If It's All Booming So Much....why All The Trolls ?

[TheCountOfNowhere]

Is this the real Danny Blanchflower ?

https://twitter.com/D_Blanchflower

AreTheShiresCrashing ‏@ShiresCrashing 9m9 minutes ago

@D_Blanchflower Any comments on housing bubble, is it being caused by home owning George Osbornes HTB scheme?

0 retweets 0 favorites

2. Danny Blanchflower ‏@D_Blanchflower 1h1 hour ago Hanover, NH

   @ShiresCrashing certainly looks that way - what goes up must come down with hp/earnings ratios that high

[pipllman]

yes, Blanchflower is a regular tweeter and he has long been of the view that the UK property market is a bubble

[TheCountOfNowhere]

*A £200,000 house costs £10,000 a year to rent. Where else could I put £200,000 and get a 5% yield? Why would I sell?*

That's kind of my thinking. Been in mine for over two years, house prices would have to fall a lot in real terms to have made it worth not buying. That might happen but worst cases seanrio it will of ended up costing a bit more for my house, but not significantly and I've had the security. If it did crash massively I'm happy anyway as I've just bought a small one and would trade up.

Weird,m i pay X K a year for a house that could cost me 2X K a year + costs + maintenance to buy.

I spend 10k and save/invest 10k.

As prices were dropping gradually up to 2012 it was suddenly looking like renting would become good value.

I am, whats the sentence,....much better off with 0 risk, 0 hassle and a fabulous place to live.

Your own personal experience needs to be put to one side and you have to at the general picture.

Lots of trolls seem to use their own "personal" "anecdotal" position to show what a great idea buying is and why justify to themselves that they are doing the right thing.

It;s obviously made up bollcosk.

[TheCountOfNowhere]

I think people are too often called trolls.

I bought my place in 2013 and I'm still a bear. It was 2005 prices though and needed work doing but could afford it in cash. Its oddly "worth" 30% more than I paid now done up.

I do want to move to somewhere bigger though, so still wanting the correction.

No just the ones who are trolls.

We see no end of people with 100 tweets telling us they have bought houses and what a great investment it is, how it is better than renting and how much money they have supposedly made.

The bottom line though is....why the ***k are they here telling us this....one answer...they are trolls trying to convince the people of the good ship HPC to buy into the pyramid scam that they themselves are party to.

No ta.

[pipllman]

It was and has been ever since....SPOT ON.

Errrr....yes it has

But because of the actions of a select bunch of MPs and bankers we now fully expect another ( large-ish ) nominal correction.

If your salary and savings kept with with 2007 in real terms ( i.e. Chinese people ) , the crash has been unstoppable and obvious. Sadly for us poor folls here the real world crash hasn't been obvious and due to 0 wage growth another leg down is imminent ( off the back of the london mega buubble collapse ).

I cannot be any clearer on this....We were right...We continue to be right...now, f**k off.

If the graph that you so often refer to does show a crash, what is the problem? This website was right all along and the crash is well under way. The only thing to worry about now is timing an entry into the falling market. Your prediction of an imminent (how soon is that by the way?) leg down (how far down by the way?) may give anyone waiting for lower prices to make a purchase the opportunity they want.

I disagree. There has not been a price crash and the pattern on that chart is not a crash. I would go as far as to label it a pullback. Certainly nothing more. Yet.

Also, that graph is no reflection of the local market that any particular buyer wishes to buy in. Given the very low level of transactions and low level of stock for sale, the property that has been and is available on the market in many areas isn't necessarily a good selection of desirable property for that area.

Coming out of a situation like this, where transaction levels are low, supply is low and there is significant pent up demand for quality houses at lower prices might mean that prices fall less or more slowly than some people expect too. If there are 3 buyers waiting for a £160k 3 bed (2007 priced) house in a particular area, then the first two that come available at that price might end up selling for a bit more as those 3 buyers battle to grab one.

Prices could start to go down dramatically tomorrow, next week, next month, next year or next decade. What happens between now and then (whenever it is) isn't sensibly predictable given the predilection of governments to intervene to keep house prices up and rising.

