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Time to feel bearish again?


Libspero

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9 hours ago, Noallegiance said:

Per month.

Luckily the wife works so we can cover all the bills.

Ok, the only exception to this is if you love your job...and you have a partner to do the financial `heavy lifting` :-)

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On 02/04/2019 at 19:38, Noallegiance said:

This is a strange one, to me, from an HPC veteran.

Do you not believe that the 'once in a lifetime event' was (and still is being) artificially stopped before the real damage was done?

The longer we go on, the more firm I become in my belief that 2008 wouldn't be fit to iron the next downturn's shirt.

I do reckon that the 2008 downturn was pretty mild comapre to a couple of other that I have seen. I'm 69 BTW.

In the mid 70s I was working for a building/property company in West London. We were converting a block of houses in Bayswater into fltas and got planning permission for a penthouse over all 4 houses. Really a fantastic place. The boss reckoned that it would sell for £70,000, a lot of money then. The arse fell out of the market and it went for £47,000.

When I bought this place in 1989 I paid £55,500. A couple of years later I reckon that I would have been lucky to get £30,000.

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  • 3 weeks later...
sancho panza
5 hours ago, Libspero said:

I saw that on the news this morning alongside the FTSE ticker -0.88%.
We're in a bear market in stocks,a lot of people jsut won't accept it.

4 hours ago, Libspero said:

Incredible times we live in.And economic activity is dropping despite record low rates.

 

Helicopter Ben was just plain wrong.

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Caravan Monster

Did some work for a savvy local businessman (also vocal remainer and btl'er xD) a while back, who clearly had access to large amounts of credit. He bought a very run down house with a couple of derelict barns on a quarter acre village site for around £1m. He then spent over a £1m on a not especially good renovation. Once the renovation was done, his wife divorced him and after various attempts to rent out and air bnb parts of the house the place has gone on the market asking £1m. So if it achieves asking, he'll be left around £1m in the hole + interest and fees. Just one story where I happened to be in the right place to be confident about the facts and figures involved, when is this sort of stupid shit going to stop? The average local wage is around £25k and the house made a decent family home, but isn't anything special. How many times is this story being repeated around the country, surely people will not continue foolishly throwing around these sort of income multiples for much longer?

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  • 2 weeks later...
Fully Detached

I'm forced to weigh up this buy vs rent thing again after our landlord has decided to sell up and we're struggling to find anything that suits us as much as the current place. I'm quite surprised to see that despite what I consider to be ludicrous local asking prices, it might just make sense to me.

Some facts - local area has a pretty good jobs economy, so average wage is probably £30k+ perhaps a little higher. That means you're looking at almost quarter of a million pounds for a 3 bed semi ex local-authority house. Quarter of a fucking million. Anyway, with a bit of negotiation I could buy such a place with approx £30k mortgage, although what I'd actually do is take an £80k repayment and hold on to some pms, land and crypto worth a little over £50k. Back to that in a moment.

That means a monthly mortgage payment of about £500 if I do it over 15 years, against a monthly rental of £1k. As long as I keep doing my current work I can overpay that at a hell of a rate of knots and clear the mortgage in a few years. So if you use the god-awful monthly affordability measure I'd be an utter idiot not to buy.

Aside from investing that much of the money that I sweated to earn in an ex-LA house, there are some things that put me off. Make no mistake, I am entirely of the view that 2008 was a dress rehearsal, and that the chickens will come home to roost at approximately the same time as the priced out generation become the ones who are making the rules and running the economy. I expect houses to lose out significantly in the coming years, whether real or nominal remains to be seen. In addition, I checked the mortgage lending criteria for one bank, and was amazed to see that a single borrower needs to earn £50k+ and joint borrowers need combined £75k; LTV is similarly challenging. Which leaves me wondering who the fuck is actually taking out these mortgages, because the average salary around here would exclude probably 80% of people from getting one. If it's investors, then that leaves me thinking that bath-time could be coming sooner rather than later. I'm also looking at local signs of impending recession. All local business contacts are feeling a cold wind, and I get the feeling that even if 2019 is not going to be the big one, there's a bit of a blow off due.

Factor in Brexit and that confuses things even further - as I see it we're looking at roughly 2/3 likelihood of economic hardship, 1/6 chance of things staying the same and 1/6 chance of a bit of a boost if it turns out that whatever happens wasn't so bad after all (against IMO a high chance of recovery a couple of years after a hard Brexit, but that would be recovery after a significant economic hit).

And so I'm left with the question of the safety of my cash, and albeit that most of it is index linked, I don't trust the government not to devalue it. Quite honestly I'd rather take a 40% hit on an overpriced council house than take the same hit on my cash only to find that it was used to prop up the value of the council house that I could have bought - effectively what happened in 2008. If the house devalues, so does every other house up the ladder, giving me an opportunity to move up, particularly if the other investments have done OK in a downturn.

