Property crash, just maybe it really is different this time

[mh9000]

Not working for me either. I had saved houses that have since gone through and were showing the latest 2021 sold price but now the entire history has disappeared.

52 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.

 

 

Edited February 28, 2022 by mh9000

[No One]

8 hours ago, haroldshand said:

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

This.


Despite all the post claiming that the market is about to crash ("seriously guys, HPC tomorrow") the graph still looks like this:

Which means my post still holds up.

Not that I want to be right, its just sad that I am.

Only thing that will dampen house prices is if Putin nukes us.
 

[No One]

Ok, I just stumbled on something whilst looking for a chart.

Someone has gone into digging up very very old AV.House Price data going back 200 years.

 

Quote

We dug into the treasure trove that is the Bank of England’s Millennium of data resource to analyse the history of house prices. We found that the average house in the UK currently costs more than eight-times average earnings, based on data as at 31 December 2020.

Before the current episode, this eight-times-earnings level has only been breached twice previously in the past 120 years – once just prior to the start of the financial crisis and once around the start of the 20th century.

It may only be of historic curiosity, but it is interesting that house prices were even more expensive in the latter half of the nineteenth century. They then went on a multi-decade downtrend relative to earnings. This only bottomed out after World War I. There are three important drivers of this: more houses, smaller houses, and rising incomes.

• More houses: There was a more than doubling in the stock of housing in England, Wales and Scotland between 1851 and 1911. It rose from 3.8 million to 8.9 million houses – for reference, today it stands at more than 28 million.
• Smaller houses: Houses built before 1850 were significantly larger than those built after. 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[1]. This reflected both a shift in construction towards smaller types of housing (e.g. a shift away from detached houses towards terraces) and a downshift in the average size of houses within each category. For example, the average plot size for a pre-1850 terrace was 278 square metres but that fell to 147 square metres for those built between 1850 and 1899.
• Higher incomes: While average house prices fell by 23% between 1845 and 1911 (-0.4% a year), due in part to the two factors above, earnings rose by 90% over the same period (+1.1% a year).

 

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So this was a great time for UK homebuyers? Not really. The UK was a nation of renters back then. Even in 1918, over three quarters of people rented their home (data based on England and Wales, but this is likely to be representative of the UK). It was not until the second half of the 20th century that the cult of home ownership really took off. Rates of home ownership rose steadily in the intervening decades, peaking at over 70% in the early 2000s.

However, as house prices have risen from around four-times average earnings in the mid 1990s to more than eight-times more recently, affordability has deteriorated dramatically for first-time buyers (most mortgage providers apply constraints on the amount they will lend as a multiple of earnings). This has contributed to home ownership rates falling to 62-64% in the past five years, levels last seen in the early 1980s.

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Returning to homebuilding, it all but ceased entirely during World War I for obvious reasons. However, once the war was over, it picked up in the 1920s, before a construction boom took place in the 1930s. More than 2.7 million homes were built in this decade, with more than 2 million being built by the private sector alone. Interest rates being anchored at 2% and abundant land and labour all helped.

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House building also took off after the second world war – a necessity as large parts of the nation’s housing stock had been destroyed during the war. However, in contrast to the 1930s when the private sector took the lead, it was the public sector which picked up the mantle in the 1950s, 60s and 70s (this was also peak time for slum clearances – an average of around 67,000 homes a year were demolished or closed down between 1955 and 1980, peaking at 95,000 in 1971). In turn, the private sector has been the dominant house builder for the past 30 years.

This chart is shocking! Look at the amount of housing built in the 50's!

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Regional variations in affordability

Returning closer to the present, disparities in affordability exist between regions and the sexes. As could have been anticipated, long-term regional data is not quite as abundant as nationwide data but we are able to track house price-earnings multiples back to 1969. This is shown for males below. A comparison with females follows (earlier data is only available for males and females separately).

The shift in affordability between London and other parts of the UK stands out. The average London house would cost over 11-times the average London wage. Properties in the south east and south west are also expensive but this is likely to be influenced by commuters who live in those regions but work in London, earning London wages (which are higher). The popularity of second homes in Devon and Cornwall is also likely to be a factor.

Things get more affordable as you move further north. The Midlands cluster around 6.5-times average earnings, while the North West and Yorkshire, alongside Wales, are on around 5.5 to 6-times.

