MrMarket

http://www.lettingfocus.com/blogs/2017/04/is-a-housing-over-supply-looming/ Good demographic analysis. Probably bang on. People will wake up one day in the not too distant future and whinge, but the government said we had a housing supply crisis...

Agree. It's bonkers. But mid- and top-end are dead. Lower end alive. 300 - 400k seems to be what 2 "normal" full time salaries x 4.5 + a bit of BOMAD deposit will get you.

One of my team at work got told her landlord was selling up this week. Place has been rented out "forever ". (Aka it's tired and needs doing up). This is zone 2 london. Price 20% above fair market according to her. Maybe a coincidence, but hopefully realism kicking in. Just need a few more. Rightmove listing stats will be interesting viewing in the next few months.

Lower... although to be fair i'm looking at 650k+ family houses. At 400k and below, stuff is still moving

I was looking on Companies House the other day, to see what the Wilson's were up to. Incredibly (or not) Fergus registered a company last year called "search for a European heavyweight champion limited ". The mind boggles. Company was dissolved this year, so presumably the search failed. Heavyweight easy, limited easy, champion.... more challenging

I went to see a Crest Nicholson development in outer london (sunbur) The sales chat was fixed price, no discounts...but we can "help" with stamp duty or even better do a great deal on a part exchange (average of 3 EA valuations... and nothing round here sells at EA vals anymore). I concluded they must be doing anything possible to get the land reg vals as high as possible to a) placate the mugs that have already bought anchor the mugs that have yet to buy to high prices.

Very long time lurker.. thought I'd celebrate Section 24 Day with a rare post. Financial "innovation" lies behind many a speculative bubble. Arguably BTL and the Northern Rock "Together" (125%) were the poster child for the last boom. BTL hasn't gone anywhere (yet), but now we have Help to Buy. The parallels between Together and Help to Buy are ridiculous. Both are 125% loans. The resale value of a HtB property is a maximum 80% of the paid price - because the new buyer can't access the government loan, therefore can only afford to pay a maximum of the mortgage without subsidy. 100% / 80% = 125%. Factor in a new build premium and it's probably even higher. Both books are now of similar scale. NR lent around £23bn under Together. HtB has supported £18bn of property purchase as of last month. At current lending rates, it'll beat the NR by the end of the year. Both offered grace periods of 5 years on the unsecured or top up before reverting. Together lasted 9 years before bringing down the economy, HtB is scheduled to last....9 years. Whilst I want to see all speculative devices removed (BTL, HtB, Far East off-plan purchases), I am not 100% convinced that HtB as a speculative instrument is necessarily a bad thing. It does encourage a speculative bubble in new build, which will lead to over-construction in the long-run and bleeds capital out of the mainstream housing market, the effects of which might be to bring about a crash sooner. Interested in others thoughts.

Thanks, I assume new business includes re-mortgaging, not just house purchase? If that's the case, once you factor out the impact of the stamp duty kick in the Spring, and the rates drop kick (driving re-mortgaging) recently, then the underlying house purchase volumes must be looking pretty sick.

I was worried that stamp duty could be cut, particularly given Javid's recent comment about taxes being constantly under review. However this blog argues high stamp is protecting high house prices by limiting transaction volume. https://medium.com/@danfareyjones/cut-stamp-duty-do-it-and-watch-prime-london-implode-48965e604a42#.beh3z0aj8 If nothing else it does make you think about the law of unintended consequences, and that the effects of any housing-related policy in the autumn statement may not be clear for some time.

Same. My first post since 2008. Dug out my login and reset the password yesterday. This is the most bearish i've felt since at least 2010. I really hope the worm has turned now. The number of lurkers coming out of the shadows seems to be an interesting anecdotal in itself. 18 months ago it was just The Count holding the fort here. No disrespect to Count, but I thought this site was done. Happy to be proved wrong.

Read "The Three Trillion Dollar War" by Joseph Stiglitz, an economics professor from Columbia University in New York. His thesis is that the Fed and the US government flooded the market with liquidity to mask the impact on the economy of the war in Iraq. The sheer volume of funds sloshing around meant that debt became cheap and fuelled the credit bubble. It completely hid the effect on the economy of the war in Iraq - I say hid, read "postponed". It could be possible this guy is talking bullsh*t, but then he has a Nobel Prize. Enough said really.

I've been watching this housing slowdown unfold for a while on this site now, but thought I'd make my first post as things are finally starting to get interesting. Has anyone else noticed the interesting change in sentiment in the last week? EAs are now starting to TALK THE MARKET DOWN. For example, from the Times this week: "Savills, the property agency, has given warning of sharp price falls for multi-million-pound Central London flats and houses this year and next, reversing a forecast made last autumn. " EAs make their money on volume more than absolute price levels, it's a brokerage business. For the past 6 years they've irresponsibly built volume by talking the market up and whipping the public into a buying frenzy. Suddenly that doesn't work anymore. Now the only way they can save their BMWs and Mini Coopers is to talk it down - and quickly - in a vain hope this encourages sales. Expect more EAs to follow suit across the board with headlines about "sellers being unrealistic, etc" (the irony). I really think we've reached the tipping point now. Expect the EAs to become the biggest bears out there! - and not just the ones that lose their jobs.

What many people forget is that there were actually two bubbles in the 1920s. The Great Depression in 1929 was preceeded by the Florida Real Estate boom of 1924 - 1927. Americans could buy choice real estate for only 10% down. Demand was such that house prices could be expected to rise by as much as 50% per month at the height of the bubble (and I thought Wandsworth was extreme at 30% p.a.). Rising prices encouraged more yet demand. People sold out, then bought multiple properties with their equity gains (BTL, sound familiar?). Demand was such that developers began to offer "prime beach front properties" that were up to 15 miles away from the sea! (ex-local anyone?). In 1926 the buyers ran out and prices peaked. Everyone rushed to get out of the market and prices crashed. By 1928 the market was down 85%. Interestingly the blame for the crisis was laid at the door of two hurricanes that blew through in 1927 (U.S. sub-prime debt) rather than the obvious cause of speculation and over-leverage. Believe it or not, despite this boom and bust they went through it all again in 1929 (gold?, agricultural commodities?). People don't learn!

How much longer? Interesting question. Having spent some time thinking about this I really think we're looking at 2 and a half to 3 years before this bottoms out. I really don't see prices falling for a much longer period of time. If you think about it, the people who should be the last to get burned will be those who purchased at the height of the bubble - summer 2007. Most of these will get hit when they need to remortgage (impossible given negative equity) or pay the SVRs when their fixed rate deals end (possibly 30% increase in cost). Typically this will be 2 - 3yrs after taking the mortgage out. A significant number should get in trouble and become forced sellers through bankruptcy, repossession etc. Allow another 6 months after the fixed rate period ends for this to bite in. Add the lot together and I think you're looking at just under 2 to just under 3 years to the trough; early-2010. I would say however not to be afraid of buying in a falling market, and don't try to time the turn - it's impossible and you'll probably miss it. By the time the statistics and media get hold of the fact the "market has turned", you can bet it turned 6 months before, and houses are priced at the same levels they were 12 months previously (rise has wiped out falls). As long as prices are significantly down on the peak, that the house you're looking for appears good value to you, and that you can afford it within your means I'd go for it. Certainly this is what I am hoping to do.