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duffbear

The fat lady is singing!

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The average price of a flat in London is moving inexorably towards the £400,000 mark. According to Halifax, the current average is £398,038. Buying an average flat would mean raising a deposit of some £20,000 and paying £1,843 a month to service the debt, assuming a 25-year repayment mortgage is taken out.

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17 minutes ago, tomandlu said:

Until IRs rise, I'm not holding my breath...

HTB/FLS/Foreign investors fueled the "recovery"

 

HTB2 has gone.

FLS is still there but for how long, it's an act of criminal theft IMHO

Foreign investors...well, are you stupid ebnough to buy in a country where the population is rising up against th establishment and immigration.

High IRs/Low prices = crash

High Prices/Low IRs = crash

 

Same Same as they say in thailand.

 

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19 minutes ago, tomandlu said:

Until IRs rise, I'm not holding my breath...

Yep, we all thought that the day of reckoning had come back in late 2007/early 2008 and then we got ZIRP, bailouts, unlimited liquidity to banks, daft schemes to help people buy at unaffordable prices ... the works.

We need to see interest rates rise and in a way that is not 'voluntary' by TPTB ... ie. they must have no choice but to raise rates because they sure as hell won't choose to raise them, quite the opposite.

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10 minutes ago, TheCountOfNowhere said:

HTB/FLS/Foreign investors fueled the "recovery"

FLS is still there but for how long, it's an act of criminal theft IMHO

FLS taper well under way already - complete by end Jan 2018

Term Funding Scheme covering this already? Watch out in August to see if Carney renews that.

Little uptick in savings rates suggests banks are still tapping cheap / free finance from somewhere...

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7 minutes ago, TheCountOfNowhere said:

High IRs/Low prices = crash

High Prices/Low IRs = crash

We can but hope. However, without lower IRs, forced sellers will remain few on the ground and desperate mugs will step in at the slightest sniff of a bargain, with their eyes only on the affordability of the monthly payments. A slow, slow slide? Definitely. A crash? Needs more IR...

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4 minutes ago, tomandlu said:

We can but hope. However, without lower IRs, forced sellers will remain few on the ground and desperate mugs will step in at the slightest sniff of a bargain, with their eyes only on the affordability of the monthly payments. A slow, slow slide? Definitely. A crash? Needs more IR...

I disagree

Now that the words are out there, panic will set in. Some of those holding on to their properties 'until they get the RIGHT value' will see sense (esp those who saw the last crash) and drop in order to get a sale. And so on to the usual snowball (it always happens - always)

BTL investors will pull out in much the same way.

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14 minutes ago, shindigger said:

McDonnell in Number 11 should sort that nicely.

I think that may be the super catalyst, I'd expect the pound to crash if this were to happen.

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The fat lady may be singing, but she's singing in a s***e flat that costs £400,000 and you probably wouldn't want to buy even if you could afford it. 

So forgive me if I shall wait and see. Still far too early.

Edited by Tempus

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2 minutes ago, Tempus said:

Still far too early.

I agree. There are some encouraging signs that a perfect storm could be about to appear on the distant horizon, but it might just as easily take a year or two to properly get going. Unfortunately.

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5 minutes ago, duffbear said:

I disagree

Now that the words are out there, panic will set in. Some of those holding on to their properties 'until they get the RIGHT value' will see sense (esp those who saw the last crash) and drop in order to get a sale. And so on to the usual snowball (it always happens - always)

BTL investors will pull out in much the same way.

Well, what would you call a crash and when do you think it will happen?

I'd certainly agree that the smart money is going elsewhere. Unfortunately, even when they lose their attraction as an investment class, demand from FTBs and up-sizing families, plus low supply - well, I remain sceptical.

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10 minutes ago, tomandlu said:

Well, what would you call a crash and when do you think it will happen?

I'd certainly agree that the smart money is going elsewhere. Unfortunately, even when they lose their attraction as an investment class, demand from FTBs and up-sizing families, plus low supply - well, I remain sceptical.

it's already begun: sentiment is everything

How many will upsize if they think waiting 12 months will mean saving 10s if not 100s of '000s of £££? FTBs the same. This crash is starting with a whimper. It'll end with a bang.

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I expect most FTBs in the last few years buying into this bubble will have no idea that such as thing as negative equity is possible...I expect many are going to learn the hard way.

