Property crash, just maybe it really is different this time (Part 2)

[MightyTharg]

1 hour ago, Wight Flight said:

That is relying on capital appreciation in real terms.

I am not sure that is going to happen over the next 12 months.

No it isn’t. Ignore the house.

Put your money in a savings account you get less interest than inflation, you lose money.

Borrow money as a mortgage, you pay less interest than inflation, you make money.

 

(Bizarrely, the government will also tax the saver who has lost money and give a tax rebate to the borrower who has made money.)

[Ash4781b]

3 hours ago, HousePriceMania said:

I mean, what the fuck...how is this even legal

 

Property investor with £18m investments and £12.9 in company debt demands help for property investors with debt

 

The country is dead to me.

 

No coasters on tables?  (Under glasses)

Edited June 21, 2023 by Ash4781b

[Wight Flight]

21 minutes ago, MightyTharg said:

No it isn’t. Ignore the house.

Put your money in a savings account you get less interest than inflation, you lose money.

Borrow money as a mortgage, you pay less interest than inflation, you make money.

 

(Bizarrely, the government will also tax the saver who has lost money and give a tax rebate to the borrower who has made money.)

You can't ignore the house.

It is the asset you are using to hedge against inflation.

Until it isn't.

[HousePriceMania]

31 minutes ago, MightyTharg said:

Borrow money as a mortgage, you pay less interest than inflation, you make money.

 

2 issues with that

1) You mean wage inflation.  20% general inflation and 10% wage inflation = 10% harder to service you debts

2) Borrow money as a mortgage, buy into a bubble, loose your deposit, go bankrupt bad be fucked for 20 years.

I'll take the 6% savings rates for now

If you buy government bonds at the peak interest rates, you can sit make for 30 years a very happy man.

People in the UK can't see past buying a crappy house to make money.

It's bizarre.

[HousePriceMania]

25 minutes ago, Ash4781b said:

No coasters on tables?  (Under glasses)

He doesn't look happy does he.

I wonder if he just found out the iMF/FED are in charge

[AlfredTheLittle]

40 minutes ago, HousePriceMania said:

2 issues with that

1) You mean wage inflation.  20% general inflation and 10% wage inflation = 10% harder to service you debts

2) Borrow money as a mortgage, buy into a bubble, loose your deposit, go bankrupt bad be fucked for 20 years.

I'll take the 6% savings rates for now

If you buy government bonds at the peak interest rates, you can sit make for 30 years a very happy man.

People in the UK can't see past buying a crappy house to make money.

It's bizarre.

How do you buy government bonds?

[HousePriceMania]

1 minute ago, AlfredTheLittle said:

How do you buy government bonds?

ETF or 

https://www.dmo.gov.uk/responsibilities/gilt-market/buying-selling/

 

 

[belfastchild]

7 hours ago, azzuri82 said:

So why do you think that NI property market appears to be struggling generally?

Is it though?

I read this thread and certain posters talk about houses at all time highs, maybe in England or parts of it. House a couple of doors up went for around 160k late last year. House next door went for 250k in 2007/8.

Parts of ni are high but i remember 2007 3 bed flats in Andy town going for 230k.

Saw a massive fucking grand designs House out in lisburn on 2 acres be put on for a mil, whilst dickheads are looking 300k for a semi in East Belfast.

Half a mil will get you a proper ranch with granny annexe, outbuildings  land etc in the sticks.

Most people who bought in pre 2008 are still underwater  even more so with interest and now rising rates. If they wanted to move in the last 5 years (halfway through mortgage) they would have to crystallise a big loss. Take all those out of the equation and its only stuff bought in the last 8 years or so or out of mortgage probate stuff going up (unmaintained in other words).

 

[Balding Badger]

7 hours ago, HousePriceMania said:

 

 

I honestly think this has all the hallmarks of what John Kenneth Galbraith called the "No Business Meeting".

“Yet to suppose that President Hoover was engaged only in organizing further reassurance is to do him a serious injustice. He was also conducting one of the oldest, most important—and, unhappily, one of the least understood—rites in American life. This is the rite of the meeting which is called not to do business but to do no business. It is a rite which is still much practiced in our time. It is worth examining for a moment. Men meet together for many reasons in the course of business. They need to instruct or persuade each other. They must agree on a course of action. They find thinking in public more productive or less painful than thinking in private. But there are at least as many reasons for meetings to transact no business. Meetings are held because men seek companionship or, at a minimum, wish to escape the tedium of solitary duties. They yearn for the prestige which accrues to the man who presides over meetings, and this leads them to convoke assemblages over which they can preside. Finally, there is the meeting which is called not because there is business to be done, but because it is necessary to create the impression that business is being done. Such meetings are more than a substitute for action. They are widely regarded as action.” 
― John Kenneth Galbraith, The Great Crash 1929

Lewis doesn't realise this though as he is pushing his vested interest. Hunt has already said he supports the BofE raising rates, even if it means recession. He wants people to think he is listening and they will ask the banks to be nice but I don't think anything will actually be done.

