Property crash, just maybe it really is different this time (Part 3)

[Plan-b]

Nationwide says selling prices in April fell by 0.4%

[onlyme]

24 minutes ago, Plan-b said:

Nationwide says selling prices in April fell by 0.4%

Compare to comparable pre-covid April figure of +0.7%, agents should be in full spring bounce mode at this point, shot their bolt early this year on the back of promised rate drops.

Notice even in these figures SE/SW was beginning to lag, wouldn't be surprised to the the same sort of splits with south still being weakest.

https://www.gov.uk/government/news/uk-house-price-index-for-april-2019

[belfastchild]

31 minutes ago, JoeDavola said:

But changing my attitude about it being an investment doesn't change prices being double inflation adjusted what they were a generation ago does it.

If you include mortgage costs in the inflation, they arent. A generation ago is even after I bought mine.
I bought a new car in 2000 for around 13k. Equivalent model now is over 40k. Thats almost double inflation adjusted in a generation.

[JoeDavola]

7 minutes ago, belfastchild said:

If you include mortgage costs in the inflation, they arent.

I guess the figure in my head is late 90's, a house my folks bought for £85K that would be near £300K now.

And a mortgage buyer now will have accrue mortgage costs on £300K rather than £85K so I don't think mortgage costs are a fair comparison, I know you probably mean for me as a cash buyer.

Don't get me wrong I'm less bothered than ever about the ridiculous prices in certain areas as I know I'll be able to buy somewhere with enough room for a single person in cash or almost cash - I'll be grand just in a smaller house than I would have been which frankly probably doesn't matter at all.

[belfastchild]

1 minute ago, JoeDavola said:

I guess the figure in my head is late 90's, a house my folks bought for £85K that would be near £300K now.

How much would it cost to build it this month?

Paid my house insurance last month, rebuild cost was estimated to be about 20-30k less than houses are going for. Thats pretty much the floor for prices. I dare say the plot cost for your parents house now would dwarf 85k.

[JoeDavola]

Just now, belfastchild said:

How much would it cost to build it this month?

Paid my house insurance last month, rebuild cost was estimated to be about 20-30k less than houses are going for. Thats pretty much the floor for prices. I dare say the plot cost for your parents house now would dwarf 85k.

Yup - which means essentially we're fucked long term then if wages won't pay enough to pay a mortgage that borrows enough to pay someone for a plot and to build a house.

[belfastchild]

1 minute ago, JoeDavola said:

Yup - which means essentially we're fucked long term then if wages won't pay enough to pay a mortgage that borrows enough to pay someone for a plot and to build a house.

Said the same thing in 1995 as house prices were going up 4% a month.

And yet here we are.

[onlyme]

11 minutes ago, belfastchild said:

Said the same thing in 1995 as house prices were going up 4% a month.

And yet here we are.

Then though that was after a long period of recession and pretty neutral interest rates with little likely risk of much higher in the forseeable, it was the bump off the bottom. Mortgage / wage levels were nothing like they are now. As for car prices, we'll see how sustainable they are, or indeed how sustainable car transport for many has become, lust because prices are where they does not make them either affordable or sustainable in the medium/long term.  So the government will just import loads more bodies - which is what they are doing, well that is not going to end well either and  pensions have been slashed (rising retirement age) and taxes the highest ever to pay for it.

[belfastchild]

9 minutes ago, onlyme said:

Then though that was after a long period of recession and pretty neutral interest rates with little likely risk of much higher in the forseeable, it was the bump off the bottom. Mortgage / wage levels were nothing like they are now. As for car prices, we'll see how sustainable they are, or indeed how sustainable car transport for many has become, lust because prices are where they does not make them either affordable or sustainable in the medium/long term.  So the government will just import loads more bodies - which is what they are doing, well that is not going to end well either and  pensions have been slashed (rising retirement age) and taxes the highest ever to pay for it.

 

[onlyme]

5 minutes ago, belfastchild said:

 

Served me well in the end, I held out, 2 bed terrace to 5 bed detached in place voted in top ten in the country to live not long ago, buying again in the dip when there was relative value, mortgage less than £30k, daughter through the best schools in the area for free equivalent to private education.

All in at the moment and largely reliant on the housing market for income, can't change what I think about the situation, not sustainable.

 

[reformed nice guy]

2 hours ago, belfastchild said:

Said the same thing in 1995 as house prices were going up 4% a month.

And yet here we are.

But there has been a generational difference. Everyone down a level.

