Property crash, just maybe it really is different this time

[HousePriceMania]

1 hour ago, Boon said:

I would love to see a dip just to see attitudes like 'house prices always rise', 'my house is my pension' shit disappear. Surely it would be a good thing to see the general public educated a little. I would say now you have a position where there are many people who have 95%+ of their total worth in a property. But not only that, it is leveraged position.

As I mentioned before I do know some people who have rented rather than sold, 'waiting for the market to recover', but I do wonder if there may be more slow-motion car crashes like this:

https://www.rightmove.co.uk/properties/118196975#/?channel=RES_BUY

(check the historic sold price)

Said person may be facing a situation where there is a £50k+ loss, and they cannot get a remortgage because the valuation will be much less. A higher mortgage cost also means they can't rent it either.

With prices at higher wage multiple extremes that the 2007 bubble and with rising IRs and cost of living, how can there not be a pull back in prices unless it's just banks going round buying anything at continually increasing prices with magicked up cash ( I've not put that past them ) ?

people in 2007 must have thought prices were crazy but now they are all trying to buy persimmon 3 bed semis for £600K and they think that's normal !!!

 

Edited April 8, 2022 by HousePriceMania

[Boon]

Depends where you are in the country.

Personally I think the difference this time around in London is that people buy alone much more rarely nowadays especially at the lower levels. Used to be the case that a man got a job, then bought a 'bachelor pad', usually code for somewhere that was cheap and crap. Meet a woman, move in together somewhere else.

I think that step on the ladder has practically vanished, today the young couples first step is to move in together into that same cheap and crap place, either after a spell at parents or rented. But the ladder since the last few years has vanished, not many of these places would have seen much appreciation in price. Thanks to the pandemic houses would have gone up in price, thus boosting the demand for the commuter towns.

So the wage multiple for property has gone up in an absolute sense as it looks at one wage but it ignores that more and more people will use dual incomes to buy it, because that's the only way to do it.

[Colliedog1]

Talking to a lady at the car boot who sells new builds. 2 investors had pulled out recently, one due to mortgage costs going up. Unfortunately plenty still buying with the help of mum and dad and if near a railway station, the work from home brigade.

North /West Yorkshire area

[HousePriceMania]

I've seen it all now....ITV advising people how much house prices will go up and stay up I assume

 

 

[Sugarlips]

https://www.stuff.co.nz/life-style/homed/housing-affordability/128295035/wellingtons-redhot-house-prices-are-finally-cooling--why-then-is-noone-buying

NZ teetering...

The bottom has fallen out.”

Beth Coughlan has a phrase of her own: “quite disappointing”. At the start of the year, the Coughlan’s listed their first family home, in Wellington, for enquiries over $859,000. No-one was interested. They dropped the price to $815,000, then $759,000 and, now, earlier this week, $699,000. “It is really disheartening, as a vendor, to not know how long you’ll be sitting there.” Coughlan was holding onto the consolation that they should “be able to buy in the same market” – eventually. “It’s just getting it sold – you can’t buy until you’ve sold.”

[wherebee]

17 minutes ago, Sugarlips said:

https://www.stuff.co.nz/life-style/homed/housing-affordability/128295035/wellingtons-redhot-house-prices-are-finally-cooling--why-then-is-noone-buying

NZ teetering...

The bottom has fallen out.”

Beth Coughlan has a phrase of her own: “quite disappointing”. At the start of the year, the Coughlan’s listed their first family home, in Wellington, for enquiries over $859,000. No-one was interested. They dropped the price to $815,000, then $759,000 and, now, earlier this week, $699,000. “It is really disheartening, as a vendor, to not know how long you’ll be sitting there.” Coughlan was holding onto the consolation that they should “be able to buy in the same market” – eventually. “It’s just getting it sold – you can’t buy until you’ve sold.”

ANZ Bank chief economist Sharon Zollner said the family had little to worry about.

“It’s a more stressful market to sell in, but they’ll get it back when they’re the buyer, and they buy a house that’s been marked down by $250,000,” she said.

 

fucking muppet.  that statement has zero percent chance of being right. 

[Sugarlips]

30 minutes ago, wherebee said:

ANZ Bank chief economist Sharon Zollner said the family had little to worry about.

“It’s a more stressful market to sell in, but they’ll get it back when they’re the buyer, and they buy a house that’s been marked down by $250,000,” she said.

 

fucking muppet.  that statement has zero percent chance of being right. 

Prices finally beginning to move in Perth after a decade of sideways to down ie affordable. The market is pricing in 13 rate rises in Oz in the next year or so, will cause some damage on the east coast, will be interesting if it snuffs out the market turnaround in the west too. Is the hat finally out of rabbits?

