Property crash, just maybe it really is different this time

[Boon]

Agree

'Cost of living crisis' seems to have been a recent addition in the news in the last few months. 

But I don't think it's that difficult to go to different places and wonder why that is. Weekends I pass posh restaurants, 'cool' hangouts, no shortage of punters even though their prices have gone up (again).

To me just points to a widening inequality in society.

[King Penda]

16 hours ago, spygirl said:

Snooze you loose ....

They have a model.

The model does not work.

They are coming round to the fact theyve fucked up. A lot.

It will be very painful, in terms on the dumb leveraged.

IO mortgage esp BTL are fucked.

 

 

I might foward that news to my mate in Benidorm he ows 83k on his interest only house and his moaning his bag off about his morgage going up

[haroldshand]

2 hours ago, Democorruptcy said:

Almost £1 trillion of savings is sitting in easy access savings, according to the latest bank of England figures,

https://www.thisismoney.co.uk/money/saving/article-10980341/Best-savings-rates-Santander-boosts-rates-big-banks-follow.html

I gave this a little thought and when you really think about UK  personal debt accounts for £2 Trillion, public debt is also £2 Trillion along with all the pension debt that I don't full understand yet but eclipses both personal and public debt. Then you can be sure that most of that £1 Trillion savings  is in the top 10% wealthiest  accounts, and if someone told me 80% plus of it is in their accounts I would not be surprised.

Even including that top 10% richest  this country is very much in the red and all based on an illusion of a very high valued property market which would collapse if only 5% tried to cash out at the same time

[Noallegiance]

1 hour ago, haroldshand said:

P.S   Off this Topic     Halifax up 1% today, I seriously laughed, who the hell has decided that now is the right time to pay historical highs for a house

There's a fella in my office who bought a few months ago.

[Democorruptcy]

31 minutes ago, haroldshand said:

I gave this a little thought and when you really think about UK  personal debt accounts for £2 Trillion, public debt is also £2 Trillion along with all the pension debt that I don't full understand yet but eclipses both personal and public debt. Then you can be sure that most of that £1 Trillion savings  is in the top 10% wealthiest  accounts, and if someone told me 80% plus of it is in their accounts I would not be surprised.

Even including that top 10% richest  this country is very much in the red and all based on an illusion of a very high valued property market which would collapse if only 5% tried to cash out at the same time

I doubt that the top 10% have 80% of the easy access savings, losing so much value against inflation. I think you are underestimating how many houses are mortgage free and how few actually have a mortgage. With no mortgage or rent to pay people accumulate cash.

[Bus Stop Boxer]

Patma spewing out lots of re-availables in last few days. Nth Dorset.

[Democorruptcy]

21 hours ago, Transistor Man said:

I'm from Anglesey originally. Those prices are incredible, 

Another £600k+ today:

https://www.rightmove.co.uk/properties/124747349#/?channel=RES_BUY

 

[Noallegiance]

57 minutes ago, Democorruptcy said:

I doubt that the top 10% have 80% of the easy access savings, losing so much value against inflation. I think you are underestimating how many houses are mortgage free and how few actually have a mortgage. With no mortgage or rent to pay people accumulate cash.

All the more reason to let the housing market burn.

[Napoleon Dynamite]

3 hours ago, haroldshand said:

P.S   Off this Topic     Halifax up 1% today, I seriously laughed, who the hell has decided that now is the right time to pay historical highs for a house

I'm selling a probate and have accepted a silly offer on it.  30% up in 2 years.  20 odd viewings in a few days.

Guy at work and his Mrs buying.  He's on 35/40K, Mrs is a teacher, so combined income around 70K.  Buying 5 year old 3 bed semi for £280K. Load of competing offers.  Says it's cheaper than renting.

Crazy, but they're still lending to support it.  I think it's top of the market, just hope probate sale goes through and buyers don't get cold feet.

[With a crooked smile]

32 minutes ago, Napoleon Dynamite said:

I'm selling a probate and have accepted a silly offer on it.  30% up in 2 years

Thats a very good result. Out of interest where abouts in the country is this and what type of property is it?