Company directors and other top managers live in the houses doctors used to afford.
Doctors live in the type of house senior accountants used to live in.
Accountants and other middle class people live in the houses the working class were in.
Tradesmen live in the terraces of the unskilled.
The unskilled rent and now can't buy.

Many skilled people, like software engineers, are on decent wages but can only afford houses their grandparents who did not go to university and worked in a jam factory were living in.

[belfastchild]

1 hour ago, reformed nice guy said:

Many skilled people, like software engineers, are on decent wages but can only afford houses their grandparents who did not go to university and worked in a jam factory were living in.

Sorry mate, complete bollocks.

Some grandparents. The majority of people rented, its going back that way, slowly. Only problem is that instead of the council/government owning the houses individuals, quangos and companies own them now.

Im not going to go back to my grandparents but my parents would have been grandparents of my oldest nephews. They lived in council houses until I was around 30. I bought a house before they did.
My aunts and uncles who were teachers/social workers etc all started off in 2 beds after getting married, they may have ended up in nice houses 40-50 years down the line but thats not what they started off with.

The problem I see is that people think they can live in houses that their parents/grandparents own now and wont live in the shit tips they first lived in/owned because they are better than that.

The first house I ever lived in was a 2 up 2 down mill house with outside toilet. Not saying go back to that but you can get a 2 bed equivalent type of house in a bad area here for 70k. Its just the mollycoddled software engineers who see what they came from dont want to live there. They want to skip the 1 or two houses in between etc.

Also the 'used to afford' doesnt really map now because having an inside toilet is pretty much normal now. The lower bar has been raised, the middle ground has been filled with other stuff so the old survivor bias houses have ballooned.

[spygirl]

19 minutes ago, belfastchild said:

Sorry mate, complete bollocks.

Some grandparents. The majority of people rented, its going back that way, slowly. Only problem is that instead of the council/government owning the houses individuals, quangos and companies own them now.

Im not going to go back to my grandparents but my parents would have been grandparents of my oldest nephews. They lived in council houses until I was around 30. I bought a house before they did.
My aunts and uncles who were teachers/social workers etc all started off in 2 beds after getting married, they may have ended up in nice houses 40-50 years down the line but thats not what they started off with.

The problem I see is that people think they can live in houses that their parents/grandparents own now and wont live in the shit tips they first lived in/owned because they are better than that.

The first house I ever lived in was a 2 up 2 down mill house with outside toilet. Not saying go back to that but you can get a 2 bed equivalent type of house in a bad area here for 70k. Its just the mollycoddled software engineers who see what they came from dont want to live there. They want to skip the 1 or two houses in between etc.

Also the 'used to afford' doesnt really map now because having an inside toilet is pretty much normal now. The lower bar has been raised, the middle ground has been filled with other stuff so the old survivor bias houses have ballooned.

I agree.

Mortgage/home ownership only became mass market in the mid 70s.

 

[JoeDavola]

23 minutes ago, belfastchild said:

The problem I see is that people think they can live in houses that their parents/grandparents own now and wont live in the shit tips they first lived in/owned because they are better than that.

I think thats unfair but then again it depends on the generation.

My grandparents generation (i.e. when my parents were kids) were 100% more impoverished than me. No doubt. They did have enough to raise 4 kids each, but people expected less then.

My parents were proper skint until I was about 10, and my Dad worked 7 days a week so Mum could stay at home. But even with that, I don't think the house my Dad owned when he was 35 couldn't be bought now on a Belfast City Council Joiner's wage now even with overtime, never mind buying it and supporting a family.

What I will say though is that at 40, I don't work anywhere near as hard as my Dad did when he was 40. Or 50 most likely. I have it easy in that way.

Edited May 1 by JoeDavola

[AWW]

4 hours ago, belfastchild said:

How much would it cost to build it this month?

Paid my house insurance last month, rebuild cost was estimated to be about 20-30k less than houses are going for. Thats pretty much the floor for prices. I dare say the plot cost for your parents house now would dwarf 85k.

It's not. During the 90s crash lots of places sold for less than rebuild cost. Assuming that the rebuild cost is a floor assumes that there is always someone out there who can afford to rebuild.

[sancho panza]

7 hours ago, onlyme said:

Compare to comparable pre-covid April figure of +0.7%, agents should be in full spring bounce mode at this point, shot their bolt early this year on the back of promised rate drops.

