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Property predictions 2022


sarahbell

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10 hours ago, UmBongo said:

No chance of a market correction unless interest rates go up. This guy even references a graph from TOS. :D

 

 

What I don't quite get is how there can be 1.5m transactions in 2021, a record number but caused by so few properties being on the market? Don't the two cancel out?

Also he mentions his foreign buyer clients, surely though those same people would just step in and buy more if there was any drop in prices ?

So many reasons to see that big drop coming but like he concludes no idea if it will be 2022 or another 5-10 years due to whoever is responsible for the can-kicking so it doesn't crash on their watch.

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11 hours ago, UmBongo said:

No chance of a market correction unless interest rates go up. This guy even references a graph from TOS. :D

 

Fully agree, but they are going up!

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33 minutes ago, mh9000 said:

 

What I don't quite get is how there can be 1.5m transactions in 2021, a record number but caused by so few properties being on the market? Don't the two cancel out?

Also he mentions his foreign buyer clients, surely though those same people would just step in and buy more if there was any drop in prices ?

So many reasons to see that big drop coming but like he concludes no idea if it will be 2022 or another 5-10 years due to whoever is responsible for the can-kicking so it doesn't crash on their watch.

If 2022 is the year of significant interest rate rises, in my opinion that'd be getting to the giddy heights of 1.5% .. then a crash is likely. If however rates stay low in 2022 it'll be whenever they do rise!

All the complex theories as to what would crash the market on HPC website have all been proven to be wrong.

Also think Boris going could be a negative for a HPC as whoever comes in will no doubt want to make their own bubble, like all those who have followed John Major have done. (Major was at fault for creating BTL, so he is also a cunt)

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39 minutes ago, mh9000 said:

 

What I don't quite get is how there can be 1.5m transactions in 2021, a record number but caused by so few properties being on the market? Don't the two cancel out?

Also he mentions his foreign buyer clients, surely though those same people would just step in and buy more if there was any drop in prices ?

He mentioned Institutional investors who just swoop in and buy houses at the original asking prices. I wonder if Estate Agents are feeding details of forthcoming listings to them before advertising the to those wanting a home to live in and amateur landlords? :/

 

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I wonder if the increasing push to get back to to offices in big towns, as per this article, will reverse the drain of working families from cities to rural areas? https://amp.ft.com/content/d0df2f1b-2f83-4188-b236-83ca3f0313df

"Working from home is “dissipating the social capital that you need to be a successful, complex organisation” he says. “You have to build the right psychological contract.”"

Or could even result in more separations as tired commuters divorce, leading to breakups of large family home and uptake of smaller places? Just musings..

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2 hours ago, Herby said:

I wonder if the increasing push to get back to to offices in big towns, as per this article, will reverse the drain of working families from cities to rural areas? https://amp.ft.com/content/d0df2f1b-2f83-4188-b236-83ca3f0313df

"Working from home is “dissipating the social capital that you need to be a successful, complex organisation” he says. “You have to build the right psychological contract.”"

Or could even result in more separations as tired commuters divorce, leading to breakups of large family home and uptake of smaller places? Just musings..

All those garden offices need to be paid for by the guberment by councils ( sap council tax payers ) to house the doctors obviously. 

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Just now, Phil said:

All those garden offices need to be paid for by the guberment by councils ( sap council tax payers ) to house the doctors obviously. 

Anyone who thought they had escaped was obviously mad as fuck.

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This is a good example of straw clutching -

Bank of England governor warns inflation will stay higher for longer than expected after it hit 30-year peak of 5.4% - but rules out interest rates returning to pre-financial crash levels

https://www.dailymail.co.uk/news/article-10419075/Bank-England-governor-says-rates-WONT-return-pre-financial-crash-levels.html

The governor of the Bank of England today warned inflation could last longer than first thought after it hit a 30-year high of 5.4% - as he ruled out interest rates returning to levels seen before the financial crash.

Andrew Bailey told MPs on the Treasury Select Committee that financial markets now do not expect energy prices to start easing back until the the second half of 2023.

So ... not temporary then ...

The Bank and its global counterparts have until now stuck to the view that many of the factors pushing inflation - such as global supply chain disruption and wholesale energy price rises - would be 'transitory'.

Rising prices are more than energy.

Mr Bailey said there was a 'structural reason' for low interest rates both in the UK and across the world, based on the need for more investment to meet the demands of an ageing population and counter low productivity. 

Mr Bailey said the Bank's view was that nothing was taking place that would change this 'structural story'. 

'So when I hear people say we could go back to the pre-financial crisis days I would counter that,' he said. 'That's not to say interest rates won't rise, it's to put it into context of how much.'

Interest rates reached 5.5% on the eve of the financial crisis before plummeting as the Bank tried to encourage businesses to start spending again. 

Well .... I thought low IRS wee down to a saving glut ... Now they are down to investment. Im not sure how competing for capital will lower the price of capital.

IR wil rise in reaction to prices. Thats it.

