Property crash, just maybe it really is different this time

[onlyme]

21 minutes ago, Wight Flight said:

I am the only one in my road of 30 houses that goes to work.

Houses worth maybe £600k on average.

They aren't all on £60k pensions.

 

 

Yes, but you are on the IOW, there will be similar in a lot of more retirement type areas near the coast away from main commercial hubs.  A lot of this money comes from gains in and around London but people have to feed that flow by buying on the first / second rungs, that is the group that may be hugely overextended to get even those places.

 

[Wight Flight]

14 minutes ago, onlyme said:

Yes, but you are on the IOW, there will be similar in a lot of more retirement type areas near the coast away from main commercial hubs.  A lot of this money comes from gains in and around London but people have to feed that flow by buying on the first / second rungs, that is the group that may be hugely overextended to get even those places.

 

It is the same anywhere. It is only first time buyer price to earnings ratio that matters.

Almost nobody that bought 5+ years ago could afford their house now.

[Democorruptcy]

1 hour ago, onlyme said:

Sure but everything is relative, would not be surprised to find there has been way more excessive borrowing than 5x and not in small numbers, the prices to earnings don't stack up, 

BoE presumably still have the rule 'no more than 15% of mortgages can be greater than 4.5x income'?

[Noallegiance]

1 hour ago, onlyme said:

Sure but everything is relative, would not be surprised to find there has been way more excessive borrowing than 5x and not in small numbers, the prices to earnings don't stack up, 

My wife and I are forever wondering how anyone is 'affording' their lifestyle.

[leonardratso]

2 hours ago, Noallegiance said:

My wife and I are forever wondering how anyone is 'affording' their lifestyle.

they arent, not for long anyway.

[wherebee]

4 minutes ago, leonardratso said:

they arent, not for long anyway.

We are.  Because we buy second hand, haven't had a holiday in 2 years, and don't take drugs or drink excessively.

we're boring though, apparently. 

[onlyme]

7 hours ago, Democorruptcy said:

BoE presumably still have the rule 'no more than 15% of mortgages can be greater than 4.5x income'?

The BOE has an inflation target of 2%, it is officially 10%, but that number is fabricated and artificially nudged to the low side .

A fish rots from the head down, I think you can take it to the bank that participants all the way down the chain have been incentivised to follow suit to compete/play/function in the false game they set, again.

[sancho panza]

On 17/08/2022 at 10:43, spunko said:

Well the banking industry will have its arsed covered anyway as they have supposedly 'stress tested' everyone taking out a mortgage even if interest rates hit 8% or whatever. My understanding is that they went on the basis that if you can't afford 8% interest rates you won't be getting a mortgage from us.

Only time will tell if they actually bothered with this. And it looks like it's been canned in the last year anyway so perhaps those folk will have to do some sort of "missold muh mortgage" legal action.

The problem is that they didn't factor in what would be driving rates higher to 8.5% eg oil,gas,leccy,food etc.

Most likely they used ye olde 'ceteris paribus' assumption and we all know what assumption is don't we children?

As we've been devling into on the main thread,heating bills going from £150 to £350 pcm, food bills going from £400 to £500 pcmfor a family of four,taxes increasing-NI,council tax,diesel bills up £100 pcm.

Just off the top of my head(and I'm probabaly being conservative),that's £500 pcm that your average family has to find alongside

Mortgage calcs for context.Worth noting that over 25 years higher IR's mean nearly an extra £100k in repayments.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

£150,000 25 yr repayment at 3% £711 pcm full term £213,358

                                                at 5% £877 pcm full term £263,162

                                                at 7% £1060 pcm full term £318,076

 

Personally,I don't think IR's are going to be the issue,rather people choosing to heat/eat, rent/mortgage will get paid 4th after diesel bill.

Govt going to get it's chequebook out methinks.

 

[sancho panza]

On 17/08/2022 at 10:50, dnb24 said:

Midlands mate

Small towns like Hinckley are nice places and reasonable compared to the big cities.Big cities are going to be depressing places to live imho over the next decade.

