'trouble In Paradise': Haart Boss Warns Of Big Slump In Buyers, Says House Prices Have Hit A Ceiling

[Fully Detached]

Sounds too good to be true dosent it? No doubt remain will be along soon to pi55 on everyone's fire.

The most disturbing thing for me was Osborne saying that we should be worried about a possible 18% hit (side note it's a carefully worded 'hit' including predicted gains over next few years and not a haircut), yet he has never mentioned once that we should be worried about the disgusting increases over the last few years. This tells me that we have a Chancellor that is perfectly happy with annual double digit growth.

The other VI spin that is being pushed, started by Osborne, and picked up by others on Twitter is that a collapse in prices won't make houses cheaper. Kid you not! The argument goes cheaper houses, higher rates = houses still unaffordable so don't wish for cheaper prices you plebs! That does not explain why every house in London was actually bought at some point by people in normal jobs, average salaries who could not dream of buying the same house today but somehow managed to buy it in the low prices, higher rates era.

That alone shows who these people are working for. It ain't you and me. I will continue to do the exact opposite of what they want me to do.

[Blod]

The other VI spin that is being pushed, started by Osborne, and picked up by others on Twitter is that a collapse in prices won't make houses cheaper. Kid you not! The argument goes cheaper houses, higher rates = houses still unaffordable so don't wish for cheaper prices you plebs! That does not explain why every house in London was actually bought at some point by people in normal jobs, average salaries who could not dream of buying the same house today but somehow managed to buy it in the low prices, higher rates era.

And whilst that was being touted Stuart Rose was warning wages would surge.

Up thread the old 'rent it out' meme was trotted out. How does that work now with the stamp duty change. Do you pay the extra every time you move then claim it back, or would the HMRC try to recover the duty if you've failed to sell your old home.

[winkie]

Who will stay in a place for long where they no longer feel welcome?.....working solely to put a roof over your head....where the balance of community and quality of life is falling not improving.

Edited May 25, 2016 by winkie

[canbuywontbuy]

Who will stay in a place for long where they no longer feel welcome?.....working solely to put a roof over your head....where the balance of community and quality of life is falling not improving.

You summed up Northampton (town centre 3 mile radius at least). The only aspiration is to get the hell out (I am).

Edited May 25, 2016 by canbuywontbuy

[thewig]

And whilst that was being touted Stuart Rose was warning wages would surge.

Up thread the old 'rent it out' meme was trotted out. How does that work now with the stamp duty change. Do you pay the extra every time you move then claim it back, or would the HMRC try to recover the duty if you've failed to sell your old home.

The 'rent it out' MEME just evolved, innit.

[Venger]

Once upon a time agents valued the home..now vendors are valuing their own homes....they think everyone wants it and can pay for it.....no sale no fee,no business...or diversify into rental, same problems....more stuff out there than people are ready, willing or able to pay.

Used to find that difficult to believe... but apparently so.

Owners seem to have had way too much involvement/power in the asking price side of things, for way too many years .

Also the EAs too often having to massage egos. How did it ever get to EAs winning instructions by pitching higher. Thrilling.

Actually reminds me of a story from 2008-09 on HPC. Woman selling terrace house edge of London. Had 3 EAs around. "I went with the higher bid".

London Evening Standard: Help! I'm suffering brickor mortis

Jonathan Prynn

25.07.08

..."But we're getting married in November and have grown out of the cottage so we're looking for somewhere bigger in the same area, as it's local to where I grew up," she says. The cottage is on the market for £425,000 but that is as low as they are willing to go. Her estate agents say they don't understand why no one will buy it.

"If there's still no movement between now and late summer, we'll take it off the market so we don't have to worry about it during the wedding and then maybe think again next summer."

The situation was all very different last August when Rebecca first put the cottage on the market.

"We had bought it in 2006 for £304,000 and were thrilled when we had two local estate agents - Gascoigne Pees and James Anderson - value it at £479,000 and £469,000 respectively. We accepted the higher bid and shortly afterwards it went on the market. We had tens of viewings, but no offers. I suggested to the agent that this might be price-related, but - as estate agents do - they kept saying, 'We don't understand why it's not selling, it's such a lovely price' and told us not to lower it."

