Property crash, just maybe it really is different this time

[Wight Flight]

11 minutes ago, One percent said:

Won’t someone think of the over extended.    No one said that interest rates could possibly go up.  
 

https://www.dailymail.co.uk/money/mortgageshome/article-11259611/Heavily-mortgaged-generation-pay-price-UKs-rate-crisis.html

The heavily-mortgaged generation will pay the price for Britain's lurch from difficult times to mini-financial crisis, 

er, no.  These fools have driven the cost of housing out of the reach of those more sensible. Let ‘em burn. 

Pretty much all of these will have started with a BOMAD loan.

No sympathy.

[sancho panza]

1 hour ago, spunko said:

The way that estate agents despise Rightmove makes me like it even more. The brass neck of whinging about Rightmove fees, it's basically the only advertising you need to do. Take photos, write a description, stick it on Rightmove. I believe they charge a monthly fee to each estate agent office - between £600 and £2k a month. Hardly a lot of money is it?

Even Savills are paying ~£10k a month supposedly for ALL their branches across the UK. I think that's very reasonable.

My advertising costs for one of my businesses are around 45%. I'd love to be paying those kinds of fees, the average EA must be making what £8k a month per branch in turnover? Not even 10% of their total outlay on marketing.

The issue is the per branch charge and it's not a particualrly transparent system as clearly some of the bigger guys pay less per branch and things like Purple Bricks don't even have branches.

I think gradually,we'll see the msaller players dissappear and merge.There's jsut no need for aphsycial branch these days.Lot of cost with little added to the bottom line.

 

https://www.estateagenttoday.co.uk/breaking-news/2019/11/huge-agency-anger-at-rightmove-fees-and-attitude-to-our-industry

Some figures are striking (all figures are pcm):

- Rightmove costs for single-branch agencies vary from £1,936+VAT down to £990+VAT;

- Zoopla costs for single branch agencies vary from £665+VAT to £250+VAT;

- OTM costs for single branch agencies vary from £355+VAT to temporarily free.

“We get around the same level of enquiries whether it be people looking to buy, view or sell from Zoopla and Rightmove. Zoopla is far better value for money. Right move’s fee is totally unjustifiable…”;

“In terms of sales leads, RM is better than OTM by about 30 per cent but certainly not five times bettie which is virtually what the price difference is. When you factor in that we get more rents leads from OTM than RM it certainly can’t…”;

[Democorruptcy]

57 minutes ago, One percent said:

Won’t someone think of the over extended.    No one said that interest rates could possibly go up.  
 

https://www.dailymail.co.uk/money/mortgageshome/article-11259611/Heavily-mortgaged-generation-pay-price-UKs-rate-crisis.html

The heavily-mortgaged generation will pay the price for Britain's lurch from difficult times to mini-financial crisis, 

er, no.  These fools have driven the cost of housing out of the reach of those more sensible. Let ‘em burn. 

There's a post here you might be interested in? Apparently people have their 'lives on hold' unless they own a house and nobody on here should delight in it (even if their 'lives might be on hold'?). It's a very popular post. I nearly gave it a vomit but tempered it to a bogged.

 

[Spiney Norman]

Anacdotal I know, but one of search areas where perhaps there were 1 or 2 new listings a month has had 8 new listings in the last 3 days!

Racing for the exit me thinks?

Its all about sentiment, and sentiment is changing I can see it in the RM listings.

[Herby]

On 06/07/2022 at 12:35, Herby said:

With the advent of no-fault divorce in April 2022, and apparently it takes 7 to 10 months to get two finality, that could be an increase in ex-family homes on the market from November or December onwards.

It may also put pressure on smaller places to rent or buy.

https://www.family-lawfirm.co.uk/divorce/no-fault-divorce-uk/

On 6 April 2022, no fault divorce was introduced in England and Wales. This is part of a number of changes to UK divorce law brought in by the Divorce, Dissolution and Separation Act 2020, which were effective from this date.