So right now I'm swinging between seeing a lot of sense in buying and recoiling at the thought of getting utterly butt-fucked for a house that would have been 60k in 2003.

Any thoughts are very welcome - sorry for the long ramble.

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5 minutes ago, Fully Detached said:

In addition, I checked the mortgage lending criteria for one bank, and was amazed to see that a single borrower needs to earn £50k+ and joint borrowers need combined £75k; LTV is similarly challenging. Which leaves me wondering who the fuck is actually taking out these mortgages, because the average salary around here would exclude probably 80% of people from getting one.

The only bank I've seen with that criteria is FD on interest only. A standard overpayment mortgage comes down to affordability with at least one month in employment. As I've said previously in other threads banks are happy to take the state retirement age as a planned retirement age. Youngsters are now doing 35 year mortgages to ensure affordability criteria is met. Some lenders are even offering them over 40 years.

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Bobthebuilder

Fully Detached,

Not much advice to give but, ive never looked at a house to live in as an investment, more like the moneys gone, ive spent it.

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15 minutes ago, Fully Detached said:

And so I'm left with the question of the safety of my cash, and albeit that most of it is index linked, I don't trust the government not to devalue it. Quite honestly I'd rather take a 40% hit on an overpriced council house than take the same hit on my cash only to find that it was used to prop up the value of the council house that I could have bought - effectively what happened in 2008. If the house devalues, so does every other house up the ladder, giving me an opportunity to move up, particularly if the other investments have done OK in a downturn.

So right now I'm swinging between seeing a lot of sense in buying and recoiling at the thought of getting utterly butt-fucked for a house that would have been 60k in 2003.

Any thoughts are very welcome - sorry for the long ramble.

Not advice but IMO its better to be in the game than on the sidelines and spreading your risk (crypto, pms ect) that way if (when?) the gov do the next thing to prop the market up your covered either way.

As Bob says dont look at it as an investment and it means you wont have a landlord sell up on you again.

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2 minutes ago, stockton said:

Not advice but IMO its better to be in the game than on the sidelines and spreading your risk (crypto, pms ect) that way if (when?) the gov do the next thing to prop the market up your covered either way.

As Bob says dont look at it as an investment and it means you wont have a landlord sell up on you again.

Again not advice, but I would disagree. I think you do need to spread your risk and not be so reliant and heavily invested into the local/regional/national economy. Have a global balanced diversified portfolio. Then if the local jobs and/or housing market goes tits up you don't; have all your eggs in one basket. I think this is where a large part of people go wrong is they put all their savings into a house deposit and then borrow as much as they can. Sounds like Fully Detached has enough capital he can be in the local housing market in a variety of ways without exposing himself too much.

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36 minutes ago, Fully Detached said:

I'm forced to weigh up this buy vs rent thing again after our landlord has decided to sell up and we're struggling to find anything that suits us as much as the current place. I'm quite surprised to see that despite what I consider to be ludicrous local asking prices, it might just make sense to me.

Some facts - local area has a pretty good jobs economy, so average wage is probably £30k+ perhaps a little higher. That means you're looking at almost quarter of a million pounds for a 3 bed semi ex local-authority house. Quarter of a fucking million. Anyway, with a bit of negotiation I could buy such a place with approx £30k mortgage, although what I'd actually do is take an £80k repayment and hold on to some pms, land and crypto worth a little over £50k. Back to that in a moment.

That means a monthly mortgage payment of about £500 if I do it over 15 years, against a monthly rental of £1k. As long as I keep doing my current work I can overpay that at a hell of a rate of knots and clear the mortgage in a few years. So if you use the god-awful monthly affordability measure I'd be an utter idiot not to buy.

Aside from investing that much of the money that I sweated to earn in an ex-LA house, there are some things that put me off. Make no mistake, I am entirely of the view that 2008 was a dress rehearsal, and that the chickens will come home to roost at approximately the same time as the priced out generation become the ones who are making the rules and running the economy. I expect houses to lose out significantly in the coming years, whether real or nominal remains to be seen. In addition, I checked the mortgage lending criteria for one bank, and was amazed to see that a single borrower needs to earn £50k+ and joint borrowers need combined £75k; LTV is similarly challenging. Which leaves me wondering who the fuck is actually taking out these mortgages, because the average salary around here would exclude probably 80% of people from getting one. If it's investors, then that leaves me thinking that bath-time could be coming sooner rather than later. I'm also looking at local signs of impending recession. All local business contacts are feeling a cold wind, and I get the feeling that even if 2019 is not going to be the big one, there's a bit of a blow off due.

Factor in Brexit and that confuses things even further - as I see it we're looking at roughly 2/3 likelihood of economic hardship, 1/6 chance of things staying the same and 1/6 chance of a bit of a boost if it turns out that whatever happens wasn't so bad after all (against IMO a high chance of recovery a couple of years after a hard Brexit, but that would be recovery after a significant economic hit).

