Property crash, just maybe it really is different this time

[HousePriceMania]

20 hours ago, sancho panza said:

We'll still get a credit defaltion,it'll jsut be the biggest ever(and that's from someone who's balls deep long in this market)

What makes you say that ?

Edited August 26, 2021 by HousePriceMania

[Frank Hovis]

15 minutes ago, HousePriceMania said:

What makes you say that ?

 

I agree, this seems to be an article of faith like a big house price crash.

That latter was inevitable under the previous method of managing the economy but then governments changed the rules.

 

"Modern monetary theory" doesn't inevitably lead to collapse / big kahuna / credit deflation whatever.

Just look at Japan; plodding along perfectly well for twenty years with a Debt / GDP ratio that would have seen any country begging to the IMF thirty years ago.

The worst thing people can do IMHO is sit in cash awaiting the "inevitable" crash.

Because it might be decades away or never really happen and throughout that time your cash will be dwindling in value.

I'm not saying to put your money in anything in particular but holding it in cash seems a guaranteed way to become poorer with each passing year.

[HousePriceMania]

15 minutes ago, Frank Hovis said:

 

I agree, this seems to be an article of faith like a big house price crash.

That latter was inevitable under the previous method of managing the economy but then governments changed the rules.

 

"Modern monetary theory" doesn't inevitably lead to collapse / big kahuna / credit deflation whatever.

Just look at Japan; plodding along perfectly well for twenty years with a Debt / GDP ratio that would have seen any country begging to the IMF thirty years ago.

The worst thing people can do IMHO is sit in cash awaiting the "inevitable" crash.

Because it might be decades away or never really happen and throughout that time your cash will be dwindling in value.

I'm not saying to put your money in anything in particular but holding it in cash seems a guaranteed way to become poorer with each passing year.

Apart from 2020, was an instant 20% gain that year.

[Frank Hovis]

5 minutes ago, HousePriceMania said:

Apart from 2020, was an instant 20% gain that year.

Through holding cash do you mean?

How so?

[HousePriceMania]

15 minutes ago, Frank Hovis said:

Through holding cash do you mean?

How so?

Stock market crashed.

Bought.

Stock Market recovered.

Sold.

20% better off.

Difficult to do with no cash.

Edited August 26, 2021 by HousePriceMania

[Frank Hovis]

14 minutes ago, HousePriceMania said:

Stock market crashed.

Bought.

Stock Market recovered.

Sold.

20% better off.

Difficult to do with no cash.

Fair point.

And well played sir! 

 

It's long term holding of cash with no thought of any other investment that most people do and is a guaranteed way to lose money in real terms.

[spygirl]

Oireland.

But same applies to UK

https://www.irishtimes.com/business/economy/home-ownership-being-blocked-by-mortgage-rules-industry-group-claims-1.4654955?mode=amp

The Central Bank’s mortgage lending rules are “effectively locking those on average incomes out of the home-ownership market,” the Institute of Professional Auctioneers and Valuers (IPAV) has said.

In a pre-budget submission, it said the rules should be “tweaked” to allow those earning up to €60,000 to borrow 4.5 times their income, instead of 3.5 times.

This would bring greater fairness to the market and “give hope to a large cohort of the younger generation,” it said.

“It is now clear that the regulations as currently constituted are effectively locking those on average incomes out of the home-ownership market,” IPAV’s chief economist Jim Power said.

Rates

“In an environment of historically low mortgage interest rates, prospective buyers on average incomes, and even those on relatively high incomes in some parts of the country, cannot aspire to home ownership and are being forced into a rental market that is expensive and not functioning properly,” he said.

The Central Bank’s mortgage measures restrict lending for most borrowers to 3.5 times income, or, in the case of second-time buyers, stop them from borrowing more than 80 per cent of the value of the property.

[sancho panza]

3 hours ago, HousePriceMania said:

What makes you say that ?

I'm not going to bore on but I will....,don't mean to teach you how to suck eggs ec

My view is that credit deflation and price inflation aren't mutally exclusive,they can exist side by side and may exacerbate the worst effects of each other.

Despite the govt having stepped in to a large degree bailing out the banks and using fiscal stimulus,the simple reality is that for the foreseeable they are the transfer mechanism between capital supplier and credit seeking customer.

Whereas in 2008 the banks were exposed to sub prime mortgages which took them down,the coming deflationary BK will involve them dealing with the said same sub prime mortgages that haven't defaulted/sub prime car loans/defaulting CRE loans/forex risk etc etc.............this crisis will be much bigger than 2008.

I say that as someone who has the family portfolio at 10% cash or so-not much given how bearish I am.

