a j Posted June 27, 2017 Share Posted June 27, 2017 Just now, dougless said: I am afraid I have to agree with this. I have been predicating a house price correction since 2003; shows how little I know! It does seem like continuing house price inflation is the top priority of recent Governments. Its a sad indictment of our country when it seems to be run for the few at the expense of the many. For years the 'many' loved house price inflation - and low interest rates. Now the proportion of the population who own their own homes is decreasing there is a changing balance of political incentive. Quote Link to comment Share on other sites More sharing options...
ThePrufeshanul Posted June 27, 2017 Share Posted June 27, 2017 Well the thing is that the "forces" can be as determined as they want - they can only influence the market not control it completely. If they had the power to control it there would never have been any price crashes in history. At some point people run out of money to keep paying ever increasing speculative mortgage payments. The fact is that the low interest rates, government schemes and growth of the economy have made mortgages relatively affordable the past few years for those people who have had access to the bank of mum and dad to raise the deposit. All that is now changing - although I do think there is no "logical inevitability" when it comes to the economy - let alone politics - both of which obviously have massive bearing in determining house prices. Quote Link to comment Share on other sites More sharing options...
rantnrave Posted June 27, 2017 Share Posted June 27, 2017 At the turn of the decade, I used to argue passionately on anti-HPC sites that the housing market was done for and prices would come tumbling down. Had to stop posting there after the Funding for Lending Scheme and Help to Buy went live because the amount of egg on my face had grown to form a large omelette. There is in my opinion plenty more that TPTB can do to further inflate house prices. They would be reckless beyond belief to do so, especially now they can see the social unrest which 15+ years of relentless pursuit of HPI has resulted in, but they can still do it. Whichever way they turn, things are going to get ugly, that's for sure. The BoE and authorities are in a very deep hole, but Mark Carney has shown time and time again that he's more than prepared to drill deeper. From the top of my head, possible actions to further fuel the bubble include negative interest rates, allowing FLS for residential mortgages again, reversal of recent anti-BTL measures, offering UK citizenship to anyone from overseas who spends £500k on a UK property, intergenerational mortgages, return of 125% loans (underwritten by the taxpayer), HTB extended to 40% nationwide and not just London... Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 38 minutes ago, dougless said: I am afraid I have to agree with this. I have been predicating a house price correction since 2003; shows how little I know! It does seem like continuing house price inflation is the top priority of recent Governments. Its a sad indictment of our country when it seems to be run for the few at the expense of the many. They are almost out of levers though, and political trends have shifted drastically against them. Tory party hq will have realised that the young non home owners are a growing political force. They will need to change their policies to deal with this. The fire will also make property owners (landlords) and developers an easy political target. But i am talking about a repeat of 2010 to 2012 with decling real terms house prices. This was caused by the same issues that have reappeared. Declining real terms wages and poor growth and business sentiment. The growth from 2013 to 2016 was during a peroid of real terms wage growth and a strong economy. The dat is all there. Lets not overthink things. We are back to 2011 situations economically. I think government will prevent a crash unless we enter economic turmoil. But i expect a few years of between 0% and -6% real terms changes Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 Just now, rantnrave said: At the turn of the decade, I used to argue passionately on anti-HPC sites that the housing market was done for and prices would come tumbling down. Had to stop posting there after the Funding for Lending Scheme and Help to Buy went live because the amount of egg on my face had grown to form a large omelette. There is in my opinion plenty more that TPTB can do to further inflate house prices. They would be reckless beyond belief to do so, especially now they can see the social unrest which 15+ years of relentless pursuit of HPI has resulted in, but they can still do it. Whichever way they turn, things are going to get ugly, that's for sure. The BoE and authorities are in a very deep hole, but Mark Carney has shown time and time again that he's more than prepared to drill deeper. From the top of my head, possible actions to further fuel the bubble include negative interest rates, allowing FLS for residential mortgages again, reversal of recent anti-BTL measures, offering UK citizenship to anyone from overseas who spends £500k on a UK property, intergenerational mortgages, return of 125% loans (underwritten by the taxpayer), HTB extended to 40% nationwide and not just London... Reversal of btl legislation is a political impossibility right now. It cannot happen. More likely we get more changes against these people. The politics of the uk has shifted and the tories are not stupid Quote Link to comment Share on other sites More sharing options...
adarmo Posted June 27, 2017 Share Posted June 27, 2017 3 hours ago, Funn3r said: Logically you would expect that UK companies selling things abroad would be loving it. In practice though it doesn't feel like that at all. Show me someone who is doing well out of the crashed pound and I will show you 100x who are paying more for less and not happy about it. Not to mention savers who not only have been hammered by low IR but now also had their capital haircutted relative to other world currencies. Day to day for your average guy this is not relevant. Maybe for holiday time. Maybe for buying a holiday home. Otherwise GBP is functional currency for their income and expense. UK manufacturing and services that export are loving it. At least in the firm I work for we've got other countries clambering to purchase from our price lists despite increasing prices by 20% in January. Quote Link to comment Share on other sites More sharing options...
