolic terms, because it is a rise, and in actual terms because it is a doubling.

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1 hour ago, Frank Hovis said:

 

I also expect BoE base rates to go to 0.5% in mid 2018; though all these will be doing is following the gilts and swaps curves upwards.  This is a huge rise in symbolic terms, because it is a rise, and in actual terms because it is a doubling.

Not only that risk will have to be factored in too into mortgage rates, on the way up risk will be a lot higher than on the way down. Risk can be counted by higher marginal rates or stricter lending criteria both of which will limit over borrowing. 

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6 hours ago, Green Devil said:

I agree, but do you really expect the gimp to raise rates? Not a chance on his watch. So we are looking 2021 at the earliest for the first 0.25%.

Mortgage rates are not the same as base rate. Remember we've got Basel 3, PRA changes, etc that will affect mortgage rates independently of base rate.

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6 hours ago, One percent said:

America are beginning to raise rates. If it continues he won't have a choice 

True, but that will get reversed when the US economy hits trouble as is expected soon, according to many commentators. I wonder if Carney will accept high inflation and 1dollar=1pound? In the longterm the GBP has become a bit like the old Italian lira. Check out longterm graphs going back 50-100 years measuring GBP against the CHF.

 

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This is purely anecdotal ..at the beginning of the year BTL started to off load big time around my way i thought this is the start for sure the "cheap" ones flew of the shelf then the kite flyers went one buy one buy april`ish i thought WTF i never realy looked again until the other day ...all but the cheap ones 10-20% less than the others for comparable places are back on the market 

I`m guessing either rental cover has made them un mortageable for BTL or the penny has finaly dropped most relisted have small price drops but they are still way off what the cheaper ones were and theres more and more coming to the market 

To me it looks like the vendors are dictating the prices and that reflects the amount of leverage involved ..as theres no continuity in pricing IMO this could get very interesting if you know who don`t step in with a bag of magic beans 

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Certainly I would like to see 5% rates or whatever but it just ain't gonna happen. I predict no rises til after Brexit.  And that's the same as how long is a piece of string. 

However if UK currency crash occurs and UK turns banana Republic,  then yes something may have to give. Until the loose money for many years to come.

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On 02/07/2017 at 21:04, One percent said:

I don't think so, london is lost. A few enclaves of cockerney geezers but getting less by the day. 

I'm a cockney, well by decent and moved back in December 2016! Both my parents born within earshot of Bow Bells.

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1 hour ago, Kurt Barlow said:

I'm a cockney, well by decent and moved back in December 2016! Both my parents born within earshot of Bow Bells.

Wow, a real Iive cockerney geezer. :)  I'm a bit of an incomer but my kids were born, just, within the sound of bow bells. 

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http://www.dailymail.co.uk/money/mortgageshome/article-4677680/RICS-data-expected-house-price-growth-slipping.html

Anyone know if this is on the frontpage of the actual paper? It's their main story online, except for the autist's mother paying for sex (!).

 

@TheBlueCat great hadn't seen that, thanks!

 

 

To be fair:

 

Quote

The average first time buyer of housing is leveraged 10-20 times, this is greater leverage than is available to most hedge funds.

That is absolutely correct, and not something I've considered before.

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Excuse my ignorance but what does ToS actually stand for? I know it's a reference to the 'other' forum but I don't know what words they are: 'Threads of Shite' perhaps? :/

One house for sale in my city was marketed for £170k and has dropped to £150k. c. 11.5% drop. Vendor(s) must be faily desperate. I hope to see many more price reductions in the coming months and years.

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On 03/07/2017 at 04:41, Frank Hovis said:

I've said for years that all the talk of sentiment and supply and demand is irrelevant tosh to explain the rises.

People buy the best house they can afford, and afford for houses means meet the monthly mortgage payment rather than writing a cheque for the price tag.

If mortgage rates double, as is highly likely, then the amount the same person on the same salary will be able to pay for a house with the same monthly mortgage repayment will halve.

After allowing for cash buyers this will mean big drops, 30% if not 40%.  And as with other crashes even if you are in a position to take advantage you should still sit on your hands for at least five years because that 40% will be realised as something like 15% year one, 5% year two, 5% year three etc. until 40% has been achieved at which point it will bump along the bottom for several years.