Sellers even into the crunch felt they called the shots... but for a few months they began not to - some reality - ... until rates slashed and QE, and then back to owners knowing what it is worth, and being big part of what it ever goes on market for.

Luckyone: My expectation is that this market segment will behave in the same fashion as any other market which has topped out. Supply will increase, volume will decrease for quite a while before prices begin to crumble.

Many of us think that the entire market pricing structure is driven by the high priced segment, as all other properties are priced based on compromises versus the ideal (location, size, commuting etc). When the top end crumbles, everything else will follow.

Also early days just as Bubble 1.0 taking off (imo), EAs seemed to be part of setting value. Seems some got carried away, or differed a lot in opinion, from about this time. And many buyers seem to associate more debt with what they're worth/house worth more.

1997

click image to expand.

What a real market is supposed to be about.... for valuing.

Conformity: If the neighbourhood consists of 2,000 square feet, three-bedroom home, improving a property above that standard may not be profitable. Converting a home by adding 500 square feet and changing the internal layout to four bedrooms and three baths could be money poorly spent, based on the principle of conformity.

Contribution: This principle acknowledges additional market value one may expect from improving a property is not equal to cost, but to the contribution those changes make to actual market value. Thus, in a low-demand market, an improvement may add only $2,000 to market value even though the actual cost was $5,000.

Substitution: This principle is, "A property's greatest potential market value is limited by the market value of other, similar properties." Thus is would not be realistic to judge market value in a vacuum. Without considering the market value of similar properties located in a similar area, we cannot accurately analyze market value of any property. This theory is easily observed. When two similar properties are for sale, the lower-priced one will tend to sell first and, as a result, the market value of the remaining property may be lowered.

Demand innit. Population growth. Small island. ..... the housing market runs on money.

laurejon

I have bought several plots of land over the years for development. I purchased an old shack with no permission on the south coast for 40K in 1989 and gained permission for a pair of semi-detached chalet bungalows. 15months later having completed that project and sold them on and made a tidy sum I purchased a very similar plot same size but with outline for 115,000 and used the same drawings for th detailed application that was passed immediately using the other sites permission as a precedence. The recession hit, and the bank revalued the site I had paid 115,000 for at 25,000

During the recession, you could not give a plot of land away, it would cost more to build a house than the house was worth on the open market, and that did not include the land prices. Therefore land was essentially worthless. I had seven days notice to repay 400k in the last recession, which comes as a bit of a shock. But business is business, and the banks will tell you, that if you cant sell it, they are only too happy to sell it for you. Another property I was building at the time was valued off plan at 300K that was valued by the bank at 150K which is less than the cost of the build let alone the land.

Edited May 25, 2016 by Venger

[Venger]

I sussed this government a long time ago, I think most on here did. They wanted, encouraged, made policy, so that we would get rampant property inflation. The only thing is that they could never admit to it while shedding crocodile tears for the "poor priced out young FTB's" as they made more debt available to them.

Now their hand has been forced, they know how so many feel about their illusionary house price wealth, so they had to come out and say what they did, now it is official.

And of course they have list me as a voter, unless of course they get David Davis into number 10.

They've allowed BTLers to go on the double-down, and recapitalised the banks. All lined up for HPC. Maybe some of the BTLers you know will feel it, including the guru.

Lot of BTLers have danced into it.

You member 1990s HPC don't you, from being homeowner in early 20s.

Surely 90s HPC gave you opportunity to upsize, until you sold in messy divorce while back, after long wave HPI? Wouldn't it have cost you more to upsize without 90s HPC?

Seems you were still left in okay position from 90s recession to be able to upsize!!

The way some people go on about a future HPC today (the pain on all the innocents - noooooooo - innocence) surprised they didn't hand over all their money to those who were struggling in early 90s, rather than upsizing.

I always remember the early 1990's recession.

We were all Jack the lads in our late teens early 20's with all of us having our first homes, I kid you not.

We were all working, many of us in the trades, plumbing, sparks etc and then bang the recession really took hold. I remember new builds mothballed and not restarted for four or five years. Some mates and people I knew from site who were all a jolly bunch all of a sudden started losing homes, relationship break ups, all kinds of related hardships.

Simple fact is you never know who is swimming and clowning about in the sea without their bathing costumes util the tide goes out.

