Savills: house price growth is ‘unsustainable’

[AvoidDebt]

A dose of reality but still focused on growth and not the inevitable collapse. What else can they say?  

Today’s house price growth is ‘unsustainable’ says Savills

Current levels of house price growth are unsustainable and are stilll skewed by last year’s Stamp Duty rush, Savills has claimed.

The agent predicts house price inflation will be flat this year amid rising inflation and low wage growth, and warns that first-time buyer numbers may actually be inflated as a consequence of the Stamp Duty changes.

Citing Council of Mortgage Lenders data, research by Savills shows home mover numbers fell by 8% compared with the same period in 2015 while first-time buyer numbers increased by 7%.

This means that first-time buyer numbers were equal to home movers in the second half of 2016, for the first time since the mid-1990s.

But Chris Buckle, associate director at Savills research, said that rather than first-time buyer numbers increasing, instead many in that category may actually really be home movers using cash given to them by their parents who can no longer co-purchase the property due to the extra Stamp Duty rules.

He said: “Home mover numbers have clearly been suppressed by increased mortgage regulation, constraining the amount aspiring upsizers can borrow, but we believe these numbers also point to another trend – a change in the behaviour of the bank of mum and dad.

“Parents are now less likely to help their children access the market by co-buying a property, which would incur the 3% additional home Stamp Duty charge, but give a cash injection instead.

“As a result, these purchases are recorded not as home mover activity, but further boost first-time buyer numbers already inflated by government schemes such as Help to Buy.”

http://www.propertyindustryeye.com/stamp-duty-changes-have-skewed-first-time-buyer-numbers-savills/

[spyguy]

No.

The current levels of house prices are not sustainable.

House prices will halve. Or wages will double. Or maybe a bit of both.

For London you need to see both.

UKs problem is its very exposed to IR turning. Should have spent the last 10 years hammering down debt rather than encouraging more debt.

[Philby1]

17 minutes ago, spyguy said:

No.

The current levels of house prices are not sustainable.

House prices will halve. Or wages will double. Or maybe a bit of both.

For London you need to see both.

UKs problem is its very exposed to IR turning. Should have spent the last 10 years hammering down debt rather than encouraging more debt.

Wish spyguy was delivering the budget today 

[Mrs Bear]

Savills are a higher-end agent and so presumably have been hit hard by fewer transactions.  I've seen a lot of EAs quoted in the media lately, talking the market down and advising more 'realistic' pricing.  Unheard of not so,long ago. 

Only yesterday we had a card shoved through the door - a local EA offering 0.5% commission 'for a limited time only.  This agent is new to the area - what on earth possessed them to move in now I can't imagine. 

A lot of EAs  must be getting desperate. I've said this before, but fairly recently  I saw a sign in a Hamptons branch in Oxford saying, 'From first flat to large detached...'  or wtte.  Hamptons are traditionally another higher-end EA so evidently they are eager for ANY business, including places they might have been a bit sniffy about before.  Or maybe people selling cheaper-end flats wouldn't have thought of using them.  

 

[spyguy]

14 minutes ago, Philby1 said:

Wish spyguy was delivering the budget today 

I have a red bag, if that helps.

'No more boom or bust!' Then non in a knowing way, gurning to the cameras.

[Maynardgravy]

1 hour ago, spyguy said:

No.

The current levels of house prices are not sustainable.

House prices will halve. Or wages will double. Or maybe a bit of both.

For London you need to see both.

UKs problem is its very exposed to IR turning. Should have spent the last 10 years hammering down debt rather than encouraging more debt.

B...b...but what about the banker bonuses?

[zugzwang]

1 hour ago, spyguy said:

No.

The current levels of house prices are not sustainable.

House prices will halve. Or wages will double. Or maybe a bit of both.

For London you need to see both.

UKs problem is its very exposed to IR turning. Should have spent the last 10 years hammering down debt rather than encouraging more debt.

Or house sizes will halve...

Edited March 8, 2017 by zugzwang

[LiveinHope]

23 minutes ago, zugzwang said:

Or house sizes will halve...

