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Brexit Blowback - The Panic Will Start With Property

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Brexit Blowback - The Panic Will Start With Property

http://www.zerohedge.com/news/2016-07-05/brexit-blowback-panic-will-start-property

....The UK establishment have been loathe to let supply match demand (as it did in Ireland) as it would have meant the collapse of house prices and the UK (and interconnected) banking systems. I therefore posit that they never wanted to remedy the shortage of affordable housing and therefore rejected all suggestions as to how to fix the problem as meaningless. Alas, the dominant class did not envisage Brexit and the possible geopolitical consequences for asset prices in the UK, in particular, the property market.................................. ..... The cracks have already begun to appear, two UK real estate funds — Aviva and Standard Life — have just halted redemptions as they were running out of cash due to large withdrawal demands. Perhaps regulators should have wondered how an open-ended fund — whereby retail investors can demand their money back at short notice — could work with assets like property that take much time to sell. And so the tragedy unfolds … though perhaps the politicians on the continent, that lust after revenge should first ask themselves, “Why did Britons vote to leave and can the panic be contained?”....
Edited by Saving For a Space Ship

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If they wanted to pop the property bubble all they have to do is raise rates from 0.5% to 2.5%. Which is quite possible if sterling continues to plunge. This would punish the brexit voters (or do i mean the remain voters?) that are loaded up with big london debt.

C'est la vie...

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This has been on the cards for ages. Commercial property is widely acknowledged as cyclical.

Agreed. Last year my pension got moved to a different provider, On checking what they were proposing as a portfolio I noticed it had a large amount of commercial property in it. I switched from commercial property to commodities as commodities have been falling since 2011 culminating with the collapse in oil prices. Buy at the bottom of the market. The trend at the moment is to convert office space into flats as there are far too many offices sitting empty for years. If commercial property stops rising landlords can no longer pretend to make a profit on an illiquid asset. Flats are seen as a panacea for oversupply and easier to let.

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Hey, I'm all for bargains...however...

We're already in a precarious position with the economy and face increasingly bad news about the short to medium outlook for the UK.

All the options being touted for BREXIT hinge upon the population here not going ballistic and rioting.

The UK certainly cannot have a massive house price crash and the Establishment will not allow this to happen.

If the UK 'crashes' or appears to be, it will be up for sale to the first bidder coming along with a fat wallet. Chinese perhaps?

Expect the unexpected.

Absolutely NO GOOD can come of a big crash, you all know that.

Edited by cashinmattress

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Crash please. The bigger the better. I am extremely careful what I wish for and have had 30+ years to come to this conclusion.

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The devaluation in the pound has effectively made housing quite a bit cheaper for anyone with non-sterling wealth. Plus, any foreign investor would now face losses/much lower profit if dumping their UK property portfolio and would be inclined to hold on for a sterling recovery, IMO. If anything, all this is likely to hold up prices in the near term.

Unless of course the pound really starts to crumble to the extent where the BoE must support it - in which case interest rate rises would cause a lot of issues and destabilise the property market.

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Hey, I'm all for bargains...however...

We're already in a precarious position with the economy and face increasingly bad news about the short to medium outlook for the UK.

All the options being touted for BREXIT hinge upon the population here not going ballistic and rioting.

The UK certainly cannot have a massive house price crash and the Establishment will not allow this to happen.

If the UK 'crashes' or appears to be, it will be up for sale to the first bidder coming along with a fat wallet. Chinese perhaps?

Expect the unexpected.

Absolutely NO GOOD can come of a big crash, you all know that.

Comedy gold

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Absolutely NO GOOD can come of a big crash, you all know that.

Disagree completely.

Only by everything crashing (and I mean the entire financial system) can we rebuild and create a better future. The pain has to be gone through at some stage.

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If the pound falls enough then house prices will still fall regardless of foreign investment.Because immigration will reduce.Eastern Europeans sending money home won't get the bang for the buck they used to.

Absolutely NO GOOD can come of a big crash, you all know that.

My gold shares have been going gangbusters this year.