Going by the BoE ability to predict and understand IRS, Id take Baileys claims with a large pinch of salt.

Depends what he means by not returning to pre fin crisis. I think he means lending rather than price of lending.

Its just waffle. They dont know.

Besides, the spread over BoE base rates is chunky and will remain chunky - ~2%.

'Single mother explains how rising energy bills are badly affecting her'

She looks like one of the goto single mums - or they all look the same.

How about - Worker explains how ~4m non working single parents are affecting his tax?

 

 

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On 21/01/2022 at 07:49, spygirl said:

IR wil rise in reaction to prices. Thats it.

Going by the BoE ability to predict and understand IRS, Id take Baileys claims with a large pinch of salt.

Depends what he means by not returning to pre fin crisis. I think he means lending rather than price of lending.

Its just waffle. They dont know.

Besides, the spread over BoE base rates is chunky and will remain chunky - ~2%.

 

 

 

If sterling gets smashed and prices rise they'll be forced to raise rates ,as you say simplez

Mkaes me smile tho as the people we have to sort this mess out are the ones who created it and still didn't see it coming.

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With the expected energy prices they don’t need to raise. In my head I’m loosely working to 3% by end calendar year but I doubt they will do that. However, politically I expect them to keep rates low so it will be become effectively how fast can one raise prices at s company and ride the wage inflation. Removing the triple lock was interesting so they clearly know what the plan is. Those that can access credit will be laughing while those on fixed incomes will see their standard of living fall probably decimated.

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  • 2 weeks later...

Prices in2022 will hopefully fall particularly with the direction of rate rises and it’s impact on sentiment….it’s just a question of the definition of what a fall is.

If inflation is 5% then perhaps if they stay static that could be seen as a fall in real terms but not a vote loser for TPTB. And TPTB will probably try everything to avoid real falls across the country (London falls for flats are unavoidable even for them 😉

Context here is that I believe some of the prices paid in 2020 and 2021 were artificially high due to supply issues and the government handing out money like nightclub leaflets. There has also been massive bandwidth in prices paid for houses near me with ‘some’ stuff selling way over value because of timing, nice weather, low supply and a nice decor…..

So whilst I am saying they may only fall in real terms (because of ongoing props) infact a 15/20% drop may happen on top of that for anyone who was caught up in the ‘10 viewing per property’ scenarios over the pandemic.

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At the lower end I still believe prices are set by rents as landlords can always outbid a tenant using the tenants income to do so.

We are led to believe that landlords are astute financially, so let's look at some numbers.

(With the caveat that I am watching the rugby, drinking beer and don't have a calculator).

To set a base, my place is worth £600k and I pay £13k per year rent.

Let's assume the landlord has a £400k mortgage at 2.5%, so is paying £10k per year interest. With costs of about £3k per year he is breaking even (but not as far as HMRC are concerned)

If the rumours are true, interest rates will rise 1% this year. This doesn't seem outrageous.

Landlords cost will therefore rise by £4k. He has a bit of an offset as my rent can go up by 2.5%, or £400. He is therefore now making a loss of £3,600.

He won't like that, so decides to sell.

Landlord 2 is equally happy to break even, but will be paying 3.5% on his mortgage. With the same £3k costs, he can pay £10,400 in interest which will get him a loan of £297,000.

If he has the same 66.6% LTV that means that the most he would pay is £445,000.

That 1% interest rate rise has, for the numerically minded, reduced the value of my house by £155k - just over 25%.

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I've been looking at places, and 10 per property would've been toward the lower end. More like 20-40 in some cases. This is in the north as well around the 200-300k mark. I can't really see how these places would stay flat but I wish they would.

@Wight FlightYour rent is also insanely cheap isn't it at 1080 pcm for a 600k place? These same 200-300k places, for similar rental I'm looking at some arse of a LL is trying to get £1200 a month for a 2 bed place, not sure they're trying to get students at 600 pcm for a room but that's still mental. I've no idea who would actually pay that, I think they're just trying it on.

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5 minutes ago, mh9000 said:

I've been looking at places, and 10 per property would've been toward the lower end. More like 20-40 in some cases. This is in the north as well around the 200-300k mark. I can't really see how these places would stay flat but I wish they would.

@Wight FlightYour rent is also insanely cheap isn't it at 1080 pcm for a 600k place? These same 200-300k places, for similar rental I'm looking at some arse of a LL is trying to get £1200 a month for a 2 bed place, not sure they're trying to get students at 600 pcm for a room but that's still mental. I've no idea who would actually pay that, I think they're just trying it on.

Actually it was £1,100 but I couldn't be arsed with the maths. Also the house was only worth £420k one year and one day ago when we moved in. 

The place before that was only £900 but the landlord sold it for exactly £500k.

Once you get above what most people are able to pay, the landlord yield drops substantially.

Landlords should stick to flats.

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52 minutes ago, Wight Flight said:

At the lower end I still believe prices are set by rents as landlords can always outbid a tenant using the tenants income to do so.

We are led to believe that landlords are astute financially, so let's look at some numbers.