[Guest_growlers_*]

Pointless thread.

Edited September 10, 2015 by growlers

[Roman Roady]

Count, to answer the question is simple.

Its not all booming is it.

Its not Capitalism and it hasnt been since 2008.

Since that year we have seen "Capitalism" act in a manner we were told it never could.

The whole western economic system is now an artificial construct more akin to the controlled economies of the Soviet Union and its satellites.

Just look at all of the stock market indices in the last 2 months, WILD fluctuations day by day...that is not the sign of a good world economy.

We are witnessing the end of the real British Empire...not the one we were all told about (and are now ashamed of) but the banking system it was built around and which financed it and the domination of the USA over the past 70 years...the Anglo American Banking Empire, the men behind the curtain.

They moved from the UK 100 years ago to the US.

Then we were treated to a 30 year European Civil war (with a 20 year cease fire to raise another generation).

Now they are trying to do the same again with the successor to the US.

It aint going to end well I'm afraid.

[gf3]

Weird,m i pay X K a year for a house that could cost me 2X K a year + costs + maintenance to buy.

I spend 10k and save/invest 10k.

As prices were dropping gradually up to 2012 it was suddenly looking like renting would become good value.

I am, whats the sentence,....much better off with 0 risk, 0 hassle and a fabulous place to live.

Your own personal experience needs to be put to one side and you have to at the general picture.

Lots of trolls seem to use their own "personal" "anecdotal" position to show what a great idea buying is and why justify to themselves that they are doing the right thing.

It;s obviously made up bollcosk.

Like to give some figures to that? How much is your rent and how much do you think your rented house is worth?

If you live in the SE you are probably better off renting.

[Venger]

I used to believe in HPC but a few years ago I had a rethink.

I think people on here are very good at describing the front end of the elephant but they need to walk around the back and have a look at the elephant from that angle.

A £200,000 house costs £10,000 a year to rent. Where else could I put £200,000 and get a 5% yield? Why would I sell?

South east is totally mad by the way don't buy anything unless it's got at least a 4% yield over rent.

Are you looking at it from outright owner perspective. No one is suggesting you sell, just that others have to time their market purchases carefully. You're just one market participant.

And besides, £200K is lower end of market imo, in this bubble.

Also there is interest on borrowing, over the longer term, if rates jump/revert to SVRs. And when I last checked some 50% of mortgages are on SVR of circa 4%. Many a BTLer losing their profit on just 1 month void. Math can make things get really serious.

Well, based on the loan value for standard SVR mortgage I've just looked at on my Banks website, you would actually be looking at £400k interest on a £400k loan over the next 25 years (that's if interest rates stay as low as they currently are - which I don't think anyone believes will happen.)

Now, look at some of the daft £450k terraced houses in Hale we've been discussing on the Hale & Alty thread. I can easily see those dropping by at least 10-20% in value over the next 5 years; maybe much more. But even at just over a 10% fall and no rises in interest rates, that's your £50k deposit gone (plus the loss of the interest it could have earned in an ISA/etc..) And in the first 5 years of mortgage payments, at £2.6-2.7k per month? Well, you've only paid off £26k of your house. But remember the interest on the loan? That's cost you another £121k in just the first 5 years. So, after 5 years, you are ~£180k down on a £450k house - if interest rates don't go up at all and your house only drops in value by about 12%. The reality is likely to be something much more severe, IMHO - a 30% fall in prices and interest rates at just 2% higher than today gives a loss of over £300k on a £450k house in just five years. And what have you got for that £180k-£300k of investment? Just £26k worth of equity in a house (and minus all your other costs for 5 years - moving costs, stamp duty, maintenance, etc., you don't even have that!)

So that, to me at least, is what is so frightening about buying in the current market. Not a single young person under the age of 35 I speak to can afford to buy at current prices. And for those that do, the doubling and trebling of houses prices needed to wipe out the enormous amount of interest they'd paid in the first 5-10 years of ownership is just not going to happen. Scary stuff indeed.

