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House Price Crash Forum


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  1. If I remember correctly, Hometrack have been overly-bullish in their early predictions, certainly for the last two years, with fairly rapid downward adjustments following later in the year. I think they are also saying lower volumes to come... it can't be a fun time to be an estate agent.
  2. Hi Frugalista, I agree with what you are saying. My point was that the guy selling his old-built two-bedder has to compete with the new-build two-bedder and so he can see the value of his property dragged down by an oversupply of new-build (for precisely the reasons you point out), which in turn means he has less equity to help support his offer on the out of town place or whatever (so he must be willing/able to borrow more to maintain the same price of the other place). Essentially, the more the market is built on swapping bubble equity in one place for bubble equity in another the more it is at risk from falling prices anywhere along the chain. We hear how people "have to get X because that's the only way I can afford Y" but can't get X... eventually they have to accept they are not getting X so they are not paying Y. The depth of price falls is sure to be different in different parts of the chain and in differnt areas of the country but all property is potentially affected by the "over-supply" of new-build.
  3. Hi BuyingBear, I agree... but I think they MEANT to say prices are too high (the difference between there being too many new builds and there being too many new builds at a price "the market" can bear). It is a back-handed way of saying new-builds are over-priced. I'll have one if the price drops sufficiently... if not they can stay on the market as far as I'm concerned.
  4. The official number is somewhere around 6%. However, you need to recognise not all landlords are entirely honest and tell the revenue/their lender etc that they have a BTL (they can get a better rate on an owner-occupier loan and some don't like paying tax on their gains). The actual percentage is higher than the official figure but nobody really knows how high. Secondly, they control a far higher proportion of the bottom end of the market (traditional FTB territory) rather than detached houses etc (TTRTR is an exception rather than the rule), which means the bottom of the ladder is actually heavily dependent on BTL purchases/lack of BTL sales. This area of the market obviously props up sales further up the chain. I think you and the person you debated with are both right - BTLs control a relatively small part of the market but it was rampant buying in this part of the market that has driven prices so high... and, in my opinion, lack of buying or selling here will drive the reverse (remember BTLs, having priced most FTBs out of this area, now need to keep providing capital for further sales to take place at flat or even higher prices... if they will not or cannot then prices will return to the level where an FTB buys again).
  5. I bow to your wisdom Charlie. Nominal interest rates were indeed around 12-13% with annual inflation averaging around 15-16% (with zero/negative real interest rates)... it got worse in 1975. All-in-all, it was a grim time... but there were still more houses actually getting sold in 1975 than in 2005! And the CML is predicting the market is going into yet more of a shutdown? Well, if they are right, people MIGHT be able to CLAIM their house hasn't fallen in value but I pity anyone ACTUALLY trying to sell. A Pyrrhic victory?
  6. Aren't those VERY grim figures for property sales? I mean ACTUAL sales - after you have stripped out people shifting about their existing mortgages. I think Savills recently estimated house sales this year will be 930,000 (don't remember if this was the EXACT figure but it was there or thereabouts), which it described as the lowest number since 1974. Is the CML really saying that 2006 and 2007 will be even worse than 1974 (when interest rates were 25% or so, TWO general elections were held, the UK had a three-day week etc)?
  7. So, that is a lender officially saying it believes there is an OVERSUPPLY of new-build property and that the valuation of new-build property is essentially fantasy and that the property market has ceased to function in this area? OUCH! Now, I'm finding it hard to understand how there can be an oversupply of new-build property without there being a general oversupply of property. Either people need the property or they don't... whether it was built last week, last year or 50 years ago is surely a detail. And, as I read it, essentially the lender is saying it no longer wants to lend on these properties since it fears it is being conned and it is not confident its loan is supported by the true value of the property and the equity the BTL claims to have in the property. It is saying it believes the value of these new builds needs to fall (to remove the oversupply and re-balance supply and demand). Now, you may argue this is just one lender but that is pretty grim I would have thought. And whether you like new-builds or not falling prices here must have a negative impact on house prices generally.
  8. Hmm, Please excuse my ignorance over the ins and outs of the benefits system (I don't claim them and don't look to profit out of them so please do excuse me). Whether it is the DSS, DWP, HM Revenues & Customs, Gordon Brown himself, surely it still means THE GOVERNMENT (in whichever name it likes) CAN decide to unilaterally downgrade how much it will pay in housing benefit. It doesn't need to agree it with landlords. You are of course right, landlords can decide they will rent their property for more privately or insist the Housing Benefit recipient makes up the difference... if this is possible.
  9. As others say on this thread, taking investment advice from the man on the Clapham omnibus is a great way to become poor. They'll tell you property is a terrible investment just about the time that the market bottoms out (not when it tops out). And for the record, as pointed out over and over again on this site, unemployment rises AFTER house prices fall not before... prices peak out as everyone is very confident and extrapolate a wonderfully bright economic future... and later find out they were wrong.
  10. Brown closes door on property in pensions FT Story Now, as someone who thought the whole Sipp argument was mostly hot air I can't get TOO excited that it seems to have evaporated completely. Still.
  11. An interesting post TTRTR. I would agree the "political" risk is a serious factor - I seem to remember suggesting to BBB a long while ago that renting to DSS tenants is not the risk-free bet many see it as precisely because it could become a political hot potato (the amount of council tax money handed over to private landlords for housing DSS tenants) that COULD (not necessarily would) be hit quite quickly (the council decides it will pay a maximum of £x and the landlords can like it or lump it). This risk is obviously included in the rental premium you require when you decide to buy/hold property. In my opinion landlords NOT buying (let alone selling) in numbers will see the market fall significantly (precisely because BTLs have priced the other potential buyers - FTBs - out). BTLs are the key support for the market these days, if they re-trench the market WILL re-trench, potentially quite seriously. In such a scenario (which may or may not happen) I think prices will fall, rents might rise (perhaps only temporarily though as the balance moves back towards buying being attractive rather than renting) and longer term yields will rise again. You're describing a bear market in housing, driven by a lack of BTL buying on the back of these regulations. Like I said, I'm not sure they are quite that serious but I think such a scenario could play out (I believe it is likely) for a variety of reasons with this set of regulations not helping. The irony is people will all look back and say "obviously X killed the market (these regulations?), without that things would have been fine" but actually the market got killed by over-excited "investors" who didn't care about yields, didn't mind that they had no risk premium, were happy subsidising their tenants in the short-term etc."
  12. Sorry, if BTL loans get called in on any major scale I'll be looking to buy from a desperate landlord... at the going rate not what he'd like to get or what he needs to ensure his pension isn't trashed. I can't help feeling you are getting over-excited about this but if you are not you really ought to be turning bear about now.
  13. Aaaaaaaaahh, Then it will be time to buy a home... with the money saved and invested while assorted idjit boys bet their pension on 22 Acacia Avenue (because the government wouldn't let them lose money etc). No, I really will feel sorry for them.
  14. Hi enworb, I agree entirely. I'm not trying to stick up for overpriced UK plumbers (the last one my landlord sent around was Iranian - very good, very efficient, much cheaper, nice guy... why would my landlord even consider paying double for a lazy British con-artist plumber). My point is that these immigrants (I have no problem with immigrants by the way) undermine salaries in MANY areas (plumbing just happened to be the one this thread's originator chose so I stuck with it). Lower average salaries undermines landlords' abilities to "raise the rents", especially if the people who undermine the salaries are happy "doubling up"/packing themselves in. This is NOT the saviour of the BTLs' pensions... it is actually a bearish point (even if there is a short-term positive)... but I'm guessing he has "beenhearingthisforyears".
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