Notice even in these figures SE/SW was beginning to lag, wouldn't be surprised to the the same sort of splits with south still being weakest.

https://www.gov.uk/government/news/uk-house-price-index-for-april-2019

Had a quick chat with an old mate in leicester this morning.He's a wise old soul and was telling me that for the first time in his life,he's starting to see people in his area facebook groups start advertising houses on them.

Mar 24

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary--2

Executive Summary

Seasonally adjusted residential transactions in March show a third consecutive month-on-month increase, rising 1% from 83,040 in February 2024 to 84,200 in March 2024. Non-seasonally adjusted residential transactions increased by 20% in March 2024 relative to February 2024. Seasonally adjusted residential transactions are 6% lower than in March 2023.

Seasonally adjusted non-residential transactions in March increased by 1% relative to February 2024. Non-seasonally adjusted non-residential transactions increased by 29% relative to February 2024. Seasonally adjusted non-residential transactions are 9% lower than in March 2023.

This release includes provisional data for financial year 2023 to 2024.

Seasonally adjusted residential transactions decreased by 17% on the previous financial year, falling from 1,208,310 in financial year 2022 to 2023 to 999,460 in financial year 2023 to 2024. This is the lowest level of seasonally adjusted residential transactions since financial year 2012 to 2013.

 

8 hours ago, JoeDavola said:

Yes personally had I spent the last 15 years moving my money into shares and ringfencing it from tax I'd not be in the least bit worried about buying a house. It is, more than ever, a terrible investment IMO.

I think however lon term people with their wealth in something other than housing should consider living somewhere other than the UK. Property is the only store of wealth many people know, it doesn't matter if the yields are 2% or whatever, it's all that many or perhaps even most people in the UK want to plough intergenerational wealth into; owning in most cases very ordinary houses.

thought provoking post.made me wonder.

you could currently rent our hosue with the income of £200k worth of BATs.so in a hypothetical scenario would I rather own £200k of BATs at £23 or a hosue....................I realsied Id rather own the BATs.

I think you're right,down here we have a different take but msot people jsut shuffle blindly into hosuing as a store of wealth.

they're not helped by recent histroy over 20 years which would reinforce the logic that prices only go up.

Edited May 1 by sancho panza

[sancho panza]

6 hours ago, belfastchild said:

If you include mortgage costs in the inflation, they arent. A generation ago is even after I bought mine.
I bought a new car in 2000 for around 13k. Equivalent model now is over 40k. Thats almost double inflation adjusted in a generation.

the infltion in car prices hasnt been measured properly alongside hosuing.

house prices jsut arent measured full stop

car prices are measured bu thtne hedonic adjsutments made to depreciate the rpice rise for improvements in qulaity,so if a car goes from £10,000 but leccy windows become standard then they reduce the price rise in the onfaltion data.

so people's pay has been mnaipulated under the real rate of inflation

4 hours ago, reformed nice guy said:

But there has been a generational difference. Everyone down a level.

Company directors and other top managers live in the houses doctors used to afford.
Doctors live in the type of house senior accountants used to live in.
Accountants and other middle class people live in the houses the working class were in.
Tradesmen live in the terraces of the unskilled.
The unskilled rent and now can't buy.

Many skilled people, like software engineers, are on decent wages but can only afford houses their grandparents who did not go to university and worked in a jam factory were living in.

this is very true.The main reason being that so many old dears are living in family homes because their pensions are so generous that they can afford to.Years ago,when hosues got too big or people didnt need the room,they'd drop down.

less so now as the oldies jsut get the young people to pony up the tax for their pensions and their social care.

 here's some data on OO rates as which have been rising since end of WW1

https://www.economicshelp.org/blog/15814/housing/uk-housing-history/

1 hour ago, AWW said:

It's not. During the 90s crash lots of places sold for less than rebuild cost. Assuming that the rebuild cost is a floor assumes that there is always someone out there who can afford to rebuild.

Worth noting that cars sell for less than the rebuild cost.

Housing has been unusual in not seeing that phnomenon voer the last 50 years that as houses age they decline in price.

Second hand houses that need work doing will go for less than those that dont

if i was ever to bid on a hosue,I would likely bid under rebuild cost if the bricks/kitchen/nabthroom are old.

Edited May 1 by sancho panza

[belfastchild]

2 hours ago, AWW said:

It's not. During the 90s crash lots of places sold for less than rebuild cost. Assuming that the rebuild cost is a floor assumes that there is always someone out there who can afford to rebuild.

Its a current guide, no point referencing the 90s. Different times, different labour costs, different materials costs.

