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2017 predictions


jiltedjen

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I predict we will have a 2018 prediction thread.....all those still here will still be breathing, nobody starved and debt will have multiplied but nobody nearer repaying it......and the little one said "roll over"....although a few will fall out. ;)

 

Happy New Year.toonvectors-14292-140.jpg

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On 29/12/2016 at 8:05 AM, oracle said:

interesting.did they just lPO last summer?

chart looks a bit toppy at the moment but if it goes back down to £3.50-75 i might take a punt.

12700732006251.jpg

Worth doing some more research in this area.

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12 minutes ago, thisisthisitmaybe said:

A recession is pretty much what the economy needs. We've avoided them for too long through central bank manipulation.

Recessions are to embraced as part of a healthy economic cycle.

Yep recessions need to be frequent - as frequent recessions are short and swift. This one definitely won't be but as 80% of my business is now offshore it won't really impact me...

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On 12/31/2016 at 0:18 AM, Digsby said:

HPC. Actually, the "C" in that stands for Correction, not Crash. That's not to imply a crash-lite scenario, as in a correction being a small adjustment in prices and a crash being a large correction in prices, but to imply that a crash happens by accident, and the context of a house price crash is disastrous, whereas a correction involves the putting right of something that is not right - and house prices are not right.

To summarise my rationale:

 

Enjoyed the main post a lot, but the C in HPC stands for Crash, unless we are now taking a snowflake position that crash is too un-PC.  That we risk alienating those who would have us in rented forever and dream of house prices doubling every few years regardless.   I like how some of the main BTL participants on BTL forums have been shaken and now pay HPC a lot more attention as a threat to their big VIs and overleveraged greed - as they reconcile themselves to shock that they are not the protected core-voters (S24).

housepricecrash.co.uk   crash crash crash crash crash.

Crash to Correction / (Half-man to Quarter man) - just doesn't have the same ring to it. :)

 

Yes, many read 'crash' and see it as 'disastrous' but through a VI I do not share.   From their side 'crash' often brings on the human-shield positions (and often from those who own outright at mad high values) to put homeowners first... because someone might have bought aged just 27 with big mortgage, and 'crash' people 'prey on misery' etc. 

Crashes as accidents?  Also as projected market consequences for extreme build up of malinvestment, mistakes, big egos and bubble-head thinking.   Not just on buyer side, but also on those not tempted to sell £2m+ houses they bought decades ago.  That's where the malinvestment is.  In multi-trillion valued housing market. BTLers.   And yes, house prices are not right, and crashes can put things right sharply.

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Other countries getting steeling up and being more willing to openly criticise British positions/policies - or - more openly positioning to take advantage of some UK weaknesses.

Quote

2011

It is rare for a minister of one country to attack alleged government policy in another country, even when the government of the country on the receiving end of the criticism has changed.

So these remarks by Tim Geithner, US Treasury Secretary, are of more than passing interest:

"The United Kingdom's experiment in a strategy of 'light touch' regulation to attract business away from New York and Frankfurt ended tragically."

http://www.bbc.co.uk/news/business-13678448

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On 12/31/2016 at 0:18 AM, Digsby said:

HPC. Actually, the "C" in that stands for Correction, not Crash. That's not to imply a crash-lite scenario, as in a correction being a small adjustment in prices and a crash being a large correction in prices, but to imply that a crash happens by accident, and the context of a house price crash is disastrous, whereas a correction involves the putting right of something that is not right - and house prices are not right.

To summarise my rationale:

 

Also reminded of some book I once read about the naming of the Spitfire fighter plane.  Apparently a lot of hesitation on one committee about the official naming of the aircraft.  Some feared the name 'Spitfire' for the new fighter plane, at that stage of things, may have been too much of an aggressive name projection.      

Quote

 

The Supermarine Spitfire, so called after the Supermarine chairman's nickname for his daughter.  

When the time came to name the world’s most celebrated fighter plane he suggested Spitfire, believing it summed it up perfectly.

The Air Ministry wasn’t quite so sure, nor too was the design engineer RJ Mitchell who pushed for the aircraft to be called the Shrew.

In the end though McLean won the argument and Annie Penrose became forever linked with the legendary plane.

 

For me the housing market is not some fun common-room word game, but with BTL and HPI chasing policies we have seen, something which negatively affects millions of younger people who have to make their own way in life.   I couldn't care less if 'Crash' brings out the human shield HPI protectors - they're not going to be on side of lower prices anyway without matters being forced.

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On 12/31/2016 at 0:18 AM, Digsby said:

HPC. Actually, the "C" in that stands for Correction, not Crash. That's not to imply a crash-lite scenario, as in a correction being a small adjustment in prices and a crash being a large correction in prices, but to imply that a crash happens by accident, and the context of a house price crash is disastrous, whereas a correction involves the putting right of something that is not right - and house prices are not right.