There is now a period of reflection – a minimum of 20 weeks – from when the application for divorce is made to when a Conditional Order can be made. This provides a period of reflection for the parties to consider their decision.

6 weeks later, the Final Order will be made.

In total, therefore, a no fault divorce will take around 7 – 10 months.

 

Looks like the predictions were right.. 

https://www.msn.com/en-gb/money/other/divorce-applications-soar-to-their-highest-level-in-a-decade-after-new-no-fault-laws-introduced/ar-AA12o50o

"new figures from the Ministry of Justice, published today, revealed that between April and June this year there were more than 33,500 divorce applications."

That's a lot of marital homes potentially to come on the market!

 

[Boon]

Might be good if you are tracking an area to get a Google sheet or something to remind you of the numbers on a specific date. There are many false dawns.

Personally I think it is too early for panic, higher bills have not even hit yet. The majority of those new listings I see in my area are still trying to get early 2022 prices, almost as if nothing has happened.

Someone with a mortgage offer locked in might still have cheap finance, and maybe anyone porting a mortgage could keep their terms as well. These might be thin on the ground but I think its still months before any proper forced sales come on.

 

[Democorruptcy]

Just talking to a mate who told me his friend had bought and moved in today. My mate said from what he had seen on the BBC, it might be a bad time to buy. He asked me if I thought prices might go down and his friend could be repossessed. I told him prices might possibly go down but his friend's bank probably would probably keep him in the house, by switching his mortgage to interest only so he didn't own it at the end of the term, or just extending the term from say 30 to 50 years. My mate seemed very relieved for his friend.

[Spiney Norman]

20 minutes ago, Boon said:

Personally I think it is too early for panic, higher bills have not even hit yet. The majority of those new listings I see in my area are still trying to get early 2022 prices, almost as if nothing has happened.

Yep, thats what i'm seeing.

The new listings at eyewatering prices sit there unloved for a month maybe two then thy are reduced. Plenty of reductions over the summer. I'm expecting more to come.

 

[sancho panza]

4 hours ago, Boon said:

Personally I think it is too early for panic, higher bills have not even hit yet. The majority of those new listings I see in my area are still trying to get early 2022 prices, almost as if nothing has happened.

 

Super tankers take 8 miles to turn around.Yachts 20metres if theyre going slow enough.

Hosuing markets are not yachts.By the time we may start seeing nay downside price action given the lagging nature of the data,then the downturn would be deeply entrenched.

The below was psoted maint hread by @Plan-b.

The hosuing maret is one thing but pub chains,theatres and restaurants look fubar

[sancho panza]

4 hours ago, Democorruptcy said:

Just talking to a mate who told me his friend had bought and moved in today. My mate said from what he had seen on the BBC, it might be a bad time to buy. He asked me if I thought prices might go down and his friend could be repossessed. I told him prices might possibly go down but his friend's bank probably would probably keep him in the house, by switching his mortgage to interest only so he didn't own it at the end of the term, or just extending the term from say 30 to 50 years. My mate seemed very relieved for his friend.

Here's two of the maint trades in the secotr.the main players peaked Dec 06 thru to Apr 07,so timing wise it looks like th trade is on.Banks started going pop sept 07 and then BK Oct 08.

There's very little left to short,the price is baked in now to trades like those below and Barclays(equity raiisng sssh ssh!!) is circa 1.45gbp.hardly worth the bother PE 6 market cap£22bn.it's had it's trousers throughly pulled down and the pockets gone through already

Berkely looks like there's some meat on the bone

Edited September 29, 2022 by sancho panza

[Democorruptcy]

12 minutes ago, sancho panza said:

Here's two of the maint trades in the secotr.the main players peaked Dec 06 thru to Apr 07,so timing wise it looks like th trade is on.Banks started going pop sept 07 and then BK Oct 08.

