Property crash, just maybe it really is different this time

[Bobthebuilder]

3 minutes ago, Wight Flight said:

Is it my imagination or has this thread turned?

I was talking to a mate over the weekend who rents in Dorset. Some property has almost doubled over the last few years, but rent has remained pretty stable.

A typical 2 bed terrace / bungalow has gone from about £160k to almost £300k, rents have remained at around £650 to £700 per month.

He thinks it's nice that the area is becoming popular and thinks it is a good thing that prices have risen so much, so quickly, but laughs when I mention his rent might also double.

So. Who blinks first, the renter or the landlord?

Current yields have fallen 50% for any new landlords entering the market.

[Wight Flight]

1 hour ago, Bobthebuilder said:

So. Who blinks first, the renter or the landlord?

Or the government via LHA?

Who knows? I was just looking at a 2.5 bed semi up for £1,100. Agent says that tenant's income must be 2.5x rent, I.e. £33k.

Very, very few jobs down here pay that. If they insist on the multiple then we will have stalemate.

[Don Coglione]

1 minute ago, Wight Flight said:

Or the government via LHA?

Who knows? I was just looking at a 2.5 bed semi up for £1,100. Agent says that tenant's income must be 2.5x rent, I.e. £33k.

Very, very few jobs down here pay that. If they insist on the multiple then we will have stalemate.

Two incomes?

[Wight Flight]

1 minute ago, Don Coglione said:

Two incomes?

It's a possibility, but difficult with young children. The childcare costs would wipe out the 2nd income.

Let's look at historical norms. Even last year, your gross income needed to be 3* rent.

And traditionally, gross rent would be 10% of the property value.

In any kind of sane world, a person working full time should be able to afford to rent a 1 bed unit.

37.5 hours on minimum is about £18,000 per annum. Allowing a rent of £6,000 giving a property value of £60k.

Anything over that for a one bed flat and we are in government support or bubble territory.

[spygirl]

10 hours ago, Pip321 said:

Little bit of background is I have developed property for 30 years or so and am slowly selling those that were held as tenants move out. That was always the exit plan. But I still keep really close to the local market with many contacts. 

I think people who are bulls (not you or many on these threads obs.) mistake demand and desire for housing for the actual whole market.

There is always demand, in the 80’s I would have given my left kidney when buying my first house and when we moved in 92 I borrowed over 5x with almost no consideration for what might happen and that was during an unprecedented sentiment slump.

I know there is more to it but for many it’s just a question of ‘what can I borrow’….I think the ridiculous HTB scheme highlights that. Who borrows on those terms to pay for an awful newbuild when a nice 1950’s semi with bigger garden and bigger rooms is 30% cheaper.

Once this market subsides then I think we will see a significant readjustment in prices. Like shares it won’t be universal but dependant on the house types, the street and the geography. I have seen some truly appalling purchases made over the last 18 months and to be fair I have seen some fairly decent buys.

The numerous props have been terrible and all under the guise of helping the young to buy….when we know it was to continue to inflate this ridiculous situation where a person in full time average job can’t buy a decent average home. 

The key will be at a higher level the headlines will hopefully show a softening market. Once the daft urgency to buy ‘anything’ subsides then people can breath and negotiate a half decent price. 

 

Pip/pop321.

Surely wrong avator?

 

[spygirl]

10 hours ago, Pip321 said:

Little bit of background is I have developed property for 30 years or so and am slowly selling those that were held as tenants move out. That was always the exit plan. But I still keep really close to the local market with many contacts. 

I think people who are bulls (not you or many on these threads obs.) mistake demand and desire for housing for the actual whole market.

There is always demand, in the 80’s I would have given my left kidney when buying my first house and when we moved in 92 I borrowed over 5x with almost no consideration for what might happen and that was during an unprecedented sentiment slump.

I know there is more to it but for many it’s just a question of ‘what can I borrow’….I think the ridiculous HTB scheme highlights that. Who borrows on those terms to pay for an awful newbuild when a nice 1950’s semi with bigger garden and bigger rooms is 30% cheaper.

Once this market subsides then I think we will see a significant readjustment in prices. Like shares it won’t be universal but dependant on the house types, the street and the geography. I have seen some truly appalling purchases made over the last 18 months and to be fair I have seen some fairly decent buys.

The numerous props have been terrible and all under the guise of helping the young to buy….when we know it was to continue to inflate this ridiculous situation where a person in full time average job can’t buy a decent average home. 

The key will be at a higher level the headlines will hopefully show a softening market. Once the daft urgency to buy ‘anything’ subsides then people can breath and negotiate a half decent price. 

 

One thing I've always found puzzling is you get these areas where property us expensive just because it's expensive- or was.

Typically these area had lots of well paying finsec jobs which were created post 1984 and the vast expansion of banks etc  and people paid large multiples(6×+) just because the last lot had.

This tripped up 89-95 as high IR reamed the South. However things returned to normal, with people chasing prices up.

Then 2008 happened, which is now the high water mark in finsec employment.

