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Xil

What Happens When The Market Is Polarised?

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For the same sort of money, I'm seeing reasonable family homes going sale agreed in a matter of days, I also see a number of less desirable houses that have been stuck on the market for a year (and had their prices reduced).

If the market is polarised like this, what happens next?

Does the good stuff pull up the prices of the poor stuff? (Spring bounce)

Or do the lingering houses taint the market and gradually drag the better ones down? (House price slide)

Xil.

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The only thing that will drag house prices down is serious unaffordability and with IRs at 4.5% you haven't got that.

People know where they stand and have budgetted for this.

You need a massive rise in unemployment or a large rise in IRs - neither are going to happen in the next 12 months. So prices won't be going down.

This is just sooooooo obvious, I just can't understand why people on this bulletin board can't see it - I mean jeez there is about 18 months evidence of this since we entered the soft landing.

Sales volumes haven't crashed, EAs are still making money and sellers are still getting near their asking prices as a whole.

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The only thing that will drag house prices down is serious unaffordability and with IRs at 4.5% you haven't got that.

People know where they stand and have budgetted for this.

You need a massive rise in unemployment or a large rise in IRs - neither are going to happen in the next 12 months. So prices won't be going down.

This is just sooooooo obvious, I just can't understand why people on this bulletin board can't see it - I mean jeez there is about 18 months evidence of this since we entered the soft landing.

Sales volumes haven't crashed, EAs are still making money and sellers are still getting near their asking prices as a whole.

Wrong.

Unemployment rises after a housing boom, historically by about 40% within 2 years.

Have a look at what's happening on the high street, a major retailer is going bankrupt practically every week.

There is a recession on the way, and many jobs are going to go.

Coupled with high inflation in essentials (gas,council tax, electricity,transport), many families are going to go bankrupt.

Usually a recesison is accompanied by a nasty rise in interest rates, as the goverment has to increase borrowing and foreign investor's lose their appetite for UK assets.

If you think the housing market will hold up under these conditions, you're living on the wrong planet.

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Wrong.

Unemployment rises after a housing boom, historically by about 40% within 2 years.

Have a look at what's happening on the high street, a major retailer is going bankrupt practically every week.

There is a recession on the way, and many jobs are going to go.

Coupled with high inflation in essentials (gas,council tax, electricity,transport), many families are going to go bankrupt.

Usually a recesison is accompanied by a nasty rise in interest rates, as the goverment has to increase borrowing and foreign investor's lose their appetite for UK assets.

If you think the housing market will hold up under these conditions, you're living on the wrong planet.

Looks like you are agreeing with me - you need high unemployment and high IRs.

However, you are predicting a 40% rise in unemployment and presumably this needs to happen this year to meet your theory.

Dream on, it ain't going to happen - you get my amateur Hysterical Pundits Club economist of the day award !

:D

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If house prices to earnings ratio is at its highest EVER, I think that might just qualify as 'serious unaffordability'.

The VIs and Gordon Broon are tapdancing on quicksand.

The warning signs of a recession are all in place. The high street is already feeling the strain, the knock on effects will start to be felt sooner rather than later.

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Sales volumes haven't crashed, EAs are still making money and sellers are still getting near their asking prices as a whole.

History is full of smug complacent statements like this that returned to haunt their authors......

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For the same sort of money, I'm seeing reasonable family homes going sale agreed in a matter of days, I also see a number of less desirable houses that have been stuck on the market for a year (and had their prices reduced).

If the market is polarised like this, what happens next?

Does the good stuff pull up the prices of the poor stuff? (Spring bounce)

Or do the lingering houses taint the market and gradually drag the better ones down? (House price slide)

Xil.

This is just not the case near me - infact I would say the reverse (only crappy cheap terraces ripe for gutting) are really selling. "Nice" stuff ( family homes detached etc.. not moving for 9mths + on average)

Next door to me is a 3 bed detached in the corner of a cul de sac, conservatory etc.. Just what you would describe as 'reasonable family home'. It has been on the market empty for 18mths.

