Property crash, just maybe it really is different this time

[spygirl]

11 hours ago, Hancock said:

@HousePriceMania

Bailey is a corrupt cunt, do a google search and you'll see what he was up to when at the FCA.

Anyway -

https://www.dailymail.co.uk/money/markets/article-10198781/Bank-England-considering-easing-mortgage-rules.html

I truly hate this breed of sub-human traitorous scum.

Bailey is a seat warmer, wanting to do as little as poss before getting his pension.

This is a proble,.

BoE needs to be far more active.

[Hancock]

5 hours ago, Axeman123 said:

Look at it another way: Pishy won't get the firehose of taxpayer funds out to damp down the smouldering correction, so the squid have had to resort to Bailey with his regulatory bucket. This may also just be jaw-boning, intended to boost sentiment. You could even see this as TPTB acknowledging all the transactions in limbo where down-valuation has pushed the LTV or lending multiple too far.

It purely intent on sending prices higher, Sunak will no doubt hand over taxpayers money in some form to prop up the housing ponzi scheme if the BoE ever hints he should.

See in Spain they're doing something about Blackstone buying up houses with freshly printed money thats handed to them.

Love the way the FT mentions the Spanish govt being leftwing, but not the USA govt under Trump/Biden thats gives taxpayers money to the 0.1%ers.

https://www.ft.com/content/9ef1eb29-04a5-441f-ac77-f6a0fb7d2d85

Spain takes on private equity landlords as cost of housing soars Blackstone and others could face rent caps in bill championed by leftwing government Residential apartments in the Lavapies neighbourhood of Madrid, where, like much of Europe, rents and property prices are rising.

Spain’s leftwing government is championing rent controls as property costs rise across Europe, part of a proposed housing law that it says will protect vulnerable tenants against investment funds and other big landlords. Critics say the measure is misguided and will put the country’s supply of accommodation at risk.

But Ione Belarra, leader of the radical Podemos party that supports the bill, said it would right the balance in a sector transformed by the eurozone financial crisis over a decade ago and the arrival of institutional funds.

Investment group Blackstone is now Spain’s biggest landlord. “The big investment funds saw a niche here to speculate in the housing business,” Belarra, who is also Spain’s social affairs minister, told the Financial Times in an interview. “Now we are beginning to put limits to this and say to the big landlords that they can keep doing housing business, but not at any price,” she added. “Not at the price that there are evictions, or that people have to pay more than 30 per cent of their income in rent.”

Blackstone, which now owns close to 30,000 homes in Spain, declined to comment. The proposals come at a time of concern across much of Europe at rising rents and property prices. In Germany, Berlin’s citizens voted in September to expropriate big landlords to reduce rents. The bill casts light on negotiations over the economy within the ruling coalition, with Podemos pushing for a more radical line than the bigger Socialists of prime minister Pedro Sánchez.

Podemos insisted on the text of the housing bill as a condition of its support for the 2022 budget, the Socialists’ legislative priority. Among many other moves the bill seeks to ban the sale of social housing to investment funds. In 2013, when local authorities were desperate to balance their books in the wake of the financial crisis, Blackstone bought 1,860 flats from the city of Madrid for €129m. They are now part of the group’s €5bn portfolio of Spanish property, which includes hotels and offices. Blackstone’s accumulation of those assets has coincided with deep structural changes in the Spanish property market.

Before the crisis the economy revolved around the construction sector, which drove the banking system, the job market and even government revenues. After the crash, mortgages became far harder to obtain and hundreds of thousands lost their homes. Spain’s social affairs minister, Ione Belarra, says people should not have to pay more than 30 per cent of their income in rent

As a result, more people sought to rent, reversing a trend in which housing ownership had risen for decades — although owner-occupiers still account for more than three-quarters of homes. Increased demand has pushed up costs. According to calculations by EY, the consultancy, average rent has risen more than 40 per cent over the past five years, despite a dip during the pandemic. The issue is all the more powerful among Podemos supporters because of Spain’s youth unemployment rate of more than 30 per cent — more than half of 25 to 29 year olds still live with their parents.

