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Wurzel Of Highbridge

Property Transactions Will Never Recover.

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There seems to be expectations that a recovery in the property market will see transactions and prices back at their 2007/8 highs.

Articles such as this have become common recently.

UK house prices to rise by a quarter with London average to hit £500,000 by 2018 - CEBR

Estate agent Haart predicted housing transactions will rise by up to 15 per cent over the next 12 months

Foxtons to float on London Stock Exchange

The company plans to raise £55m though a share sale as it seeks to benefit from the housing market recovery.

...

Foxtons said that transaction levels in London were still about 55% below the levels seen from 2000 to 2006.

This will not happen in the next 50 years as 2008/7 were one off credit fueled boom where demand was from investors and speculators using cheap money to speculate in the housing market.

This fake demand cannot return unless banks accept self cert mortgages and relax lending standards back to where they were before the collapse.

First time buyers and movers will never be able to makeup this level of transactions. As real wages decline, movers would require rising asset prices to give them enough cash to pay stamp duty (yet again) removal fees etc.

Many of the older generation are in their 'house for life' and have no desire or need to move, many of those who were looking at downsizing are now using equity release instead.

Increasing number of renters are also not helping transaction levels.

I think that it is quite clear and obvious that transactions are not going to recover even with the HTB and HTB2 schemes as they only target first time buyers.

How can the number of estate agents that has shot up recently be supported?

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There seems to be expectations that a recovery in the property market will see transactions and prices back at their 2007/8 highs.

How can the number of estate agents that has shot up recently be supported?

Lettings are going up and up - and agents get guaranteed annuity income from a let. They charge the landlord 10-15% a year + charge the tenants to re-sign a contract every year. Lettings is the new sales as the 20 something generation can never save enough to buy property near where their parents live.

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There seems to be expectations that a recovery in the property market will see transactions and prices back at their 2007/8 highs.

Articles such as this have become common recently.

UK house prices to rise by a quarter with London average to hit £500,000 by 2018 - CEBR

Foxtons to float on London Stock Exchange

This will not happen in the next 50 years as 2008/7 were one off credit fueled boom where demand was from investors and speculators using cheap money to speculate in the housing market.

This fake demand cannot return unless banks accept self cert mortgages and relax lending standards back to where they were before the collapse.

First time buyers and movers will never be able to makeup this level of transactions. As real wages decline, movers would require rising asset prices to give them enough cash to pay stamp duty (yet again) removal fees etc.

Many of the older generation are in their 'house for life' and have no desire or need to move, many of those who were looking at downsizing are now using equity release instead.

Increasing number of renters are also not helping transaction levels.

I think that it is quite clear and obvious that transactions are not going to recover even with the HTB and HTB2 schemes as they only target first time buyers.

How can the number of estate agents that has shot up recently be supported?

Liar loans (self-cert,etc.) are back in vouge for some years now.

They are under different guise/name, but it is still the same crap ("impaired credit history" buyers will be accepted by FCA for HTB,etc.,up to 75 years of age you can STILL get a mortgage after alleged very recent "reductions" from 85 years of age,multiples of 7-11 times salary esp.in London,5% deposit for FT buyers which takes them 7 years to scrape the barrel in order to save that 5% deposit but all of a sudden once the Government guarrantees that they will be "capable" of paying off their mortgage,they will be "able" to pay of 5% interest per year + alleged "repayment of the mortgage" it is a liar loan surely,etc...)

Remember "Special liquidity scheme",etc. devised by Big Daddy (Gordon Brown) to "help us all" by giving Social Security benefits to Banks (for nothing in return to the taxpayer) for years.That was official,how much help they gave Banks unoficially over these years we can only guess.

We were all waiting on this forum for years for those Social Security benefits for Banks to end.Then came FLS,HTB,...

All the above (not to mention anything else) points to the fact that nothing has changed-it is much worse now.

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Lettings are going up and up - and agents get guaranteed annuity income from a let. They charge the landlord 10-15% a year + charge the tenants to re-sign a contract every year. Lettings is the new sales as the 20 something generation can never save enough to buy property near where their parents live.

The last house I rented [in the UK] the agent was just a finder, took a one off fee from me and proiduced the contract for the landlord - there were no ongoing fees for me or the landlord.

Perhaps this was the exception? I now pay 30% less rent than in the UK in a much better area, no ongoing fees here either.

Personally I blame weak landlords - I mean if I were a landlord I would not be giving free money to estate agents who do nothing.

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I think that it is quite clear and obvious that transactions are not going to recover even with the HTB and HTB2 schemes as they only target first time buyers.

How can the number of estate agents that has shot up recently be supported?

There are a number of categories of people that won't be able to sell over the coming years .

1) IO mortgage holders-4 million-most of whom,if they're outside the M25-are deep under water.

2) A good proportion of the 1.5 million BTL mortgage holders who are likewise under water.

3) Anyone who has had their hours cut or lost their job but is still able to service their current mortgage.

There are also a number of categories of people who don't want to or can't buy.

When you run some basic figures,it's hard to see how many EA's with 4/5 staff are clearing their bills each month,let alone making a profit.

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There are a number of categories of people that won't be able to sell over the coming years .

1) IO mortgage holders-4 million-most of whom,if they're outside the M25-are deep under water.

2) A good proportion of the 1.5 million BTL mortgage holders who are likewise under water.

3) Anyone who has had their hours cut or lost their job but is still able to service their current mortgage.

