Property crash, just maybe it really is different this time

[Long time lurking]

 

[gibbon]

3 hours ago, spygirl said:

Nope.

You'll notice the absence of BD n Mirpuri shitholers since minimum earning requirement.

Dont meet the hurdle.

The abduls doing deliveroo end to be Indians as they can manage the low he student Visa hurdle. Most bd n mirpuri fail that, being illiterate grunts.

 

Well that's categorically bollocks, I started doing deliveroo in lockdown for some pocket money and exercise. I could count on one hand the Indians I met doing it. Most of them are Brazilians, North Africans and Middle Easterners. 

9 hours ago, tank said:

I look at some of the flats I've owned in places like Lanarkshire and Lancashire - within ten miles of two large regional cities - and I could have easily BTLed them for 8-10% yield. Not as much capital appreciation compared to the cities but a good rental return.

I didn't want the hassle, so I just sold up when I moved on but it's easy to get a solid return from BTL in these regions as long as you don't get greedy and over leverage. The moment you desperately start chasing rent, the quality of tenant drops and you end up with squatters.

This rule doesn't apply to slumlords in the usual areas e.g. Ahmed in Bradford can obviously cram 8/10 half cousins from Karachi into a 2 bed flat/terrace and put them to work via the gig economy and money laundering fronts. The government and home office are more than happy to issue the visas. Over a million in the last year alone.

We might start seeing the housing market slow when yields drop to 3-4%, But while people are desperate to find anywhere to live and while the government continues to empty the entirety of the 3rd world here I don't see that happening any time soon. Yes rates will go up but landlords will just increase their rents to cover it and turn more and more housing stock into tenements when as you say Ahmed sticks all his inbred cousins into a 2 bed house. 

Every other day on the local reddit group there's someone begging to find a place to live, saying they've spent weeks/months looking and contacted hundreds of lettings agents, look at the one below, when a pair of doctors struggled to find anywhere you know you're fucked:

[Boon]

I think they have kind of left out some details.

There is a massive BTR apartment complex in Bristol near the hospital, this is just one EA alone and the reduced dates hardly imply they are being snapped up immediately. I don't think many of these BTR places price themselves cheap because profit maximisation and full occupancy are quite separate things. If they did achieve the latter it is almost certain they have priced too cheaply. 

https://www.rightmove.co.uk/property-to-rent/find/Savills-Lettings/Castle-Park-View.html?locationIdentifier=BRANCH^244091&propertyStatus=all&includeLetAgreed=true&_includeLetAgreed=on

Doesn't say what the other person does, so guessing that overall affordabilty or refusal to pay that rate is the key. If they come from London it must be pretty galling to have to pay what would be an increase, as £1,750 is above what something in outer London might go for. 

[Boon]

Having searched the thread it is exactly as I said:

No doubt they can get away with charging £1750 because of the lack of comparables in locations.

So not really desperate in that sense of the word are they? Because it is guaranteed they could get a flat at that place, it is just that it costs a lot of money.

[gibbon]

10 minutes ago, Boon said:

I think they have kind of left out some details.

There is a massive BTR apartment complex in Bristol near the hospital, this is just one EA alone and the reduced dates hardly imply they are being snapped up immediately. I don't think many of these BTR places price themselves cheap because profit maximisation and full occupancy are quite separate things. If they did achieve the latter it is almost certain they have priced too cheaply. 

https://www.rightmove.co.uk/property-to-rent/find/Savills-Lettings/Castle-Park-View.html?locationIdentifier=BRANCH^244091&propertyStatus=all&includeLetAgreed=true&_includeLetAgreed=on

Doesn't say what the other person does, so guessing that overall affordabilty or refusal to pay that rate is the key. If they come from London it must be pretty galling to have to pay what would be an increase, as £1,750 is above what something in outer London might go for. 

 

Bristol rentals are less affordable than London these days, a central(ish) studio flat here will set you back £900-£1000 p/m. Least in London you've got loads of high paying jobs to cover the insane rent. We've been "shoreditched".

Seen that BTR place, can't really get my head around the whole concept. Just seems another bung to developers to build more shit box flats.

