Property crash, just maybe it really is different this time

[With a crooked smile]

1 minute ago, belfastchild said:

Neighbour is the same (not HSBC), told me yesterday that they are starting to exclude bank earnings from NHS applicants. Nurses etc who use their days off to work shift for agencies. Was always included in the past, now seen as temporary earnings which arent guaranteed.
If they are excluding those, which are pretty much guaranteed due to shortages etc, then something is up.

I found that sort of statement to be mostly bollocks. I was told the same about RSUs by the mortgage company. Guess what RSUs or in the case of nhs bank hours turn up as cash on your P60. The mortgage company then told me that they would average my earnings based on p60s for the last 3 years. As I'd been getting RSUs for the last 3 years in effect they did lend against them. It'll be the same for nhs staff.

[belfastchild]

1 minute ago, With a crooked smile said:

I found that sort of statement to be mostly bollocks. I was told the same about RSUs by the mortgage company. Guess what RSUs or in the case of nhs bank hours turn up as cash on your P60. The mortgage company then told me that they would average my earnings based on p60s for the last 3 years. As I'd been getting RSUs for the last 3 years in effect they did lend against them. It'll be the same for nhs staff.

Just reporting what I was told, payslips are being asked for and asked for them to separate out into full time and bank ones.

[haroldshand]

6 minutes ago, belfastchild said:

Neighbour is the same (not HSBC), told me yesterday that they are starting to exclude bank earnings from NHS applicants. Nurses etc who use their days off to work shift for agencies. Was always included in the past, now seen as temporary earnings which arent guaranteed.
If they are excluding those, which are pretty much guaranteed due to shortages etc, then something is up.

I remember back in the early 1990's having just come of the forces and attending a skillcentre full time for a year and a half and then just getting a job as an electrical improver with my Electrical  I&M Part 1 and 2.  Myself and my then gorgeous girlfriend did not have a pot to piss in besides a deposit for a 3 bedroom Victorian Terrace , it was brilliant.

All that done on a my full wage as an inexperienced sparks and my girlfriends part time wage(she was studying still), I moaned a little back then but I look back now and realise how lucky I was compared to the poor sods today

[Bus Stop Boxer]

Somebody on this thread is getting a little twitchy.

Let England Shake.

[Formerly]

.

Edited July 23, 2022 by Formerly
double post

[Formerly]

42 minutes ago, With a crooked smile said:

I know he has a degree, his wife is a teaching assistant. Yes he's on a good salary. We all are in SaaS. And that's the point really. Lots of people go on about average wage here. The reality is there are plenty of people under 40 that can afford and are buying houses all over the country without government schemes. 

I welcome alternative (or should that be mainstream?) points of view. I was wrong in 2004 about the scale of the forthcoming HPC. Those who said the government wouldn't let it happen were right. I truly underestimated the burden that the government was willing to inflict on future generations.

Having said that you are conflating the circumstances of an individual with the circumstances of plenty.  Averages, by definition, are more representative than exceptions.

I could argue that plenty have bought houses that they cannot afford. If they pay them off then my argument was wrong.

I don't know how this will all pan out, but I do feel than the can has been kicked close to the end of the road now.

My concern is that governments have proven their recklessness. What will they do next?

[haroldshand]

Nationwide data out next week.

If this one doesn't show any kind of downward momentum then that's going to be puzzler for me(yet again), the stress is there if there is  any has to start appearing soon

[haroldshand]

2 minutes ago, Formerly said:

I welcome alternative (or should that be mainstream?) points of view. I was wrong in 2004 about the scale of the forthcoming HPC. Those who said the government wouldn't let it happen were right. I truly underestimated the burden that the government was willing to inflict on future generations.

Having said that you are conflating the circumstances of an individual with the circumstances of plenty.  Averages, by definition, are more representative than exceptions.

I could argue that plenty have bought houses that they cannot afford. If they pay them off then my argument was wrong.

