Venger Posted January 20, 2014 Share Posted January 20, 2014 But seriously underwriting standards are still much much tighter than they were back in the day 7 times income anyone? 120% ltv? Not seen anything even close yet...... I am looking at macro conditions and will trade what I see... But we still have a rate rise cycle to complete...I will derive no pleasure from any spring bounce if it happens. I don't care where prices go too much... I'm just bringing it up because it does happen...annoyingly... Estate agents ...what can you do? There are so many possible triggers, including tightening underwriting standards, with house prices refinflated beyond peak in most areas I'm seeking to buy a home in. Estate Agents, and their profits, well one EA had a big go at Rightmove just the other month. Many are struggling for supply in this low-inventory market, so its not fully paradise for them, price rises, although many talk like it is. And EA's also struggling managing sellers expectations with bubble fever, which has downsides for them. Sounds like you're fully buying into this new normal. Govs brought in HTB2 to help people pay higher prices. When buyers can't buy via schemes, prices slide at the margin of what people can actually afford to pay with normal mortgage/own financial positions.. Yet low inventory. too and HTB2. When prices rise, it should bring out more sellers, but that's not particularly happening at all yet, despite almost lottery win HPI house valuations for many older owners. Mania to me. http://www.housepricecrash.co.uk/forum/index.php?showtopic=194235 Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted January 20, 2014 Share Posted January 20, 2014 City crooks/Wall St. crooks, what's the difference? It's one big pool of effluent and they all play in it. Bernanke's QE infinity sent the US stock market parabolic last year, naturally a lot of that 'wealth' ran up the Thames like the tide and left a similar stink behind as it passed. But Osborne's bubble is very different from Brown's. London specific. Cash based rather than debt based. Speculation driven rather than owner-occupier driven, and likely to endure only as long as ZIRP and QE are likely to endure. Osborne is the one variable I can't factor. How much he spends this year trying to win the GE could hold the market up into 2015, I'll give you that. The net lending graph is quite something. No wonder transaction levels are well down. Quote Link to comment Share on other sites More sharing options...
Neverwhere Posted January 21, 2014 Share Posted January 21, 2014 But seriously underwriting standards are still much much tighter than they were back in the day 7 times income anyone? 120% ltv? Not seen anything even close yet...... I am looking at macro conditions and will trade what I see... But we still have a rate rise cycle to complete... I will derive no pleasure from any spring bounce if it happens. I don't care where prices go too much... I'm just bringing it up because it does happen...annoyingly... Estate agents ...what can you do? If house prices continue to outpace stagnant wages it will precipitates a crash all by itself. Foreign investors might bolster London prime but they'll want to realise their gains so are they really going to stick around once the regions/outer boroughs start to fall? I don't think so. Bring on the spring bounce, the sooner this thing blows its top the better! Quote Link to comment Share on other sites More sharing options...
Venger Posted January 21, 2014 Share Posted January 21, 2014 City crooks/Wall St. crooks, what's the difference? It's one big pool of effluent and they all play in it. Bernanke's QE infinity sent the US stock market parabolic last year, naturally a lot of that 'wealth' ran up the Thames like the tide and left a similar stink behind as it passed. But Osborne's bubble is very different from Brown's. London specific. Cash based rather than debt based. Speculation driven rather than owner-occupier driven, and likely to endure only as long as ZIRP and QE are likely to endure. Osborne is the one variable I can't factor. How much he spends this year trying to win the GE could hold the market up into 2015, I'll give you that. So that chart is net lending. Banks still getting their money back from their debtors, even at lower rates, reducing their exposure and position, and clearly less appetite to lend by them, and borrow by individuals. eg: 2012. The figures, which include loan repayments, show a 3% drop in net lending in the final quarter of 2011. http://www.bbc.co.uk...siness-17009985 2013: http://www.bbc.co.uk...siness-21653603 I can see a way the banks can bolster their lending way back up, in the future, and therefore their profits, with all the owner equity/outright home ownership out there in the housing market. Via HPC. Cash based investment into property, at higher prices, is also a negative to banks who aren't doing the lending at peak prices. No real profit in it for them. Yet more homes to lend against at in the future, huge volume of mortgage to younger people, at lower prices, imo, I hope. Unless banks never want to really lend again. Quote Link to comment Share on other sites More sharing options...