(With the caveat that I am watching the rugby, drinking beer and don't have a calculator).

To set a base, my place is worth £600k and I pay £13k per year rent.

Let's assume the landlord has a £400k mortgage at 2.5%, so is paying £10k per year interest. With costs of about £3k per year he is breaking even (but not as far as HMRC are concerned)

If the rumours are true, interest rates will rise 1% this year. This doesn't seem outrageous.

Landlords cost will therefore rise by £4k. He has a bit of an offset as my rent can go up by 2.5%, or £400. He is therefore now making a loss of £3,600.

He won't like that, so decides to sell.

Landlord 2 is equally happy to break even, but will be paying 3.5% on his mortgage. With the same £3k costs, he can pay £10,400 in interest which will get him a loan of £297,000.

If he has the same 66.6% LTV that means that the most he would pay is £445,000.

That 1% interest rate rise has, for the numerically minded, reduced the value of my house by £155k - just over 25%.

Superb context ie watching rugby, drinking beer and even suggesting modern borrow to Let Landlords might be astute. 😆😆

My view was S24 stopped the casual BTL’er who may have a job (and therefore possibly a higher rate tax payer) from starting in the first place. It certainly stopped the ones borrow a zillion pounds on interest only and thinking that was normal business practice.

However, you will still get the odd self proclaimed ‘accidental LL’ (apologise for that phrase) and those incorporating….but at the moment the main thing I would hope stop anyone thinking of BTL is the massive prices.

You’d get a better annual dividend return on a never never US tech stock.😆😆

BTL is shrinking but my slight worry is the high middle income families still at it ‘to get their kiddies on the market’. Hopefully they will recognise that they would only be making matters worse.🤦🏻‍♂️

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5 minutes ago, Pip321 said:

Superb context ie watching rugby, drinking beer and even suggesting modern borrow to Let Landlords might be astute. 😆😆

To be honest I am drinking a nice bottle of Malbec but that didn't fit the projected image.

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To extend my above post. Current LL is only happy to break even because of the capital gain.

If that goes, any buyer is going to want the historical norm 10% return on investment. That makes my place worth £130k.

Anywhere between the two numbers is possible.

 

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£600k doesn't really sound lower end though, there would be also second-steppers bidding for that. At the very bottom end yes, its true.

Also a change in the interest rate won't automatically increase mortgage payments for landlords straight away. And many will continue to believe that the long-run trajectory for prices is up, therefore making them willing to forgo any immediate returns.

It is an interesting exercise to think about interest rates though. If interest rates were to rise quite a lot, say if base rate goes up by 2%, I think a lot of flats would be fucked, I think the process will be gradual though as the penny will drop at different times for different landlords.

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5 hours ago, Boon said:

£600k doesn't really sound lower end though, there would be also second-steppers bidding for that

I agree. It just happens to be the market I know well and have the numbers for.

My last place on the mainland was worth £1m when I agreed the rental at £2,750.

There is much better value to be had renting in the mid-range.

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4 hours ago, Boon said:

£600k doesn't really sound lower end though, there would be also second-steppers bidding for that. At the very bottom end yes, its true.

Also a change in the interest rate won't automatically increase mortgage payments for landlords straight away. And many will continue to believe that the long-run trajectory for prices is up, therefore making them willing to forgo any immediate returns.

It is an interesting exercise to think about interest rates though. If interest rates were to rise quite a lot, say if base rate goes up by 2%, I think a lot of flats would be fucked, I think the process will be gradual though as the penny will drop at different times for different landlords.

Flats are worse because the service charges can complete kill the calculation before it even begins.

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House i had saved on RM has just gone SSTC.

Sale fell through when up for £325k last year, so bangs it up to £350k then £340k and it SSTC again.

Prices in and around York are more than this now.

Would have been a nice house if it didnt sell and they'd have taken £300k.

Cunts need to get interest rates up ASAP, so those buying places like this are in negative equity.

image.png.21611febb32dd1bda2eccad5b6e76290.png 

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53 minutes ago, Hancock said:

House i had saved on RM has just gone SSTC.

Sale fell through when up for £325k last year, so bangs it up to £350k then £340k and it SSTC again.

Prices in and around York are more than this now.

Would have been a nice house if it didnt sell and they'd have taken £300k.

Cunts need to get interest rates up ASAP, so those buying places like this are in negative equity.

image.png.21611febb32dd1bda2eccad5b6e76290.png 

Couldn’t agree more but I’ve lost any hope it will happen in any timeframe that’s useful to me. Even if they’re in negative equity it doesn’t help me to buy really, they’ll just hold on make the payments and this shit will continue. 
edit. Not that I know what I’m talking about but seeing the exact same thing as you.

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2 minutes ago, mh9000 said:

Couldn’t agree more but I’ve lost any hope it will happen in any timeframe that’s useful to me. Even if they’re in negative equity it doesn’t help me to buy really, they’ll just hold on and this shit will continue. 

If some people are in negative equity it'll be all over the news and others will stop buying.

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