Property crash, just maybe it really is different this time

[Formerly]

On 12/02/2023 at 18:17, Formerly said:

Just looked at Nationwide's HPI report for January. Unless prices rise next month, we'll be YoY negative. If the soft landing is achieved and prices stay the same we'll be -0.7% YoY. February is normally the first month of the year when they seasonally adjust prices down, so there's a really good chance it'll happen.

 

11 hours ago, HousePriceMania said:

Nationwide index gone yoy -ve, now down 6% from peak

 

 

 

I'm surprised that more hasn't been made of the Nationwide negative YoY here. Given I slightly underestimated the YoY fall for Feb, I'll go with -4% YoY for the next report.

 

https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-turns-negative-in-february-falling-to-its-weakest-level-since-2012

Edited March 1, 2023 by Formerly

[Chewing Grass]

17 minutes ago, Formerly said:

 

I'm surprised that more hasn't been made of the Nationwide negative YoY here. Given I slightly underestimated the YoY fall for Feb, I'll go with -4% YoY for the next report.

 

https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-turns-negative-in-february-falling-to-its-weakest-level-since-2012

Wrong kind of terror, doesn't suit the narrative.

[spygirl]

1 hour ago, AlfredTheLittle said:

That's a weird article, it's in a UK paper and presented as if it's about the UK, but if you read it, it's a US article about the US. Looks like the DM don't even bother reading their own articles anymore, probably written by ChatGPT

You're right!

I just read the headline.

US must be bloodbath.

US rates never went as low as tge UK, flattening out st 4%ish.

And they are going up - touching 7% with a couple of points left.

 

[spygirl]

49 minutes ago, Formerly said:

 

I'm surprised that more hasn't been made of the Nationwide negative YoY here. Given I slightly underestimated the YoY fall for Feb, I'll go with -4% YoY for the next report.

 

https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-turns-negative-in-february-falling-to-its-weakest-level-since-2012

Im surprised that's not much has been made about NW circling the toilet rim of going bust.

 

[HousePriceMania]

5 hours ago, JoeDavola said:

To be pedantic of course mortage rates are irrelevant for those who actually own their homes.

But I appreciate that "homeowners" fits on the drawing whereas "folk with several decades of already crippling mortgage debt ahead of them" doesn't

Inflation is more relevant.

 

If you cant eat and pay council tax, you need to sell...

[One percent]

2 minutes ago, HousePriceMania said:

Inflation is more relevant.

 

If you cant eat and pay council tax, you need to sell...

But what if what you are trying to sell is so overpriced, no one can afford it?   

[AlfredTheLittle]

25 minutes ago, One percent said:

But what if what you are trying to sell is so overpriced, no one can afford it?   

It's the other way around - what if running a house becomes so expensive, no one can afford to keep it

[One percent]

1 minute ago, AlfredTheLittle said:

It's the other way around - what if running a house becomes so expensive, no one can afford to keep it

Think they are two sides of the same coin. The idiot left standing when the music stops.  

[nirvana]

[nirvana]

Taylor Wimpey reporting tomorrow, watch out below

[Guest]

12 hours ago, AlfredTheLittle said:

That's a weird article, it's in a UK paper and presented as if it's about the UK, but if you read it, it's a US article about the US. Looks like the DM don't even bother reading their own articles anymore, probably written by ChatGPT

Does make you wonder who's going to be lending to British mortgagors at 4% in the Great British Peso and a stagnant economy when they can lend to Americans at 7% in the world's reserve currency with a growing economy and rising wages.

[spygirl]

12 hours ago, Ash4781b said:

Blimey with inflation at 10% these are massive falls already. Still I see bricks and raw materials are rising in price. But I guess so are mortgages, eggs, well most things.

Looks like the gov’ will have to intervene else those house builders will revert to hibernation mode. Heard an advert on radio about buying a new build said prices go up. Builders will be lobbying hard. They need to shift what they got and re-group.

Not yet.

From ~89 -> ~98 some of shitholier places in SE lost about 40% nominal, 70% real terms.

I worked with someone whod bought a place nearReading in 1988. Repo'd after a divorce in 94ish for 40kish.

In Scabby there were ~20%-30% nominal falls and 50% real falls.

Yes, IR went much higher.

But HPE were much much lower.

IIRcLondon?SE was 6-7x then.

Its 15+ today.

Any HPI without wage inflqtion is always going to be ephemeral.

 

 

[spygirl]

14 minutes ago, Darude said:

Does make you wonder who's going to be lending to British mortgagors at 4% in the Great British Peso and a stagnant economy when they can lend to Americans at 7% in the world's reserve currency with a growing economy and rising wages.

