Property crash, just maybe it really is different this time

[MrXxxx]

10 hours ago, Axeman123 said:

eg: Why the house price crash everyone predicted hasn’t happened....YET!

FTFY :-)

[tank]

11 hours ago, JoeDavola said:

Hilarious that in GB they actually show the old selling prices - we don't have that info in NI.

Really hits home how fucked the young are.

£75K in 1996 money is £140K. So that flat is three times as expensive in real terms.

The young should be out rioting.

Most of those who grow up in Greater London these days have names like Tyrone/Abdul and have had state subbed accomodation in their families going back a generation or more. The only thing that will get them rioting is cuts to bennies. Most of the white Cockneys have long decamped to Kent and Essex.  

Then there's middle class Toby and Tammy from the Home Counties who migrate to London for 'the experience' of living in the big city. They will have the BOMAD/trust funds in place to buy a £400,000 flat similar to the above or the Victorian ones in semi gentrified shitholes like Hackney. The housing market, outside international buyers, is mostly an exchange of existing wealth via boomers and their children.

Once they pair off and get ready to start banging out sprogs, they'll typically exchange their BOMAD bought leasehold flat in London for a freehold house in a regional city like Bristol or Manchester, or, if they've got well paid City careers, the suburban 'stockbroker belt'.

Edited May 25, 2023 by tank

[wherebee]

10 hours ago, HousePriceMania said:

Remember when people used to say inflation was good for people with mortgages, they'll just clear their debt ?
 

Seems not.

naw.  massive underreporting of income in Australia.  For one thing, millions of tradies who run small businesses with cash in hand and on the books trades.  For another, like the situation my wife and I have deliberately engineered - on paper we had about 80k income each last year.  But the company took in 500,000 income.  A lot of stuff that would have come out of post tax income gets covered, legally, by the company.  For example, once a year we can have a directors christmas dinner in Melbourne, and stay at a hotel for the night.  That's paid for by the company out of pre tax income.  If we had to pay it out of post tax, we'd have to earn about 800 bucks...!

What the COVID lockdowns did do was make people realise that they can minimise spending, minimise income, and still be better off.

The above graph is stunning in it's lack of reflection of the real world.

[HousePriceMania]

6 hours ago, wherebee said:

naw.  massive underreporting of income in Australia.  For one thing, millions of tradies who run small businesses with cash in hand and on the books trades.  For another, like the situation my wife and I have deliberately engineered - on paper we had about 80k income each last year.  But the company took in 500,000 income.  A lot of stuff that would have come out of post tax income gets covered, legally, by the company.  For example, once a year we can have a directors christmas dinner in Melbourne, and stay at a hotel for the night.  That's paid for by the company out of pre tax income.  If we had to pay it out of post tax, we'd have to earn about 800 bucks...!

What the COVID lockdowns did do was make people realise that they can minimise spending, minimise income, and still be better off.

The above graph is stunning in it's lack of reflection of the real world.

So it reflected the real world when it was going up but now it's falling it doesnt ?

[AWW]

7 hours ago, tank said:

Most of those who grow up in Greater London these days have names like Tyrone/Abdul and have had state subbed accomodation in their families going back a generation or more. The only thing that will get them rioting is cuts to bennies. Most of the white Cockneys have long decamped to Kent and Essex.  

Then there's middle class Toby and Tammy from the Home Counties who migrate to London for 'the experience' of living in the big city. They will have the BOMAD/trust funds in place to buy a £400,000 flat similar to the above or the Victorian ones in semi gentrified shitholes like Hackney. The housing market, outside international buyers, is mostly an exchange of existing wealth via boomers and their children.

Once they pair off and get ready to start banging out sprogs, they'll typically exchange their BOMAD bought leasehold flat in London for a freehold house in a regional city like Bristol or Manchester, or, if they've got well paid City careers, the suburban 'stockbroker belt'.

Nope, kids' names are pretty similar to the rest of the country: https://www.standard.co.uk/news/london/revealed-boroughbyborough-the-most-popular-baby-names-in-london-a3942946.html

I think you overestimate the amount of domestic money flowing into London property. It's not Surrey stockbrokers buying their kids places in Hackney. It's the Chinese.