In Scotland, the average house costs around 4.7-times average earnings, the lowest of the major British regions. Readers may be surprised to learn that this regional divergence is a relatively recent phenomenon. In the three decades prior to the mid-1990s, there was relatively little difference between different parts of the country.

Quote

Conclusions

How might affordability improve?

Houses have rarely been more expensive relative to earnings than they are today in more than 120 years. Prices are stretched everywhere but London and the south of England stand out. Things look even less affordable for women.

The last time there was a sustained decline in the house price-earnings multiple was the second half of the 19^th century. Average house prices fell for more than 50 years thanks to substantial building of houses, many of which were smaller than existed before. At the same time earnings rose.

How likely or even desirable would that be today? The UK’s heavily mortgaged consumers would struggle to cope with 50 years of falling house prices. It would also be political suicide for whoever was deemed responsible. A shift towards the building of smaller houses would also seem unlikely  – research has found that houses are smaller today than at any point since at least the 1930s[1]. Hobbit homes cannot be ruled out entirely but I’m not sure how positive an outcome that would be.

Which leaves us with earnings. Earnings growth has been weak since the financial crisis but has recently picked up strongly – average earnings in the final quarter of 2020 were 4.7% higher than the same period of 2019. A period of stronger pay growth may represent the best hope of improving affordability (with the caveat that  stronger earnings may result from a stronger economy which could result in a stronger housing market).

The elephant in the room here is interest rates. A Bank of England working paper[2] concluded that nearly all of the rise in average house prices relative to incomes between 1985 and 2018 can be seen as a result of “a sustained, dramatic, and consistently unexpected, decline in real interest rates as measured by the yield on medium-term index-linked gilts”[3]. The Bank doesn’t rule out other factors, but concludes that they have had more of a short term impact. It furthermore concludes that: “An unexpected and persistent increase in the medium-term real interest rate of 1 percentage point from its level as at end 2018 could ultimately generate a fall in real house prices (over a period of many years) of just under 20%.”

However, depending on whether you are a current home owner or a prospective buyer, you are likely to be encouraged and discouraged in equal measure by the Bank of England’s scepticism that this is likely to materialise. Just because house prices are expensive relative to earnings does not mean there is a good reason to expect them to cheapen materially.

Is property a better pension investment than shares?

A bigger shadow is the faith that many Brits put in property as their pension. Anyone who has read the Money section of a Sunday newspaper will be familiar with the question regularly posed to celebrity interviewees: Which is better, property or pension? In all but a tiny minority of cases, the answer comes back “property”.

House prices have tended to rise over time, so it is not hard to understand why people say this. £100,000 worth of UK property 25 years ago would be worth an average of around £451,000 today. This obviously varies by region. In London it would be worth around £660,000 and in Scotland, £378,000. These figures exclude any costs of ownership such as maintenance, repairs, insurance or taxes; any income generated by the property (not relevant for primary residence, only buy-to-let); and the impact of leverage/mortgage finance.

However, that same £100,000 invested in the global stock market (again, excluding any costs) would have grown even more, to around £727,000. This is 10% more than in even the best performing regional property market, London. Furthermore, it doesn’t matter whether you look at this over 5, 10, 15, 20, 25 or 30 year horizons. The stock market would always have resulted in a bigger increase in your £100,000 compared with UK residential property.

This also does not take into any account the substantial tax savings which can be earned by saving into a pension nor the substantial taxes and costs associated with buying and selling property.

So the next time you think about which is better, property or pension, think carefully before you answer.

References

[1] Historical Statistics of Housing in Britain, Cambridge Centre for Housing & Planning Research, University of Cambridge

[2] London Association of building Control: https://www.labc.co.uk/news/what-average-house-size-uk

[3] Staff Working Paper No. 837: UK house prices and three decades of decline in the risk‑free real interest rate

[4]For those who are interested, real interest rates were on a highly volatile but only very slowly rising trend for much of the 1850-99 period. As a result, they are unlikely to have been the major driver of the cheapening of houses relative to earnings during this period. The reasons given earlier are likely to have played a bigger role.

 

 

[CVG]

9 hours ago, Bobthebuilder said:

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.

Report it to the ASA. I have and they've done f' all

[Sugarlips]

8 hours ago, No One said:

 

Only thing that will dampen house prices is if Putin nukes us.
 

Go long bomb shelters

[HousePriceMania]

ONS saying mortgage approvals rose again....yet there is nothing to buy.

Im starting to smell a rat.