Below is a paper from Kevin Dowd and Dean Buckner,essentially outlining how UK banks are more leveraged than 2006.

Key take home for me from this paper is what I refer to as the Dowd Buckner ratio.Their thinking being that bank balance sheets/risk weightings of assets aren't an accurate assessment of what the books are really like.(big banks can use the IRB approach to risk weightings that allows them to grade on the basis of their own perfoming/non perfoming loans,smaller banks use standardized approach which leaves less room for misinformation but still plenty of wiggle room)

They argue that dividing the market cap by total assets cuts out all the bullshit and lay out the logic for it.Super paper imho.

From May 2020 but nothings changed.

http://eumaeus.org/wordp/index.php/2020/05/06/can-uk-banks-pass-the-covid-19-stress-test/

'Using the latest available figures, the Big Five UK banks have an average priceto-book ratio of 39.2%, an average market cap to total asset ratio of 2.3% and an implied leverage of 43.3. These are not healthy metrics. The PtB ratio for a healthy banking system is well over 100%. The average capital ratio is far below the minimum values recommended by many experts, and the leverage is far above any accepted reasonable safe level. And these numbers ignore the hidden leverage, hidden losses and other problems in banks’ books, and there appear to be plenty of those too. UK banks are not only in poor shape, but they are also in considerably worse shape now than they were going into the GFC. Taking the end of December 2006 as a yardstick, their average PtB ratio then was 255% and has since fallen by 212 percentage points, their average capital ratio has nearly halved and their average leverage has close to doubled. Remember too that insufficient capital (or if you prefer, excessive leverage) was rightly blamed as a major contributor to the severity of the GFC.

Look at it this way. The UK banks’ capital in market value terms is now a mere £140.6 billion, but the Big Five banks’ losses from the GFC were likely over £500 billion, well over three and a half times as much as their current market cap. Therefore, a GFC repeat that inflicted similar losses on the banks would wipe out their capital more than three and a half times over. UK banks are not nearly sufficiently capitalised to withstand a shock on anything close to the same scale as they experienced then and still emerge solvent, let alone in good shape and able to operate normally. Or, to put the argument the other way round, a shock mild enough to inflict a loss of £140.6 billion on the banks would be enough to wipe out their capital. UK banks might be able to withstand a mild cold, but nothing more severe.

Edited August 26, 2021 by sancho panza

[sancho panza]

3 hours ago, Frank Hovis said:

Just look at Japan; plodding along perfectly well for twenty years with a Debt / GDP ratio that would have seen any country begging to the IMF thirty years ago.

The worst thing people can do IMHO is sit in cash awaiting the "inevitable" crash.

Because it might be decades away or never really happen and throughout that time your cash will be dwindling in value.

I'm not saying to put your money in anything in particular but holding it in cash seems a guaranteed way to become poorer with each passing year.

I don't know when the BK will happen,just that it will.Most likely at the moment we can least afford it to.

I agree with you thought,sitting in cash until it happens is the worst option.

[sancho panza]

2 hours ago, Frank Hovis said:

Fair point.

And well played sir! 

 

It's long term holding of cash with no thought of any other investment that most people do and is a guaranteed way to lose money in real terms.

It's actually worse than that if you consider-as I do-that different income deciles suffer differing inflation rates.CPIH is a catch all,but people on lower incomes spend far more on food and fuel than rich people.

[sancho panza]

19 minutes ago, spygirl said:

Oireland.

But same applies to UK

https://www.irishtimes.com/business/economy/home-ownership-being-blocked-by-mortgage-rules-industry-group-claims-1.4654955?mode=amp

The Central Bank’s mortgage lending rules are “effectively locking those on average incomes out of the home-ownership market,” the Institute of Professional Auctioneers and Valuers (IPAV) has said.

In a pre-budget submission, it said the rules should be “tweaked” to allow those earning up to €60,000 to borrow 4.5 times their income, instead of 3.5 times.

This would bring greater fairness to the market and “give hope to a large cohort of the younger generation,” it said.

“It is now clear that the regulations as currently constituted are effectively locking those on average incomes out of the home-ownership market,” IPAV’s chief economist Jim Power said.

Rates

“In an environment of historically low mortgage interest rates, prospective buyers on average incomes, and even those on relatively high incomes in some parts of the country, cannot aspire to home ownership and are being forced into a rental market that is expensive and not functioning properly,” he said.

The Central Bank’s mortgage measures restrict lending for most borrowers to 3.5 times income, or, in the case of second-time buyers, stop them from borrowing more than 80 per cent of the value of the property.

