Property crash, just maybe it really is different this time

[sancho panza]

3 hours ago, With a crooked smile said:

 How much have you spent on rent over the years and how much do you think you'll spend on rent over the next 10?

Key consideration imho is having a plan for when you cant work anymore.Thats either paying a hosue off,or having pension assets in situ to pay rent or buy somewhere.

Some people don't have the money to either buy a hosue or save for their retiremetn and thats a tough boat to be in.

2 hours ago, With a crooked smile said:

From Sky:

US inflation grew at a slower pace than expected in July, according to the latest government figures, easing pressure on the Federal Reserve to deliver another super-sized interest rate hike.

Consumer prices jumped by 8.5% in July compared with a year earlier, down from the 9.1% year-on-year jump in June.

 

On a monthly basis, prices were unchanged between June and July, for the first time in more than two years.

Following the inflation news, traders slashed bets that the Federal Reserve would deliver a third consecutive 75-basis-point hike.

A 50-basis-point rise is now widely expected when the central bank meets in September.

Interest rate rise may continue for a while but I wouldn't bet on them rising for long and could well go into reverse 

I think the Fed will pivot especially as I think the jobs situation in the US is worse than the BLS data shows.Their dual mandate and having learned hard watched and learned their playbook,means I'm expecting a pivot.Whoch will mena weak dollar phase and then possiblt BK,quite what happens to rates thereafter I jsut don't know.I think the infaltion is embeded demogrpahically in terms of wages and on the supply side in energy.

Dificult to figure the way through this whats coming

2 hours ago, With a crooked smile said:

Is it tho? How much have wages gone up by? I had a 17k pay adjustment around Jan / Feb and a 3k payrise in March. I'm not saying that's typical but im saying over the lifetime of a fix particularly at the moment people's salaries are increasing rapidly.

I'm over paying my most expensive mortgage by 13k a year at the moment.

A lot of people are overpaying but this is pure Fishers debt deflation cycle as people paying down debts reduces economci activity and therefore reduces people;s ability to earn down the line

see from number 2/3/4/etc

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

'According to Fisher, once the credit bubble bursts, this unleashes a series of effects that have serious negative impact on the real economy:

1. Debt liquidation and distress selling.
2. Contraction of the money supply as bank loans are paid off.
3. A fall in the level of asset prices.
4. A still greater fall in the net worth of businesses, precipitating bankruptcies.
5. A fall in profits.
6. A reduction in output, in trade and in employment.
7. Pessimism and loss of confidence.
8. Hoarding of money.
9. A fall in nominal interest rates and a rise in deflation-adjusted interest rates.

49 minutes ago, GTM said:

I STR in 2014. The main reason I did it was that it was completely unsuitable for my physically disabled son. It would also have been helpful to have more liquidity to increase my Afren short. Borrowing more to buy something suitable would have meant never retiring. 

My winnings from that Afren bet covered 3 years of rent. Other sensible investment/gambling decisions (delete as appropriate) have seen my wealth rise such that I could buy that place I sold 3x at 2014 prices and 2x at current prices.

My divis more than cover my rent.

Just in case that sounds too conceited, that was despite losing about £60K periodically shorting Tesla. Though at one point I was losing money shorting Wirecard.... 

Fair play.I was wrong about hosue prices from about 2004 to 2015 when I finally got my head around CB playbooks.We specualte like you.

Although we use our salaries to pay rent then I invest in equites andn trade options  for us as a family.

We're in the same situation if needed use divis for rent.Very lucky but have worked hard and like you taken some big losses on the way,partticualrly scottish play,northern rock and a few more.also made a few bob too.can't complain.

Far more worried on a personal level about hedging sterling,food,fuel than buying a hosue these days.Can't be arsed maintaining one.

We're looking to buy one when we retire on the isle of man I think.will rent till then.unless they become a fair bit cheaper then they currently are.my main interest in them is what will happen to the banks balance sheets but I think you only get a clear view on hosuing pricing many months after the transactions and tooo late for me to trade it.

If we bought now,I'd have to sell some of our long term holdings such as shell/bp/barrick/newmont etc,all bought for good prices and I'm jsut not willing to surrender them on an opportunity cost basis.

@With a crooked smile thank you for your kind word.s

[HousePriceMania]

Who knew the housing market needed to recovery ????