Against such a backdrop, the housing bill, whose backers hope will become law in the first half of next year, is politically charged.

One measure would allow regional governments to force big landlords — defined as those holding more than 10 properties — to cap rents in so-called “stressed areas”, where rent has risen significantly above inflation. The legislation would also allow regions to implement tax incentives for smaller owners to reduce rents or impose penalties to prevent them from keeping properties vacant.

Javier García-Mateo, partner for real estate at EY in Spain, said rental properties’ share of the country’s total housing inventory had risen from less than 10 per cent in 2010 to 15-20 per cent today, but argued the proposed law threatens future supply. “In any market in which you intervene with a cap, you will disincentivise developers,” he said. According to his estimates, of a pipeline of 28,000-29,000 flats that developers were preparing to build for rental, some 8,000 have been put on hold until the consequences of the law become clearer.

Spain’s Association of Rental Property Owners also contends that the bill would limit housing supply and reduce investment. “This government, and in particular Podemos’s proposals always have the same assessment from the economic elites — whatever measure it is, we always hear that it will sink the economy, that the country is headed for disaster,” said Belarra, who took over in June from founder Pablo Iglesias as Podemos’ leader. “This argument is beginning to wear out.”

David Lucas, the government’s top official for housing policy, emphasised that 85 per cent of landlords are smaller property owners, for whom tax incentives rather than obligatory caps will apply.

He notes that, according to the current draft, caps would not come into force for 18 months, to allow time to compile a new index of rental prices.

In any case, regions governed by the opposition centre right People’s party have vowed not to apply the curbs permitted by the law should it be approved by parliament. But Lucas also argued that the legislation is long due. “Each time there was a crisis, it was difficult for many citizens to get housing, while many others lost their homes,” he said. “This was an unsolved problem.” 

Many voters are unconvinced. “Rents are going higher and higher,” said Casandra, who leases a 30-square-metre flat in Vallecas, a traditional working class district of Madrid where rents have risen markedly. “I don’t think this law will stop that. If I were a landlord I would also increase the rent.”

[Boon]

It's the wrong prop really.

Doing some quick maths, maybe about after 6x multiples the risk/reward is unfavourable, although for specific customers I think it would be OK.

The major risk to the bank of people defaulting must be higher interest rates, as there currently is a high jump for everyone (when the mortgage goes off the teaser rate to the SVR). This gap of c.2.5% could be even more if interest rates go up. Yet if it does it's a double whammy for the bank, as then property prices might also go down.

Would banks really seek to risk up their books even more? Creating a larger section of riskier loans increases the chance of contagion.

A better one would be 50 year mortgages.... we've already done 40 so why not go a bit further. That would also juice prices in the same way.

[spygirl]

1 hour ago, Hancock said:

It purely intent on sending prices higher, Sunak will no doubt hand over taxpayers money in some form to prop up the housing ponzi scheme if the BoE ever hints he should.

See in Spain they're doing something about Blackstone buying up houses with freshly printed money thats handed to them.

Love the way the FT mentions the Spanish govt being leftwing, but not the USA govt under Trump/Biden thats gives taxpayers money to the 0.1%ers.

https://www.ft.com/content/9ef1eb29-04a5-441f-ac77-f6a0fb7d2d85

Spain takes on private equity landlords as cost of housing soars Blackstone and others could face rent caps in bill championed by leftwing government Residential apartments in the Lavapies neighbourhood of Madrid, where, like much of Europe, rents and property prices are rising.

Spain’s leftwing government is championing rent controls as property costs rise across Europe, part of a proposed housing law that it says will protect vulnerable tenants against investment funds and other big landlords. Critics say the measure is misguided and will put the country’s supply of accommodation at risk.

But Ione Belarra, leader of the radical Podemos party that supports the bill, said it would right the balance in a sector transformed by the eurozone financial crisis over a decade ago and the arrival of institutional funds.