[wherebee]

1 hour ago, Sugarlips said:

Prices finally beginning to move in Perth after a decade of sideways to down ie affordable. The market is pricing in 13 rate rises in Oz in the next year or so, will cause some damage on the east coast, will be interesting if it snuffs out the market turnaround in the west too. Is the hat finally out of rabbits?

NZ and Canada both announcing probable bans on foreign ownership of residential property....... which will push more towards Oz, sadly.

[Long time lurking]

Well better late than never 

 

[Long time lurking]

For what it`s worth and i have lost the link to the chart but the US 30y bond is close to 3% from what i can make out this is mainly mortgage based investing  as 30 year fixed rate mortgages are the norm 

The FED if believed targeting 3% base by the autumn 

Mortgages could well be becoming far more expensive very soon,where the US go we follow  

[Plan-b]

2 hours ago, Long time lurking said:

For what it`s worth and i have lost the link to the chart but the US 30y bond is close to 3% from what i can make out this is mainly mortgage based investing  as 30 year fixed rate mortgages are the norm 

The FED if believed targeting 3% base by the autumn 

Mortgages could well be becoming far more expensive very soon,where the US go we follow  

We already are, the Barclays fix I agreed last August and was valid for me until January this year has gone up by nearly one percent since then. That's for exactly the same mortgage product.

[spygirl]

2 hours ago, Plan-b said:

We already are, the Barclays fix I agreed last August and was valid for me until January this year has gone up by nearly one percent since then. That's for exactly the same mortgage product.

Up 50%!!!

[Herby]

It Sucks. 

Been trying to buy a house, post-divorce, for about a year.

Out-bid every time, even when going 10% above asking (£50k+) in my rural environ as a single buyer .

I don't wish ill on others, just wish house prices reflect earnings in a sleepy market town in hampshire.. 

[Long time lurking]

4 hours ago, Plan-b said:

We already are, the Barclays fix I agreed last August and was valid for me until January this year has gone up by nearly one percent since then. That's for exactly the same mortgage product.

But we could be talking another 3-4% by the year end for any new or expiring fixes 

For the IO BTL brigade that could mean  doubling or trebling of there mortgage payments

[wherebee]

56 minutes ago, Herby said:

It Sucks. 

Been trying to buy a house, post-divorce, for about a year.

Out-bid every time, even when going 10% above asking (£50k+) in my rural environ as a single buyer .

I don't wish ill on others, just wish house prices reflect earnings in a sleepy market town in hampshire.. 

sorry to hear that, Herby.

I said to a builder I know here who was looking to buy, that due to inflation his savings are eroding at at least 10% a year.  That 100,000 deposit is only 90,000 of spending power by end 2022....

 

hence to rush to hard assets.  of course, if you overborrow, you are fucked as well.

[Plan-b]

8 hours ago, Herby said:

It Sucks. 

Been trying to buy a house, post-divorce, for about a year.

Out-bid every time, even when going 10% above asking (£50k+) in my rural environ as a single buyer .

I don't wish ill on others, just wish house prices reflect earnings in a sleepy market town in hampshire.. 

Hampshire is a very nice area and very popular, The M4 corridor is nearby and a major high-technology hub with Important cities and towns along it. 

Not surprised by your difficulties there in a sleepy Hampshire market town sounds just the ticket for those £100K+ couples in Fin-Tec who need to go to the 'office once a week/easy London access/south coast attractions' from their  homeworking idyllic country house. Sounds lovely because it is.

You may have to look further afield or earn more I'm afraid. 

Sorry I do sympathise.

 

Edited April 10, 2022 by Plan-b

[Animal Spirits]

Average monthly rent payments are expected to be cheaper than mortgage commitments later this year – the first time the balance has shifted in two decades.

https://www.yourmoney.com/mortgages/trouble-ahead-as-rent-set-to-be-cheaper-than-paying-mortgage/

As part of its analysis, it set out the cumulative costs and benefits of buying a house in 2018 and 2023 and selling it five years later. For comparison, it also showed the finances of a renter who invests their home deposit in a global equity tracker.

It said despite the upfront costs of buying and mortgage repayments rising above the cost of rent, homebuyers will still be better off than renters in five years’ time.

“Only if house prices were 3.5% lower than they are now when the buyer sells would renting be the better option. Nonetheless, with the financial benefits becoming less obvious"

[Plan-b]

 

15 hours ago, Long time lurking said:

For what it`s worth and i have lost the link to the chart but the US 30y bond is close to 3% from what i can make out this is mainly mortgage based investing  as 30 year fixed rate mortgages are the norm 

The FED if believed targeting 3% base by the autumn 

Mortgages could well be becoming far more expensive very soon,where the US go we follow  

[Wight Flight]

11 minutes ago, Animal Spirits said:

Average monthly rent payments are expected to be cheaper than mortgage commitments later this year – the first time the balance has shifted in two decades.

https://www.yourmoney.com/mortgages/trouble-ahead-as-rent-set-to-be-cheaper-than-paying-mortgage/

As part of its analysis, it set out the cumulative costs and benefits of buying a house in 2018 and 2023 and selling it five years later. For comparison, it also showed the finances of a renter who invests their home deposit in a global equity tracker.