 

Higher interest rates and Ukraine war threaten property recovery, says Savills

https://www.ft.com/content/5bb93c9f-976f-4f11-95a0-0decedb78587

[HousePriceMania]

Savills results were out today, I dont think they could have been very good 
 

 

 

I shorted them based on the information from UKPropertyLion showing all time low sales volumes.

 

[onlyme]

35 minutes ago, HousePriceMania said:

Savills results were out today, I dont think they could have been very good 
 

 

 

I shorted them based on the information from UKPropertyLion showing all time low sales volumes.

 

There's a London market indicator if ever there was one,  The city boys will now know to keep their hands stuffed in other peoples' pockets. 

Update on other house that was up for sale, new agent didn't work, chain (short) of nearly 6 months broken. Tiny sample but everyone I know looking to sell this spring/summer season has failed and their pricing was not out of the ordinary.

[sancho panza]

1 hour ago, HousePriceMania said:

Savills results were out today, I dont think they could have been very good 
 

 

 

I shorted them based on the information from UKPropertyLion showing all time low sales volumes.

 

Fair play there HPM but let's look at the full picture(and I'm not saying the hosuing market isn't struggling)

Interesting though that SVS telegraphed the coming collapse in 07.Northern rrock went in the sept iirc

36 minutes ago, onlyme said:

There's a London market indicator if ever there was one,  The city boys will now know to keep their hands stuffed in other peoples' pockets. 

Update on other house that was up for sale, new agent didn't work, chain (short) of nearly 6 months broken. Tiny sample but everyone I know looking to sell this spring/summer season has failed and their pricing was not out of the ordinary.

I think this is the key issue-liquidity.One of the reasons I steer clear of taking market related psoitions ref hosuing etiher directly or indirectly,is that price discovery is so poor and a lagging indicator.

some are tkaing 12 months to hit the land reg.

as you allude,the chains collapsing/completing is perhaps the best forward indicator but very hard to get relaible data.

can't imagine the stress of trying to shift a flat in SW8 & the like at the minute

Edited August 11, 2022 by sancho panza

[Democorruptcy]

The Treasury has released the latest Mortgage Guarantee stats today

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1097188/2021_mgs_Statistics_Publication_March_2022.pdf

Note the document has a lot of detail about 'Mortgages' but nothing at all about the number of times the 'Guarantee' was called on by lenders. Hasn't there been any yet? This scheme will not doubt be used by lenders for their worst credit risks, so if prices were to drop, what it's costing is more important.

If anyone wants to ask them to include in future reports, stats about the guarantee (taxpayer bailouts to lenders), here's the email address:

[email protected]

[onlyme]

Just now, sancho panza said:

Fair play there HPM but let's look at the full picture(and I'm not saying the hosuing market isn't struggling)

I think this is the key issue-liquidity.One of the reasons I steer clear of taking market related psoitions ref hosuing etiher directly or indirectly,is that price discovery is so poor and a lagging indicator.

some are tkaing 12 months to hit the land reg.

as you allude,the chains collapsing/completing is perhaps the best forward indicator but very hard to get relaible data.

can't imagine the stress of trying to shift a flat in SW8 & the like at the minute

Reckon at least 3 months it has been bust. You get the normal summer slowdown but May/June rate rises possibly stiffed it, you'll get a small rush of proceed able buyers locking in a fix keeping the numbers up but new buyers pegged back at the point.

[HousePriceMania]

2 hours ago, onlyme said:

There's a London WORLD market indicator if ever there was one,  The city boys will now know to keep their hands stuffed in other peoples' pockets. 

Update on other house that was up for sale, new agent didn't work, chain (short) of nearly 6 months broken. Tiny sample but everyone I know looking to sell this spring/summer season has failed and their pricing was not out of the ordinary.

 

[No One]

On 10/08/2022 at 11:22, No One said:

My area has gone 280->278

278->282 (+4)

[Boon]

3 hours ago, Democorruptcy said:

The Treasury has released the latest Mortgage Guarantee stats today

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1097188/2021_mgs_Statistics_Publication_March_2022.pdf

Note the document has a lot of detail about 'Mortgages' but nothing at all about the number of times the 'Guarantee' was called on by lenders. Hasn't there been any yet? This scheme will not doubt be used by lenders for their worst credit risks, so if prices were to drop, what it's costing is more important.

