Thursday, Jul 13, 2017

Property Market In State of Lethargy

BBC: Estate agents have lowest stock of homes for 40 years

Both titles are from the BBC, the Lethargy one being from their home page.
I guess that with current prices estate agents only need to sell one or two houses a month to make a nice living.

Posted by tenyearstogetmymoneyback @ 06:07 AM (5251 views) Add Comment

23 Comments

1. reticent said...

Seller's strike.

Looking more like 2011 than 2008 at this point. I still think that it's all down to what happens with BTL. But rising IRs or an exodus of foreigners off the back of Brexit are not implausible. Trump seemed keen to raise rates during the campaign. A small black swan could start the speculator's selling off and then it will just snowball.

The NW London figures have been yo-yoing for a year now, and fell slightly over the spring.

Friday, July 14, 2017 08:08AM Report Comment
 

2. britishblue said...

There is another dynamic at work. Quite a few immigrants are going home. This is not because of Brexit although this may have focused their minds and stimulated conversations among themselves as to the pros and cons of living in the UK. It is because living in a shoe box in London is no longer the dream standard of living. As the EU money has poured into Eastern Europe they have seen standards of living back home improve. I spoke to a male Polish nurse yesterday. He said that he and is wife said, 'what are we doing here'. Most of our salaries go on rent, we are living in cramped conditions, whilst our kids get bigger and we will never be able to afford a property. Secondly, the predicted rise in rents in London from Buy to letters passing on costs has gone the other way at all levels. In the £10,000 a month property, rents are down as much as 30% on some properties and even at the £1200 mark landlords are now being told if you have a good tenant, don't try and put the rent up, because if you lose them, you may get less next time. Of course this information is being suppressed.
In the last month we have seen rents go down, property prices for sales go down and this is when we have a record low of stock on the market. What happens if there is a surge in people putting property on the market?

Friday, July 14, 2017 10:17AM Report Comment
 

3. jack c said...

I've been a contributor to this site for 10 years and onlooker prior to that and to use one of my broken record phrases "you can only defy gravity for so long" - maybe Brexit really is the catalyst to a genuine reversal in UK property prices.

Friday, July 14, 2017 10:48AM Report Comment
 

4. tenyearstogetmymoneyback said...

Britishblue.

I wonder if recent events, like the fact that fire safety standards seem to have been dropped to the level of a third world country, has focused peoples minds.

Back to the original article and looking through the comments someone said that Stamp Duty is now so high they couldn't afford to move so were improving instead. I have just been working out and I could get a conservatory fitted for the price of selling this place and buying an identical place next door.

Friday, July 14, 2017 10:19PM Report Comment
 

5. tom101 said...

Britishblue, I have heard exactly the same as you have. Skilled European workforce looking for alternatives to Britain. Fair enough!

Saturday, July 15, 2017 01:19PM Report Comment
 

6. icarus said...

Front-running border patrols to get OUT?

Saturday, July 15, 2017 08:26PM Report Comment
 

7. libertas said...

The lower levels of stock began around 1996 when Blair opened up the borders.

FACT: Immigrants do not have a property to sell when the purchase.
FACT: We are not building enough new properties to cope with the additional population.
FACT: London has risen from 6.5m people in 1996 to almost 9m now.

So its not a buyers strike, its an imbalance in supply and demand driven by immigration that is driven by economic activity in London being stronger than elsewhere in Europe, with much of the Med suffering 50% youth unemployment.

What I believe is happening with prices, on the lower volumes, is higher volatility. You see this with for example detached sales being more volatile in a London Borough on average than terraced because of the volume, because if you have, say, 10 sales per month of detached vs 100 of terraced, detached has a more volatile price. I see this in the Rightmove house price charts.

I am also seeing recent rapid price increases were I live, in Edmonton and Tottenham. Newcomers to London are now blocked from the inner city if they want large properties so are flooding to the suburb and that trend has been underway for a few years, with places like Walthamstow initially taking the lead. Recall, in the 1980s and before, places like Enfield and Barnet were more expensive than places like Hackney. That reversed, but I believe the suburbs will once again become more expensive than the City, albeit without the City reducing in value.

So we have to separate out the impact of tax changes on the high end of the market vs the overall trend, and I do believe that Reticent is right, this looks more like 2011 than 2008. The only question I have is, at what stock level does this move towards hyperinflation? Do stocks per surveyor have to fall to 30, 20, 10, 1?

This would not be the case if Europe could become less sclerotic and begin creating jobs for itself, so the turnaround is when Europe sorts its stuff out, but I believe that Brexit will cause an acceleration of British economic growth vs Europe because we will get fantastic trade deals, the huge slashes of regulations will boost the economy and any tariffs will be absorbed in a lower valued pound.

