Losing Faith In Hpc

[Keep Walking]

As if the BoE give a T*ss about inflation.

Ongoing 5% inflation is clearly their goal - erodes debts and means the house price bubble deflates in real terms even though in nominal terms house prices stay pretty much stagnant.

And the government are totally happy with this. After all they've got a hell of a lot of debt.

Don't expect rates to rise for years and years and years.

Brute experience will herald the change, brought about by events. Nothing that politics or economics predicts, ever calculates human history.

Watch people and smell the fear!

[heresjohnny]

I havn't posted for ages (took me three attempts to get a new password!!). Anyway, we bought a house about 18 months ago. I was really reluctant to do so being a firm believer that houses are massively overpriced but since then we've had our first child so security and having our own home was a big thing for us. Plus we probably wont move for 20 years now.

I still think houses are overpriced and we bought somewhere without needing a big mortgage (got 15 years of London equity behind us and moved to the Midlands).

Anyway, I think house prices won't go down until interest rates go up. I have two annecdotal examples:

1. One of my brother in laws has 10 properties. Most are worth less than he paid for them but because interest rates are low he is making money on the rent. He admits himself if interest rates hadn't gone down he would have gone bankrupt

2. A work colleague and his wife own three properties - their house (they bought together) and their old "single person properties". Again worth less than they paid for them but making money on the rent

The plates will stop spinning sooner or later but whats going to make it? I really despair for the youngsters today and I'm really angry about how much houses cost but I guess I'm part of the problem arn't I?

[sbn]

That is stunningly accurate! Many true words spoken in jest

Seriously that is spooky, don't know how long I've been reading the site but those stages are spot on.

Scary, Scary Scary

This person has an insight beyond his 2009 joining date.

Or maybe it just took me longer to work through the stages ....

[Wahoo]

How can you lose faith at this moment....when the walls are about to come crashing down. Economic indicators have never been so bad.

[pete.hpc]

ANother recession looks like the best hope.

Come on guys, we're better than this

[chronyx]

All I hear with bad news is abstract quotes/numbers etc.

It doesn't affect my day-to-day life one jot, and in a way that is what I am wating for, I just want this whole charade over and done with, I'm one of those people that just thinks '****** it' and takes tough things on the chin, this eeking it out like pulling a plaster off step-by-step is doing my head in.

[Mr. Piddle]

I find all this slightly depressing sometimes, although I am still far from giving up hope that one day I can buy a house I can afford.

There are tons of places coming onto the market and people ARE worried about their jobs etc.

I dont think our only hope is interest rate rises, I think there are still plenty of other factors we can rely on

JUST WISH THEY WOULD SODDING HURRY UP ABOUT IT!!!!! :angry:

[guitarman001]

There is always the option to move abroad.

+1. Look to Europe where their POLICY is to keep property prices well controlled for economic stability, where you have better rights as a tenant, where you don't see these ridiculous bubbles every other decade.

[Wahoo]

There is always the option to move abroad. Chili the country is expected to have GDP per capita thats the equivalent of Spain within the next ten years according to some bbc program on tv tonight.

I think some people rely on people not moving to other parts of the world but I dont think you will see a house price crash like we saw in the 90's becuase over here even if you get repossed you are still liable for any outstanding balance so people in distress with their debts will move heaven and earth to keep that roof over their heads.

Society in this country is polarising into the haves or have not's and I can easily see this country become a place where only the super rich can afford a decent lifestyle. The question is will we see a break down in society like we saw with the riots over Aug to flatten the slave boxes so that when the dust settles theres room for some decent sized properties and estates?

Yep...Chili is gonna boom. But they don't look west...they see their future around the Pacific rim.

[qwerty1984]

It is if much of the cost push inflation is due to a weakened currency that would be strengthened by an interest rate rise - thus reducing the impact of the cost push inflation.

An IR rise will send the economy back into a long recession. Do you genuinely think that this will lead to a strong £ long-term?