[HousePriceMania]

1 hour ago, Long time lurking said:

 

So if inflation keeps going, could be 4% total by the end of the year.

Wonder when the rush to sell begins....

[JoeDavola]

4 minutes ago, gibbon said:

Bristol rentals are less affordable than London these days, a central(ish) studio flat here will set you back £900-£1000

Why?

What is there in Bristol? Is there some amazing arts 'scene' or something that's attracted a bunch of trustafarians?

[gibbon]

6 minutes ago, Boon said:

Having searched the thread it is exactly as I said:

No doubt they can get away with charging £1750 because of the lack of comparables in locations.

So not really desperate in that sense of the word are they? Because it is guaranteed they could get a flat at that place, it is just that it costs a lot of money.

I think it's insane anyones willing to pay anything close to that sort of money to live in this shit hole. They'll be in a 2 bed shit box flat, no offstreet car parking space nor anywhere on the street around there to park it. The park opposite is mostly used to buy and sell drugs and for the local blacks to cache weapons. Still I guess there's loads of coffee shops, a climbing wall, a hammock and a brewdogg so it must be worth it.

[Long time lurking]

1 minute ago, HousePriceMania said:

So if inflation keeps going, could be 4% total by the end of the year.

Wonder when the rush to sell begins....

The US have said to have priced in 175bps over the next two meeting July /August alone ,£ will be under more pressure 

[HousePriceMania]

From the U.S.

 

https://papereconomy.substack.com/p/forecasting-the-coming-housing-collapse

[Boon]

9 minutes ago, gibbon said:

 

Bristol rentals are less affordable than London these days, a central(ish) studio flat here will set you back £900-£1000 p/m. Least in London you've got loads of high paying jobs to cover the insane rent. We've been "shoreditched".

Seen that BTR place, can't really get my head around the whole concept. Just seems another bung to developers to build more shit box flats.

Think it is more a function of supply and demand.

Brighton is the same, layout of that place means very few new flats unless north of the station. 

In London there are blocks of new flats on every street. I've seen new build flats trying to be rented at the same price as when they were built 7 or 8 years ago...  that's because there are always new ones coming up which are almost the same.

What is going up are the cheaper rentals, as older contracts expire they will be re-let at a higher rate. Thus the average rent paid is higher. 

I can understand BTR - the overall yield must be pretty good and it makes sense to build them at the time. But with interest rates going up then (IMO) cheaper ones will become more common. Most so far are of the 'luxury' type.

[gibbon]

19 minutes ago, JoeDavola said:

Why?

What is there in Bristol? Is there some amazing arts 'scene' or something that's attracted a bunch of trustafarians?

The Guardian was ramping it for years since the early 2000s because it was cheap, gritty, edgy socialist paradise full of recreational druggies.

So the home county hipster trustafarians who could no longer afford their pilgrimage to Shoreditch moved here in their thousands bringing with them their BOMAD loans, wanky coffee shops, art installations, popup cup cake shops, craft "bottle shops" etc end result is everything now costs a shit ton including rent and housing. I was in the city of London earlier this year for a few days and I thought the prices for booze, food and everything else seemed pretty reasonable, that's how fucked up Bristol is at the moment. I also got decent polite service in the city (which took me back at first) compared to Bristol where everyone who serves you is a surly cunt.

The art scene is basically endless amounts of graffiti and shit like this everywhere, which no joke is the very centre of Bristol if you put a pin in the map:

Edited July 14, 2022 by gibbon

[tank]

13 hours ago, gibbon said:

Well that's categorically bollocks, I started doing deliveroo in lockdown for some pocket money and exercise. I could count on one hand the Indians I met doing it. Most of them are Brazilians, North Africans and Middle Easterners. 

We might start seeing the housing market slow when yields drop to 3-4%, But while people are desperate to find anywhere to live and while the government continues to empty the entirety of the 3rd world here I don't see that happening any time soon. Yes rates will go up but landlords will just increase their rents to cover it and turn more and more housing stock into tenements when as you say Ahmed sticks all his inbred cousins into a 2 bed house. 

