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buyinbrazil

Where from here?

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Please excuse a general lack of specific facts in this post! This is a collection of my ramblings and thoughts, please correct or add to them !

 
     In a rising property market, (like we saw from the mid 90s ti 2006/7/8 ish) reducing the BOE interest rate adds fuel to the fire. It encourages a " virtuous/ vicious" cycle of increased debt taking against assets, which increases the price of the asset. As has been said before, you can't breathe in forever! 
    Now, however, (having have had historically low rates for several years ) because the banks have tightened criteria for lending, the speculative " investment" is not happening. Fewer  investors will be looking to property as a good option, the downside risks of currency effects/ interest rates etc are just too high. With these low rates though,  lots of home owners are under no pressure to sell, so there we are. The music has stopped on this game of musical chairs! Now that the man or woman in the street has been starved of their free wealth gains in the riding market,  folk are beginning to understand that the debt is real and we are, in fact, not as wealthy as we thought we were. I see more aggression on the roads, it feels like a society on a knife edge, walking a type rope of debt. Haves and have nots, and of course, the will never haves! I don't like it. 
 
  What a mess, what a joke. Employers using immigration/ globalisation to squeeze more and more out of their employees in a race to the bottom. Nice.  The employee gets rewarded for their toil with tokens that have increasingly poor value when it comes to housing, as William Hague wrote recently, low rates have allowed asset holders to be rewarded for simply holding assets, whereas work has reduced levels of reward, in terms of house buying power. How does that insentivise work exactly? 
 
   What a mess, you could not make it up! 
 
Where does it go from here? Too many in the UK do not contribute enough for the society to pay its own way. There is a high expectation level about what society owes them, the NHS for example. Huge demographic inequalities, in terms of numbers and resource ownership, distorting the policy makers' decisions against the minority demographics. Marked inequalities between the generations. Land tax really does appear the only morally right course to take but don't hold your breath. Perhaps we are in an adjustment phase, perhaps the ten yours of rising prices was the anomaly.
  
      I can not see where economic growth will come from, we've tied ourselves up in knots. Perhaps with the weak pound we will see a growth in manufacturing here. Perhaps we will all become a lot poorer and live simpler lives with more community spirit, no bad thing either.
 
    

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Regarding house prices I think we are somewhere near the top of the cycle. Prices are so unaffordable. There is a generation of those who bought before the bubble and those who didn't. Those who didnt are priced out end of story. The stagnation we see is simply due to overpricing an 

d those that have the asset swapping it among themselves. I was hoping for some sort of correction, but is looking impossible IMO. The whole system is rotten to the core. Perhaps there will be a meltdown and we get lucky.

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I think the impact of Chinese investors is underestimated. UK property is a global commodity and what UK FTBers can afford to pay could become increasingly irrelevant. As in '08-'09, UK property has crashed spectacularly in a very short space of time - assuming your starting point isn't in Pounds Sterling. Economic woes in China could magnify demand for bog standard UK property as people there seek a safe haven.

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10 minutes ago, GreenDevil said:

Regarding house prices I think we are somewhere near the top of the cycle. Prices are so unaffordable. There is a generation of those who bought before the bubble and those who didn't. Those who didnt are priced out end of story. The stagnation we see is simply due to overpricing and those that have the asset swapping it among themselves. I was hoping for some sort of correction, but is looking impossible IMO. The whole system is rotten to the core. Perhaps there will be a meltdown and we get lucky.

The thing to remember is that prices are being kept high by the bottom being filled up with BTLers. The great unknown is how many of those buyers are cash rich paying cash for those properties (after all to many a 4% return via rent is better than keeping the cash in the bank) and how many of using mortgages - as the rug is slowly being pulled away from  the Interest only BTLer crowd.

I believe for most of the country the only way is down but London may be different especially if people overseas are looking for a safe place for their money.