Edited September 10, 2015 by Venger

[pipllman]

Venger

I would suggest that many and maybe even most buyers do not do that "total ££ that I must pay to the bank over the course of the loan" calculation.

The house purchase decision is often made in a very blinkered "have I got the deposit and can I pay the mortgage now" basis. Nothing else seems to matter to them. Not the interest rate, not the variability of the interest rate, not the duration of the term, not the price relative to history or wages. Nothing except making the purchase now.

Who am I to judge if that is the right way to go about it or not? I certainly wouldn't expect to be invited to participate in such decision making by anyone. It is their call.

[gf3]

Are you looking at it from outright owner perspective. No one is suggesting you sell, just that others have to time their market purchases carefully. You're just one market participant.

And besides, £200K is lower end of market imo, in this bubble.

Also there is interest on borrowing, over the longer term, if rates jump/revert to SVRs. And when I last checked some 50% of mortgages are on SVR of circa 4%. Many a BTLer losing their profit on just 1 month void. Math can make things get really serious.

I think you are right about houses in the £400,000 bracket. I would think around here a £400,000 house would rent for £15,000 a year a much lower yield.

It really is a mixed bag You can't come up with one statement that covers all areas and all parts of the market. The calculator is your friend.

[Venger]

I would suggest that many and maybe even most buyers do not do that "total ££ that I must pay to the bank over the course of the loan" calculation.

The house purchase decision is often made in a very blinkered "have I got the deposit and can I pay the mortgage now" basis. Nothing else seems to matter to them. Not the interest rate, not the variability of the interest rate, not the duration of the term, not the price relative to history or wages. Nothing except making the purchase now.

Who am I to judge if that is the right way to go about it or not? I certainly wouldn't expect to be invited to participate in such decision making by anyone. It is their call.

Yes it is each individual's call/action in a competitive market. The market is to judge, without Breakdown 2.0 in the next HPC for your buyers who don't think vs those who do. They're not having breakdowns for renter dead-money savers. There's enough doubt being stirred up on HPC that hpcers are wrong, and might as well buy. Not for me.

Buyers at the margin have been paying prices that many of us recoil from. Pushing and falling over themselves to pay higher prices in tight supply market, and BTLers have been hard at it to trap in Generation Rent Forever too. Doesn't mean HPC won't eventually come in, allowing opportunity for those who waited for value. I will stick to the calculated risk at these prices.

I have a lot of friends who are buying houses because they need space for the kids. Somehow their tolerance for debt is much much higher than mine

I'm 31 and I moved to London four years ago. I earn a good wage, although I'm single. I don't have a million pound house. I live in a flat share. Prices were already crazy when I arrived and they're even more out of reach now. With prices rising 60k a year I literally cannot save enough to keep up.

[pipllman]

Yes it is each individual's call/action in a competitive market. The market is to judge, without Breakdown 2.0 in the next HPC for your buyers who don't think vs those who do. They're not having breakdowns for renter dead-money savers. There's enough doubt being stirred up on HPC that hpcers are wrong, and might as well buy. Not for me.

Buyers at the margin have been paying prices that many of us recoil from. Pushing and falling over themselves to pay higher prices in tight supply market, and BTLers have been hard at it to trap in Generation Rent Forever too. Doesn't mean HPC won't eventually come in, allowing opportunity for those who waited for value. I will stick to the calculated risk at these prices.

At least you are making a calculated risk. There is plenty of evidence to suggest that others are not making the calculations and do not understand the risk of the position they are taking - blind faith in HPI forever.

Overall, the calculated risk must, surely, win out over blind faith.

I don't think that half opportunity to buy, that you sort of wish you had taken (the inheritance sale that you have mentioned here), will be your last chance to get the sort of house you want for the sort of price you want to pay.

I have no way of telling you when any price fall will happen, how big any price fall will be, or how long prices will stay at any level they reach. And, if this opinion is rendered wrong for a long time by further government / central bank interference, I won't be totally surprised.

[Guest_northshore_*]

Not the clearest charts/colours for a forum, but regional house prices adjusted for RPI inflation (NI not included as changes there mess up axes for everywhere else). Edit: data is to Q2 2015, not today.