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Prices won't just drop because you think prices are too high.

Prices will have to be 'forced' down, kicking and screaming as they go. People who are rich beyond their wildest dreams won't give up their gains easily.

The current situation of stagnation won't change house prices until people are forced into selling their houses at a lower price - serious and painful unaffordability for existing house owners is required.

The economy is not in a bad enough state - its going to have to get a whole lot worse before you get your house price crash.

History is full of smug complacent statements like this that returned to haunt their authors......

It isn't complacent, its just the reality of today and its something you just can't take.

Please feel free to tell me when exactly this crash is going to happen ..........

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Prices won't just drop because you think prices are too high.

Prices will have to be 'forced' down, kicking and screaming as they go. People who are rich beyond their wildest dreams won't give up their gains easily.

The current situation of stagnation won't change house prices until people are forced into selling their houses at a lower price - serious and painful unaffordability for existing house owners is required.

The economy is not in a bad enough state - its going to have to get a whole lot worse before you get your house price crash.

I worked until recently in the Head Office of a major building society and insurer. The majority of their insurance business for the past few years has been underwriting policies for those 'rich beyond their wildest dreams'. They were using their house as a cash machine by using MEW. All the 'gains' are those on paper.

Bills skyrocketing, rising unemployment, no FTBs, all add up to bad news for the economy.

If others want to fiddle while Rome burns, that's their problem. I'm just painting a picture of what I see - I'm old enough to remember how previous 'economic miracles' ended.

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Along the South Coast in Dorset there is a marked increase in houses for sale. Yes there have been the same houses for sale for months on end but not shifting. The new stock being added however is of better quality and is going on for lower prices (undercutting existing stock). A lot of this new stock is being advertised 'No chain'.

I think volume will play a big part. How many people are realising that this might be the best time to get out of housing before being stuck in a prolonged slump?

Many will be expecting to retire in 5 years time and to be honest many may now see this as 'Last chance Saloon' to get out with a wad of cash and 'Live the dream' in their retirement!!

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I think this graph courtesy of Bandwagon is the counter to the assertion that the recession needs to happen first. Clearly, this has not been the case in the past.

Clearly politicians know that recession follows HPC and this government has done all it can to keep the market from going down.

It doesn't have many cards left to play though...

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Nope can`t agree with you. I see plenty of expensive property in my area stuck for over a year, I realise it`s all relative, but by expensive in my area I mean 350K+. What always staggers me with these stubborn vendors is where do they imagine their buyer will emerge from?

Also where are most of them off too?

An agent suggested to me that very few are upgrading or taking out bigger mortgages, what does that tell you? As for the landed gentry cashing in, that is such a tiny percentage, it`s not worth debating.

Each week the instructions appear to grow and the last land reg stats suggested volumes were down 40-50%

What`s selling well? In L`pool builders are killing each other for the 40-45K "do up for a first time buyer 2 bed terrace". Smart move? Perhaps, but reducing their exposure is crippling their margins, they are literally buying in work to keep themselves busy `cos there is very little else for them to do.

I question the maths on it TBH, I reckon with a sale price of 65k and paying 45k they`re left with 8K profit after 3 months before fees and disbursements, as I said buying the work in. Strange times, edge of a precipice if you ask me. <_<

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......edge of a precipice if you ask me. <_<

I'll echo that. Just need that boot over the edge and house of cards will fall.

This is just not the case near me - infact I would say the reverse (only crappy cheap terraces ripe for gutting) are really selling. "Nice" stuff ( family homes detached etc.. not moving for 9mths + on average)

Next door to me is a 3 bed detached in the corner of a cul de sac, conservatory etc.. Just what you would describe as 'reasonable family home'. It has been on the market empty for 18mths.

I'm glad the pattern is different elsewhere. I just wish there was more pressure on family homes in my area.