There's very little left to short,the price is baked in now to trades like those below and Barclays(equity raiisng sssh ssh!!) is circa 1.45gbp.hardly worth the bother PE 6 market cap£22bn.it's had it's trousers throughly pulled down and the pockets gone through already

Berkely looks like there's some meat on the bone

BDEV was ExDiv today at 7.25% based on the price at closing the day before. When the market was well down early yesterday I was slightly tempted to harvest it but after the BoE intervened prices went up, so that ruled it out. Glad I didn't bother!

[Wight Flight]

36 minutes ago, sancho panza said:

Berkely looks like there's some meat on the bone

If you saw the footage of Liz Truss oop North today with the hard hat on, the chap on her left that she was having a happy chat with was Rob Perrins.

Nothing changes.

 

 

[HousePriceMania]

6 hours ago, Herby said:

Looks like the predictions were right.. 

https://www.msn.com/en-gb/money/other/divorce-applications-soar-to-their-highest-level-in-a-decade-after-new-no-fault-laws-introduced/ar-AA12o50o

"new figures from the Ministry of Justice, published today, revealed that between April and June this year there were more than 33,500 divorce applications."

That's a lot of marital homes potentially to come on the market!

 

And 2x the number of slave boxes needed to house the divorcees 

40 minutes ago, Wight Flight said:

If you saw the footage of Liz Truss oop North today with the hard hat on, the chap on her left that she was having a happy chat with was Rob Perrins.

Nothing changes.

 

 

Same old tory shite 

[spygirl]

17 hours ago, sancho panza said:

The issue is the per branch charge and it's not a particualrly transparent system as clearly some of the bigger guys pay less per branch and things like Purple Bricks don't even have branches.

I think gradually,we'll see the msaller players dissappear and merge.There's jsut no need for aphsycial branch these days.Lot of cost with little added to the bottom line.

 

https://www.estateagenttoday.co.uk/breaking-news/2019/11/huge-agency-anger-at-rightmove-fees-and-attitude-to-our-industry

Some figures are striking (all figures are pcm):

- Rightmove costs for single-branch agencies vary from £1,936+VAT down to £990+VAT;

- Zoopla costs for single branch agencies vary from £665+VAT to £250+VAT;

- OTM costs for single branch agencies vary from £355+VAT to temporarily free.

“We get around the same level of enquiries whether it be people looking to buy, view or sell from Zoopla and Rightmove. Zoopla is far better value for money. Right move’s fee is totally unjustifiable…”;

“In terms of sales leads, RM is better than OTM by about 30 per cent but certainly not five times bettie which is virtually what the price difference is. When you factor in that we get more rents leads from OTM than RM it certainly can’t…”;

The only people I see stop and look in EA windows are the 65+

Force of habit Id guess.

Pointless, as sellers do not drive the market Buyers do.

EAs need to ditch all their large offices and go to a small shared office model, out on a retail area with parking.

Mots can be done online and phone.

This will fuck up the small one shops EAs as the office is normally in the SIPP.

 

 

[sancho panza]

1 hour ago, spygirl said:

The only people I see stop and look in EA windows are the 65+

Force of habit Id guess.

Pointless, as sellers do not drive the market Buyers do.

EAs need to ditch all their large offices and go to a small shared office model, out on a retail area with parking.

Mots can be done online and phone.

This will fuck up the small one shops EAs as the office is normally in the SIPP.

 

 

Yeah I think small shop freeholders are going to be the leading the property loser board.I've seen these small shops local to me swapping hands for 5% and 6% gross yields.I jest not.

I jsut don't know how-aside from money laundering-many local high sts will be viable going forward.Amazon has killed them.

Also makes you wodner abotu teh qulaity of the bank loan books that were lending on thsoe kind of gros yields,even with a decent deposit.

[sancho panza]

10 hours ago, Wight Flight said:

If you saw the footage of Liz Truss oop North today with the hard hat on, the chap on her left that she was having a happy chat with was Rob Perrins.

Nothing changes.