 

Edited by eek

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55 minutes ago, eek said:

The thing to remember is that prices are being kept high by the bottom being filled up with BTLers. The great unknown is how many of those buyers are cash rich paying cash for those properties (after all to many a 4% return via rent is better than keeping the cash in the bank) and how many of using mortgages - as the rug is slowly being pulled away from  the Interest only BTLer crowd.

I believe for most of the country the only way is down but London may be different especially if people overseas are looking for a safe place for their money.

 

It`s happening in my neck of the woods but flipping and the greater fool (BTL) is putting the brakes on

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I agree with the BTL mantra. Certainly the last two family homes I was interested and offered on were bought by BTL scum, marketed as refurbed, they were fixers, sold at fantasy prices, so BTL scum does just a lick of paint and up for rent... Unfortunately I don't see s24 making any difference, likely to be reversed by the hamster, plus the gimps Zirp, as opposed to rates rises which were promised before brexit if we leave, which was why i voted leave, actually being he greater evil. While the gimp is running he show, its up up at least until 2019, its time to buy, even though I cannot afford to upsize, coming to the conclusion STR was a mistake for me and I should of bought as big as i could afford 3 years ago.

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I can't see Sterling appreciating anytime soon against any of the major currencies (except perhaps the Euro). And I can't see UK house prices rising much either. I don't think foreign buyers will touch UK property with a bargepole...There are far safer safe havens!

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4 hours ago, GreenDevil said:

Regarding house prices I think we are somewhere near the top of the cycle. Prices are so unaffordable. There is a generation of those who bought before the bubble and those who didn't. Those who didnt are priced out end of story. The stagnation we see is simply due to overpricing an 

d those that have the asset swapping it among themselves. I was hoping for some sort of correction, but is looking impossible IMO. The whole system is rotten to the core. Perhaps there will be a meltdown and we get lucky.

Would you please stop plastering the forum with Scooby-doo videos? ?

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2 hours ago, GreenDevil said:

I agree with the BTL mantra. Certainly the last two family homes I was interested and offered on were bought by BTL scum, marketed as refurbed, they were fixers, sold at fantasy prices, so BTL scum does just a lick of paint and up for rent... Unfortunately I don't see s24 making any difference, likely to be reversed by the hamster, plus the gimps Zirp, as opposed to rates rises which were promised before brexit if we leave, which was why i voted leave, actually being he greater evil. While the gimp is running he show, its up up at least until 2019, its time to buy, even though I cannot afford to upsize, coming to the conclusion STR was a mistake for me and I should of bought as big as i could afford 3 years ago.

Your mistaken a flipper for a bit toileter.

 

Its not time to buy, r u ££££ing insane?

 

Its time to leave the UK before it all lucks off.

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1 hour ago, oatbake said:

I can't see Sterling appreciating any time soon against any of the major currencies (except perhaps the Euro). And I can't see UK house prices rising much either. I don't think foreign buyers will touch UK property with a bargepole...There are far safer safe havens!

A Chinese colleague, who I think is moderately well connected in Beijing, and who himself has investment properties both in London and Beijing, is strongly of the opinion that the people he knows in China regard the fall in the pound as a buying opportunity. He also would buy another place in London if he had the money. His view is that London is safe, and long term will always go up. Obviously I differ rather sharply on the factual basis of this in the future - but I trust his opinion on sentiment.

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Yes, I think foreign investment will wane . The biggie is whether or not the BTL crowd rush for the exit. The average UK property worshipping numpty has relished the ride up but even they must now see the problems that sill prices bring to our society. It's madness it really is. BTL investors blinkered to what they are actually doing " I'm providing a service" yeah right you are. Tide slowly turning but yikes this really is a very slow burner!

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It is no longer a worry for me. The population is obsessed with housing, debt, financialisation and entitlement/dependence on the state is embedded.

It is up to you to work out how you can take the above and work it to your advantage whilst retaining your ethics and morals.

It's more possible then you might think. It does however require an entirely different mindset from almost everyone you meet, and crucially that means comparing yourself to anyone else is the silliest thing you can do.