[200p]

Forget looking at interest rates, unemployment rates, sentiment readings; there is one simple indicator...

When The Sun removes the "Have a laugh" jokes that are interspersed within its pages. I believe they were introduced to lift the daily gloom in about 2008.

[19 year mortgage 8itch]

It's like a platsic bear beauty pageant in here, wall to wall furry clunge.

I'll pass

[NEO72]

I havn't posted for ages (took me three attempts to get a new password!!). Anyway, we bought a house about 18 months ago. I was really reluctant to do so being a firm believer that houses are massively overpriced but since then we've had our first child so security and having our own home was a big thing for us. Plus we probably wont move for 20 years now.

I still think houses are overpriced and we bought somewhere without needing a big mortgage (got 15 years of London equity behind us and moved to the Midlands).

Anyway, I think house prices won't go down until interest rates go up. I have two annecdotal examples:

1. One of my brother in laws has 10 properties. Most are worth less than he paid for them but because interest rates are low he is making money on the rent. He admits himself if interest rates hadn't gone down he would have gone bankrupt

2. A work colleague and his wife own three properties - their house (they bought together) and their old "single person properties". Again worth less than they paid for them but making money on the rent

The plates will stop spinning sooner or later but whats going to make it? I really despair for the youngsters today and I'm really angry about how much houses cost but I guess I'm part of the problem arn't I?

Not at all, you did what we all are doing - what we think is best for us and ours.

I would say though that I know several struggling LLs - one who needs liquidity so has been forced to realise a loss and one who is being pushed onto repayment at a punitive rate. However, all this shows is that we can't generalise - one swallow doesn't make a summer and all that. What I do know though is that however well in general BTLers are doing, almost 90% of mortgages are not BTL, and many of those paying them are seeing their pay packets running out earlier each month.

[eric pebble]

..//....

What I do know though is that however well in general BTLers are doing, almost 90% of mortgages are not BTL, and many of those paying them are seeing their pay packets running out earlier each month.

I am hearing more and more about LL's who are being stung for new boilers/roofs/windows - thus wiping our their supposed "profit" on their BTL Empires small and large......

Also - We must ALL know of AND be experiencing the incredibly high cost of living - bills & petrol etc etc.

It is all pretty alarming imho.... And the idea that house "prices" are going to continue going up and up and up --- - well, I dunno....... Pigs fly I s'pose...

[CleverBear]

Not at all, you did what we all are doing - what we think is best for us and ours.

I would say though that I know several struggling LLs - one who needs liquidity so has been forced to realise a loss and one who is being pushed onto repayment at a punitive rate. However, all this shows is that we can't generalise - one swallow doesn't make a summer and all that. What I do know though is that however well in general BTLers are doing, almost 90% of mortgages are not BTL, and many of those paying them are seeing their pay packets running out earlier each month.

Alot of posts I seem to read involve people who cant move simply renting their places out to avoid selling for a loss. Then they rent somewhere else and hence there is massive demand for property. With IR so low then renting a place out will keep their ownership of the place. If I had a choice it would be for the economy to be ticking along nicely, and IR to rise. I also think WHEN IR rise then it could be good, because I expect alot of BTL LL's have taken on property thinking they can make money when IR are 0.5%. So in a way, the longer IR stay low then the bigger crash we could get when they rise.

[ReJoyce]

How are we going to get falls without interest rate rises? Its so depressing to think I have been waiting for about 3 years now and I am getting older. I kind of feel like life is passing me by, but I dont want to buy into what I consider an inflated market.

How are we going to get any house price falls without IR rises? It seems like all these people dont have to move because their mortgage is o little each month. This way they can save money every month and actually are being rewarded for buying into bubble at the expense of savers/hopeful homebuyers like me.

Is there a scenario that anyone can see falls in house prices without rate rises? If so please give me the logic because I am really depressed about it all at the moment.

Thanks

I sympathise with you. I was in the same boat and decided enough was enough, especially with our accidental landlord. I bought earlier this year and managed to get the house for, what I felt was, a good price.

