Property crash, just maybe it really is different this time

[Boon]

Wonder what the rent repayments as % of income would look like....

Maybe they could use that a guide to shut up any complainers.

Edited October 5, 2022 by Boon

[HousePriceMania]

1 hour ago, Boon said:

Wonder what the rent repayments as % of income would look like....

Maybe they could use that a guide to shut up any complainers.

[HousePriceMania]

[HousePriceMania]

3 hours ago, spunko said:

I suspect this will be like the claim that Fungus Wilson sold all his properties to a Chinese property developer, i.e. complete bollocks that journalists can't be bothered to verify.  I bet they haven't even sold 50% of them.

June 2022

https://www.dailymail.co.uk/news/article-10922989/Landlord-said-did-not-want-coloured-tenant-banned-selling-property.html

 

"Investigators claimed Mr Wilson and his wife, Judith, made more than £40million from the sale of 166 properties - with £35 million made in the last two years."

 

"But the multi-millionaire claimed he had no money and was unable to pay." 

 

"In exchanges with Mr Wilson, the judge asked him about a statement he made in a letter to the council where he said: 'I take more annually in salary and capital gain than the entire salary bill of Ashford Borough Council.'

David Lock QC, sitting as a deputy judge of the High Court, asked: 'When you made the statement, was it true?'

Mr Wilson, who chose to represent himself, said: 'No, it was not true.'"

 

Look at the picture of him, shoes of a poor man.

 

Edited October 5, 2022 by HousePriceMania

[Wight Flight]

4 hours ago, Axeman123 said:

I was about to post something similar.

I expect the next wailing sad face article will be "we can't complete on our off-plan purchase because the mortgage rates have gone up...and now we face losing our deposit"  (or perhaps being sued for specific performance).

There is a video somewhere of the last time this happened with a bunch of off plan Berkley buyers getting very angry that they were being forced to complete on houses that were already worth thousands less than they had agreed to pay before they had even moved in.

[sancho panza]

I was planning to do these updates once a week on  a monday but this downturn is running away.Here's Wednesdays data.All the rising inventory is coming off sales falling through

 

Rightmove inventory - aord of warning the individual categories don't add up to the total,presuming due to some being in two categories

 

Leicestershire county

Date         Inventory    Inv incl SSTC     detached    semi     terraced      flats     bungalows

14/8/22      3950

2/9/22        4210

12/9/22     4354

19/9/22     4501

26/9/22    4585          10359                                

3/10/22    4674          10361             1776              1030         727             532          485

5/10/22   4773            10367

5/10/22   

[AWW]

5 hours ago, Inque said:

Ouch

 

Cue a hundred replies telling Ed that demand is so high that prices can't possibly fall, and a hundred arguments between people who know that house prices are based on cost of credit and people who think house prices are based on how much they can be rented out for.

[Wight Flight]

48 minutes ago, AWW said:

that house prices are based on cost of credit and people who think house prices are based on how much they can be rented out for.

Surely both factors have to be combined. Neither exist in isolation?

[AWW]

48 minutes ago, Wight Flight said:

Surely both factors have to be combined. Neither exist in isolation?

Prices follow mortgage rates (inversely). Rents follow wages.

Watch what happens over the next six months. Prices will fall. Rents won't.

[Wight Flight]

3 minutes ago, AWW said:

Prices follow mortgage rates (inversely). Rents follow wages.

Watch what happens over the next six months. Prices will fall. Rents won't.

Not quite.

Prices follow yield which is a function of interest charged over rent achievable.

I agree that rents won't change, but that doesn't mean they are not a vital part of the equation..

[Stuey]

8 hours ago, sancho panza said:

I was planning to do these updates once a week on  a monday but this downturn is running away.Here's Wednesdays data.All the rising inventory is coming off sales falling through

 

Rightmove inventory - aord of warning the individual categories don't add up to the total,presuming due to some being in two categories

 

Leicestershire county

Date         Inventory    Inv incl SSTC     detached    semi     terraced      flats     bungalows

14/8/22      3950

2/9/22        4210

12/9/22     4354

19/9/22     4501

26/9/22    4585          10359                                

3/10/22    4674          10361             1776              1030         727             532          485

5/10/22   4773            10367

5/10/22   

You can't paste tables into here, all the columns get misaligned. Do a screenshot or something? 