And so I'm left with the question of the safety of my cash, and albeit that most of it is index linked, I don't trust the government not to devalue it. Quite honestly I'd rather take a 40% hit on an overpriced council house than take the same hit on my cash only to find that it was used to prop up the value of the council house that I could have bought - effectively what happened in 2008. If the house devalues, so does every other house up the ladder, giving me an opportunity to move up, particularly if the other investments have done OK in a downturn.

So right now I'm swinging between seeing a lot of sense in buying and recoiling at the thought of getting utterly butt-fucked for a house that would have been 60k in 2003.

Any thoughts are very welcome - sorry for the long ramble.

My guess is that UK housing is not going to have any gains  for ever.

In 10 years time, the demographics for most towns will be so fucked that housing cost will not be a issue for my kids, whole be working in ~10-15 years time.

Sure, Kensington, Westminster will still be relatively expensive - assuming tis not overrun by muzzers then.... - alawys will be. Whether or nt itll 2014ish expensive is yet to be seen.

But <pick a town> Nah.

The *two* most important things to work out - and its impossible due to shit stats are - is the following:

1) How much of the areas property is owned by the over 55s?

2) How much much is the average under 45 earning?

Its going to be brutal.

spys simple stat - in 10 years time 50% of the 64 and older will be dead. That rate might be slightly higher.

Some towns/areas have and will have a huge number of probate to clear.

As far as hysteiclal We'll miss out!!!!

Heres the LR numbers for my local town (the postcode that covers the largest number of property):

https://www.home.co.uk/guides/house_prices_report.htm?location=whitby&all=1

(home.co.uk is *fantastic*. It puts prices in a simple chart).

It shows Browns idiot biggest crdit bubble everseen - 2002->2006ish ,when even the nuts banks ran out of idiots, before imploding 2007)

And it shows prices have pretty much been stuck since 2004/2006.

(You can ignore the odd spike - low property sales).

The number of property sold chart is hugely skewed by loads of people buying property for furnished holiday lets (id guess 30% of sales). Even with these, you can see sales have been pretty thin since 2008 - thats 11 years ago.

The other side note is the the UK finsec as a sector that employed a high number of people, paying them high wages, has long gone. This is significant for the South but affects other places - just look at the Yawk jobs losses with Aviiva and scamsters like CPP.

The UK job and property market has relied on the fnsec to create high paying jobs. And provide cheap mortgage finance. This is over now.

 

 

 

 

 

 

 

 

 

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41 minutes ago, A_P said:

The only bank I've seen with that criteria is FD on interest only. A standard overpayment mortgage comes down to affordability with at least one month in employment. As I've said previously in other threads banks are happy to take the state retirement age as a planned retirement age. Youngsters are now doing 35 year mortgages to ensure affordability criteria is met. Some lenders are even offering them over 40 years.

Be careful.

What advertised is not normally shown.

A sensible conservative bank will be avoiding 30+ year mortgages are theres the likelyhood that MMR will be respun to set a max of 25 eyars or so.

And, with FTB age being 35+, you'll be lucky to get a 30 year mortgage. Again, most banks will not allow a mortgage beyond SRA.

You have to be careful about the BS and wishful think in person fiance columns to the actual being mortgages being sold. They really dont tally.

 

 

 

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Fully Detached

I wasn't expecting replies so quickly, thanks to all.

I'm definitely not looking at a house as an investment, it's just that I've worked hard to save what I have (spent years saving to buy outright but was always just outpaced by HPI) and I don't want to lose any more than I have to.

But as I look at it I'd be exchanging my riskiest*/largest savings - cash - for a house, whilst holding on to assets that might do very well in a failing economy (OK the land would lose value but long term I might get planning on that so it's a definite hold). So even risk means I have a net £30k mortgage, worst case is I have an £80k mortgage and best case is maybe my other assets do well enough to negate the mortgage altogether.

I need to get over the butt hurt about the cost, I'm aware of that.

The other thing in my mind is that this summer might be a good time to get a better price because of Brexit worries etc.I"m sure that could go both ways in that maybe people won't sell until they know what's happening.

Just seen Spy's comments and yes I agree with every word. The problem is I've agreed with every word since 2003 and all I've seen so far is extend and pretend, ably assisted by a deliberately undereducated and dumbed-down population who think that 35-40 year mortgages are there to help them. Those same people will probably be queueing at the doors when the first intergenerational mortgages go on offer. It honestly makes me think that we'll have flat or positive HPI right up until the day when the shit hits the fan and it all goes Mad Max.

* I say riskiest because it's the one that's entirely in the hands of the govt / BOE and oddly enough I don't trust them as far as I could fucking throw them.