MARTINX9 Posted January 21, 2014 Share Posted January 21, 2014 If house prices continue to outpace stagnant wages it will precipitates a crash all by itself. Foreign investors might bolster London prime but they'll want to realise their gains so are they really going to stick around once the regions/outer boroughs start to fall? I don't think so. Bring on the spring bounce, the sooner this thing blows its top the better! It was very interesting to note the spin on the Rightmove figures today in terms of London - with the talk of house prices in London rising '7% annually" in January. This might have led people to believe asking prices had risen 7% in a month. Interestingly - and I only saw this hidden away in the City pages of the Standard - there were very big month on month falls in asking prices in January in Westminster (down 8.3%) and Kensington (down 6.9% in a month). Now some of us might suggest an 8.3% fall in a month is a crash in prime London. No doubt it will rebound when all the sellers return from their winter ski breaks - but I didn't see any of the other papers highlight the big fall in prime central London. When prices there are falling - and the biggest rises are in Barking and Dagenham perhaps we truly have reached the top of the bubble - or probably not! http://www.standard.co.uk/business/business-news/london-house-prices-tower-hamlets-beats-kensington-as-it-sets-property-prices-pace-9071273.html "The average asking price demanded by sellers in Tower Hamlets jumped 3.6% to £531,917 in January — closely followed by Barking & Dagenham, where prices rose 3.4%. In contrast, Westminster saw an 8.3% slide in asking prices, albeit to £1.39 million while prices in Kensington & Chelsea were down 6.9% to a mere £2.05 million. Across the capital, overall average asking prices eased 0.2% to £514,704 in January." Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 (edited) 1390265740[/url]' post='1102452602']http://www.standard....ce-9071273.html "The average asking price demanded by sellers in Tower Hamlets jumped 3.6% to £531,917 in January — closely followed by Barking & Dagenham, where prices rose 3.4%. In contrast, Westminster saw an 8.3% slide in asking prices, albeit to £1.39 million while prices in Kensington & Chelsea were down 6.9% to a mere £2.05 million. Across the capital, overall average asking prices eased 0.2% to £514,704 in January." This is interesting because it means that FDI into prime is falling while the increase in January was driven entirely by the regions... I'm actually pretty bearish about the super prime market.. I don't think the inflows will continue until the tax/political situation is more clear ie après the election... But hey what do we care if apartments cost 4000 psf in belgravia or 3000 psf.... That's an entirely different ladder of global cash buying dudes ...chinese Russians Arabs Indians etc... And it's skewed at the top end by the trophy 100-200 million quid homes... Tower hamlets is actually way more representative of the city and there you can see that things are on the up but off a low base in line with what recruitment companies are saying... While you might think that price falls could/may/might ripple out from there the strong financial position of many owners in super prime. means in the event of proper price falls the market just becomes totally illiquid... Edited January 21, 2014 by jonpo Quote Link to comment Share on other sites More sharing options...
Venger Posted January 21, 2014 Share Posted January 21, 2014 While you might think that price falls could/may/might ripple out from there the strong financial position of many owners in super prime. means in the event of proper price falls the market just becomes totally illiquid... You were saying housing markets take forever to turn a moment ago, and no crash forces to be really seen. Now you're talking sudden market illiquidity events. Otherwise known as conditions for value crash. That's fine with me. Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 You were saying housing markets take forever to turn a moment ago, and no crash forces to be really seen. Now you're talking sudden market illiquidity events. Otherwise known as conditions for value crash. That's fine with me. Yes, surely there has to be some ripple, even if the effect is delayed. Million-quid properties falling by hundreds of k will eventually force sellers of FTB properties to cut by 10k. Quote Link to comment Share on other sites More sharing options...
