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Sprrite

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Everything posted by Sprrite

  1. Whilst inflation is increasing, I'm still doubtful that IRs will rise. The end of furlough is nearly upon us and I do expect a rise in unemployment. Whilst there are currently worker shortages in certain sectors, I wonder how long that will last with furlough no longer being an option.
  2. Once all that furlough cash is out of the system, we'll really see what inflation is like. I'm still not convinced that interest rates will rise.
  3. Not surprised by the drop in the number of transactions but on aggregate I don't think it will affect property prices. Stamp Duty holiday was a mistake but I do now think that even without the Stamp Duty holiday prices will still have went up with all the spare cash from WFH brought to many people.
  4. I'm probably the most contrarian person right now on inflation as my view is that any inflation will likely only be temporary as price increases are mostly being driven by supply side shocks and not necessarily by demand. The effect COVID is having on the supply chain cannot be understated at all as ports and shipping are now working at a slower pace than they were pre-covid. Getting from A to B is taking much longer and this may likely continue until the end of this year in some capacity depending on how COVID plays out. Recent COVID upsurge in Guangdong, China is a good example of this which shows the unpredictability of this pandemic. The BBC had a good article on this below on the effect it will have on the supply chain until the end of 2021. bbc.co.uk/news/business-57446437 On a local UK level, demand for goods/services will increase massively once lockdown is fully lifted, but I fully expect this to be temporary and once things are back to "normal", demand will fall back to its natural equilibrium. One consequence of this pandemic may actually end up being that supply chains are more localised, and with automation, it may make more sense to produce things locally to avoid large shipping costs.
  5. I've been listening to David Lammy on LBC this morning who was talking about eviction ban and as you can probably guess there were lots of LLs moaning stating that tenants are gaming the system and choosing not to pay. I still think the LLs who have 1 or 2 properties will struggle and those with a much larger and diversified portfolio will ride this storm out. Having said that, it is getting more onerous now to rent out properties with more regulation so the days of accidental LLs may be over. It will be interesting to see what happens but I don't think it will bring overall property prices down - although I hope i'm wrong.
  6. This is not about winning/losing, it isn't a zero-sum game. This is merely a discussion like many others on this forum.
  7. In my opinion, if anything were to happen it would be based on the above 3. The first point is very topical as many of new build flats built since 2015 are not selling at the same level (unless it's SO) since the next buyer doesn't have access to the same HTB financing. I could see some form of this happening i.e. HTB only available for FTBs for properties build in the last 5 years (or something similar to this). Point 6 has been previously discussed by the Tories previously from what I remember but it does open a can of worms and stores up problems in future years. Depending on how things go electorally in the next few years, this may happen but it's the only asset that millennials have that is locked away. Point 10 is interesting. I'll probably be shot down for this but it may make sense to have a 60/70 year mortgage as with current interest rates (and factoring in any IR increases) it would be cheaper than renting. If it helps get more people on the property ladder and reduced the amount of people renting it can't be a bad thing. Another positive is that money previously going to BTLs would go into other productive parts of the economy.
  8. I guess we'll see. I know I'm contrarian on this point and I've said it before on this forum, but I still think there is a chance of a deflationary cycle happening especially once government supports ends and unemployment increases. God knows how many people have left the UK because of the pandemic and the knock-on effects of this.
  9. Well you're probably right no-one is 'forced' but I suspect a lot of LLs will want guarantors or significant rent upfront given how COVID has panned out and the difficulty of evicting tenants in the last 12 months. I have had the issue of guarantor sprung on me rather slyly by an agency a few years ago which was a big learning experience for me. It was more common than people think in pre-pandemic times. I'll see how it is later this year when I move back to London but I am very hesitant to add guarantors (even though I know they will never be needed).
  10. For London, the flat is nice and it would suit a couple who are FTBs but the biggest issue is the tenants. You'd have to be pretty brave right now to buy with a tenant in place.
  11. Also forgot to mention the Suez blockage would have had some temporary effect too.
  12. The reason some think this is temporary is because it's a supply side shock. The demand of those materials hasn't increased commensurate to the current price increases. It is taking longer for goods (building materials or otherwise) to get from A to B. Ports aren't working at optimal capacity due to COVID (new safety protocols). Furthermore, many Indians are also seamen but due to COVID, they either aren't working or some countries are refusing to let ships dock in their countries. A very good article on this from the FT below: https://www.ft.com/content/cf40d764-6ab6-4638-bea6-594cc3cd5d53 Couple this with the fact that at the beginning of an economic cycle, commodities usually always boom and we have the perfect storm. I think this is temporary as long as the world can adequately recover from COVID in the next 6-12 months and things go back to relative 'normality'.