At some point, we will need to either close up shop and say, no more immigration or, we will have to go crazy with development, with skyscrapers extending out into the suburbs. This has already begun, with a 38 storey residential tower soon to be built at White Hart Lane in Tottenham and countless skyscrapers building up in Stratford, which was once low rise.

Interesting times ahead!

Sunday, July 16, 2017 03:58AM Report Comment
 

8. techieman said...

I've been reviewing rightmove and the great majority of the rental properties have been "reduced". And yes this is in the "suburbs" of London.

Of course we have a fragmented market but to refuse to accept rental prices are falling is refusing to accept reality. Price comparisons are very difficult for sales because comparing like for like is nearly impossible as BB says.

An example ? Near me a place was sold for 450k... a bungalow of a 95 year old that had not been touched for decades.

Developers bought the place and got permission to build another floor. So it's now a 2 storey + dorma conversion. So how will that appear in the stats when it's sold ?

Will the records show the amount spent on the property .... nope it'll just jump from 450 to say 700 (if prices remain constant).

Reverting back to the rentals. If the rents are getting lower then why would someone buy a property to achieve a falling yield at the same price ?

If IRS rise then that means the yield looks even more unattractive. Finally the rise in population has already happened.

Extrapolating prior trends in prices and population is anti cyclic. But if you want to do that keep calm and carry on.

Sunday, July 16, 2017 05:15AM Report Comment
 

9. techieman said...

Libby read what you said... you are predicting we will do well and at the same time a lower value pound. If we will do well won't the value of the pound appreciate?

Again your position seems somewhat disjointed. A lower value pound won't encourage people to come here to send money "back home" .
Please enlighten me....

Also it's fair comment to say that generally the property market gains on IR rises, but that pre-supposes the market is similar to prior times. With BTL and section 24 in particular... fings ain't what they used to be.. if IRS rise then it's likely more BTLS will head for the exits.

Sunday, July 16, 2017 05:23AM Report Comment
 

10. icarus said...

@7 - there you go again - comparing London to whole countries. London is doing well compared with the UK too, partly because of high government infrastructure spend per capita compared with the rest of the UK. Compare like with like - London with other cities. How does London's economic performance compare with, say, Berlin's? And Berlin doesn't suck the life out of the rest of the German economy, or depend on finance and an imperial past either. (Read Daniel Defoe's reporting over 200 years ago about how London reduced the rest of England to dependence and subservience - it was 20 times bigger than any other English town at the beginning of the 17th century while Germany had several medium-sized (30,000-50,000) cities at the time.

And please - no more 'huge slashes of regulations will boost the economy'. That's as ridiculous as the American broadcaster who, when a 2,000 sq mile piece of ice broke away from Antarctica, said it wasn't in any shipping lane, so wouldn't disrupt commerce. Or the idea that the Pacific is so big that Fukushima radiation won't affect it. And in the wake of the Grenfell Tower fire........The bonfire of regulations is part of the enrichment of the few at the expense of everybody else.

Sunday, July 16, 2017 08:19PM Report Comment
 

11. libertas said...

Techieman, folk are coming here to get jobs, period, because unemployment is rife throughout Europe, particularly for the youth.

Regarding the pound, I simply stated that higher tariffis will be absorbed by currency fluctuations.

also "If the rents are getting lower then why would someone buy a property to achieve a falling yield at the same price ?" - Because a house purchased on a re-payment mortgage can fall 3% every year and you are still better off than 0% in the bank or renting, and even with this scenario you would own the asset outright at the end vs having jack squiggly nothing. Plus, those with cash see dips as buying opportunities because generally they are purchasing for the long-run and park cash in such an illiquid investment as property to expect returns over 10 to 25yrs. Indeed, due to capital gains tax, most never plan to sell, which is why capital gains tax needs to be slashed or gotten rid of because its a major reason, in combination with the shift to BTL for stocks being reduced.

Not sure what the relevance of a piece of ice breaking away from Antarctica is when average sea ice has soared in recent years. Didn't AlGore say sea ice would be gone by now? Yes, getting rid of ridiculous regulations on carbon will supercharge the American economy, and additional CO2 that plants breath will result in increased biodiversity and crop yields and it will do nothing for water vapour, which forms 2% of the atmosphere and the vast majority of greenhouse gas effect unlike CO2, which is measured in parts per million and has a lower greenhouse quotient than water vapour, but politicians didn't find any way to tax water vapour. Your link with Fukushima is interesting, because these fraudulent taxes and regulations on carbon are a large part why we are not clean burning coal that has no risks once decent scrubbers are added to the stacks and we have thousands of years of it. Also, the Greenfell tower insulation was to meet said climate change targets, in a rush, where an obsessive compulsive adherence to the fraud led those not asking questions about the policy to turn a blind eye to the fat cat charlatans cashing in on the fad, the greatest of whom is the Crown Estate, making so much cash, mainly in subsidies in the sea bird killing arrays out to sea.