Venger Posted January 21, 2014 Share Posted January 21, 2014 Yes, surely there has to be some ripple, even if the effect is delayed. Million-quid properties falling by hundreds of k will eventually force sellers of FTB properties to cut by 10k. Ah sarcasm. The ripple? Who knows? in the event of super-prime falling like that, cost jobs as super-prime equity goes poof at such a rate, affect spending, and might push up borrowing costs. So it quite quickly takes things out of the sellers hands, and some flinch, bringing down asking prices. Stoking more panicked supply to market. Lower transaction prices of just a few homes affect values of surrounding houses. And some buyers may decide to skip FTB level entirely, if prices fall harder at the overly inflated 2nd tier/middle, putting more downward pressure on FTB properties. Putin is now calling (I mean ordering) their central bank to ease borrowing cost for their productive firms. Super-prime need super-prime money always willing to be there willing to bid at previous transaction prices... and if such buyers drop off.. ? Lots of triggers for London super-prime. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 21, 2014 Share Posted January 21, 2014 Ah sarcasm. The ripple? Who knows? in the event of super-prime falling like that, cost jobs as super-prime equity goes poof at such a rate, affect spending, and might push up borrowing costs. So it quite quickly takes things out of the sellers hands, and some flinch, bringing down asking prices. Stoking more panicked supply to market. Lower transaction prices of just a few homes affect values of surrounding houses. And some buyers may decide to skip FTB level entirely, if prices fall harder at the overly inflated 2nd tier/middle, putting more downward pressure on FTB properties. Putin is now calling (I mean ordering) their central bank to ease borrowing cost for their productive firms. Super-prime need super-prime money always willing to be there willing to bid at previous transaction prices... and if such buyers drop off.. ? Lots of triggers for London super-prime. Brilliant...super-prime, the new paradigm. idiot-prime more like. Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 Yes, surely there has to be some ripple, even if the effect is delayed. Million-quid properties falling by hundreds of k will eventually force sellers of FTB properties to cut by 10k. nah If I own 5 factories out in china and use 100million in profits to buy a flat in belgravia. and then that house drops in price to worthless... how many factories do i own now ? likewise If a nuclear bomb hits mayfair and this dude looses a couple of billion http://en.wikipedia.org/wiki/Gerald_Grosvenor,_6th_Duke_of_Westminster do you really think that it will affect the price of 2 bed semis in scunthorpe ? the guy will still own all his inherited land... he will still receive all his ground rents from his super rich tennants.. my heart would bleed for him if he did loose a couple of billion it really would... but it wouldn't change much really..would it ? Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 nah If I own 5 factories out in china and use 100million in profits to buy a flat in belgravia. and then that house drops in price to worthless... how many factories do i own now ? likewise If a nuclear bomb hits mayfair and this dude looses a couple of billion http://en.wikipedia...._of_Westminster do you really think that it will affect the price of 2 bed semis in scunthorpe ? the guy will still own all his inherited land... he will still receive all his ground rents from his super rich tennants.. my heart would bleed for him if he did loose a couple of billion it really would... but it wouldn't change much really..would it ? Every heard of Chaos Theory. A butterfly flaps its wings in Tokyo... Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 Ah sarcasm. The ripple? Who knows? in the event of super-prime falling like that, cost jobs as super-prime equity goes poof at such a rate, affect spending, and might push up borrowing costs. So it quite quickly takes things out of the sellers hands, and some flinch, bringing down asking prices. Stoking more panicked supply to market. Lower transaction prices of just a few homes affect values of surrounding houses. And some buyers may decide to skip FTB level entirely, if prices fall harder at the overly inflated 2nd tier/middle, putting more downward pressure on FTB properties. Putin is now calling (I mean ordering) their central bank to ease borrowing cost for their productive firms. Super-prime need super-prime money always willing to be there willing to bid at previous transaction prices... and if such buyers drop off.. ? Lots of triggers for London super-prime. sorry, not intended as sarcasm. Everything is connected to everything. Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 You were saying housing markets take forever to turn a moment ago, and no crash forces to be really seen. Now you're talking sudden market illiquidity events. Otherwise known as conditions for value crash. That's fine with me. I was saying that the macro conditions for the whole market usially take a while to change... On a micro level there is always a spectrum of value and price changes in the market... and there are specific events which can influence prices at a microlevel e.g. Imagine a coal pit which is the major employer in a small town closes down? Imagine the gov introduces 100% capital gains tax on properties over 10 mill ? Imagine the effects of crossrail 1/2/3 etc Imgaine HTB3 gives free deposits to people under 30 say. The point is that these events may happen at any time... and under a variety of market conditions. but they usually do not change the direction of the whole market. In a bull market although prices generally increase on average.... there are overvalued shares/houses which will fall and likewise undervalued shares/houses that will fail to rise. the goal of a market participant is always to search for value under any kind of general market conditions Quote Link to comment Share on other sites More sharing options...
