Property crash, just maybe it really is different this time

[Boon]

Tend to agree, little has happened yet. 

One thing I am seeing in London is that new listings coming onto the market have slowed again, basically 50% of pre-pandemic norms, and I guess that even that is much below what volumes were 10 years ago.

Mass panic I think is unlikely to happen because of the way that people's interest rates don't jump at the same time, and most people are fixed.

A lot of bleating is made of the increase in energy costs yet when push comes to shove a lot of households will be able to mitigate their cost by reducing usage (which after all, is what the government are after, just that they can't say it).

So you might have small pockets of panic but largely this will be also surpressed by the media, for not wanting to stoke it. We can see that the cost of living thing has a snowball effect and people sniffing a handout pretend to be in as well.... for example someone on Facebook I know is showing outrage, but they had a family holiday in France last month! The cost of living crisis to them is interpreted as being unable to keep up the standard of life they had before, not outright struggling.

I do think it'll be as I think, the cheaper places keeping on going up in price masking heavier falls elsewhere. Thus the overall picture can still be painted as rosy.

[Stuey]

1 hour ago, King Penda said:

There’s no panic anywhere about anything (ok a bit about the heat ) saying that my mate In Telford who is still on holiday has slowly realised I might be correct about interest rates going above 5%

3rd/4th/5th September the mood will change over the weekend IMO. @Stuey prediction! Nail it to the wall. 

Everyone back in the office and skint...rain for 40 days...no Bank Holidays for 16 weeks

[Bus Stop Boxer]

2 hours ago, haroldshand said:

But this sadly is not happening in the UK, not even remotely close.

It's fair to say that the UK is now burning and there is no corner of our economy that is not being hit badly and with just about everyone accepting that come October the shit will really hit the fan with of course the one major exception PROPERTY.

Sorry but I am just not even seeing an ounce of panic yet though there are some tiny tiny signs of discomfort we still have 10,000's of immigrants turning up monthly and little new housing being built.

It's just not happening boys and looks like ToS are going to have to continue whinging for a few more years/decades yet

I disagree. Market has stopped dead where i am, and plenty of sales are failing.

Stuff that would have sold in a week 6-8 months ago is stuck.

New listings with kite flying prices are getting reduced in a week.

I wouldnt say its panic, but there are people stood in quicksand now. The arm waving isnt far off.

And we're only nibbling on the bread sticks and olives here, the starter hasn't even arrived yet.

Edited August 13, 2022 by Bus Stop Boxer

[Lightscribe]

2 hours ago, haroldshand said:

But this sadly is not happening in the UK, not even remotely close.

It's fair to say that the UK is now burning and there is no corner of our economy that is not being hit badly and with just about everyone accepting that come October the shit will really hit the fan with of course the one major exception PROPERTY.

Sorry but I am just not even seeing an ounce of panic yet though there are some tiny tiny signs of discomfort we still have 10,000's of immigrants turning up monthly and little new housing being built.

It's just not happening boys and looks like ToS are going to have to continue whinging for a few more years/decades yet

Those turning up at Dover aren’t buying houses and paying mortgages. They are being housed with relatives or in hotels and being funded by the government (or more accurately the tax payer).

It’s the ever cheaper money supply that has driven house prices not lack of supply. Money supply is about to get very expensive.

This time is different it really is and I haven’t said that since 2007.

US, Australian and Canada have already turned. We are next. It will hit us harder and our delusion will hold out the longest because literally our economy is based on house prices. 

Once housing and construction swings, that accounts for a large proportion of our (actual) working population and Eastern European employment.

All we have left then is services and good luck with that with high inflation in a global depression.

[sancho panza]

It's about the mood music. chart where they're showing transactions under £200k are down bigly.Markets margins move etc

tow of the charts aren;t loading but I dont have a sub to the telrgaph

https://www.telegraph.co.uk/property/house-prices/charts-show-why-house-prices-falls-imminent/

House price falls are imminent as soaring mortgage rates and spiralling living costs finally catch up with the housing market, experts have warned.