Investment group Blackstone is now Spain’s biggest landlord. “The big investment funds saw a niche here to speculate in the housing business,” Belarra, who is also Spain’s social affairs minister, told the Financial Times in an interview. “Now we are beginning to put limits to this and say to the big landlords that they can keep doing housing business, but not at any price,” she added. “Not at the price that there are evictions, or that people have to pay more than 30 per cent of their income in rent.”

Blackstone, which now owns close to 30,000 homes in Spain, declined to comment. The proposals come at a time of concern across much of Europe at rising rents and property prices. In Germany, Berlin’s citizens voted in September to expropriate big landlords to reduce rents. The bill casts light on negotiations over the economy within the ruling coalition, with Podemos pushing for a more radical line than the bigger Socialists of prime minister Pedro Sánchez.

Podemos insisted on the text of the housing bill as a condition of its support for the 2022 budget, the Socialists’ legislative priority. Among many other moves the bill seeks to ban the sale of social housing to investment funds. In 2013, when local authorities were desperate to balance their books in the wake of the financial crisis, Blackstone bought 1,860 flats from the city of Madrid for €129m. They are now part of the group’s €5bn portfolio of Spanish property, which includes hotels and offices. Blackstone’s accumulation of those assets has coincided with deep structural changes in the Spanish property market.

Before the crisis the economy revolved around the construction sector, which drove the banking system, the job market and even government revenues. After the crash, mortgages became far harder to obtain and hundreds of thousands lost their homes. Spain’s social affairs minister, Ione Belarra, says people should not have to pay more than 30 per cent of their income in rent

As a result, more people sought to rent, reversing a trend in which housing ownership had risen for decades — although owner-occupiers still account for more than three-quarters of homes. Increased demand has pushed up costs. According to calculations by EY, the consultancy, average rent has risen more than 40 per cent over the past five years, despite a dip during the pandemic. The issue is all the more powerful among Podemos supporters because of Spain’s youth unemployment rate of more than 30 per cent — more than half of 25 to 29 year olds still live with their parents.

Against such a backdrop, the housing bill, whose backers hope will become law in the first half of next year, is politically charged.

One measure would allow regional governments to force big landlords — defined as those holding more than 10 properties — to cap rents in so-called “stressed areas”, where rent has risen significantly above inflation. The legislation would also allow regions to implement tax incentives for smaller owners to reduce rents or impose penalties to prevent them from keeping properties vacant.

Javier García-Mateo, partner for real estate at EY in Spain, said rental properties’ share of the country’s total housing inventory had risen from less than 10 per cent in 2010 to 15-20 per cent today, but argued the proposed law threatens future supply. “In any market in which you intervene with a cap, you will disincentivise developers,” he said. According to his estimates, of a pipeline of 28,000-29,000 flats that developers were preparing to build for rental, some 8,000 have been put on hold until the consequences of the law become clearer.

Spain’s Association of Rental Property Owners also contends that the bill would limit housing supply and reduce investment. “This government, and in particular Podemos’s proposals always have the same assessment from the economic elites — whatever measure it is, we always hear that it will sink the economy, that the country is headed for disaster,” said Belarra, who took over in June from founder Pablo Iglesias as Podemos’ leader. “This argument is beginning to wear out.”

David Lucas, the government’s top official for housing policy, emphasised that 85 per cent of landlords are smaller property owners, for whom tax incentives rather than obligatory caps will apply.

He notes that, according to the current draft, caps would not come into force for 18 months, to allow time to compile a new index of rental prices.

In any case, regions governed by the opposition centre right People’s party have vowed not to apply the curbs permitted by the law should it be approved by parliament. But Lucas also argued that the legislation is long due. “Each time there was a crisis, it was difficult for many citizens to get housing, while many others lost their homes,” he said. “This was an unsolved problem.” 

Many voters are unconvinced. “Rents are going higher and higher,” said Casandra, who leases a 30-square-metre flat in Vallecas, a traditional working class district of Madrid where rents have risen markedly. “I don’t think this law will stop that. If I were a landlord I would also increase the rent.”

Spain blackstone, rents are side show.

Theres plenty of housing in Spain. Not many jobs.

Spain is rapidly reversing all progress since Franco died.