[Napoleon Dynamite]

28 minutes ago, With a crooked smile said:

Thats a very good result. Out of interest where abouts in the country is this and what type of property is it?

Stockport (SK8). 3 Bed Detached. Crazy round here. Low volumes & high prices.

Seems like there's 2 tier economy at the moment.  One set of people suffering, the other prospering.  But with energy bills and interest rates surely everybody will be suffering soon?

[sancho panza]

3 hours ago, haroldshand said:

I gave this a little thought and when you really think about UK  personal debt accounts for £2 Trillion, public debt is also £2 Trillion along with all the pension debt that I don't full understand yet but eclipses both personal and public debt. Then you can be sure that most of that £1 Trillion savings  is in the top 10% wealthiest  accounts, and if someone told me 80% plus of it is in their accounts I would not be surprised.

Even including that top 10% richest  this country is very much in the red and all based on an illusion of a very high valued property market which would collapse if only 5% tried to cash out at the same time

I've heard various quotes circa 70% of UK private wealth tied up in housing.When you can buy BP at £3.80 .....???

Every man and his dog is stacked up in it.

I also hear politicians saying we're one of the richest coutnries in the world which tells us all we really need to know about their grip on reality.

 

Edited July 7, 2022 by sancho panza

[haroldshand]

4 hours ago, Democorruptcy said:

I doubt that the top 10% have 80% of the easy access savings, losing so much value against inflation. I think you are underestimating how many houses are mortgage free and how few actually have a mortgage. With no mortgage or rent to pay people accumulate cash.

I do know that more than 50% of UK property is mortgage free, just leads me to believe that a sizable minority are holding a lot of debt

[haroldshand]

8 hours ago, HousePriceMania said:

People are buying before the mortgage rates go up and they can't afford to pay these prices.  The MSM have pushed this message for a couple of months now.

What we have are top 10% earners in the country thinking that they need to rush to buy bottom 10% housing because they are going to miss out, they dont seem to see the other side of the equation.

I think this is symptomatic of the peak bubble mania.

The amount of times I have heard when asking why the hell have prices have shot up again and I hear "Oh That's because..."

The cost of living crisis is not affecting  me in the least but I just want to witness at last and after 100's of false dawns that prices are falling and I won't truly believe it until it's in black and white.

So many times property inflation has survived a crisis 

[Ina]

Just back from drinks with a big York estate agent.  He said in the last 2 weeks the tide has turned.  It will pop big time.  He’s always been a bull in the past.

[Loki]

25 minutes ago, Ina said:

Just back from drinks with a big York estate agent.  He said in the last 2 weeks the tide has turned.  It will pop big time.  He’s always been a bull in the past.

[HousePriceMania]

59 minutes ago, Ina said:

Just back from drinks with a big York estate agent.  He said in the last 2 weeks the tide has turned.  It will pop big time.  He’s always been a bull in the past.

Sorry to hear that.

Not that it's going to pop, that you know a 2nd hand house salesman.

[Stuey]

9 hours ago, Ina said:

Just back from drinks with a big York estate agent.  He said in the last 2 weeks the tide has turned.  It will pop big time.  He’s always been a bull in the past.

You can tell this from the fact Sleepy Joe @JoeDavola has started putting bids in...

[JoeDavola]

11 hours ago, Ina said:

Just back from drinks with a big York estate agent.  He said in the last 2 weeks the tide has turned.  It will pop big time.  He’s always been a bull in the past.

Turned in what way?

I’d be interested to know what the ‘start’ of a crash looks like from an EA perspective.

If there’s a crash it will be interesting to see how long from top to bottom … last NI crash was 08-13 50% drops.

[JoeDavola]

18 hours ago, Napoleon Dynamite said:

I'm selling a probate and have accepted a silly offer on it.  30% up in 2 years.  20 odd viewings in a few days.

Guy at work and his Mrs buying.  He's on 35/40K, Mrs is a teacher, so combined income around 70K.  Buying 5 year old 3 bed semi for £280K. Load of competing offers.  Says it's cheaper than renting.