[spygirl]

3 hours ago, HousePriceMania said:

ONS saying mortgage approvals rose again....yet there is nothing to buy.

Im starting to smell a rat.

Mortgage approvals are not mortgage being used to buy a house.

Expired MAs are probably a lot higher than you might think.

I know mine expired whilst I was stuck on some legal shit.

Luckily, they HSBC) redid the mortgage at slightly less.

 

 

 

[HousePriceMania]

Is there any sign of the Russian war impacting the London pwopatee market yet ?

 

 

 

[Wight Flight]

I wonder at what age people just think fuck it, no point in buying a house now? If there was decent security of tenure then I would be there. Really don't want to hand over £400k of my hard earned to some grubby boomer. I would rather spend it on enjoying myself than impoverishment in my second youth.in

And I wonder what happen when this meets the age of a first time buyer? My guess is, in the south, it you haven't bought by the time you have kids, you won't be buying until they leave home. Maybe 55ish if you are lucky.

So only the very successful or those without kids will want to buy. Doesn't bode well for family houses.

[HousePriceMania]

1 minute ago, Wight Flight said:

Doesn't bode well for family houses BRITAIN.

No point paying £400K for a house that's worth £50k.  

If you get to retirement, go somewhere nice and sunny to live, that 400K is better paying for your own happy retirement than theirs.

[Bobthebuilder]

12 minutes ago, Wight Flight said:

I wonder at what age people just think fuck it, no point in buying a house now? If there was decent security of tenure then I would be there. Really don't want to hand over £400k of my hard earned to some grubby boomer. I would rather spend it on enjoying myself than impoverishment in my second youth.in

And I wonder what happen when this meets the age of a first time buyer? My guess is, in the south, it you haven't bought by the time you have kids, you won't be buying until they leave home. Maybe 55ish if you are lucky.

So only the very successful or those without kids will want to buy. Doesn't bode well for family houses.

If you do not have the savings to buy outright, what bank is going to give a 45+ year old a mortgage? I had enough of a problem at 42, loads of questions from the bank about how I planned to pay the mortgage at 65+.

I am starting to see country thatched cottages in Dorset, that require some works (probate?) now being listed at the same price as bungalows in the market towns. Building costs, energy, council tax bands starting to bite?

[Wight Flight]

32 minutes ago, HousePriceMania said:

No point paying £400K for a house that's worth £50k.  

If you get to retirement, go somewhere nice and sunny to live, that 400K is better paying for your own happy retirement than theirs.

Retirement isn't on the cards. Possibly work six months of the year and travel for the  other six until I drop dead.

[haroldshand]

I just caught the Nationwide house price data by accident a few moments ago and burst out laughing, normally I just do not give a fuck anymore and never check.

https://www.cityam.com/average-uk-property-tops-record-260000-as-house-prices-accelerate-by-12-6-per-cent/

MoM rise of +1.7%, I have just had it with this over populated country where work is punished as we let millions more people in who are slagging us off within a few years as they want more free money and sympathy

High real inflation along with high decade long house price inflation, just brilliant, just cannot wait until end of this year and I am out off here

 

[HousePriceMania]

1 hour ago, haroldshand said:

I just caught the Nationwide house price data by accident a few moments ago and burst out laughing, normally I just do not give a fuck anymore and never check.

https://www.cityam.com/average-uk-property-tops-record-260000-as-house-prices-accelerate-by-12-6-per-cent/

MoM rise of +1.7%, I have just had it with this over populated country where work is punished as we let millions more people in who are slagging us off within a few years as they want more free money and sympathy

High real inflation along with high decade long house price inflation, just brilliant, just cannot wait until end of this year and I am out off here

 

 

Up nearly 13% in a year....with nothing up for sale.

Collapse cannot be far off, this is proper proper proper mania stuff

[spygirl]

1 hour ago, haroldshand said:

I just caught the Nationwide house price data by accident a few moments ago and burst out laughing, normally I just do not give a fuck anymore and never check.

https://www.cityam.com/average-uk-property-tops-record-260000-as-house-prices-accelerate-by-12-6-per-cent/

MoM rise of +1.7%, I have just had it with this over populated country where work is punished as we let millions more people in who are slagging us off within a few years as they want more free money and sympathy

High real inflation along with high decade long house price inflation, just brilliant, just cannot wait until end of this year and I am out off here

 

Is it NW own sales data?