If anyone wants to ask them to include in future reports, stats about the guarantee (taxpayer bailouts to lenders), here's the email address:

[email protected]

Seems unlikely that defaults will happen in the opening period. Which is stupid, as (IIRC) the government guarantee part is for the first 7 years. After that it is on the banks, although 7 years of payments should provide some cushion.

Think going down the scheme is the choice of the borrower, not the lender, for if you only had 5% deposit there might not be any other mortgage you could apply for.

At Barclays anyway it is a full percentage point above a 'normal' mortgage for a 5-year fix. At these rates I only think the desperate or those out of options will be using it

Ie: flat price £425k, mortgage £400k = £2145 a month plus service charge, maybe £2445 all in
Comparable cost to rent something like this will be £1500.

 

[onlyme]

26 minutes ago, Boon said:

Seems unlikely that defaults will happen in the opening period. Which is stupid, as (IIRC) the government guarantee part is for the first 7 years. After that it is on the banks, although 7 years of payments should provide some cushion.

Think going down the scheme is the choice of the borrower, not the lender, for if you only had 5% deposit there might not be any other mortgage you could apply for.

At Barclays anyway it is a full percentage point above a 'normal' mortgage for a 5-year fix. At these rates I only think the desperate or those out of options will be using it

Ie: flat price £425k, mortgage £400k = £2145 a month plus service charge, maybe £2445 all in
Comparable cost to rent something like this will be £1500.

 

Problem, rents are hugely inflated, many have not had any choice and forked out regardless of affordability, of those a lot won't have any budget left after pay rises that won't cover the rising costs this winter, if their budgets are not already under water from inflation over the last 12 months.

[Democorruptcy]

55 minutes ago, Boon said:

Seems unlikely that defaults will happen in the opening period. Which is stupid, as (IIRC) the government guarantee part is for the first 7 years. After that it is on the banks, although 7 years of payments should provide some cushion.

Think going down the scheme is the choice of the borrower, not the lender, for if you only had 5% deposit there might not be any other mortgage you could apply for.

At Barclays anyway it is a full percentage point above a 'normal' mortgage for a 5-year fix. At these rates I only think the desperate or those out of options will be using it

Ie: flat price £425k, mortgage £400k = £2145 a month plus service charge, maybe £2445 all in
Comparable cost to rent something like this will be £1500.

Getting the desperate onboard without a risk to the lenders is what it's all about. The lenders keep the profits from those that can pay and taxpayer's cover their losses from those that can't pay and might have to sell at a loss.

[Wight Flight]

4 hours ago, onlyme said:

Problem, rents are hugely inflated, many have not had any choice and forked out regardless of affordability, of those a lot won't have any budget left after pay rises that won't cover the rising costs this winter, if their budgets are not already under water from inflation over the last 12 months.

Rents aren't inflated. They just reflect an interest only mortgage payment.

To buy, on a 25 year mortgage with a 10% deposit, you need to factor in interest at about 3% and capital repayment at 4%. 7% a year in total for year 1.

A landlord with 40% deposit can rent to you at 3% return and just about break even.

Over time those numbers switch, but the BTL landlord can always outbid the buyer in year one, so that time period won't happen.

[onlyme]

Just now, Wight Flight said:

Rents aren't inflated. They just reflect an interest only mortgage payment.

To buy, on a 25 year mortgage with a 10% deposit, you need to factor in interest at about 3% and capital repayment at 4%. 7% a year in total for year 1.

A landlord with 40% deposit can rent to you at 3% return and just about break even.

Over time those numbers switch, but the BTL landlord can always outbid the buyer in year one, so that time period won't happen.

Depends on what you take as the baseline, relative to hyper inflated capital values, yes certainly in a lot of rents are lower than you would expect, relative to wages though they are and are about to be tested by expenditure on even more fundamental and basic needs. No doubt there will be an attempt to maintain rent levels, but that could come at the expense of voids and that is not sustainable for long either.

[Wight Flight]

1 minute ago, onlyme said:

Depends on what you take as the baseline, relative to hyper inflated capital values, yes certainly in a lot of rents are lower than you would expect, relative to wages though they are and are about to be tested by expenditure on even more fundamental and basic needs. No doubt there will be an attempt to maintain rent levels, but that could come at the expense of voids and that is not sustainable for long either.