Only time will tell, but I hope to stay in it for a decent time so should be able to ride out the storm. I also see the £100k I "made" on my previous house (I STR'd in 2008) as a buffer, I didn't see the cash, so I can afford to lose it.

regards

J

[Einstein71]

I STR'd 7 years ago, joined HPC website in 2005 (I had to change username back in 2008 after forgetting password etc).

Apart from holidays I have visited the site every day, I wring my hands with anxiety whenever we get a Haliwide or IR announcement, I am the one argueing HPC until 3am at parties. I am obsessed, friends just think I am a nut job. In 2008 when Northern Rock collapsed I rang around all of my friends, prepared the missus for buying a house in a years time and sat back and waited........nothing!!! A few puppet properties dropped their price by about 10% here in Sussex but nothing more.

So I then blamed the whole thing on Gordon Brown. Dont worry I told everyone, as soon as the Tories get in they will let the whole thing collapse and then blame it on new labour, they wont continue this charade........

Anyway here we are again, soverign debt crisis, double dip, rising inflation, unemployment etc. Is this the trigger? Well it is likely that I will be here in 2013 asking the same question. At the end of the day to precipitate a crash you require forced sellers en masse, this in my opinion requires IR's of around 4% which in my area moves mortgages to the same level as rents. This would be political suicide and I dont see it happening.

So basically if you want my advice, take a look around, if you see something you like for sale and you can afford the deposit then go and negotiate 15%+ off of the price and just get yourself a home. Whatever you do dont spend/waste the next 7 years of your life hanging around this site, being the bitter one at the parties and pis*ing off the partner/kids. My personal situation, I am looking now and can save around £10500 per annum between rent and mortgage and plus I will have the security of my own home and the ability to personalise it in my own personal style rather than some random LL's style. The usual suspects will spout the "hold tight and enjoy the crash" line but that is because they have only that hope to hold on to, I know because it was the sort of defence i would use on a daily basis.

The days of using property as a way of making money via capital gains are over. Dont even think of flipping a property for a quick £30k. In fact with costs and taxes you'll probably sell for less than you paid, even if there isn't a crash and you have updated that kitchen, you'll also take months to sell it if you decide to do so. If you can accept this but you just want a home not an investment then go for it, you'll have the security of knowing you won't be thrown out at any moment with a months notice and you'll have lower outgoings for the forseeable than if you rent, possibly negating any loss in equity...possibly.

[CleverBear]

I STR'd 7 years ago, joined HPC website in 2005 (I had to change username back in 2008 after forgetting password etc).

Apart from holidays I have visited the site every day, I wring my hands with anxiety whenever we get a Haliwide or IR announcement, I am the one argueing HPC until 3am at parties. I am obsessed, friends just think I am a nut job. In 2008 when Northern Rock collapsed I rang around all of my friends, prepared the missus for buying a house in a years time and sat back and waited........nothing!!! A few puppet properties dropped their price by about 10% here in Sussex but nothing more.

So I then blamed the whole thing on Gordon Brown. Dont worry I told everyone, as soon as the Tories get in they will let the whole thing collapse and then blame it on new labour, they wont continue this charade........

Anyway here we are again, soverign debt crisis, double dip, rising inflation, unemployment etc. Is this the trigger? Well it is likely that I will be here in 2013 asking the same question. At the end of the day to precipitate a crash you require forced sellers en masse, this in my opinion requires IR's of around 4% which in my area moves mortgages to the same level as rents. This would be political suicide and I dont see it happening.

So basically if you want my advice, take a look around, if you see something you like for sale and you can afford the deposit then go and negotiate 15%+ off of the price and just get yourself a home. Whatever you do dont spend/waste the next 7 years of your life hanging around this site, being the bitter one at the parties and pis*ing off the partner/kids. My personal situation, I am looking now and can save around £10500 per annum between rent and mortgage and plus I will have the security of my own home and the ability to personalise it in my own personal style rather than some random LL's style. The usual suspects will spout the "hold tight and enjoy the crash" line but that is because they have only that hope to hold on to, I know because it was the sort of defence i would use on a daily basis.

