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Moneyweek: House Market Is Going To Crash

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http://www.moneyweek.com/investments/property/uk-house-prices-heading-for-a-fall-10707

The housing market is heading for a fall
By Bengt "Ben" Saelensminde Feb 23, 2011
On Monday, Rightmove delivered news of its latest health check on the UK housing market. And boy was it ugly.
Rightmove spelled out the news in three grim statistics:
• 1.3m properties were put on market last year
• 884,000 properties were sold (HMRC data)
• 530,000 mortgages were granted
Those three facts all point to one thing: the UK housing market could soon be falling in a big way..../

Pleasant read and all quite plausible if not obvious.

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http://www.moneyweek.com/investments/property/uk-house-prices-heading-for-a-fall-10707

The housing market is heading for a fall
By Bengt "Ben" Saelensminde Feb 23, 2011
On Monday, Rightmove delivered news of its latest health check on the UK housing market. And boy was it ugly.
Rightmove spelled out the news in three grim statistics:
• 1.3m properties were put on market last year
• 884,000 properties were sold (HMRC data)
• 530,000 mortgages were granted
Those three facts all point to one thing: the UK housing market could soon be falling in a big way..../

Pleasant read and all quite plausible if not obvious.

It's the pent up demand supply, innit.

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Moneyweek and the Economist have been banging this drum for years, like a stopped clock they'll be right eventually.

My guess is that the crash won't happen until significant interest rate rises happen, this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high) with some ups and downs.

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Moneyweek and the Economist have been banging this drum for years, like a stopped clock they'll be right eventually.

My guess is that the crash won't happen until significant interest rate rises happen, this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high) with some ups and downs.

20% drop over next 2 years whilst rates go up, then a George Osborne bonanza give away budget a year before the election, plus a lower interest rates then we're all rich again from rising house prices :rolleyes:

Edited by SEW247

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Yep, preaching to the converted.

I like reading Moneyweek, and I tend to agree with their analyses, but they have an awful habit of being wrong about the big calls on timing of investments.

They said not to invest in March/April 2009, apart from a few selected 'defensives'. I understand they've been saying that the housing market will crash since 2003/2004.

These are sensible enough views to take, they just happen to have been proved wrong.

Bengt's articles in particular tend to be very simplistic. His one about hyperinflation last year was particularly bad. This housing one is also pretty basic.

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Moneyweek and the Economist have been banging this drum for years, like a stopped clock they'll be right eventually.

My guess is that the crash won't happen until significant interest rate rises happen, this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high) with some ups and downs.

yes but the 0.5% interest rise over the coming months IS significant compared to the current level

so yes indeed, nothing exceptional about your point tho

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yes but the 0.5% interest rise over the coming months IS significant compared to the current level

so yes indeed, nothing exceptional about your point tho

0.5% at the wholesal;e level is a 50% trise as it goes up the chain to retail level. Thus, the person now on a variable at 4% will see the rate rise by 50% to 6%.

This is why Merv cannot hike--it will push the housing market down the cliff faster than it is going now. IMagine the huge increase in reposessions that would be triggered by a 50% rise in IR? IMagine the damage it will do to leveraged BTLers? Just imagine, oooo-yeth pleathe Mr. Merv. :D

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Moneyweek and the Economist have been banging this drum for years, like a stopped clock they'll be right eventually.

My guess is that the crash won't happen until significant interest rate rises happen, this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high) with some ups and downs.

Demand for housing is down. And what about supply?

Well we know that there was an almighty overhang left over from last year. And we know that property coming onto the market in January was up around 35% on last year. And according to Rightmove, that's only going to get worse as ‘forced sellers' start to appear. Many people just won't be able to afford to keep up mortgage repayments as stagflation bites.

:D

Edit:

a very unhealthy dynamic is emerging.

Why oh why lower housing costs are "unhealthy"?!?!?! AAARRRGGGHHH!!! Fecking imbecile ignorant unthinking lunatic fecking b@stards!!!

Edited by Tired of Waiting

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Moneyweek and the Economist have been banging this drum for years, like a stopped clock they'll be right eventually.

