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Marshall211

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  1. https://www.ftadviser.com/mortgages/2022/03/28/uk-housing-market-is-kaput-brokers-claim/?page=1 "Britain's housing market is broken and the property bull market could soon turn into a bear, mortgage advisers have warned."
  2. As a Canadian who moved to the UK 3 years back I remember seeing similar stories of overstreched budgets, high private debt, Canada having some of the most expensive cities for real estate all the way back to 2013. I believed it for 1 to 2 years but then saw how the market behaved totally opposite. Canada has few major cities relying on immigrant population and never stopping Chinese money. Talking to my friends now they say it gets worse and worse with supply being very limited. However, after 2 years of muted growth due to covid, Canada will again see high number of immigrants flocking to Toronto, Alberta etc. For a country with second largest land mass it is appalling how govt. policy has ensured population clusters in only 2 to 3 cities and those cities are not growing out but growing up with small and ugly condo buildings everywhere. Average Canadian mortgage rate is higher than in the US or the UK. Immigration of people from Asisa remains the biggest driver of real estate. Note, these are not asylum seekers but well educated students or professionals who are migrating to Canada due to its still liberal immigration policy.
  3. Per Bloomberg this morning, markets are pricing in the benchmark rate to shoot up to 2% this year. "Markets are already pricing in a half-point increase at one of the next two meetings of the Monetary Policy Committee. Further increases are likely, with current pricing suggesting the benchmark rate, currently 0.5%, will hit 2% this year -- the highest since before the financial crisis." https://www.bloomberg.com/news/articles/2022-02-16/u-k-inflation-overshoot-adds-pressure-for-big-boe-rate-hike
  4. https://propertyindustryeye.com/an-injection-of-new-listings-needed-to-reduce-the-pressures-now-facing-agents/ Significantly more homes are urgently needed to ease the pressures now facing agents with low stock levels, new research shows. Landmark’s latest property trends report shows that weak property listings pipeline continues to be the dominant pressure on activity levels in the England and Wales’ residential property industry The report, which reflects on market activity during October, November and December of 2021, shows that demand continued to outstrip supply, with listings down 7% in October and 6% in December. Only November reported comparable volumes to 2019, however this is deceptive as the parliamentary elections and the UK-EU Withdrawal Agreement in November 2019 led to an unusually subdued property market, meaning Q4 2021 is only comparable to these unusually slow previous market conditions. Legal completion volumes dropped by an average of 18% in the last quarter compared to 2019 data, which was to be expected following the final stamp duty incentive deadline in September when completion volumes leapt 44% higher than pre-pandemic levels. Key Findings: Property Listings: Last quarter, new property listings remained subdued when compared to the same period in 2019: -7% in October, level in November and -6% in December. This is against a backdrop of high demand, where a large proportion of properties coming to market are being sold very quickly, creating dual pressures upon both stock levels and prices. Sold Subject to Contract: For properties converting to Sold Subject to Contract, the data more closely reflected SSTC data from 2019: October reported a 9% decrease, while November was 5% up and December was a 6% higher than pre-pandemic levels. Legal Conveyancing: Property search order volumes were marginally higher than 2019 figures in October, at 5% up, while this decreased in November and December due to market effects, with data showing activity was 9% and 2% lower, respectively, when compared to pre-pandemic volumes. Completions: Data shows that completions overall were on average 18% lower in Q4 of 2021 versus 2019. Completions were 30% lower in October compared to 2019, following September’s significant rush to complete ahead of the end of the SDLT incentive, which saw figures 44% higher compared to the same period in 2019. Completions were however just 6% behind 2019 data in December, as conveyancers worked hard to complete as many transactions as possible ahead of Christmas. Simon Brown, CEO of Landmark Information Group said, “The figures in our latest Property Trends Report are a case of assessing perceptions versus reality. While the data shows a closer alignment to pre-pandemic figures, we must remember that November and December data in 2019 was far from typical, due to the elections and Brexit agreements, which slowed conditions at that time. The market needs an injection of new listings to really help boost overall conditions and reduce the pressures now facing agents with historically low stock levels.”
