Property crash, just maybe it really is different this time

[spygirl]

10 hours ago, tank said:

It should surprise no one when you look at Britain's history and politics, especially over the last 40 years.

The Tory Party represent wealthy landowners and rentiers, Always have and always will. They have never represented ordinary working folk. They have been in government for 30 of the last 40 odd years and are largely responsible for converting our once mixed, post war economy into a rentier hell. Most on here blame Blair and Broon but they were a symptom of the neoliberal disease aka Thatcherism. 

Property is about the only thing of value the UK has left to sell. Everything else has been flogged off or shut down by neoliberals. We now have an unproductive rentier economy fuelled by huge fiscal supports and mass immigration. All our former white colonies have gone the same way, but unlike Australia and Canada, we don't have natural resources to bail out our per capita living standards. All we've got is property and people farming hence Brexit. There are a lot more Pakistanis than Poles. 

Not since the corn laws.

 

[MrXxxx]

Interesting piece from Schroders, the last time UK property was so unaffordable was 1876!

https://www.schroders.com/en-gb/uk/individual/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/

Edited February 23, 2023 by MrXxxx

[Frank Hovis]

10 minutes ago, MrXxxx said:

Interesting piece from Schroders, the last time UK property was so unaffordable was 1876!

https://www.schroders.com/en-gb/uk/individual/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/

 

This is a good graph from what is an excellent article, thanks for linking it.

I would suggest that an inceasing level of home ownership is a consequence of productive workers being fairly rewarded for that productivity so allowing them to make the switch from renting to owning their own home.

Wages were at that rewarding level all the way for forty years through 1953 to 1991 allowing big jumps in the numbers owning their own home.

This rate of increase then fell significantly up to 2001 before going into reverse as slave wages started reducing the number of owner occupiers.

Whilst we are now at a similar level to 1991 the reality is that it's far worse because the rate is falling.  Young people or teh low waged cannot buy their homes and those homes sold are tumbling into the hungry maw of BTLers and corporate landlords via "equity release" schemes.

[spygirl]

ER is minor player.

I knwo thers more of it but its still piss in ocean levels.

 

[No One]

House volume locally is forming a consolidation range. Sellers are holding out for the time being.

[MrXxxx]

1 hour ago, Frank Hovis said:

This rate of increase then fell significantly up to 2001 before going into reverse as slave wages started reducing the number of owner occupiers.

...and why did salaries fall significantly?...well lets consider a few figures, firstly Net migration [https://migrationobservatory.ox.ac.uk/resources/briefings/eu-migration-to-and-from-the-uk/]

...and your [Schroders] home ownership/renting figure:

..and what do we notice?

1. Net non-EU migration has remained fairly stable between 2000-2011.

2. Net EU migration increase rapidly from 2003.

3. The inflexion point for a decrease in home ownership in the UK was 2001 onwards [additional figure below shows this better as the Schroders one leaps' from 2001 to 2010-11, but pattern is the same].

NOTE: I have nothing against immigrants/immigration AND 'correlation is not necessarily causation' BUT ~ early 2000's there was a dramatic increase in Eastern European migration to the UK to work in lower paid areas of the economy [well paid by their standards], this appears to correlate with increased Private renting demand [this would be especially true of lower value rentals]...so where would these rentals come from?..BTL [increase Owned Outright figure?].

Further to this, since Brexit [yes that 'Old Chesnut'] many Eastern Europeans have returned home, and as a result 'we' have had a 'shortage' in their specific skill areas [read as 'suppliers/manufacturers have got used to paying low wages and don't want to pay the new market rate'], and 'we' are experiencing/struggling with wage inflation especially in the Services sector.

Basically over the last 30-40 years we have been exporting our inflation by outsourcing ours via offshoring production, resulting in a disinflationary environment. Not content with this, we have also done the same with the Services sector either via Call centers where the service can be provided in a WFH scenario or via cheap Eastern European labour where physical presence was required. At the moment the former can still be exploited, "But for how long I hear you ask?", whereas the latter is still a 'work in progress' due to a) the formulation of 'Special visas', b) encouraging EE back from a better performing home economy, and c) public acceptance in the UK....

[HousePriceMania]

2 hours ago, MrXxxx said:

Interesting piece from Schroders, the last time UK property was so unaffordable was 1876!

https://www.schroders.com/en-gb/uk/individual/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/

I've been posting that chart to telegraph/FT/various others for 18 months and now someone's picked up on it.

I extrapolated the 2022 stuff.

[HousePriceMania]

53 minutes ago, spygirl said:

ER is minor player.

I knwo thers more of it but its still piss in ocean levels.

 

The dam seems to have broken in Northants...

I know someone who paid £550K for a house like this nearby in 2022...

 

I'd estimate that house as being worth about £250K in line with wages/historical data etc.

