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Property crash, just maybe it really is different this time


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Several years ago I became  as HPC.com indoctrinated as much as the most ardent bear  as you could be and made a series of well received posts where I also used the terms "sheeple, lemmings, walking dead" and often making fun of those that invested in property with the well used term "Huh, property only ever goes up does it" in a notulant way. To be  fair I had my views on UK housing and I searched  HPC.com  out and joined as they matched my views and  anyone  that dare say otherwise to that crash manta  had a short and abusive membership.

I posted and was accepted by some of the most long term Bearish posters and we got on well, some of you will know who I am talking about. But after constantly taking the piss out of people who we claimed had the attitude of "it only ever goes up" or "it's different this time" which in all fairness I cannot recall a pro housing poster ever say I started having a few doubts creep in which I kept quite for a little while.

I always had the attitude that I would change my ideas or views if I seriously doubted them and though I am not saying there will never be a property crash these days I am not certain if there will or won't be anymore. Jobs are being lost, businesses are folding , debt is rising and confidence is draining and yet that housing boom continues, and there are so many other economic issues and problems I could name as well

Maybe it really is different this time?

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I know everyone on here is clued in to the ridiculous state of UK housing and none of this is news to you lot, but I need to vent... A mate of mine has just exchanged on a new-build (yeah, I know

My mate whose sale of a 125k house fell through for the third time since June was lamenting how he can’t shift his 125k house yet the nice 300k ones in his area seem to go quick mostly to cash buyers.

After the stamp duty prop ends in March, it will be extended. This time however it will apply to houses 500k+. What this will achieve is skewing the national average even higher, just like the last on

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44 minutes ago, Frank Hovis said:

The last available prop is the return of MIRAS.

https://en.wikipedia.org/wiki/Mortgage_Interest_Relief_At_Source

If a crash looks to be coming that then it will be brought back; if even that doesn't stop prices falling then yes it will be the big one. 

I should be convinced more than I was several years ago that a property crash is coming and on balance I think I would still prefer that outcome, but struggling to see it even though the basic maths says there is no other possibility, yet my logical brain refuses to accept it :)

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1 minute ago, haroldshand said:

I should be convinced more than I was several years ago that a property crash is coming and on balance I think I would still prefer that outcome, but struggling to see it even though the basic maths says there is no other possibility, yet my logical brain refuses to accept it :)

My position is that there is bound to be a crash at some point owing to the disconnect between house prices and wages.

The big question is when and, given that the last big crash took eight years to fully happen - 1988-1996 -  then even if it happens tomorrow the best time to buy will be 2028.

Maybe the economic fall out from the ending of furlough will trigger it, maybe a run on sterling forcing interest rates up, maybe war with China.

The difference for me now is that in 2007 I was desperate for it to happen immediately because I wanted to buy a house.  Having now bought a house I might take a crash as an oportunity to move up but I am in no rush to move and may not move up even with massive falls because I'm very happy where I am.

I would say that all of that makes my prediction of a crash more solid because I'm not much personally affected whereas in 2007 I was desperately wishing for it to happen so wasn't seeing it straight.

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Just now, BoSon said:

It's all relative, what's likely to crash harder and faster, property prices in sterling or sterling itself?

 

I would suggest property prices in sterling because a sterling crash will finally bring some chunky interest rates because the defence of the currency will be more important than worrying about a wave of respossessions.

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4 hours ago, Frank Hovis said:

My position is that there is bound to be a crash at some point owing to the disconnect between house prices and wages.

The big question is when and, given that the last big crash took eight years to fully happen - 1988-1996 -  then even if it happens tomorrow the best time to buy will be 2028.

Maybe the economic fall out from the ending of furlough will trigger it, maybe a run on sterling forcing interest rates up, maybe war with China.

The difference for me now is that in 2007 I was desperate for it to happen immediately because I wanted to buy a house.  Having now bought a house I might take a crash as an oportunity to move up but I am in no rush to move and may not move up even with massive falls because I'm very happy where I am.

I would say that all of that makes my prediction of a crash more solid because I'm not much personally affected whereas in 2007 I was desperately wishing for it to happen so wasn't seeing it straight.

House prices in NE have gone nowhere in 15 years.