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1 minute ago, spygirl said:

Be careful.

What advertised is not normally shown.

A sensible conservative bank will be avoiding 30+ year mortgages are theres the likelyhood that MMR will be respun to set a max of 25 eyars or so.

And, with FTB age being 35+, you'll be lucky to get a 30 year mortgage. Again, most banks will not allow a mortgage beyond SRA.

You have to be careful about the BS and wishful think in person fiance columns to the actual being mortgages being sold. They really dont tally.

 

 

 

Why do I need to be careful and why do we have to keep having this conversation?

SRA is now 68. Someone who is thirty will have no problem putting a retirement age of 68 on their mortgage application....Are you taking an extreme FTB age of 35 in the SE or something? Even still they could get a thirty year mortgage, and I personally know two parties that have done that in the SE.

Quote

The industry group UK Finance estimates the average age of first-time buyers to be around 30 years old, and so many of those saving to purchase a house for the first time are likely to be in the 22 to 29 age group.Jul 25, 2018

I've given you a link to the personalfinance sub reddit that shows 35 year mortgages are now common place.

Obviously when it comes to underwriting then yes that is a different kettle of fish. But there are a variety of variables that impact that and could be any number of things rather than retirement age.

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1 hour ago, Fully Detached said:

Any thoughts are very welcome - sorry for the long ramble.

All you need to think is "What can they do, no holds barred, to keep house prices high?". Not "What is right to do?" or "What is sensible to do?"

Then you'll have an answer. xD

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Bobthebuilder
1 hour ago, Fully Detached said:

So even risk means I have a net £30k mortgage, worst case is I have an £80k mortgage and best case is maybe my other assets do well enough to negate the mortgage altogether.

Dont forget offset mortgages, they can be great for someone in the right position financially wise.

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Fully Detached
23 minutes ago, Loki said:

All you need to think is "What can they do, no holds barred, to keep house prices high?". Not "What is right to do?" or "What is sensible to do?"

Then you'll have an answer. xD

Yes, that's basically how I'm looking at it now. I think there is no longer any opportunity for a controlled rebalancing, so it's going to be pedal to the metal right up until the moment we hit the brick wall.

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Fully Detached
Just now, Bobthebuilder said:

Dont forget offset mortgages, they can be great for someone in the right position financially wise.

Yep I had a quick look at those - if we decide to buy then I'll look in more detail but ideally I'd like to minimise my borrowing as far as possible. The only reason for wanting to hold the non-cash assets is that I think they'll hedge to some extent the potential risk I'd be taking by buying at the top of the market.

Even as I type this I'm thinking how ironic it would be for me to buy at probably the all time top after 15 years of waiting for prices to drop. Life is a funny old thing.

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1 hour ago, spygirl said:

spys simple stat - in 10 years time 50% of the 64 and older will be dead.

So in effect, we can say folk will be taking their illusory gains to their graves.

All a bit pointless really.

Unless they're buried with a valuation certificate for some archaeologist to marvel over in the years to come!

Housing is a chattel and should not appear on your list of assets.  A silly price does not change it from chattel to investment.  Take it off and the small list of "wealthy" people becomes minute.

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9 minutes ago, Harley said:

So in effect, we can say folk will be taking their illusory gains to their graves.

All a bit pointless really.

Unless they're buried with a valuation certificate for some archaeologist to marvel over in the years to come!

Housing is a chattel and should not appear on your list of assets.  A silly price does not change it from chattel to investment.  Take it off and the small list of "wealthy" people becomes minute.

Any OAP, 70+ trying to sell a house 'valued' over ~180k in Scarborough is more likely to leave in a coffin than a removal van.

Lots of the other places are like that, esp. in the South now.

 

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reformed nice guy
2 hours ago, spygirl said:

The *two* most important things to work out - and its impossible due to shit stats are - is the following:

1) How much of the areas property is owned by the over 55s?

2) How much much is the average under 45 earning?

I live in a very small hamlet and I am seeing this play out already.

People that retired into the town paid high prices. Some are looking to move and the houses are not selling. One bought for £275k in 2008 sold for 300k recently... asking price was originally 525k and it took 3 years to sell!

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8 hours ago, Harley said:

So in effect, we can say folk will be taking their illusory gains to their graves.

All a bit pointless really.

Unless they're buried with a valuation certificate for some archaeologist to marvel over in the years to come!

Housing is a chattel and should not appear on your list of assets.  A silly price does not change it from chattel to investment.  Take it off and the small list of "wealthy" people becomes minute.

Well it could be an investment if you sold and downsized at a later date...

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UnconventionalWisdom
19 hours ago, reformed nice guy said:

asking price was originally 525k and it took 3 years to sell!

Doesn't surprise me, most people dont realise that the banks influence the newspapers and the newspapers make out like theres no risk in housing. 

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