Property crash, just maybe it really is different this time

[Herby]

Not sure if this is bad reporting, or they've got inside a knowledge? Where the heck did 4.62% base rate come from by the end of the year?

https://www.cityam.com/homeowners-look-to-flog-properties-as-uk-house-price-growth-slows/

 

[haroldshand]

FUCK ME..

https://www.telegraph.co.uk/property/house-prices/homeowners-race-sell-house-prices-fall/

Homeowners race to sell up before house prices fall

This from the Daily Telegraph, I don't know what has got into them recently and this reported as factually happening, loads of subscribers threatening to stop their subscription because of it 

 

[Frank Hovis]

4 minutes ago, haroldshand said:

This from the Daily Telegraph, I don't know what has got into them recently and this reported as factually happening, loads of subscribers threatening to stop their subscription because of it 

 

It could be just another generation of journalists coming through.

The previous generation were all homeowners with BtL portfolios; the new generation are probably renting off them and are so not wedded to the standard journalistic doctrine that house price rises = good news!

Though the crash will only become baked in when we start seeing such stories given prominence in the Express.

[Heart's Ease]

16 minutes ago, Frank Hovis said:

 

It could be just another generation of journalists coming through.

The previous generation were all homeowners with BtL portfolios; the new generation are probably renting off them and are so not wedded to the standard journalistic doctrine that house price rises = good news!

Though the crash will only become baked in when we start seeing such stories given prominence in the Express.

I had noticed Melissa Lawford's name on the byline of quite a few bearfood property pieces a few days ago. I guess the sub editors write the headlines.

Not stalking but note from her Twitter (which is 95% usual journo) that she was living in a Brixton houseshare in 2020. She also posted this tweet recently:

 

 

[Boon]

Obvious question is where are these homeowners going to go?

I would think most people could sense that prices could fall if interest rates go up, but they will be inclined to stay, not least because their own deals do not rise at the same time as interest rates.

Sure there will be a few that do go but much like the cladding bullshit there is an element of using a few people to create headlines to pretend it affects everyone.

In other news, and to quote Shaun Richards 'never believe anything until it is officially denied':

https://www.bloomberg.com/news/articles/2022-07-05/uk-households-can-withstand-rates-of-up-to-5-boe-says

Now I do think this is bullshit. Maybe people could survive the rates until their fix ended, but a large number of people would be in the shit if 5% rates were to emerge over the next couple of years. 

[King Penda]

The Bank of England claims people can afford to pay higher mortgages has rates increase the guy at Lloyd’s says hold my pint to that .

 

Edited July 6, 2022 by King Penda

[Frank Hovis]

1 minute ago, Heart's Ease said:

I had noticed Melissa Lawford's name on the byline of quite a few bearfood property pieces a few days ago. I guess the sub editors write the headlines.

Not stalking but note from her Twitter (which is 95% usual journo) that she was living in a Brixton houseshare in 2020. She also posted this tweet recently:

 

 

 

That's good news, the media message will start changing from high and increasing house prices being great news to questioning where such leaves working people in their twenties and thirties.

[Frank Hovis]

13 minutes ago, Boon said:

Obvious question is where are these homeowners going to go?

 

Where does a man go after a ruinous divorce when his wife has the house?

Rented flat, houseshare, static caravan, park lodge.

Whilst Tony Blair is clearly a dangerous idiot one of his team worked the numbers and demonstrated that there is actually enough housing for everyone if it was evenly distributed.

This then opens the door to financially penalising second home owners and holiday lets (Hurrah!!!) and penalising rather than rewarding under-occupation (Boo!!!!!) so that you encourage more effective usage of existing housing rather than continually building more.

As per an IoW article that @Wight Flight posted the number of second homes / holiday lets on the IoW roughly equates to the number of families there waiting on the housing register.  Their housing crisis could be solved at a stroke and this would be a similar situation across all nice coastal and rural areas in the nation.

 

 

Edited July 6, 2022 by Frank Hovis
buying -> building

[Wight Flight]

For those that don't remember 2008 (or don't think it happened)

https://www.rightmove.co.uk/house-prices/po30/brickfield-close.html

Interesting little development sold about then. Anyone that bought new took a good 10 years to get back to the paid price, some even longer.

'You can't go wrong with houses'

[King Penda]

17 hours ago, Onsamui said:

Everybody in Cornwall thought that in 89/90, and my goodness what a crash.  Many friends lost everything.  

Yes my dad had to buy my sisters house to save her in 89/90

[sancho panza]

10 hours ago, tank said:

They will never let sort of crash happen again, imo.

Not only will there be more bailouts but mortgage restbite periods for those temporarily unable to pay.

The world has changed since the 1980s and 90s, even 2008.  The belief that we still have a functioning democracy with political choice in this country went out with Blair and it's the same story everywhere else in the developed world. It's a world run by ultra liberal technocrats with the illusion of democratic choice kept afloat via the usual distractions e.g. wokery.