The crunch point will hit at the end of this year and bring a year-long downturn in 2023, with prices falling by 4pc, according to the Centre for Economics and Business Research, an analytics firm. 

But the hit could be far worse if the looming recession brings soaring unemployment, while ever-increasing inflation pushes the Bank of England to continue raising interest rates.

Andrew Wishart, of Capital Economics, a research firm, said: “The historical record shows that increases in interest rates of the scale that we are seeing now are always a precursor of house price falls.”

Capital Economics has forecast a two-year property market downturn, with price falls of between 5pc and 10pc by the end of 2024.

Whatever happens, the blow will be unequal – with certain areas and parts of the market hit far worse than others. 

Transactions are going to tank

Estate agents are feeling pessimistic about the state of the market. In July, their expectations of property sales over the next 12 months reached the lowest level since March 2020, according to the Royal Institution of Chartered Surveyors, a trade body. That was when the housing market was shut down for the first time in history. 

Excluding that lockdown low, the July forecast was the worst on record in the Rics dataset, which goes back to 2012.

This followed three consecutive months of plunging buyer inquiries. Agents expect house prices will flatline over the next three months.

As mortgage rates continue to rise, the market will slow. Richard Donnell, of property website Zoopla, said: “The biggest casualty will be turnover.” He has forecast that in 2023 there will be around 1.1 million transactions, which is 200,000 fewer than this year.

“Transactions will fall, and then I think it will take six months for sellers to realise and for asking prices to come down,” said Mr Donnell. “I just think everything will flatline. Next year I think we will see house price growth at 0pc, or maybe falls of 1pc or 2pc.” In some areas, the drops could be closer to 5pc, he added. 

First-time buyers will be wiped out

Sales are already falling fast – but only at the lower end of the market. In July, agreed sales of homes worth less than £100,000, and those worth between £100,000 and £200,000 collapsed. Compared to 2019, each price bracket recorded a drop of 33pc and 20pc respectively, according to data from TwentyCi, an analytics firm.

The contrast to the top end of the market is huge. Sales of homes priced between £700,000 and £800,000 were up 87pc compared to July 2019. 

Part of the disjunction can be explained by house price rises: rapid growth has meant that there are fewer homes in the lowest price bracket. But the polarisation is primarily a symptom of the fact that more and more lower income earners and first-time buyers are getting locked out of the market as interest rates rise and the cost of living crisis bites. Meanwhile, richer homeowners, with more equity or no need for a mortgage, are much less affected.

Lucian Cook, of Savills estate agents, said: “It reflects the fact that more affluent households are typically less reliant on mortgage finance to fund their next purchase, less exposed to and constrained by the increased cost of borrowing, and more able to cut back on discretionary expenditure to weather the increases in the basic cost of living.”

But falling transactions at the lower end of the market are a warning sign for homeowners higher up. The falls are concentrated in the busiest sector of the market. There were roughly ten times as many sales in the £100,000 to £200,000 price bracket as in the £700,000 to £800,000 bracket in July. As first-time buyers and second-steppers stop moving house, buyer demand will decline all the way up the property ladder.

London and the South East will be worst hit

Any house price falls will be focused in certain areas, where people’s finances are more stretched by mortgage repayments and rising energy bills are eating up a greater proportion of disposable income.

Martin Beck, of the EY Item Club, an economic forecaster, said: “There is a distinction between first-time buyers and older homeowners. The pain of the cost of living crisis will really be felt by lower income groups.”

More expensive properties, whose buyers are less dependent on the mortgage market and who have more savings, are more likely to hold their value. “But the properties for first-time buyers might see outright falls,” said Mr Beck.

The areas where affordability is already most stretched – namely London and the South East – are the areas that are most dependent on mortgage lending and are therefore the places likely to see the biggest property market slowdowns, said Mr Donnell.

“Inner London boroughs have already been underperforming. In real terms, prices in London are falling at speed,” said Mr Donnell.

Demand is falling just as supply is rising

Buyer demand – an indicator for future sales rates – is falling steadily. In January this year, buyer demand (measured by property searches and inquiries) was 67 percentage points above the five-year average, according to property website Zoopla. By July, that had plunged 45 percentage points to just 22.

