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

[JoeDavola]

Saw the article about mortgage rates going up to 5.8% then went on the NI property sales site and saw what i consider to be quite a normal 3 bed semi for £270K. Sort of house my Dad was able to pay for on one wage and support a family.

The figures your paying to buy a rather normal house with a mortgage are quite shocking now, and this is in 'cheap' NI.

If that calculator below is correct then 5.8 over 30 years is over double the amount in ££ over that time period, then add in say £1200 a year council tax plus all your bills plus allowing money for house maintenance of which there will be the occasional large bill over 30 years.

It still looks to me like buying and running such a home plus even the cheapest car you can get now takes up basically every penny of take home pay of one 'decent' wage for the forseeable. Has to. Yes wage inflation will to an extent eat up that debt over time, but IMO not to the extent it used to.

Edited April 29 by JoeDavola

[Plan-b]

44 minutes ago, Ash4781b said:

Bailey said rates would come down so surely he must deliver?

Its all talk the US Fed is just as bad with the 'Fed jawbone' as it's known.

Rates are set by market forces not Central Banks. They can and do manipulate the short end somewhat (yield curve control) but that's about it. Too much for too long of that sort of behaviour can impact a countries currency, see Japan.

The way the UK behaves fiscally I wouldn't be surprised to see rates rise.

[Democorruptcy]

In 2023 the Treasury Select Committee and the FCA both questioned banks about why saving rates were so low, while mortgage rates were rising. Obviously at the moment the media has a lot about mortgage rates rising but nothing about saving rates rising. If you would like to try increase saving rates perhaps send an email to them asking why saving rates are falling while mortgage rates are rising?

TSC = [email protected]

FCA = https://www.fca.org.uk/contact

[JohnnyB]

1 hour ago, Democorruptcy said:

Did the BBC say it's great news for savers because if mortgage rates are going up, then banks must be raising saving rates as well?

The advice made me swear out loud. Genuinely all three are bad advice.

There might be a slight psychological benefit to overpayments (if you're a loose spender) but if savings rates are higher it makes more sense to grow the cash and increase your liquidity. 

[spygirl]

10 hours ago, JohnnyB said:

The advice made me swear out loud. Genuinely all three are bad advice.

There might be a slight psychological benefit to overpayments (if you're a loose spender) but if savings rates are higher it makes more sense to grow the cash and increase your liquidity. 

Only overpaying makes your mortgage more affordable.

The other two make it very expensive.

The level of shear study in that article is shocking.

Again, I had a sub 2% 5y fix on a 10y mortgage.

I paid the expected SVR - 6% i.e. overpaying 4%.

At the end of 5y fix Id already paid 50% off  - 10y mortgage n all that.

The extra 5 x 4% got rid off another 20%

Mortgages are long terms debt. The longer and the higher the interest; the more expensive the mortgage is.

 

 

[HousePriceMania]

13 hours ago, Axeman123 said:

Exactly, settling at a fairly normal level historically speaking. Even when people get their potential 1-3x 25bps cuts later this year it isn't going to be a big deal either. Normies are just not ready to accept that the QE era was the anomoly, and there is no ZIRP "normal" to return to.

It was Term Funding and Funding for Lending Scheme that really suppressed mortgage/savings rates.

Who needs to offer competitive rates for money when you can just get the BoE to magic you some up.

So as you say, even in IRs fall 1 % this year mortgage rates will stay up.

Edited April 30 by HousePriceMania

[HousePriceMania]

https://propertyindustryeye.com/estate-agents-over-valuing-homes-to-gain-instructions-helping-nobody/

 

"Estate agents over-valuing homes to gain instructions ‘helping nobody’"

 

The penny has finally dropped....

 

 

[MrXxxx]

 

[MrXxxx]

1 hour ago, MrXxxx said:

 

...remember you have only made a loss when you crystallised it!

'Hold tight' and:

 

Edited April 30 by MrXxxx

[spygirl]

4 hours ago, HousePriceMania said:

It was Term Funding and Funding for Lending Scheme that really suppressed mortgage/savings rates.

Who needs to offer competitive rates for money when you can just get the BoE to magic you some up.

So as you say, even in IRs fall 1 % this year mortgage rates will stay up.

It was.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2018/term-funding-scheme-web-version.pdf

TFS started in 2016. Ended Late 2018.

I remember discussing it on TOS.

https://www.housepricecrash.co.uk/forum/index.php?/topic/232273-ta-ta-term-funding/#comment-1103345556

TFS was the thing that pushed the banks so you could borrow low n long.

To a certain extent, I really benefited from it - note Im talking about saving money on the mortgage, not inflating HP.