[Balding Badger]

Whilst I'm on a Galbraith blitz I want to share a few of his quotes from The Great Crash 1929. 

“There would also be, we may be certain, the traditional reassuring words from Washington. Always when markets are in trouble, the phrases are the same: “The economic situation is fundamentally sound” or simply “The fundamentals are good.” All who hear these words should know that something is wrong.” 

Remember that, we will be hearing it a lot in the coming months!

“Financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with Communism, lies the threat to Capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound.”

ZIRP and QE anyone? I always maintain Galbraith would have recognised instantly the characters and the script playing out in our times.

“However, none of this was immediately apparent. If one has been a financial genius, faith in one’s genius does not dissolve at once..."

Every BTLer you ever met will be feeling this way at the moment.

“The consequences of successful action seemed almost as terrible as the consequences of inaction, and they could be more horrible for those who took the action. A bubble can easily be punctured. But to incise it with a needle so that it subsides gradually is a task of no small delicacy.”

...calling Mr Bailey, "How steady is your incision hand?".

[With a crooked smile]

4 hours ago, HousePriceMania said:

People in the UK can't see past buying a crappy house to make money.

It's bizarre.

You can't see past it either.

If you could you'd be happy buying government bonds and other investments and not moaning across multiple platforms and websites every day about house prices. 

 

[Kendo]

I also like Galbraith’s quote: “The function of economic forecasting is to make astrology look respectable.” 
 

Watching Newsnight and the first item on mortgages was as bearish as I’ve ever seen it. And boy were they struggling to come up with the real reasons for our inflation. Elsewhere on this site, there was some mention of the book on the Titanic, ‘A night to remember’ (I think it was), and how it had some great lessons about macroeconomics and understanding cross-market aspects. The irony was not lost on me that the next item on Newsnight after the mortgage/inflation debate was the Titanic sub story - which they also had technical issues with and had to temporarily abort.

[Chewing Grass]

31 minutes ago, Balding Badger said:

Whilst I'm on a Galbraith blitz I want to share a few of his quotes from The Great Crash 1929. 

“There would also be, we may be certain, the traditional reassuring words from Washington. Always when markets are in trouble, the phrases are the same: “The economic situation is fundamentally sound” or simply “The fundamentals are good.” All who hear these words should know that something is wrong.” 

Remember that, we will be hearing it a lot in the coming months!

“Financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with Communism, lies the threat to Capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound.”

ZIRP and QE anyone? I always maintain Galbraith would have recognised instantly the characters and the script playing out in our times.

“However, none of this was immediately apparent. If one has been a financial genius, faith in one’s genius does not dissolve at once..."

Every BTLer you ever met will be feeling this way at the moment.

“The consequences of successful action seemed almost as terrible as the consequences of inaction, and they could be more horrible for those who took the action. A bubble can easily be punctured. But to incise it with a needle so that it subsides gradually is a task of no small delicacy.”

...calling Mr Bailey, "How steady is your incision hand?".

His book is a must read and can be got as a Penguin softback for a couple of quid on ebay.

[reformed nice guy]

42 minutes ago, With a crooked smile said:

You can't see past it either.

If you could you'd be happy buying government bonds and other investments and not moaning across multiple platforms and websites every day about house prices. 

 

“Beware that, when fighting monsters house prices, you yourself do not become a monster house owner... for when you gaze long into the abyss, the abyss gazes also into you.”

[HousePriceMania]

Multi-millionaire middle class property investor Martin Lewis has now called the Labour ( the party of the poor mand working class ) shadow chancellor to see what Labour can do to prop up his investments.

 

 

 

[HousePriceMania]

It strikes me that Mr Lewis is somewhat desperate to keep property prices up...could be be in trouble here, he's a very wealthy man so I'd have hoped not.

[Ash4781b]

Anecdote. There’s 5 2bed places for sale within 200m of me (Kent). All On around £285k Rightmove but previously similar were listed and selling at around the £300k. Consistent with the narrative. Although this is before the interest rate rises kick in. Although I would say that there’s still a lot of sold boards quickly up.  Still I don’t think I’ve seen Rightmove prices move like this in my local. 

[Guest]

7 hours ago, HousePriceMania said:

Multi-millionaire middle class property investor Martin Lewis has now called the Labour ( the party of the poor mand working class ) shadow chancellor to see what Labour can do to prop up his investments.

 

 

 

I wish Martin Lewis would stop chasing politicians around with the begging bowl and stick to telling people how to buy cheaper car insurance.

