Property crash, just maybe it really is different this time

[Bobthebuilder]

9 minutes ago, Frank Hovis said:

 

It was a mangled Withnail and I quote 

Uncle Monty, is that you?

[HousePriceMania]

On 03/11/2022 at 15:11, Frank Hovis said:

 

I agree, I thought it was a huge headline number but I need a 40% fall to take my house back to its 2014 purchase price.

It's 68% up in that time.

And in real terms ?

[AWW]

4 hours ago, HousePriceMania said:

And in real terms ?

This is the sort of comment I find really unhelpful on the thread. You can't seriously look at a 68% return in 8 years and scoff at it because it's nominal. It's about 35% in real terms (if you believe the RPI measure and ignore GBPUSD).

One of the things I find tiresome about some discussion forums are the people who line up for a row about how good houses are as an investment. And they're always the people who argue that a house shouldn't be viewed as an investment.

Data and anecdata, thoughts on market sentiment, people's experiences, all very interesting.

The arguments for arguments' sake, not so much.

[King Penda]

8 minutes ago, AWW said:

This is the sort of comment I find really unhelpful on the thread. You can't seriously look at a 68% return in 8 years and scoff at it because it's nominal. It's about 35% in real terms (if you believe the RPI measure and ignore GBPUSD).

One of the things I find tiresome about some discussion forums are the people who line up for a row about how good houses are as an investment. And they're always the people who argue that a house shouldn't be viewed as an investment.

Data and anecdata, thoughts on market sentiment, people's experiences, all very interesting.

The arguments for arguments' sake, not so much.

I bought mine to live in just over 10 years ago rents in my street were about 300/325 I’m told a couple in the street now go for above 500 a month my house is if you beleive zoopla gone up in value by about 55%

[Stuey]

7 hours ago, King Penda said:

I bought mine to live in just over 10 years ago rents in my street were about 300/325 I’m told a couple in the street now go for above 500 a month my house is if you beleive zoopla gone up in value by about 55%

I was paying 480/month at my old 2-bed place, that included free broadband & water, as well as piggybacking on others' heating. Reckon that was worth about £80. A good deal and a river view so stuck it out for nearly five years 

[spygirl]

London commercial property ...

 

Fire sale begins as property funds face rush of UK redemptions

Investors withdrawing millions of pounds triggers sale of prime property

https://www.ft.com/content/ebcea340-6773-401b-85bd-2cd37bb09fb9

UK real estate funds, including vehicles managed by Schroders, CBRE Investment Management, Legal & General Investment Management, M&G and Abrdn, are marketing at least 18 commercial assets collectively priced at about £1bn in the capital, according to property agents.

Fund managers insisted that the sales were being triggered as they rebalanced portfolios on behalf of clients, but property agents said the level of activity was far higher than normal.

Proxy for London employment and demand.

London is over as somewhere where you have to go to to get a well paying job.

 

 

 

[haroldshand]

20 hours ago, HousePriceMania said:

Someone on TOS doesn't believe some random bloke on the internet's house price index

FFS, what's the world coming too, no trust.

 

 

The one thing I personally won't be taking any sermons from and preached to is the predictions from TOS, yes they might be right this year but have called it very very wrong far too many times to claim any kind of success.

Even now I reserve a little part of myself for the possibility that they can still prevent a crash

[Boon]

11 hours ago, AWW said:

This is the sort of comment I find unhelpful on the thread. You can't look at a 68% return in 8 years and scoff at it because it's nominal. It's about 35% in real terms (if you believe the RPI measure and ignore GBPUSD).

One of the things I find tiresome about some forums are the people who line up for a row about how good houses are as . And they're the people who argue that a house shouldn't be viewed as .

Data and anecdata, on market , people's experiences, all very interesting.

The arguments for arguments' sake, not so much.

That is it, isn't it.

It is kind of strange to me why polar opposites exist. Over history houses have been expensive at times and a bad buy, but also have been cheap at times and a good buy. 

Now, those times may only become apparent with hindsight but at each end you have people that have difficulty accepting this fact.

The TOS is one thing with some characters who have missed out on the last boom. However, the 'property only goes up' crowd are not entirely right either; if you make the wrong type of purchase at the wrong time that is equally bad.