 

Pre-2020 I saw some BIG houses around about in need of work selling for £150-£220 (ish) per  sq ft....here's £90 per sq ft ( 17,000 ft of property )

https://www.rightmove.co.uk/properties/131909303#/?channel=RES_BUY

 

If that drops 30% I'm having it, I'll need all the dosbodders to move in to heat it via body heat though 
 

Edited February 23, 2023 by HousePriceMania

[afly]

7 minutes ago, HousePriceMania said:

Pre-2020 I saw some BIG houses around about in need of work selling for £150-£220 (ish) per  sq ft....here's £90 per sq ft ( 17,000 ft of property )

https://www.rightmove.co.uk/properties/131909303#/?channel=RES_BUY

 

If that drops 30% I'm having it, I'll need all the dosbodders to move in to heat it via body heat though 
 

Fookin hell, nice gaff but just mowing the lawn would be a ballache!

[HousePriceMania]

3 minutes ago, afly said:

Fookin hell, nice gaff but just mowing the lawn would be a ballache!

That's why the big houses were owned by people who owned slaves.

[AlfredTheLittle]

3 hours ago, MrXxxx said:

Interesting piece from Schroders, the last time UK property was so unaffordable was 1876!

https://www.schroders.com/en-gb/uk/individual/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/

quote from the article: "Prior to 1850, the average house in England and Wales had a plot size of 913 square metres but houses built in the next 50 years had an average plot size of only 268 square metres."

Current UK average for a newbuild is 76 metres square, according to Google.

[crashmonitor]

Thank goodness for the woman called Mann. Bailey won't agree no doubt. 

 

https://www.theguardian.com/business/2023/feb/23/interest-rates-rise-bank-mpc-inflation-wages-prices

 

 

 

Edited February 23, 2023 by crashmonitor

[Long time lurking]

An American observations in England

 

[Democorruptcy]

3 hours ago, afly said:

Fookin hell, nice gaff but just mowing the lawn would be a ballache!

It's not just cutting it, then there's what to do with all the grass. I had a mate with 3 acres who soon got fed up of it and bought 4 sheep to sort the grass out. I once viewed a house with a ride on mower with mulcher, it was the nicest lawn I've ever seen, top golf course putting green quality.

[apples]

https://www.telegraph.co.uk/property/house-prices/house-prices-falling-now-best-time-move/ (full article text in quote)

House prices may be falling – but now is the best time to move

Quote

Moving up the ladder is becoming easier as sale prices fall

The housing market downturn is upon us. In January, people who sold their homes got an average price of £258,297, according to Nationwide Building Society. That was £15,454 less than those who sold a home in August.

Further house price falls are in the pipeline. Analysts have forecast drops of as much as 10pc or more.

On the surface, for homeowners, it looks like a terrible time to move. But for anyone hoping to buy a bigger property, now is in fact the best opportunity they have had in years to sell up.

This is because, when house prices rise, it becomes harder and harder to upsize. This is because the price gaps between the rungs of the housing ladder get wider disproportionately. Every house price increase means that homeowners need more and more money to move up.

The pandemic property boom turbocharged the cost of upsizing. The price difference between a flat and a terraced house, and between a terraced house and a semi-detached, has ballooned. In every single region of the country in 2022 the price difference between the first three rungs of the housing ladder hit the highest level for a decade, according to analysis by Hamptons estate agents. 

The South East has the largest price gap between property types of any region. 

If a first-time buyer purchased a flat here in 2017, they would have paid £205,380 on average, according to Hamptons. If they sold in 2022, they would have benefitted from 14pc house price growth, meaning they could sell their property for £27,910 more than they paid for it.

This sounds like a happy windfall, but it comes with a catch. Over the same time period, the price of a terraced house – a typical “second step” home – rose by 22pc. This means the next property on the ladder would have cost them £74,980 more than it did five years earlier. 

Even though the homeowner has made a profit on their sale, it counts for less towards their onward purchase, with the upsizing price gap jumping from 30pc to 47pc.

But now that house prices are falling, this trend is starting to go into reverse.

Richard Donnell, of Zoopla, a property website, said: “Half of all homes on our site have had their asking prices reduced in the last few months, and the spread of adjustments is uniform. In every price band and every region, a similar number of properties are having their prices adjusted. The rule everyone is adjusting to is broadly similar.”

In the South East, if house prices fall by 10pc across the board, a homeowner selling a flat will get £23,329 less than if they sold last year. But if they are buying a terraced house, they will also pay £34,258 less on their onward purchase. This will be a net gain of £10,929.

But the gain could be even bigger because larger properties are likely to see larger percentage house price falls. 

Karl Thompson, of the Centre for Economics and Business Research, a research consultancy, said: “As equivalent proportional falls see a narrowing of absolute differences, this may prove a good time to upsize.