To summarise my rationale:

1. The HTB Mortgage Guarantee Scheme (HTB2) ended this month. I was never against HTB1 in principle, because in theory it should have increased supply by driving FTB demand towards new builds. But HTB2 was a disastrous policy, and in my opinion responsible for much of the the 2013-present HPI. It allowed the continuance of 90-95% LTV mortgages in an environment where they were otherwise banned. People who would have remained renting and saving for another 2 or 3 years were able to buy at current prices, bringing a huge amount of demand forward from the future. Obviously, you can't always bring demand forward and so it had to end, the sooner the better (three years too late, imo). I think the impact of this is underestimated. Standard LTV's are now applicable, cutting probably 25% of previously eligible FTBs out of the market at current prices. 

2. The coverage ratios and interest rate stress test requirements of the PRA's supervisory statement on on underwriting standards in the BTL sector come in to force on 1st January 2017 (2 days time! - though it has effectively already happened). This is not an insignificant milestone - underwriting standards will have gone up, by law. If there has, will have been a decent amount of HPI in October/November/December, this is likely because of the BTL heavy lenders selling hard ahead of the change. I can't say for sure, but, other than the impending BTL income tax changes (and thus borrower future affordability), BTL lenders have had very little to worry about until Monday - bear in mind, BTL lending, on a per lender basis, is virtually zero risk which is why the PRA (and the Basel committee, and the Treasury) have had to step in - it's the systemic risk which is important overall, so don't kid yourself that BTL lenders will have been pushing their BTL products hard ahead of the changes.

3. Article 50 is going to be invoked in March. I think there are still significant numbers of people who don't believe it's going to happen, and when it does, confidence will take a dive. The Supreme Court ruling is due sometime in January. I was pretty confident that the ruling would go in favour of the Government, my reasoning being that they threw the High Court case so as to allow them to appeal it to the Supreme Court so there could be no doubt to the legality of a Royal Prerogative, but having watched a day or so of the proceedings, I don't think the Governments case is as strong as I first supposed. Therefore, I'm left wondering why the case was appealed if the argument put forth in the appeal is not particularly strong. My assumption must be that it was either incompetence or to buy time. Either way, it has allowed people to kid themselves that it is not going to happen when is patently is.

4. We also have the Spring Budget in March. I can't recall precisely what Hammond announced in the Autumn statement regarding future budgets and statements, but I think he said that March would be the last spring budget, with expectations of few significant changes, and autumn would be the first autumn budget, But given that Article 50 is due to be invoked in March, I doubt that promise (if I didn't imagine it) of no significant changes in March will hold true. There will need to be changes. What they are, who knows, corporation tax cuts and other incentives to keep businesses here perhaps, but whatever they are, I doubt they will be minor, Whether they have an effect on the housing market is debatable, 

5. In April, the initial phase of the BTL income tax changes takes effect. Now it;s from April, so the pain won't be felt for another year, and I suspect that a large number of BTLers don't actually have an accountant so they if they are not already aware of the changes, they'll pass through April unawares unless HMRC use the opportunity to communicate the changes. Those that do use the services of an accountant, I think are ironically those most unlikely to be aware of the changes because they don't keep up with news about tax rules, and so assuming that the accountants communicate the forthcoming difference in their returns, I reckon awareness is going to jump hugely in the coming few months and sell-offs begin in earnest before the end of the 2017 tax year.

6. Also in April, Lettings Agent fees will be unlawful. This has been discussed a lot, but in my opinion the only logical outcome is that Estate Agents are going to have to make more revenue from sales. They can do that in either of two ways, pressurise buyers into paying more, or pressurise vendors into accepting less. With affordability stretched as it is, the former seems unlikely unless they severely restrict what is available to buy (and I believe they have been anyway, safe in the knowledge that they have a steady letting revenue stream). We're all aware of the house that have been on the market for months and months, years in some cases. So they have property on their books that could sell if it weren't for the fact that few will pay the prices. Add the end of HTB2 into the mix, even fewer buyers. I think they are going to pressurise vendors. I also think this is the purpose of the policy.

7. By the end of September, the remaining aspects of the PRA's supervisory statement will be enforced. such as the income affordability testing and the special rules for portfolio landlords. Other posters have a far better understanding of the impact of this than I do, but I know it is yet another nail in the BTL coffin. I might mean we get another surge in late summer, but given everything else going on, I can only see it producing something of a dead cat bounce.