Who is gonna be worse off in a couple of years, someone who was an uber bear and stayed out of the market, or someone who bought somewhere a few years ago at peak prices, at the max what they could afford and their rate going from 1% to 5%? Or those who levered up at every opportunity, buying more and more BTL, feverishly outbidding others at any cost.

Those are the polar opposites but when people seek to compare they only want to compare an opposite to a median person; thus they will always think they are right, and the arguments rumble on.

[AWW]

My view is - everyone needs somewhere to live. If you own a house, your position is flat. If you don't, you're short. And if you own more than one house, you're long.

Obviously there are other things to consider, like leverage, like the opportunity cost of not five bagging in Mosaic, like ongoing maintenance costs etc.

But as a simplified view, I think it broadly works over time for how "well" or "badly" you'll do in a rising or falling housing market.

[AWW]

1 hour ago, spygirl said:

London is over as somewhere where you have to go to to get a well paying job.

I wouldn't be so sure about that. There is growing resentment in the city about newly remote workers being paid the same as they were when they were based in London, while those unable to work remotely still bear London living costs. There are already rumblings in some of the banks about significant pay cuts for remote workers.

Of course, there are several ways this could pan out. London/SE living costs and wages could fall, with the country undergoing an economic rebalancing that would IMO be a very good thing. But I think the most likely outcome is that remote workers get paid less. It's effectively an arbitrage opportunity at the moment, and we know what markets like to do with those.

[Chewing Grass]

Best example I've ever seen showing how misleading the estate agent lens is, game of pool anyone...

[Joncrete Cungle]

The Black Belt Barrister on the housing crash, Landlord woes, guarantors, SVR, gifted deposits and more. Looks like an increase in enquiries to his law firm about mortgage problems has prompted him to make this video. Along with others making property market videos with incorrect information.

[Democorruptcy]

19 hours ago, Bobthebuilder said:

Thats my thought as well, a lot of London has not done much over the last few years, whereas places like the SW have had almost 100% gains in some places. They will be the first to reverse IMHO.

That needs something doing about altering the tax incentives for holiday lets, to change sentiment. Article I posted the other day. Tax perks for holiday rentals under scrutiny

[Axeman123]

8 minutes ago, Joncrete Cungle said:

The Black Belt Barrister on the housing crash

I watched that earlier. He seemed to be explaining a lot of basic stuff, which implies ordinary Joe is very missinformed on the terms of his quarter to half million pound leveraged bet on property. One example was people thinking going gaurantor on a two-year fixed rate mortgage only has them on the hook for two years! (that would have been true if the borrower was able to remortgage without a gaurantor after the initial period due to the value of their equity rising, but obviously not so much now)

Always nice to see non property focused youtubers getting onboard the price crash narrative though.

[moneyscam]

Not seen this posted anywhere on here and I don't think it would actually happen but you never know. It would put a right spanner into the works though if it becomes true. It would have all sorts of implications for transaction levels, prices, supply and mobility.

 

Edited November 5, 2022 by moneyscam

[Plan-b]

5 minutes ago, moneyscam said:

Not seen this posted anywhere on here and I don't think it would actually happen but you never know. It would put a right spanner into the works though if it becomes true. It would have all sorts of implications for transaction levels, prices, supply and mobility.

 

[Axeman123]

3 minutes ago, moneyscam said:

It would have all sorts of implications for transaction levels, prices, supply and mobility.

It would be an interesting zero cost way to keep supply constrained in the event of a crash. I can't personally see it happening though, unless there is a huge capital gains allowance in place of the uncapped private residence relief. Ordinary Joe losing ~20% of his net worth to move nearer his widowed mum etc would be a terrible look.

[Plan-b]

Just now, Axeman123 said:

It would be an interesting zero cost way to keep supply constrained in the event of a crash. I can't personally see it happening though, unless there is a huge capital gains allowance in place of the uncapped private residence relief. Ordinary Joe losing ~20% of his net worth to move nearer his widowed mum etc would be a terrible look.

The Torys must know they are finished whatever, so just scorched earth policy now and makes little difference its also a nice earner.

Labour would probably go with it if they get in.

[Boon]

TBH I think it is inevitable that property gets some attention - after all that is where the created money has ended up.