I think the issue nowadays isn't about whether the govt has a choice but to try and bail out the banks and the hsouing market,as so many desperately in debt borrowers are th wrong side of an about to capsize ship.It's more whether they'll be successful.Debt deflations that occur once every 80+ years may create the sort of demand destruction that quite simply means the govt can't create the demand to sustain it.

I've bored the main thread with thsi before but Irving Fisher theory of debt deflation has hsitroy on it's side.Fisher's paradox bascially asserts that during debt deflation people pay down debts and that the very act of them paying down debts means that economic activity reduces and therefore their ability to further pay donw detbs reduces.

If we get that sort of debt deflation in the credit markets(and I think it's highly likely we will) then there will be repercussions and the govt will try and prop up the hsouing market becuase if they don't the banks will go.

As I've said,oil and gold decide what sort of day we'll have but I'm glad I'm not leveraging a salary at 5 times to buy a new build liek some of my collegues at work.

 

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

Fisher's formulation (1933)

In Fisher's formulation of debt deflation, when the debt bubble bursts the following sequence of events occurs:

Assuming, accordingly, that, at some point in time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links:

1. Debt liquidation leads to distress selling and to
2. Contraction of the money supply, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of the money supply and its velocity, precipitated by distress selling, causes
3. A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
4. A still greater fall in the net worths of business, precipitating bankruptcies and
5. A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make
6. A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
7. pessimism and loss of confidence, which in turn lead to
8. Hoarding and slowing down still more the velocity of circulation.

   The above eight changes cause

9. Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

— (Fisher 1933)

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

[HousePriceMania]

34 minutes ago, Heart's Ease said:

I had noticed Melissa Lawford's name on the byline of quite a few bearfood property pieces a few days ago. I guess the sub editors write the headlines.

Not stalking but note from her Twitter (which is 95% usual journo) that she was living in a Brixton houseshare in 2020. She also posted this tweet recently:

Melissa seem to have gone from full on bull to bear  in the space of 4 weeks.

This is 6 months after moving out to the shires and buying a massively over priced house.

[HousePriceMania]

5 hours ago, JoeDavola said:

Reminder that there was a 50% drop in NI between 07 and 12, but I think the governments attitude has changed massively from even 10 years ago, as you say it’ll be bailouts all round spreading the cost of the mistakes of some across the many.

You think the tory bankers will bail out the people ?

[Don Coglione]

23 minutes ago, Wight Flight said:

For those that don't remember 2008 (or don't think it happened)

https://www.rightmove.co.uk/house-prices/po30/brickfield-close.html

Interesting little development sold about then. Anyone that bought new took a good 10 years to get back to the paid price, some even longer.

'You can't go wrong with houses'

Check out the losses on some of these bad boys:

https://www.rightmove.co.uk/house-prices/rg21/alencon-link.html?page=1

[JoeDavola]

1 hour ago, Frank Hovis said:

It could be just another generation of journalists coming through.

The previous generation were all homeowners with BtL portfolios; the new generation are probably renting off them and are so not wedded to the standard journalistic doctrine that house price rises = good news!

Though the crash will only become baked in when we start seeing such stories given prominence in the Express.

Thats an excellent point that so many of the greatest beneficeries of HPI will likely be retiring over the next decade so there should be less of an appetite for anyone under 40 (or really 50 by then) to sing the "isn't HPI wonderful!" tune.

[sancho panza]

1 hour ago, Herby said:

Not sure if this is bad reporting, or they've got inside a knowledge? Where the heck did 4.62% base rate come from by the end of the year?

https://www.cityam.com/homeowners-look-to-flog-properties-as-uk-house-price-growth-slows/

 

4.62% would crash what's left of the economy.

1 hour ago, Frank Hovis said:

 

It could be just another generation of journalists coming through.

The previous generation were all homeowners with BtL portfolios; the new generation are probably renting off them and are so not wedded to the standard journalistic doctrine that house price rises = good news!

Though the crash will only become baked in when we start seeing such stories given prominence in the Express.

and @Heart's Ease

My younger collegues-NHS- at work fall into 4 categories on housing-and I'm tlaking newly qualified parmedics so decent job.

1) live with parents

2) HMO

3) overpriced rental houseshare

4) 35 year mortgage.

A lot see this through very different glasses to their parents.

[JoeDavola]

57 minutes ago, Boon said:

Obvious question is where are these homeowners going to go?

 

47 minutes ago, Frank Hovis said:

Rented flat, houseshare, static caravan, park lodge.

 

Hovis got there before me...there is a twitter account that's been running for a couple of years that is tracing the increidible increase in awful slum housing in Belfast - either terraces divided up into apartments so small they don't look legal, or 5 bed HMO's where they're looking as much for one room as you'd have paid for a small one bed flat 5-10 years ago.

The vultures are waiting, and their end game assuming you don't have children to bargain with the state with is for you to rent a room in a house with a bunch of strangers.