Along the South Coast in Dorset there is a marked increase in houses for sale. Yes there have been the same houses for sale for months on end but not shifting. The new stock being added however is of better quality and is going on for lower prices (undercutting existing stock). A lot of this new stock is being advertised 'No chain'.

I think volume will play a big part. How many people are realising that this might be the best time to get out of housing before being stuck in a prolonged slump?

Many will be expecting to retire in 5 years time and to be honest many may now see this as 'Last chance Saloon' to get out with a wad of cash and 'Live the dream' in their retirement!!

Shamus, you have a similar situation to the one I have attempted to describe. I also see a number of 'no chain' sales but the houses look too big to be typical BTL.

I think the exodus will be too late (as always). All the warning signs are there but the market has been teetering on the brink without any genuine panic rushes to the door.....yet

I think Phil and Krusty might tip the balance:

1. Their new programme pursuades 100,000 people to rush out on Thursday morning and MEW their remaining equity

2. The banks smell a rat and the money lending rules are enforced properly

3. Nobody in the whole country can qualify for a mortgage or re-mortgage

4. Full scale slide in house prices

5. RECESSION (thanks Durch)

6. IMuppetNorth seen eating a hat

Xil.

Edited by Xil

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I'm going to have to add 'Im Oop Norf' to my avatar. Probably at the bottom

Anyone who thinks there is 'affordability' when FTBs have fallen from their typical 50% to 7%, and are STILL priced out of 90% of UK towns is a d1ckwit or deliberately trying to provoke (or more likely, both).

And also, it takes a very special kind of child in a special class not to understand that if the 'carry cost' (mortgage interest payments') is temporarily low yet the actual asset cost is exceedingly high the 'affrodability' isnt present. The mortgage needs to be paid off. I'll explain this in moron language so ImANorthernShirtLifter can understand:-

If IRs went to 0.000001% and 1 bed flats hit £1,000,000,000 tomorrow would they be 'affordable'?

No, fvckwit. Sure you could make the payments while interest rates stayed low but even so, how would you pay it off in 25 years???? Magic beans?

I dunno. What the h*ll are they teaching these halfwits nowadays...

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I'll echo CIUW on this point.

Although monthly mortgage payments are affordable this is because the mortgage is being paid off (via low inflation) much more slowly than before. If we increased saving to compensate they would no longer be affordable (could go up to over 70% of THP).

Today's FTB's must bear in mind that they could still be in the same one bed flat in twenty years time.

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The other thing that ImUpNorth does not factor is YES!!!! Maybe today at low interest rates I could possibly struggle to buy. AS he says - there probably WONT be a major rise in IR's in the next 12 monts but a mortgage is 25 YEARS!!!

This live today and worry about tommorrow attitude is DANGEROUS!

TB

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This is just not the case near me - infact I would say the reverse (only crappy cheap terraces ripe for gutting) are really selling. "Nice" stuff ( family homes detached etc.. not moving for 9mths + on average)

Next door to me is a 3 bed detached in the corner of a cul de sac, conservatory etc.. Just what you would describe as 'reasonable family home'. It has been on the market empty for 18mths.

Ans in previous 'crashes' it's price would have been slashed to get a sale. Ever thought wwhy this time around no price slashing?

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Please feel free to tell me when exactly this crash is going to happen ..........

IMupNORTH - i am from up north too, the problem is you've given up. You're listening to the hype - go back two years, houses were selling like hot cakes. We STR ours in two weeks - we had five offers. That was happening all over the board, regardless of how nice a house was. Now there's a few that sell quickish, the rest are on for ages. If the market was that good, why do all the ea's have signs on the properties saying "price reduced", "stamp duty exempt". If the market was strong they wouldn't need those little incentives to pull the "crowds" in. Look at the signs around you, and not the newspaper articles. They tell a very different story - if i were an EA i'd want to string it out for as long as possible too.

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I think march is going to be a interesting month, I know 4 couples who are putting there house for sale in march and by reading the expats forum it looks like half of the forum is waiting for march to put there house on, supply and demand will rule this market.

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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