[spunko]

34 minutes ago, sancho panza said:

The problem is that they didn't factor in what would be driving rates higher to 8.5% eg oil,gas,leccy,food etc.

Most likely they used ye olde 'ceteris paribus' assumption and we all know what assumption is don't we children?

As we've been devling into on the main thread,heating bills going from £150 to £350 pcm, food bills going from £400 to £500 pcmfor a family of four,taxes increasing-NI,council tax,diesel bills up £100 pcm.

Just off the top of my head(and I'm probabaly being conservative),that's £500 pcm that your average family has to find alongside

Mortgage calcs for context.Worth noting that over 25 years higher IR's mean nearly an extra £100k in repayments.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

£150,000 25 yr repayment at 3% £711 pcm full term £213,358

                                                at 5% £877 pcm full term £263,162

                                                at 7% £1060 pcm full term £318,076

 

Personally,I don't think IR's are going to be the issue,rather people choosing to heat/eat, rent/mortgage will get paid 4th after diesel bill.

Govt going to get it's chequebook out methinks.

 

I was playing around with this earlier. If the base rate hits 3.75% as many 'experts' predict by early 2023, that will mean a remortgage will be at 5.75% or so.

For a 250k mortgage that's an extra ~£500 a month they need to find, compared to the month before.

Coincidentally that is the average monthly cost of a PCP vehicle now. Early terminations inbound?

If there is a load of voluntary teminrations coming to the market that will lead to oversupply and used prices will drop. Plus, PCP will become unaffordable for new contracts for many. Currently, Audi charge 4.9% IIRC for new PCP contracts; if the base rate climbs to the extent predicted, I'm sure they'll be charging closer to 9%. That's an extra £200 a month right there for the average PCPer.

£700 a month for a fucking Audi A3

[HousePriceMania]

Any bears feeling hungry ?
 

 

[Axeman123]

1 hour ago, sancho panza said:

Govt going to get it's the banks' chequebook out methinks.

If the government starts handing out printed money like a drunken sailor it will be systemic collapse IMO.

Far more likely they force lenders to extend far greater forbearance, so anyone willing to fill out income-and-expenditures forms truthfully and pay what they reasonably can will never get evicted. In practice this will wipe out any equity in a property, but avert mass homelessness. Maybe the quid pro quo will be to enable lenders to get deductions at source from wages, like child support. This would also nicely stymie "jingle mail", as you might as well stay put if you are paying either way.

[Stuey]

1 hour ago, sancho panza said:

Small towns like Hinckley are nice places and reasonable compared to the big cities.Big cities are going to be depressing places to live imho over the next decade.

Big cities, and sprawling red-brick suburbia both.

Smaller, unenriched towns will do well. Hebden Bridge is the example to follow. 

[HousePriceMania]

26 minutes ago, Axeman123 said:

If the government starts handing out printed money like a drunken sailor it will be systemic collapse IMO.

Far more likely they force lenders to extend far greater forbearance, so anyone willing to fill out income-and-expenditures forms truthfully and pay what they reasonably can will never get evicted. In practice this will wipe out any equity in a property, but avert mass homelessness. Maybe the quid pro quo will be to enable lenders to get deductions at source from wages, like child support. This would also nicely stymie "jingle mail", as you might as well stay put if you are paying either way.

The trouble with all this is, the government are destroying the lives of the next generation, best case...a new party ousting the old guard for decades, worst case open violent revolt.

 

[Axeman123]

1 minute ago, HousePriceMania said:

The trouble with all this is, the government are destroying the lives of the next generation, best case...a new party ousting the old guard for decades, worst case open violent revolt.

I wouldn't expect my little thought experiment above to hold house prices up if implemented, just to prevent mass evictions. I still see house prices coming down.

I do see open violent revolt potentially on the horizon, and assume Truss (or her backers) do too.

[Heart's Ease]

11 minutes ago, Stuey said:

Big cities, and sprawling red-brick suburbia both.

Smaller, unenriched towns will do well. Hebden Bridge is the example to follow. 

Hebden Bridge is known locally (to me) as a drug town with a tourist problem.