Now, places which were upwardly mobile - London n its commuter towns, Golden triangle, are looking threadbare in terms of well paying jobs and number of those jobs.

Now MMR has removed the wiggle room that let lend stupider n stupider multiples, finally ending in uncovered IO lending.

HTB fuckwittery a dumb political response to the ever falling number of housing transaction esp FTB.

The thing that needs doing is killing IO BTL. They - and I - thought s24 would kill them. It should have. Hnrc is really going yo have to go nuts on chasing up none tax payment. Theyd done the legwork, only for covid to spoil/delay the party.

Now it's down to BoE. They need to start forcing banks to raise more capital against IO loans. Theyve only got 10 years before the turds land and none can pay the principle off.

 

[Pip321]

20 minutes ago, spygirl said:

One thing I've always found puzzling is you get these areas where property us expensive just because it's expensive- or was.

Typically these area had lots of well paying finsec jobs which were created post 1984 and the vast expansion of banks etc  and people paid large multiples(6×+) just because the last lot had.

This tripped up 89-95 as high IR reamed the South. However things returned to normal, with people chasing prices up.

Then 2008 happened, which is now the high water mark in finsec employment.

Now, places which were upwardly mobile - London n its commuter towns, Golden triangle, are looking threadbare in terms of well paying jobs and number of those jobs.

Now MMR has removed the wiggle room that let lend stupider n stupider multiples, finally ending in uncovered IO lending.

HTB fuckwittery a dumb political response to the ever falling number of housing transaction esp FTB.

The thing that needs doing is killing IO BTL. They - and I - thought s24 would kill them. It should have. Hnrc is really going yo have to go nuts on chasing up none tax payment. Theyd done the legwork, only for covid to spoil/delay the party.

Now it's down to BoE. They need to start forcing banks to raise more capital against IO loans. Theyve only got 10 years before the turds land and none can pay the principle off.

 

Agree.

S24 would be much more effective if we had interest charged on mortgages. I have not repaid my mortgages (although I hold cash for the same amount should I ever need to repay the mortgages)….but the reason is my average mortgage rate is only a balmy 1.1% (but will now be moving up to 1.35%…but that’s still nothing really) 

And those getting in now….I know of at least 2 examples where they max’d out on government covid loans and just don’t know what to do with it. So they are buying property….really awful.

We need all the props removing…and rates about 3 or 4% then the wheels will completely fall off the BTL wagon.

[Wight Flight]

9 hours ago, Pip321 said:

We need all the props removing…and rates about 3 or 4% then the wheels will completely fall off the BTL wagon.

That's all well and good, but where do you expect renters to live?

[Pip321]

25 minutes ago, Wight Flight said:

That's all well and good, but where do you expect renters to live?

There would still be rentals but that side of the equation doesn’t need feeding with interest only mortgages and interest rates at near zero. The shift from ownership for the young to renting wasn’t ‘a choice by young renters’ but was thrust upon them  

Someone buying a house doesn’t remove it from the supply/demand equation, the house doesn’t disappear. House bought means one less tenant.

If IO continued we could have seen every house bought by an investor in the UK at a cost of £250 pcm and rented it out at £900 pcm.

‘The wheels falling off BTL’ is not the same as the wheels falling off a balanced rental supply with a good choice between buying and renting. 

[Wight Flight]

2 minutes ago, Pip321 said:

Someone buying a house doesn’t remove it from the supply/demand equation, the house doesn’t disappear. House bought means one less tenant.

It's a nice theory but it isn't working that way in practice.

The rental properties being sold down here aren't being bought by tenants leading to a very serious homeless problem.

There needs to be a solution but taxing mom and pop landlords out of existence isn't the right one currently.

[Herby]

17 hours ago, Wight Flight said:

Is it my imagination or has this thread turned?

What do you mean? Going bearish?

In my corner of Hampshire I've just seen my first 20% discount, from 750k down to 600k in a month and a half... 

[spygirl]

On 15/12/2021 at 11:07, spygirl said:

Problem was identified in early 00s when 80% of mroitgages sold were IO - a hefty number of people only hear 'mortgages'. Theyve got a mortgae, itll pay for the house.

It might seem obvious to epople on here but a lot of people are that dumb.

https://www.fca.org.uk/publication/research/fca-interest-only-mortgage-review.pdf

Bottom chart from the PDF.

The rise in maturity, mid chart, starts in 2025.

I know several people where I guess their  entire life style is based on 200k+ of IO mortgage about to mature in 5 years.

 

 

 

Look at those maturity dates.

Due you reckon tge BoE is going yo let these mortgages go to term with no idea whether the borrower can pay back tge cspital?

It wont.

At the very minimum its going to require banks to hold more capital against the IO book.

You can expect banks being forced to spend a lot of time of money finding out if tge IO mortgage is good.

There will be hassle after hassle, making IO loans v expensive, leaning in banks to get them off the books and to a finance company wholl sell bonds to buy the IO book.

This will step up a gear with raising IRs.

 

 

[Noallegiance]

11 hours ago, Herby said:

What do you mean? Going bearish?

In my corner of Hampshire I've just seen my first 20% discount, from 750k down to 600k in a month and a half... 