This is one thing that really, really pisses me off. Whenever house prices are mention in the MSM they never ever ever mention interest rates. It's all about supply 'n' demand init. If interest rates were at 16% what would happen to house prices? Would this then cause 40% more houses to be magicked out of my ass? 

Ignoring this point totally, makes any discussion utter bollocks and irrelevant.

 

2 minutes ago, UmBongo said:

Excuse my ignorance but what does ToS actually stand for? I know it's a reference to the 'other' forum but I don't know what words they are: 'Threads of Shite' perhaps? :/

One house for sale in my city was marketed for £170k and has dropped to £150k. c. 11.5% drop. Vendor(s) must be faily desperate. I hope to see many more price reductions in the coming months and years.

The Other Site. Shhhh! :ph34r:

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7 hours ago, XswampyX said:

Whenever house prices are mention in the MSM they never ever ever mention interest rates. It's all about supply 'n' demand init. If interest rates were at 16% what would happen to house prices? Would this then cause 40% more houses to be magicked out of my ass? 

We know that house prices are determined by interest rates, certainly for new entrants. If prices did fall because of interest rate increases then the next factor is the unemployment rate. If that leaps up then foreclosures would drive prices lower because of an increased supply from mortgaged owners being forced to sell. Look what happened in 2008/09. 

As I'm looking to move any fall in the price I get for my house could work in my favour as the next purchase would be at a lower price. Many others would work out that they could upsize, subject to selling their existing home, with a lower cost to change. This would increase demand and put a brake on price falls. 

Wasn't this done to death on TOS. 

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15 minutes ago, sleepwello'nights said:

We know that house prices are determined by interest rates, certainly for new entrants. If prices did fall because of interest rate increases then the next factor is the unemployment rate. If that leaps up then foreclosures would drive prices lower because of an increased supply from mortgaged owners being forced to sell. Look what happened in 2008/09. 

As I'm looking to move any fall in the price I get for my house could work in my favour as the next purchase would be at a lower price. Many others would work out that they could upsize, subject to selling their existing home, with a lower cost to change. This would increase demand and put a brake on price falls. 

Wasn't this done to death on TOS. 

raison d'être of tos 

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15 hours ago, sleepwello'nights said:

We know that house prices are determined by interest rates, certainly for new entrants. If prices did fall because of interest rate increases then the next factor is the unemployment rate. If that leaps up then foreclosures would drive prices lower because of an increased supply from mortgaged owners being forced to sell. Look what happened in 2008/09. 

As I'm looking to move any fall in the price I get for my house could work in my favour as the next purchase would be at a lower price. Many others would work out that they could upsize, subject to selling their existing home, with a lower cost to change. This would increase demand and put a brake on price falls. 

Wasn't this done to death on TOS. 

Not really. Nobody wants to catch a falling knife.

How old are you out of interest? A lot of homeowners genuinely cannot remember a time when prices didn't rise every month. Panic will set in, and people will stay put as their hand will have been forced.

Moving at a time when prices are falling might be beneficial if played right, but it's extremely easy to get burned on an illiquid asset. And we're not just talking about £500 or £1000; a lot of people if they play their cards wrongly could easily lose £250k. That's jumping off a tall bridge level of loss.

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1 minute ago, spunko2010 said:

Not really. Nobody wants to catch a falling knife.

How old are you out of interest? A lot of homeowners genuinely cannot remember a time when prices didn't rise every month. Panic will set in, and people will stay put as their hand will have been forced.

Moving at a time when prices are falling might be beneficial if played right, but it's extremely easy to get burned on an illiquid asset. And we're not just talking about £500 or £1000; a lot of people if they play their cards wrongly could easily lose £250k. That's jumping off a tall bridge level of loss.

I've always looked on a house as somewhere to live. The accepted wisdom during the whole of my life has been that owning is financially beneficial as opposed to renting. There are advantages and disadvantages to both options, what suits one doesn't necessarily suit another. To me the advantages outweigh the disadvantages.  I've benefitted immensely from house price inflation throughout my married life and now sort of mortgage free I have flexibility and options. 

