Property crash, just maybe it really is different this time

[sancho panza]

3 hours ago, Boon said:

These yields are quite funny to look at, once you start adjusting for expenses, tax, voids, managing agents, why bother? I can only presume these are marketed at businesses that might like to pay up front, can run it effeciently (both in operations terms and tax) and have it as a hedge on depreciating currency.

The Leicester one I think will be in a permanent bubble. Looking at the sparesness of furnishings it seems like a house a footballer might live in, so there is a possibility the owner is ambivalent to whether it sells or rents.

Ref the yields,I couldn't agree more.RUnning HMO's properly and prfoessionally as a business,I'd expect to see 20% gross yields running versus say a 5% base rate as a minimum.The reality is that the rent is harder to collect,there's far more damage and there's far more damage more often,so you or the appointed handyman will be there a lot.

 

I hope this doesn't come across as snobbish but my view is that if you need to rent out a multimillion pound pad to cover teh costs then you probably couldn't afford it in the first place.

I've seen markets(particualrly the Isle of Man) where stuff sits on it for years at kite flying prices because the owners want top dollar or nothing.

Sales like this one in Leicester are much more ambiguous affiars.As soon as you have a tenant in(especailly one who can afford that rent) then the place is off the marekt until the end of the tenancy which could mean missing a crucial sale window..Whatever the contract says in the small print.That means that the owner is effectively arbitraging the loss of a sale with the cashflow from the rent

Hence why they're going for a big rent or a big sale price because they havent really thought it through.The reality is that they will likely get neither because generally anyone looking to buy or a rent a place at thsoe gross yields will have the sense to see if the vendor is trying to arb the sale.

If that was me and I was looking at that place(and I'm not) to buy or rent,the fact that the owner is doing both means my first bid would never be higher than say a bar and even then I'd be thinking to let it hang for some more time and see what develops as the owner is clearly in trouble.

For me this is a real no no if you're looking to sell,then sell.

[sancho panza]

2 hours ago, Axeman123 said:

I think they were just saying they don't expect to reach the 5% base currently priced in, which none of us were expecting them to anyway. Obviously algos will only respond to headines and keywords, so this could still be intended to show the market approves of Hunt and perhaps see some slightly lower mortgage deals.

Another interpretation would be the fed are preparing to pivot (stop laughing at the back) and the BoE (plus other international CBs) are positioning for it.

 

UST market has serious liquidity issues and I suspect that's why we'll get a pivot if blowing up the world economy isn't enough

https://seekingalpha.com/article/4547096-us-treasury-market-becoming-illiquid

Major Problem, U.S. Treasury Market Is Becoming Illiquid

Oct. 18, 2022 1:20 AM

Summary

• The US Treasury market is generally viewed as the deepest and most liquid securities market in the world and it plays a critical role in the global economy.
• The 10-year bond is often used as a proxy for many other important financial matters, such as mortgage rates. It also tends to signal investor confidence in the economy.
• Declining liquidity in the US Treasuries market represents the biggest systemic risk to financial markets since the 2007 housing bubble, if not bigger.

Edited October 20, 2022 by sancho panza

[Axeman123]

11 minutes ago, sancho panza said:

UST market has serious liquidity issues and I suspect that's why we'll get a pivot if blowing up the world economy isn't enough

Just like a hands off approach to Boston residents financing terrorism in Ireland vs 9/11, the US will tolerate any ammount of pain for others but almost nothing for themselves.

[Noallegiance]

Anecdote:

Two families I know of are up for mortgage renewal next June.

At current rates they're looking at £1000 extra per month.

[Stuey]

27 minutes ago, Noallegiance said:

Anecdote:

Two families I know of are up for mortgage renewal next June.

At current rates they're looking at £1000 extra per month.

They can just get another job, easy. 

[HousePriceMania]

https://www.bbc.co.uk/news/business-63327553

"Mortgage rates hit fresh 14-year highs"

 

28 minutes ago, Noallegiance said:

Anecdote:

Two families I know of are up for mortgage renewal next June.

At current rates they're looking at £1000 extra per month.

My savings have been devalued £200K.  fuck them.

[sarahbell]

1 hour ago, HousePriceMania said:

https://www.bbc.co.uk/news/business-63327553

"Mortgage rates hit fresh 14-year highs"

 

My savings have been devalued £200K.  fuck them.

Yeah.

This is all about mortgages and the insane lending.

FUcking bastards

[dnb24]

On 11/10/2022 at 14:50, dnb24 said:

1700, reductions are 30% of daily listings.

1823 it’s a pile on at the minute

[reformed nice guy]

The next big estate agents conference will be grim

 

 

[Castlevania]

6 hours ago, sancho panza said:

There appear to be some signs of stress at the top end of the market near me.

for sale for £1.5mn or rent for £3500pcm which equates to a 2.8% yield.I think it's msot definitely overpriced as a rental given the bills that will come with it.A more reasonable(an dare I say it,liquid) asking price would be circa 1.5% aka £1875.I'd still offer £1500 as there won't be many bidders.

I never understand why vendors like this don't just cut the asking sale price ? But if the bottom of the market isn't liquid,then the top will be even worse

Sale details

https://www.rightmove.co.uk/property-for-sale/map.html?locationIdentifier=REGION^13180&numberOfPropertiesPerPage=499&radius=3.0&propertyTypes=&includeSSTC=false&viewType=MAP&mustHave=&dontShow=&furnishTypes=&viewport=-1.07425%2C-1.00146%2C52.6185%2C52.6375&keywords=

rental

https://www.rightmove.co.uk/properties/127832615#/?channel=RES_LET

 

Interstingly,using a 100% 2% mortgage,interest would be £30,000 per annum.At the new 5.4% that £81,000.Suggesting that target sale price might be in the region of £555,555 if new mortgage rates assert tehmselves(which I suspect they will.