I can see 20 year old's being ok with renting as they find their way in life, I personally was in my early 20's when I purchased my first home and moved up the ladder to my second home at 27. I can see some 30 year old's tolerating renting and 40 years starting to get really p**sed off with having to still pay a high percentage of their wages for rent. But then you start to get people dropping out, and why not.

People wanting to take responsibility for their lives with pensions, paying bills and essentials thinking why work a 40/50 hour week to go into my 50's still handing over everything I work for while some people live better and have done nothing. I am starting to see it now, people cashing in pensions, giving up jobs and thinking the Government can now look after me until I peg it, and I do not blame them

[giesahoose]

Must still be heavily regional. A few people in my work have been buying and selling recently. Flats and houses are going to closing date and selling substantially over home report value.

[Fully Detached]

I sussed this government a long time ago, I think most on here did. They wanted, encouraged, made policy, so that we would get rampant property inflation. The only thing is that they could never admit to it while shedding crocodile tears for the "poor priced out young FTB's" as they made more debt available to them.

Now their hand has been forced, they know how so many feel about their illusionary house price wealth, so they had to come out and say what they did, now it is official.

And of course they have list me as a voter, unless of course they get David Davis into number 10.

In fairness, I apply that to all parties equally.

[eek]

They've allowed BTLers to go on the double-down, and recapitalised the banks. All lined up for HPC. Maybe some of the BTLers you know will feel it, including the guru.

Lot of BTLers have danced into it.

You member 1990s HPC don't you, from being homeowner in early 20s.

Surely 90s HPC gave you opportunity to upsize, until you sold in messy divorce while back, after long wave HPI? Wouldn't it have cost you more to upsize without 90s HPC?

Seems you were still left in okay position from 90s recession to be able to upsize!!

The way some people go on about a future HPC today (the pain on all the innocents - noooooooo - innocence) surprised they didn't hand over all their money to those who were struggling in early 90s, rather than upsizing.

The only innocents are those who bought their first home in the last 5 years. BTLers will get what their greed deserves. People who bought prior to 2007 should have overpaid enough on their mortgage to have little or no mortgage yet. if they haven't well self inflicted no sympathy...

Meanwhile I'm going to sit back with popcorn and watch

Edited May 25, 2016 by eek

[Venger]

That's right GS - I really do.

However I'm going to drop it now for I've made my views clear.

Post more about innocence and hardship and how you're not going to tow the line here about hating on homeowners (no one does) - as an owner from early 20s, who upsized into the 90s hpc.

eek - no there are no innocents, only market participants who have outbidded other would-be buyers. Take ownership own decisions. Geez, you paid your mortgage of 10 years ago, and you're another who feels HPC going to be awful .

Have some perspective for renter-savers and would-be upsizers - and all the good things a HPC can bring in terms of rebalancing.

Do I need to link up to so many articles of boomers with their £650K - £1.8m homes with no mortgages? There's fat equity on owner side. Guardian suggested a few year ago that fewer than 2 in 5 owners have a mortgage.

I think you need to read what I said again.....


Note I didn't say who is creating the products, nor implied anything (you just assume stuff and throw insults about).

My reason for returning to this site after ten odd years is because as I've said before the can has been kicked as far down the road as it can be kicked.

Now is the real beginning of the end game and while I've got nothing invested in the game (I bought 20 years ago and haven't had a mortgage for 10 years) I'm back to see how it plays out.. And its going to be utterly horrendous. We have prices way beyond any historic mean and inflation cannot be created (remember they've spent 8 years trying and have not been able to do a thing)...

No it's not. How is it going to be horrendous for you for example? Some lost value in your paid-off home? Oh cry me a section 21.

Only for very few people, who are not worth holding up all the good things about hpc and rebalancing for future generation. Just an ego HPC, and finding out the BTLers for the most part, where too many of them have been utterly greedy. It's also not a game.

[eek]

That's right GS - I really do.

However I'm going to drop it now for I've made my views clear.

Post more about innocence and hardship and how you're not going to tow the line here about hating on homeowners (no one does) - as an owner from early 20s, who upsized into the 90s hpc.

eek - no there are no innocents, only market participants who have outbidded other would-be buyers. Take ownership own decisions. Geez, you paid your mortgage of 10 years ago, and you're another who feels HPC going to be awful .