Funny how the parasites look at it.

'mortgage lending rules locking people out of ownership'.....not absurdly high house/earnings multiples.

[Frank Hovis]

2 minutes ago, sancho panza said:

It's actually worse than that if you consider-as I do-that different income deciles suffer differing inflation rates.CPIH is a catch all,but people on lower incomes spend far more on food and fuel than rich people.

Absolutely that.

Lower income people have fallen into the maw of the government who now sets their:

Wages - minimum wage 

Taxes

In work benefits

 

Effectively dictating how much money they have to send each month.

Out of this comes rent, council tax and utilities, all of which increase at a faster rate than their monthly money, leaving little left that is genuinely available for discretionary spending.

Out if that they can eat, drink, smoke, go on holiday, have a car.

So the government squeezes it to stop them having a car, smoking, and drinking.

They then squeeze it further to reduce holidays.

 

When you are in this position the government effectively owns you and decides what you can do.

 

 

[spygirl]

[HousePriceMania]

56 minutes ago, spygirl said:

Expected....by whom ?

I see more help announced today for people to get "affordable" housing again today...just as the market is tanking again.

I've done some rough figures from that graph and taking Jan 20 as the starting point then which was going up to around 70 in the Boris bounce then the average since then is about 75 and falling quickly, so buy the end of the year there will have been no boom just a lot of people with dogs they've paid too much for that no one will ever want to buy sitting in houses that are suffering from the same issue.

I'd expect to see that back below 40 by December.

Edited August 31, 2021 by HousePriceMania

[HousePriceMania]

It's a momentous day today, The tories have surpassed Broons insanity

 

[spygirl]

Banks dont want to lend.

https://www.cityam.com/60-per-cent-of-all-properties-sold-in-london-hit-by-down-valuations/amp/

[HousePriceMania]

49 minutes ago, spygirl said:

Banks dont want to lend.

https://www.cityam.com/60-per-cent-of-all-properties-sold-in-london-hit-by-down-valuations/amp/

At the new paradigm all time unaffordable prices, I dont want them to lend either.

 

Nationwide is a worry IMHO

[haroldshand]

Well Nationwide up again 2% in one Month and now up 11% Year on Year, I just piss myself with some of the posts I have read on TOS over the years, is it even possible to be more wrong and out of touch.

Is there anyone left here that is still under the illusion that prices are going to drop and considering Hong Kong along with the Afghan debacle and the fact that we have 800 south coast immigrants just strolling into the UK without a care in the world and welcomed with 4 star luxury Hotels  and emergency cash payments with some  now predicting   immigration numbers close to half a  million year on year.

Brexit, control of our borders?

 

WHERE

[Bobthebuilder]

@HousePriceMania

I see on the deflation thread that you run the property lion index. You must be well-placed to form a view on house prices, what's your prediction for the next 12 months or so?

From what I can see everywhere outside of London has gone ballistic over the past year, with falls / less demand in my area of London.

[HousePriceMania]

9 minutes ago, Bobthebuilder said:

@HousePriceMania

I see on the deflation thread that you run the property lion index. You must be well-placed to form a view on house prices, what's your prediction for the next 12 months or so?

From what I can see everywhere outside of London has gone ballistic over the past year, with falls / less demand in my area of London.

BTB, I'm seeing exactly the same as you.

Prices outside of London make the 2007 bank collapsing bubble prices look sensible but prices in London are coming down, I saw a LOT of drops listed on UKPropertyLion twitter feed last weekend esp in London.

There is practically nothing to buy outside of London and it looks like nothing much is selling in London, which makes sense looking at those charts.

Even the MSM are saying London, or parts of London are falling.

I know 3 peoples who have sold their houses outside of London in a day/hour for pretty much 4x what it should be worth, 2 buyers from London and 1 down sizer who paid 10K over the asking to make sure they didn't miss out ( total Ponzi ).   These are houses I personally wouldn't want to live in, sold, straight away.

1 person is now paying £500,000 for a house you would not want to live in, in an area they dont want to live in and 1 person £800K for a house that wouldn't shift for £200K less for years and I mean years. I person is going all in and taking on a massive mortgage on a house he wont need in 2 years when his kids leave.

It's a proper full on mania.

What chance of a lot of the sales outside of London are in part down to londoners leveraging up and/or using everything they have to get a huge mortgage whilst thinking they'll sell their place when the market picks up ?

Anyway, will be interesting to see this months PL data with the stamp duty cut effectively over.