My worry(if I was the owner) was that factoring in the new,post ukraine fuel bills being higher,means cost of carry may impact sale price pontetnially.

Glad I haven't got a big pad to sell at the minute.The buyer pool is shrinking by the day

Which footballers have Leicester recently sold?

[sancho panza]

4 hours ago, dnb24 said:

1823 it’s a pile on at the minute

How low was it two motnhs back or when you first measured it? Has the inventory pluss SSTC remained flat?

4 hours ago, Castlevania said:

Which footballers have Leicester recently sold?

With where it is-major road out of Liecester,and how it's done up,it's not really a footballers hosue.It's a local family I suspect.Footballer's live somewhere else.

It's on the A47,lot of big lorries heading up and down it all day plus school traffic.

That hosue may be many things but being worth £1.5mn in the curretn situation ain't one of em.

 

[dnb24]

7 hours ago, sancho panza said:

How low was it two motnhs back or when you first measured it? Has the inventory pluss SSTC remained flat?

I haven’t been keeping an eye on SSTC+inventory mate, but in 8 weeks it’s gone from roughly 1450 to 1823

[spygirl]

20 hours ago, HousePriceMania said:

Didnt take long for Jeremy cHunt to make his mark.

 

 

Investors now expect Fed to raise rates to 5% next year

Traders have priced in May 2023 increase as central bank continues to tackle high inflation

https://www.ft.com/content/963bc01e-c81a-462c-ac2b-ef838cb8bc39

BoE is still continuing wit this daft idea thats its price maker rather than a price taker.

 

[spygirl]

On 20/10/2022 at 08:51, Bear Hug said:

Crasy £300k asking price for a 2 bed terrace in Reading. It's small. How small?

Food having to be stored in the toilet small. 

 

This is continue the Reading is a shithole thread from TOS.

When London falls; Reading collapses.

Im still waiting for the census figures. I expect the local population to be mainly non brits on benefits.

Its gone from being a rough town with bars to bedsitville.

Employment has lurched down n down - theres very few companies in and around now. The M4 is not worth using.

Its going to be brutal

 

[HousePriceMania]

11 minutes ago, spygirl said:

Investors now expect Fed to raise rates to 5% next year

Traders have priced in May 2023 increase as central bank continues to tackle high inflation

https://www.ft.com/content/963bc01e-c81a-462c-ac2b-ef838cb8bc39

BoE is still continuing wit this daft idea thats its price maker rather than a price taker.

 

[spygirl]

8 minutes ago, HousePriceMania said:

A picture is worth a 1000 words ...

[Axeman123]

Some genius financial planning on display in this article:

‘Tracker’ mortgages surge in popularity as homeowners try and cut bills

"Demand for tracker mortgages has more than doubled since the mini-Budget as desperate buyers gamble on future interest rates.

A tracker mortgage is currently £500 a month cheaper than a two-year fix with a £200,000 mortgage. Even though that is almost guaranteed to rise, experts say homeowners are reluctant to lock into long-term deals..."

Telegraph, via Yahoo finance

https://uk.finance.yahoo.com/news/tracker-mortgages-surge-popularity-homeowners-070000070.html

[Bear Hug]

13 minutes ago, spygirl said:

This is continue the Reading is a shithole thread from TOS.

When London falls; Reading collapses.

Im still waiting for the census figures. I expect the local population to be mainly non brits on benefits.

Its gone from being a rough town with bars to bedsitville.

Employment has lurched down n down - theres very few companies in and around now. The M4 is not worth using.

Its going to be brutal

 

I'm just surprised how slow it's turning. I was monitoring those sort of houses from 5y ago. There were a few in £200k-£250k range listed around that time. Now those became £250k-£300k (ignoring any "low" guide price auction listings) 

[HousePriceMania]

40 minutes ago, spygirl said:

A picture is worth a 1000 words ...

And the inflation chart ?

[HousePriceMania]

38 minutes ago, Bear Hug said:

I'm just surprised how slow it's turning. I was monitoring those sort of houses from 5y ago. There were a few in £200k-£250k range listed around that time. Now those became £250k-£300k (ignoring any "low" guide price auction listings) 

Im seeing some 2022 price + 30% coming on the market while most of the other places that haven't sold desperately dropping their prices 10/20%

Very few get out at the top in any investment scam

[No One]

On 19/10/2022 at 20:20, No One said:

361.. Numbers are beginning to increase again

364

[sancho panza]

3 hours ago, dnb24 said:

I haven’t been keeping an eye on SSTC+inventory mate, but in 8 weeks it’s gone from roughly 1450 to 1823

No worries.Real estate markets can be very local .In Leics the increase in inventory is clearly the result of coallpsing chains as the total inventory(available +SSTC) hasn't moved.

20% hikes in inventry do seem to confirm most of our thoughts about market direction

[Bus Stop Boxer]

Been trying to find that cartoon that was oft seen on TOS. Think it was by "Matt".

Bloke in estate agents:

"How much is this house"?

..............

"How much is it now"?

[spygirl]

31 minutes ago, HousePriceMania said:

And the inflation chart ?

[Wight Flight]

This is how landlords are going to bail themselves out.

Just triple the price and shorten the term. Bingo.

https://www.rightmove.co.uk/properties/128264264?#/?channel=RES_LET

(Similar houses in that street were £1,100 earlier this year)