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House Price Crash Forum

MrMonkey

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Everything posted by MrMonkey

  1. Mental health impacts are never nice, and people should be allowed to make mistakes without it ruining their lives. Sympathy for Samantha, even if she is where she is due to her own poor financial decision making. That said, her own refusal to face reality is something that should be challenged: I mean, she is already unable to finance her own mortgage, so the question is does she sell and use the capital growth to find somewhere smaller now, or does she wait until her financial situation is much worse. Sam is already 'borrowing' money from her mother to pay for day-to-day living costs, so unless she wins the lottery this weekend things are not going to improve quickly. She would be helping her own mental health by selling and buying a smaller place that she can actually afford. Given that the article says she bought in 1998, she must surely have a big wedge of equity, so the situation is a 'asset rich, cash poor' one, which is best fixed by reversing that balance and turning the equity (which is not helping her) into cash (which she desperately needs).
  2. Sure, the stats are correlating. But asking prices and sales prices are different beasts, and we just need to be sure that we are as much aware of what they do not show as we are of what they actually show.
  3. Asking prices are an interesting metric, but need to be taken with a massive pinch of salt. Naturally, the asking price and the sales price are entirely separate, but will diverge more during an unstable market. But just as importantly, but often overlooked in the press, is that asking prices can rise as prices fall, entirely rationally. How? Imagine there are five similar properties on the market in an area, priced £150k, £175k, £200k, £225k, and £250k. The average asking price will be £200k. Being similar, the cheapest two properties sell, and the remaining three properties do not choose to lower their prices. Now there are three properties, priced £200k, £225k, and £250k. The average asking price is now £225k, even though the sales of the cheaper properties have demonstrated a lower value for these properties. In short, I would expect asking prices to remain relatively static, as seller attempt to 'ride it out'. Its like a magic trick - don't look at what the magician is trying to show you, just watch their hands.
  4. A YOY drop in March, alongside energy bills rising by about 40% (I know the cap is rising by 20%, but the £400 per household subsidy is also ending now), and realistic expectations of a further interest rate rise. Lots of reasons to expect the price reductions to continue for a while.
  5. In the 2017 and 2019 general elections there was an option available who promised to reduce generational inequality (as well as other forms of inequality). Polly Toynbee did everything she could to undermine this option, setting back progressive politics for years, and now has the temerity to complain about the situation she has helped to create.
  6. They will be fine. Having spent years telling their friends what savvy businessmen they are this will be an opportunity to demonstrate their industrial acumen. If anything, those canny BTL landlords should be welcoming any market conditions that will allow them to expand on the cheap. Unless, of course, the whole enterprise was a house of cards built on cheap debt and expectations of perpetual asset growth.
  7. I thought that, when landlords exit the market, their properties simply disappear from existence.
  8. Inflation is like acceleration. Sure, it may be a bit lower now. But 'the car' (prices) is still getting 'faster' (more expensive) at a dangerous rate. Until inflation drops to about 3% it will continue to be a problem, whether it is 11% or 6%.
  9. Values go up: "I am a very canny Investor" Values go down: "Government have screwed me over"
  10. Public sector workers carried the country through austerity through reducing wages, and then through COVID by working while much of the economy was furloughed. Now they are expected to accept worsening pay to fix the problems the Government created yet again. I fully support their strike and hope they get everything they are asking for. They deserve so much more than their demands. After all, anything less than a 10% rise is lower than inflation, and by definition can not be inflationary as the Government claim.
  11. Vendors aren't budging yet. Properties always come onto the market requiring a quick sale, be it through death, divorce, work relocation, etc. And these will price appropriately and sell quickly, setting a reasonable expectation for the local market. EAs may be happy to wait it out for a while, but their running costs will continue regardless of income. The agents will need to cover bills and wages, the agents themselves will be loathed to see their commission fall. They may say that sellers are happy to wait it out, but the salesmen will want to get paid. And then, of course, there is the principle that when there is a fire in a building you want to be out the door before the scrum, not crushed in with the crowd. When sentiment turns those 'waiting it out' will start panicking. Sure, a few will have the wealth to wait indefinitely, but prices and value will be determined by actual sales, not asking prices. Of course, it may all be a tiny downwards blip. Sunak may announce a huge scheme to inject more money. Which I presume is what those sellers waiting on the sidelines are hoping for.
  12. Agree with him, put in a genuine offer, and tell him that your offer is not open to negotiation.
  13. This video is worth watching. Only a few minutes, but explains how COVID was an opportunity for the rich to accumulate more wealth which had to go somewhere: Basically, Government support went into the bank accounts of workers, who had to spend it on rent/mortgages/food/etc as normal, so did not accumulate wealth. This subsequently went to the wealthy (landlords, banks, retailers, etc), where it sat, because the more premium channels where they would spend it (holidays, restaurants, etc) were closed. As such, when the housing market reopened there were wealthy buyers with more money than they had before the pandemic alongside a cut to Stamp Duty that helped people spend more on housing. So the housing market rose dramatically as demand rose alongside the money available to the rich to bid on housing. The channel is worth subscribing to, generally focusing on wealth inequality. There is a longer video here, created a couple of years ago during the pandemic, which predicted the post-lockdown house price rise that occurred.
  14. If there is a World Cup every month then we might be all right.
