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Dbag Predicts House Price Shock

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Slightly shady forecasting history but:

<Quote>

Londons housing market is facing a major shock as private landlords offload properties because tax increases will reduce returns on their investments to near zero, according to analysts at Deutsche Bank AG.

New lending rules will also severely restrict the ability of investors, who have accounted for about 40 percent of purchases in recent years, to fund property purchases with debt, Deutsche Bank analysts Oliver Reiff and Markus Scheufler wrote in a report Wednesday. Landlords selling homes may create an excess of properties on the market, damping prices.

This has the potential to create a major shock to the market, the analysts wrote, recommending investors sell shares in Capital & Counties Properties Plc, which is developing homes in the Earls Court neighborhood. A material number of owners will face pain and squeezes on returns.

CapCo fell as much as 4.5 percent, the most since May 3, and was the biggest decliner in the 27-member Stoxx 600 Real Estate index. The shares were trading at 316 pence at 2:25 p.m. in London

Buy-to-let lending for home purchases fell 86 percent by value in April from the previous month, according to data compiled by The Council of Mortgage Lenders. Berkeley Group Holdings Plc, Londons biggest homebuilder, said sales reservations fell 20 percent in the five months through May, in part because of the increased taxes against rental investors. The referendum on EU membership has also impacted sales, the firm said.

Return on Equity

New tax rules will reduce BTL returns on equity towards zero and result in low or negative cash flow, particularly for new landlords, according to the Deutsche Bank report.

Developers are delaying new luxury-home projects in London after successive increases in sales taxes made building less profitable, consulting firm Arcadis NV said last week. The moves come after a 3 percentage-point increase in the stamp-duty sales tax for landlords and second home owners in April which followed an increase in charges for all luxury-home purchasers in December 2014.

There were 116,000 home transactions in the London market last year, about three percent or four percent of the total stock, according to Deutsche Bank. The German lender expects demand from all buyers to fall by about 20 percent because investment property is considerably less attractive, while demand for rental properties may fall by 50 percent.

Bloomberg - London Housing Market Facing Major Shock After Tax Rises http://bloom.bg/1S6Ujrb

</Quote>

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There is no doubt, we are approaching a meltdown of biblical proportions. What gets me is people that say 20-30% and it will be OK.

No No it just doesn't work like that. Soon as this starts to fall, it becomes unstoppable.

People love HPI forever (those with VI) but as soon as this goes south its a different ball game.

No body in their F@#ing tiny mind is going to be buying in to this.

They buy because are going up (this is the main motivation to buy)

Once this starts everyone (including you will sit and watch the collapse)

Motivation by Greed will stop, Fear will stop everything else.

Most people are going to be onlookers in fear, buying is the last thing that will enter their minds.

(Everyday is like this, I never think this will end up positive) 12+ years I think like this and still it just gets worse.

For me it just went upside down 2003-2004 (nothing made any sense after that)

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There is no doubt, we are approaching a meltdown of biblical proportions. What gets me is people that say 20-30% and it will be OK.

No No it just doesn't work like that. Soon as this starts to fall, it becomes unstoppable.

Although I like a good post-of-doom in the morning, I have to point out that it did start to fall in 2008 and it was stopped.

I have doubts about a meltdown, I just don't know what is coming. Endless money printing confuses my little brain.

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Although I like a good post-of-doom in the morning, I have to point out that it did start to fall in 2008 and it was stopped.

I have doubts about a meltdown, I just don't know what is coming. Endless money printing confuses my little brain.

Yes, but they threw the whole shebang at the 'problem' - could they repeat the trick again? I have my doubts.

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The average house price compared to average salary in London is now in a whole new league to what we've seen before. About 20x.

And the gap is increasing exponentially. Just last October, average price was £500,000 http://www.bbc.co.uk/news/business-34656650. Within months, this had risen to £600,000 http://www.standard.co.uk/news/london/average-london-house-price-rises-above-600000-for-first-time-ever-a3262831.html

Incredibly rapid rises. At this rate, we are on course for a million within a couple of years.