Here's an interesting one that draws together several housing related topics

Mr Johnston from Oxfordshire bought idyllic Bantham Estate in South Devon for £11.5M in 2014. Mr Johnston also owns Great Tew estate in Oxfordshire About Mr Johnston's Bantham and Great Tew

So Mr Johnston owns Bantham and some of Bantham Village. He now wants to build some houses, a leisure complex etc etc, having initially said when he bought Bantham that he was against new development.

There is a near 8000 signature petition going against the development. You could say that is Nimbyism.

But Bantham is unaffordable for any local and I very much doubt locals would be against affordable housing development.

But according to the new landowner:

Quote

Mr Johnston claimed that ‘it would be very difficult to address the wish for new housing for sale in the £125,000 to £350,000 price bracket requested.’

Link

How much does it cost to build a house when you already own the land ?

Edited March 8, 2017 by LiveinHope

[Muddlehead]

41 minutes ago, LiveinHope said:

How much does it cost to build a house when you already own the land ?

The opportunity cost remains the same.

[LiveinHope]

21 minutes ago, Muddlehead said:

The opportunity cost remains the same.

so, he overpaid

 

Which you could argue he did as he outbid the last man standing, which was the wealthy abomination called the National Trust

Edited March 8, 2017 by LiveinHope

[Muddlehead]

2 minutes ago, LiveinHope said:

so, he overpaid

Quite likely. Winner's curse and all that

[Fromage Frais]

2 hours ago, Philby1 said:

Wish spyguy was delivering the budget today 

I wish he was delivering the budget back in 2007/08

 

[spyguy]

2 hours ago, Mrs Bear said:

Savills are a higher-end agent and so presumably have been hit hard by fewer transactions.  I've seen a lot of EAs quoted in the media lately, talking the market down and advising more 'realistic' pricing.  Unheard of not so,long ago. 

Only yesterday we had a card shoved through the door - a local EA offering 0.5% commission 'for a limited time only.  This agent is new to the area - what on earth possessed them to move in now I can't imagine. 

A lot of EAs  must be getting desperate. I've said this before, but fairly recently  I saw a sign in a Hamptons branch in Oxford saying, 'From first flat to large detached...'  or wtte.  Hamptons are traditionally another higher-end EA so evidently they are eager for ANY business, including places they might have been a bit sniffy about before.  Or maybe people selling cheaper-end flats wouldn't have thought of using them.  

 

Higher end normally means does not deal with renting slums to EEers.

Income will be purely sales commission.

 

[TheCountOfNowhere]

5 hours ago, zugzwang said:

Or house sizes will halve...

1/4 you mean...thety've already halved

[TheCountOfNowhere]

They'll be wheeling that report out in 12 months time, saying, WE TOLD YOU SO.

After we'd been telling them for 2 years.

[zugzwang]

7 hours ago, TheCountOfNowhere said:

1/4 you mean...thety've already halved

Speaking of which... good day to bury bad news?

Quote

Loss-making Royal Bank of Scotland has awarded bonuses in shares to its top management team worth almost £16m.

The bank revealed the bonus awards to nine executives an hour after Philip Hammond delivered his budget and said he was “uncertain” as to when the Treasury would be able to sell off any of its 73% stake in the bailed-out bank.

The announcement by the Edinburgh-based bank also included details of £6m in bonuses that have been paid out after being awarded in previous years.

Last month, when RBS reported losses of £8bn for 2016, the bank’s chairman, Sir Howard Davies, had attempted to justify the need to pay bonuses by saying staff should not be penalised for the “sins of the past”.

A year ago, the management team were awarded bonuses worth £17.4m.

Since RBS’s £45bn taxpayer bailout during the financial crisis, it has reported nine consecutive years of losses amounting to more than £58bn.

https://www.theguardian.com/business/2017/mar/08/royal-bank-of-scotland-rbs-awards-16m-bonuses-nine-top-executives

 

[Sancho Panza]

13 minutes ago, zugzwang said:

Speaking of which... good day to bury bad news?