Have some perspective for renter-savers and would-be upsizers - and all the good things a HPC can bring in terms of rebalancing.

Do I need to link up to so many articles of boomers with their £650K - £1.8m homes with no mortgages? There's fat equity on owner side. Guardian suggested a few year ago that fewer than 2 in 5 owners have a mortgage.

No it's not. How is it going to be horrendous for you for example? Some lost value in your paid-off home? Oh cry me a section 21.

Only for very few people, who are not worth holding up all the good things about hpc and rebalancing for future generation. Just an ego HPC, and finding out the BTLers for the most part, where too many of them have been utterly greedy. It's also not a game.

You seem to have different memories of the 1989-92 crash than I did. I also have friends in northern Ireland who have gone bankrupt to escape houses they panicked into buying back in 2006...

A lot of people actually bought houses in a panic as prices rose because they had few other options, probably pressure from family) and they wanted to "own" something before they start their family... For them all I can feel is pity you however seem to feel that they should suffer for their moment of weakness and seem to want to gloat.

Edited May 25, 2016 by eek

[Blod]

The 'rent it out' MEME just evolved, innit.

The beauty of it now is that it's history. If actually used it will show the users ignorance of the the current situation. Innit.

[Venger]

Hey Venger

Yes you are right, I will not be suffering like so many people, I have a good pension pot and made substantial profits from a sold home, though I ddi not pay it off like you claim. so what!

Are you saying only the suffering and poor can have empathy with those who are priced out of the housing market?

I have my own reasons for wanting a house price crash, most of them are moral reasons.

You have a fabulous wonderful day

I have to go to work now.

It would be nice to see a change in focus on your 'innocence hardship' of just a very few big mortgage debtors - if we ever do get a HPC.

Buyers who chose to go and view, place offer, apply mortgage, and outbid someone else in the market....

To drop the projection that renter-savers on HPC are here to prey on misery....

I am closely watching two sites in particular at the moment, 118 and MSE property debate board, both are hilarious, though one is more indignant at the moment about tax changes and the anti BTL sentiment sweeping the country and the other is basically just annoyed that people like us are going to profit from their misery, I will let you work out which is which

But as much as I want to see the BTL model destroyed once and for all, I do like to try and understand where some of these people are coming from and more importantly are there any innocents among them, though they, MSE being far worse, are just ranting foaming at the mouth idiots who can not see the other side of the argument, and yes I do think innocents will be hurt, and the weapon of choice will be big hanging debts, not your or mines fault I might add.

You just knew this was coming, the best weapon the last three governments have by far, scare the electorate to death with threats to their illusionary wealth

P.S.. I thought I had been banned from HPC for not going along with hating present home owning innocents that will inevitably be hurt in the coming property crash.

To recognise there is much by way of equity in the market - outright owners/equity rich who will only get hit on egos in a HPC.

And to recognise there are renter-savers and would-be upsizers who can gain from HPC. Friends and family who rent and can buy off perhaps an outright owner who decides to sell up and downsize because no longer HPI+++++ and decides to accept quite big gains, but not hyper gains. Fairer price.

Many boomers bought the houses that they'd live in for the rest of their lives, and raise their families in, at the beginning of their working lives, before they had families.

I feel that the kind of laddderism that you're assuming here is part of a perhaps unwitting attempt by society at large to turn a blind eye to the failure of the boomers to build sufficiently to ensure that their children, and pretty soon their children's children, enjoy the access to housing that boomers did nothing to earn but enjoyed nevertheless.

I think the other rather insidious idea lurking in your thinking is that it is somehow a problem if somebody pays too much for a house and ends up stuck in it. When so many hard working young people are totally excluded from even having the option to purchase property expecting any sympathy for people who not only had that option but acted on it is a dog that won't hunt as far as I am concerned.

We cannot have a housing market where there is no downside to paying too much, that way lies madness. If these people paid too much and were relying on calm economic waters forever so that they could build up some equity and trade up, f**k 'em. Houses are for living in. Taking on debt is about making and keeping promises. Some people will have bad luck; we can't protect people from the vagaries of chance, the idea that we can is stupid fantasy. The whole idea of starter homes and ladders strikes me as total boll0cks, cut from the same idiotic cloth as much of the rest of the apparently endemic HPI+++ for-f**king-ever madness

Gloat eek? Geez. Most of us want homeownership. What do you want from the world? Where there is no downside to paying to much at any time, to outbid other people?