In less than 10 years it'll be a failed, South Americanish state - bankrolled by Germany - assuming EU is still going.

 

[spygirl]

48 minutes ago, Boon said:

It's the wrong prop really.

Doing some quick maths, maybe about after 6x multiples the risk/reward is unfavourable, although for specific customers I think it would be OK.

The major risk to the bank of people defaulting must be higher interest rates, as there currently is a high jump for everyone (when the mortgage goes off the teaser rate to the SVR). This gap of c.2.5% could be even more if interest rates go up. Yet if it does it's a double whammy for the bank, as then property prices might also go down.

Would banks really seek to risk up their books even more? Creating a larger section of riskier loans increases the chance of contagion.

A better one would be 50 year mortgages.... we've already done 40 so why not go a bit further. That would also juice prices in the same way.

I'd suggest you use an on line mortgage calculator.

Once you go beyond 25y, the monthly savings on longer terms get less n less. And the costs rise horrendously.

 

[HousePriceMania]

On 13/11/2021 at 09:57, spygirl said:

I think all of us with children are concerned about the next generations ability to get a foot on the property ladder.

Ah, yes. UK economy is just housing ....

At some point soon, the UK will face having to get way a ahead o the Fed in raising rates, just to stop the pound collapsing.

Or face being slow and having the pound collapse that way.

If the pound collapses then the mainstay of the economy - business/trade - will collapse.

Seriously, does  that cretin Ea thing that a country with large amounts of debt and large current deficit has much choice when it comes to raising rates to stop pound collapsing, shift loads of UKGOV debt, maintain the £ as a non basket case currency.

 

 

I feel like I am living in a parallel universe sometimes.  What you describe is now nailed on at some point in the future.  I we can see it then TPTB can see it.  The question is, why dont they change course.  Ocam's Razor would dictate it's because they simply can't.  Hence why I am preparing for the mother of all collapses.  If they change course then I will reassess my position.

[spygirl]

16 hours ago, Boon said:

It's the wrong prop really.

Doing some quick maths, maybe about after 6x multiples the risk/reward is unfavourable, although for specific customers I think it would be OK.

The major risk to the bank of people defaulting must be higher interest rates, as there currently is a high jump for everyone (when the mortgage goes off the teaser rate to the SVR). This gap of c.2.5% could be even more if interest rates go up. Yet if it does it's a double whammy for the bank, as then property prices might also go down.

Would banks really seek to risk up their books even more? Creating a larger section of riskier loans increases the chance of contagion.

A better one would be 50 year mortgages.... we've already done 40 so why not go a bit further. That would also juice prices in the same way.

The longer the mortgage term, the more likely the mortgage will default.

AFAIK 50 year mortgage are not even a thing.

30 seems to be the max.

Very very people remain working for the same employee/job over 30 years. 

Even taking one at at 20, theres a lot of upheavals and changes in those 30 years.

Theres not been he 70s of high inflation and high wage inflation to beat down the mortgage debt - see mortgage prisoners who cannot afford the mortgage they took out pre 2008.

 

 

[HousePriceMania]

https://www.telegraph.co.uk/property/house-prices/house-prices-fall-ahead-christmas-lull/?utm_content=telegraph&utm_medium=Social&utm_campaign=Echobox&utm_source=Twitter#Echobox=1636963794

 

"Drop in asking prices creating a 'window of opportunity' for buyers, estate agents say"

 

House prices fall ahead of Christmas lull

[HousePriceMania]

From TOS, that's some lull.

 

[Axeman123]

46 minutes ago, HousePriceMania said:

"Drop in asking prices creating a 'window of opportunity' for buyers, estate agents say"

Snap one up quick before they shoot right back up, says used house salesman.

I remember (on TOS maybe) a thread about newspaper coverage of the late 1980s/early 1990s crash. This is all feeling very familiar, last time around papers were full of optimism pretty much all the way down. Every sucker's rally was allegedly the bottom and every new low a fantastic buying opportunity.