There are also a number of categories of people who don't want to or can't buy.

When you run some basic figures,it's hard to see how many EA's with 4/5 staff are clearing their bills each month,let alone making a profit.

Could this be bullish for prices then since the supply is being cut off? I suppose the demand is equally cut off so no.

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The major factor is that sentiment has changed hence all the ramping by the vi`s, just look at all the bank adds on the tv and it`s no coincidence that it`s the state owned banks in the main

The foundation of the pyramid is crumbling without first time buyers and it will inevitably collapse without them hence HTB ,whether this will change the centerment only time will tell

Edited by long time lurking

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Could this be bullish for prices then since the supply is being cut off? I suppose the demand is equally cut off so no.

This is the key driver of deflation historically,the slowing of demand for credit.

Increasingly,there are portions of our society,that either don't want to be in debt or can't afford to be.As yet,they haven't found a way to enforce people to take on debt.

When you look at the fixed costs of buying a house eg stamp duty,legal fees,EA fee if you're selling to fund a purchase,mortgage fees etc,it's a lot of money to be found from shrinking disposable incomes earned from increasingly insecure jobs.

Even if there isn't a substantial and speedy crash at some point-which rather depends how solvent our banks are-then we appear to be doomed to death by a thousand cuts.

Edited by Sancho Panza

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I think the reason transactions will never go back to where they were is that so much of the first rung property market is increasingly in the hands of landlords.

I am watching landlords continue to hoover up bottom rung properties in solid middle class areas.

Even without knock on effects for families, I'm not sure how long places like this will remain middle class.

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I think the reason transactions will never go back to where they were is that so much of the first rung property market is increasingly in the hands of landlords.

The foundation of the pyramid is crumbling without first time buyers and it will inevitably collapse without them hence HTB ,whether this will change the centerment only time will tell

They pyramid scheme was based on the concept of a property ladder, as hotairmail points out the majority of these properties are being bought up by landolrds [or forced to by low interest rates] and as long time lurking suggests this means the pyramid scheme is crumbling or eating it's self.

I think many people here can see that the people at the top of the ponzi who own detached houses in nice areas just cannot sell [outside London which is exceptional]

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I am watching landlords continue to hoover up bottom rung properties in solid middle class areas.

Even without knock on effects for families, I'm not sure how long places like this will remain middle class.

About a decade or two, and then those areas can degrade very rapidly. When housing is purely a fianncial proposition, especially lower level rental then the owners spend as little as possible on keeping up appearances.

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I think the reason transactions will never go back to where they were is that so much of the first rung property market is increasingly in the hands of landlords.

I agree....also many of the landlords live overseas so are happy to pay the EA the appropriate fees to manage said property......rent money being exported. ;)

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They pyramid scheme was based on the concept of a property ladder, as hotairmail points out the majority of these properties are being bought up by landolrds [or forced to by low interest rates] and as long time lurking suggests this means the pyramid scheme is crumbling or eating it's self.

I think many people here can see that the people at the top of the ponzi who own detached houses in nice areas just cannot sell [outside London which is exceptional]

Current setup means they think they don't have to sell. They just extend their leverage and start buying the stuff at the bottom and work their way up.

Feudalism, here we come, again.

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About a decade or two, and then those areas can degrade very rapidly. When housing is purely a fianncial proposition, especially lower level rental then the owners spend as little as possible on keeping up appearances.

Yes, problem is that residential market is so fragmented now, there's little in the way of gentrification.

Just swathes of obesity and visible tattoos.

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Yes, problem is that residential market is so fragmented now, there's little in the way of gentrification.

Just swathes of obesity and visible tattoos.

Perhaps the new 'Barret Box' estates will be the get out for the working classes as most landlords will not touch these as there is no profit to be made on renting new builds.

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Lettings are going up and up - and agents get guaranteed annuity income from a let. They charge the landlord 10-15% a year + charge the tenants to re-sign a contract every year. Lettings is the new sales as the 20 something generation can never save enough to buy property near where their parents live.

Yes, we are becoming a nation of renters - which means that it is inevitable that legislation that will enforce better conditions for tenants are on the way. If Cam and his band of idiots don't do it then the next lot will. Then the six months and annual tenancies that the estate agents are living off will decline dramatically.

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Yes, we are becoming a nation of renters - which means that it is inevitable that legislation that will enforce better conditions for tenants are on the way. If Cam and his band of idiots don't do it then the next lot will. Then the six months and annual tenancies that the estate agents are living off will decline dramatically.

I doubt this very much. This is isn't the Labour party of Nye Bevan or Atlee. It ain't the Liberal party of Lloyd George. Modern Labour is as removed from ordinary people as Cameron and Osborne are.

You don't think Cameron is the only one who has a bread maker and his special flour flown in from the Cotswolds do you?

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There seems to be expectations that a recovery in the property market will see transactions and prices back at their 2007/8 highs.

The advertising campaign is having an effect. It's making people who still live at home feel guilty by deriding them.

I know someone now thinking of buying because of the adverts. He has been paying off the mortgage in his parents' rental flat for years.

Another person I know has been offered 100k from his parents to buy a house, mainly because he was thinking of moving out from his parents, who had been charging him 500 a month. The parents are getting no interest in the bank after all.

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Not likely a permanent situation - as soon as another asset class (cash) becomes higher yielding - and tax system gets adjusted against people with multiple properties - it'll all reverse.

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