Theres two types of market crashes - prices n number of  transactions

UK has the latter.

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5 hours ago, Frank Hovis said:

The last available prop is the return of MIRAS.

https://en.wikipedia.org/wiki/Mortgage_Interest_Relief_At_Source

If a crash looks to be coming that then it will be brought back; if even that doesn't stop prices falling then yes it will be the big one. 

What about lifetime mortgages.. im sure I read some countries already do these..  100 year mortgages you can pass on to your kids.. 

If we don't get a peasants revolt at some point the population truly are too stupid to be allowed to vote.. 

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5 minutes ago, macca said:

What about lifetime mortgages.. im sure I read some countries already do these..  100 year mortgages you can pass on to your kids.. 

If we don't get a peasants revolt at some point the population truly are too stupid to be allowed to vote.. 

UK law makes these a no go.

They only happened in Japan in late 80s.

Japanese prop has fallen for 30 years.

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After the stamp duty prop ends in March, it will be extended. This time however it will apply to houses 500k+. What this will achieve is skewing the national average even higher, just like the last one did, with FTB and flats at a standstill. 

The economy in 2021 will be decimated, our GDP has suffered the worst (only worse is India) because we don’t actually make anything anymore, we just buy and sell houses to one another. Most of the population will be living on government support (more than so than now) but everything is awesome because the one and only obsession in this country will be increasing in paper value. That is of course until it doesn’t and it will only postpone the inevitable.

It’s almost as if the government is increasingly disconnecting it from reality on purpose, knowing the collapse will be catastrophic. If most of the country is highly indebted through mortgage debt, they can’t just hand the keys back through the letter box like in the 90’s. They could however offer mass debt forgiveness in exchange for forfeiture of land and property. 

 

Edited by Lightscribe
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6 minutes ago, Lightscribe said:

After the stamp duty prop ends in March, it will be extended. This time however it will apply to houses 500k+. What this will achieve is skewing the national average even higher, just like the last one did, with FTB and flats at a standstill. 

The economy in 2021 will be decimated, our GDP has suffered the worst (only worse is India) because we don’t actually make anything anymore, we just buy and sell houses to one another. Most of the population will be living on government support (more than so than now) but everything is awesome because the one and only obsession in this country will be increasing in paper value. That is of course until it doesn’t and it will only postpone the inevitable.

It’s almost as if the government is increasingly disconnecting it from reality on purpose, knowing the collapse will be catastrophic. If most of the country is highly indebted through mortgage debt, they can’t just hand the keys back through the letter box like in the 90’s. They could however offer mass debt forgiveness in exchange for forfeiture of land and property. 

 

On the contrary we are living in very stable times for housing. 

Rates are guaranteed at zero for eternity. In fact they are irrelevant. Government will do everything in its power to ensure your property investments have high yields yet and increasing capital gain. Its like betting on a one horse race both ways.

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16 hours ago, Frank Hovis said:

 

I would suggest property prices in sterling because a sterling crash will finally bring some chunky interest rates because the defence of the currency will be more important than worrying about a wave of respossessions.

I am hoping for say  two or three Bitcoin that will pay for a handsome home :)

Edited by haroldshand
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12 hours ago, Inigo said:

I've been saying that house prices at the current level are untenable for about 15 years now.  I still think this, but have stopped saying it to people or at least include the proviso that I've been wrong for 15 years so far.

Not quite as long as you waiting, but I totally get you. You just look at it all from a common sense approach and it should all be collapsing by this coming  Monday morning, but it just goes on

P.S any of you still housepricecrash.com disciples?

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12 hours ago, Option5 said:

The trigger may not be reposessions but voluntary bankruptcies to clear debts from unsecured lending.

£2 Trillion  in personal debt now and after a low wage rise and low inflation environment in the UK and I would have thought you suggestion would of started happening  long ago. It seems the more debt people take on where it starts causing stress the answer seems to be to take even more of it on

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Posted this on another thread so i'm repeating myself but fuck it, there ain't ever going to be a property crash, the housing market is 100% backed by the government. It will happily print a few trillion to keep it propped up and everyone will get a little poorer but houses will stay frothy. "muh economy will collapse though if they keep printing blah blah"...nah...won't be like that..we ain't gonna just wake up one day and be all living under bridges. Just every year we'll notice little things...butter more expensive..swear it used to be 50p..shit like that. This is a multi generational thing. Those who are betting or hoping for a crash are there fooling themselves. Ok maybe your great great great grandchildren will experience it but by that time they'll all be street urchins anyway so who gives a fuck?

