Property crash, just maybe it really is different this time

[spygirl]

2 hours ago, Boon said:

That's not the end of it really.

By end of year food might be up 20-25% - for families maybe equivalent to the heating cost rise.

Hilariously there are some on there who think it'll be good for house prices because nobody could afford to sell. I don't see it that way.

I do think it's handy for the government really - they can deflate a bit of the price bubble and it can be blamed on other things. A decline in house prices without a war would be unpopular with the masses. 

Im sure mumsnet will be making their Eggloos sweat.

 

[Bobthebuilder]

Strange week in my search area. Seen a 2 bed terrace go SSTC at £290k and the next day another 2 bed terrace listed at £235k. Also seeing small BTL flats listed as auction starting at £60k.

Either an odd week or a bit of fear creeping in, time will tell.

[eek]

5 hours ago, Bobthebuilder said:

Strange week in my search area. Seen a 2 bed terrace go SSTC at £290k and the next day another 2 bed terrace listed at £235k. Also seeing small BTL flats listed as auction starting at £60k.

Either an odd week or a bit of fear creeping in, time will tell.

Doubt it's fear - at the moment things are still selling instantly round here. 

[Bobthebuilder]

59 minutes ago, eek said:

Doubt it's fear - at the moment things are still selling instantly round here. 

Where are you looking eek? Nothing is shifting fast in my Dorset search.

[eek]

21 minutes ago, Bobthebuilder said:

Where are you looking eek? Nothing is shifting fast in my Dorset search.

Darlo and it's not us but a friend wishing to move North.

Now he is fussy(ish) about the area he wants but things are literally going to best and final offers in days. 

[Bobthebuilder]

11 minutes ago, eek said:

Darlo and it's not us but a friend wishing to move North.

Now he is fussy(ish) about the area he wants but things are literally going to best and final offers in days. 

Fascinating. I am sure it's some sort of ripple effect with people chasing never ending property gains.

In Dorset, I watch an area of 300 square miles, largely rural. I see an average of about 15 properties listed per day. Most of these are new listings, next are reduced with SSTC coming last at about 1 a week, sometimes 2.

It was a feeding frenzy during lockdown with hundreds of places still SSTC over a year later, chains I presume.

Sounds like markets vary a lot by area.

 

[Formerly]

It's a rough part of a town with little to offer the young, but this was sold in 2006 for £57,500, in 2013 for £25,250 to the current seller. 4 prices drops in 5 months and now 70% of their original asking price. There are some motivated sellers out there.
https://www.rightmove.co.uk/properties/115934378#/?channel=RES_BUY

[haroldshand]

https://www.telegraph.co.uk/property/buy/will-housing-market-realise-cost-living-crisis-war/

 

The property market is now beyond and rational  understanding.

 

[haroldshand]

16 hours ago, Bobthebuilder said:

Fascinating. I am sure it's some sort of ripple effect with people chasing never ending property gains.

In Dorset, I watch an area of 300 square miles, largely rural. I see an average of about 15 properties listed per day. Most of these are new listings, next are reduced with SSTC coming last at about 1 a week, sometimes 2.

It was a feeding frenzy during lockdown with hundreds of places still SSTC over a year later, chains I presume.

Sounds like markets vary a lot by area.

 

Over the last decade I personally know many people who just constantly flip property at a profit. I really cannot tell you if this is still a widespread activity or not these days, I suspect it is with many still believing there is money to be made.

But what does need to be considered in these risky dangerous times is that many of them will one day shut the door as it is too risky while the rest then lose on that last property deal wiping their previous good times and gains out.

The next 12 months should be interesting, but I am still 50 50 as to whether we will see a property crash

[CVG]

19 hours ago, eek said:

Darlo and it's not us but a friend wishing to move North.

Rishi?

[eek]

2 hours ago, CVG said:

Rishi?

Nope he has a very nice house near Northallerton.. 

[spygirl]

The spring bounce has been killed.