[snaga]

I just did an online new deal quote for my Nationwide mortgage, the automatic property valuation was £45K lower than the agreed valuation 5 years ago, in reality it's probably £50K more than 5 years ago.

As my LTV is so low, this doesn't really matter to me, but I thought it interesting, are the banks deliberately undervaluing properties in expectation of a crash?

[spygirl]

2 hours ago, HousePriceMania said:

From TOS, that's some lull.

 

From earlier in this thread - 

 

By the mid 90s, the 90s crash had really bottomed out locally.

Streets were still a forest of 'For Sale'. One long road which I went up n down, every other house was 'For Sale'

From 88ish-91/92sih

I have two distinct memories if 88-92ish.

One - everyone - and I mean everyone - was either a EA, endowment salesman or working in the bank.

Two - It all stopped.

in about 1995, I remember going round to an EA as a mate was going round to bollock the EA for not selling his house - Hes not showing people its for sale, mate whinged.

I bumped into the EA later, in a pub and had a chat. His words were along lines of  -

Its dire. We are not selling anything. Couple of years back were were selling houses daily. Now we only sell one or two a week. Theres no money in it....

The relevance of the last bit is when I look at Aug 1995 sales v August 2021 - 

https://www.home.co.uk/guides/house_prices_report.htm?location=scarborough&startmonth=08&startyear=1995&endmonth=08&endyear=2021

Aug 1995	Aug 2021	Change
	Detached	16	2	-88%
	Semi	37	7	-81%
	Terraced	25	8	-68%
	Flat	23	7	-70%

 

Cut n paste messed up column headings.

There are several EAs. I assume each office must employ a handful of people.

Dire earnings. Getting towards blowing off tramps in the park for loose change to eat.

 

 

[King Penda]

https://www.theguardian.com/money/2021/nov/13/great-britains-north-south-house-price-divide-will-narrow-over-next-five-years?fbclid=IwAR24ce8ynMd8DrO1NTSdl_wIgB7y0XskwYTdhO1FW-rAH3W3xG5LSMtSz8k

[Hancock]

1 hour ago, King Penda said:

https://www.theguardian.com/money/2021/nov/13/great-britains-north-south-house-price-divide-will-narrow-over-next-five-years?fbclid=IwAR24ce8ynMd8DrO1NTSdl_wIgB7y0XskwYTdhO1FW-rAH3W3xG5LSMtSz8k

So level out by houses in the north becoming even more unaffordable.

That article was just written for the sake of writing an article on pwopertee!

[King Penda]

38 minutes ago, Hancock said:

So level out by houses in the north becoming even more unaffordable.

That article was just written for the sake of writing an article on pwopertee!

You could be correct but I can’t see a crash in stoke if I’m honest wages are going up and there are better jobs ie pay wize if you make an effort jcb are still after staff around here so if you don’t mind repetitive work you could probably get on there.yes I know we have inflation on many things but the computer that says yes or no just looks at what’s comeing in and debt you owe.so in Theory punters/mugs can borrow more.

[King Penda]

5 hours ago, spygirl said:

From earlier in this thread - 

 

By the mid 90s, the 90s crash had really bottomed out locally.

Streets were still a forest of 'For Sale'. One long road which I went up n down, every other house was 'For Sale'

From 88ish-91/92sih

I have two distinct memories if 88-92ish.

One - everyone - and I mean everyone - was either a EA, endowment salesman or working in the bank.

Two - It all stopped.

in about 1995, I remember going round to an EA as a mate was going round to bollock the EA for not selling his house - Hes not showing people its for sale, mate whinged.

I bumped into the EA later, in a pub and had a chat. His words were along lines of  -

Its dire. We are not selling anything. Couple of years back were were selling houses daily. Now we only sell one or two a week. Theres no money in it....

The relevance of the last bit is when I look at Aug 1995 sales v August 2021 - 

https://www.home.co.uk/guides/house_prices_report.htm?location=scarborough&startmonth=08&startyear=1995&endmonth=08&endyear=2021

Aug 1995	Aug 2021	Change
	Detached	16	2	-88%
	Semi	37	7	-81%
	Terraced	25	8	-68%
	Flat	23	7	-70%

 

Cut n paste messed up column headings.