I don't know how this will all pan out, but I do feel than the can has been kicked close to the end of the road now.

My concern is that governments have proven their recklessness. What will they do next?

I personally started taking an interest in all this around 2015 and I know some go back far longer, but back in 2015 the debt I thought/assumed people were taking on was insane and had to be at breaking point. No matter how broken the property market appears to look it never stops shocking you and this time I feel that mass immigration and population is making a massive difference.

If it's not going to start happening in the next few months it is never going to happen IMO

[With a crooked smile]

3 minutes ago, Formerly said:

I welcome alternative (or should that be mainstream?) points of view. I was wrong in 2004 about the scale of the forthcoming HPC. Those who said the government wouldn't let it happen were right. I truly underestimated the burden that the government was willing to inflict on future generations.

Having said that you are conflating the circumstances of an individual with the circumstances of plenty.  Averages, by definition, are more representative than exceptions.

I could argue that plenty have bought houses that they cannot afford. If they pay them off then my argument was wrong.

I don't know how this will all pan out, but I do feel than the can has been kicked close to the end of the road now.

My concern is that governments have proven their recklessness. What will they do next?

Sure I guess one of my points is that averages are largely irrelevant because going forward with continued immigration not everyone will own a house.

Will there be a HPC in the short term 3 ish years? Possibly I doubt prices will go down by much more that 10% due to pent up demand. I also think the hybrid work environment means that cheaper areas of the country will continue to rise due to migration from SE.

[Formerly]

2 minutes ago, haroldshand said:

I personally started taking an interest in all this around 2015 and I know some go back far longer, but back in 2015 the debt I thought/assumed people were taking on was insane and had to be at breaking point. No matter how broken the property market appears to look it never stops shocking you and this time I feel that mass immigration and population is making a massive difference.

If it's not going to start happening in the next few months it is never going to happen IMO

Mostly I agree. Never is a very long timeframe though.

[haroldshand]

1 minute ago, Formerly said:

Mostly I agree. Never is a very long timeframe though.

As I typed it yes I did realise

Anytime soon I should have said

[JohnnyB]

Bit of help here please - this chart means I own the house at the end right? 

[With a crooked smile]

18 minutes ago, JohnnyB said:

Bit of help here please - this chart means I own the house at the end right? 

Yes it does really. It all depends on your appetite for risk. The most recent sales local to  me where someone bought a property 20 odd years ago and sold recently. 

You could have had a very good family home on IO and then downsized once the kids are older and even helped them out with a deposit. 

Many on here are over cautious imo.

[With a crooked smile]

2 hours ago, Bus Stop Boxer said:

Somebody on this thread is getting a little twitchy.

Let England Shake.

Haha just seen what you did there and no not twitchy at all. The twitchy one is the guy you see multiple times a day posting in this thread and running websites constantly monitoring house prices. What a way to live.

I only check in here on this thread one or twice a week. Look at my posting history. I'm more interested in off topic and the state of the nasdaq.

[Frank Hovis]

1 hour ago, haroldshand said:

If it's not going to start happening in the next few months it is never going to happen IMO

 

This inevitably sounds vague but I think that a big reduction, I hesitate to use the word crash, is on the cards but for causes that aren't currently weighing heavily upon the housing market.

Higher interest / mortgage rates may have an effect but that will be more limited than in previosu decades because, as regularly discussed, two decades of cheap money have allowed a lot of the owner occupier housing market to become debt free with many house now purchased for cash.

The causes I would suggest are a related bundle of tax and legislative changes that have begun to make home ownership less attractive and, with the government now desperate for cash whilst being unable to pull much more in from taxing wages and goods because of high energy, food and commodity prices, I can only see this accelerating.