At the same time, the number of available listings is climbing steadily as sellers realise the housing market has peaked. In December 2021, supply hit a low of 42 percentage points below the five-year average. By July, this gap had more than halved. The number of listings is now only 20 points below the five-year benchmark.

This closing of the historic supply/demand imbalance could bring a stop to house price growth and usher in falls.

Rising mortgage rates will also seriously constrain how much would-be buyers can borrow and therefore offer on a property. Mr Donnell said: “The difference between being able to buy at a mortgage rate of 2.5pc and 4pc creates a serious step up in spending. By the end of this year and the start of next year, the mindset of consumers will change when it comes to moving.”

As homeowners come to the end of their fixed rate deals, supply could rise further as they find their homes become unaffordable due to soaring mortgage rates, and so they have to sell up.

Karl Thompson, of CEBR, said:“We have seen significant changes this year in terms of the cost of living crisis in shops and rising bills. But the impact on mortgages will be slower. A significant number of homeowners are rolling out of fixed-rate deals this year, but that number will increase and increase next year.”

People will lose their homes

Just as mortgage repayments get much more expensive, borrowers may also become more likely to lose their jobs when the recession bites. “The big question is will unemployment go up,” said Mr Donnell.

Pantheon Macroeconomics, an analyst, has forecast that the unemployment rate will jump from 3.7pc at the start of this year to a peak of 4.6pc for almost the entirety of 2023, as the incoming recession takes hold.

 

 

Edited August 13, 2022 by sancho panza

[sancho panza]

.

 

 

Edited August 13, 2022 by sancho panza

[Bobthebuilder]

16 minutes ago, sancho panza said:

.

 

 

Quoting your "nothing" post to say, probably "nothing" on the market below £200K anymore. Hence no sales.

[haroldshand]

3 hours ago, Lightscribe said:

Those turning up at Dover aren’t buying houses and paying mortgages. They are being housed with relatives or in hotels and being funded by the government (or more accurately the tax payer).

Those turning up on the south coast are a fraction of the immigration numbers legal and illegal. And no matter if they are highly skilled or as in 90% plus of cases thick as fuck and useless they will end up staying in the UK and will be housed at some point in the same type of houses many working British would want to buy but paid for by the taxpayer directly to the BTL landlords, whether a small family proper British heritage with 2 kids  and working pays for that house or 24 immigrants stuffed into the same house those houses are being snapped up if not for families then investors and yes those "turning up at Dover" one way or another are holding this bubble up, that's if it is a bubble which I constantly have doubts about these days

[sancho panza]

26 minutes ago, Bobthebuilder said:

Quoting your "nothing" post to say, probably "nothing" on the market below £200K anymore. Hence no sales.

Entirely possible. The data is so lagging its relatively untradeable.only rightmove has the data and they stopped publishing it many years ago

I can entirely understand why that section of the market would shut down first given inflation is mainly in food n fuel.

 

Also though,that section of the market has been illiquid for years so again possibly less relevant. For years we've had a mid tier equity swapping market (which includes BTL as they'v e mainly used their domestic residential equity at the base of their debt pyramid- even though many may not be aware of it)

Edited August 13, 2022 by sancho panza

[Noallegiance]

1 hour ago, sancho panza said:

It's about the mood music. chart where they're showing transactions under £200k are down bigly.Markets margins move etc

tow of the charts aren;t loading but I dont have a sub to the telrgaph

https://www.telegraph.co.uk/property/house-prices/charts-show-why-house-prices-falls-imminent/

House price falls are imminent as soaring mortgage rates and spiralling living costs finally catch up with the housing market, experts have warned.

The crunch point will hit at the end of this year and bring a year-long downturn in 2023, with prices falling by 4pc, according to the Centre for Economics and Business Research, an analytics firm. 

But the hit could be far worse if the looming recession brings soaring unemployment, while ever-increasing inflation pushes the Bank of England to continue raising interest rates.