And you as an outright owner with no mortgage..... all this hpc will be utterly horrendous line from you.

Operation Human Shield.

What in your analysis was the immediate problem that was solved by getting into leveraged investment in residential property?

Their lack of a pension due to the destruction of final salary pensions (although that relates to buying the property not the court case).

More accurately the immediate problem for starting the court case was that their monthly repayments had gone up £500 a month and this argument could reduce that payment....

2005 eek.

This site is made up of two types of people. There are those (mainly FTBers who want a house and cannot see why people want, need or should be allowed to own more than one house) and those that see property as simply another asset class. I agree with you, there will be a time when BTL makes sense again and while last time I became a landlord through necessity, this time round, when the time is right, I will probably add a house or two to my investments (provided I have time to treat it as a proper business tho).

[Venger]

You seem to have different memories of the 1989-92 crash than I did. I also have friends in northern Ireland who have gone bankrupt to escape houses they panicked into buying back in 2006...

A lot of people actually bought houses in a panic as prices rose because they had few other options, probably pressure from family) and they wanted to "own" something before they start their family... For them all I can feel is pity you however seem to feel that they should suffer for their moment of weakness and seem to want to gloat.

Operation Human Shield from the outright owner who tells me HPC will be horrendous. Cry me a S21 notice.

This site is made up of two types of people. There are those (mainly FTBers who want a house and cannot see why people want, need or should be allowed to own more than one house) and those that see property as simply another asset class. I agree with you, there will be a time when BTL makes sense again and while last time I became a landlord through necessity, this time round, when the time is right, I will probably add a house or two to my investments (provided I have time to treat it as a proper business tho).

I'm done. Wake up people.

[eek]

Oh diddums... A pointless trawl of comments from 11 years ago

Mind you it shows that I thought there was a problem them (prices too high) and its only got worse in many places - thankfully the last big increase from London hasn't radiated up north yet (except a little bit in March's mad rush)..

Clearly you don't remember 1989-93. If you did you would know that Bank's basically stopped lending on residential property... Unless you were the perfect customer you didn't have a pray of getting a mortgage for £10000 let alone £500,000....

As for why I expect pain.

The bank stress tests of 2016 are based on a drop in house prices of 30% focused on certain areas (lovely get out clause there to manipulate your figures to pass the test) and ignores whether they will be in a position to or be willing to lend at that point (yes the bank would still be going but I doubt it would be in a position to lend to anyone)... Unfortunately for house prices to hit sensible affordable levels prices down south probably need to drop 40-70% and we don't know what the impact of that will be for banks....

When Gordon Brown rewrote economics with no more boom and bust he comprehensively failed to understand the reason for why things need to go bust. The greater the boom the more painful the unavoidable bust will be. After 19 years of virtually continual boom the next bust is going to be painful....

Edited May 25, 2016 by eek

[Venger]

Oh diddums... A pointless trawl of comments from 11 years ago

Mind you it shows that I thought there was a problem them (prices too high) and its only got worse in many places - thankfully the last big increase from London hasn't radiated up north yet (except a little bit in March's mad rush)..

Clearly you don't remember 1989-93. If you did you would know that Bank's basically stopped lending on residential property... Unless you were the perfect customer you didn't have a pray of getting a mortgage for £10000 let alone £500,000....

As for why I expect pain.

The bank stress tests of 2016 are based on a drop in house prices of 30% and ignores whether they will be in a position to or be willing to lend at that point (yes the bank would still be going but I doubt it would be in a position to lend to anyone)... Unfortunately for house prices to hit sensible affordable levels prices down south probably need to drop 40-70% and we don't know what the impact of that will be for banks....

When Gordon Brown rewrote economics with no more boom and bust he comprehensively failed to understand the reason for why things need to go bust. The greater the boom the more painful the unavoidable bust will be. After 19 years of virtually continual boom the next bust is going to be painful....

Cry my 3 brothers and sister (and the kids) a S21 each please.

I think you need to read what I said again.....

Note I didn't say who is creating the products, nor implied anything (you just assume stuff and throw insults about).

My reason for returning to this site after ten odd years is because as I've said before the can has been kicked as far down the road as it can be kicked.