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1 minute ago, Wayward said:

I expect most FTBs in the last few years buying into this bubble will have no idea that such as thing as negative equity is possible...I expect many are going to learn the hard way.

And the bankers who give a f**k when they repo them this time, claim their 20% HTB bonus, keep their deposits sell on for 50% less then chase them for the loss for the next 11 years.

 

It's not called a "pay us if you like", it's called a "death pledge"

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1 hour ago, tomandlu said:

We can but hope. However, without lower IRs, forced sellers will remain few on the ground and desperate mugs will step in at the slightest sniff of a bargain, with their eyes only on the affordability of the monthly payments. A slow, slow slide? Definitely. A crash? Needs more IR...

Do the sums.

 

£100,000 debt with IRs going up from 5% to 6%

 

5 % on £100K = £5K  a year say and 6% = 6K, someone's paying £1K more.

 

or 

 

IRs at 2% with house prics going up from 250K to 300K.

2% of 250K = £5K...2% of 6K = £6K....Someone's paying £1K more.

Then dont forget all those juicy 2% fixed term deals that are going up right about not !!!!

And dont forget the Sentiment !!!! Now when you say to people...the housing bubble is collapsing, the nationwide has dropped for 3 months, they'll say..."yes, I heard".

It's not IRs that's going to collapse this.

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You've got to consider all those FTBerz who religiously avoided any credit use leading up to their mortgage applications and now, during their 2 year fix, loaded up on cheap credit and a couple of PCPs which they now struggle to pay back, debt building and building, AND their house is potentially dropping in value due to buying at the 15 peak. Their credit rating has gone from near perfect to just ok, good luck getting another 2% deal. Never mind the Brexit fallout or BTL sell off dragging down values.

I'm with Count on this, I don't think we're looking at IR rises as our only hope.

Edited by Barnsey

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2 hours ago, duffbear said:

Does the ES editor know about that article?

He's made taxpayers liable for up to 40% of the losses on new build properties up to £600k

 

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1 hour ago, tomandlu said:

Well, what would you call a crash and when do you think it will happen?

I'd certainly agree that the smart money is going elsewhere. Unfortunately, even when they lose their attraction as an investment class, demand from FTBs and up-sizing families, plus low supply - well, I remain sceptical.

You forget 1 thing.

 

THE INSANE PRICES.


See above example.

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19 minutes ago, TheCountOfNowhere said:

Do the sums.

I'm not suggesting that the downward trend isn't likely to continue, but that does not constitute a crash IMHO; more of a slow correction with suckers pulled in along the way at each new price-point. "Sentiment" is important, but we've been banging on about sentiment since 2007, and it's certainly not reached tipping point yet.

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6 minutes ago, Democorruptcy said:

Does the ES editor know about that article?

He engineered it for his banker buddies so will be smiling smugly to himself:mellow:

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35 minutes ago, tomandlu said:

I'm not suggesting that the downward trend isn't likely to continue, but that does not constitute a crash IMHO; more of a slow correction with suckers pulled in along the way at each new price-point. "Sentiment" is important, but we've been banging on about sentiment since 2007, and it's certainly not reached tipping point yet.

This whole bubble has been driven from London, parts of Prime London are already 20% down.  There is no support for these prices when you take away the investors and foreign buyers.

The collapse is emanating from London and will continue to gather momentum, purely on the basis that PCL is around down a large chunk.

Next it's be outter London, then Luton, the Milton Keynes, then the S.E.  Local wages, even city wages cant afford to prop up these extra ordinary prices.

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3 minutes ago, TheCountOfNowhere said:

This whole bubble has been driven from London, parts of Prime London are already 20% down.  There is no support for these prices when you take away the investors and foreign buyers.

The collapse is emanating from London and will continue to gather momentum, purely on the basis that PCL is around down a large chunk.

Next it's be outter London, then Luton, the Milton Keynes, then the S.E.  Local wages, even city wages cant afford to prop up these extra ordinary prices.

I wouldn't dispute any of that (much), but the problem/point is that higher IRs would do two things - create more forced sellers AND lower prices. Lower prices without volume is not much help, and does little to speed up true price discovery. In other words, low IRs give sellers a false edge in the game. Does this prevent a 'crash'? No, but it makes it play out in (very) slow motion.

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