Again ....

The US *SETS* the price of money in world.

Fed raies then the UK, EU and everyone else does.

The amount of drivel spouted since 2000 from BoE ECB etc, about CB being dependent, setting IR etc etc.

UK normally has a 1%-2% spread over Fed rates.

This has pretty much been fixed since Bretton Woods n all that.

It doesnt has to be this way. Theres no reason why BoE/UK cannot follow a path of hard currency a la Swissy.

But they dont.

Its too hard and they on index linked pensions.

The best to low inflation is to remove *ALL* indexing from public sector and BoE pensions.

Ideally youd want them to move to DC pensions.

 

 

 

 

 

 

[wherebee]

16 hours ago, JoeDavola said:

To be pedantic of course mortage rates are irrelevant for those who actually own their homes.

But I appreciate that "homeowners" fits on the drawing whereas "folk with several decades of already crippling mortgage debt ahead of them" doesn't

about 15 years ago I worked with a right twat.  bling, audi, you know the drill.  Anyway, he came into the office boasting one monday that he'd just bought a house for a million pounds.  About 30.  The usual suspects gathered round congratulating him.

I interjected with 'you didn't buy it. The bank did. You owe them a million quid, the bank owns the house whilst you rent it from them'.

fuck me was he angry.

[MrXxxx]

12 minutes ago, spygirl said:

IIRcLondon?SE was 6-7x then.

Its 15+ today.

Then it was 3.5x a single salary format wasn't it?...now it is 3.5x joint salary, hence the 7x figure?

[MrXxxx]

10 minutes ago, spygirl said:

he US *SETS* the price of money in world.

Fed raies then the UK, EU and everyone else does.

The amount of drivel spouted since 2000 from BoE ECB etc, about CB being dependent, setting IR etc etc.

UK normally has a 1%-2% spread over Fed rates.

So with the markets in the US in the last few days talking about another 1-2 0.5% rate hikes by March, the Fed Fund is going to be ~ 6% by mid 2023, so this means UK rates are going to be ~ 7-8%?

[One percent]

6 minutes ago, MrXxxx said:

Then it was 3.5x a single salary format wasn't it?...now it is 3.5x joint salary, hence the 7x figure?

This is how there has been massive hpi. Prices rising to soak up the available credit.  

[MrXxxx]

Just now, One percent said:

This is how there has been massive hpi. Prices rising to soak up the available credit.  

...and the problem is, once that 'Genie is out of the box' it's not going back in :-(

[spygirl]

2 minutes ago, MrXxxx said:

So with the markets in the US in the last few days talking about another 1-2 0.5% rate hikes by March, the Fed Fund is going to be ~ 6% by mid 2023, so this means UK rates are going to be ~ 7-8%?

Look at the chart.

 

[One percent]

Just now, MrXxxx said:

...and the problem is, once that 'Genie is out of the box' it's not going back in :-(

Well they can’t keep going up forever, especially when wages aren’t. 

[MrXxxx]

3 minutes ago, spygirl said:

Look at the chart.

 

What chart?...do you mean the figure you posted above?...there are two different y-axis values, so does the UK really run ~2% above the US Fed Funds rate?

[Wight Flight]

1 minute ago, MrXxxx said:

What chart?...do you mean the figure you posted above?...there are two different y-axis values, so does the UK really run ~2% above the US Fed Funds rate?

In a normal world yes. £ is not seen to be as safe as the $ so we need to add an extra incentive for people to hold it.

[No One]

[HousePriceMania]

12 hours ago, One percent said:

But what if what you are trying to sell is so overpriced, no one can afford it?   

That's when the let the foreigners in....

[spygirl]

1 hour ago, One percent said:

This is how there has been massive hpi. Prices rising to soak up the available credit.  

Otjer way around -  loose bank mortgage lendign from 98- >2014 expanded credit.

90%+ of bank credit goes on real estate.

This has been changed.

Ive been shouted by a ocuple on TO - You dotn udnerstand banking!

But this is how I thkink he BoE wants the mortgage market to work now - 

For every 100k of house the BoE wants 20% buyer deposit, 20% bank capital and 20% from private credit (i.e. a bond for a long fix period). with BoE providing the balance. whcih will be paid own rapidly in the first 10y.

A peak 2008 Brownism, for each 100k of house the buyer was providing £500 (borrowed), the bank was lending 125k (well, need moeny to do it up) with the full lump drawn down from BoE.