In Nationwide BS terms (their index & RPI) showing London is at real high and for rest of the country:
NORTH -26% from Q2 2005
YORKS & HSIDE -25% from Q3 2007
NORTH WEST -26% from Q2 2007
EAST MIDS -18% from Q2 2007
WEST MIDS -20% from Q3 2004
EAST ANGLIA -13% from Q3 2007
OUTER S EAST -9% from Q3 2007
OUTER MET -2% from Q3 2007
SOUTH WEST -16% from Q3 2007
WALES -26% from Q2 2007
SCOTLAND -26% from Q3 2007
N IRELAND -56% from Q3 2007
UK -16% from Q3 2007

Edited September 10, 2015 by northshore

[zugzwang]

You must have missed something:

Q.E.D.

Damn right! There are three distinct peaks on the rhs of that chart. Brown's first bubble that almost got de-railed in 2004/5, but which he and King re-inflated by imprudently lowering interest rates. Brown's second bubble in 2009/10, when he encouraged the bailed-out banks to keep lending and thus improved his chances of re-election in 2010. And the Osborne-Carney 'austerity' bubble from 2013-15.

[Le Grande Fromage]

To put it into contex how mad the whole manipulated system is,and how the Govt loves to tie "the masses" into debt which generally makes you get up at silly o'clock to get earning ££££'s to pay rent/mortgages/carloans/credit cards etc etc ponder on this.

1991 Im a civil servant clerk,my brother a clerk in London we buy jointly a maisonette for £39k in a terrible state .

Same year my mate again a clerk in london buys a 2 bed house in rochester £36k

All of us were earning 8-11K a year,I was working at the DSS 7 days a week as the recession was boom time for us, we were all circa 21 yrs old,with crap entry level jobs

Fast forward to 2015, half of my friends 34-41 age group rent,all have kids,all on "8 week wonders on a Tenancy" all their money going on rent etc and the Govt thinks this is the best way for the UK to go forward and prosper,Im surprised there is not marching in the streets,like the poll tax riots (I was there) although I recon most are working too long hours to make it,totally bonkers

[Kiwi Toast]

Quite a few equities pay 5% dividends. Many more pay 4+%. Considering the much higher transaction costs for property and maintenance costs, 4.x% on equities should be as good as 5% on property.

Equities outperform property in the long run. I think outperformance is particularly likely now.

Oh and if you're bullish and want to take a risk you can get leverage on equities just like you can on property.

[WideAsleep]

You made a troll bait thread? Why feed them? Feed them and they will get stronger.

[gf3]

Quite a few equities pay 5% dividends. Many more pay 4+%. Considering the much higher transaction costs for property and maintenance costs, 4.x% on equities should be as good as 5% on property.

Equities outperform property in the long run. I think outperformance is particularly likely now.

Oh and if you're bullish and want to take a risk you can get leverage on equities just like you can on property.

Very good point. I am quite heavy on equities but knowing how fast they can drop I do feel safer with a property. A bit of diversity is good.

[gf3]

You made a troll bait thread? Why feed them? Feed them and they will get stronger.

But what is a troll?

I thought a troll was someone who would say anything just to upset someone. I will never learn anything if I only mix with people that only agree with everything I say. Having people disagree with me can make me 1) change my mind and educate me or 2) after hearing all the counter arguments make me feel safer in my original theory.

[Bland Unsight]

But what is a troll?

I thought a troll was someone who would say anything just to upset someone. I will never learn anything if I only mix with people that only agree with everything I say. Having people disagree with me can make me 1) change my mind and educate me or 2) after hearing all the counter arguments make me feel safer in my original theory.

Troll.

[dances with sheeple]

You made a troll bait thread? Why feed them? Feed them and they will get stronger.

[Benbec]

The primary thesis of this website (and correct me if I am wrong on this) is that house prices had increased by so much that a price crash was inevitable and imminent

That has not happened, quite the opposite in fact - apart from a small glitch late 07 to mid 09 - houses prices have remained at exceptionally high levels when compared to anything seen previously and, especially in some areas, have increased considerably to levels that, on some measures, are record highs.