Buy gold stocks, buy gold, buy silver.

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I think a crash would be a bad thing for the UK economy. However prices are too high and a crash will have to happen sooner or later. The soft landing in a low inflation environment is very unlikely.

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If they wanted to pop the property bubble all they have to do is raise rates from 0.5% to 2.5%. Which is quite possible if sterling continues to plunge. This would punish the brexit voters (or do i mean the remain voters?) that are loaded up with big london debt.

C'est la vie...

It would simple take any rise in rates to crash the market. Its not the number but the fact that they aren't moving that is the problem. I have a feeling that any response to market conditions which resulted in a change of rates, even a drop, would destroy sentiment and hence result in HPC.

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It would simple take any rise in rates to crash the market. Its not the number but the fact that they aren't moving that is the problem. I have a feeling that any response to market conditions which resulted in a change of rates, even a drop, would destroy sentiment and hence result in HPC.

People have been programmed to expect rates to drop in a crisis, so if they don't that will destroy sentiment too.

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Perhaps.

It won't be in a decade when you're still holding out for a sub £100k 3-bedder in a nice neighborhood.

Will that then be dark comedy?

Ooo-err.

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Hey, I'm all for bargains...however...

We're already in a precarious position with the economy and face increasingly bad news about the short to medium outlook for the UK.

All the options being touted for BREXIT hinge upon the population here not going ballistic and rioting.

The UK certainly cannot have a massive house price crash and the Establishment will not allow this to happen.

If the UK 'crashes' or appears to be, it will be up for sale to the first bidder coming along with a fat wallet. Chinese perhaps?

Expect the unexpected.

Absolutely NO GOOD can come of a big crash, you all know that.

I thought you were eyeing a move back to Canada.

HPC is the only way out of this, followed by years of annual high volume property transactions at low prices (mortgages)... back to working for a living instead of HPI lazyness. Fewer than 2 in 5 owners with a mortgage? What's the pain there apart from mostly ego crash, and few renter savers want to sacrifice their own prospects of getting ahead in life, on behalf of the very buyers who outbid them in market. 1 in 5 properties a BTL.

No good for the young in HPI worship, and prospect of renting forever, to behold £300,000 - £400,000+ South Manchester semi-Ds.

China has its own problems and won't be buying up all the houses to rent out. Politics is turning on BTL already.

Edited by Venger

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I thought you were eyeing a move back to Canada.

HPC is the only way out of this, followed by years of annual high volume property transactions at low prices (mortgages)... back to working for a living instead of HPI lazyness. Fewer than 2 in 5 owners with a mortgage? What's the pain there apart from mostly ego crash, and few renter savers want to sacrifice their own prospects of getting ahead in life, on behalf of the very buyers who outbid them in market. 1 in 5 properties a BTL.

No good for the young in HPI worship, and prospect of renting forever, to behold £300,000 - £400,000+ South Manchester semi-Ds.

China has its own problems and won't be buying up all the houses to rent out. Politics is turning on BTL already.

Ok, yes there are changes being made to the lending criteria, however; let me quote the industry here.

“This lending squeeze will only increase the financial barriers to entry to the market, restricting access to only cash buyers or those with hefty deposits, and potentially forcing some existing landlords to sell up,”

This will scare off or restrict the plebs.

Any taxes/extras on BTL mortgages will be added to rents. Simple innit?

It will do nothing to stop big cash rich funds / investors from buying up hoards of UK property (at a nice discount).

UK property which has a pretty safe margin on top with gov't guarantees which shall be written/underwritten by taxpayers as per usual... all things being equal in this uncertain climate.

I think this a more realistic outcome. The UK simply can't be seen as a risk to investors or this island is finished and will go from metropolitan to medieval very quickly. Do you (sane) people with children want this scenario?

Like I said, I would like a cheaper house but I don't go through life with rose coloured glasses or ascribe to some of the forum regulars apocalyptic collapse theories which also makes housing both cheap and desirable.

http://www.ftadviser.com/mortgages/mortgage-data/

Edited by cashinmattress

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