Every other day on the local reddit group there's someone begging to find a place to live, saying they've spent weeks/months looking and contacted hundreds of lettings agents, look at the one below, when a pair of doctors struggled to find anywhere you know you're fucked:

I'm not surprised to learn that, but it's usually the sort of scenario junior doctors with kids face if they get a specialty training post in the Highlands or Cornwall, not a reasonably large city like Bristol. 

Not only is Bristol a magnet for 'failed in London', trust funded Henrys and Harriets, but also the third sector non jobs that come with a lot of these wankers. Hence an influx of 'clients' - i.e. third world immigrants, 'refugees' and wrong uns booted from London social housing.

With one million a year plus now  flooding in, plus millions of illegal overstayers, the situation is only going to get a lot worse. Like you, I can't see how that level of extreme population growth tallies with significant depreciation of house prices. Maybe a slight dip in and around London, but big rises elsewhere to 'level it up'. 

Edited July 14, 2022 by tank

[JoeDavola]

18 hours ago, gibbon said:

The Guardian was ramping it for years since the early 2000s because it was cheap, gritty, edgy socialist paradise full of recreational druggies.

So the home county hipster trustafarians who could no longer afford their pilgrimage to Shoreditch moved here in their thousands bringing with them their BOMAD loans, wanky coffee shops, art installations, popup cup cake shops, craft "bottle shops" etc end result is everything now costs a shit ton including rent and housing. I was in the city of London earlier this year for a few days and I thought the prices for booze, food and everything else seemed pretty reasonable, that's how fucked up Bristol is at the moment. I also got decent polite service in the city (which took me back at first) compared to Bristol where everyone who serves you is a surly cunt.

The art scene is basically endless amounts of graffiti and shit like this everywhere, which no joke is the very centre of Bristol if you put a pin in the map:

Yeah Edinburgh had its fair share of ‘bohemian’ trustafarian ‘artists’ when I used to go there, but for them to make up most of a city sounds awful.

[haroldshand]

22 hours ago, HousePriceMania said:

Wonder when the rush to sell begins....

Don't we all after so many years and some decades.

Still zero sign yet that prices are in anyway stressed, in fact this week it has started looking more  optimistic for the housing market after a previous week of bearish overload.

The UK property defies all logic but defy it does

[Boon]

The factors involved in house buying have changed haven't they? They aren't going to revert back to 2000.

For instance most people don't buy on 1 income now. Rarer that one parent is a full-time, unless the other is extremely well paid. 

Benefits offer some kind of floor in the market as a minimum income achievable. In places where prices are too expensive you get the practice of carving houses into flats so it does become profitable.

Yields in some parts of the country are higher than others. Some places are still pretty affordable.

I do think focusing on the overall figure is of less use, because nobody buys at that figure and your local market will most likely have differing trends.

London already has some strong falls, some flats 20% off peak, not much of a stretch to see another 10-20% going if rates are much higher as their use is limited for familys and for those on benefits. Will there be forced sellers here? Hasn't been many of yet. Most are shielded from interest rate rises because of the fix, and energy prices have just kicked in. So naturally that number should increase the more time goes by like this.

Offsetting that is gains in cheaper places. Those places are way more likely to be sold and hence featured in the stats, hence boosting the national indexes. So to the untrained eye it will appear that there was no house price correction, but in reality there will be in certain parts. 

[Democorruptcy]

Rents up - demand up, supply down.

Quote

 

The average advertised rent outside London is 11.8% higher than a year ago, while in the capital it is up by 15.8%, according to the property website Rightmove.

The rise in housing costs is piling more pressure on households already feeling the strain of the cost of living crisis, and has been largely blamed on demand for rental properties greatly outstripping supply, leading to intense competition among tenants for what is available. Rising interest rates are also feeding through to tenants, with many landlords on tracker rates.

During the period from 1 April to 30 June, the average advertised asking rent outside London hit another new record of £1,126 a calendar month, Rightmove said. This figure has jumped by 19% – or £177 – in the two years since the pandemic started.

In London there was also a new record average advertised rent of £2,257, and the website said the 15.8% annual rate of growth was “the highest ever annual rate of any region”.