Every time there has been a sign that the market was going to enter a sustained period of price declines, something has been done (with taxpayers money) to prevent that.

That is down to interference in the market by governments and central banks. Of that there is no question.

But it doesn't change the fact that the house price crash expected by most here has not happened. Yet.

I don't take any delight in that, it is simply a fact

It doesn't mean that a house price crash isn't going to happen, just that it hasn't.

Predicting when it might start is impossible. Predicting its magnitude is impossible. Predicting its duration is impossible.

Acting in the market as if it is not even a possibility is reckless. Staying out of the market in expectation that it is imminent is frustrating and a not inconsiderable, albeit calculated, risk.

None of that means that this forum is any less educated or educational than others.

I'm one of these people who can't wait any longer. Have just had an offer accepted (considerably above asking price) for a family home in Edinburgh. I can afford the mortgage. I accept the possibility that prices will drop, possibly by quite a bit (20-30% like in 2008 in Edinburgh), but because I don't know when that will happen and I have children growing up I can't wait for yet more years. It looks to me as if houses are greatly overpriced in relation to earnings, but the lack of supply and low interest rates (factors which will persist for many years) are maintaining the high prices.

I seriously thought about waiting another year or so (I'm renting just now) but it felt like things were on hold and you get tired of that. Ultimately I am buying a house that I like, that I can afford, and that I'll probably stay in for 15-20 years+.

I think a lot of people are in this kind of position...

[Benbec]

If the graph that you so often refer to does show a crash, what is the problem? This website was right all along and the crash is well under way. The only thing to worry about now is timing an entry into the falling market. Your prediction of an imminent (how soon is that by the way?) leg down (how far down by the way?) may give anyone waiting for lower prices to make a purchase the opportunity they want.

I disagree. There has not been a price crash and the pattern on that chart is not a crash. I would go as far as to label it a pullback. Certainly nothing more. Yet.

Also, that graph is no reflection of the local market that any particular buyer wishes to buy in. Given the very low level of transactions and low level of stock for sale, the property that has been and is available on the market in many areas isn't necessarily a good selection of desirable property for that area.

Coming out of a situation like this, where transaction levels are low, supply is low and there is significant pent up demand for quality houses at lower prices might mean that prices fall less or more slowly than some people expect too. If there are 3 buyers waiting for a £160k 3 bed (2007 priced) house in a particular area, then the first two that come available at that price might end up selling for a bit more as those 3 buyers battle to grab one.

Prices could start to go down dramatically tomorrow, next week, next month, next year or next decade. What happens between now and then (whenever it is) isn't sensibly predictable given the predilection of governments to intervene to keep house prices up and rising.

That's my problem. In the school catchment area I need, there are usually 1-2 houses on the market that suit me and are in my price range at a given time-point.

And prices *could* go down dramatically in the next few months (and if I have bought at the peak it will hurt to know this) but I'll bet you could find lots of posts from 2012, 2013, 2014 on this site that called the peak then as well.

[Bland Unsight]

The members here get frothy about BTL 'going to get gutted', people who bid it all up with liar loans are going to burn in hell, etc - but it still hasn't happened.

Troll.

Read the whining from the Property11Later blowhards; it's not just "the members here" suggesting that they are going to be gutted by a tax change that gives every appearance of being designed to gut them.

Likewise anyone foolish enough to have financed interest-only with a cheeky liar loan. They are the famed mortgage prisoners. And there are hundreds of thousands of them. Outside London and the South East some of them are royally screwed. Unable to sell without wiping themselves out and leaving themselves with no deposit for a new place and unable to finance a switch to a repayment mortgage, even at these comedy low rates, because they can't pass LTI and LTV requirements.

Obvious your suggestion that the the thing that is going to happen in 2020 hasn't happened yet is a most excellent point, and well made.The other thing that, according to you, hasn't happened, has happened.

Hence a cracking critique of the position of "the members" that you are offering here, (a category that includes you BTW).