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

[Axeman123]

4 hours ago, Wight Flight said:

The US government spends over 50% more per head on public medical care than the UK.

All sorts of protected class benefit/welfare etc people over there get everything, ordinary people get nothing AIUI. The closest analogy would be UK housing, some are grossly over provided for and the govt spends a vast ammount in the process and yet many people are struggling to keep a roof over there head while working full time on good money. In both cases the govt money hose drives costs for people not being provided for to the moon.

[Rare Bear]

On 03/02/2024 at 09:28, belfastchild said:

Meant it a bit differently from that. In 2007 a lot of dublin investors just came north to buy properties as Dublin was too expensive.
I know one couple who were selling a house had a viewing with a Dublin investor and he offered 10% under the current bid price in person (not supposed to do apparently). Opened a case full of cash in front of them when they said no.
At least 3 in my immediate area were repossessed by NAMA.

When youve mentioned indians etc in the past with regards to NI you also have to remember the school systems. Indians and muslims dont tend to send their kids to Catholic maintained schools. Its always the proddy ones or now the integrated ones. You have to be in the proddy/integrated catchment areas to have kids in the schools. Its not just a case of being in the right area for the right schools, it has to be the right type of schools.

An Indian family lived a couple of doors from me when i was a child. 1950s. The two children, both girls went to the catholic school. It was about 200 yards from their door. The protestant school, which might have had a dozen pupils, was about 500 yards away.

Edit to add: In Donegal.

Edited February 4 by Rare Bear

[Mandalorian]

Back on topic somewhat.

I live in a very 'enriched' area.  It wasn't like this when I was a kid.  Hardly had any enrichment and now it's about 40%.

Once the old man pops it (he's almost 80) there's nothing really keeping me here.  The place has changed.  No community any more.  Litter everywhere, but not much crime.

 

I'm weighing up buying a place budget currently circa £200-250k - should have done in 2005 but we live and learn....  Blame the other place.  I've found several non-enriched areas.

 

So the question is what are we expecting for house prices?  And why?  Why being the important bit.

When do we think will be the bottom?  And what will that look like?

 

 

Now the frog has gone we won't get someone ramping HPI for the sake of contrarianism - but increasing house prices are a possibility I suppose. I can't see it but wouldn't be surprised - house prices have long ceased to make sense.

My suspicion is stagnation in prices  and inflation in wages will cause a real term fall, but not much nominal.

I'm actually surprised I look at Rightmove and think "£230,000 for that 3 bedroom semi isn't bad" but then I think "that's a quarter of a million pounds" and think it's insane.

 

Is there a change in the air?

 

[Bobthebuilder]

8 minutes ago, Mandalorian said:

My suspicion is stagnation in prices  and inflation in wages will cause a real term fall, but not much nominal.

I'm actually surprised I look at Rightmove and think "£230,000 for that 3 bedroom semi isn't bad" but then I think "that's a quarter of a million pounds" and think it's insane.

The area I monitor is in Dorset, been some big falls in asking prices £425K to £325K for a 4 bed for example, none of this will show up in the indexes as nothing much is selling ATM. Some stuff is being listed at what look like cheap prices compared to the covid boom, 2 beds in lovely villages for around £250K that sell very fast.

A 3 bed came up last week at £235K, again looks cheap for the area, but like yourself I am not sure if it is cheap or just looks like it.

No idea when a bottom might hit, but as always the cost of credit is likely to be a big factor.

[Mandalorian]

3 minutes ago, Bobthebuilder said:

The area I monitor is in Dorset, been some big falls in asking prices £425K to £325K for a 4 bed for example, none of this will show up in the indexes as nothing much is selling ATM. Some stuff is being listed at what look like cheap prices compared to the covid boom, 2 beds in lovely villages for around £250K that sell very fast.

A 3 bed came up last week at £235K, again looks cheap for the area, but like yourself I am not sure if it is cheap or just looks like it.

No idea when a bottom might hit, but as always the cost of credit is likely to be a big factor.

Your final sentence there is the kicker.

They always bore on about supply and demand but then never quite twig that it's not supply and demand of the houses themselves, but the availability of affordable credit to buy them.

I suppose that's more my question.  What's likely to happen to credit availability and cost?

[Bobthebuilder]

2 minutes ago, Mandalorian said:

I suppose that's more my question.  What's likely to happen to credit availability and cost?

"Credit deflation and the reflation cycle to come", we have been discussing it for years.

[Mandalorian]

1 hour ago, Bobthebuilder said:

 we have been discussing it for years.

[Bobthebuilder]

3 minutes ago, Mandalorian said:

A few years ago we were talking about interest rates at 4 to 5%, many posters used to laugh at us because ZIRP was going to last forever.

I already own a paid for house, so most of my chat on house prices is purely academic.

[Mandalorian]

37 minutes ago, Bobthebuilder said:

A few years ago we were talking about interest rates at 4 to 5%, many posters used to laugh at us because ZIRP was going to last forever.

I already own a paid for house, so most of my chat on house prices is purely academic.