Crazy, but they're still lending to support it.  I think it's top of the market, just hope probate sale goes through and buyers don't get cold feet.

Yeah there’s several parts of Belfast where a semi is £280k which is too much imo.

Heck there’s some parts where the semis are getting bud up to 415k which is insane.

[JoeDavola]

17 hours ago, Napoleon Dynamite said:

Stockport (SK8). 3 Bed Detached. Crazy round here. Low volumes & high prices.

Seems like there's 2 tier economy at the moment.  One set of people suffering, the other prospering.  But with energy bills and interest rates surely everybody will be suffering soon?

Yes I’m getting the same feeling in NI regarding the two tiers.

I think there is also a LOT of cash out there still looking for a ‘home’ - there’s a hell of a lot of cash buyers out there from anecdotes I’m hearing.

So even if IR’s do increase I wonder will houses still sell it’ll just be the very rich buying them.

[mh9000]

18 hours ago, Napoleon Dynamite said:

I'm selling a probate and have accepted a silly offer on it.  30% up in 2 years.  20 odd viewings in a few days.

Guy at work and his Mrs buying.  He's on 35/40K, Mrs is a teacher, so combined income around 70K.  Buying 5 year old 3 bed semi for £280K. Load of competing offers.  Says it's cheaper than renting.

Crazy, but they're still lending to support it.  I think it's top of the market, just hope probate sale goes through and buyers don't get cold feet.

Playing devils advocate, believe me I certainly want a drop in prices too,  is that so outrageous?

Total income of 70k, could borrow around 315k so 280k minus whatever deposit they have, presumably 20% seems fairly comfortable to me? Can you blame them if it’s cheaper than renting. Just looking for counter arguments for a crash/drop.

Guess the crazy part is up 30% in 2 years though!

[Boon]

TBH it only doesn't seem mad when compared to Southern prices. And a modest 3 bed semi is probably in line for those type of jobs - not min wage, but also not high earners either.

But consider that if these guys were renting before saving a deposit might have taken a while. Maybe assume the mortgage costs £1k a month.

Could this couple afford to run their household on one income? Probably no. So what happens if they want to have kids? Actually that is a rhetorical question as I have heard of a couple like this.... they did manage on one income but money was extremely tight, I recall them not taking any overseas holidays at all and having to take loans for big expenses. Eventually the mum went back to work part-time when the kids went to school.

So sure it might be affordable, but you'll be a slave to the house unless one of the people gets a big pay-rise, which is not that likely in teaching.

[mh9000]

Yeah I was comparing it to southern prices, I’m in the north as well. Even in 2020 it could’ve been ~215k if it’s 30% up in 2 years and pretty sure their income won’t have changed so actually that is nuts!

If it’s “cheaper than renting” for them surely still would be significant demand though as I guess that would be fairly a common scenario.

Not sure what the alternative would be for a couple in that position? wait for a crash and hope to time somewhere near the bottom and hope the madness doesn’t get any worse?
 

[Boon]

Thing is I think some parts of the north have been cheap for some time, you could argue that some places are still cheap.

If that couple had bought a few years back at -30% it probably would be more comfortable on one wage. I am sure quite consistently down the ages that this was how it used to be - one parent worked and could service a mortgage even on a standard job while one looked after the kids.

I do also think some places are more prone to price distortion than others, London is the standout example but I guess anywhere where demand exceeds supply is fair game. But there are a few cities which are big and don't suffer as much from this.

Here property prices are driven more by rent - the function of maximum affordability and mortgage costs equals property worth. I would guess that this is why prices topped out in London some years back because these things have not improved (the pandemic boost driven by increased affordability like stamp duty breaks).

Alternative for the couple would be to wait, if you don't want to wait: move to a cheaper area, or compromise on the type of property, either by less bedrooms or a flat. 

Trouble is a lot of people have an innate need to keep up with others and buy the most expensive thing they can afford, right now. That's been the beauty behind the schemes like HTB/SO.

Edited July 8, 2022 by Boon