The energy and IR increases, and the massive contraction of bank mortgage lending has killed it.

 

[Pip321]

On 11/03/2022 at 02:05, Formerly said:

It's a rough part of a town with little to offer the young, but this was sold in 2006 for £57,500, in 2013 for £25,250 to the current seller. 4 prices drops in 5 months and now 70% of their original asking price. There are some motivated sellers out there.
https://www.rightmove.co.uk/properties/115934378#/?channel=RES_BUY

I think this illustrates that when we talk about ‘house prices’ that really there isn’t a consistent measure across the UK for where we really are.

Mention if Darlo too, with high demand and Dorset with falling demand. 

I live in a very affluent and pretty area in North Yorkshire. House prices are high(ish) and I expect them to fall. However perhaps they will just stop rising and inflation will do its job.

However Darlington may creep up, Dorset down and certainly London is in trouble. 

So I think for me it’s a variable answer depending on the growth we have seen in the local areas and the falls will be as variable as the rises.

I am overall a bear but in the cold quiet Jan 2021 my son bought. With a little help and guidance from me he got an ex rental which had been renovated improved and extended but had crappy laminate floors, no light shades and felt totally unloved in its presentation. He paid £248k and similar houses were maybe £235k in 2018 but £300k in the summer 2020 madness. 

We looked at the price worked it back with normal inflation ie 2.5% ish and infact it hadn’t really gone up much more than inflation for 20 years. Indeed this particular house had fallen when allowing for inflation, its renovation and extension since it had been bought in 2016.  Too many people buy with less due process than when they buy a TV….we researched and to be fair to say I know the local market is an understatement  

However, some sale prices for ones with log burners and blue grey kitchens were really daft prices. Same house type, unextended on an awful angled plot sold for £325k in 2020…but it’s kitchen was nice and it had those nice grey blinds 🤦🏻‍♂️. Seriously who does that?

Back to point. I think ‘some’ prices will fall. Some won’t. It depends what and where.  So people should buy reasonably are carefully. Like they would with an important purchase like a TV 😆🤦🏻‍♂️

[HousePriceMania]

Anyone thinking of buying a house in Surrey ?

[Frank Hovis]

12 minutes ago, Pip321 said:

Back to point. I think ‘some’ prices will fall. Some won’t. It depends what and where.  So people should buy reasonably are carefully. Like they would with an important purchase like a TV 😆🤦🏻‍♂️

 

I think it will come down to interest rates going up for two reasons:

1. Mortgage affordability: it's about 3% now IIRC, take that to 6% and you halve the capital sum that you can service.

2. The binary position of most people: cash or property.

If you can obtain 5% interest in cash then you will be looking to match or exceed that if you rent property out.

If a property's monthly rental is £1,200, £14,400 a year, then that values a rental property at yields of:

3% £480k

4% £360k

5% £288k

6% £240k and so on.

 

That perceived required yield will dictate what the BtLers will pay. 

The usual brag of the BtLer will be that they will just increase rents but they can only do that if they weren't already charging the maximum that the market would bear.

Which most of them are.

[Formerly]

51 minutes ago, Frank Hovis said:

 

I think it will come down to interest rates going up for two reasons:

1. Mortgage affordability: it's about 3% now IIRC, take that to 6% and you halve the capital sum that you can service.

2. The binary position of most people: cash or property.

If you can obtain 5% interest in cash then you will be looking to match or exceed that if you rent property out.

If a property's monthly rental is £1,200, £14,400 a year, then that values a rental property at yields of:

3% £480k

4% £360k

5% £288k

6% £240k and so on.

 

That perceived required yield will dictate what the BtLers will pay. 

The usual brag of the BtLer will be that they will just increase rents but they can only do that if they weren't already charging the maximum that the market would bear.

Which most of them are.

With the current price increases on all the basics, plus the coming tax (NI) rise, and hopefully interest rate rises, people will have less to spend. The maximum that the market will bear may decrease. It's a nasty domino effect for BTLs :).