Its a guide. I mentioned in another post on another thread about seeing newbuilds go up in rural area here, 175k I think for 3 beds, terraced. Given all the costs, newbuild premium, profit etc youd be hard pressed to go lower than something like 140-145k.

People selling is a different matter, if you have to sell, you have to sell regardless. The current problem is the availability of new houses.

1 hour ago, sancho panza said:

if i was ever to bid on a hosue,I would likely bid under rebuild cost if the bricks/kitchen/nabthroom are old.

Obviously. Rebuild cost includes bathroom and kitchen. Seeing that in bids for houses locally. Rebuild cost is a rough guide, higher for a ready to move in one, less for ones that need new kitchen/bathroom etc.

1 hour ago, sancho panza said:

Worth noting that cars sell for less than the rebuild cost.

After lying under one all afternoon I can tell you exactly why!

[eek]

3 hours ago, AWW said:

It's not. During the 90s crash lots of places sold for less than rebuild cost. Assuming that the rebuild cost is a floor assumes that there is always someone out there who can afford to rebuild.

Round here rebuild prices are often way more than the price of a property that’s for sale 

[spunko]

5 hours ago, belfastchild said:

The first house I ever lived in was a 2 up 2 down mill house with outside toilet. Not saying go back to that but you can get a 2 bed equivalent type of house in a bad area here for 70k. Its just the mollycoddled software engineers who see what they came from dont want to live there. They want to skip the 1 or two houses in between etc.

 

Eh? You certainly can't in the SE.

A bad area like let's say Croydon:

https://www.rightmove.co.uk/properties/144454586#/?channel=RES_BUY

Find me a 2 bed house for £70k in the SE even that's a complete shit tip and I'll Paypal you £100.

[With a crooked smile]

10 hours ago, JoeDavola said:

Because even the people like my folks who have seen huge HPI over their lifetimes won't see a penny of that money as it's all in...their house.

totally depends a move 30 mins away or approx 15 miles to somewhere nice - not a shithole (and not fucking Penrith @Bobthebuilder) would mean a drop of between 30 and 50% in house price - so you can indeed cash out and stay connected with friends and family. I've always assumed big cities are similar - expensive in the middle cheaper on the outskirts.

by way of example Cockermouth is a nice pleasant market town 4 bedroom terrace 240k

https://www.rightmove.co.uk/properties/134640701#/?channel=RES_BUY

Not particularly nice part of Keswick 3 bedroom end of terrace 425k

https://www.rightmove.co.uk/properties/147029147#/?channel=RES_BUY

 

 

Edited May 1 by With a crooked smile

[JoeDavola]

5 minutes ago, With a crooked smile said:

totally depends a move 30 mins away or approx 15 miles to somewhere nice - not a shithole (and not fucking Penrith @Bobthebuilder) would mean a drop of between 30 and 50% in house price - so you can indeed cash out and stay connected with friends and family. I've always assumed big cities are similar - expensive in the middle cheaper on the outskirts.

I think that’s less true than ever in NI and in my parents case for all their talk they don’t appear to want to leave the area they’ve always been in.

[belfastchild]

21 minutes ago, spunko said:

Eh? You certainly can't in the SE.

A bad area like let's say Croydon:

https://www.rightmove.co.uk/properties/144454586#/?channel=RES_BUY

Find me a 2 bed house for £70k in the SE even that's a complete shit tip and I'll Paypal you £100.

Didnt say the SE, said over here. Also know of places in the NW England you can do the same roughly.

Ive mentioned before working in London in the 90s on and off. Couldnt afford to buy there back then. Family and friends were down Winchester and Epsom way, couldnt afford down there either.

[Bobthebuilder]

7 minutes ago, With a crooked smile said:

totally depends a move 30 mins away or approx 15 miles to somewhere nice - not a shithole (and not fucking Penrith @Bobthebuilder) would mean a drop of between 30 and 50% in house price - so you can indeed cash out and stay connected with friends and family. I've always assumed big cities are similar - expensive in the middle cheaper on the outskirts.

In London you can go around 50% less from central to outer regions still in a London post code.

[Bobthebuilder]

1 minute ago, belfastchild said:

Didnt say the SE, said over here. Also know of places in the NW England you can do the same roughly.

Ive mentioned before working in London in the 90s on and off. Couldnt afford to buy there back then. Family and friends were down Winchester and Epsom way, couldnt afford down there either.

Met my Polish builder mate today for a pint, he was telling me 2 up 2 down terraces in Walthamstow are going for around £800K now.