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Chrippie

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  1. Genuine question: why so confident that inflation returns given the severity of the recession?
  2. https://www.home.co.uk/search/price_info.htm?property=4217341687 fairly chunky 36% off here
  3. Totally agree with this - if you haven’t lived through a crash it’s hard to get your head round how completely herd mentality changes . Most people get their views from headlines and if the headlines are all about prices falling and negative equity even nice houses will collapse in value. This is not a buy the dip market imo. i bought my first house coming out of the crash of early nineties in the east end. I remember chatting to the agent about the houses on tredegar Square ( which are completely gorgeous and were way out of my league btw) - he said those are unsellable - nobody wants a big house because of the risk you’re taking on if the market continues to go down and the cost of running it etc. Look on houseprices.io and they were selling for 255k then and one sold for 3.9m recently. It’s just most peoples mindset gets really cautious when it’s really bad. people that buy after a 10% drop with a big mortgage will be the ones who are hurt most by this. Even if there’s a rebound in 3-4 years they’ll still be in negative equity when it comes to refinance .
  4. I think its on in a big way. One think i think people don't understand (even on this forum) is the extent to which property prices are set at the margins. There are roughly 18-19m privately owned homes in this country, and there's around 1.2m sold a year. So about 6% change hands every year. With interest rates where they and the economy having been solid a tiny proportion of these will have been truly "forced". What this means is you don't need "everyone" or even "lots" of people to be pushed into selling to create a spiral down. If just 2-3% more people are forced into selling or decide they want to get on with their lives even if it means taking a hit on their house then its a massive change in market dynamics. But we are looking at 20%+ of the workforce with significantly changed circumstances. Whole industries screwed (hospitality, travel etc). Then there's Airbnb, btl sellers coz the rent's not being paid, deaths, divorces out of lockdown, foreigners selling, people moving cz they can save money without having to commute, ridiculous new builds in areas with no local demand (at the price). ETc etc. And all of this after they've already thrown the kitchen sink at it. ZIRP, HTB, zero capital gains on private residence etc etc. its going to be calamitous in my view.
  5. If what is happening in Central London on the rental market is an early indication then the housing market is about to implode. Our contract up in 3 months so starting to properly look around and there is 3-4x more stock of what we are in (family houses in / around w8) & at asking rents up to 20% cheaper than they were being advertised at 2 years ago. The Airbnb issue has really dumped on the rental market; my guess is lots of these places are going to sit empty until the owners bite the bullet and sell them. Someone else posted a link to http://insideairbnb.com/london/?neighbourhood=Kensington and Chelsea&filterEntireHomes=false&filterHighlyAvailable=false&filterRecentReviews=false&filterMultiListings=false- The numbers are amazing: 3000 properties in K&C available year round on airbnb, and that's a borough with 50000 privately owned homes, and about 1,200 sold each year. Its been so distorting. I suspect in 6 months time when some of these owners get distressed it'll get pretty interesting.
  6. Classic! £15k a month (!) income and the landlord is still going bust. Section 24 do your worst: https://www.rightmove.co.uk/property-for-sale/property-92017133.html
  7. I thought I’d try to be a little analytical about the changes that are coming, I can;t be bothered to give sources for some of the data I’ve included below. I’ve tried to sense check, but some of it is from the web so may not be correct, happy if people have good sources for figures that are incorrect. Also I’m interested in London prices as that is where i live. One of the things people on here bring up as to why there wont be a crash is that interest rates are low, and that is of course true. But why? Its because with low interest rates there are no or very few forced sellers. This is why transaction volumes are so low. Very few people are able to afford the prices being asked, but very few sellers are forced into taking discounts to what they believe their house to be worth. This is why overall transactions in london have roughly halved over the last 20 years, despite so much new build. In london roughly 30-40k houses are built annually and 70k houses sell annually out of a stock of 3.6m, of which roughly 60% (2m) are owner occupied, 20% private rent (700k) and 20% public rent. So on top of the new builds the privately owned houses are currently selling roughly every 50 years, which is why I think that there is very little forced selling happening. This fits with experience on my street of 50 houses (in Kensington) where 3 have sold in the last decade. What this also means though is that we have no idea of the clearing price if people actually needed to sell. But going forward we are going to see: More probate sales. It seems reasonable that there are going to be roughly 150-200k excess deaths in UK in next 12 months, perhaps 30k in london, if 1/3rd of those deaths lead to a house sale its reasonable to assume 10k incremental probate sales, on top of the natural 30k per year (8m people 60% oo, 80 year life expectancy 2 deaths required per probate sale). More debt. Across the country we are looking at 10-15% unemployment (3m people). On top of htat a further 10-15% of hte working population are set to see incomes materially fall, so another 3m (just a guess, but i think reasonable). Probably in total around 1m working people in london are badly affected, if 40% own homes and 5% of those are forced to sell this is 20k homes. More divorce. In China divorce rates are up 25% post lockdowns. Across the uk 100k divorces per year so an incremental 25k, maybe 5K in london, if 70% own a home (age demographics of divorce) that;s maybe another 3k sales. BTL/airbnb etc. BTL is already net negative in london (Ie more landlords are selling than buying) in london There are 700k privately rented houses, 200k airbnbs and c. 3-400k second houses. With rents being missed, airbnb problems etc. It seems conservative/reasonable to see 5% of these being sold in london =60k. Foreigners own around 10% of London property ( I think , again a guess, more than this is likely in central London) with global recession, inability to travel here, and commodity price collapse means some are likely to be keen ot sell. if 5% sell - 18k sales If 2% of london owner occupiers decide to move out of town for more space this is 40k sales Housing completions are around 40-50k per year in london. Add this lot up and the total number of houses coming to the market in the next year based on all these assumptions is c. 230k Of which maybe half are properly forced sales, so maybe 120-130k sales in the next year where the sellers need the sale even at a discount ( i realise there may be some double counting, but i think the proportions assumed are pretty conservative) What is the natural demand? If you take out btl, foreigners (no students and cant fly here anyway, plus global recession, commodity price collapse etc). In a city with 8m people and 80 year life expectancy, with 1.5 adults per purchase on average and 60% of the population buying a house then there shoudl be 40k ftb houses purchased per year. But mortgage availability has gone down, some of these natural buyers will be unemployed or have seen incomes get hit. I dont see where the wave of buying comes from to pick up 1-200k forced sales. Prices get set around the margin - if we have a year where volumes need to double or triple then the clearing price i think is going to be far below the current price, even if interest rates stay low, unless something truly remarkable happens around government support for the sector. Anyway, long post - I’d be interested if people think I’ve missed something or got numbers wrong.