Venger Posted January 21, 2014 Share Posted January 21, 2014 sorry, not intended as sarcasm. Everything is connected to everything. As I posted just the other day in regional forum... John Muir (1938-1914), although probably wasn't talking about finance seeing as he was a Scottish born American naturalist / wildlife preservation guy, but holds true for complex markets I would have thought. When we try to pick out anything by itself, we find it hitched to everything else in the universe. 5 factories in China eh jonpo. Perhaps that owner may begin to wish he'd not over-leveraged for 5. Factory output stats ot any concern to you there? When China authorities seems to be mostly jawboning, injecting liquidity here and there, once quite measly amount, and yesterday a new round, not revealing exactly how much, trying to hold down the interbank lending rate. Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 I was saying that the macro conditions for the whole market usially take a while to change... On a micro level there is always a spectrum of value and price changes in the market... and there are specific events which can influence prices at a microlevel e.g. Imagine a coal pit which is the major employer in a small town closes down? Imagine the gov introduces 100% capital gains tax on properties over 10 mill ? Imagine the effects of crossrail 1/2/3 etc Imgaine HTB3 gives free deposits to people under 30 say. The point is that these events may happen at any time... and under a variety of market conditions. but they usually do not change the direction of the whole market. In a bull market although prices generally increase on average.... there are overvalued shares/houses which will fall and likewise undervalued shares/houses that will fail to rise. the goal of a market participant is always to search for value under any kind of general market conditions Fair point, but unfair comparison to London. more than 1/4 of UK households are in London and SE and thus could reasonably be expected to be affected by the 'event' of a crash in London prime through ripple out within 6-18 months Quote Link to comment Share on other sites More sharing options...
TwoWolves Posted January 21, 2014 Share Posted January 21, 2014 Asking prices are after all just that - asking. I remember January 2007 starting much like this and it turned even before the market crash came, people don't remember that. Prices just became so silly people began to realize it was silly. Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 Every heard of Chaos Theory. A butterfly flaps its wings in Tokyo... Yes of course i am well aware of chaos theory.. but its not all that useful for predicting house prices.. Every heard of the johari window? You can watch them there butterflies in Tokyo and base your home trading strategy around it if you like? I on the other hand as a rational risk neutral housing consumer ...would prefer to look at the right-move data.... and facts.. and when the facts change so will I... what would you do ? Your looking at an asset class which has significant fictional costs (taxes) associated with trading... people aint going to go running off at the first sign of trouble unless some serious sh1t goes down... like wise they aint going to buy at the drop of a hat either... they got to have a deposit saved.. and stuff... but If houses are going up... and other people know they are going up because the read it in the right move data like i did... does that make them more likely to buy.. or sell ? Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 Fair point, but unfair comparison to London. more than 1/4 of UK households are in London and SE and thus could reasonably be expected to be affected by the 'event' of a crash in London prime through ripple out within 6-18 months well Belgravia and Mayfair are the very top of the pyramid ontop of another big pyramid (greater london).. most areas of london didnt really feel the boom from those areas when they went up so doubt we will feel it much if these areas cool or even fall back to what most normal people would call sanity. London prices are probably only going to fall if employment falls significantly and/or mortgage rates rise significantly e.g. 5% plus... none of these look likely in the short term. Also London is far more geared towards income/returns from capital markets (capital by name, capital by nature). Its not like global stock markets are on a downward path at the moment. they are setting new higher highs. Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 Yes of course i am well aware of chaos theory.. but its not all that useful for predicting house prices.. Every heard of the johari window? You can watch them there butterflies in Tokyo and base your home trading strategy around it if you like? I on the other hand as a rational risk neutral housing consumer ...would prefer to look at the right-move data.... and facts.. and when the facts change so will I... what would you do ? Your looking at an asset class which has significant fictional costs (taxes) associated with trading... people aint going to go running off at the first sign of trouble unless some serious sh1t goes down... like wise they aint going to buy at the drop of a hat either... they got to have a deposit saved.. and stuff... but If houses are going up... and other people know they are going up because the read it in the right move data like i did... does that make them more likely to buy.. or sell ? So you accept that Right move 'data' and facts are different things? Don't think johari window is relevant. If it is, it is less so than Chaos Theory which underpins the connectedness yet unpredictability of events. People are less rational and more impulsive than you give credit for, in my opinion. And they can take decisions quickly that ripple out in waves affecting everyone. Quote Link to comment Share on other sites More sharing options...