Andrew Wishart, of Capital Economics, a research firm, said: “The historical record shows that increases in interest rates of the scale that we are seeing now are always a precursor of house price falls.”

Capital Economics has forecast a two-year property market downturn, with price falls of between 5pc and 10pc by the end of 2024.

Whatever happens, the blow will be unequal – with certain areas and parts of the market hit far worse than others. 

Transactions are going to tank

Estate agents are feeling pessimistic about the state of the market. In July, their expectations of property sales over the next 12 months reached the lowest level since March 2020, according to the Royal Institution of Chartered Surveyors, a trade body. That was when the housing market was shut down for the first time in history. 

Excluding that lockdown low, the July forecast was the worst on record in the Rics dataset, which goes back to 2012.

This followed three consecutive months of plunging buyer inquiries. Agents expect house prices will flatline over the next three months.

As mortgage rates continue to rise, the market will slow. Richard Donnell, of property website Zoopla, said: “The biggest casualty will be turnover.” He has forecast that in 2023 there will be around 1.1 million transactions, which is 200,000 fewer than this year.

“Transactions will fall, and then I think it will take six months for sellers to realise and for asking prices to come down,” said Mr Donnell. “I just think everything will flatline. Next year I think we will see house price growth at 0pc, or maybe falls of 1pc or 2pc.” In some areas, the drops could be closer to 5pc, he added. 

First-time buyers will be wiped out

Sales are already falling fast – but only at the lower end of the market. In July, agreed sales of homes worth less than £100,000, and those worth between £100,000 and £200,000 collapsed. Compared to 2019, each price bracket recorded a drop of 33pc and 20pc respectively, according to data from TwentyCi, an analytics firm.

The contrast to the top end of the market is huge. Sales of homes priced between £700,000 and £800,000 were up 87pc compared to July 2019. 

Part of the disjunction can be explained by house price rises: rapid growth has meant that there are fewer homes in the lowest price bracket. But the polarisation is primarily a symptom of the fact that more and more lower income earners and first-time buyers are getting locked out of the market as interest rates rise and the cost of living crisis bites. Meanwhile, richer homeowners, with more equity or no need for a mortgage, are much less affected.

Lucian Cook, of Savills estate agents, said: “It reflects the fact that more affluent households are typically less reliant on mortgage finance to fund their next purchase, less exposed to and constrained by the increased cost of borrowing, and more able to cut back on discretionary expenditure to weather the increases in the basic cost of living.”

But falling transactions at the lower end of the market are a warning sign for homeowners higher up. The falls are concentrated in the busiest sector of the market. There were roughly ten times as many sales in the £100,000 to £200,000 price bracket as in the £700,000 to £800,000 bracket in July. As first-time buyers and second-steppers stop moving house, buyer demand will decline all the way up the property ladder.

London and the South East will be worst hit

Any house price falls will be focused in certain areas, where people’s finances are more stretched by mortgage repayments and rising energy bills are eating up a greater proportion of disposable income.

Martin Beck, of the EY Item Club, an economic forecaster, said: “There is a distinction between first-time buyers and older homeowners. The pain of the cost of living crisis will really be felt by lower income groups.”

More expensive properties, whose buyers are less dependent on the mortgage market and who have more savings, are more likely to hold their value. “But the properties for first-time buyers might see outright falls,” said Mr Beck.

The areas where affordability is already most stretched – namely London and the South East – are the areas that are most dependent on mortgage lending and are therefore the places likely to see the biggest property market slowdowns, said Mr Donnell.

“Inner London boroughs have already been underperforming. In real terms, prices in London are falling at speed,” said Mr Donnell.

Demand is falling just as supply is rising

Buyer demand – an indicator for future sales rates – is falling steadily. In January this year, buyer demand (measured by property searches and inquiries) was 67 percentage points above the five-year average, according to property website Zoopla. By July, that had plunged 45 percentage points to just 22.

At the same time, the number of available listings is climbing steadily as sellers realise the housing market has peaked. In December 2021, supply hit a low of 42 percentage points below the five-year average. By July, this gap had more than halved. The number of listings is now only 20 points below the five-year benchmark.