Round my area (SE) I'm still hearing anecdotes (not from estate agents) of bidding wars and offers of £18k+ above asking.

[Bobthebuilder]

1 hour ago, Noallegiance said:

Round my area (SE) I'm still hearing anecdotes (not from estate agents) of bidding wars and offers of £18k+ above asking.

I am not seeing that in my part of SE London, but demand has gone up for flats, apparently.

[Noallegiance]

 

[haroldshand]

On 20/02/2022 at 16:17, Wight Flight said:

Is it my imagination or has this thread turned?

In what way Dude?

Do you detect a potential crashing housing market?

Personally I am still going to sit on the fence for a while longer

Events in the UK are turning for the worse rapidly, but the way people are these days they will become malnourished, freezing, power turned off before they let anything happen to their illusional property wealth

[Wight Flight]

2 minutes ago, haroldshand said:

In what way Dude?

Do you detect a potential crashing housing market?

Personally I am still going to sit on the fence for a while longer

Events in the UK are turning for the worse rapidly, but the way people are these days they will become malnourished, freezing, power turned off before they let anything happen to their illusional property wealth

Just a few people seem to be happy with rising prices.

[Boon]

One of the most likely things is that the government will protect those prices on the pretext of 'the conservatives have your back'

Most people know it ain't right and just makes things worse for the young, but because they are enriched they look the other way.

 

[reformed nice guy]

Scottish government is looking to fuck up markets a bit more:

Key Actions

This draft Strategy is an important first step in a phased approach to introduce reform during the course of this Parliament. Key actions identified to deliver improvements include:

• delivering a new deal for private rented sector tenants that puts them on a more equal footing with social rented tenants, through the introduction of a new Housing Bill in the second year of this Parliament;
• establishing a regulator for the private rented sector that will enforce defined standards and considering the role of the existing Regulator covering social rented housing - through legislation by the end of this Parliament;
• implementing a national system of rent controls for the private rented sector, whilst exploring what further action we can take to ensure rents in the social rented sector are affordable by the end of 2025;
• creating a new Housing Standard covering all homes; and
• regulating to set minimum standards for energy efficiency and zero emissions heating.

 

https://www.gov.scot/publications/new-deal-tenants-draft-strategy-consultation-paper/pages/3/

[No One]

So 08 didn't kill the Housing Market
Section 24 didn't kill the Housing Market
COVID didn't kill the housing market
Inflation didn't kill the housing market

 

Maybe Putin closing of the gas and forcing the west to raise IR's will kill the housing market?

[spygirl]

2 hours ago, No One said:

So 08 didn't kill the Housing Market
Section 24 didn't kill the Housing Market
COVID didn't kill the housing market
Inflation didn't kill the housing market

 

Maybe Putin closing of the gas and forcing the west to raise IR's will kill the housing market?

2008 killed the UK baks/finsec, was wed known it from ~1960s to 2008.

S24 has killed IO BTL. Morons dont know they are dead.

COVID affects humans. However, the extra debt run up will raise IRS even more.

Infation doesnt kill housing - providing people work.

Again, look for the number of housing transaction. These were flatlining before Covid.

We may be back to flatline- or lower.

 

 

[haroldshand]

19 hours ago, No One said:

So 08 didn't kill the Housing Market
Section 24 didn't kill the Housing Market
COVID didn't kill the housing market
Inflation didn't kill the housing market

 

Maybe Putin closing of the gas and forcing the west to raise IR's will kill the housing market?

Yep I am still looking for that very first crumb of a house price pullback, I started this thread 15 months ago and nothing has made me change my mind yet from my opening post.

Seems like the UK is becoming an even more of a safe haven for anyone who wants to come and what do more people equal, rising house prices

[Green Devil]

20 hours ago, No One said:

So 08 didn't kill the Housing Market
Section 24 didn't kill the Housing Market
COVID didn't kill the housing market
Inflation didn't kill the housing market

Putins war didnt kill the housing market

 

FTFY 

[Boon]

Is it me, or does the 'property sale history' thing no longer work on Rightmove?

For instance:

https://www.rightmove.co.uk/properties/120452207#/?channel=RES_BUY

This is only one of a few I have seen recently where you can corroborate the house number quite easily and you know it has been sold (ie this was sold for £350k in 2018). 

I also have sold properties on my saved list which definitely did have a sale price history, I have checked those and the sale history has gone.

 

[Bobthebuilder]

24 minutes ago, Boon said:

Is it me, or does the 'property sale history' thing no longer work on Rightmove?

For instance:

https://www.rightmove.co.uk/properties/120452207#/?channel=RES_BUY

This is only one of a few I have seen recently where you can corroborate the house number quite easily and you know it has been sold (ie this was sold for £350k in 2018). 

I also have sold properties on my saved list which definitely did have a sale price history, I have checked those and the sale history has gone.

 

Rightmove seem to be playing all kinds of tricks lately, some seem under hand to me. I see one property in Dorset that has been relisted 6 times since Xmas as reduced, but the asking price has remained the same.