bearwithasorehead Posted January 21, 2014 Share Posted January 21, 2014 well Belgravia and Mayfair are the very top of the pyramid ontop of another big pyramid (greater london).. most areas of london didnt really feel the boom from those areas when they went up so doubt we will feel it much if these areas cool or even fall back to what most normal people would call sanity. London prices are probably only going to fall if employment falls significantly and/or mortgage rates rise significantly e.g. 5% plus... none of these look likely in the short term. Also London is far more geared towards income/returns from capital markets (capital by name, capital by nature). Its not like global stock markets are on a downward path at the moment. they are setting new higher highs. Again, you make what seem like reasonable points, but the nature of 'financial' pyramids is that they are unstable unlike the ones in Egypt. While I am generally skeptical about the doom merchants on this site and the pessimistic side of me kind of agrees with you, I don't agree that it would only be the triggers you indicate that would induce (some) falls in London. And though a lot of wealth is concentrated there, not much of it filters to the vast majority of buyers and sellers of houses. Quote Link to comment Share on other sites More sharing options...
lastlaugh Posted January 21, 2014 Share Posted January 21, 2014 Asking prices are after all just that - asking. I remember January 2007 starting much like this and it turned even before the market crash came, people don't remember that. Prices just became so silly people began to realize it was silly. Yes, I remember that about 2007 too. The silly prices did indeed begin to turn before the crash. Funny, because conventional wisdom has it that the financial crisis caused UK house prices to fall, when in fact they had run out of steam of their own accord. This feels like 2007 again, but with far worse macro economic conditions. Quote Link to comment Share on other sites More sharing options...
jonpo Posted January 21, 2014 Share Posted January 21, 2014 1390312122[/url]' post='1102452956']Again, you make what seem like reasonable points, but the nature of 'financial' pyramids is that they are unstable unlike the ones in Egypt. While I am generally skeptical about the doom merchants on this site and the pessimistic side of me kind of agrees with you, I don't agree that it would only be the triggers you indicate that would induce (some) falls in London. And though a lot of wealth is concentrated there, not much of it filters to the vast majority of buyers and sellers of houses. You cannot compare the market for housing...to say ponzi schemes like bitcions... Bitcions generate very little.. Where as housing produces a roof over all our heads. The pyramid is a structure which has been used since ancient times... Most companies are pyramid like for instance... And the military is another well known autocratic pyramid. Each new generation is born with nothing and must buy and inherit assets from the elders.. It's the same as it ever was. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 21, 2014 Share Posted January 21, 2014 You cannot compare the market for housing...to say ponzi schemes like bitcions... Bitcions generate very little.. Where as housing produces a roof over all our heads. The pyramid is a structure which has been used since ancient times... Most companies are pyramid like for instance... And the military is another well known autocratic pyramid. Each new generation is born with nothing and must buy and inherit assets from the elders.. It's the same as it ever was. That's perfectly true, of course. Which is why pyramid schemes are often so successful and enduring! They look like genuine businesses until with a flourish the curtain is pulled back and the charade revealed. Bernie Madoff's operation being a pre-eminent example. Quote Link to comment Share on other sites More sharing options...
Venger Posted January 21, 2014 Share Posted January 21, 2014 Yes, I remember that about 2007 too. The silly prices did indeed begin to turn before the crash. Funny, because conventional wisdom has it that the financial crisis caused UK house prices to fall, when in fact they had run out of steam of their own accord. This feels like 2007 again, but with far worse macro economic conditions. Interest rates slowing demand to pay higher prices, and US sourced liquidity or price-concern problems already feeding through from early 2007 from US. People hold and hold. Very few people get out with 90% gains or more in a bear market. They hold and hold all the way down. Lower prices set by few sellers on the margin. jonpo's old top of the pyramid, housing rich, have been forced to lose value because it suited the interest of emerging young people in power before. Such as in the last HPC of the late 80s and early 90s. Allowing people like Cameron to buy his home at value in Notting Hill early 90s, and many others to trade up, including some very grateful families I know of in London, who were parents in their mid/late 30s at the time. It suited the dynamic. Perhaps also suiting dynamic for bankers too, with loads of fresh new lending at lower asset values... breaking up overextended businesses to split assets to many other people, and more housing transactions maybe. Quote Link to comment Share on other sites More sharing options...
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