This closing of the historic supply/demand imbalance could bring a stop to house price growth and usher in falls.

Rising mortgage rates will also seriously constrain how much would-be buyers can borrow and therefore offer on a property. Mr Donnell said: “The difference between being able to buy at a mortgage rate of 2.5pc and 4pc creates a serious step up in spending. By the end of this year and the start of next year, the mindset of consumers will change when it comes to moving.”

As homeowners come to the end of their fixed rate deals, supply could rise further as they find their homes become unaffordable due to soaring mortgage rates, and so they have to sell up.

Karl Thompson, of CEBR, said:“We have seen significant changes this year in terms of the cost of living crisis in shops and rising bills. But the impact on mortgages will be slower. A significant number of homeowners are rolling out of fixed-rate deals this year, but that number will increase and increase next year.”

People will lose their homes

Just as mortgage repayments get much more expensive, borrowers may also become more likely to lose their jobs when the recession bites. “The big question is will unemployment go up,” said Mr Donnell.

Pantheon Macroeconomics, an analyst, has forecast that the unemployment rate will jump from 3.7pc at the start of this year to a peak of 4.6pc for almost the entirety of 2023, as the incoming recession takes hold.

 

 

All those bold bits are music to my ears. I don't care of that makes me a cunt.

[Wight Flight]

1 hour ago, sancho panza said:

The crunch point will hit at the end of this year and bring a year-long downturn in 2023, with prices falling by 4pc, according to the Centre for Economics and Business Research, an analytics firm. 

Back to where they were in April then?

[King Penda]

12 hours ago, Stuey said:

3rd/4th/5th September the mood will change over the weekend IMO. @Stuey prediction! Nail it to the wall. 

Everyone back in the office and skint...rain for 40 days...no Bank Holidays for 16 weeks

But the kids are back school most parents will be so elated they won’t care for two weeks 

[marceau]

17 hours ago, haroldshand said:

Those turning up on the south coast are a fraction of the immigration numbers legal and illegal. And no matter if they are highly skilled or as in 90% plus of cases thick as fuck and useless they will end up staying in the UK and will be housed at some point in the same type of houses many working British would want to buy but paid for by the taxpayer directly to the BTL landlords, whether a small family proper British heritage with 2 kids  and working pays for that house or 24 immigrants stuffed into the same house those houses are being snapped up if not for families then investors and yes those "turning up at Dover" one way or another are holding this bubble up, that's if it is a bubble which I constantly have doubts about these days

Housing is going to remain a problem as long as we have a government that doesn't represent our interests. Everything is secondary to that. 

Neither owning nor renting will prevent people (or their children) being robbed under a system that views them as prey.

Edited August 14, 2022 by marceau

[Noallegiance]

4 hours ago, marceau said:

Housing is going to remain a problem as long as we have a government that doesn't represent our interests. Everything is secondary to that. 

Neither owning nor renting will prevent people (or their children) being robbed under a system that views them as prey.

Indeed. The ultimate predator being the state.

In a market, you choose whether to part with cash. In collectivism it's taken from you by law.

In banking it's akin to the difference between a standing order and a direct debit.

[tank]

On 13/08/2022 at 21:42, Lightscribe said:

Those turning up at Dover aren’t buying houses and paying mortgages. They are being housed with relatives or in hotels and being funded by the government (or more accurately the tax payer).

It’s the ever cheaper money supply that has driven house prices not lack of supply. Money supply is about to get very expensive.

This time is different it really is and I haven’t said that since 2007.

US, Australian and Canada have already turned. We are next. It will hit us harder and our delusion will hold out the longest because literally our economy is based on house prices. 

Once housing and construction swings, that accounts for a large proportion of our (actual) working population and Eastern European employment.

All we have left then is services and good luck with that with high inflation in a global depression.

The Tories have let in 1 million net third world immigrants over the past 12 months to support property prices and drive down wages.

1 million net. They'll do it again this year and the next too. For every Eastern European who arrived under EU membership, the Tories are now letting in 4 from the developing world. That's the Brexit dividend. 

