Property crash, just maybe it really is different this time

[With a crooked smile]

20 hours ago, onlyme said:

The void in the middle is when they change their tune, panic and go bust

I'd imagine most have learned that lesson and got a decent lettings department with good recurring revenue. 

[MrXxxx]

On 11/06/2023 at 14:18, With a crooked smile said:

Most of these big reductions are just vendors completely taking the piss

Agree, but they have to try to support their 'smoking' habit, as looking at some examples they are consuming at an industrial rate! :-)))

[MrXxxx]

22 hours ago, HousePriceMania said:

Just looked at the UKPL weekly run.

Current asking prices jumped another £2K last week, I thought this surge would fizzle out by now but it seems strong.

Meanwhile number of listings also continues to surge.

 

 

 

 

But as this is based on averages, could you not see a 'price increasing' effect [rather than a drop] if the proportion of higher value properties being listed increased?...if we compared these values with the median of properties being listed this may become apparent.

[MrXxxx]

13 hours ago, Van Lady said:

The silence was deafening!

Well when their three kids are still living with them[ because prices are still too high locally] it won't be! :-)

[HousePriceMania]

1 hour ago, MrXxxx said:

But as this is based on averages, could you not see a 'price increasing' effect [rather than a drop] if the proportion of higher value properties being listed increased?...if we compared these values with the median of properties being listed this may become apparent.

Yes.  Rightmove have already stated this is what is happening.

When they start dropping their prices the average should collapse quickly.

[spygirl]

Trussed Turkeys.

https://www.ft.com/content/69632bc0-dec9-4a67-a9d0-cd64c4bd832c

Gilts

 

Add to myFT

Gilt yields surpass mini-Budget level on strong UK wage growth

Data underlines case for Bank of England to continue raising interest rates, say economists

 

 

How many times am I going to read the phrase 'higher than economists predicted'? Does anyone in that profession actually have a clue what's going on? The BoE continue to take a 'let's wait and see' approach and then repeatedly learn that the outlook is worse than they anticipated. Another 0.25% rise is guaranteed, but a 0.5% rise may indicate that the BoE are getting a grip rather than constantly being behind the curve. Russell 3 HOURS AGO thumb_up Recommended 97 comment Replies 3 forumGo to conversation

 

2 year swap rates now at 5.6% - watch all those mortgage deals get pulled and repriced at / around there. Sandeep Bhatia 4 HOURS AGO thumb_up Recommend 52 comment Replies 2 forumGo to conversation

 

So ..... its possible we are looking at 8% resi SVR.

Scrub the 10 for IO BTL. Make it 15%

 

[Bobthebuilder]

11 minutes ago, spygirl said:

So ..... its possible we are looking at 8% resi SVR.

My SVR on Natwest offset is currently 7.75%, its going to be even higher than 8% soon I think.

[Democorruptcy]

27 minutes ago, Bobthebuilder said:

My SVR on Natwest offset is currently 7.75%, its going to be even higher than 8% soon I think.

SONIA 2yr swap rate up a full quarter of a percent this morning, 5.36 from 5.11

https://www.chathamfinancial.com/technology/european-market-rates

We are going to have a lot more mortgage wailing!

[Bobthebuilder]

6 minutes ago, Democorruptcy said:

SONIA 2yr swap rate up a full quarter of a percent this morning, 5.36 from 5.11

https://www.chathamfinancial.com/technology/european-market-rates

We are going to have a lot more mortgage wailing!

The last time my mortgage was this high, was 1997.

[InLikeFlynn]

57 minutes ago, Democorruptcy said:

SONIA 2yr swap rate up a full quarter of a percent this morning, 5.36 from 5.11

https://www.chathamfinancial.com/technology/european-market-rates

We are going to have a lot more mortgage wailing!

Good spot. Was about to post something on this.

The latest wage inflation data are a car crash - the market is adjusting to this. 

The predictions made multiple times by many contributors to this thread earlier this year are coming to pass. Namely that inflation is here to stay and that interest rates will be forced much higher than the market was pricing.

Significant increases in SONIA swap rates across the board...

1,2,3 and 5 year rates all up around 0.2% - 0.3%  today as you say!

They are all up around 0.75% - 1.0% over the past month!

The importance of this is that apparently this is the rate from which mortgage lenders price their loans. looking at typical margins in the past most fixed rates will be in the 5% - 6% range from now on, with potential increases to come.

Lenders are struggling to adapt quickly to these changes -

https://propertyindustryeye.com/growing-concern-as-more-lenders-follow-hsbc-and-pull-mortgage-deals/

Expect more withdrawals and repricing of loans by lenders*.