My guess is that the crash won't happen until significant interest rate rises happen, this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high) with some ups and downs.

There are several ways people income can get squeezed and thus force things to happen, so far we have seen very little effect from any of them.

The are plenty of alternatives to IRs to provide the push and I suspect we will see most of them in action long before BoE IR changes have any real effect, together they will have quite and effect:

Unemployment (only starting to rise)

Tax rises (mostly starting from April)

Benefit reductions (mostly starting from April)

Inflation (already in action)

Wage Freezes (already in action)

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There are several ways people income can get squeezed and thus force things to happen, so far we have seen very little effect from any of them.

The are plenty of alternatives to IRs to provide the push and I suspect we will see most of them in action long before BoE IR changes have any real effect, together they will have quite and effect:

Unemployment (only starting to rise)

Tax rises (mostly starting from April)

Benefit reductions (mostly starting from April)

Inflation (already in action)

Wage Freezes (already in action)

You forgot interest rate rises on debt.

But, yes, I agree with the rest of the list

EDIT:

No you didn't forget. I need to read posts more carefully...duuuuuhhhh

Edited by tallguy

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Why oh why lower housing costs are "unhealthy"?!?!?! AAARRRGGGHHH!!! Fecking imbecile ignorant unthinking lunatic fecking b@stards!!!

*Sigh*

We need house prices to double every 7 years, because then people can use their new-found wealth to borrow their way to prosperity, and then their houses can also provide their pensions. That's just basic new-paradigm-economics (Copyright GB 2007).

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*Sigh*

We need house prices to double every 7 years, because then people can use their new-found wealth to borrow their way to prosperity, and then their houses can also provide their pensions. That's just basic new-paradigm-economics (Copyright GB 2007).

Sorry, I'd forgotten that.

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0.5% at the wholesal;e level is a 50% trise as it goes up the chain to retail level. Thus, the person now on a variable at 4% will see the rate rise by 50% to 6%.

This is why Merv cannot hike--it will push the housing market down the cliff faster than it is going now. IMagine the huge increase in reposessions that would be triggered by a 50% rise in IR? IMagine the damage it will do to leveraged BTLers? Just imagine, oooo-yeth pleathe Mr. Merv. :D

Saw an article in the Daily Mirror yesterday that said BTlers were up shit creak. Said that according to the CML BTL arrears and repos were surging.

Can't find the article now unfortunately. But the headline focused on the plight of tenants getting kicked out. It was in the money section.

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...this year will be a slow decline in nominal terms(a bit faster in real terms as inflation will be high)....

Why does an increase in the price of other goods mean that house prices are cheaper? relative to what? Beans? well, whooppee doo.

I want house prices to be relatively cheaper relative to my wages. Until that happens, the real / nominal price of a house doesn't matter two hoots.

If WAGES don't increase, then house prices will crash, no matter what the rate of inflation.

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Why does an increase in the price of other goods mean that house prices are cheaper? relative to what? Beans? well, whooppee doo.

I want house prices to be relatively cheaper relative to my wages. Until that happens, the real / nominal price of a house doesn't matter two hoots.

If WAGES don't increase, then house prices will crash, no matter what the rate of inflation.

Yup. Too many people conflate wage inflation and price inflation.

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Saw an article in the Daily Mirror yesterday that said BTlers were up shit creak. Said that according to the CML BTL arrears and repos were surging.

Can't find the article now unfortunately. But the headline focused on the plight of tenants getting kicked out. It was in the money section.

Is this the article?

http://www.mirror.co.uk/advice/money/2011/02/23/tenants-risk-becoming-innocent-victims-of-buy-to-let-repossessions-115875-22942225/

THOUSANDS of tenants risk becoming innocent victims of a new wave of repossessions.

Figures from the Council of ­Mortgage Lenders reveal a near-6% surge in buy-to-let borrowers falling behind with repayments at the end of last year.

And that’s with interest rates at a record low.

The fear is this number could spiral when the Bank of England starts raising rates, which could happen any month now.

Caught in the middle are tenants who may find themselves homeless through no fault of their own.

That was the very real prospect for mum-of-one Poppy McFee who faced Christmas in a hostel when she was given 10 days to leave her rented flat.