“This effect is likely to be further strengthened in light of expectations that house prices at the more expensive end have further to fall this year.”

The price of homes further up the ladder were much more inflated by the pandemic property boom than those lower down. Detached house prices climbed by 32pc during the pandemic between February 2020 and December 2022. This was twice the pace of the 16pc growth recorded across the flat market, Mr Thompson said. 

“Factors including a reversal of the race for space and lower price sensitivity among higher-end sellers are expected to see a continuation of recent evidence of sharper falls at the top end of the market,” he said.

This means that homeowners who are upsizing might have to take a small hit on their sale prices, but they will get a bigger proportionate discount on their onward purchases.

“For those who are able to make the jump, the incentives to do so are therefore only likely to grow,” Mr Thompson added.

Just as the pandemic pushed people to reassess their living arrangements, the cost of living crisis will push older homeowners to move to smaller properties that are cheaper to run, Mr Donnell said. 

“I think a lot of downtraders in the market will be keen to move because they can’t afford to live there anymore. There could be some good deals,” he added.

Downsizers selling larger properties have the most leeway to accept discounts because they have benefitted from decades of house price growth, as well as the pandemic property boom.

In the three years to December alone, house prices soared by 27pc, official data show. “These people might be more open to a deal,” Mr Donnell said.

 

Edited February 23, 2023 by apples

[MrXxxx]

1 hour ago, crashmonitor said:

Thank goodness for the woman called Mann. Bailey won't agree no doubt. 

 

https://www.theguardian.com/business/2023/feb/23/interest-rates-rise-bank-mpc-inflation-wages-prices

 

 

 

Mmmm, this article got me thinking, perhaps what the BoE are doing is playing a waiting game. They will keep interest rates artificially low to enable those on two year fixes to re-fix. After this they will ramp it up hoping to 'save' as many as possible per a given amount of unemployment/GDP sacrifice?

 

[MrXxxx]

30 minutes ago, apples said:

https://www.telegraph.co.uk/property/house-prices/house-prices-falling-now-best-time-move/ (full article text in quote)

House prices may be falling – but now is the best time to move

 

Where do I start?...no, can't be bothered...anyone with an 'ounce of common sense' will see the flaws in this puff-piece straight away!

[Van Lady]

2 hours ago, crashmonitor said:

Thank goodness for the woman called Mann. Bailey won't agree no doubt. 

 

https://www.theguardian.com/business/2023/feb/23/interest-rates-rise-bank-mpc-inflation-wages-prices

 

 

 

Never seen a picture of her before. Don’t think she’s on  @DurhamBorn’s shag list.

[reformed nice guy]

Any port in a storm....

[Funn3r]

4 hours ago, Long time lurking said:

An American observations in England

 

Jargon translation request - I get that he's not impressed but what does "non-mark to market basis" actually mean?

[Rare Bear]

5 hours ago, MrXxxx said:

Mmmm, this article got me thinking, perhaps what the BoE are doing is playing a waiting game. They will keep interest rates artificially low to enable those on two year fixes to re-fix. After this they will ramp it up hoping to 'save' as many as possible per a given amount of unemployment/GDP sacrifice?

 

But there's always people needing a refix.

 

[reformed nice guy]

2 hours ago, Funn3r said:

Jargon translation request - I get that he's not impressed but what does "non-mark to market basis" actually mean?

Mark to market is a term that accounting gnomes use to hide losses when shit is going down. If for example they own a Russian factory that was worth $1 billion a few years ago but due to sanctions etc they could only sell it for $10 million now, mark to market allows them to make up a figure higher than $10 million to account for volatility/once in a lifetime events/market manipulation or any other excuse of the day.

[MrXxxx]

8 hours ago, Rare Bear said:

But there's always people needing a refix.

 

Agree, but proportionally more people would have fixed at a particular time rather than go SVR...you will never remove all of the pain ['victims'] but you can lessen it ['them'].

[HousePriceMania]

Had the unfortunate experience of talking to a commission based 2nd hand house salesman yesterday, according to him the market is buoyant, everything is selling at (bubble mania level) asking prices and no one is going to accept low ball offers. 

He must know something I dont.

[Don Coglione]

9 hours ago, reformed nice guy said:

Mark to market is a term that accounting gnomes use to hide losses when shit is going down. If for example they own a Russian factory that was worth $1 billion a few years ago but due to sanctions etc they could only sell it for $10 million now, mark to market allows them to make up a figure higher than $10 million to account for volatility/once in a lifetime events/market manipulation or any other excuse of the day.

Haven't you got that arse-backwards? What you are referring to is mark-to-model.

Mark-to-market is reality, ie we're fucked!

No idea what the original quote means; I suspect wannabe word salad, in an attempt to sound smart.