There are several EAs. I assume each office must employ a handful of people.

Dire earnings. Getting towards blowing off tramps in the park for loose change to eat.

 

 

Let’s put that to the test this was listed last week Thursday or Friday ish .let’s see how long it lasts https://www.rightmove.co.uk/properties/114991109#/?channel=RES_BUY.   Ps it says listed on the 18th this is incorrect I spotted it last week 

Edited November 15, 2021 by King Penda

[Bobthebuilder]

8 minutes ago, King Penda said:

Let’s put that to the test this was listed last week Thursday or Friday ish .let’s see how long it lasts https://www.rightmove.co.uk/properties/114991109#/?channel=RES_BUY

It's been listed since the 18th of October. Have a look at street view, the image is 2021, it's had a lot of work done to it this year, new front door, new fences etc.

Lot of house for the money, nice green area opposite as well.

[Option5]

11 minutes ago, Bobthebuilder said:

It's been listed since the 18th of October. Have a look at street view, the image is 2021, it's had a lot of work done to it this year, new front door, new fences etc.

Lot of house for the money, nice green area opposite as well.

It looks like number 3 to mee which backs onto the A50 so lots of noise, pollution and vibration

[King Penda]

11 minutes ago, Bobthebuilder said:

It's been listed since the 18th of October. Have a look at street view, the image is 2021, it's had a lot of work done to it this year, new front door, new fences etc.

Lot of house for the money, nice green area opposite as well.

Strange I’ve not spotted it I always use the most recently listed .oh well I put my hands up to my error

[King Penda]

Just now, Option5 said:

It looks like number 3 to mee which backs onto the A50 so lots of noise, pollution and vibration

The a50 is close but you won’t be bothered by it noise wize now pollution if you see that roundabout over the a50 it’s one of the worst places in the whole of stoke for pollution.however that’s still a lot better than many other cities 

[Bobthebuilder]

Just now, King Penda said:

Strange I’ve not spotted it I always use the most recently listed .oh well I put my hands up to my error

No probs Stokie, I'm just checking out the listing. Sold in 2014 for £75,000 current owner bought it in 2017 for £90,000.

If we get a perfect storm for housing in the next few years, I can see that price falling. My brain is telling me 30% to 50% IF we get a crash.

[Hancock]

45 minutes ago, King Penda said:

You could be correct but I can’t see a crash in stoke if I’m honest wages are going up and there are better jobs ie pay wize if you make an effort jcb are still after staff around here so if you don’t mind repetitive work you could probably get on there.yes I know we have inflation on many things but the computer that says yes or no just looks at what’s comeing in and debt you owe.so in Theory punters/mugs can borrow more.

The big decider is interest rates, they go up house prices come down, if they don't then currency crashes and we get even higher inflation and a Labour govt!

[Chewing Grass]

1 minute ago, Hancock said:

The big decider is interest rates, they go up house prices come down, if they don't then currency crashes and we get even higher inflation and a Labour govt!

Would a Labour government be any different to the one we have other than most of then not being able to string a coherent sentence together whilst lying.

Just realised that if you dyed Angela Rayners hair black she would be just as ugly as Jacinda Ahern whilst probably dribbling even more.

[Hancock]

2 minutes ago, Chewing Grass said:

Would a Labour government be any different to the one we have other than most of then not being able to string a coherent sentence together whilst lying.

Just realised that if you dyed Angela Rayners hair black she would be just as ugly as Jacinda Ahern whilst probably dribbling even more.

Not a Starmer Labour govt, its why i'm out!

[King Penda]

33 minutes ago, Hancock said:

The big decider is interest rates, they go up house prices come down, if they don't then currency crashes and we get even higher inflation and a Labour govt!

Maybe on more expensive gaffs and they won’t go anywhere near historic avarages.the government needs inflation to erode its debt so which will hit someone the hardest an interest rate rise on a morgage or inflation that will give regular pay rises .what will fuck things up is millions being made unemployed