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House Price Crash Forum


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Everything posted by Unmoderated

  1. Agreed - however I mentioned it to demonstrate the increase in population. Number of people is also a bad method to measure housing demand. It ignores the average size of a household (falling in the UK as more live alone and have smaller families) and also the propensity for others to buy an investment property, be it a project, holiday home, second home etc. If you're interested here's what Savills have to say (seem fairly sensible to me) Actual housing demand is determined by the number of people willing and financially able to buy a home, second home or investment property. This demand will be dictated by a number of factors including aspiring buyers’ ability to sell their existing home, their access to housing equity or a deposit, their access to credit at an affordable price, their current income and future expectations, as well as the financial and tax implications of property ownership, expectations of future returns and market sentiment. Of these factors, the cost and availability of credit has had the greatest direct effect on housing market demand over the last two decades. The graph below translates gross lending into transactions using the 1995 average debt to income multiple as a base. This suggests an additional 900,000 transactions would have been required in 2002 to ‘absorb’ increased levels of gross lending at 1995 debt (and possibly house price) to income ratios. https://www.savills.co.uk/blog/article/197856/residential-property/how-do-you-measure-housing-demand.aspx
  2. Hiya, you might find this link interesting. http://www.economicsonline.co.uk/Competitive_markets/The_housing_market.html What are you describing is the price elasticity of demand, or supply. This ratio measure the change in prices for a given change in demand or supply. For a 10% increase in supply to drop prices by the same 10% the ratio would be 1. One thing that stands out (in the link) is the number of households in 1997 was 23.87m. 20 years later we're at 27.23m (increase of 14.1%). We would have needed to add 168k homes per year on average for the last 20 years but that would ignore buildings being knocked down. I actually really like this article... and I have a economics degree. In the short term housing supply is inelastic (can't easily throw up a million houses for a huge number of reasons from planning, land purchasing and down to design, build, material and labour constraints. Demand is flexible in the short term though.
  3. haha, proves market rates were already being charged
  4. Could be just what the doctor ordered but not for the cash rich. I remember being bashed by Venger (and trying to bash back tbh) around this point that the only really politically acceptable way of resolving the housing affordability crisis was to have wage inflation and price inflation and flat house prices in the medium term. Engineering a crash would cost the govt (any govt) power and maintaining the status quo is obviously building up bigger problems. I do think that the BoE would allow inflation to overshoot for a time in the scenario we get a good Brexit result, and by good I mean for the GBP.
  5. Interesting - just a few questions then if I may? Do they need to repay the £120m or simply take out a new facility? Bearing in mind they are still profitable when amortisation is excluded (that's the slow writeoff of over payment for acquisitions tbh) they can still pay more than £7.2m (6%+libor) and generate positive cash flow do you think a bank might call that in or keep milking? How much cash should a company the size of Romans be generating? Who says they need to repay it in the time frame? There are further options like refinancing, or selling part or all of the group. What sort of cash flow do they need to reschedule it? If they've fallen short of that already would they not have breached their covenants? Would the lender look for it to be cash flow positive (which it is) and have a positive EBITDA (which is has).
  6. I don't share the pessimism about Reading and the surrounding areas. I've never especially fancied living in Central Reading but demand must be there for them to get away with charging those prices. Surrounding areas are lovely and they are building infrastructure which is a big deal compared to many other places... (cross rail, green park station, Wokingham, Winnersh and Earley distributor roads and the former having just had a total town centre rejuvenation and ongoing municipal development of more shops and leisure faculties. Despite the doom and gloom my mortgage provider added 2% to the desktop valuation of our place in Wokingham in the past 12 months (only relevant because we remortgage next year and I want to get to 75% LTV). Re Romans - they are utter scum. Taking a look at their accounts they are making their big losses because they are overpaying for acquisitions. It is the amortisation that's kicking them. However, it also seems that they are paying for these in shares and loan notes to the former owners so has a limited cash impact. You will note from a review of the accounts that cash actually increased in the 9 month period to 31 Dec 2017 by circa £3.5m. One thing I liked about this though was that total pension contributions were approximately £362 per employee per year. Who says these cretins are short signed? To your point - you can't simply slash half the wages bill and expect the same level of sales. Their strategy though of buying up the competition in order to ramp fees may work short term and generate positive cash flows while creating accounting losses (but note not tax losses in this period). It would be interesting to understand the portion of fees generated from tenants fees (admin, check in etc) that I've been fleeced by once in the past. I suspect their days are numbered but while they're generated cash and the shareholders hold the debt and the bank loan is rolling interest up until 2023 they might be able to tread water a little while. I'll crack a bottle of the expensive stuff when they blow up though, but do not put it past Countrywide to buy the Romans Group.