  15. I'm of the view that the taxation system should be a lever to drive social change. You want people to buy electric cars? Make them tax-exempt and raise taxes on others. You want to cut smoking? tax cigarettes and use the money to pay for healthcare. The same applies with BTL. If there are too many raise tax levels until the only ones who remain are not depriving people from affordable accommodation. Tax breaks for those charging below 30% of the local median household income for an average home. Tax hikes for everyone else, with a 100% rate above a certain level. Stamp duty reductions for occupiers, stamp duty hikes for landlords. Double Council Tax rates and wealth taxes for vacant properties and second homes. And so on. Landlords tell us they are smart investors. Lets see how canny they are when they are not being given a licence to milk their tenants for everything they can, but are being taxed in line with the impact on society that their investments create. If they have any cashflow problems, then they can always cancel their Netflix subscriptions and cut back on their avocado consumption.
  16. I think that 15% feels dramatic without being big enough that the Government start panicking and announcing a new HtB and 50-year mortgages. A 15% drop would simply reverse the last few years' increases and eat the deposits of recent buyers, rather than plunging many homeowners into negative equity. What Nomura's analysis appears to consider that others do not mention is the price point at which increased interest rates and household inflation could balance out, and a 15% drop feels on the cautious side of this, if the higher costs of living elsewhere also need to be considered. Some quick calcs on the mortgage calculator here, and the suggestion here of the average FTB in 2022 buying a £244k house with a deposit of £61k, suggest that: At 2% interest in 2022, the monthly repayment on a 25-year mortgage would have been around £787 Assuming a 15% drop in house prices, but the same deposit, the cheapest fix available via moneysupermarket.com would be £805 per month (approx 5.5% rate) on a 25-year mortgage Not massively different, but a bit higher and suggests that a 15% fall would see similar costs for first time buyers today as pre-rate rise. Of course, if interest rates rise further then this would impact these calculations, and figures will eventually be eroded by high inflation if wages follow suit. The main external variables that could affect results as I see them are: How could sentiment affect prices? When falling will they go into a rapid decline or will there be the demand to hold prices up somewhat? Will the Government sit back and watch or implement policies to prop up house prices? How will other economic factors affect things? Namely, will other costs keep rising faster than wages (limiting available budgets and savings opportunities for people buying), and will unemployment increase enough that there may be less demand for purchases and more houses coming onto the market?
  17. Ironically, they could benefit from their 20% equity loan dropping in value, allowing them to buy out the loan or pay it off at a lower rate than if their house rises greatly in value in the intervening 5 years.
  18. IRs will continue to stay where they are, or higher, as long as two things continue: Inflation remains high (at the moment a fall to 5% inflation may feel low, but it is not, and would still be more than double the BoE's target) America's Fed keeps rates at the level they are. To an extent BoE need to follow the Fed's lead, because if rates fall we will see the value of Sterling fall and this will, again, fuel inflation as imports become more expensive. I can see Japan being in a very difficult situation for this reason - sub-zero interest rates will erode the value of the Yen this year as other banks raise their rates or keep them where they are, and the country will see inflation of imported goods with domestic inflation rates kept low by continuing to suppress the wages of workers Neither of these situations looks likely to change anytime soon. If rates drop then inflation will take off as the cost of oil, gas, food, etc jump when the Sterling takes a hit.
  19. Firstly, the Tories have screwed the pooch on the economy. After the last decade of fiscal mismanagement the aim of the game is not 'propping up house prices' so much as 'stopping the country's economy collapsing in a wave of stagflation'. Keeping house prices up was a reasonable goal for them when it was the only plate they had to spin. Now they need to deal with pensioners spending over 30% of their income on heating and families down to one meal a day. Secondly, a few years ago enough young people could get a mortgage (with BOMAD support) that the public generally were comfortable with the status quo. Today it feels like the aspiration of home ownership has escaped even well-off 20-somethings and, with living costs on their parents rising, that source of money is running low. Basically, how many parents are seeing their 30-something children stuck in insecure low-paid work without any realistic prospect of moving out? That number must be growing, and 3-generation households are not a norm in the UK. Finally, the Tories will see growing discontent amongst voters about all this and softening opposition to wealth taxes. I'm not saying that we will see a big raid on homeowners and landlords, but when the country is struggling and these groups have locked in huge financial gains over the past few decades in assets that cannot be hidden offshore it can only be a matter of time before those in charge realise that this is an easy and increasingly popular target for public income.
  20. I caught the BBC's summary of the newspaper front pages last night. Despite the news about snowfall and Brexit dominating the headlines, the paper reviewers addressed this headline first. Their insight? We always see drops in December. A small drop in asking prices and the Government's stamp duty exemption make this a great time for FTBs. Expect more mad gainz soon! We'll see.
  21. Given the speculation about a deterioration in public finances, I doubt that the Chancellor is going to be able to backtrack on any of his current tax plans. Especially considering that landlords are one of the easiest sources of tax revenue, with high-value assets which are made of bricks and can be seen on Google Maps. It is also one of the few government policies which is popular with younger voters. Of course, we should not discount the possibility that the Government will do something short sighted to try to kick start the housing market yet again.
  22. Disgusting. These people are victims of a landlord willing to trade people's basic rights for profit. I know that migrants in cramped accommodation get little sympathy with many, but they are the oppressed in these situations. The media has, for years, informed us that migrants are the cause of social problems, whereas in reality they are the victims of exploitation. Landlords who treat people in this way deserve everything which the legal system can throw at them.
  23. From the BBC article: Hopefully when the less professional landlords sell up then we will have more of a 'functioning private rented sector'. I look forward to seeing dilapidated HMOs being put on the market with the same asking price of well maintained three bedroom family homes. It should be a bit of a wake up call to many landlords that their 'pension' is not as liquid or valuable as they have convinced themselves.
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