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Property crash, just maybe it really is different this time


haroldshand

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Anecdotally huge amount of supply coming on in my local area. I’ve never seen anything like it. I know there were some recent anecdotals in the credit deflation thread. I’m not sure what’s going on 

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30 minutes ago, Ash4781b said:

Anecdotally huge amount of supply coming on in my local area. I’ve never seen anything like it. I know there were some recent anecdotals in the credit deflation thread. I’m not sure what’s going on 

I expect more cuts in price but not in volume. The cuts will be small at first. Then all at once. Imo.

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That's with interest rates below 1%, implies that at 4% terminal rate the mortgage might be 9%+

Can only see some kind of 'extend and pretend' scheme coming. Pretend the mortgage rate was 3% or whatever, anything above it gets deferred and added to the loan. Extend duration if they can't afford it.

Alternative is that when people can't pay the properties will be foreclosed, but what is the value gonna be when mortgage rates are over 9%.

The extend and pretend stuff also handiliy be advertised as doing the public a favour, but we all know it is about the bank trying to protect themselves.

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1 hour ago, Ash4781b said:

Anecdotally huge amount of supply coming on in my local area. I’ve never seen anything like it. I know there were some recent anecdotals in the credit deflation thread. I’m not sure what’s going on 

Same as me.

Even with the lack of listings- and mortgages - since 2008, prices have stayed level.

Now stuff is flooding on.

Theres only a small number of mortgable people locally, majority either too old or too on benefits.

 

 

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sancho panza
1 hour ago, HousePriceMania said:

I thinkw e've had this psoted somewhere before.I sued to lookat NZ as a place you might want to live,much like OZ and Canada, but the way they lurched toward totalitariansim so easily under Comrade Ardern is anotehr reason people are leaving.

Not a place to be when they shut the borders and they bring in clot shot mandates

https://www.theguardian.com/world/2022/may/18/more-people-leaving-new-zealand-than-entering-as-young-flee-high-cost-of-living

Young New Zealanders are leaving in droves as borders reopen and economic conditions tighten at home.

The latest data from Stats NZ found that in the year to March, annual net migration was negative, with 7,300 more people leaving than entering. That loss marks a dramatic shift from early in the pandemic when border closures and the relative safety of Covid-free New Zealand prevented many from leaving. In the year to March 2020 there was a record net gain of 91,700.

Now, many New Zealanders – particularly young professionals and graduates – are heading off overseas once more. Some are driven by tough economic conditions in New Zealand, which is dealing with high inflation of 6.9%, housing unaffordability, and sky-high living costs: petrol, rents, mortgage interest rates and groceries are all on the rise.

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My local search on Rightmove has gone from 70ish consistently to 105 now. Small anecdote but interesting in that there isn't a huge rush of properties coming on that's causing it, seems like the rate of sales/withdrawals has slowed down creating this imbalance.

 

Not really many flats in the area so not stuff being dumped, still early days with the QE inflation affects so don't think seeing forced sellers just yet. I'd guess that prospective buyers are facing rising monthly mortgage costs and the energy and petrol costs are causing a "computer says no" situation with the current prices.

 

Feels nicely timed for an autumn collapse now, rate and price rises will take a few months to feed through whatever happens (2 month credit card charge to payment demand is the minimum lag for these things)

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7 hours ago, HousePriceMania said:

6% fall in NZ house prices being described as a blood bath...after 30% rises

I hope those wankers see a real bloodbath (in house prices) some day! It is the entitlement of it that really irks me, free money taken for granted.

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HousePriceMania
13 minutes ago, Axeman123 said:

I hope those wankers see a real bloodbath (in house prices) some day! It is the entitlement of it that really irks me, free money taken for granted.

NZ

Canada

Australia

UK

Everywhere the queen owns really

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Long time lurking
38 minutes ago, HousePriceMania said:

"maybe it really is different this time"

 

With IRs going up...who thinks this now ?

image.png.75e6006dbea32a54e274acffa32628bf.png

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On 11/06/2022 at 10:33, Wight Flight said:

Why would the treasury want more home owners?

If an OO buys a house, they don't even always get the stamp duty.I

If a landlord guys a house, they get loads of stamp duty and 20% of the rental income. They also get capital gains on sale.

What am I missing here?

 

I can only guess they've looked at the demographics and concluded that it's a vote winner no matter how little economic sense it actually makes... simply on the basis that there must presumably now be more potential voters amongst the benefits classes than there are amongst the productive, full time working, net contributing, non-benefits claiming members of society?

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Long time lurking
51 minutes ago, Royston said:

I can only guess they've looked at the demographics and concluded that it's a vote winner no matter how little economic sense it actually makes... simply on the basis that there must presumably now be more potential voters amongst the benefits classes than there are amongst the productive, full time working, net contributing, non-benefits claiming members of society?