I think you also overestimate the numbers moving from London to other UK cities. I can't find the data right now, but the numbers are tiny. People don't leave London because they've had enough of London, they leave because they've had enough of city living.

[HousePriceMania]

https://www.propertymark.co.uk/resource/housing-insight-report-april-2023.html

 

[wherebee]

2 hours ago, HousePriceMania said:

So it reflected the real world when it was going up but now it's falling it doesnt ?

there has been a huge rotation out of 'known, taxed' income in my view in the past couple of years.  People have really woken up to the legal - and illegal - ways they can avoid declaring income to the taxman.  So on the way up, traditional go work in an office or a shop, get paid, taxman sees it all, number go up.  Now......

[AWW]

3 hours ago, wherebee said:

there has been a huge rotation out of 'known, taxed' income in my view in the past couple of years.  People have really woken up to the legal - and illegal - ways they can avoid declaring income to the taxman.  So on the way up, traditional go work in an office or a shop, get paid, taxman sees it all, number go up.  Now......

Absolutely. I've always been a diligent tax-avoider, but mates never really asked me any questions about it. Since Covid and people's exasperation with scandals like Bounce Back loans, 10% benefit increases etc, I'm constantly asked about SIPPs, thresholds, even had a mate asking me about EIS. John Smith on PAYE getting reamed because £75k a year makes him "rich" has had enough.

[JoeDavola]

38 minutes ago, AWW said:

Absolutely. I've always been a diligent tax-avoider, but mates never really asked me any questions about it. Since Covid and people's exasperation with scandals like Bounce Back loans, 10% benefit increases etc, I'm constantly asked about SIPPs, thresholds, even had a mate asking me about EIS. John Smith on PAYE getting reamed because £75k a year makes him "rich" has had enough.

Yeah my mate's on about £75K and is taking the full tax hit on that and it's eye watering how much he's giving the government every month.

He lives in a nice house but that's about it - no real extravagant spending beyond that. No foreign holidays, he and the wife drive cars they've had for ages and paid off. Couple of young kids.

Edited May 25, 2023 by JoeDavola

[Democorruptcy]

SONIA 2yr swap rate over 5% today. I might have to tell RM to up their default 5.15% soon.

https://www.chathamfinancial.com/technology/european-market-rates

 

[Ash4781b]

5 hours ago, Democorruptcy said:

SONIA 2yr swap rate over 5% today. I might have to tell RM to up their default 5.15% soon.

https://www.chathamfinancial.com/technology/european-market-rates

 

https://www.bbc.co.uk/news/business-65713905
 

mortgage rates jumping up

[Boon]

Mumsnet are onto it:

https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates

Although I do wonder whether the banks might just use extend and pretend for themselves to pretend something really bad happening.

Example, I know someone who remortgaged at the start of 2022 and the valuation came in at a stupidly high figure with nothing backing it apart from the kite-flying prices at the time; it seems they took the 2016 sale price and added 1% a year.

But now there are is actual evidence against that. Actual sales are coming in below that, the more recent SSTC is around £100k from that remortgage figure.

I seen it at a variety of levels, all on flats; something used to be over £400k now at £300k; another flat that sold £300-£330 came on auction this week and scraped above £200k. 

What has killed the value for these is service charges, under £200 has gone to around £400. Some are even worse.

But the banks must be aware that for specific assets valued at specific times must now be lower. Will they take an impairment charge and margin call owners to restore the LTV? Can't see it happening for owner occupied. 

Maybe for BTL, but given the marginal price of flats on these blocks are almost always set by landlords, that makes the owners prisoners. 

[spunko]

20 hours ago, tank said:

Most of those who grow up in Greater London these days have names like Tyrone/Abdul and have had state subbed accomodation in their families going back a generation or more. The only thing that will get them rioting is cuts to bennies. Most of the white Cockneys have long decamped to Kent and Essex.  

Then there's middle class Toby and Tammy from the Home Counties who migrate to London for 'the experience' of living in the big city. They will have the BOMAD/trust funds in place to buy a £400,000 flat similar to the above or the Victorian ones in semi gentrified shitholes like Hackney. The housing market, outside international buyers, is mostly an exchange of existing wealth via boomers and their children.