However, some locations have seen even bigger hikes. Rightmove’s table of rental price hotspots was topped by Manchester, where the average asking rent is up 23.4% in a year – from £913 in the second quarter of 2021 to £1,127 in the same period this year.

In second place was Chatham in Kent, where the equivalent increase was 21.4%, while in third place was Liverpool, which saw a 19.4% rise.

Three seaside towns – Weymouth in Dorset, Torquay in Devon and Margate in Kent – saw above-average annual increases of 19.1%, 18% and 16.9% respectively.

In the wake of the pandemic, many tenants are continuing to re-evaluate what they want from a home and where they want to live. Some have decided they want to live in the suburbs, the countryside or by the coast, which may help explain why some of the biggest rent rises have been recorded in many seaside towns and in parts of Wales.

The figures provide the latest evidence of how the London’s rental market is experiencing a dramatic bounceback. A few months into the pandemic it was being reported that private rents in some parts of London had tumbled by up to 20%, with landlords forced to slash what they charged as tenants quit the capital, international student numbers plummeted and companies put relocation plans on hold.

But the return to the office, more overseas students looking for a place to live and companies moving or expanding have all fired up the market.

Richard Davies, managing director of estate agent Chestertons, said: “Those who secured a property at a discounted rental rate during the pandemic are keen to hold on to this deal as long as possible, particularly in the face of rising living costs.”

He added that the various factors at play had “created an extremely competitive market for tenants, where many offer landlords over asking price in order to secure a property”.

Rightmove said the stock of available rental properties was down 26% compared with last year’s levels, while demand was up 6%.

It added that average monthly rental payments were now 40% higher than they were 10 years ago, while typical mortgage payments for the same properties were up 13%.

An estimated 11 million people rent privately in England alone, and the sector has doubled in size during the past 20 years.

https://www.hl.co.uk/news/2022/7/14/private-rents-in-uk-reach-record-highs-with-20-rises-in-manchester

 

 

[Sugarlips]

The Oz property market psychology summed up in one anecdote (posted elsewhere today). What could possibly go wrong?

I've just pulled the trigger. Sorrento, 300m from beach and Hillary's boat harbour. 700+sqm, 5 bed house, ~$1.4m. It should rent for $1,000 p.w. 

It ticks a lot of boxes. I feel like it's an 8/10. I really would have liked to wait for a 10/10. However, my finance approval was expiring, and under new assessment with my already very large debt load (which can be handled fine) I wouldn't have qualified. So pulled the trigger. 

Thanks everyone here for all the great insights on Perth!

https://reiwa.com.au/3-lacepede-drive-sorrento-4607155/

Edited July 15, 2022 by Sugarlips

[JoeDavola]

38 minutes ago, Boon said:

The factors involved in house buying have changed haven't they? They aren't going to revert back to 2000.

I think as well as dual incomes, there is also the factor of intergenerational wealth often staying in housing.

My parents generation were the first where most bought their house, their parents generation often rented, so many of them inherited nothing.

Now many people will inherit part of the HPI of one or even two generations, and I think in many cases will plough all that money straight back into housing.

There is also a further contraction of supply via the migrant ghettos that are cropping up across the UK, these used to be for working class folk or even starter homes for middle class, but you will get white flight from these areas and increased competition to live in areas that are 'expensive enough' where this problem isn't visible.

It's far more complex than just 'average house price'.

Edited July 15, 2022 by JoeDavola

[haroldshand]

On 14/07/2022 at 10:43, gibbon said:

We might start seeing the housing market slow when yields drop to 3-4%, But while people are desperate to find anywhere to live and while the government continues to empty the entirety of the 3rd world here I don't see that happening any time soon. Yes rates will go up but landlords will just increase their rents to cover it and turn more and more housing stock into tenements when as you say Ahmed sticks all his inbred cousins into a 2 bed house. 

Every other day on the local reddit group there's someone begging to find a place to live, saying they've spent weeks/months looking and contacted hundreds of lettings agents, look at the one below, when a pair of doctors struggled to find anywhere you know you're fucked:

Yep I think you highlight many of my concerns and I refuse at the moment to open the champagne and toast the incoming property crash though in the last few weeks I have edged towards ever so slightly there being a property price correction next year. But anyone who has the slightest interest with my house price predictions knows they are up and down like a whores draws.