  5. https://www.ftadviser.com/ftadviser-focus/2021/12/10/change-afoot-in-uk-housing-market-but-no-need-to-panic/?page=1 The dark clouds of uncertainty that hung over the UK property market for much of 2019 and early 2020 have yet to return and there are no signs of them doing so in 2022 either. "So we can expect more of the same where upward house price growth is concerned, although it’s likely that the market will shift down a gear or two"
  6. For those curious, here is the property link https://www.rightmove.co.uk/properties/117053864#/?channel=RES_BUY
  7. Just an anecdote. I went to view a property which was listed few days ago. Based on comps, it is priced higher, has only one bathroom etc and nothing out of the ordinary. I went recognizing all these factors but realizing there is not much out there anyways. Listed for 550k. To my surpirse, it was super busy at the viewing. We were given a 15 minute slot and before we arrived there were 2 couples and after our slot there were more cars coming in. The agent told me they wanted to keep an open day however given the sheer number of people, they had to book short appoitments for better management. At the end of the appointment, they said they were looking to get all offers by Monday afternoon and make a decision. While this is just an anecdote it shows that strong demand continues to be there for reasable sized properties and the supply is extremely limited. This will continbue to support prices.
  8. I do not yet see any remote evidence of HPC. Personally, I was in the camp that believed that end of government support (Furlough / SDT Holiday) would trigger some sort of dip. I am monitoring SE London and SW London market for semi detached houses. There is no sign of let up in prices. There is definite drop in new supply but anything half decent has so much demand that the likelihood of prices going down any time appears remote. There was no increase in supply as we assumed would happen with the end of SDT Holiday (by means of broken chains). There is a record number of houses SSTC for many months. While the so called industry experts have called this market with high demand and low supply unsustainable (https://www.thisismoney.co.uk/money/mortgageshome/article-10245869/Industry-chief-brands-property-market-unsustainable-24-BUYERS-home-sale.html), I am not sure why this would be so. There is always this possibility of trickling increase in supply being matched by large number of buyers keeping prices high at all times. SD Holiday merely brought forward the demand but low interest rates will ensure prices will sustain. A 25bps increase or even 50bps increase will not turn into a redcuction in prices. As a buyer I feel dissolusioned since an extra few month's savings does not even make a difference to the deposit required now. Any significant impact from the new covid variant would mean that the hope of rate increases will be deferred. It is all shit.
  9. Was the housing market boom 'built on sand'? Stamp duty cliff edge saw property purchases plunge 63% last month from an all-time high in June https://www.thisismoney.co.uk/money/mortgageshome/article-9921859/Property-transactions-plummeted-63-July-stamp-duty-holiday-pulled.html
  10. Wisdom says..."never ask a barber if he thinks you need a haircut"
  11. House sales collapse as Sunak reins in stamp duty cut https://www.telegraph.co.uk/business/2021/07/12/house-sales-collapse-sunak-reins-stamp-duty-cut/ Expected cliff edge in transactions however, the supply is very low suggesting the prices are not expected to fall.
  12. It has been 5 days since SD holiday June deadline ended and as I previously mentioned I have not seen a significant uptick in failed sales. What is coming back is not different from what I see on a regular basis, at least in SE London / SW London area for houses (not flats). I am not sure what others are noticing in their areas of interest. While anecdotal, the experience just reinforces my belief that the prices are not coming down anytime soon. As much as I would like a correction I just do not see the signs even after the major milestone of SD Holiday ending.
  13. I agree some properties are coming back to the market either at the same or higher higher price bands. However, with one week to go for the June 30 deadline, I am yet to see a flurry of breakages of chains compared to normal times. May be we will see more as days go by. Else, it will further support the notion that there is a genuine surpassing of demand over supply and therefore, the prices will continue to be maintained even after SD Holiday ends.
  14. I could not locate any authentic CEBR article predicting what OP's comment mentioned. A quick look on their website has the prediction from Sept 2020. Could Express be recycling an old article on their own? Having said above, I do notice a slowdown (I am in SE London) with very few new listings, few properties coming back (with no change in their price tag). Anything reasonably priced still sells like hot cakes while the overpriced ones keeps hanging. I expect some slowdown from SD Holiday ending, I do not expect a major correction in the absence of interest rate rises. The only thing that will cause correction if steep dip in affordability on account of higher rates or continued high unemployment.