The days of using property as a way of making money via capital gains are over. Dont even think of flipping a property for a quick £30k. In fact with costs and taxes you'll probably sell for less than you paid, even if there isn't a crash and you have updated that kitchen, you'll also take months to sell it if you decide to do so. If you can accept this but you just want a home not an investment then go for it, you'll have the security of knowing you won't be thrown out at any moment with a months notice and you'll have lower outgoings for the forseeable than if you rent, possibly negating any loss in equity...possibly.

I guess with wages creeping up and the money in the bank earning 3% then at least flat house prices will effectively bring down prices by 3% a year for me. Thats a good thing I suppose.

[PopGun]

I'm actually starting to get hopeful again.

IMO, the HPC fundamentals are bogus:

1. SMI: Unless there's a sudden glut of social housing (property grab/building etc) I can see SMI rolling over yoy so long as it remains cheaper than rehousing tens of thousands of newly homeless families.

2. Interest Rates: Can't see these going up anytime soon, especially when the state owns so much of the mortgage book. Moan about inflation all you want, but high interest rates didn't stem the inflation tide anywhere else, so I doubt it would make any difference here, apart from making a bad situation worse.

3. Mass unemployment. This is the killer, but in terms of new mortgage affordability, not those already in houses (see 1).

So despite being certain that mass repossessions and IR hikes aren't going to happen anytime soon, I'm still seeing sizeable reductions in all variety of property and location types.

The big indicator for me is bank lending and risk, which will hit the low/average earners the hardest (i.e. 90% of buyers). The problem on this site is many posters focus on posh areas, where there’s always going to be people with money, and thus see no or little price reduction.

This is why anyone hoping for a 4 bed detached in leafy Surrey with a 50% discount will end up disappointed.

For everyone else, the crash is underway, well until Merv, Osborne et all pull another white rabbit out of their collective ar5es.

[Conrad]

I think the change over the last few months is that with the threat of more QE and inflation its a gamble not to hedge on debt and buy a house with a mortgage. Nothing is certain in life but for a long time it seemed that crash was on the cards but TPTB have stopped it at the expense of the pound.

[Einstein71]

I guess with wages creeping up and the money in the bank earning 3% then at least flat house prices will effectively bring down prices by 3% a year for me. Thats a good thing I suppose.

Everyone is in their own unique situation. I was always happy renting as long as I knew that the mortgage+costs on the place I was renting was more than the rent I was paying and IF the mortgage did become cheaper any shortfall was more than covered by expected price drops.

In my specific area it seems nice places are renting fast and rents are rising, at the same time prices aren't dropping and mortgages are cheaper than ever (3.4% 5yr fix). I did the sums and even taking into account losing interest on my deposit and £2k maintenance I am losing out by around £900pcm by renting. The LL deciding to sell and handing me my section 21 has given me a reality check. It simply isn't worth the emotional stress just holding out for what may never come and like a previous poster I would look for a lower end property and if prices did drop by 40%+ I would simply sell for a loss (or rent out the lower end place) and buy a high end property.

Of course the ideal situation would be to just rent and see a huge property crash and then buy a high end property but I have now realised that this is a very big gamble, I still wish it to happen but I genuinely think that it will not be allowed to happen. I know people say "Oh they wont have any choice" but I am now not so sure, I think they can manipulate things to that degree, I think stock markets can crash, banks can go under, countries can default but Joe Bloggs will continue to pay 2.5%on his mortgage and will not sell for 10%+ loss. The first credit crunch should have been the trigger, those people that said "This Boom was fuelled by credit, when that is taken away the whole thing will crash" have been proven wrong. The Credit has gone but there is no crash, not even a shift in sentiment. Sure people are struggling to sell but they still believe in housing and todays Daily Express shows the mood, people genuinely think the market is shifting up by 2-3% per annum, they have no intention of dropping their prices.