Mrs McFee, husband Curtis and son Taliesin, now aged three-and-a-half, endured problems even before moving into the property in Colchester, Essex, in early 2009.

She said: “It was filthy when we were shown round but we were told it would all be cleaned up. However, when we moved in we found fleas on the carpet and the bathroom was ­horrendous.

“The landlord came round – it was the only time we ever saw him – but in the end we cleaned it ourselves.”

Things settled down but out of the blue, at the end of November, a letter arrived addressed to the occupants.

To their horror, it was a court eviction letter on behalf of the landlord’s lender, citing non-payment of the mortgage and warning they had to be out of the house by the beginning of December.

Marketing manager Mr McFee rang the landlord who claimed he was challenging the action but, with the eviction looming, the family found another flat in a hurry.

The McFees’ saga was far from over however, as they battled to recover their £600 deposit.

They won a county court ­judgement against the landlord because he failed to ring fence the deposit but they have yet to get the money. “It was terrible,” said Mrs McFee.

“At one stage we were facing the prospect of having to spend Christmas in a homeless hostel.

“With a young son, I couldn’t let that happen.”

Council of Mortgage Lenders’ data shows 19,700 buy-to-let ­mortgages were in arrears in the last quarter of 2010, up from 18,600 the previous three months.

Meanwhile, separate figures from the Ministry of Justice found a rise in the number of landlords trying to evict their tenants.

There were 34,443 possession claims – the first stage towards an eviction – in England and Wales between October and December last year. This was a 3% increase on the previous quarter.

The Ministry of Justice does not give details about the claims, although in some cases it could be struggling landlords trying to boot out tenants before their lender demands the keys.

The law provides limited ­protection for tenants in these circumstances (see box top right) but it’s a very different story if the landlord falls behind with mortgage payments and their bank or building society comes knocking for arrears.

As in the McFees’ case, the lender must send a notice to the occupiers to state that they are taking ­possession action.

Since October 1 last year, tenants have had the right to ask a court to postpone the ­possession date for up to two months to give them the chance to find somewhere else to live.

But Robbie De Santos, assistant policy officer for the housing charity Shelter, said: “We are concerned about the lack of regulation in the private rental market. Most tenants have very limited protection and the number of people renting will only grow as it becomes harder for them to afford a big enough deposit to buy a home of their own.

“It means people who want to put down roots risk having to move more often than they’d like, which is particularly hard for families with children.”

Can families rest assured?

VIRTUALLY everyone who rents from a private landlord has an “assured shorthold tenancy” agreement.

These allow a landlord to ask a tenant to leave after six months or ­whenever the initial fixed term ends, although they must give the tenant two months’ notice.

They can also go to court to boot a tenant out at any other time on certain grounds, including rent arrears or anti-social behaviour.

Landlords have certain obligations to repair and maintain their property and cannot increase the rent in the initial period, but campaigners say it is easy for them to turf out tenants who complain.

On the other hand, it gives honest landlords the right to get rid of troublesome tenants.

There is much better protection for those with an alternative assured tenancy but there are far fewer of these. Tenants who have them tend to have rented a property for a long period.

I don't know about landlords always doing credit checks on tenants, it strikes me tenants are the ones who need to check out the credit worthiness of their LL's, before handing money over to them for a new rental.

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Is this the article?

http://www.mirror.co.uk/advice/money/2011/02/23/tenants-risk-becoming-innocent-victims-of-buy-to-let-repossessions-115875-22942225/

I don't know about landlords always doing credit checks on tenants, it strikes me tenants are the ones who need to check out the credit worthiness of their LL's, before handing money over to them for a new rental.

Yep that's it, thanks.

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Why does an increase in the price of other goods mean that house prices are cheaper? relative to what? Beans? well, whooppee doo.

I want house prices to be relatively cheaper relative to my wages. Until that happens, the real / nominal price of a house doesn't matter two hoots.

If WAGES don't increase, then house prices will crash, no matter what the rate of inflation.

Fair point.

I'd say that inflation will lead to wage inflation for many. Especially those who are not in fear of losing their jobs.