I'm still not sure how anyone can look at the graph of BoE rates and think 2008 to 2022 was in any way normal.

Makes me laugh when a 'journalist' asks the Bank, "when are rates going to go back to normal?". They did.  12 months ago.

[Plan-b]

3 hours ago, Mandalorian said:

Back on topic somewhat.

I live in a very 'enriched' area.  It wasn't like this when I was a kid.  Hardly had any enrichment and now it's about 40%.

Once the old man pops it (he's almost 80) there's nothing really keeping me here.  The place has changed.  No community any more.  Litter everywhere, but not much crime.

 

I'm weighing up buying a place budget currently circa £200-250k - should have done in 2005 but we live and learn....  Blame the other place.  I've found several non-enriched areas.

 

So the question is what are we expecting for house prices?  And why?  Why being the important bit.

When do we think will be the bottom?  And what will that look like?

 

 

Now the frog has gone we won't get someone ramping HPI for the sake of contrarianism - but increasing house prices are a possibility I suppose. I can't see it but wouldn't be surprised - house prices have long ceased to make sense.

My suspicion is stagnation in prices  and inflation in wages will cause a real term fall, but not much nominal.

I'm actually surprised I look at Rightmove and think "£230,000 for that 3 bedroom semi isn't bad" but then I think "that's a quarter of a million pounds" and think it's insane.

 

Is there a change in the air?

 

Recently on the "Credit deflation and the reflation cycle to come" thread, a 20% drop was more or less the consensus for the middle of the UK, less oop norf and more darn sarf. Say 10-20-30% not adjusted for inflation.

Timing is always tricky but falls to start/have already started, this year and into 2025.

[spygirl]

3 hours ago, Bobthebuilder said:

The area I monitor is in Dorset, been some big falls in asking prices £425K to £325K for a 4 bed for example, none of this will show up in the indexes as nothing much is selling ATM. Some stuff is being listed at what look like cheap prices compared to the covid boom, 2 beds in lovely villages for around £250K that sell very fast.

A 3 bed came up last week at £235K, again looks cheap for the area, but like yourself I am not sure if it is cheap or just looks like it.

No idea when a bottom might hit, but as always the cost of credit is likely to be a big factor.

It used to be pretty much cost of credit and local employment conditions.

That ended sometime in the 00s.

Nowirs hiw many people are actually doing paid- sub 40% of households near me.

But also how many 70 + and how decrepit are they.

You are going to see spring local house prices driven by how bad the yearly flu outbreak is.

[spygirl]

25 minutes ago, Plan-b said:

Recently on the "Credit deflation and the reflation cycle to come" thread, a 20% drop was more or less the consensus for the middle of the UK, less oop norf and more darn sarf. Say 10-20-30% not adjusted for inflation.

Timing is always tricky but falls to start/have already started, this year and into 2025.

I'd reckon that locally ( NY coast) there bill a 40% nominal drop.

Some places where FHLs n 2nd homes have flooded in since Zirp will see 50% drops.

[Boon]

Also split this into houses and flats as well.

I spoke to a friend last week who lives in a flat outside London and there is a new-ish scam on the district heating which supplies hot water and underfloor heating.

Last month their tariff went up from 4p a unit to 40p a unit - a 10-fold increase. They are not free to change the tariff (which is set at the building level) and also the tariff is not protected by the energy price cap as it is a business tariff.

There are some flats reporting bills of £4-500 a month, and lots of disgruntled owners. But who the hell is gonna buy one of these places, when the service charge is also £300 a month? 

Maybe gas prices might drop and the tariff drops again, but this could be another scandal brewing.

Peak asking price for one of these flats was c.£550k in the years before the pandemic (which didn't get paid) and top price around £500k. But when you add in all these costs and the projected rent I think this is gonna fall way more than average. 

[Sasquatch]

5 hours ago, Mandalorian said:

Back on topic somewhat.

I live in a very 'enriched' area.  It wasn't like this when I was a kid.  Hardly had any enrichment and now it's about 40%.

Once the old man pops it (he's almost 80) there's nothing really keeping me here.  The place has changed.  No community any more.  Litter everywhere, but not much crime.

 

When we bought our house 3 years ago, we visited the property and village perhaps 7 or 8 times before we got to completion on the purchase. I'm sure that is quite unusual but it was a major commitment and we wanted to make sure the decision was as sound as possible.

Each visit gave us more and more comfort. We visited at different times and different days and even managed to speak to some of the locals and neighbours. All very positive and even more so 3 years hence. It's a place full of generations of families and a solid mix of old and young. 99% non enriched. Very very traditional. Not too much new build housing so any growth has been organic. Peaceful with direct access to the countryside. Everything quite steady and 'boring'.

A gem of a community and I suspect places like this are becoming rarer and rarer these days which is quite sad when you think about it.

[Bobthebuilder]

2 hours ago, Sasquatch said:

A gem of a community and I suspect places like this are becoming rarer and rarer these days which is quite sad when you think about it.