  7. Other end and only anecdotal but I had a mortgage query regarding how much more we could borrow to fund an extension and our provider thinks the house has increased in value by about 4% in 12 months (South East about an hour's train journey to Waterloo). My mortgage man also said "You're lucky, most of my London clients' valuations are coming back for less than they paid! Hes not dealing with the millionaires either but just people on decent salaries, finance and IT contractors so this will be the BTL and Chinese overseas fodder. Perhaps he seemed distant because he was bored? 34 years (man and boy) of showing people around houses must take its toll.
  8. My hunch also. Taketh from thy BTL spiv and giveth to thy noble hardworking homeowner.
  9. Yes, if you think the cost of a new kitchen and bathroom for a flat (fitted and all done for you) would be in the region of £10k and then think that the marginal increase in rental might be £100/£150 per month that's a hefty payback period. Arguably we could get into the improvement in value impacting the LTV and therefore the interest rate..... but if you're doing BTL correctly everything is basic as can be to keep capital invested low and there is marginal improvement in rental prices. Caveat the place must be usable otherwise it wont probably rent (or would fall foul of certain regs which we all know takes place).
  10. Great idea. Might head in there this weekend. There's never been a better time to buy a cool fridge from a distressed seller. Less keen on the other furniture. Several years ago (when I was at uni) we decided to see if we could flick the channel on their sky box that was being shown on those massive TVs reserved for open office lobbies and council estates. Managed to flick from News24 to BabeStation.
  11. I agree that if you double the interest rate you've effectively doubled the cost of borrowing £X sum of money. However, that makes it all sounds jolly terrible. From my perspective what is important is the affordability of the monthly payments. Not interest rate, or the amount borrowed so to speak. If interest rates increase by 0.5% our monthly payments increase by about £100, but that is on current payments of £1,300/month. Double the base rate and increase our payments by 7.7% The other thing to say is that the costs of borrowing by the banks may have doubled but what impact on mortgage rates? Save for a handful of amazing (in hindsight) trackers at x% below base rate most trackers, SVRs and fixes will be set at today's base rate + X%. So argue about 100% or 106% but that's not important. Real question is how high must rates go before it's impacting prices in a major way? Next question, would the BoE know this in advance? Would the BoE ever go there?
  12. @Beary McBearface is right on the money with this for me. I have since bought and been fully branded a troll by many on here. I'm sure it's just good humour for the most part (there are some cantankerous folks like the CountofNowhere who might have suffocated when his bubble ran out of air), but I still think it's wrong that I had to be on a decent salary, with a partner on a decent salary, and wait til my mid thirties to be able to buy something fairly run down (but it a lovely town). And in defence of Beary, do we know he doesn't own? How has he lost? How much has he lost? What if he stuck his deposit on bitcoin in 2008 and posts from his Island McIsland? His analysis is pretty cutting and he leaves most of it to the reader to extract a conclusion. I hold the view that he/she adds immense value to this forum and the debate. It is interesting you choose a casino's roulette wheel as an approximation of playing the property market. Was this subliminal? P.S. it's 'You're at the roulette table' (contraction of you are, not the possessive 'your').
  13. It would kill the housing market dead! Nobody would ever move house. LVT would be a much better bet and abolishing Stamp Duty. You want to minimise transaction costs and charge the owners for the cost of providing the services and infrastructure that maintain or increase those prices.