[Frank Hovis]

1 minute ago, Formerly said:

With the current price increases on all the basics, plus the coming tax (NI) rise, and hopefully interest rate rises, people will have less to spend. The maximum that the market will bear may decrease. It's a nasty domino effect for BTLs :).

 

Maybe but it's going to be a far nastier effect for those renting.

They're going to lose everything.

[Formerly]

1 hour ago, Pip321 said:

I think this illustrates that when we talk about ‘house prices’ that really there isn’t a consistent measure across the UK for where we really are.

I'm completely in agreement. The flat came to my attention when looking at a 3 bed bungalow a few miles away. Despite being band F council tax and the worst energy efficiency (F or G?) that sold in a couple of days for 10x the asking price of the flat.

[Formerly]

3 minutes ago, Frank Hovis said:

 

Maybe but it's going to be a far nastier effect for those renting.

They're going to lose everything.

Not necessarily. Renters can move to cheaper or shared accommodation. BTL could not only lose their properties, but also still be left owing the banks.

[Wight Flight]

1 hour ago, Frank Hovis said:

 

Maybe but it's going to be a far nastier effect for those renting.

They're going to lose everything.

Why?

[HousePriceMania]

2 hours ago, Frank Hovis said:

That perceived required yield will dictate what the BtLers will pay. 

 

They seemed quiet happy with a 1% yield a few weeks ago 

[Bobthebuilder]

3 hours ago, Pip321 said:

Dorset down

Got to happen soon I think, prices have gone mental these last 2 years. Starting to see reductions and some places come on that look cheap, but in reality require a lot of work, grade 2 listed and huge council tax bills.

Mate rents a 2 bed terrace in a Dorset market town, moved in pre convid, house worth about £160k, rent at £650 per month. House now worth north of £280k, rent still £650, he couldn't afford it if the rent doubles.

Also to note, the house is in need of a few upgrades to meet the new C rated energy certificate. It needs new doors, windows and a new gas combi boiler, currently it only has electric hot water cylinder and night storage heaters.

It is getting to the point that, its all starting to look like a bit of a mess.

[Boon]

Todays raise only equates to another £20 or so on a £200k mortgage. So its unlikely to be material now.

But if the base rate ever gets to 2%, that's closer to £200. Add in that by the end of the year we may have seen another rise in the price cap of power. That equates to an extra £400 a month on bills for a household, compared to what they are paying now. And that is just for the mortgage/power - add in the rest of the things that are seeing increases and it might be £500/600.

Some may get wage rises offsetting it, but I guess a lot will not. But the average awareness of what is coming I think is low, I bet hardly anyone realised there was a BOE decision due today or that the futures imply there are more rate rises to come. The MSM do a poor job of informing people of that.

So people continue to price their properties confidently, knowing that if they can leave them up long enough the lack of competition means they are likely to get a bite. That has been the case for the last few years.

But now I hope we have opened the gates for more properties to come. Those who bought more than 5 years ago may also have some capital gains to play with and be less fussy on price, some leveraged people may have no choice.

Like frogs in the boiling water, once a lot of people realise it may be too late and it may be a race to get out. 

At least that what I predict for my own areas.

 

 

[Frank Hovis]

1 hour ago, Wight Flight said:

Why?

 

As has been happening over the last year:

Families who either lose their property through it being sold out from under them or because they are unable to afford the increased rent (or static rent against energy price rsies and NI increases) have been ending up on the homeless register or in temporary accommodation noweher near their jobs and their kids' schools.

The ones that have been on the radio or the press have typically been in the same house for 10 - 20 years and had been confident that there lives woudl continue as they had been for the foreseeable future.

And then you are homeless and stuck in a B&B or cheap hotel at the end of the ever-lengthening queue for social housing.

[Bus Stop Boxer]

Mate has pointed out that this is an odd week in the month to tweak rates. Is it?

Unscheduled?