 

[Democorruptcy]

I mentioned market pricing of the Fed holding rates in March had gone slightly odds-on last week to 56%, it's now up to 86.5%

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

 

[Democorruptcy]

I asked the Treasury for some stats on how much the mortgage schemes had cost taxpayers, so they pointed me to this document. I find it very hard to believe that since Help to Buy started in 2013 that only 33 claims totalling £389k have been made against it. I'm sure the last time I asked, much earlier on, it was over £1m (I think I posted that somewhere on ToS).

The Help to Buy: mortgage guarantee scheme was launched on the 8
October 2013 to address the shortage of high loan-to-value mortgages
by offering lenders the option to purchase a guarantee on mortgages
where the borrower has a deposit of between 5% and 20%. The scheme
closed to new loan applications on 31 December 2016.
Under the scheme rules, the maximum contingent liability limit was set
at £12bn. As at 31 March 2023 the maximum potential liabilities under
this scheme were estimated to be £22m.
During the life of the scheme there have been 33 successful claims
totalling £389k. Since inception, average property values have increased
This has contributed to a low number of claims. The scheme will be
completely closed in June 2024 and no claims will be honoured beyond
this date.

A new mortgage guarantee scheme was launched on the 19 April 2021
to address the shortage of high loan-to-value mortgages by offering
lenders the option to purchase a guarantee on mortgages where the
borrower has a deposit of at least 5%. The scheme was going to remain
open to new loan applications until 31 December 2022, however, to
continue to support first-time buyers, the Government has decided to
extend the scheme for a further 12 months until 31 December 2023.

Under the scheme rules the maximum contingent liability limit was set
at £3.9bn. In December 2022, this was reduced to £3.2bn. As at 31 March
2023 the maximum potential liabilities under this scheme were
estimated to be £885m. There have been no claims to date.

For both mortgage guarantee schemes, a portion of the liability would
crystallise if the following events occurred: 1) a borrower defaults on
their mortgage 2) the sale proceeds from property are less than the
outstanding principal and interest repayments owing; and 3) the lender
makes a claim to HM Treasury for the difference.

 

[Loki]

1 hour ago, Democorruptcy said:

I mentioned market pricing of the Fed holding rates in March had gone slightly odds-on last week to 56%, it's now up to 86.5%

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

 

The lights are going out all over Stockton 

[Phil]

Sat recieved letter from solicitors saying I need to make appointment to sign for completion. I already told solicitors 8th April soonest.

Saturday went to house to be met by the executives of the property. They told me they are keeping the heating on, so paying for gas, electricity.

Called solicitors today and said if they want to complete asap/early, knock 9k off asking as I ain't ready till 8th April.

Did I do the right thing?

[sancho panza]

jsut posting up some local rentals in area I follow.Market generally appears to be bidless above the £1000cpm mark.

think the retnal marekt peaked for max demand/liquidity last year tbh

This place has been empty for five months coming up.reasonable price,they'll liekly take £1000pcm now,nice area,edge of leciester but in countryside.

overpriced,but still reasonable for circa £1400pcto   £1500pcm,empty 6 /7 months

this one was overpriced originally but at £1500pcm ,should get bid at £1400pcm.time will tell.

[sancho panza]

I know this from 22 january and we may have covered it-cant remembr -but would be interested to know from the guys following the SW area-devon/corneall etc whether they're seeing higehr end places sat there going no bid?

https://www.telegraph.co.uk/money/property/house-prices/end-of-working-from-home-dream-shrinks-1m-home-club/

End of working from home dream shrinks £1m home club

Number of million-pound properties falls as white-collar workers sell their rural retreats

The number of properties worth more than £1m has slumped as pandemic-era demand for rural homes slows. 

There were 8.3pc (60,260) fewer properties worth at least £1m at the end of 2023 compared to the previous year, data show. 

The number of million-pound properties fell in every British region in 2023, with the total now standing at 670,100.

However, 80pc of the decline occurred outside the capital, as white-collar workers tempted during Covid to swap their city townhouse for a rural retreat sold up, according to estate agents Savills.

East and South East England, Yorkshire & Humber and Wales saw the steepest falls of 13pc, while London saw the lowest drop of 4pc.

[sancho panza]

really good interwview with WOlf Richter talking about how in the US the hosuing market is split in two.

1st is pro building firms,cutting prices,cutting hosue sizes, to find the bid,sales are holding up,not spectualr but decent.

2nd is resale,homeowners not cutting prices,going no bid,market frozen,existing home sales down a thrid yoy,to levels back to 1995.'sellers dont want to come to grips with reality'.

video at link from 52 mins

https://wolfstreet.com/2024/02/04/how-the-housing-market-split-in-two-doubts-about-the-taming-of-inflation-and-whats-going-on-with-new-used-vehicles/

Edited February 5 by sancho panza

[Covid19 and life to go]

This seems to be pretty spot on about the future housing market👍

 

 

 

[sancho panza]

Edited February 6 by sancho panza

[sancho panza]

backing up the thesis I subscribe to that rents peaked last year varying depending where you are..Theyre still a lot higher than 2 years ago but IM seeing more and more sit there away from the bottom end of the sector.

Edited February 6 by sancho panza