Now is the real beginning of the end game and while I've got nothing invested in the game (I bought 20 years ago and haven't had a mortgage for 10 years) I'm back to see how it plays out.. And its going to be utterly horrendous. We have prices way beyond any historic mean and inflation cannot be created (remember they've spent 8 years trying and have not been able to do a thing)...

GS goes on an on about pain/innocence too....homeowner at young 20s..... did he help out his pals who lost jobs, or focused on the upsize house he did.

Now sat on mad gainz after a separation, and on great money.

There has not been a HPC here in my parts, or SE/London, just more HPI. Priced out renter-savers vs huge BTL speculation.

I saw what lurks in your lusting heart..... two kinds of people on hpc.... big-me about BTL cause just another asset class to you. That doesn't change.

Spare me the hardship/pain, into a HPI bubble on bubble and HPC that hasn't happened yet and that we can't even be certain will!

Owners can sell today... such little inventory on market, in a market where transactions are going on at very high prices (which my family refuses to pay, but obviously some 'innocent' will - who deserves housing more clearly... and may well be able to afford it with Bomad or other).

We're not in a market where all homeowners are innocents - and renter-savers "just here to prey on misery and gloat at painfully high prices."

Point is both you and GS are on HPC fretting about the minority of homebuyers who've taken on jumbo mortgage (when £Trillions in equity on owner side - and BTLer speculation fest). GS upsized into the HPC of the 90s... and had the longer wave HPI ride. Was he giving his money away in early 90s to help out the 'innocents'. Of course not. Upsized into it. Took advantage. Homeowner early 20s, and homeowner again long-wave years. No perspective of challenges for younger people in this market.

Picked out of a document from last month, that Ghost Bird linked up to the other day.

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability)

Sir Jon Cunliffe: The other thing that has come in increasingly over the last 15 years is not owners occupiers but buy to let. Virtually all the growth in mortgages over the last few years has come from buy to let, not owner occupier.

..Sir Jon Cunliffe: A lot of the growth that we have seen has been because this has looked to be an asset that gives relatively good return at a time when many other assets - pensions or otherwise - are not giving a good return.

- re long passage on BTL / not knowing how BTLers-landlords would react / different opinions OBR vs Council of Mortgage Lenders and others =

..Sir Jon Cunliffe: Of course, you also need to estimate whether, if a number of buy-to-let landlords with mortgages exit the market and the flow of new buy-to-let mortgages goes down because of the extra stamp duty, that means more first-time buyers coming into the market because there is a slowing in house-price growth.

[eek]

Cry my 3 brothers and sister (and the kids) a S21 each please.

GS goes on an on about pain/innocence too....homeowner at young 20s..... did he help out his pals who lost jobs, or focused on the upsize house he did.

Now sat on mad gainz after a separation, and on great money.

There has not been a HPC here in my parts, or SE/London, just more HPI. Priced out renter-savers vs huge BTL speculation.

I saw what lurks in your lusting heart..... two kinds of people on hpc.... big-me about BTL cause just another asset class to you. That doesn't change.

Spare me the hardship/pain, into a HPI bubble on bubble and HPC that hasn't happened yet and that we can't even be certain will!

Owners can sell today... such little inventory on market, in a market where transactions are going on at very high prices (which my family refuses to pay, but obviously some 'innocent' will - who deserves housing more clearly... and may well be able to afford it with Bomad or other).

We're not in a market where all homeowners are innocents - and renter-savers "just here to prey on misery and gloat at painfully high prices."

Point is both you and GS are on HPC fretting about the minority of homebuyers who've taken on jumbo mortgage (when £Trillions in equity on owner side - and BTLer speculation fest). GS upsized into the HPC of the 90s... and had the longer wave HPI ride. Was he giving his money away in early 90s to help out the 'innocents'. Of course not. Upsized into it. Took advantage. Homeowner early 20s, and homeowner again long-wave years. No perspective of challenges for younger people in this market.

Picked out of a document from last month, that Ghost Bird linked up to the other day.

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability)

Are you sure about ever? I seem to have a longer memory than you (1989-92 was a crash took until 2001 for prices to finally reach the 1989 peak, 1974-7 was a crash hidden by stagflation)... Sadly as prices aren't available online you only have anecdotes to go on....