A crazy market. God knows how they'll keep it going.

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The average house price compared to average salary in London is now in a whole new league to what we've seen before. About 20x.

And the gap is increasing exponentially. Just last October, average price was £500,000 http://www.bbc.co.uk/news/business-34656650. Within months, this had risen to £600,000 http://www.standard.co.uk/news/london/average-london-house-price-rises-above-600000-for-first-time-ever-a3262831.html

Incredibly rapid rises. At this rate, we are on course for a million within a couple of years.

A crazy market. God knows how they'll keep it going.

I think Cameron and Osborne's aim was to create a housing boom lasting through the GE and on to the brexit referendum. Beyond that, before the next election, I can't see why they'd pump it any further.

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Yes, but they threw the whole shebang at the 'problem' - could they repeat the trick again? I have my doubts.

Indeed

People are generally on low ish incomes relying on benefits. Don't think there's much slack in the system. Don't think people are giving the government the benefit of the doubt either. MPs being murdered in broad daylight on the streets is consistent with that. Is it the 1970s again?

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Indeed

People are generally on low ish incomes relying on benefits. Don't think there's much slack in the system. Don't think people are giving the government the benefit of the doubt either. MPs being murdered in broad daylight on the streets is consistent with that. Is it the 1970s again?

The middleclassy swim school that my kids go to is advertising availlability of slots at the weekend.

Thats never happened in the 5 years theyve been going there.

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I thought stuff was overpriced from 2002ish. A couple who are a friend of the family mortgaged themselves to the hilt to spend 1/2 million on a townhouse in Islington. They are the smuggest g*ts ever - sitting on a valuation of 3.2 Million quid for doing feck all. What's that all about? I mean really, if we take a step back and look at this sort of stuff with any objectivity it just looks completely insane.

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I think Cameron and Osborne's aim was to create a housing boom lasting through the GE and on to the brexit referendum. Beyond that, before the next election, I can't see why they'd pump it any further.

They would be fools to pump it further.... so maybe they will :(

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I thought stuff was overpriced from 2002ish. A couple who are a friend of the family mortgaged themselves to the hilt to spend 1/2 million on a townhouse in Islington. They are the smuggest g*ts ever - sitting on a valuation of 3.2 Million quid for doing feck all. What's that all about? I mean really, if we take a step back and look at this sort of stuff with any objectivity it just looks completely insane.

At some point it will have to end. How, why, when, and what the hell we will be left with afterwards are the questions I find myself asking now days (I don't care about buying, at all now). I hope your friends will still be as smug if/when their paper wealth goes up in smoke.

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The middleclassy swim school that my kids go to is advertising availlability of slots at the weekend.

Thats never happened in the 5 years theyve been going there.

I attend the same social event in June of every year in Spain. It's not cheap. 98% of the attendees are from UK and it's always been packed - but not this year.

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For me it just went upside down 2003-2004 (nothing made any sense after that)

For me 1999, 2000 at the latest. By 2001 it seemed to me to be an extraordinary and outrageous bubble that would have to pop any moment. Ah, those were the days, the innocence of youth!

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All engineered for the Brexit vote told you so moment, the whole thing has been engineered and timed to bring the UK to its financial knees whatever the result.

Remember the Irish and how they were shafted and how the Greeks were financially terrorised/blackmailed.

The rest of the this year will be a financial rollercoaster of gloom.

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I disagree to a point. I work for a financial institution and if brexit happens, we will move to Frankfurt or Amsterdam. Most of my friends work for firms with similar contingencies. I think Cameron will undo asset bubble started by Thatchers.....but not in the way he hoped.

All engineered for the Brexit vote told you so moment, the whole thing has been engineered and timed to bring the UK to its financial knees whatever the result.

Remember the Irish and how they were shafted and how the Greeks were financially terrorised/blackmailed.