  8. My view is we've hit the iceberg, but the band is still playing and people are still dancing. Water is starting to flow, but it takes a lot of people a long time to realise that the ship is going down. When they do there is going to be an epic scramble for the lifeboats. This is the biggest economic event of my (probably everyone on here's) lifetime. At the very least we are going to be paying for it for years, possibly decades. There is no way the housing market is going to come through it unscathed.
  9. Jesus f'in g Christ: Literally no idea. He's in charge. Are they actually just going to let it burn?
  10. Gosh its great to have such level-headed people on here. You are absolutely right. Nothing to worry about. The fact that eg Lufthansa, a company with 135000 employees just announced a 50% cut to capacity shows that it's just a hiccup and we will be wondering why anybody cared about this in a week or two when it all blows over.
  11. Where the fire analogy is in my view useful though is that what you are assuming is that there is no cost to waiting, but that's not true. Call the fire brigade too late and the house burns down. Call it early and you can save it. The Chinese quarantined Wuhan on 23rd January when the whole of China was at 400 cases, and its still under quarantine 6 weeks later. Suggests to me Italy and other European countries are already too late to avoid a massive problem in 2-3 weeks and we need to be taking draconian measures now, and every day we delay the overall impact, by which i mean total number of deaths and total economic impact and overall loss of freedoms, is likely to be greater. It isn't going to stop on its own in the next few weeks.
  12. For people struggling to expain to friends and family how bad this might be I thought this was a pretty good explanation of why this is worse than Flu/potentially a major problem here, just c&p from reddit: "The virulence (R0) of SARS-CoV-2 is estimated between 1.4-6.49, with a mean estimate of 3.28[1] . This mean estimate is much higher than the seasonal flu, which has an R0 of 1.3[2] . What this means is that SARS-CoV-2 spreads signficantly faster than the seasonal flu. The Case Fatality Rate (CFR) of SARS-CoV-2 is at least 2-3%[3] . This is 20-30 times higher than the CFR of the season flu, which is around .1%[4] . SARS-CoV-2 can be transmitted without the infected showing any symptoms[5] . This makes it much more difficult to control. Roughly 20% of SARS-CoV-2 infections result in serious symptoms that require medical intervention[6] . This is more than 10 times the hospitalization rate of the seasonal flu[7]. Symptoms from SARS-CoV-2 can persist over a month[8] compared to the seasonal flu where symptoms typically tend to clear after 5 days[9] . There is no vaccine for SARS-CoV-2[10] whereas people regularly get annual flu shots. There is no herd immunity for SARS-CoV-2 which means that it can theoretically infect the entire population. See, for example, a Korean psychiatric department where the virus infected 99/102 people. Now, consider the multiplicative effect that all of these attributes have for the virus. Compared to the seasonal flu, SARS-CoV-2 (1) spreads faster; (2) kills far more; (3) is harder to control; (4) requires use of far more medical resources; (5) for far longer a period of time; (6) has no effective treatment; and (7) can infect entire populations. These factors mean that SARS-CoV-2, if left unchecked, is far more likely to overwhelm a country's medical infrastructure. Additionally, when medical infrastructure is overwhelmed, the CFR will skyrocket because we know that 20% of cases require medical intervention." I must admit i hadn't thought through the implications of symptoms lasting a month vs c. 5 days for flu. It would seem that and the fact you are 10x more likely to be hospitalised suggests to me we might need 50x as many hospital beds to cope with the same number of cases of this vs seasonal Flu. So if the NHS can struggle with a normal flu season this could be beyond overwhelming.,
  13. I've seen (though I can't find the links) evidence suggesting this isn't the case - if I recall other coronaviruses use the same pathway (ACE2), and no evidence that Asians are more easily/severely infected - therefore its more likely that fewer non-Asian deaths (yet) is more to do with length of time it takes to die and how long the virus has been prevalent in non-Asian countries, plus probably quality of healthcare, especially vs Hubei where healthcare clearly overwhelmed.
  14. Way too early to be saying this imo. On 28th January, ie just over 2 weeks ago, Singapore had 7 cases, quite similar to where we are now. Now they have 58 of which 15 are critical and a further 7 serious. Its likely that a number of these die. According to Wikipedia, the Chinese Doctor (Li Wenliang) who died, contracted the virus on 7th of January and died on 7th of February. It takes a long time to die it seems. Give it a few weeks and lets see where we are at both in terms of international spread and deaths.
  15. OK then its a bad analogy - but I dont think that is the key issue, but rather whether having the coronavirus gives you immunity. And that at the very least seems to be in question https://www.businessinsider.com/wuhan-coronavirus-risk-of-reinfection-2020-2?r=US&IR=T
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