  13. Let's run with the point about hospital staff brining COVID back to their homes - during lockdown, the worst that happens is that COVID would only spread within their homes whereas if there was no lockdown, it can easily spread to to others in the community causing an exponential rise in infections and deaths. In regards to your second point in regards to the solution - it wasn't politically feasible to infect a significant portion of the population or 'young people' as they would have inevitably spread it to the older generation. How many of those would have got Long Covid which further strains the NHS in future years? Letting people get mass infected would have just made the spreading of COVID more intense and overloaded the NHS. The very fact that the Indian variant is more infectious makes it more deadly. It's a numbers game after all and the more people you infect, the more deaths that will occur. What's going on in India is a lesson to other countries in the region and the world. Nutcases? Really? There's any things I would have liked to have done differently in the last 18 months, but ultimately lockdowns worked in the UK. They reduced infections and deaths - to argue against that is going against fact.
  14. It has flattened the curve in the UK last year and also earlier this year during periods of lockdown. Even the lite-lockdown in November reduced transmissions. If lockdowns didn't occur, we would have had a much higher death rate in the UK - it's a numbers game after all and the more people infected means the more deaths that would have taken place. Given the Indian variant is now in the UK, I can see some form of another lockdown occurring later this year (possibly around half term school holidays in October).
  15. Lockdown has helped flatten the curve in the UK and in other countries/ Hospital Transmission to the community will be negligible under lockdown - I'm not sure how this causes the dominance of a more harmful strain? If you look at India, the amount of political/religious events that took place were breeding grounds for spreading the virus 🦠 and given this there's more transmission, there's more likelihood of different and more harmful strains emerging in order to survive and thrive. We may not like it, but lockdown does seem to work to flatten the curve.
  16. I still think inflation will remain low long term. This uptick in inflation has more to do with COVID - as in Ports/Ships working at less than optimal efficiency due to social distancing / sick leave than anything else. Now granted this could continue for a while depending on how the pandemic plays out. Shipping and trade basically collapsed downwards in around March/April 2020 but has since recovered to pre-pandemic levels whilst countries are still fighting the pandemic and implementing safety protocols like social distancing. Inevitably this will have an effect on port capacity and how long things are taking to get from A to B. Interest video from the FT on this topic. Eventually this should level itself out in the future once most countries get vaccinated and things return to relative "normality". Inflation in hard assets like housing/stocks is mostly being driven by the professional class and the savings they have made in the last 12 months. So in answer to the OPs, there won't be a 'crack-up boom' since the credit is going to people who inevitably can afford repayment and may have likely made big down-payments on there property purchases.
  17. Do you have a link to that story? Or was it on LBC?
  18. I do find it interesting we are seeing articles like the above especially in places like the Times. I have seen similar stuff on the FT and Guardian recently too. AFAIK, this has not happened previously. In regards to your second point, I think looking at a home as an investment is one of the reasons we are in this mess. A house should be somewhere to live in, not a commodified asset. Having looked at your analogy though, I still think that the FTSE 100/All Share accumulation would have outperformed average house prices in the last 30 years. If you hold stocks long-term, they will always provide a decent return.
  19. I accidentally copied the full article and can't amend my post. The most interest quote I find is above.
  20. This property frenzy is likely to end in tears Buyers making offers on houses they haven’t even viewed should beware the risk of higher inflation and interest rates It was the moment a month ago when a firm of estate agents grandly declared themselves too busy to return calls that we decided, as renters, not to get involved in the latest property boom. A few days earlier we had seen a house that we were only moderately interested in booked out for viewings within minutes of going on the market. No, we were told, it was impossible to actually walk inside the house before placing an offer. Perhaps we could look at it on Google street view? We passed and the sale moved rapidly to a closing date. Since then, like many others, we have watched awestruck as the home property market spins ever faster. House prices rose by an average of 8.2 per cent in the past 12 months, according to the Halifax, as buyers fear “missing out”. That fear is classic bubble behaviour, when consumers clamour mainly just to join in. The trend appears to be accelerating. Prices jumped by 1.4 per cent in April compared with March. The British love a good property frenzy but even by our standards this is ridiculous. There’s a pandemic on. How on earth can it be that house prices are rising in the midst of a health emergency that has caused an economic disaster on a scale rarely seen outside wartime? The answer is easy and we’re not unique. Across the West, the normal rules of the economy — and supply and demand — have been suspended by governments understandably keen to protect jobs and incomes. When unemployment rises in a recession, significant numbers of buyers and owners become financially distressed. Then house prices tend to fall. This time, unemployment has not risen as steeply as expected because taxpayers have spent billions paying wages with furlough schemes. Central banks have set interest rates at even closer to zero. And this after a long period where they have also used QE (quantitative easing, described