  15. https://www.bloomberg.com/news/articles/2021-06-05/red-hot-housing-market-is-creating-a-fresh-risk-for-u-k-economy The U.K. property market is heating up rapidly, and a mix of surging demand and double-digit price growth is causing concern that an unsustainable bubble is building. The pace of mortgage approvals is running more than a third higher than its pre-pandemic levels, and housing could be heading for its busiest year since before the financial crisis as buyers rush to take advantage of a tax cut. But with affordability stretched and lenders easing mortgage requirements, the signs are starting to worry some Bank of England policy makers. The government’s tax holiday is only temporary, potentially creating a cliff edge and precipitating a slowdown toward the end of the year, just as job support programs end. BOE Deputy Governors Jon Cunliffe and Dave Ramsden both said this week that they’re watching the housing market “carefully” amid the boom conditions. One risk is that banks relax lending restraints due to the wave of demand. Nationwide Building Society has started offering new mortgages that are 5.5 times the incomes of first-time buyers, above the 4.5 ratio commonly used. If others follow suit and tell regulators they need to adjust to the market, “we do start to see some danger,” said Neal Hudson, founder of Residential Analysts. Still, demand could be propped up after the tax perk is phased out in the coming months as pandemic effects linger, particularly the work-from-home culture that’s fueled a desire for larger homes further outside urban areas. The following charts break down what’s been happening in one of the most turbulent periods for the economy in modern history. Home Loan Demand U.K. mortgage approvals are running far above pre-pandemic level Source: Bank of England After more than a year of pandemic restrictions, residential property looks unscathed. Chancellor Rishi Sunak’s stamp-duty cut, which saved buyers as much as 15,000 pounds ($21,200), lit a fire under the market as other parts of the economy suffered. The surge in demand can be seen in mortgage and transaction numbers, both of which reached multi-year highs. Despite criticism that the stimulus wasn’t needed, Sunak extended the perk to October 2021, past its original deadline of March. In addition to the stamp duty effect, the pandemic also sparked a shift in lifestyle choices, and the desire for bigger properties is creating regional hotspots within the housing market. That structural shift is happening on a global scale, with the U.K. one of 13 countries which saw double-digit house price growth over the past year, according to broker Knight Frank LLP. That’s prompting authorities across the world to pull levers to put the brakes on rampant house price growth. Canada’s bank regulator has tightened mortgage lending requirements in light of its own housing boom, and New Zealand’s central bank is also threatening to act. Back in the U.K., “there are quite a few people that are worried about what’s going on with house prices outside of London,” said Marcus Dixon, head of research at LonRes, a property data company. “We don’t mind a little bit of growth but we don’t want a crash.” The latest figures from Nationwide Building Society put price growth close to 11%. While that may be skewed because of the slump in activity during the U.K.’s first lockdown a year earlier, values are still on a tear. Statistics office data puts average gains in the first quarter at 9%. Priced Out The mini-boom is an issue for those who were struggling to get on the property ladder even before the pandemic. With most lenders requiring a down payment of a fifth of the price, the average amount raised by new buyers to get a mortgage climbed by 23% in 2020, figures from Lloyds Banking Group show. Affordability was already stretched, particularly in London. Critics of Sunak’s stamp duty cut say it added to the unequal fallout from the pandemic on younger workers, a point noted by Cunliffe. “One cannot ignore that housing booms shift wealth towards existing and generally older homeowners and can therefore widen intergenerational inequity,” he said last month. The divergence between those who can and those who can’t afford to buy a home hits at the heart of the Conservative Party’s push to get more people on the housing ladder. The policy — “Generation Buy” — appeals to the quintessentially British dream of home ownership as a life milestone and the main way of accumulating wealth. But while many people built up savings during the pandemic because they couldn’t go on holidays or eat out, it wasn’t the same for everyone. Young workers were disproportionately in industries most affected by lockdowns — such as retail and restaurants — leaving them out of pocket at a time when they might be trying to save for a deposit. The government has since introduced a guarantee program for 95% loan-to-value mortgages. But other lending criteria mean it’s not always easy to get those loans. And for those who do, 5% doesn’t give buyers much of a margin above negative equity if home values fall. The program also stimulates demand without doing anything for supply, increasing the risks. The risk of price declines is particularly pronounced in London, which has lagged behind other regions, and even within the city there’s been wide variance in demand. Boroughs with some of the most expensive homes in the country have faced a reckoning as people fled the city center, while districts on the outskirts have been much sought after. But there are signs the wave of departures is starting to reverse, with demand ticking up in cities across the country amid a rapid vaccination rollout. As the U.K. passes a succession of milestones in controlling the spread of Covid-19, threats to the economy linger. While the housing rally still has some distance to run, the unwinding of the stamp duty will occur around the same time that government job support ends. The latter could expose weakness in the labor market and push up unemployment.
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