[Stuey]

1 minute ago, Heart's Ease said:

Hebden Bridge is known locally (to me) as a drug town with a tourist problem.

Compared to Cragg Vale 

[Boon]

Here is an interesting one:
https://www.rightmove.co.uk/properties/125374403#/?channel=RES_BUY

Some wide variances in prices in the development. I do think the key is competition, so flats like this will take the brunt.. if you look through the sold prices these have been a bad buy in the last few years and some recent ones like this which may be underwater for some time unless government help comes in.

From a landlords perspective I don't know what how this makes sense at current prices.

£15,600 a year rent, less £3k service charge/ground rent, less £1.5k agent fee, less £1k contingency for repair/voids.
Assuming paid £350k up front, £7.1k pre-tax profit. Yield after tax must be less than the base rate. 

Chance of capital appreciation on this do not seem favourable in either short or medium term due to the hundreds of other identical flats, so if price goes up there may be lots of people willing to unload into that rise. So what have I missed?

[HousePriceMania]

Posted these numbers on TOS

 

The couple of years before CV19' data shows a steady rise in properties coming to the market during the summer.

2018 saw a rise of 128 per day on average ( March to Oct )
2019 saw a rise of 116 per day on average ( March to Oct )

2020 saw a sharp rise when the lockdown stopped...259 per day  ( March to Oct )

2021 saw a sharp fall of -303 per day.  ( March to Oct )

2022...March to August ....403 per day, this is 3/4 x the pre-covid numbers.

The 2021 mania is being reversed and they've left a massive hole in sales, just as mortgage rates have tripped, inflation is crippling people, sentiment plummets and savings are getting trashed.

Any agent who says they are doing well are outright lying.

[Democorruptcy]

2 hours ago, sancho panza said:

The problem is that they didn't factor in what would be driving rates higher to 8.5% eg oil,gas,leccy,food etc.

Most likely they used ye olde 'ceteris paribus' assumption and we all know what assumption is don't we children?

As we've been devling into on the main thread,heating bills going from £150 to £350 pcm, food bills going from £400 to £500 pcmfor a family of four,taxes increasing-NI,council tax,diesel bills up £100 pcm.

Just off the top of my head(and I'm probabaly being conservative),that's £500 pcm that your average family has to find alongside

Mortgage calcs for context.Worth noting that over 25 years higher IR's mean nearly an extra £100k in repayments.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

£150,000 25 yr repayment at 3% £711 pcm full term £213,358

                                                at 5% £877 pcm full term £263,162

                                                at 7% £1060 pcm full term £318,076

 

Personally,I don't think IR's are going to be the issue,rather people choosing to heat/eat, rent/mortgage will get paid 4th after diesel bill.

Govt going to get it's chequebook out methinks.

 

25 Years? How quaint and old fashioned!

[HousePriceMania]

From twitter....

 

 

 

 

[Boon]

There is great stuff in that thread (press the read replies for more)

 

[HousePriceMania]

2 hours ago, Axeman123 said:

I wouldn't expect my little thought experiment above to hold house prices up if implemented, just to prevent mass evictions. I still see house prices coming down.

I do see open violent revolt potentially on the horizon, and assume Truss (or her backers) do too.

No one wants a violent collapsing society. I would hope that them with most to lose, remind them how much they have to lose and how lucky the are that their ancestors heads weren't chopped off by a guillotine.

Humans do the oddest things tho, else we'd never have had hyperinflation anywhere.

[Bus Stop Boxer]

Ding ding

 

All aboard driver!!

https://www.rightmove.co.uk/properties/126165752#/media?channel=RES_BUY&id=media1&ref=photoCollage

 

Someones gone absolutely nuts in there.

Edited August 18, 2022 by Bus Stop Boxer

[Axeman123]

13 minutes ago, Bus Stop Boxer said:

Ding ding

 

All aboard driver!!

https://www.rightmove.co.uk/properties/126165752#/media?channel=RES_BUY&id=media1&ref=photoCollage

 

Someones gone absolutely nuts in there.

Using a minibus as a tip vehicle?