This has got nothing to do with the relatively tiny number of illegals in the channel. The above immigrants are 100% legal.

Edited August 15, 2022 by tank

[HousePriceMania]

 

"BLAME", like it's a good thing.

The MSM really dont want (their) house prices to drop.

 

[Lightscribe]

49 minutes ago, tank said:

The Tories have let in 1 million net third world immigrants over the past 12 months to support property prices and drive down wages.

1 million net. They'll do it again this year and the next too. For every Eastern European who arrived under EU membership, the Tories are now letting in 4 from the developing world. That's the Brexit dividend. 

This has got nothing to do with the relatively tiny number of illegals in the channel. The above immigrants are 100% legal.

Which was always the plan. Brexit is a piss in the ocean.

https://www.un.org/en/development/desa/population/publications/ageing/replacement-migration.asp

https://www.weforum.org/agenda/2016/11/8-predictions-for-the-world-in-2030/
 

Edited August 15, 2022 by Lightscribe

[No One]

[HousePriceMania]

Rightmove sounding desperate/like they are trying to cover up what's going on.  UK property lion has show tghe number of properties available to buy has been shooting up, 30% this year, so a desperate state from RM.

 

https://thenegotiator.co.uk/rightmove-says-stock-down-39-on-pre-pandemic-levels/

 

Rightmove says stock down 39% on pre-pandemic levels

5 minutes ago, No One said:

They're picking some really odd reference points, which points to things being very very bad.,

[Boon]

To be fair why shouldn't pre-pandemic be compared? Pandemic had anomalous in both directions - lockdown gave artificially low listings, stamp duty holiday artificially high.

Of course the effect of the recent rate rises and energy costs have yet to really filter into the market but it will be a poor show if listing numbers cannot be above the pre-pandemic level in 6 months or so.

[HousePriceMania]

1 minute ago, Boon said:

To be fair why shouldn't pre-pandemic be compared? Pandemic had anomalous in both directions - lockdown gave artificially low listings, stamp duty holiday artificially high.

Of course the effect of the recent rate rises and energy costs have yet to really filter into the market but it will be a poor show if listing numbers cannot be above the pre-pandemic level in 6 months or so.

They can pick what reference point they want.

What reference point they pick is telling though.

Available properties up 30% since Jan and increasing at the steepest rate I have data for, so 4 years.

That's my reference point.

 

[HousePriceMania]

To highlight the difference in pre and post summer listing for sale....

 

 

There is a marked difference.

[Boon]

Guessing Rightmove's motivations is that they want more listings on there whether they sell or not. Having few listings eventually will be bad for their business as then EA branches close.

I believe mostly EAs and Rightmove want prices up but ultimately need volumes so maybe their narrartive could turn once the market does. 

Using a crude extrapolation we might get back to pre-pandemic levels in around a year and a half. 

[HousePriceMania]

14 minutes ago, Boon said:

Guessing Rightmove's motivations is that they want more listings on there whether they sell or not. Having few listings eventually will be bad for their business as then EA branches close.

I believe mostly EAs and Rightmove want prices up but ultimately need volumes so maybe their narrartive could turn once the market does. 

Using a crude extrapolation we might get back to pre-pandemic levels in around a year and a half. 

volumes up and prices up.

Trouble is, prices are at all time unaffordable extremes.

[haroldshand]

On 13/08/2022 at 12:20, Bus Stop Boxer said:

I disagree. Market has stopped dead where i am, and plenty of sales are failing.

Stuff that would have sold in a week 6-8 months ago is stuck.

New listings with kite flying prices are getting reduced in a week.

I wouldnt say its panic, but there are people stood in quicksand now. The arm waving isnt far off.

And we're only nibbling on the bread sticks and olives here, the starter hasn't even arrived yet.

When I mean "nothing is happening" I mean nothing is happening with prices heading down which is what many people seem to want here?. I have been told a thousand times over 5 years when I made the same remark that "I am wrong" or people "disagree" to then give me some information that is supposedly rock solid data confirming it is now about to happen, Mmmmmm