[Ash4781b]

15 hours ago, Inque said:

Ouch

 

Bring on the massive wage increases? Oh wait how is productivity?

[GTM]

16 hours ago, JoeDavola said:

£865K for a studio. i.e. a room.

£865K to live in a room in a converted power plant.

You do wonder how the estate agents can keep a straight face.

Then you find out what your share of the repair and maintenance costs for the building are. 

I wouldn't take one of those flats if they were free.

[haroldshand]

15 hours ago, Boon said:

You can check on houseprices.io, it seems like virtually no sales of new-build flats are going through in this area, the properties that do sell are the older style ones.

I do think the press seem to be trying to lay the foundations for some kind of government action here.

That's the feeling I am starting to get, yesterday I read about BOE and Kwasi Kwarteng having meeting concerning "the coming mortgage crisis".

Personally I think it will be one bailout too many if they use taxpayers money, try telling priced out under 40 year olds they are now paying over leveraged mortgage homeowners to stay in the house as they look through their shop window still.

Moral hazard has already probably vanished but that would be the final nail in the coffin, it would be tax evasion from me if I could get away with it from now on

[HousePriceMania]

Love Property Log

 

 

[Plan-b]

1 hour ago, haroldshand said:

That's the feeling I am starting to get, yesterday I read about BOE and Kwasi Kwarteng having meeting concerning "the coming mortgage crisis".

Personally I think it will be one bailout too many if they use taxpayers money, try telling priced out under 40 year olds they are now paying over leveraged mortgage homeowners to stay in the house as they look through their shop window still.

Moral hazard has already probably vanished but that would be the final nail in the coffin, it would be tax evasion from me if I could get away with it from now on

What would be the cost bailing out a percentage of UK housing that is supposedly worth in total around £8 trillion?

Just a 10% Bailing out cost = £800 Billion.

I'd suggest its not gonna happen in any meaningful way, when the reported energy bailout of up to £66 Billion and some Tax tampering has all but destroyed international financial confidence in the UK, in a week has moved interest rates to levels not seen in decades and got the UK credit rating downgraded by Fitch.

There maybe some forbearance, tampering around the edges or letting defaulters stay in their property for rent (fair enough), but a mass bailout? not this time because this time it really is different.

[Boon]

1 minute ago, Plan-b said:

What would be the cost bailing out a percentage of UK housing that is supposedly worth in total around £8 trillion?

Just a 10% Bailing out cost = £800 Billion.

I'd suggest its not gonna happen in any meaningful way, when the reported energy bailout of up to £66 Billion and some Tax tampering has all but destroyed international financial confidence in the UK, in a week has moved interest rates to levels not seen in decades and got the UK credit rating downgraded by Fitch.

There maybe some forbearance, tampering around the edges or letting defaulters stay in their property for rent (fair enough), but a mass bailout? not this time because this time it really is different.

I was thinking about it, but sums are less.

Total value of mortgages outstanding = £1.7tn

Vast majority of these mortgages are not going to be problematic, anything taken out over a reasonable time ago (ie 8 years) would be at much lower valuations, will have paid off some capital and thus room to be rejigged if paymetns are an issue.

So maybe being pessimistic 75% of that falls under this description. = £425bn of distressed mortgages, where people really have no option (ie cannot extend, cannot remortgage)

A bailout doesn't mean that the entire mortgage is paid off. So maybe it could cost something in the region of £50bn or less. Some kind of temporary bridging by which a forced sale should occur if the numbers will not stack up.

Trouble is once you start helping one group everyone is going to want a piece of it.

[HousePriceMania]

I give you...the party of the workers and the poor.

 

 

[haroldshand]

17 minutes ago, Plan-b said:

What would be the cost bailing out a percentage of UK housing that is supposedly worth in total around £8 trillion?

Just a 10% Bailing out cost = £800 Billion.