Expect more genuinely sad stories from those who are caught up in it through just wanting to escape the arbitrary tyranny of the UK rental market .

Expect more prolonged and deeper price falls in the UK housing market.

Expect a bloodbath in the BTL sector... rates here are even higher.

For the first time in the nearly 20 or so years since I joined TOS we are going to have a proper correction.

 

 

 

*Edit to add - HSBC (usually market leaders) have a 5-year fix available at 4.64% on their website today. SONIA swap rates have already risen to 4.74% for 5 years... as soon as this tranche of cash has been lent expect significant repricing.

Edited June 13, 2023 by InLikeFlynn

[HousePriceMania]

At this point in time does anything think the housing bubble is not going to collapse ?

[Guest]

2 hours ago, HousePriceMania said:

At this point in time does anything think the housing bubble is not going to collapse ?

There's still plenty of cope around on social media, the main 3 types I've seen are:

1. Higher interest rates might slow down house price inflation or even cause prices to drop by a few percent but no more than that

2. Only a few unlucky souls who have to remortgage soon are going to be caught by this, everybody else will be able to ride it out to the end of their current fix by which point rates will be back down again

3. Governments/central banks will intervene somehow at some point to stop house prices dropping

[Eventually Right]

2 hours ago, HousePriceMania said:

At this point in time does anything think the housing bubble is not going to collapse ?

I don't.  I think it goes down another 10% or so nominal, similar to Durhamborn's view.

We're nowhere near seeing massive repossessions, and I bet if we even looked like we were, there would be govt pressure on the banks to limit those, as well as other state support for in-trouble mortgage holders.

If the BOE were to raise rates to 10%, and keep them there, then I'd change my mind.  I just don't see a nominal crash anymore (wish I did!).

[HousePriceMania]

17 minutes ago, Eventually Right said:

I don't.  I think it goes down another 10% or so nominal, similar to Durhamborn's view.

We're nowhere near seeing massive repossessions, and I bet if we even looked like we were, there would be govt pressure on the banks to limit those, as well as other state support for in-trouble mortgage holders.

If the BOE were to raise rates to 10%, and keep them there, then I'd change my mind.  I just don't see a nominal crash anymore (wish I did!).

30% increase in 2 years with 0% IRs and Term Funding suppressing mortgage rates, all fuelled by people fleecing their london flats.

I think you're a tad optimistic.

DB, never said 10% nominal falls, he said he didn't study the housing market and he'd expect 10% falls.

If he studied it a bit more, he'd expect bit more falls 

The collapse has only just started, there will be a lot of people totally ****ed in the next 2 years as their 2 year fixes come up for renewal.

 

[HousePriceMania]

24 minutes ago, Darude said:

There's still plenty of cope around on social media, the main 3 types I've seen are:

1. Higher interest rates might slow down house price inflation or even cause prices to drop by a few percent but no more than that

2. Only a few unlucky souls who have to remortgage soon are going to be caught by this, everybody else will be able to ride it out to the end of their current fix by which point rates will be back down again

3. Governments/central banks will intervene somehow at some point to stop house prices dropping

 

I dont think people realise just how insane the house prices actually are.

have a look anywhere on the country, it's 20x the local wage to buy a house.

[Guest]

5 minutes ago, HousePriceMania said:

 

I dont think people realise just how insane the house prices actually are.

have a look anywhere on the country, it's 20x the local wage to buy a house.

Price anchoring is a very powerful phenomenon.

'But of course it costs £350k to buy a 700 sq ft 2 bed terraced house where the front door and staircase are both in the living room, that's just what houses cost.'

[HousePriceMania]

Here's 4 of the first 25 properties in my search are today...notice anything ?

[Eventually Right]

10 minutes ago, HousePriceMania said:

30% increase in 2 years with 0% IRs and Term Funding suppressing mortgage rates, all fuelled by people fleecing their london flats.

I think you're a tad optimistic.

DB, never said 10% nominal falls, he said he didn't study the housing market and he'd expect 10% falls.

If he studied it a bit more, he'd expect bit more falls 

The collapse has only just started, there will be a lot of people totally ****ed in the next 2 years as their 2 year fixes come up for renewal.

I hope you're right, and they crater.  I'm just not convinced anymore. 

And I'd agree that a lot of people are going to be screwed, when their fixes expire-I just don't think it leads to enough forced selling to cause a crash.

[HousePriceMania]

16 minutes ago, Eventually Right said:

I hope you're right, and they crater.  I'm just not convinced anymore. 

And I'd agree that a lot of people are going to be screwed, when their fixes expire-I just don't think it leads to enough forced selling to cause a crash.