Once they pair off and get ready to start banging out sprogs, they'll typically exchange their BOMAD bought leasehold flat in London for a freehold house in a regional city like Bristol or Manchester, or, if they've got well paid City careers, the suburban 'stockbroker belt'.

This is accurate based on what I'm seeing. Round here all the landed gentry types buy their 20 something children a flat in Zone 2, which they live in for a few years, then flog it when the children start to have their own children. At that point they move back to the area they grew up in and mummy and daddy buy them a larger house nearby using the equity. 

One of my loaded neighbours sold their home for a few million so that they could buy their 3 kids houses just recently.

Often mummy has never worked from what I can tell, she just married into wealth, and the cycle repeats and the unearned wealth gets transferred down to each generation. 

[spunko]

6 minutes ago, Boon said:

Mumsnet are onto it:

https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates

Although I do wonder whether the banks might just use extend and pretend for themselves to pretend something really bad happening.

Example, I know someone who remortgaged at the start of 2022 and the valuation came in at a stupidly high figure with nothing backing it apart from the kite-flying prices at the time; it seems they took the 2016 sale price and added 1% a year.

But now there are is actual evidence against that. Actual sales are coming in below that, the more recent SSTC is around £100k from that remortgage figure.

I seen it at a variety of levels, all on flats; something used to be over £400k now at £300k; another flat that sold £300-£330 came on auction this week and scraped above £200k. 

What has killed the value for these is service charges, under £200 has gone to around £400. Some are even worse.

But the banks must be aware that for specific assets valued at specific times must now be lower. Will they take an impairment charge and margin call owners to restore the LTV? Can't see it happening for owner occupied. 

Maybe for BTL, but given the marginal price of flats on these blocks are almost always set by landlords, that makes the owners prisoners. 

How many posts do I need to read on there before Queen Mum enters and starts whingeboasting about the increasing mortgage costs on her 8 bedroom mansion in Kensington?

 

'we' can't afford it... using hubby's money naturally.

[JoeDavola]

5 minutes ago, Boon said:

Mumsnet are onto it:

https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates

Although I do wonder whether the banks might just use extend and pretend for themselves to pretend something really bad happening.

Example, I know someone who remortgaged at the start of 2022 and the valuation came in at a stupidly high figure with nothing backing it apart from the kite-flying prices at the time; it seems they took the 2016 sale price and added 1% a year.

But now there are is actual evidence against that. Actual sales are coming in below that, the more recent SSTC is around £100k from that remortgage figure.

I seen it at a variety of levels, all on flats; something used to be over £400k now at £300k; another flat that sold £300-£330 came on auction this week and scraped above £200k. 

What has killed the value for these is service charges, under £200 has gone to around £400. Some are even worse.

But the banks must be aware that for specific assets valued at specific times must now be lower. Will they take an impairment charge and margin call owners to restore the LTV? Can't see it happening for owner occupied. 

Maybe for BTL, but given the marginal price of flats on these blocks are almost always set by landlords, that makes the owners prisoners. 

Is that 400 a month service charge??

[Wight Flight]

5 minutes ago, spunko said:

Often mummy has never worked from what I can tell, she just married into wealth, and the cycle repeats and the unearned wealth gets transferred down to each generation. 

Yet you oppose inheritance tax?

[One percent]

Just now, Wight Flight said:

Yet you oppose inheritance tax?

The rich tend to have ways of avoiding it. It’s those just above the middle that get hammered. 

[Wight Flight]

17 minutes ago, spunko said:

How many posts do I need to read on there before Queen Mum enters and starts whingeboasting about the increasing mortgage costs on her 8 bedroom mansion in Kensington?

 

'we' can't afford it... using hubby's money naturally.

What they all forget is that there was also 15% wage inflation, so if you could survive on beans on toast for a couple of years you were sorted.

Edited May 25, 2023 by Wight Flight

[Boon]

24 minutes ago, JoeDavola said:

Is that 400 a month service charge??