loosely as money-printing) to keep the financial system awash with money. There are additional explanations for the bubble. There are fewer houses on the market as older Britons with properties they like and decent-sized gardens that suit lockdown stay put. It also seems likely that the freezing of the labour market disrupted the usual stream of internal migration by families moving when the breadwinner has to relocate. Simultaneously, those buyers with piles of cash are eager to move out of cities in search of the rural idyll. Supply is limited, money is cheap, prices go up. On top of all this, the chancellor, Rishi Sunak, introduced what turns out to have been an entirely unnecessary stamp-duty holiday that comes to an end in England in June. This is a rocket-fuelled boom propelled by government action. What could possibly go wrong? Quite a lot, as it happens. Surging prices depend, for now, on cheap borrowing costs. If interest rates have to rise, probably sooner rather than later, that will financially stress anyone who has over-borrowed in a panic. Rates have to rise when inflation (prices other than property) appears. And here it is, in the US, the world’s leading economy. Yesterday it was revealed that inflation has surged to 4.2 per cent, well above the widely expected 3.6 per cent. It has been spurred by rising commodity prices, increases in costs because Covid has disrupted global supply chains, and higher wage demands. Recklessly, the new US administration under Joe Biden has exacerbated this with about $6 trillion of extra spending, loading yet more fuel on the fire. This is not a hysterical prediction of imminent doom, but with a strongly recovering economy there are big risks. One of those is an overheating housing market that threatens the wellbeing of millions. Incidentally, if there is inflation and a crash, it will blow up politics in the process and make most of the calculations of this week about who is likely to be in office for ever and who is finished look like deluded chatter. A soft landing is still possible. A short burst of inflation in the wider economy may not be sustained and the air might go out of the property market gradually. Housebuilders have responded to the surge in prices and demand by beginning more projects. But the warning signs are there. I made my own declaration of interest earlier about not wanting house prices to go too high. Yet unlike squeezed younger Britons, fighting to get on the ladder, we are lucky, having been through several housing cycles already. We are in no hurry and in a year or two plan to go somewhere far cheaper than London, as there is no need to be there five days a week after the crisis. It was an interesting experience earlier this year, though, seeing how quickly one can become part of the property frenzy. We started looking in several areas, tentatively at first, in February after we had our first jabs and felt more confident. You start with a few light episodes of Kirstie Allsopp and Phil Spencer’s Location, Location, Location on TV, and before you know it you’re on the hard stuff, tracking houses and opening the Rightmove app every five minutes. Allsopp has been by far the most sensible voice on all this. In the spring, she spoke about the risks of the market overheating after noticing that people were bidding crazily on houses they hadn’t seen. It is worth remembering that a house is just a place to live in before the next buyer takes it on. Ashes to ashes, dust to dust and all that. Listen to Kirstie, and beware that US inflation number. It’s time for us all to be careful.
  21. Exactly, BTL in it's nature is a type of business - why should the state cover your losses! To be objective though, the only thing the LLs can argue is that with the moratorium on evictions, they weren't able to get rid of non-paying tenants. Regardless, they shouldn't get any support whatsoever given the nature of housing in this country and the fact that LLs will be wealthy anyways so don't need a bailout.
  22. Agreed that people should do what is best in their individual circumstances. However the main issue for people on this site is affordability and getting hold of the deposit whilst paying sky-high rents. I've been earning decent money since I graduated but only managed to save enough during the pandemic (after moving out of London) to now be in a position to buy. If you don't have the right background and with the support of BOMAD, it becomes much more difficult to get on the property ladder.
  23. Most LLs in London won't take the risk of putting a benefit tenant in over a professional tenant and in London there is no shortage of demand from professional tenants. From anecdotal personal experience, I have lived with foreign nationals and I have seen young families (of 3) and couples sharing a room in a house share in London so newcomers from abroad don't have it easy either (but better than where they came from). London prices are being propped up by foreign buyers (from Russia, China, Middle East etc) who are hoovering up properties in Zone 1 which is causing a knock-on effect to the outer zones. If foreign ownership was banned in the UK, you would see huge falls in prices in London especially the premium-prices properties which would eventually have a knock on effect to Greater London.
  24. This site has definitely made me more bullish on property in general. In regards to COVID, I always thought that with the end of furlough and government support schemes we would see some sort of correction (I was thinking around 10-15%) but with these schemes being extended and likely to be tapered off, I can't see any correction happening. I do expect insolvencies and unemployment to rise in the next 12-18 months but I now think this won't have much affect on the housing market (as counter-intuitive as this seems).
  25. Changing the inheritance tax % and threshold is pretty much redundant as most people will transfer most of their wealth before they die thus escaping any inheritance tax. I’m not If we are to get serious about the debt and deficit, we need to have a one off wealth tax that generates hundreds of billions in tax revenues. I don't think we have the political will to pull this off though.
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