 

Incredible......

[The Knimbies who say No]

3 hours ago, Sancho Panza said:

Incredible......

Such transparency.

[interestrateripoff]

23 hours ago, Mrs Bear said:

Savills are a higher-end agent and so presumably have been hit hard by fewer transactions.  I've seen a lot of EAs quoted in the media lately, talking the market down and advising more 'realistic' pricing.  Unheard of not so,long ago. 

Only yesterday we had a card shoved through the door - a local EA offering 0.5% commission 'for a limited time only.  This agent is new to the area - what on earth possessed them to move in now I can't imagine. 

A lot of EAs  must be getting desperate. I've said this before, but fairly recently  I saw a sign in a Hamptons branch in Oxford saying, 'From first flat to large detached...'  or wtte.  Hamptons are traditionally another higher-end EA so evidently they are eager for ANY business, including places they might have been a bit sniffy about before.  Or maybe people selling cheaper-end flats wouldn't have thought of using them.  

 

EA entire business is based on transactions it needs churn. Luckily they've ramped btl which is a long term investment and kills churn. These people know how to make money.... 

[AvoidDebt]

Prices will halve, and then some more. They can halve the size of the new built crap but who will buy the existing stock? 

We know someone selling in London suburbs, zone 5. Bought 12 years ago, average 4 bed semi for 400k. Had it valued in Aug 2016 @1.1m. Within days they had found a new place to move to 1.8m, further out, detached, big, very nice. The kind of place a world snooker champ would have probably bought back in  the day when money actually had value.  Plan was to sell up and load up on more debt as mortgage free. Only one problem with this fantasy,  they've had zero offers, nada, zilch on their semi. In order to complete this chain of fantasy you need to find a mug prepared to pay 1.1m  for a semi in zone 5. Good luck with that. I say let's raise the prices by another 8% this year and see where we are in 12 mths time. 

[Sancho Panza]

14 minutes ago, AvoidDebt said:

Prices will halve, and then some more. They can halve the size of the new built crap but who will buy the existing stock? 

We know someone selling in London suburbs, zone 5. Bought 12 years ago, average 4 bed semi for 400k. Had it valued in Aug 2016 @1.1m. Within days they had found a new place to move to 1.8m, further out, detached, big, very nice. The kind of place a world snooker champ would have probably bought back in  the day when money actually had value.  Plan was to sell up and load up on more debt as mortgage free. Only one problem with this fantasy,  they've had zero offers, nada, zilch on their semi. In order to complete this chain of fantasy you need to find a mug prepared to pay 1.1m  for a semi in zone 5. Good luck with that. I say let's raise the prices by another 8% this year and see where we are in 12 mths time. 

Which explains beautifully why transactions in Prime London are at an all time low historically,and why the falls in inner London are starting to spread out.

They've basically run out of suckers.

[iamnumerate]

3 hours ago, AvoidDebt said:

Prices will halve, and then some more. They can halve the size of the new built crap but who will buy the existing stock? 

We know someone selling in London suburbs, zone 5. Bought 12 years ago, average 4 bed semi for 400k. Had it valued in Aug 2016 @1.1m. Within days they had found a new place to move to 1.8m, further out, detached, big, very nice. The kind of place a world snooker champ would have probably bought back in  the day when money actually had value.  Plan was to sell up and load up on more debt as mortgage free. Only one problem with this fantasy,  they've had zero offers, nada, zilch on their semi. In order to complete this chain of fantasy you need to find a mug prepared to pay 1.1m  for a semi in zone 5. Good luck with that. I say let's raise the prices by another 8% this year and see where we are in 12 mths time. 

In most parts of London halving will still make more expensive in real terms than in 2001 and they weren't cheap then.

[Patient London FTB]

16 hours ago, interestrateripoff said:

EA entire business is based on transactions it needs churn. Luckily they've ramped btl which is a long term investment and kills churn. These people know how to make money.... 

Looks like some EAs have hit on an idea to get churn up again. Charming.