The age-ing population are the forced sellers now I'd wager.

No one can afford there houses.

The probate house we offered on ( 30% below IAP and had it accepted ) is still on the market and looking expensive agains stuff that's been listed this year then reduced.

Seeing sales fall through now locally.  

We're at the tipping point now.

20 minutes ago, Darude said:

Price anchoring is a very powerful phenomenon.

'But of course it costs £350k to buy a 700 sq ft 2 bed terraced house where the front door and staircase are both in the living room, that's just what houses cost.'

Anchors dont work when the ship moves backwards.

[Boon]

We aren't there yet. And I still think the overpriced properties will take the brunt of it. New build flats I can see being very bad, but the standard family house it may be more benign, except if bought in the FOMO covid boom.

Just read the newspaper sob stories to see where we're at. Currently we have stuff like sad faces because the mortgage is going up. But by and large any time I read this the people have the means to pay it. Or have equity, having bought years ago. Only pretending to be fucked.

At this trajectory the newspapers sob stories might well be people being made bankrupt, lost life savings as value of house decreased, marooned on SVR and couldn't pay it. Having to move back to mum and dads, HMO. Amateur BTL 'empires' being wound up by the banks due to debt. Those are the sob stories that indicate pain.

We might never get to that point. Because the calls for some kind of government help would be huge by then. People like Lewis pretending he doesn't have £17m of debts and campaigning hard, despite doing nothing for renters. Regular people knowing that the props are a bad thing for their kids, but keeping quiet because it benefits them. Politicians happy to oblige because it's what the people want, and also they own multiple properties as well so they benefit more.

Anyone wanting the market to go down would be seen as a bad guy, that's how it has been. 

[InLikeFlynn]

The falls won't necessarily be quick.

Increased mortgage rates will significantly reduce buyer demand. A significant number of BTL properties will come to market as quasi forced sales. Demand for second homes and FHLs will drop as debt becomes more expensive and sentiment turns. The effect of these interest rises will take months and years to feed through, but the direction of travel is increasingly clear. 

[spygirl]

19 minutes ago, InLikeFlynn said:

The falls won't necessarily be quick.

Increased mortgage rates will significantly reduce buyer demand. A significant number of BTL properties will come to market as quasi forced sales. Demand for second homes and FHLs will drop as debt becomes more expensive and sentiment turns. The effect of these interest rises will take months and years to feed through, but the direction of travel is increasingly clear. 

I'm not sure.

The demographics are so out of kilter, and have been since 2008.

Thereafter ahousepricecrash but there was ahouse transaction crash.

The number of people, elderly people, who are massively exposed to housing positions nuts.

And theres no cushion of wager buyers, having been bled dry by btl.

 

[onlyme]

16 minutes ago, InLikeFlynn said:

The falls won't necessarily be quick.

Increased mortgage rates will significantly reduce buyer demand. A significant number of BTL properties will come to market as quasi forced sales. Demand for second homes and FHLs will drop as debt becomes more expensive and sentiment turns. The effect of these interest rises will take months and years to feed through, but the direction of travel is increasingly clear. 

Past corrections took some time for people to notice, like turning a supertanker but the dynamics almost guarantee increasing momentum to the bottom. Once the valuations are solidly falling (and seen to be from the published figures) the lengh of the transaction means that by the time of exchange propespective buyers know they are probably already underwater on their purchase price relaive to the market, they re-negotiate or pull out in  a lot of cases, causing further falls and so on.

Those Sonia rates went up twice today, just look at the changes in the last month. That's around 20% worse affordability on top of a failed spring market where prices fell.

[VeryMeanReversion]

The Bank of England have just announced the merging of the new SONIA swap rates with the old LIBOR to become LABIA as they are a bunch of cun...

[onlyme]

3 minutes ago, spygirl said:

I'm not sure.

The demographics are so out of kilter, and have been since 2008.

Thereafter ahousepricecrash but there was ahouse transaction crash.

The number of people, elderly people, who are massively exposed to housing positions nuts.

And theres no cushion of wager buyers, having been bled dry by btl.

 

I can see a huge number of renters returning home, doubling up, doing Anything to escape the latest rise in rents and put together some captial if they see a aliding market and an opportunity to slum it for a few years in order to catch a break, let alone if they lose thir job and cannot find another in the coming crunch. Voids with near 10% rates are going to be brutal if they come about in large numbers.

Academic Agent's latest stream covered the jobs market well, some very telling comments, so many undercurrents like Gen Z simply giving up feeling they have been totally left behind and effectively out of the market, refusal to return back to full office based working, acceptance of long commutes vamished. Seizmic changes largely not even present in previous downturns.