 

The first, and it has been glacier-like in its effect but it is now beginning to bite in earnest, is the removal of tax deductibility for mortgage payments on BTLs.  They are beginning to look like a very stretched and exposed investment; e.g. for this chap with 46 houses each generating an average return of:

Profit after tax £240 per year!

https://www.dosbods.co.uk/topic/8888-how-does-buy-to-let-end/?do=findComment&comment=1602169

There is also the boosting of tenants' rights; both temporarily during the pandemic period and now with the end of no fault evictions.  Removing a difficult tenant or just removinga  tenant becomes very hard indeed.

These combined serve to choke off the demand from BtL investors which has been a significnat factor at the cheaper end of the market.

Then there is taxation of houses.  This comes in four forms: Council Tax, CGT, IHT and for FHL business rates.

The damaging effect of second homes in tourist parts of the country, discussed at length on here, has seen Council Tax levied go from a discounted level, to a full level, to now 400% (CT + 300% premium) in Wales this year with the remainder of the country likely to follow suit.  This is such an easy win for the government as second home owners are unpopular and even punitive levels of tax upon them would be applauded.  

This on top of above-inflation rises in CT across the board - the additional Adult Social Care levy is relatively new and the indivdiual town precepts' have been shooting up (in Cornwall anyway) as the county council divests itself of responsibilities to town councils.

Then there is reform of FHL including AirBnB.  This is another tax turkey ripe for plucking.  Paying for commercial bin collections, paying enhanced business rates, specific taxes upon FHL income.  The money grab will be immense.

CGT is IMHO a big uncollected tax from BtLers and second homers selling up.  The property records are all there and HMRC simply has to set up a team to start trawling those and correlating them with tax returns and the rewards will be immense.  As will the fines and penalty taxes.

 

Then there is IHT.  Whilst an Englishman's home is his castle in a time when pensions are being pushed out to 70 the balance has probably tipped from forebearance of property gains to taxing them.

The current balance exempt from IHT, levied at a swingeing 40%, is £325k plus a further £175k if this includes your house being given to your children or grandchildren.

https://www.gov.uk/inheritance-tax

Now to me that limit doesn't sound very high.  A bog standard terrace in London is £1m, so the inheriting child will be paying £200k in tax and if they don't have that then the house will have to be sold.

There is also, with IHT, "the dog which didn't bark in the night".

If you look at the table of IHT limits it looks like any normal indexed table of limits until you read the first line again.

The threshold has not changed for a massive 17 years.

If you include the house that's £500k rather than £325k but still, no change.

 

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds-and-interest-rates/inheritance-tax-thresholds-and-interest-rates

 

In this period house prices have practically doubled. 

A £400k house left to children, with no other assets, would be charged zero IHT in 2009.

In 2022 that same house would be valued at £800k and would result in an IHT charge of £120k.

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/may2022

 

Consequently the government's take of HPI in the form of IHT levied has risen from about £2.4bn in 2009 to £5.4bn in 2021.

https://www.gov.uk/government/statistics/inheritance-tax-statistics-commentary/inheritance-tax-statistics-commentary#iht-receipts-and-taxpaying-estates

 

 

This is throwing together a lot of disparate elements under the heading "tax" but they all serve to increase the government's take of UK property wealth; slow boiling it so that owning a house becomes more costly every year though most don't realise or notice it because they are looking at their headline value increases. 

This has, I admit, a good while to run yet but as with any area of the economy where the government's take increases year after year there eventually comes a point where home ownership will tip into an outright liability and the market wil then crash.

I saw houses become liabilities in the early to mid 90s in London where people were paying off their mortgages far slower than the value of their houses were falling so that each year their net equity reduced and sometimes became negative.  Owning a house meant that they were becoming poorer with each passing year.

 

At present the housing market is, for the government, the goose that keeps laying the golden tax eggs and it is increasing egg production.

Most home owners only see the value of their home increasing; they don't see the march of the other taxes or the standstill of IHT rates.

 

[haroldshand]

2 hours ago, JohnnyB said:

Bit of help here please - this chart means I own the house at the end right? 