 

Edited by gibbon
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On 11/12/2020 at 15:41, Frank Hovis said:

The last available prop is the return of MIRAS.

https://en.wikipedia.org/wiki/Mortgage_Interest_Relief_At_Source

If a crash looks to be coming that then it will be brought back; if even that doesn't stop prices falling then yes it will be the big one. 

How would MIRAS help with ZIRP?

My mortgage interest  payments are .... doing sums on fingers .... sub 5% of my monthly payments.

Even if you could fix at 0% for 25 years, 97% of the Lobdon pop could not afford to buy in inner London.

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1 hour ago, gibbon said:

Posted this on another thread so i'm repeating myself but fuck it, there ain't ever going to be a property crash, the housing market is 100% backed by the government. It will happily print a few trillion to keep it propped up and everyone will get a little poorer but houses will stay frothy. "muh economy will collapse though if they keep printing blah blah"...nah...won't be like that..we ain't gonna just wake up one day and be all living under bridges. Just every year we'll notice little things...butter more expensive..swear it used to be 50p..shit like that. This is a multi generational thing. Those who are betting or hoping for a crash are there fooling themselves. Ok maybe your great great great grandchildren will experience it but by that time they'll all be street urchins anyway so who gives a fuck?

 

Nope.

Theres multiple things at play.

The main one being mid aged boomer are now in 60s.

I'm not sure what the exact numbers but something like only 30% of houses have mortgages attached to them.

About 20%of household  are oaps. Another 20-30% are social housing/HB.

The number of people in prime house buying age (25-55) who are looking to buy a house AND have the earnings is tiny. In my local area I'd reckon you are talking 10s of FTBs. The other sales are just home buyers trading away their equity. Or worse, leveraging up to speculate on BTL.

Forget saying - well my house in gold or bitcoins or magic beans ....

I can point to a large number of Northern towns where the nominal price has not shifted for 15 years.

To put in context, these places did not recover their nominal late 80s prices til late 90s.

Basically, they double due to cretin Brown, then sat there, not selling for almost 20 years.

Transaction are at multi decades low.

Considering mortgages did not become mass market tilted 70s, sales are occuring at lowest numbers ever.

The only factor propping up stagnation prices are low rates. Those wont last. Interest cycle is built into market economies.

The Western business cycle has been fucked due to bent China entering World trade in late 90s, exporting dusinflation, which fucked over dafty economist's models.

China has now aged, constrained US eventually woke up, and will be exporting  inflation  now.

 

London/SE where the build of the 2002+ HPI occurred is fucked. Tge evonomy/jibs look like Middlesbrough in late 70s - mass loss of well paying jobs.

 

 

 

 

 

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3 minutes ago, spygirl said:

I can point to a large number of Northern towns where the nominal price has not shifted for 15 years.

To put in context, these places did not recover their nominal late 80s prices til late 90s.

Basically, they double due to cretin Brown, then sat there, not selling for almost 20 years.

Transaction are at multi decades low.

I can't remember the last time I saw a removals van round my immediate locale other than the Stalag-Luft McCarthy & Stone death flats. 300% more extensions go up than folk moving.

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1 hour ago, Chewing Grass said:

I can't remember the last time I saw a removals van round my immediate locale other than the Stalag-Luft McCarthy & Stone death flats. 300% more extensions go up than folk moving.

UK housing in a lit town reflects what council estates became in the 90s - you have a lot of oaps oo. Then the other housing is occupied by bennies.

The younger, working families have been forced to live somewhere cheaper, as they pay tax fir the oaps pension and HB for Chantelle 10 kids.

There is a tiny number of people to buy the oap house.

 

I was reminded of this as a 38yo I know announces her first GK today.

Shes still on TCs with her 16yo. Her oldest (24) after a few years cash in hand has joined the LA housing queue.

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