 

 

Tell that to the FTBers and remortgagors looking at the rates in  @Plan-bs Nationwide rate post?

Edited September 30, 2022 by sancho panza

[onlyme]

1 hour ago, spygirl said:

The only people I see stop and look in EA windows are the 65+

Force of habit Id guess.

Pointless, as sellers do not drive the market Buyers do.

EAs need to ditch all their large offices and go to a small shared office model, out on a retail area with parking.

Mots can be done online and phone.

This will fuck up the small one shops EAs as the office is normally in the SIPP.

 

 

Maybe some agents are serving the rental market rather sales more now, tenants coming round for spare keys, vetting new tenants, that sort of thing. A street presence might be more useful in that market than sales.

[spygirl]

12 minutes ago, onlyme said:

Maybe some agents are serving the rental market rather sales more now, tenants coming round for spare keys, vetting new tenants, that sort of thing. A street presence might be more useful in that market than sales.

An office on an retail site would be a lot cheaper and only 10mins away.

 

You could get most EA streets nto a couple of buildings now.

 

[Dave Bloke]

23 minutes ago, onlyme said:

Maybe some agents are serving the rental market rather sales more now, tenants coming round for spare keys, vetting new tenants, that sort of thing. A street presence might be more useful in that market than sales.

Northwood reckon not, they say everything can be done WFH and have ditched nearly all their branches. They said people search online now and all contact is at the properties. The margins have also been reduced due to legals etc.

Edited September 30, 2022 by Dave Bloke

[Democorruptcy]

11 hours ago, sancho panza said:

The hosuing maret is one thing but pub chains,theatres and restaurants look fubar

Oi!! I've bought some shares in a pub chain this week!

When a few went to the chancellor begging for help with energy bills this winter, Wetherspoons weren't one of them. Some things I liked from their July update...

Quote

 

Wetherspoon has contracts for energy supplies until the end of FY23 at fixed prices which predate the current spike
in energy costs

Wetherspoon has fixed the floating rate interest cost of £770m of its bank loans, using swaps, at between 1.02% and 1.61% until November 2031

Wetherspoon has long-term contracts for many bar and food purchases, which will moderate the highly inflationary cost increases which have been widely reported.

https://www.jdwetherspoon.com/~/media/files/pdf-documents/investors/2022/pre-close-trading-update-13-july-2022.pdf

 

Plus their property portfolio was last valued at £1bn but that was in 1999. At £4 compared to £17+ just before covid I was tempted in, despite having to break my no divi no play rule. If it goes bust I've only myself to blame!

[Boon]

One thing that bothers me about Wetherspoons is that under firesale conditions what are their properties worth?

One has closed near me, that was over a year ago and nothing has taken its place. Doesn't mean that it is not sold but the only viable uses for such a space is either another pub, or a large-scale restaurant. Neither seem very viable at this moment in time.

They also appear to be massive beneficiaries of government help for employees. In the last two years over £300m.

Staffing costs are a huge cost, and at least locally dragged upwards by competition, ie why work minimum wage there if there are other jobs paying more. If more of the zombie companies were cleared out through higher interest rates it would bring worker supply back, but this doesn't seem to be happening any time soon.

Also what happens when the energy fix runs out and the prices are still high? That seems the most likely scenario to me.

[Democorruptcy]

1 hour ago, Boon said:

One thing that bothers me about Wetherspoons is that under firesale conditions what are their properties worth?

One has closed near me, that was over a year ago and nothing has taken its place. Doesn't mean that it is not sold but the only viable uses for such a space is either another pub, or a large-scale restaurant. Neither seem very viable at this moment in time.

They also appear to be massive beneficiaries of government help for employees. In the last two years over £300m.

Staffing costs are a huge cost, and at least locally dragged upwards by competition, ie why work minimum wage there if there are other jobs paying more. If more of the zombie companies were cleared out through higher interest rates it would bring worker supply back, but this doesn't seem to be happening any time soon.