I don't disagree with that.

The next few months will be interesting 

Paying six or twelve months rent up front is the norm here. I wonder how many will still have the cash to do that next year?

 

[Frank Hovis]

12 hours ago, Wight Flight said:

I don't disagree with that.

The next few months will be interesting 

Paying six or twelve months rent up front is the norm here. I wonder how many will still have the cash to do that next year?

 

 

That's though because they can as so many are currently clamouring for rentals in decent areas so they drop these hurdles in to both cut down the numbers and to reduce their risk of losing rent money.

I didn't bother to post this one as it's become the norm but here was another stampede this week; £950 sounds cheap in the current market but it is only a two bed so not suitable for most families.

 

More than 90 people apply in 48 hours to rent single Cornwall home

The modest home was taken off the market almost as quickly as it was listed as nearly 100 families showed interest

 

A modest rental home in Cornwall has received almost 90 applications from people wanting to live in it. The two-bedroom home, which happens to be in one of the county's most popular tourist traps, saw an influx of interest to its Rightmove listing.

The property is located on Penmere Drive, in the Pentire area of Newquay, for £950 per month and the agency says it received "in excess" of 90 applications from potential tenants. The applications were all made within 48 hours of the home going on the market.

The property was first listed on July 4 and applications closed on July 6 due to the sheer volume of interest. It is amid a widely reported Cornwall housing crisis which has left countless families seeking a home or in temporary accommodation after being evicted.

In Newquay right now there are only 13 places available to rent. Mo Move is the letting agency for the Penmere Drive property, and its listings regularly direct people to email instead of call due to "extremely busy" phone lines.

The listing now reads: "Due to in excess of 90 applications received for this property, applications have now closed." It also reads: "Available from the 9th August is this stunningly presented & immaculate two bedroom house that benefits from a garage, driveway parking and southerly facing enclosed rear garden, set in the Pentire area. This will be a Fixed term tenancy of 12 months

https://www.cornwalllive.com/news/cornwall-news/more-90-people-apply-24-7434603

[Wight Flight]

7 minutes ago, Frank Hovis said:

 

That's though because they can as so many are currently clamouring for rentals in decent areas so they drop these hurdles in to both cut down the numbers and to reduce their risk of losing rent money.

I didn't bother to post this one as it's become the norm but here was another stampede this week; £950 sounds cheap in the current market but it is only a two bed so not suitable for most families.

 

More than 90 people apply in 48 hours to rent single Cornwall home

The modest home was taken off the market almost as quickly as it was listed as nearly 100 families showed interest

 

A modest rental home in Cornwall has received almost 90 applications from people wanting to live in it. The two-bedroom home, which happens to be in one of the county's most popular tourist traps, saw an influx of interest to its Rightmove listing.

The property is located on Penmere Drive, in the Pentire area of Newquay, for £950 per month and the agency says it received "in excess" of 90 applications from potential tenants. The applications were all made within 48 hours of the home going on the market.

The property was first listed on July 4 and applications closed on July 6 due to the sheer volume of interest. It is amid a widely reported Cornwall housing crisis which has left countless families seeking a home or in temporary accommodation after being evicted.

In Newquay right now there are only 13 places available to rent. Mo Move is the letting agency for the Penmere Drive property, and its listings regularly direct people to email instead of call due to "extremely busy" phone lines.

The listing now reads: "Due to in excess of 90 applications received for this property, applications have now closed." It also reads: "Available from the 9th August is this stunningly presented & immaculate two bedroom house that benefits from a garage, driveway parking and southerly facing enclosed rear garden, set in the Pentire area. This will be a Fixed term tenancy of 12 months

https://www.cornwalllive.com/news/cornwall-news/more-90-people-apply-24-7434603

This one is interesting. Same village that I was in last.

The place I rented two years ago was very, very similar except it was slightly larger, and a 5 minute rather than 15 minute walk to the beach and restaurants. It also had sea views.

I was paying £900 per month. That is some increase.

https://www.rightmove.co.uk/properties/125994053#/?channel=RES_LET

 

[No One]

House prices are about to dip – and London and the South East will suffer most (msn.com)

[Boon]

TBH I do wonder if the beach locations reflect a new supply and demand? WFH means people can live anywhere. And even going a little further back Airbnb makes it easier to casually get some money.