It said despite the upfront costs of buying and mortgage repayments rising above the cost of rent, homebuyers will still be better off than renters in five years’ time.

“Only if house prices were 3.5% lower than they are now when the buyer sells would renting be the better option. Nonetheless, with the financial benefits becoming less obvious"

Those numbers don't reflect my reality.

House price inflation is the only thing that matters. Especially since it is a leveraged position.

[Herby]

2 hours ago, Plan-b said:

Hampshire is a very nice area and very popular, The M4 corridor is nearby and a major high-technology hub with Important cities and towns along it. 

Not surprised by your difficulties there in a sleepy Hampshire market town sounds just the ticket for those £100K+ couples in Fin-Tec who need to go to the 'office once a week/easy London access/south coast attractions' from their  homeworking idyllic country house. Sounds lovely because it is.

You may have to look further afield or earn more I'm afraid. 

Sorry I do sympathise.

 

Yeah, you're bang on with your summary about the diaspora from London etc.

I'd prefer to stay local so I have the opportunity to see my children more than every other weekend, and earning close to six figures already. 

I'm seeing some signs of price decreases already, let's hope they continue.

[spygirl]

2 hours ago, Plan-b said:

 

You need to view that chart with reference to the infaltion figures - 

 

Id hazard that 1990 -> 2000 is the gormless fucktard Greenspan put in play.

From 2000 to 2015 China is exporting disinflation.
From 2015 China is exporting inflation.

It looks like that US mortgage rates ought to be around 8%.

Fet rates ~6^.

 

 

 

 

[Plan-b]

2 hours ago, spygirl said:

You need to view that chart with reference to the infaltion figures - 

 

Id hazard that 1990 -> 2000 is the gormless fucktard Greenspan put in play.

From 2000 to 2015 China is exporting disinflation.
From 2015 China is exporting inflation.

It looks like that US mortgage rates ought to be around 8%.

Fet rates ~6^.

 

 

 

 

Yes US mortgage rates should be higher and traditionally they have thought to have been based around the 10 year treasury rate (currently 2.7%) , but our old friend Mortgage Backed Securities really have the say.

I think the Fed will deliberately and consistently run interest rates below inflation.

On Friday the 30 year fix made it above 5% which is getting there. 

 

[Bobthebuilder]

4 hours ago, Herby said:

Yeah, you're bang on with your summary about the diaspora from London etc.

I'd prefer to stay local so I have the opportunity to see my children more than every other weekend, and earning close to six figures already. 

I'm seeing some signs of price decreases already, let's hope they continue.

I have pretty much given up looking at north Dorset now. Thought things had started to take a hit, had a look at my favourite valley today for the first time in a while and, nothing for sale, all SSTC. Last time I looked there was around 10 places at high prices but cheaper compared to the Bournemouth area.

I assume people are widening their search area and finding perceived value.

I quoted you because maybe folk from Hampshire are also starting to look as well, the county border near the A354 Salisbury road, is about 10 miles from where I look.

 

[spygirl]

https://www.thetimes.co.uk/article/want-a-big-mortgage-youll-need-a-bigger-salary-r8kq3kmwt

Borrowers who want larger mortgages now need higher salaries to get them.

Anyone who wants a loan of 4.75 times their income from HSBC now needs to earn £50,000 a year, up from £40,000 before. Those who earn less than this will be limited to 4.49 times their income, as will borrowers who do not have at least a 10 per cent deposit. The change means that someone with an income of £40,000 who until Monday would have been able to borrow a maximum of £190,000 would now be limited to £170,600.

HSBC said it was nothing to do with rises in the cost of living and was part of a regular review of its risk appetite.

Last month Nationwide Building Society increased the minimum salary that first-time buyers needed to borrow 5.5 times their income under its Helping Hand mortgage scheme. Single borrowers now need £37,000, up from £31,000, and couples need £55,000, up from £50,000. It said this was to keep it within Bank of England rules that say a lender can only lend 15 per cent of its mortgages a year at more than 4.5 times salaries.

Halifax, Britain’s largest mortgage lender, is handing out more though. On Wednesday it said “resilient customers” with incomes of £75,000 or more would be able to borrow 4.75 times their salary, up from 4.49 times.

[spygirl]

HSBC set the weather in terms of UK mortgages.