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23 hours ago, Toast said:

A Chinese colleague, who I think is moderately well connected in Beijing, and who himself has investment properties both in London and Beijing, is strongly of the opinion that the people he knows in China regard the fall in the pound as a buying opportunity. He also would buy another place in London if he had the money. His view is that London is safe, and long term will always go up. Obviously I differ rather sharply on the factual basis of this in the future - but I trust his opinion on sentiment.

I'm hearing from an EA (London) friend of mine that it's all foreign buyers buying at the moment. There are hardly any British people buying. 

Another friend of mine is an EA in Singapore and he tells me the current feeling out there is mixed at the moment - they are wary of the pound falling more and house prices going down, but they are excited at the opportunity of bagging a bargain UK property. 

It's sickening really.. I used to Live in Singapore, and as far as housing goes, they look after people much better than our government. There is housing that only locals can buy (HDB scheme), and they also have a 15% tax on foreigners purchasing private property. WTF have the UK government done for us in recent history? 

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On 01/11/2016 at 10:30 AM, buyinbrazil said:
     In a rising property market,
    

 In a rising property market

 

Rising ?

 

I'll have 2 of what you're drinking....

 

CwQPPfsWgAAcO0T.jpg

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22 minutes ago, RickyD said:

WTF have the UK government done for us in recent history? 

FCK all. And they never will apart from the usual inflationary prop to keep the ponzi stoked.

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21 minutes ago, TheCountOfNowhere said:

I'll have 2 of what you're drinking....

I hate to say it Count, but I'm already drinking buyinbrazil's tipple. That graph shows house prices still going up, and it will do over whatever time-frame you average the data.

I'll give you that the rate of rise seems to be falling, but I remember back in 2005 on this site when people were showing growth rates of house prices falling linearly (but still positive, mark you), and ridiculing the idea that the line could reflect off zero "like a light ray". Well, that's what happened. Second derivatives are a bitch, and there's no universal law of inertia in economics to rein them in.

Actually, let me back off on that a bit: the graph you showed is year-on-year, so there is some built in smoothing. The numbers (so far) are still positive, though.

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IMF involvement may be required to ensure the UK can meet its debt repayments, whatever it takes.

After that, safe to assume we'll continue to follow the wisdom of Krugman (via ZH):

"(Prof. Krugman)

The important point about the [second world] war from the macroeconomic point of view is that it was a very large fiscal stimulus. That fact that it was a war is very unfortunate. It was simply something that led to a fiscal stimulus that would not otherwise have happened."

If you were wondering whether it wouldn't be better to create stimulus by spending on refugees, that's too cheap:

"I think if you actually cost it out, it is not very large. The refugee issue creates enormous tension because of social fears but if we can say, though strange way to put it, taking care of the refugees does not actually cost enough to be a major fiscal stimulus. It is not trivial but it is not that big. When we were looking at it, I know that President Hollande was speaking about we should lift the fiscal restraints in order to deal with this crisis. For a moment we are all kind of excited saying this is the end of austerity but the numbers just did not seem to be big enough to actually be a really major departure. If you are looking for the fiscal equivalent of war, it is not that."

https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/Meeting-minutes-Krugman.pdf

IMF budget supervision and war, then.

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So a third of the debt is to ourselves, right? Don't need the IMF for that. And is the rest/interest payable in sterling? Can't we just keep printing...until we have to buy the ink in dollars?

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To the count of nowhere, you quote the first part of my OP sentence, then you show a chart for a period of time after that period I referred to. Then commented, " in a rising property market" , what are you on? Well, read the whole paragraph me olde! I was on the lime and sodas, for what it's worth. What were you on?.

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29 minutes ago, thehowler said:

So a third of the debt is to ourselves, right? Don't need the IMF for that. And is the rest/interest payable in sterling? Can't we just keep printing...until we have to buy the ink in dollars?

Keep buying our own sterling debt with QE. Can also keep buying dollar debt, just need to print more as the pound slides..

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