Too many people yet again are getting ahead of themselves with their predictions of a property crash and yet again totally underestimating the resilience of buyers and those who already own property. One thing I have noticed above all else in the last 20 years is that someone very average might well have a fuck off £250,000 mortgage and along with that he might also have £65,000 on loans and credit cards but if his "house value" is £400,000 then everything in his world is just dandy and with the illusion IMO that he thinks should this all go wrong he is covered financially along with a nest egg.

Don't get me wrong this will one day go badly wrong whether it's next year or in a decade and they will write books about it well into the future, mainly on the subject of illusionary wealth and the psychology of the people taken in by it.

[Democorruptcy]

Welsh mob thrilled about the extra income from LTT to gift on wages for the public sector. Not long now until all the houses are public sector owned, holiday lets or public sector owned holiday lets.

Quote

 

• a total of 68,810 transactions for LTT
• £414.3 million tax due for sales and leases of property and land in Wales
• £283.7 million tax due for residential transactions, including £103.9 million additional revenue raised from higher rates

Despite the challenges of coronavirus (COVID-19), we’ve reported that we’ve raised more than £400 million in tax revenue in the last financial year to support public services, such as the NHS and schools, in communities across Wales.

https://gov.wales/new-data-published-land-transaction-tax-across-wales

 

 

[wherebee]

17 hours ago, Sugarlips said:

The Oz property market psychology summed up in one anecdote (posted elsewhere today). What could possibly go wrong?

I've just pulled the trigger. Sorrento, 300m from beach and Hillary's boat harbour. 700+sqm, 5 bed house, ~$1.4m. It should rent for $1,000 p.w. 

It ticks a lot of boxes. I feel like it's an 8/10. I really would have liked to wait for a 10/10. However, my finance approval was expiring, and under new assessment with my already very large debt load (which can be handled fine) I wouldn't have qualified. So pulled the trigger. 

Thanks everyone here for all the great insights on Perth!

https://reiwa.com.au/3-lacepede-drive-sorrento-4607155/

If 1.4M is not a lot to your total wealth, and you can buy in cash, that's a good family home close to lots of things, and unlikely to turn to complete shit rapidly.  yes, it's silly money, but you have to live somewhere.

However, if you are borrowing 1.2M of that 1.4 and the biggest fix you could get is 2 years, you are going to get your face ripped off.

[Stuey]

2 hours ago, wherebee said:

If 1.4M is not a lot to your total wealth, and you can buy in cash, that's a good family home close to lots of things, and unlikely to turn to complete shit rapidly.  yes, it's silly money, but you have to live somewhere.

However, if you are borrowing 1.2M of that 1.4 and the biggest fix you could get is 2 years, you are going to get your face ripped off.

I'd have gone for the proper Sorrento. Limoncello and even the Italians are doing good CRAFT now. 

[Sugarlips]

2 hours ago, wherebee said:

If 1.4M is not a lot to your total wealth, and you can buy in cash, that's a good family home close to lots of things, and unlikely to turn to complete shit rapidly.  yes, it's silly money, but you have to live somewhere.

However, if you are borrowing 1.2M of that 1.4 and the biggest fix you could get is 2 years, you are going to get your face ripped off.

Yes no issue with the property per se except they admit they’ve panic bought it and would’ve liked a better one and it would’ve been $900k 2 years ago.

Main concern is they seemingly no longer qualify to borrow so much as servicing tightens with each rate increase plus they admit this is on top of an ‘already very large debt load’

Each to their own but sounds pretty aggressive in the current climate to this old dosbodder! 

[Boon]

If they have mentioned the rental value it doesn't sound like a place to live in, more as an investment. And maybe more of a holiday let rather than a long-term one if you are quoting price per week.

The yield isn't very good straight up but after voids, maintenance and tax becomes terrible.

Truth is many people had also done the same over the years but seemed to look smart because of capital appreciation. Not sure where that's gonna come from if rates don't go back to 0.