If so, its useless.

You need a good 12 months clear of SD holiday to get a clear picture.

Otherwise its - 'Mortgage approvals *DOUBLE*!!!!! (Going from 2 to 4).

 

 

 

 

[haroldshand]

30 minutes ago, HousePriceMania said:

 

Up nearly 13% in a year....with nothing up for sale.

Collapse cannot be far off, this is proper proper proper mania stuff

Hey, been hearing it for a decade now but lets hope you are right and I am wrong about what's really going to happen.

Next 5 years could quite easily see another 2 million immigrants arriving, there just isn't the property any more

[HousePriceMania]

16 minutes ago, haroldshand said:

Hey, been hearing it for a decade now but lets hope you are right and I am wrong about what's really going to happen.

Next 5 years could quite easily see another 2 million immigrants arriving, there just isn't the property any more

London, down from 2016 peak with IRs at 0 and mass immigration in full swing...as has been covered several times, it's not supply and demand that's driving this, it's QE and Low IRs.

 

[HousePriceMania]

I think the NW etc are making their numbers upnow.  Low volumes, pick your data, adjust it to suit, 1 £10M  house sold, 2 50K flats...what average does that give you.

The market is dead and no one knows it yet.

 

[spygirl]

2 hours ago, HousePriceMania said:

I think the NW etc are making their numbers upnow.  Low volumes, pick your data, adjust it to suit, 1 £10M  house sold, 2 50K flats...what average does that give you.

The market is dead and no one knows it yet.

 

In short - Yep.

NW have been fibbing for years.

 

[spygirl]

From the interim results - 

Trading highlights • Gross mortgage lending grew by £5.5bn to £18.2bn (H1 2020: £12.7bn); our market share was 11.4% (H1 2020: 12.0%) in a buoyant and highly competitive market • Lent over £5bn to first time buyers, supported by our new Helping Hand mortgage and return to 95% loan to value lending • Deposit market share rose to 9.6% (4 April 2021: 9.4%) following strong deposit growth, supported by competitive products such as our Member Exclusive Fixed Rate ISA and Triple Access Online Saver, and growth in current account balances • Switching incentives helped grow current accounts to 8.7m (4 April

So ... NW have sucked up all the risky lending for that figure.

 

[HousePriceMania]

This is from the times Obituarist

https://www.thetimes.co.uk/article/rightmove-shares-are-safe-as-houses-f939zk858

 

 

not sure why the times feels the need to print something like that....maybe they are as safe as massively over priced houses in a rising interest rate environment.  Now that I can believe.

[HousePriceMania]

5 hours ago, spygirl said:

From the interim results - 

Trading highlights • Gross mortgage lending grew by £5.5bn to £18.2bn (H1 2020: £12.7bn); our market share was 11.4% (H1 2020: 12.0%) in a buoyant and highly competitive market • Lent over £5bn to first time buyers, supported by our new Helping Hand mortgage and return to 95% loan to value lending • Deposit market share rose to 9.6% (4 April 2021: 9.4%) following strong deposit growth, supported by competitive products such as our Member Exclusive Fixed Rate ISA and Triple Access Online Saver, and growth in current account balances • Switching incentives helped grow current accounts to 8.7m (4 April

So ... NW have sucked up all the risky lending for that figure.

 

NW are going out of business.

[Bobthebuilder]

1 hour ago, HousePriceMania said:

This is from the times Obituarist

https://www.thetimes.co.uk/article/rightmove-shares-are-safe-as-houses-f939zk858

 

 

not sure why the times feels the need to print something like that....maybe they are as safe as massively over priced houses in a rising interest rate environment.  Now that I can believe.

Fuk me, At a quick glance I would say that share price has out run property prices over the long term. I can remember Killer Bunny saying something about this back in the day, probably you as well HPM.

[Ash4781b]

I thought Bank of England were consulting on removing the mortgage affordability criteria. Not sure what’s it about? Presumably confirming they aren’t planning to raise interest rates too much. 

[With a crooked smile]

8 minutes ago, Ash4781b said:

I thought Bank of England were consulting on removing the mortgage affordability criteria. Not sure what’s it about? Presumably confirming they aren’t planning to raise interest rates too much. 

I think it more subtle than you might believe. You can't just rock up and go 'I'll have 10x salary please'. 

It's the stress testing of the loan at higher interest rates that they are talking about dropping. Don't think that makes much difference for most people.