Tuesday, July 18, 2017 07:51AM Report Comment
 

12. cyril said...

@11 that is a ridiculous point you made about about water vapour.
The water vapour that comes out of your exhaust pipe is taxed because the hydrogen is part of the petrol and the oxygen comes from the atmosphere = H2O.
The water doesn't make any difference to the amount of water vapour in the atmosphere because the vapour condenses as rain. Doh!

Tuesday, July 18, 2017 08:45AM Report Comment
 

13. techieman said...

Libby you are missing all of the points made by others including yours truly. The point wasn't about owners -be it on a repayment or otherwise - it was BTLrs and critically their S24 obligations.

Add to that an IR rise on those that are higher rate taxpayers AND highly geared portfolios.... and....Also if rents are reducing how can there be more and more people renting ?

If the country was full of owner occupiers on repayment mortgages with low LTV percentages you may have a point.

But if my nan had wheels .... she'd be a car 😉

Tuesday, July 18, 2017 09:01AM Report Comment
 

14. wdbeast said...

Hi techie, maybe she would be a Gran tourer!

Tuesday, July 18, 2017 09:57AM Report Comment
 

15. jack c said...

"But if my nan had wheels .... she'd be a car" - Gran Torino

wdbeast - you started something now !

Tuesday, July 18, 2017 10:07AM Report Comment
 

16. icarus said...

https://www.nytimes.com/interactive/2017/05/18/climate/antarctica-ice-melt-climate-change.html?emc=edit_ta_20170518&nl=top-stories&nlid=67649138&ref=cta&_r=0

And it's not just a question of gradual warming and gradual sea-level rises. Arctic permafrost, which is melting, contains more than double the amount of carbon that is currently in the earth's atmosphere. This carbon is liable to evaporate as methane, which is a far more powerful greenhouse gas than C02 and which is liable to erupt as big 'burps'.

Grenfell wasn't just about the cladding. No attempt has been made to retro-fit similar towers with sprinklers, and council inspectors are unable to do their jobs, usually through council short-cuts and budget restraints and, in Grenfell's case, council disdain for the poor. Also lack of maintenance - especially of the only escape route, which was cluttered with rubbish. It's part of austerity, aka the war against the poor - low pay, second-rate education and housing, lack of opportunities....anxiety, depression etc.

Tuesday, July 18, 2017 10:18AM Report Comment
 

17. icarus said...

Meant to reference libertas @11.

Tuesday, July 18, 2017 10:20AM Report Comment
 

18. letthemfall said...

@11 "when average sea ice has soared in recent years"

So that's what's seeding the clouds and keeping house prices high.

Tuesday, July 18, 2017 03:54PM Report Comment
 

19. techieman said...

Libby's arguments are too gran-ular for me. Mind you where he lives does sound very gran-doise.

Enough for me I'm off to grab some piri piri...... where ?

Tuesday, July 18, 2017 06:50PM Report Comment
 

20. jack c said...

TM forget piri piri - try this 'oop North' - Remember 'Grab a Granny Night'? It's coming back for three specials!

http://www.gazettelive.co.uk/whats-on/music-nightlife-news/remember-grab-granny-night-its-12251652

Thursday, July 20, 2017 08:56AM Report Comment
 

21. khards said...

I reckon this thread has descended to the point where it's worth a WW2 reference :-)

Friday, July 21, 2017 11:22AM Report Comment
 

22. mrcaviar said...

I believe for many people will be put off selling their house by the high prices of other houses and the costs involved in moving, with the exception for the ones that decide to get out while they can and rent.

I can't see there being a flooded market of houses for sale until we see interest rate rises and people realise their oversized house is really costing them too much money whether their house is paid for or mortgaged due to missing out of the cost of other opportunities.

Sunday, July 23, 2017 07:13PM Report Comment
 

23. libertas said...

Mrcaviar, nonsense about interest rates.

House prices soared into 2008 with rising rates and prices collapse when interest rates collapsed After 2008.

This is because rates and house prices rise in tandem when the economy is strong and both reduce into weakness. I expect the next leg of the housing boom to be triggered by the recovery that will lead to rates to rise.

Tuesday, July 25, 2017 11:23AM Report Comment
 

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