Obviously those who suffer price inflation with stagnant or dropping wages will suffer a drop in living standards and house buying power.

Edited by swissy_fit

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You forgot interest rate rises on debt.

But, yes, I agree with the rest of the list

EDIT:

No you didn't forget. I need to read posts more carefully...duuuuuhhhh

This time round the other items on the list will get the fire going, slowly and steadily. The IR rises will arrive later with plenty more fuel to keep the fire going longer and stronger. We are at the firelighters starting to work their magic stage, it is very much a sit back and wait for the long haul stage.

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Is this the article?

http://www.mirror.co.uk/advice/money/2011/02/23/tenants-risk-becoming-innocent-victims-of-buy-to-let-repossessions-115875-22942225/

I don't know about landlords always doing credit checks on tenants, it strikes me tenants are the ones who need to check out the credit worthiness of their LL's, before handing money over to them for a new rental.

That's exactly what I did do when I was renting 15 years ago. I paid six months in advance so I asked the agency (which was owned by the LL) for a bank reference. The look of blank incomprehension on their faces was worth more than rubies.

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Yep, preaching to the converted.

I like reading Moneyweek, and I tend to agree with their analyses, but they have an awful habit of being wrong about the big calls on timing of investments.

They said not to invest in March/April 2009, apart from a few selected 'defensives'. I understand they've been saying that the housing market will crash since 2003/2004.

These are sensible enough views to take, they just happen to have been proved wrong.

Bengt's articles in particular tend to be very simplistic. His one about hyperinflation last year was particularly bad. This housing one is also pretty basic.

I cancelled my direct debit at the start of the month re above.

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0.5% at the wholesal;e level is a 50% trise as it goes up the chain to retail level. Thus, the person now on a variable at 4% will see the rate rise by 50% to 6%.

This is why Merv cannot hike--it will push the housing market down the cliff faster than it is going now. IMagine the huge increase in reposessions that would be triggered by a 50% rise in IR? IMagine the damage it will do to leveraged BTLers? Just imagine, oooo-yeth pleathe Mr. Merv. :D

Forgive me for being thick, I've never had a mortgage before (maybe that makes me clever?!), but aren't most mortgages calculated at x% above BoE base rate. Therefore a 0.25% increase, while being a 50% hike in rates, would only have a 0.25% impact on residential mortgages?

Any clarification would be greatly received.

Thanks

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:D

Edit:

Why oh why lower housing costs are "unhealthy"?!?!?! AAARRRGGGHHH!!! Fecking imbecile ignorant unthinking lunatic fecking b@stards!!!

Coz like Maitland said in 2005/6 (who bought 5 BTL's) -

All the TV luvvies and anyone with excess cash to blow swapped from pension-shares to buying 5-20 BTL's each from 2001/2 onwards.

They are all stuck with them and will defend their right to sponge off poorer people (by all manipulative means) to the death.

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Rightmove spelled out the news in three grim statistics:
• 1.3m properties were put on market last year
• 884,000 properties were sold (HMRC data)
• 530,000 mortgages were granted
Those three facts all point to one thing: the UK housing market could soon be falling in a big way..../

530,000 mortgages were granted - if they all turned into sales that means at least 40% of their total sold were in cash (354,000 / 884,000).

Mortgages are going to be so yesterday - just for crap areas blighted by immigration and crime where the rich don't want to live.

Is there a breakdown for foreigner purchases and BTL?

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530,000 mortgages were granted - if they all turned into sales that means at least 40% of their total sold were in cash (354,000 / 884,000).

Mortgages are going to be so yesterday - just for crap areas blighted by immigration and crime where the rich don't want to live.

Is there a breakdown for foreigner purchases and BTL?

I'd like to see all the stats with BTL stripped out especially the transactions and mortgage numbers. All those city centre BTL flats need to come out for a start. They're a burst bubble all on their own.

I'd also question anything rightmove puts out as 'fact' (the word used in the OP article). Do they mean unique properties? numbers listed? (You need to strip out the multiple listings - there are loads in my searches). I certainly wouldn't base a major financial decision on any stats they put out.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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