[CleverBear]

Everyone is in their own unique situation. I was always happy renting as long as I knew that the mortgage+costs on the place I was renting was more than the rent I was paying and IF the mortgage did become cheaper any shortfall was more than covered by expected price drops.

In my specific area it seems nice places are renting fast and rents are rising, at the same time prices aren't dropping and mortgages are cheaper than ever (3.4% 5yr fix). I did the sums and even taking into account losing interest on my deposit and £2k maintenance I am losing out by around £900pcm by renting. The LL deciding to sell and handing me my section 21 has given me a reality check. It simply isn't worth the emotional stress just holding out for what may never come and like a previous poster I would look for a lower end property and if prices did drop by 40%+ I would simply sell for a loss (or rent out the lower end place) and buy a high end property.

Of course the ideal situation would be to just rent and see a huge property crash and then buy a high end property but I have now realised that this is a very big gamble, I still wish it to happen but I genuinely think that it will not be allowed to happen. I know people say "Oh they wont have any choice" but I am now not so sure, I think they can manipulate things to that degree, I think stock markets can crash, banks can go under, countries can default but Joe Bloggs will continue to pay 2.5%on his mortgage and will not sell for 10%+ loss. The first credit crunch should have been the trigger, those people that said "This Boom was fuelled by credit, when that is taken away the whole thing will crash" have been proven wrong. The Credit has gone but there is no crash, not even a shift in sentiment. Sure people are struggling to sell but they still believe in housing and todays Daily Express shows the mood, people genuinely think the market is shifting up by 2-3% per annum, they have no intention of dropping their prices.

Well rightmove statistics are ignored by the markets who tend to focus on Halifax/nationwide to see what is coming in the housing market. Those are the trackers I am interested in. Plus of course the LR, but that lags behind and only really shows us what we already knew 3 months ago.

I think you are probably right, and that the best thing for me to do is to look into buying a low end property at a large discount. But even that seems unlikely as people arent being forced to sell. I might start looking in jan/feb for a 2 bed house for around £130k. I would never buy a flat because its a rip off, and your right the nice places will generally be in demand.

However, whilst prices are still stagnant, I feel that waiting is paying off. Hopefully if prices are stagnant over the next 6 months then I will have 1.5% more from my savings and prices will be nicely cheaper. Also, lower end properties (small houses) have fallen and the nicer places seem to have held up/gone up. So buying a smaller place might net me a decent discount.

The only thing which makes me say you are wrong is that the fundamentals still point to overpriced housing. And, in the end, the fundamentals always come out on top.

[ccc]

They raised interest rates up to 15% but we still fell out of the ERM.

If the underlying economy is very weak I don't think raising interest rates will strengthen the currency. just send the county in to bankruptcy.

Investors are more interested in the return of their money than the return on their money theses day's.

If this wasn't true we would all be investing in Greek bonds.

An IR rise will send the economy back into a long recession. Do you genuinely think that this will lead to a strong £ long-term?

Nobody knows. However it is clear a lot of the inflation we have today is cost push as a result of a weaker £. A lot of that has to do with the interest rates involved. Of course lots of other factors involved. Only the 'market' can decide whether it would see an increase in UK interest rates as a good thing and result in a higher demand for the currency - or the opposite.

I was just pointing out where a lot of this cost push inflation clearly came from.

[The Masked Tulip]

I think it all depends on what happens with Greece and the Eurozone. If it all goes tits up then it might present a great buying opportunity.

If they QE big time then getting on board with the stock market for 6 or 12 months might be sensible.

Otherwise, with low IRs and little public sector job losses in my part of the world, buying in the coming months looks sensible. Next Spring I can see EAs just adding 50K onto 300K plus houses...

[TheCountOfNowhere]

Next Spring I can see EAs just adding 50K onto 300K plus houses...

Were houses free in Wales 6 years ago ?