TFS is interesting. That was the first time since 2007, when it all went wrong, that the power that be started drawing back.

From 08 - end of TFS, all the proprerdee booster where goign UKGIv will do what it takes.

End of TFS saw it stop.

Of course, there was Coof n allthat, which has seriously damaged UK eocnoy.

 

 

 

 

 

[sancho panza]

19 hours ago, kibuc said:

Every month or so a conversation with my wife returns like a boomerang about our inability (or my unwillingness, as she prefers to put it) to buy a house in our area. Every month I have to repeat the same arguments about prices being completely detached from earnings, and every conversation includes this particular piece

- But who's buying all these houses then?

- Other than the Hong Kongers?  Mostly people who cannot really afford it, they just don't know it yet.

Perhaps this chart will serve to support it.

In all honesty,me and Mrs P had the same debate for years.

I was helped by the fact that shes a saffer and when we looked a ta place there in 2016 she said it'd had gone from ZAR 900k in 2000 or so toZAR 2.5mn in 2016( I cant rememebr the exact dates and prices but i did check).I showed here that basically the hosue had gone from $150,000 (or so,cant remember exact firgures) to errrrrr..... $150,000 in 2016.

THus she learned to measure hosues in a denominator that was more stable.adjsuting as such by either gold or USD really does change the picture.

we rent and have done for years,but our gross yield is crica 2% on 2021 buy price.

its a difficult conversation to have but I'd rahter have your gold shares than a hosue myself...

have you thought about buying a pad back in home (poland isn't it?) and jsut carrying on renting here?

personally,think we're near to the end of 15 years of madness,your thesis about to come good imho

 

 

Edit to add-I have said to mrs Im happy to buy a pad where we're going to retire eg Isle of Man.Just dont want to be left flogging a dead horse in three years

here's on from western cape £200,000

https://www.property24.com/houses-for-sale/kleinmond/western-cape/398?sp=so%3dSize##G1459618

kleinmond

cape twon £200k

https://www.property24.com/for-sale/northshore/hout-bay/western-cape/10126/113553399

Edited April 30 by sancho panza

[kibuc]

23 minutes ago, sancho panza said:

have you thought about buying a pad back in home (poland isn't it?) and jsut carrying on renting here?

We owned a place outright back in Poland and let it out for a few month after our move to UK. Once we decided we were going to stay, we sold it to my brother avoid the hassle of maintaining a property from distance. We also thought we'd be buying soon and would need a deposit.

As things stand, we're nowhere near being able to afford getting our old place back. Prices in my home town more than doubled between 2016 and now. Combine relaxed monetary policy, genuine (as opposed to the UK) increase in earnings and millions of immigrants from Ukraine, and you get HPI on steroids.

I'm not worried about our future, I'm well aware that our needs will change drastically once the kids finish school and we'll be able to find a decent place at halt the price of the one we're currently living in. It's my wife who needs a periodic (is that a pun? perhaps it is) reality check.

[HousePriceMania]

Any idea why a new build would have no previous sales data on rightmove ?

I can think of a couple....
 

 

[Boon]

Pretty sure that's down to Rightmove and the estate agents, there must be some way to game the system and no show the previous prices. One listing I followed had the last sold price then it went unsold and came back with a different agent and then it was gone.

Zoopla seem more consistent on showing the price, so for this one it seems it was £345k in 2021.

[spunko]

59 minutes ago, HousePriceMania said:

Any idea why a new build would have no previous sales data on rightmove ?

I can think of a couple....
 

 

Rightmove have for years hidden the recent sales data when you're viewing that actual property. I dont know how they get away with it, but it's pretty easy just to type the postcode into houseprices.io  and check there.

[spygirl]

1 hour ago, HousePriceMania said:

Any idea why a new build would have no previous sales data on rightmove ?

I can think of a couple....
 

 

 

54 minutes ago, Boon said:

Pretty sure that's down to Rightmove and the estate agents, there must be some way to game the system and no show the previous prices. One listing I followed had the last sold price then it went unsold and came back with a different agent and then it was gone.

Zoopla seem more consistent on showing the price, so for this one it seems it was £345k in 2021.

 

23 minutes ago, spunko said:

Rightmove have for years hidden the recent sales data when you're viewing that actual property. I dont know how they get away with it, but it's pretty easy just to type the postcode into houseprices.io  and check there.

Dunno.

LR have some rules on publishing certain sales data -auctions,. non standards sales.

I do know some places that have gone to auction and the auction price recorded though. So, dunno.