Bearing in mind that you'll be competing with migrants who don't need the luxury of actually having their own room - 5+ years ago my mate saw 3 fully grown indian men sleeping on a matress on the ground of the living room of a one bed flat opposite him, and the amount of immigration has exploded since then.

If you are a minimum wage earner with no partner or kids, renting a room in an HMO will likely have been your only choice for housing for the last decade or so anyway.

Edited July 6, 2022 by JoeDavola

[Boon]

Ah yeah, I get that but someone moving out due to divorce is a bit of a disorderly exit isn't it? Those happen all the time. 

HMO hasn't recently turned dire, as far as I can tell the type of sharing where the house is divvied up between strangers has never been nice. Admittedly there are more of them and of course, more expensive.

What I mean is the average family who think 'shit, prices are gonna be down 10% in a year, I better sell' are not gonna be that common, and in most cases would just buy another home, porting their mortgage.

I don't regard that as the type of selling that is that meaningful. Maybe in the future you could see stuff like people badly wanting to sell but face being kicked back onto the rental market because of negative equity, or absolutely needing to sell because the mortgage reverts to SVR and they cannot afford even a new fix - which could be around 4% if interest rates get to 2.75%.  I think that would be the type of selling that is headline worthy.

[JoeDavola]

11 minutes ago, Boon said:

Ah yeah, I get that but someone moving out due to divorce is a bit of a disorderly exit isn't it? Those happen all the time.

My mate bought a house a year or so ago that came on because of a divorce.

Absolutely gorgeous detached house, in the poshest part of that particular town. Next door is a GP.

Anyway the couple who divorced have gone from one of the nicest houses in the town, to renting a tiny council house each in the dodgiest estate in the area. It must be very difficult to accept such a huge drop in your quality of life like that.

[Herby]

10 minutes ago, JoeDavola said:

My mate bought a house a year or so ago that came on because of a divorce.

Absolutely gorgeous detached house, in the poshest part of that particular town. Next door is a GP.

Anyway the couple who divorced have gone from one of the nicest houses in the town, to renting a tiny council house each in the dodgiest estate in the area. It must be very difficult to accept such a huge drop in your quality of life like that.

With the advent of no-fault divorce in April 2022, and apparently it takes 7 to 10 months to get two finality, that could be an increase in ex-family homes on the market from November or December onwards.

It may also put pressure on smaller places to rent or buy.

https://www.family-lawfirm.co.uk/divorce/no-fault-divorce-uk/

On 6 April 2022, no fault divorce was introduced in England and Wales. This is part of a number of changes to UK divorce law brought in by the Divorce, Dissolution and Separation Act 2020, which were effective from this date.

There is now a period of reflection – a minimum of 20 weeks – from when the application for divorce is made to when a Conditional Order can be made. This provides a period of reflection for the parties to consider their decision.

6 weeks later, the Final Order will be made.

In total, therefore, a no fault divorce will take around 7 – 10 months.

 

[Axeman123]

42 minutes ago, JoeDavola said:

It must be very difficult to accept such a huge drop in your quality of life like that.

Divorce is one of the most destructive things a family can do to itself, especially financially. I have a similar story of couple that went from a detached house in a village, to a town centre one-bed flat and the son-in-law's spare room respectively.

[HousePriceMania]

We've gone from, prices will go up, prices will go up a bit less quickly, prices wont fall, prices might fall a bit, prices might fall 5%

 

All in the space of a week.

 

Now we get the 4 states of greif...I mean collapsing house prices...same thing really

 

https://www.standard.co.uk/business/uk-stage-three-property-housing-market-downturn-b1010290.html

[haroldshand]

4 hours ago, Frank Hovis said:

 

It could be just another generation of journalists coming through.

The previous generation were all homeowners with BtL portfolios; the new generation are probably renting off them and are so not wedded to the standard journalistic doctrine that house price rises = good news!

Though the crash will only become baked in when we start seeing such stories given prominence in the Express.

No amazingly this was by Melissa about a big a property ramper as you could get

[haroldshand]

3 hours ago, Boon said:

Obvious question is where are these homeowners going to go?

Two points there I could off the top of my head  give a long list of people where that is not an issue in todays Britain, 2nd home owners, stressed landlords(massive numbers), Chinese investors, mothballed property, downsizing(more so in a cost of living crisis)  and I am sure there are plenty of others 

Second point is that so many people see their property as nothing but something to brag about financially and see it purely as an investment, sleeping on their mate Bobs sofa is fine by him as long as he keeps those gains.

Thats enough to start a snowball effect when a rush to the exit starts

[haroldshand]

3 hours ago, King Penda said:

The Bank of England claims people can afford to pay higher mortgages has rates increase the guy at Lloyd’s says hold my pint to that .

 

Fuck me..

That really is truly shocking to me, I sometimes think things are far worse than I thought, maybe I am cushioned by Village life too much. So many people must be living in fear constantly. I noticed many of you post are self deprecating KP, wrongly IMO, sounds like you are doing far better than most and you than you give  credit to yourself

Edited July 6, 2022 by haroldshand