8. Prime Central London is already experiencing a major price correction. Media shills would have you believe that there is a disconnect between prime London prices, sub-prime London prices, and regional prices. This is ********. PCL prices are falling because nature abhors a void. The reason for the void is insignificant. Those who might have restrained themselves to sub-prime London property were it not for the prices are now buying prime London property at lower prices. They themselves if they are selling can afford to accept slightly less. Their own buyers can therefore accept less. Fewer Londoners in general therefore feel the need to "emigrate". The shockwaves of the PCL correction with therefore hit the (who said it, "honeypot locations"?) popular cities within commuting distance of London. Those shockwaves will spread within those localities. If somebody in PCL looses £1m, then several people nearby will save £100k, and some others farther away will save £50k, and some further people will save £25k. I live in a fairly popular Londoner immigrant location, and while it's a long commute, people do. I've seen prices here go through the roof, and as locals sell up for insane prices, they've moved out into the local area causing an explosion of prices with their second hand Londoner money. Now, as the money pouring into the city reduces, an implosion is occurring, with regional prices way out of whack compared to the city (not higher, but higher than can be expected - city prices are starting to look cheap in comparison to historical norms). Nature abhors a void.

Awesome post

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On 28/12/2016 at 4:18 PM, SarahBell said:

That channel has only recently come to my attention.
 

http://socialblade.com/youtube/top/country/gb

 

£623K - £10M

ESTIMATED YEARLY EARNINGS

Yeah, as Venger states, he was kicked out by his Landlord.

Anyway, here he is on Madeira Drive in Brighton doing a video for Nissan (ignore the foreign number plates, I know Brighton when I see it). I have another star that lives close by (relatively) - so that's another claim to fame as well as David Icke! Haha.

 

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On 01/01/2017 at 5:22 PM, Venger said:

For me the housing market is not some fun common-room word game, but with BTL and HPI chasing policies we have seen, something which negatively affects millions of younger people who have to make their own way in life.   I couldn't care less if 'Crash' brings out the human shield HPI protectors - they're not going to be on side of lower prices anyway without matters being forced.

Incorrect. 'Correction' is correct. It's not political correctness, prices need correcting. 

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4 hours ago, Digsby said:

Incorrect. 'Correction' is correct. It's not political correctness, prices need correcting. 

There's no chance of me falling out with you over anything HPC - hopefully same thing for you - both are correct. :)   

Still I do hold it as important so will make this last post on this matter.    Crashes are predictable consequences of indulging in bubble behavior.

Not accidents, but predictable.   2007-08 predicted by many who stayed out of housing market.  Many 2004 HPCers still here (hi Si1 and many more).  I think it does them a small disservice to suggest HPCs are accident, and that site should have been called House Price Correction then, and now.  Maybe crashes are accidents to you and others who have 'bubble-headed' believed that authorities protect the HPI and their core-voterness.  That's part of bubble think. 

2008 overridden by policy such as QE/FLS/zirp. My prediction being banks have spent last few years offloading risk onto those most able to take the brunt of the HPC.   BTLers and property investors.   

On 12/31/2016 at 0:18 AM, Digsby said:

HPC. Actually, the "C" in that stands for Correction, not Crash. That's not to imply a crash-lite scenario, as in a correction being a small adjustment in prices and a crash being a large correction in prices, but to imply that a crash happens by accident, and the context of a house price crash is disastrous, whereas a correction involves the putting right of something that is not right - and house prices are not right.

To summarise my rationale:

BTLelegraph even dared to use it just the other day in an article - in shock article to the HPI VI.  Projects view of sudden and serious change to me as well.  Predictable and sudden and unexpected change (for many who have bet one way).  And if it's disaster for HPI Heads and BTLers - so be it.

Quote

 

While many of these countries have already introduced policies designed to reduce financial stability risks, including forcing buyers to find larger deposits and imposing borrowing limits, Ms Mann suggested that a house price crash would also reduce household spending.

The OECD’s latest economic outlook warned that an initial price correction in overvalued property markets “could be magnified by fire-sales” if investors had been “betting on continued price gains due to monetary policy support”.

http://www.telegraph.co.uk/business/2017/01/02/fears-massive-global-property-price-crash-amid-dangerous-conditions/

 

I love how 'House Price Crash' sends shudders down the BTLers.  Danced into it 2012-2015 (BTL), and so many years of ego what it is worth, supply and demand, small island, growing population to be smacked by S24 and more - real estate runs on money - (so many of the things you list in great post).

Correction/Crash.  Let it be so next few years.  We are going into it.

 

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Carter Jonas throws down their 2017 prediction. Why would these single product salesman selling houses as investments predict anything but a rise? 

Residential property returns are forecast to reach a healthy 5.6pc in 2017, albeit well below the five-year average of 13pc. 

http://www.telegraph.co.uk/business/2017/01/08/property-returns-expected-plunge-year/

 

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9 hours ago, AvoidDebt said:

Carter Jonas throws down their 2017 prediction. Why would these single product salesman selling houses as investments predict anything but a rise? 

Residential property returns are forecast to reach a healthy 5.6pc in 2017, albeit well below the five-year average of 13pc. 

http://www.telegraph.co.uk/business/2017/01/08/property-returns-expected-plunge-year/

 

13% per year for five years, and they consider another 5.6% to be healthy? The joke about the last thing that goes through a flys mind when it hits a windscreen comes to mind.

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