They have actually stated house ownership is overwhelmingly in the 65+ year old domain 

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Long time lurking
On 11/06/2022 at 10:33, Wight Flight said:

Why would the treasury want more home owners?

If an OO buys a house, they don't even always get the stamp duty.I

If a landlord guys a house, they get loads of stamp duty and 20% of the rental income. They also get capital gains on sale.

What am I missing here?

 

I think you are missing the banks run the world ,and the banks have priced themselves out of the game ,every Ponzi scheme needs a steady stream of new customers to continue 

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5 hours ago, Royston said:

I can only guess they've looked at the demographics and concluded that it's a vote winner no matter how little economic sense it actually makes... simply on the basis that there must presumably now be more potential voters amongst the benefits classes than there are amongst the productive, full time working, net contributing, non-benefits claiming members of society?

Wealth affect.

If housing keeps inflating, the working plebs who buy in feel wealthier and spend more. 

The bennie class don't vote and never will. 

Edited by tank
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Chewing Grass
On 13/06/2022 at 22:38, Chewing Grass said:

Just done my first 3 digit rightmove search and got 162 was 139 2 weeks ago that is a 16% increase, perhaps the effects of the vaxx are kicking in...

Just been back in and we are now up to 171, a 5% increase from Monday.

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https://news.sky.com/story/cost-of-living-latest-takeaways-and-netflix-blamed-for-young-people-failing-to-get-on-housing-ladder-petrol-price-passes-record-1-85-12615118
 

Your dilemmas: We are first-time buyers, should we buy now or wait?

You've been submitting your money saving or cost of living dilemmas for personal finance expert Gemma Godfrey - and the question form is now closed while she tackles some of the hundreds that have come in, including this...

Lee H: We are first time buyers and have finally saved enough deposit to buy our first home. With the high inflation and possibly recession around the corner is it a bad time to buy or should we hold out till prices drop?

Gemma says: Saving enough money to buy a first home is a momentous achievement and trying to wait for a "better time to buy" could be risky for three reasons. 

Firstly, there's no guarantee that house prices will fall, especially in highly sought-after areas where there are more people looking to buy than sell. 

Secondly, if interest rates continue to rise, a mortgage could become more expensive, especially if you were considering getting a fixed rate mortgage which could be fixed at a lower rate today. 

Thirdly, during tough times, banks have made it tougher to qualify for a mortgage, so again there's a risk that it might not be as easy to qualify for the mortgage offers on the market today. 

In general, buying a home that you're going to live in for years can be an emotional purchase. It can take time to find one that's right for you and once you do, the risk of losing it to another buyer might outweigh the benefit of waiting for a possible drop in price.

Gemma is a business advisor, finance expert and TV host, an ambassador for the charity Surviving Economic Abuse, and a former boardroom adviser to Arnold Schwarzenegger on The Apprentice.

 

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Gotta take the increased listings with a bit of a pinch of salt, could be a false start.

I mean where I look there have been times where it has spiked up a bit (never above pre-pandemic listing numbers) and then fallen back. Maybe unlikely but I do wonder if there is any way of discerning the difference that flats make, because pre-2019 there was less restriction on sale but now there must be many being kept off the market pending works or certificates.

Sadly I do believe that there will be massive lags. Said before the average person isn't gonna be aware that it is BOE decision day today, much less that the rates are going up, and even much less that the peak rates might be over 3% next year. 

In rough order I am still looking out for the following:

- increase of listings
- increase in price reductions 
- increase in sob stories ie can't afford mortgage, negative equity etc
- reversal of sentiment (still uber bullish overall)

Still think we're very much at the start but on a backdrop of interest rate rises this could be a self-reinforcing cycle - ie bad sentiment increases listings, price reductions, and hence more sob stories.

And of course some kind of government prop could cancel it altogether. It is hard to see what they could do but you never know.

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14 hours ago, Long time lurking said:

I think you are missing the banks run the world ,and the banks have priced themselves out of the game ,every Ponzi scheme needs a steady stream of new customers to continue 

That's what buy-to-let is for. Younger workers no longer become direct customers of the bank, instead they rent from a mortgaged landlord. Even better for the bankers because those younger workers will likely have to rent and send money to the bank (via BTL landlords) for many more years than they would have spent paying off their own mortgage.

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Noallegiance

Anecdotal:

Guy in office tried to remortgage as coming to end of term. Was looking all good until this week. Offer withdrawn. Spurious 'reasons'.

HSBC lender.

Property needs revaluing.

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Chewing Grass
1 minute ago, Noallegiance said:

Anecdotal:

Guy in office tried to remortgage as coming to end of term. Was looking all good until this week. Offer withdrawn. Spurious 'reasons'.

HSBC lender.

Property needs revaluing.

Ouch, that will cost him.

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Chewing Grass
6 hours ago, Chewing Grass said:

Just been back in and we are now up to 171, a 5% increase from Monday.

@JohnnyB now 175, another 4 properties in 6 hours.

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