By viewing a house as somewhere to live I don't tend to look at the financial value of it as an asset,  I don't calculate whether it is generating a yield and whether it would be more advantageous to sell and rent. Its an illiquid asset in some senses although these days in the UK there are methods of using your home to release equity, although the cost is ridiculously high. If house prices were to fall then I'm in the fortunate position, I think, that I still have somewhere to live, if I wanted to move then a new house would also likely have fallen in the same proportion.

Sure I did use the equity from my home to purchase houses which I let. I lucked in, and despite it looking to have been an unwise decision during the financial turmoil it turned out to have been a worthwhile  investment.  If it had been during John Majors tenure as PM it could have turned out differently. It didn't. When I look at prices now they strike me as being too high and too onerous for first time buyers, but they are still able to get mortgages and the desire to own a house is strong. 

Anyway having first hand experience of consumer electronics I'm quite used to catching a falling knife. You know the minute you purchase a computer, peripheral device, or any other consumer electronic that the price will fall or you could get something with more features for less a short while later. So you get used to buying something when its at a price you feel comfortable with in the knowledge that you could have carried on waiting and waiting.

 I would think that the main factor is comparing mortgage costs with rent payments. If its not thought likely that rents will fall then purchasing with a mortgage will seem more attractive.

 

 

 

 

 

 

 

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2 hours ago, sleepwello'nights said:

I've always looked on a house as somewhere to live. The accepted wisdom during the whole of my life has been that owning is financially beneficial as opposed to renting. There are advantages and disadvantages to both options, what suits one doesn't necessarily suit another. To me the advantages outweigh the disadvantages.  I've benefitted immensely from house price inflation throughout my married life and now sort of mortgage free I have flexibility and options. 

By viewing a house as somewhere to live I don't tend to look at the financial value of it as an asset,  I don't calculate whether it is generating a yield and whether it would be more advantageous to sell and rent. Its an illiquid asset in some senses although these days in the UK there are methods of using your home to release equity, although the cost is ridiculously high. If house prices were to fall then I'm in the fortunate position, I think, that I still have somewhere to live, if I wanted to move then a new house would also likely have fallen in the same proportion.

Sure I did use the equity from my home to purchase houses which I let. I lucked in, and despite it looking to have been an unwise decision during the financial turmoil it turned out to have been a worthwhile  investment.  If it had been during John Majors tenure as PM it could have turned out differently. It didn't. When I look at prices now they strike me as being too high and too onerous for first time buyers, but they are still able to get mortgages and the desire to own a house is strong. 

Anyway having first hand experience of consumer electronics I'm quite used to catching a falling knife. You know the minute you purchase a computer, peripheral device, or any other consumer electronic that the price will fall or you could get something with more features for less a short while later. So you get used to buying something when its at a price you feel comfortable with in the knowledge that you could have carried on waiting and waiting.

 I would think that the main factor is comparing mortgage costs with rent payments. If its not thought likely that rents will fall then purchasing with a mortgage will seem more attractive.

 

Even the merest mention of "equity release" means I glaze over so bear with me, but you have contradicted yourself twice here I do believe - do you look at houses from a financial perspective or not? It reads like you do given you have invested in other homes to let out. In which case, it's most definitely not a sound financial decision to move in the middle of any hypothetical crash, the value of your onward move will tank before you've even got the keys.

It's great you have secured a safety net for retirement, or whatever, but it was surely just a case of "right time, right place" (and the ability to take a risk) rather than any special insight or toiling away at the coalface? I don't think at any point in known history have house prices risen as they have done over the past 20 years or so. A trained monkey could have done it - no offence meant of course, but I do wish "property investors" would just bloody admit it.

 

Also:

19 hours ago, sleepwello'nights said:

As I'm looking to move any fall in the price I get for my house could work in my favour as the next purchase would be at a lower price. Many others would work out that they could upsize, subject to selling their existing home, with a lower cost to change. This would increase demand and put a brake on price falls.

Here's an example: why would you buy a 3 bed house at say £300k when you could in a few months time get a 4 bed house for £300k? This is what ends up breaking the bubble, the anticipation of waiting a little longer to get a better house. That 3 bed house now needs to reduce its asking price to £250k to get a sale, and the Jones up the road who have been trying to sell their own 3 bed for £290k now need to reduce their asking price to £250k respectively, etc.

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