£950 is pretty attractive to live near Fistral Beach for people that can work from home. And also letting one of the bedrooms out in the summer could get around £80 a night at very low risk, and that is also tax-free up to £7.5k. Hypothetically the final price could be really cheap for someone willing to do this.

Of course, that distorts the market for local people but I can easily understand why a place like that at that price should have loads of applications. 

[Wight Flight]

22 minutes ago, Boon said:

£950 is pretty attractive to live near Fistral Beach for people that can work from home. And also letting one of the bedrooms out in the summer could get around £80 a night at very low risk, and that is also tax-free up to £7.5k. Hypothetically the final price could be really cheap for someone willing to do this.

Letting out a spare room is a great way to get evicted.

[HousePriceMania]

48 minutes ago, No One said:

House prices are about to dip – and London and the South East will suffer most (msn.com)

Given the people moving out of london has driven prices outside of London to extremes, if London falls, who's going to pay 20x the local wages to buy crappy houses ?
 

Anywhere driven by london prices will suffer the most, i.e. the UK

[Frank Hovis]

This one is ludicrous; it's just popped up as lead story of the local paper.

Newquay one-bed 'detached villa' put to let for £1,400 a month

Living here will cost over £16,000 a year - and that's before you factor in gas bills

 

Here is the floorplan of this mighty "villa"

 

It also has no parking and in case you were thinking its saving grace might be a tremendous seaview it dioesn't have that either.

Anyone who rents this is utterly demented.

Looking at the dreadfully overdone interior I suspect that this is someone having done up their garden shed to be  a holiday let only to find that there were no takers so chancing their arm that they might find someone desperate enough for somewhere to live to pay that.

https://www.cornwalllive.com/news/cornwall-news/newquay-one-bed-detached-villa-7454572

https://www.rightmove.co.uk/properties/125963519#/floorplan?activePlan=1&channel=RES_LET

[Chewing Grass]

On 05/08/2022 at 21:59, Chewing Grass said:

@Bus Stop Boxer holy fuck, I've just redone my first 3 digit postcode search and its now 237 and looks like panic selling (or trying to) has started in earnest.

That's a 10% increase in 4 days.

New listings are all mundane stuff.

A week later we are down to 223 so 15 have presumably sold this week or 6%.

[Wight Flight]

16 minutes ago, Frank Hovis said:

This one is ludicrous; it's just popped up as lead story of the local paper.

Newquay one-bed 'detached villa' put to let for £1,400 a month

Living here will cost over £16,000 a year - and that's before you factor in gas bills

 

Here is the floorplan of this mighty "villa"

 

It also has no parking and in case you were thinking its saving grace might be a tremendous seaview it dioesn't have that either.

Anyone who rents this is utterly demented.

Looking at the dreadfully overdone interior I suspect that this is someone having done up their garden shed to be  a holiday let only to find that there were no takers so chancing their arm that they might find someone desperate enough for somewhere to live to pay that.

https://www.cornwalllive.com/news/cornwall-news/newquay-one-bed-detached-villa-7454572

https://www.rightmove.co.uk/properties/125963519#/floorplan?activePlan=1&channel=RES_LET

Electricity is included - which given it doesn't have gas brings the price down to less than £1k per month. No mention of council tax so that might also be included.

However, despite saying long term I would lay money on whoever rents that will be kicked out after six months when it will revert back to a FHL.

 

Edited August 12, 2022 by Wight Flight

[Castlevania]

14 hours ago, Wight Flight said:

Rents aren't inflated. They just reflect an interest only mortgage payment.

To buy, on a 25 year mortgage with a 10% deposit, you need to factor in interest at about 3% and capital repayment at 4%. 7% a year in total for year 1.

A landlord with 40% deposit can rent to you at 3% return and just about break even.

Over time those numbers switch, but the BTL landlord can always outbid the buyer in year one, so that time period won't happen.

Repayment mortgages don’t work that way in the U.K. They apply annuity type amortisation, the idea being that if mortgage rates stayed the same for the entire term your monthly payment would remain the same for the entire period. So you make smaller repayments and pay more in interest at the outset. Every month the interest component of your mortgage payment will decrease and the capital repayment will increase.

On a 25 year mortgage at 3% you’ll repay ~2.5% of the mortgage in the first year. So all in ~5.5%

Edited August 12, 2022 by Castlevania