[JoeDavola]

10 hours ago, belfastchild said:

Is it though?

I read this thread and certain posters talk about houses at all time highs, maybe in England or parts of it. House a couple of doors up went for around 160k late last year. House next door went for 250k in 2007/8.

Parts of ni are high but i remember 2007 3 bed flats in Andy town going for 230k.

Saw a massive fucking grand designs House out in lisburn on 2 acres be put on for a mil, whilst dickheads are looking 300k for a semi in East Belfast.

Half a mil will get you a proper ranch with granny annexe, outbuildings  land etc in the sticks.

Most people who bought in pre 2008 are still underwater  even more so with interest and now rising rates. If they wanted to move in the last 5 years (halfway through mortgage) they would have to crystallise a big loss. Take all those out of the equation and its only stuff bought in the last 8 years or so or out of mortgage probate stuff going up (unmaintained in other words).

Not all time highs, but still huge increases in recent years.

The house near you for £160K must be seen in the context of you living in what must be the one of the cheapest areas of Belfast and one of the cheapest areas of NI.

Elsewhere as you say there's dickheads looking £300K for East Belfast semi's*, and getting £300K. Saw an advert on Facebook for a rather miserable looking block of newbuild flats in Greenisland I think it was (some place I've not been and have no need to ever go), no balconies or anything, looking £250K each.

Half a mil for a ranch in the sticks is irrelevant as most people don't have half a mill and most people dont want to live out in the sticks. What is more relevant is the bog standard 2.5 bed semi near a school being twice as expensive in real terms as it was 25 years ago.

* I do get a laugh out of Dundonald being really expensive these days - especially the newbuilds - check this out near £300K and doesn't even have a garage:

https://www.propertypal.com/69-millreagh-avenue-dundonald-belfast/830770

 

Edited June 22, 2023 by JoeDavola

[JoeDavola]

8 hours ago, With a crooked smile said:

You can't see past it either.

If you could you'd be happy buying government bonds and other investments and not moaning across multiple platforms and websites every day about house prices.

See this is why I miss SNACR - he wasn't afraid to post uncomfortable truths, or things that have an element of truth, like this.

Most people do want the security of owning the place they live, which is why they will stretch themselves to their limit to get it and why it's always been such a crime to make it more and more difficult to achieve. That's why people go into BTL - cause you need shelter, its secondary only to having food to eat.

I'm sure if many of the BTL-ers could buy up all the food before you had a chance and sell it back to you at double the price they'd do that too.

[spygirl]

2 minutes ago, JoeDavola said:

See this is why I miss SNACR - he wasn't afraid to post uncomfortable truths, or things that have an element of truth, like this.

Most people do want the security of owning the place they live, which is why they will stretch themselves to their limit to get it and why it's always been such a crime to make it more and more difficult to achieve. That's why people go into BTL - cause you need shelter, its secondary only to having food to eat.

I'm sure if many of the BTL-ers could buy up all the food before you had a chance and sell it back to you at double the price they'd do that too.

Theyd not get credit/money for that.

IO BTL is an actually of fuckless stupidity with debt.

 

[JoeDavola]

8 hours ago, With a crooked smile said:

You can't see past it either.

Although to be fair, this poster presumably isn't looking to buy a house to make money, but to have somewhere to live.

[spygirl]

Im enjoying the doom loop on the radio re: IR and debt.

Not as much as the breathless, naive fucker financial reporter going - Well, the BoE introduced stress testing, to ensure people didnt borrow too much.....

Yeah, but thats only *BEFORE* they drew the mortgage.

As soon as that hurdle was jumped a lot of the new mortgage owners would have gone fucking nuts and cast aside all BoE imposed hairshirts.

 

 

[JoeDavola]

3 minutes ago, spygirl said:

Theyd not get credit/money for that.

IO BTL is an actually of fuckless stupidity with debt.

Yes but there are quite a few people out there with hundreds of K in the bank who just buy houses outright.

It's a status thing and they don't really care if the return is amazing or not. They'd rather own something they can see and touch rather than cash in the bank or some stocks.

Yes IO btl is dead, but there's still the factor of the rich using houses as their store of wealth. It's a real thing.

Edited June 22, 2023 by JoeDavola

[JoeDavola]

Further to my post above - an anedote I've told here before.

I know of a millionaire who moved back to NI from Manhattan a few years back - made his money in publishing or something.

Anyway, as soon as he moves back, he buys a house for himself.

And then a bunch of other houses in NI....just because he can. One of them is on a housing estate in East Belfast and I know the fellow who rents it.

And that was before the pandemic so his investments have gone up very nicely.

So if you're thinking of slumming it and buying a house in a housing estate in East Belfast - you could well be bidding against a millionaire. Thats the world we're living in now.