Also what happens when the energy fix runs out and the prices are still high? That seems the most likely scenario to me.

I agree with a lot of that but in the short term they look better positioned than other pub chains. I think they could have ut their pub prices up more recently but maybe they are trying to put the competition out of business? If there are more closures from pubs suffering more, then JDW should pick up more market share? They own 70% freehold and have also renegotiated lower rents on the leased. This week they have said they are selling another 32 pubs, maybe the rents there were too high not their freeholds? Your empty pub could be held by a greedy landlord? They need to offload the less profitable pubs and emerge leaner. If the governbankment don't lift bennies/pensions by inflation that could knock the share price. I just thought at £4 it was worth a punt. This is not advice!

[Frank Hovis]

1 hour ago, Boon said:

One thing that bothers me about Wetherspoons is that under firesale conditions what are their properties worth?

One has closed near me, that was over a year ago and nothing has taken its place. Doesn't mean that it is not sold but the only viable uses for such a space is either another pub, or a large-scale restaurant. Neither seem very viable at this moment in time.

They also appear to be massive beneficiaries of government help for employees. In the last two years over £300m.

Staffing costs are a huge cost, and at least locally dragged upwards by competition, ie why work minimum wage there if there are other jobs paying more. If more of the zombie companies were cleared out through higher interest rates it would bring worker supply back, but this doesn't seem to be happening any time soon.

Also what happens when the energy fix runs out and the prices are still high? That seems the most likely scenario to me.

 

For starters it clearly isn't a fire sale but generally they aren't paying a lot as they buy buildings which have no obvious other use so buy them cheaply.

The Bodmin 'Spoons is up for sale again after being reprieved a couple of years ago.  IIRC it closes at the end of October and I want to make a farewell visit.

It is one of my favourites.  It was previously a Methodist Chapel.

It is set back from the High Street up either a lot of stairs or a steep ramp at the side.  There is no parking even for staff.

You would be lucky to be able to park in the street anywhere near, and even then it's only for an hour, so I always park some way away and walk to it.  There are a lot of factors not in its favour.

I don't see what commercial use there is for such a site and they, for that reason, presumably bought it really cheaply.

 

The upstairs bar; which is very rarely open these days.

[Frank Hovis]

2 minutes ago, Democorruptcy said:

I agree with a lot of that but in the short term they look better positioned than other pub chains. I think they could have ut their pub prices up more recently but maybe they are trying to put the competition out of business? If there are more closures from pubs suffering more, then JDW should pick up more market share? They own 70% freehold and have also renegotiated lower rents on the leased. This week they have said they are selling another 32 pubs, maybe the rents there were too high not their freeholds? Your empty pub could be held by a greedy landlord? They need to offload the less profitable pubs and emerge leaner. If the governbankment don't lift bennies/pensions by inflation that could knock the share price. I just thought at £4 it was worth a punt. This is not advice!

 

£4?  Wow, I'm buying.  I sold my last lot at about £12 and had no idea that they were so cheap now, I wasn't timing the market but was selling off my individual shares prior to transferring to another provider.

Cheers for the steer Demo.

A lot of this fall is going to be the many press stories talking them down by remainers and snobs who can't stand their success.  I think what will actually happen is the other pub chains will fail leaving Spoons to clean up.

I was in one on Saturday, or rather outside as it was sunny, and it was absolutely packed.  We had the choice of three empty tables in the shade out of about thirty.  It's a successful business model.

Right, my first share purchase since making 20% in a month on buying and selling what I saw as a very cheap BT about three years ago.

 

[Boon]

Yeah, actually I can remember there are some really nice conversions that retain a lot of original features. 

I am guessing maybe a few years ago when there was cheap energy and no cost of living crisis there might have been more competition for these things as opposed to virtually none today. Much like that Bodmin one I do wonder what might happen to it after they leave, it would be sad to see it go unused.

Anyway at £4 it's certainly not expensive and could certainly go higher quicker if the uncertainty was removed.