As for the rest of your rant, I hope you realise that's all it is.....

[Venger]

eek - older outright owner who thinks 2 kinds of people on HPC, and was mad-keen on BTLing....

A trawl which showed your outlook clearly as anything (BTL - 2 kinds of people on HPC), and now you're suddenly back on the scene, outright owner with mortgage paid of 10 years ago, going on about horrors of a hpc on innocents, and accusing the extremely priced out renter-savers as gloating.

Oh diddums... A pointless trawl of comments from 11 years ago

Mind you it shows that I thought there was a problem them (prices too high) and its only got worse in many places - thankfully the last big increase from London hasn't radiated up north yet (except a little bit in March's mad rush)..

Clearly you don't remember 1989-93. If you did you would know that Bank's basically stopped lending on residential property... Unless you were the perfect customer you didn't have a pray of getting a mortgage for £10000 let alone £500,000....

As for why I expect pain.

The bank stress tests of 2016 are based on a drop in house prices of 30% and ignores whether they will be in a position to or be willing to lend at that point (yes the bank would still be going but I doubt it would be in a position to lend to anyone)... Unfortunately for house prices to hit sensible affordable levels prices down south probably need to drop 40-70% and we don't know what the impact of that will be for banks....

When Gordon Brown rewrote economics with no more boom and bust he comprehensively failed to understand the reason for why things need to go bust. The greater the boom the more painful the unavoidable bust will be. After 19 years of virtually continual boom the next bust is going to be painful....

That's called HPC. Easier for some to afford £10,000 - and banks did sell for low prices... FW at the auctions... you can't protect every buyers decision to pay mad-price (and most are outright owners anyway) and expect renter-savers to just carry the market at ever higher prices forever.

Negative equity - doesn't always mean repo.

So no HPC, because of your concern about the banks now eh. Innocents and bank solvency concerns. Anything else, two-kinds of people on HPC, BTL just another asset class, you were keen to get into - and for all I know did do - hence the innocence line and your hpc fear of bringing down banks.

I'm DONE.

Where does everyone get this idea that the Bank of England want to avoid a house price crash from?

ZIRP isn't here to ensure that some mug punter avoids negative equity. House prices (and mortgage credit) are a big deal, but they are not the UK economy, (and UK housing and mortgage credit is not driving the world economy FFS). The role of ZIRP in the housing market since about 2009 is that it is enabling mug punters to pay their mortgages (and hence helps maintaining an appearance of banking sector solvency which would be rather more difficult to pass off if half the Lloyds Group loan book was in arrears). ZIRP thus allows the over-leveraged mortgage prisoners to try to hang on whilst hoping for a miracle (though of course it doesn't force them to do that) and this affects house prices because it lessens the motivation to sell, but still its express purpose is not to hold up house prices.

The Bank have been totally clear that they believe that they banks can now take a massive HPC without any attendant threat to their solvency. It's also blindingly obvious that they are far more concerned about house prices staying at this level and transactions increasing (driving up LTIs and DSRs) than they are about house price falls.

-----

Firstly, I believe yes we have made quite a few preparations (financially speaking) to shelter us from a quite a flood - as have a great many. The fact is that, as history shows those who can see the madness for what it is, and take precautions, tend to survive more than those who do not. Whereas the financial zombies get completely eradicated.

But, as you say, it is indeed well possible that the 'flood' would exceed our expectations and not leave us completely untouched in some form or another (e.g. rising crime rates, etc). But then again are we not already 'touched', harmed and hard done by this ongoing financial madness? I would argue we, and our like, have already (unfairly!) suffered.

So IF suffering should come to those who genuinely deserve it? GOOD! It cannot come too soon.

Using the fear tactic that you espouse (i.e. you too will get swept up in the flood) doesn't hold sway with me anymore.

What are you? Man or Mouse?

It has been said, in many different ways, in respect of personal liberty and freedom that it isn't 'free' - it has to, from time to time, be paid for in toil and blood. The same such applies to ensuring restoration of financial sanity to the world. IF I have to suffer some (more than already) to ensure a better world for my children and their children than I gladly do so. What are you prepared to do?!

These personal stories of people, in this day and age, having to resort to living in vans utterly disgusts me with the 'system' and TPTB. Anyone who is not similarly disgusted simply does not grasp the significance.