Yes, combined service charge/ground rent.

Not uncommon especially with the ones with expensive communal things. Like a pool.

Some are in even worse shape, for instance:
https://www.rightmove.co.uk/properties/130973699#/?channel=RES_BUY

That kind of level makes it unsellable before even considering where it is.

One is on for auction at £220k. Either it goes for close to this, or not at all. But once it does surely the rest of them are worth in the same ballpark at current service charge and interest rates.

[Wight Flight]

11 minutes ago, Boon said:

Yes, combined service charge/ground rent.

Not uncommon especially with the ones with expensive communal things. Like a pool.

Some are in even worse shape, for instance:
https://www.rightmove.co.uk/properties/130973699#/?channel=RES_BUY

That kind of level makes it unsellable before even considering where it is.

One is on for auction at £220k. Either it goes for close to this, or not at all. But once it does surely the rest of them are worth in the same ballpark at current service charge and interest rates.

Bugger me.

at 4% yield that will rent for £1k per month.

half of which goes on the service charge.

that is what is known as a financial albatross.

[JoeDavola]

30 minutes ago, Boon said:

Yes, combined service charge/ground rent.

Not uncommon especially with the ones with expensive communal things. Like a pool.

Some are in even worse shape, for instance:
https://www.rightmove.co.uk/properties/130973699#/?channel=RES_BUY

That kind of level makes it unsellable before even considering where it is.

One is on for auction at £220k. Either it goes for close to this, or not at all. But once it does surely the rest of them are worth in the same ballpark at current service charge and interest rates.

“The service charge is £6332.70 per annum (2023) approx

The ground rent is £350 per annum (2023)

Council Tax is band E which is £2,737.25 per annum

The total square footage is 767 sqft approx“

….so basically £10k a year ownership costs even if you own it outright. Fuck me.

[sancho panza]

17 minutes ago, Wight Flight said:

that is what is known as a financial albatross.  suicide pact

corrected for you WF

[tank]

18 hours ago, AWW said:

Nope, kids' names are pretty similar to the rest of the country: https://www.standard.co.uk/news/london/revealed-boroughbyborough-the-most-popular-baby-names-in-london-a3942946.html

That doesn't correlate with the schooling demographics once these children reach age 6. 

Percentage of 'White British' students attending London LA Schools in 2012:

Inner London 16%

Outer London 36%

Average for the Rest of England 76%

Source: www.data.london.gov.uk/dataset/percentage-pupils-ethnic-group-borough

Clearly, the vast majority of people who grow up in today's London are not white British. Hardly a stunning revelation to anyone with a pair of functioning eyes.  The young White British who do buy there tend to be backed by family money and have generic Home Counties accents. A large number of these people leave when they couple up and often end up in regional cities trying to duplicate their 'London Experience'. 

Edited May 26, 2023 by tank

[onlyme]

7 hours ago, spunko said:

This is accurate based on what I'm seeing. Round here all the landed gentry types buy their 20 something children a flat in Zone 2, which they live in for a few years, then flog it when the children start to have their own children. At that point they move back to the area they grew up in and mummy and daddy buy them a larger house nearby using the equity. 

One of my loaded neighbours sold their home for a few million so that they could buy their 3 kids houses just recently.

Often mummy has never worked from what I can tell, she just married into wealth, and the cycle repeats and the unearned wealth gets transferred down to each generation. 

Similar has been happening in University towns, house bought by parents then shared to cover some of the costs, cash in at the end or keep.

[onlyme]

6 hours ago, JoeDavola said:

“The service charge is £6332.70 per annum (2023) approx

The ground rent is £350 per annum (2023)

Council Tax is band E which is £2,737.25 per annum

The total square footage is 767 sqft approx“

….so basically £10k a year ownership costs even if you own it outright. Fuck me.

If similar places end up in LTN's how do they get serviced?

The logistics for trades in cities are bad enough that for years now if given the choice trades actively avoid working in places that are difficult to park, access, get materials and work in. If you cover the area with LTN's all of those are progressively made worse, you can't even get vehicle access to unload. Could turn a half hour job into a couple of hours, actual servicing costs  could rocket.