 

Predictions for the next 12 months, well, that's easy....PRICES UP UP UP and UP, value of money DOWN DOWN DOWN.  The rich getting RICHER RICHER RICHER and the poor getting FUCKED FUCKED FUCKED.

 

I am personally waiting to see what happens after furlough is ended, it does looks like it is ending at the moment, things will get interesting then.  Forbearance has ended i believe, not sure about the bounce back scam loans, they are a disgrace and another potential driver of the insanity that is laid before us.

 

Looking at the prices and what people are saying generally, even the people selling, everyone knows it's a bubble and think it will collapse.  Sentiment is about the only thing now that will bring prices down that I can see.

 

The trouble is, we have a government full of property owning self serving ****s who will not willingly take a hit on their investments.  This isn't going to change any time soon. This is the main problem.  The HoC MPs are up to their necks in property and the bankers have them by the goolies.

 

The chancellor said he was having sleepless nights worrying about IRs, sleepless because he knows house prices collapse the minute IRs go back up ( his included and his mates too ), which means he will do everything to make sure they dont, including looking through inflation ( house prices 13%, everything else 4%+ at the moment, savings rates 0.1% ) is criminal but where are the MSM commentators scream out about this ?

The US is saying their tighten things up ...18 months from now ....despite people sleeping on the streets and food prices shooting up.  The US case shiller index just had it's biggest ever rise this week.  I think they are suffering from the lack of supply issue too.

The lack of supply issue does scream out that people are in more difficulty than the media is letting on.

There is one headwind, however, into which the housing market is facing....EAs are now complaining they have nothing to sell, no sales = out of business for those charlatans.  No sales = no new mortgage business for the banks to hand out sub-prime debt on.  At that point, both need to get sales volumes up or they will die.  That means one thing, they'll need to get prices down sharpish.  It's ironic that EAs and bankers could be the ones causing the crash.

If the U.S. does have to tighten more quickly and the UK has no choice but to follow then it's game over for this bubble, I dont think it will take much now.  Half a percent rise maybe and an end to the Term Funding scheme.  

Anyone would be a fool to make predictions right now but it does look like they will just trash the currency and steal everyone's money indirectly and quite possibly literally with bail ins to keep this madness going.

As I said, there is no indication that the British establishment is willing or able to change tact.  They have created a disaster for millions of people, some of whom aren't even born yet.

My personal plan is:

1) See how things like after October

2) If furlough is going and the market turns, hold off.

3) If there is no sign of this mania end and wage inflation is happening I'm just going to buy an old crap with a 50% mortgage and rent it out.

4) I'm looking a place in the sun in the coming weeks, literally to get the money out of the UK.

5) Anything else is going into reflation stocks after the BKK.  If the BKK doesn't happen within 12 months I'll start buying regardless. At which point I am giving up and living off the dividends.

[HousePriceMania]

1 hour ago, haroldshand said:

Well Nationwide up again 2% in one Month and now up 11% Year on Year, I just piss myself with some of the posts I have read on TOS over the years, is it even possible to be more wrong and out of touch.

Is there anyone left here that is still under the illusion that prices are going to drop and considering Hong Kong along with the Afghan debacle and the fact that we have 800 south coast immigrants just strolling into the UK without a care in the world and welcomed with 4 star luxury Hotels  and emergency cash payments with some  now predicting   immigration numbers close to half a  million year on year.

Brexit, control of our borders?

 

WHERE

Yet, London prices have fallen.

f**king weird that.

[Don Coglione]

3 hours ago, haroldshand said:

Well Nationwide up again 2% in one Month and now up 11% Year on Year, I just piss myself with some of the posts I have read on TOS over the years, is it even possible to be more wrong and out of touch.

Is there anyone left here that is still under the illusion that prices are going to drop and considering Hong Kong along with the Afghan debacle and the fact that we have 800 south coast immigrants just strolling into the UK without a care in the world and welcomed with 4 star luxury Hotels  and emergency cash payments with some  now predicting   immigration numbers close to half a  million year on year.

Brexit, control of our borders?

 

WHERE

You do realise that you are exchanging missives with the chief hpc retard on here? At least, in this thread, he has finally given up the pretense that he is someone else.

 

[HousePriceMania]

2 hours ago, Don Coglione said:

You do realise that you are exchanging missives with the chief hpc retard on here? At least, in this thread, he has finally given up the pretense that he is someone else.

 

You're really some kind of weird.

 

Edited September 1, 2021 by HousePriceMania

[Don Coglione]

17 minutes ago, HousePriceMania said:

You're really some kind of weird.

 

So why the lies?

[HousePriceMania]

Just now, Don Coglione said:

So why the lies?

You seriously have a problem.