  14. Good point. The attitude from some of the older generation (benefiting from DB pensions, free NHS, right to buy / cheap housing, decent hours per week and free university or apprenticeships) that kids are just lazy is rubbish - although the youth of today are not without their fair share of lazy people I doubt strongly that those who work do so any less hard or diligently than the older generation. I would retort back to any boomer that if you want a comfortable retirement with a DB pension and a paid for house they should have got off their butts and worked for it, not just been given it on a table of debt supported by the legs of the young. Doesn't go for all of them of course, some are genuinely attuned to the plight of the young but the one thing that comes up time and time again is when they start moaning about fields being built on. Their house was built on a field, their parents house was built on a field. If they wanted to have kids where did they expect they would live? Today's housing crisis has been caused by the generation above and no amount of working hard to earn more money will fix it - it will only raise prices. Makes me nervous that before long ALL boomers would be targeted as scapegoats and that would include my own parents who have 'benefited' (only on paper) from HPI. I'd sooner solve the issue with target population growth and house building than killing them all off. I am but one voice.
  15. Eliminating half the relief on the 40% banding, and we're halfway. So too though has the 10% automatic wear and tear allowance.
  16. I've heard stories of German landlords building balconies on the side of building to seal the deal with a tenant. Can you imagine that here?
  17. Have you a summary of those buildings of identical construction that remained upright after more intense and serious fires? Here's a slimmer building that fell into it's own footprint: http://www.internationalskeptics.com/forums/showthread.php?t=199290. That's also a good place to go and chat about your feelings on 911. Would a building that is over 40 years old be considered modern? I have many friends and some family in civil engineering and none of them think it was some crazy conspiracy. If the building was full of sensitive documents regarding the budget spending then why wouldn't they just label them top secret and hide them? Surely blowing up a building risks scattering papers all over the place? Have you ever tried to burn boxes full of file paper? Doesn't work. You'd be better hiring illiterate immigrants to shred the lot. But that's just how I'd do it. Some Americans can be a little over enthusiastic with the gung-ho approach but to demolish several skyscrapers which, no matter how careful and quiet they tried to be, would attract some attention strikes me as a poorly thought out plan. This thread is about Agenda 21 - or at least it was until Beary started up and blew the tin foil hat brigade away on a tangent. Not that it's not entertaining Beary! The most tenuous link between 911 and house prices is that the business cycles was slipping into a mild recession at that point (widely viewed as the reason for the timing) and the FED replied with dirt cheap money in the immediate aftermath. Ironically part of the 2008 GFC might be attributed to this. I assume that's where you were going but just taking us on the scenic route? Agenda 21 is not a conspiracy as Beary suggests. It doesn't meet the definition.
  18. Disagree - in my company some of the sales guys have basics closing on six figures and they would expect to get the same again in commissions. The lowest paid are on very good basics. Estate agents are probably on FA basics and 'earning' even less in commission. Depends on the industry I guess. Gotta pay minimum wage though which with 260 working days at 7.5 hours is just shy of £14.5k. Car sales people though can and do earn q decent whack, esp if working for the more prestigious brands. https://www.glassdoor.co.uk/Salaries/sales-representative-salary-SRCH_KO0,20.htm Average base pay for sales role is circa £35k but happy to read any other sources you might have? Sales get a hard time but it's a job I wouldn't do again - constant pressure, a lot is out of your control and the highs are high but the lows are low. Job insecurity vs a role that is not direct results output driven.
  19. I think several have listed them on this forum before but: Zero interest rates (government backed fixed for 25 year mortgages) MIRAS Tightening of planning/making new houses more expensive to build Relaxing immigration post Brexit (that's if anything ever changes, "plus ca change, plus c'est la meme chose" as they say) Repeal of S24 or suitable loopholes or test cases found against it More HTB More FFL Liar loans Abolition of SDLT, or at least the surcharge Allowing inflation out of the tube for a period (tricky to get back in afterwards though) More tax reliefs for FTBs (I think the USA had one where you got your last 12 months of tax refunded when you bought a house! Not that I'm hoping for these but I'm just wanting to stay realistic. I've underestimated the lengths they'll go to before is all I'm saying.
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