Would be disastrous if it came in just like this. Imagine long-term holders who have built up immense gains.... if you retrospectively allowed years of allowances to roll up - ie so 20 years ownership x £12.5k allowed per year = £250k limit

At this limit the average person might get off with paying nothing, but rich southerners might be on the hook for big bills still. But most of those southerners will be Labour.

TBH I do think reform of council tax is way overdue and tying it to land values might be easier to raise the money. There would need to be some form of redistribution though from expensive areas to cheap ones.

[ste]

If the housing market was on the brink and the government started buying up housing to prop it up with the intention of housing migrants - would this count against the national debt or would there be some trickery like with PFI?

The government could own the asset outright, or perhaps allow the banks to mop them up with the commitment of rent/occupancy or void guarantee. 

With housing and imputed rent making up more of our GDP than manufacturing - this will be protected at all costs and the above could be a stealth way of achieving it.

[Ash4781b]

An interesting throwing it out there from the Lib Dems. I wonder what would happen in practice if this was a policy. Seems it would have unintended consequences. If it can work maybe the Tories and Labour would go for it. I expect  BTL would be included..,

“Homeowners struggling to pay their mortgages amid rising interest rates should be able to apply for a £300-a-month grant, the Lib Dems have said. 

Under the party's plan, the grant would be available to people whose mortgage payments had risen by more than 10%.

….

 

Under the Liberal Democrat's mortgage protection fund, grants would be offered to homeowners to protect them from losing their homes or falling into arrears.

The party estimates this would cost £3bn and says it could be paid for by reversing cuts to the bank levy and bank surcharge.”

 

https://www.bbc.co.uk/news/uk-politics-63514047

[Wight Flight]

6 minutes ago, Ash4781b said:

An interesting throwing it out there from the Lib Dems. I wonder what would happen in practice if this was a policy. Seems it would have unintended consequences. If it can work maybe the Tories and Labour would go for it. I expect  BTL would be included..,

“Homeowners struggling to pay their mortgages amid rising interest rates should be able to apply for a £300-a-month grant, the Lib Dems have said. 

Under the party's plan, the grant would be available to people whose mortgage payments had risen by more than 10%.

….

 

Under the Liberal Democrat's mortgage protection fund, grants would be offered to homeowners to protect them from losing their homes or falling into arrears.

The party estimates this would cost £3bn and says it could be paid for by reversing cuts to the bank levy and bank surcharge.”

 

https://www.bbc.co.uk/news/uk-politics-63514047

I assume they will offer the same to renters?

[Boon]

Obviously at higher levels of borrowing £300 is a drop in the water but at lower levels.= ie much of the normal people, £300 could be most of it.

So basically removes any incentive to remortgage, people go onto higher rates and have the difference refunded while waiting for rates to drop.

It would be difficult to cost because if mortgage rates are sticky at 5%+ long term then eventually millions and millions of people will end up on this plan as fixed term rates end. Maybe banks might also get tougher, knowing that if they push people towards the grant it keeps people paying an expensive mortgage with them.

So you could have a decision where either you have to maintain an increasing expensive prop, or end it after a year and then make loads of people's mortgages expensive at once rather than a gradual thing.

And I guess none of the benefit would be passed on to renters....

Seems like a desperate ploy to get votes but the vast lack of morals will see a lot of people either stay silent knowing it is a bad idea.

 

[ashestoashes]

2 minutes ago, Boon said:

Obviously at higher levels of borrowing £300 is a drop in the water but at lower levels.= ie much of the normal people, £300 could be most of it.

So basically removes any incentive to remortgage, people go onto higher rates and have the difference refunded while waiting for rates to drop.

It would be difficult to cost because if mortgage rates are sticky at 5%+ long term then eventually millions and millions of people will end up on this plan as fixed term rates end. Maybe banks might also get tougher, knowing that if they push people towards the grant it keeps people paying an expensive mortgage with them.

So you could have a decision where either you have to maintain an increasing expensive prop, or end it after a year and then make loads of people's mortgages expensive at once rather than a gradual thing.

And I guess none of the benefit would be passed on to renters....

Seems like a desperate ploy to get votes but the vast lack of morals will see a lot of people either stay silent knowing it is a bad idea.

 

mortgages will be harder to get so your bank might want to become your landlord

[Phil]

1 hour ago, ashestoashes said:

mortgages will be harder to get so your bank might want to become your landlord

They will. They are, but without the maintenance.