There are also elaborate ways for developers to hide or scam price data - 'sell' the property to some entirely owned sub.

When houseprices.io doesnt work then looking on LR (the free bit) can work sometime.

 

 

[spygirl]

Anyhow, you houseless loser.

Big homes are an easy way to ££££££££££££££££££££

Father, 65, earns £85,000-a-year by renting out his swimming pool to hundreds of punters who don't like to take a dip in public

 

https://www.dailymail.co.uk/news/article-13367037/Father-65-earns-85-000-year-renting-swimming-pool-hundreds-punters-dont-like-dip-public.html

 

'The swimming pool is busy from 8am to 9pm. It's our main income.

'It's a joy to see people coming and going.'

Mr Crum thought about replacing it with two more bedrooms so he could Airbnb part of the house.

Instead he decided to make use of what he had and put an advert on his local Facebook group to open up his pool in August 2021.

In the first few years Steve made £40,000 to £50,000 but now makes £85,000 a year.

He said: 'It's unbelievable.'

My first thought was - Really? Every day, every hour???

My second thought was- Public pools have some hefty filtration and cleaning to attempt to keep the pool clean from ou the sweaty, greasy, shutty bodies that go in them. Oh, and the jizz.

Private pool dont - no expecting many people to be in them for many hours.

My third thought was - I bet the perves got cameras everywhere.

 

[spunko]

44 minutes ago, spygirl said:

Anyhow, you houseless loser.

Big homes are an easy way to ££££££££££££££££££££

Father, 65, earns £85,000-a-year by renting out his swimming pool to hundreds of punters who don't like to take a dip in public

 

https://www.dailymail.co.uk/news/article-13367037/Father-65-earns-85-000-year-renting-swimming-pool-hundreds-punters-dont-like-dip-public.html

 

'The swimming pool is busy from 8am to 9pm. It's our main income.

'It's a joy to see people coming and going.'

Mr Crum thought about replacing it with two more bedrooms so he could Airbnb part of the house.

Instead he decided to make use of what he had and put an advert on his local Facebook group to open up his pool in August 2021.

In the first few years Steve made £40,000 to £50,000 but now makes £85,000 a year.

He said: 'It's unbelievable.'

My first thought was - Really? Every day, every hour???

My second thought was- Public pools have some hefty filtration and cleaning to attempt to keep the pool clean from ou the sweaty, greasy, shutty bodies that go in them. Oh, and the jizz.

Private pool dont - no expecting many people to be in them for many hours.

My third thought was - I bet the perves got cameras everywhere.

 

More shocked his sons claims to be my age. They look mid 50s.

[spygirl]

1 hour ago, spunko said:

More shocked his sons claims to be my age. They look mid 50s.

Wanking in Dad's pool every night sure takes it out of them.....

[Axeman123]

2 hours ago, spygirl said:

My first thought was - Really? Every day, every hour??

Lots of Turkish barbers with similarly unfeasibly high all-cash turnovers IMO.

2 hours ago, spygirl said:

My second thought was- Public pools have some hefty filtration and cleaning

I think we all know that water in his pool will either be filthy, or incredibly heavily chlorinated. The only thing in his favour is his customers might actually take a proper hot shower with soap before getting in, unlike most public pools.

2 hours ago, spygirl said:

My third thought was - I bet the perves got cameras everywhere.

Its going to be 100% obese women using it though, excercise with low impact on their abused joints plus not wanting to be seen without baggy clothing.

[JoeDavola]

18 hours ago, sancho panza said:

In all honesty,me and Mrs P had the same debate for years.

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.

Edited May 1 by JoeDavola

[belfastchild]

24 minutes ago, JoeDavola said:

buying a house. It is, more than ever, a terrible investment IMO.

And there you have the problem in a nutshell.

Seeing shelter as an investment.

When you see it as shelter, its a different thing entirely.

[JoeDavola]

1 minute ago, belfastchild said:

And there you have the problem in a nutshell.

Seeing shelter as an investment.

When you see it as shelter, its a different thing entirely.

I don't see anything that is going to change that mindset in most for the forseeable though.

[belfastchild]

1 minute ago, JoeDavola said:

I don't see anything that is going to change that mindset in most for the forseeable though.

Doesnt matter about most, just have to change yours.

[JoeDavola]

5 minutes ago, belfastchild said:

Doesnt matter about most, just have to change yours.

Ah fuck sake I was hoping you didn't mean that.

When I said that a home was a terrible investment I wasn't saying that I'm expecting a financial return from buying a house. That's not's what is stopping me buying one, though you obviously want to buy something you've a chance at selling on fairly quick if you need to.

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.

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.