The rest of the this year will be a financial rollercoaster of gloom.

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Yes, but they threw the whole shebang at the 'problem' - could they repeat the trick again? I have my doubts.

I am genuinely worried about what they may do to halt a second HPC. Fingers crossed they are literally unable to do anything because it's hard to trust them with the temptation. A lot of damage has been done since 2008 thanks to the government's so called help. Please - no more 'help'.

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I do hope so, but at the same time I see helicopter money and more HPI instead. The powers that be won't allow it to happen.

There are no powers that be. Just a bunch of mps and vivil servsnts bricking it that it wont blow on their watch.

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For me 1999, 2000 at the latest. By 2001 it seemed to me to be an extraordinary and outrageous bubble that would have to pop any moment. Ah, those were the days, the innocence of youth!

Exactly, me too. I was convinced the poo fan would be needed by 2001, was angered by the interest rate reduction in 2005 that sparked a HP rally, bought a house in 2006 expecting it to be a disaster, was able to predict trouble ahead in the summer of 2007 as the first hedge funds toppled, pranced around saying 'told you so' throughout late 2008 and 2009, expected any other collective response to the crisis than doing what Goldman Sacks guy Paulson and Geitner were proposing - but they worked it for their friends anyway and the revolution never came, cynically lost interest once the QE ZIRP bail-in solutions truly kicked in and GFC 2 was posponed indefinitely, moved house in 2015 making a tidy profit that I still feel slightly grubby about. Half a life spent on HPC.co.uk.

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At some point it will have to end. How, why, when, and what the hell we will be left with afterwards are the questions I find myself asking now days (I don't care about buying, at all now). I hope your friends will still be as smug if/when their paper wealth goes up in smoke.

Note that I actually said 'friends of family'. Subtle difference :)

Agreed with your sentiment, as I've posted before, I'm pretty sure it'll end in tears. But when this happens and what will happen I have no f*cking clue.

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I was smug when I told people of the impending financial crisis in 2007 about 3-4 years before it happened and even got it so close as to say which part of the year it would occur in. Unfortunately intervention started and everything went even more pear shaped.

The only logic between current house price rises is the fact that

1. People are prepared to pay those prices

2. They are able to fund or get finance for those purchases.

In fact credit is once again fairly easy to get and even people with really poor credit can get a mortgage again that isn't even that expensive (I saw a no credit check mortgage for 5-6%).

As such there is no actual house crisis and there isn't a shortage of housing in the UK, houses are just expensive.

What's strange about this time is that the figures don't even really add up, the demand isn't anywhere near what it was in 2006-7 and none of the fundamentals really make any sense. Although I do hear a lot of people say 'We need to buy now otherwise we will never get on the housing market' and quite a few of my Colleagues have decided to buy.

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The average person has no idea what they are prepared to pay for a house, until they sit down with the local DEBTpusher who tells them "you're such a nice couple, I'm going to lend you £xxx,xxx." So they think well if the expert is going to lend me that much money I must be doing something right, innit?

Thats the difference between wages and DEBTmoney, the ridiculous paradox being everyone is extremely generous throwing DEBTmoney around like confetti, casually dealing in the tens and hundreds of thousands like it aint no thang, whereas they're all shopping at Lidl and collecting their nectar points religiously to save £3 off their next £30 shop or whatever.

Nuts.

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The average person has no idea what they are prepared to pay for a house, until they sit down with the local DEBTpusher who tells them "you're such a nice couple, I'm going to lend you £xxx,xxx." So they think well if the expert is going to lend me that much money I must be doing something right, innit?

Thats the difference between wages and DEBTmoney, the ridiculous paradox being everyone is extremely generous throwing DEBTmoney around like confetti, casually dealing in the tens and hundreds of thousands like it aint no thang, whereas they're all shopping at Lidl and collecting their nectar points religiously to save £3 off their next £30 shop or whatever.

Nuts.

:D

MSE brainwashing from 08->

Don't be a victim!

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