I'd suggest its not gonna happen in any meaningful way, when the reported energy bailout of up to £66 Billion and some Tax tampering has all but destroyed international financial confidence in the UK, in a week has moved interest rates to levels not seen in decades and got the UK credit rating downgraded by Fitch.

There maybe some forbearance, tampering around the edges or letting defaulters stay in their property for rent (fair enough), but a mass bailout? not this time because this time it really is different.

 The big thing now is are they going to do anything or be seen to do something, my money is on being  seen to do something. They have reached the maximum limit on this bubble and large incentives  and props(and they were large) to keep it inflated IMO..

 

P.S  I have always wondered what percentage it takes for a rush to the exit to destroy what is always a sensitive and fragile housing market, my guess is that it is way lower than 7%. The housing market is never truly worth £8 Trillions because that money does not truly exist. It's like a small crack in the Dam scenario where a trickle can be managed ......

Edited October 6, 2022 by haroldshand

[Plan-b]

19 minutes ago, Plan-b said:

What would be the cost bailing out a percentage of UK housing that is supposedly worth in total around £8 trillion?

Just a 10% Bailing out cost = £800 Billion.

I'd suggest its not gonna happen in any meaningful way, when the reported energy bailout of up to £66 Billion and some Tax tampering has all but destroyed international financial confidence in the UK, in a week has moved interest rates to levels not seen in decades and got the UK credit rating downgraded by Fitch.

There maybe some forbearance, tampering around the edges or letting defaulters stay in their property for rent (fair enough), but a mass bailout? not this time because this time it really is different.

 

11 minutes ago, Boon said:

I was thinking about it, but sums are less.

Total value of mortgages outstanding = £1.7tn

Vast majority of these mortgages are not going to be problematic, anything taken out over a reasonable time ago (ie 8 years) would be at much lower valuations, will have paid off some capital and thus room to be rejigged if paymetns are an issue.

So maybe being pessimistic 75% of that falls under this description. = £425bn of distressed mortgages, where people really have no option (ie cannot extend, cannot remortgage)

A bailout doesn't mean that the entire mortgage is paid off. So maybe it could cost something in the region of £50bn or less. Some kind of temporary bridging by which a forced sale should occur if the numbers will not stack up.

Trouble is once you start helping one group everyone is going to want a piece of it.

True, although UK housing is not just private mortgages its a massive industry, building Co's loans used in the process of construction, property portfolio's held by all kinds of entities including pension companies, and other interconnected issues, all could suffer write-downs and downgrades as an increase in perceived risk and loss of valuations of assets.

It could get very serious for the UKs future, I hear yet another rating agency has downgraded the UK.

[Axeman123]

It looks to me like they are going to repeat how they dealt with spiralling fuel costs for spiralling mortgage costs. Lenders allegedly "aren't passing on" falling swap rates, and therefore profiteering. How much actual difference to prices at the pump did this approach make?

 

[HousePriceMania]

God, that bloke with the BTL wont like this

 

 

[Plan-b]

4 minutes ago, HousePriceMania said:

God, that bloke with the BTL wont like this

 

 

Yeah but no but yeah but who takes a 2 year fixed mortgage Merryn?

I suppose it is indicative of where things are going.

[HousePriceMania]

it's all getting a bit crazy
 

 

"While the govt may claim it is limited in what it can do to support homeowners... executives may put forward proposals that would mean the Treasury coordinates with the Bank of England to provide cheap money for mortgages"
 

[Boon]

Banks got a lot of power here I think.

Because housing is a powerful source of voting intention. The rest of it isn't.

Ie builders going bust = small ones don't matter, the big ones, shareholders bail out
pension funds BTR investments need cashflow more than asset appreciation
poorly performing pensions/tracker investments = blame Putin

People getting reposessed or negative equity take up disproportionate headline news, and people will blame government ahead of anyone else.

From point of view of the banks, capping mortgage rates greatly reduces the risk of their loans going bad, and also reduces the risk of large-scale firesales which damage the asset values of everything else.

The banks bluffing that they will have to take enforcement action will have the government shitting their pants.