Would not surprise me is their people who actually thought that for real

[haroldshand]

2 hours ago, With a crooked smile said:

Haha just seen what you did there and no not twitchy at all. The twitchy one is the guy you see multiple times a day posting in this thread and running websites constantly monitoring house prices. What a way to live.

I only check in here on this thread one or twice a week. Look at my posting history. I'm more interested in off topic and the state of the nasdaq.

If you are supposed to be getting "twitchy" because of the fear of prices falling soon then I think you are in little danger in the short term

[Hardhat]

No sign of a crash round my way (Hertfordshire). Were looking to buy a 3 bed place and can barely get a viewing. Anything decent value is under offer after 3-4 days, even stuff that I consider overpriced or that needs massive reno is selling. It's a very desirable town, but even so the property market is red hot and nothing is sitting around for long.

[Don Coglione]

On 22/07/2022 at 10:13, HousePriceMania said:

The Isle Of Man is one region of Britain the UKPL tracks but the number of listings are so low it's not worth following...although I am starting to see a trend.

 

 

 

I get the feeling this is significant.

 

https://www.globalwitness.org/en/campaigns/tax-haven-next-door/

Why would people be selling up in a tax haven, anyone have any theories ?

 

Oh dear...

[With a crooked smile]

35 minutes ago, Hardhat said:

No sign of a crash round my way (Hertfordshire). Were looking to buy a 3 bed place and can barely get a viewing. Anything decent value is under offer after 3-4 days, even stuff that I consider overpriced or that needs massive reno is selling. It's a very desirable town, but even so the property market is red hot and nothing is sitting around for long.

Pretty much reflects what I hear at work from people all over the country who are looking to buy. 

[sleepwello'nights]

A couple I know had several viewings when their house was listed at the beginning of July. They accepted an offer £15k above the asking price of £450k on the second day. 

[Hardhat]

It's actually really annoying. We are early 30s, 100k+ household income and large deposit but we literally can't find anything to buy or are instantly outbid. 

However there is very, very little coming on thr market in the town we live in, less than 10 properties transacting a month, so anyone who wants to live here has little choice, which I think explains the mad competition for every property. When you walk around town there are loads of houses having work done/ extensions which I assume is instead of selling up for a bigger place.

Higher prices on lower volume can also be a sign of an impending correction.

Just anecdotal.

[The Grey Man]

I moved to my red neck area of S Manchester about 5 years ago.

Set the local top briefly. After a year several houses were up for sale and this continued.

For ever increasing prices. Decreasing time scale to sale.

Untill about 4 months ago. A nice half done up Edwardian Semi with cellars. I guess a 30 m garden at the back hasn't shifted. 300k. Way below the Zoopla's price orgasmatron site.

Not the complete picture. A cheaper, more manageable house, mid 60's at a guess sold quick. My feeling that was the last though.

No current residents.

[Napoleon Dynamite]

On 23/07/2022 at 08:18, AyrshireBoy said:

A friend is a mortgage advisor with HSBC who are known for tighter lending criteria. She told me this week thats she's never seen so many applications being knocked back and AIPs are worthless now.

22 hours ago, belfastchild said:

Neighbour is the same (not HSBC), told me yesterday that they are starting to exclude bank earnings from NHS applicants. Nurses etc who use their days off to work shift for agencies. Was always included in the past, now seen as temporary earnings which arent guaranteed.
If they are excluding those, which are pretty much guaranteed due to shortages etc, then something is up.

I'm currently extending a mortgage with HSBC and I can see they're being even tighter now (than the previous two times I've been through the process with them).

They no longer allow Child Benefit on the income calculation as it won't be paid the entire term of the mortgage.  I think they always used to allow it.

They sent a valuer round too, that's a first.  He down valued by 10%.

[spygirl]

On 23/07/2022 at 08:18, AyrshireBoy said:

A friend is a mortgage advisor with HSBC who are known for tighter lending criteria. She told me this week thats she's never seen so many applications being knocked back and AIPs are worthless now.

AIP  have always been worthless.

Just an indication.