If it doesn't you then I put it to you that you have started to lose some crucial essence of your decency and humanity.

Some just want to project the entire housing market is full of overleveraged innocent homeowners (with their love of BTL) as outright owners themselves.... "oh the horror a hpc would bring from these prices." ** Innocents. Think of the banks. Can't be allowed. **

Edited May 25, 2016 by Venger

[Neverwhere]

...Clearly you don't remember 1989-93. If you did you would know that Bank's basically stopped lending on residential property... Unless you were the perfect customer you didn't have a pray of getting a mortgage for £10000 let alone £500,000....

Mortgage lending barely dropped off between 1989-92 and had effectively recovered by 1993.

Additionally some of the minor decrease that did occur would have been accounted for simply by lower house prices rather than by less people qualifying for mortgages.

What's more mortgage lending then exceeded it's previous 1989 high over the next few years whilst house prices remained relatively static even in nominal terms:

Source

Source

Maybe it'll be different this time, but I suspect not.

However, even if it were different this time, that would just imply that house prices would be likely to keep falling until people could afford them out of actual savings or what little the banks were prepared to lend.

When speculators are eating negative cash flows they will not be in a position to hold on until what buyers there are have access to looser credit conditions. They will simply have to take what they can get or eventually the LPA receivers will take it for them.

The idea that many people would want to borrow £500k in a falling market seems to me to be significantly more unlikely than banks being unwilling to lend it if prudent LTI and LTV conditions were met.

[Venger]

George Orwell, "Politics and the English Language," 1946

...The great enemy of clear language is insincerity. When there is a gap between one's real and one's declared aims.

When there is a gap between one's real and one's declared aims, one turns as it were instinctively to long words and exhausted idioms ......

But if thought corrupts language, language can also corrupt thought.

Innocents home-owners all.

Outright owner, full of BTL ambitions. 2 types of people on HPC, all about the innocents and pain of a HPC, vs these extreme prices in so many areas.

Accusing renter savers as gloating, for a HPC that hasn't even happened.

A market full of BTL speculators who BoE repeated again have powered mortgage growth past 15 years - with their own homes to sell to make good any debt to the banks... in a HPC.

[Neverwhere]

...The bank stress tests of 2016 are based on a drop in house prices of 30% focused on certain areas (lovely get out clause there to manipulate your figures to pass the test) and ignores whether they will be in a position to or be willing to lend at that point (yes the bank would still be going but I doubt it would be in a position to lend to anyone)... Unfortunately for house prices to hit sensible affordable levels prices down south probably need to drop 40-70% and we don't know what the impact of that will be for banks....

The Bank of England stress test for 2014 (they do different ones each year to consider different scenarios) covered a 35% average fall in house prices for the UK as a whole, with higher falls in specific markets such as London. The banks handled it fine.

The combination of these macroeconomic shocks triggers vulnerabilities in the housing market. Household finances become particularly stretched due to the combined fall in real incomes and rising interest payments. This leads to a sharp correction in the housing market. From their 2013 Q4 level, house prices fall by about 35%. In nominal terms, house prices reach levels last seen in 2002. There is a differentiation across different market segments, with regions where house prices appear particularly inflated — for example, judged by historical experience in relation to earnings or rents — seeing the largest falls. London and the South East are particularly badly hit relative to the rest of the country.

[Bland Unsight]

Oh diddums... A pointless trawl of comments from 11 years ago

Why is it pointless?

And separately, did you get into BTL in the end, or not?

Edited May 25, 2016 by Ghost Bird

[eek]

Why is it pointless?

And separately, did you get into BTL in the end, or not?

Because most peoples views change over 11 years (I'm surprised how little mine actually have).

As for BTLs no as I'm sure I hinted elsewhere...

As an aside looking around where I live prices haven't risen for over 10 years based on randomingly selecting houses currently for sale and looking at the previous sale prices when they go back to that level...

[Tempus]

Sounds too good to be true dosent it? No doubt remain will be along soon to pi55 on everyone's fire.

Yes, I have a horrible feeling we'll see a remain vote (not in itself horrible...) and then Haart will be along a couple of months after saying how this helped kick the market back into business as usual. A bit like the last general election when people wait if uncertainty is near.