PropertyMania Posted June 27, 2017 Share Posted June 27, 2017 1 hour ago, Wayward said: Many here have been thinking prices can't go any further for years. You don't appreciate how powerful the forces ranged against us are...they will stop at nothing. It is apparent that they will readily risk sinking the entire economy and risk social unrest to protect prices...The first priority of state used to be to defend the realm...this has fallen into second place after propping up the high price of property. Nothing is more important to the rich and powerful. You're right, but it's less conspiracy theory and more that the majority of voters (since the 1930s?) are homeowners. This is still true, but less so, and concern for kids / grandkids 'getting on the ladder' has increased exponentially in the last few years. I think the balance of voters wanting rises vs falls has either already tipped or is very close to doing so. Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 Just now, PropertyMania said: You're right, but it's less conspiracy theory and more that the majority of voters (since the 1930s?) are homeowners. This is still true, but less so, and concern for kids / grandkids 'getting on the ladder' has increased exponentially in the last few years. I think the balance of voters wanting rises vs falls has either already tipped or is very close to doing so. Yes and that points to longer term falls. But i wasnt really discussing that. I am talking about the next 2 or 3 years whereby wage decreases in real terms will cause falling house prices. The best way for the government to boost house prices is to provide economic growth. Growth has collapsed this year in the uk and the industry surveys point to potentially negative growth by the end of the year. The second main way the government can boost house prices is giving people more disposable income to afford higher prices. Real terms wage decreases are here again though. Higher house prices from 2013 to 2016 were due to strong growth and considerable real terms wage increases. That has now turned around. I would consider buying a property in 2019 or 2020 after 2 or 3 years with a total of 10% real terms house price decreases. It isnt a crash, but the economic fundamentals are back to what they were in 2011 and 2012 and we had decreases then. The longer term house price trends are interesting. I would suggest this also points to an end to hpi because of the drastic change in the political landscape and due to brexit. The young vote matters now. Quote Link to comment Share on other sites More sharing options...
iamnumerate Posted June 27, 2017 Share Posted June 27, 2017 1 hour ago, dougless said: I am afraid I have to agree with this. I have been predicating a house price correction since 2003; shows how little I know! It does seem like continuing house price inflation is the top priority of recent Governments. Its a sad indictment of our country when it seems to be run for the few at the expense of the many. I disagree the many think house price rises are great. I don't but I think we get high house prices because people vote for the Government if their house rises in price. Look at what happened to Major in 1997. (Of course long term there are some very serious flaws with that strategy). Quote Link to comment Share on other sites More sharing options...
adarmo Posted June 27, 2017 Share Posted June 27, 2017 4 hours ago, ElPapasito said: 12. Public Sector wage inflation about to kick off as the 1% freeze is lifted. Interest rates will have to rise once pay is rising. Rising IRs is the death knell of HPI No. IRs will raise once inflation in the BoE model looking 2 years ahead becomes entrenched. Public sector pay rises are not necessarily enough to do this. Further, the BoE's mandate could change from inflation 2 years out 2% +/-1% to a higher rate, or "economic stability etc. Quote Link to comment Share on other sites More sharing options...
thisisthisitmaybe Posted June 27, 2017 Share Posted June 27, 2017 Some good points. It all comes down to people rising up against the government, which colludes with the banks to create hpi. A few years ago I thought nothing would change unless there was a popular revolution. I still think that is the case. Hence why political developments are so important, particularly the growing divide between the old and the young. Quote Link to comment Share on other sites More sharing options...
Giordano Bruno Posted June 27, 2017 Share Posted June 27, 2017 I would have agreed with you about six years ago. I now have a different perspective as to how the system works. As I see it, the bankers control the money and the politicians. Also, the bankers couldn't give a tinker's curse for the welfare of the people or of the nation. The bankers will do what suits them which, at the moment, is to print money, i.e. apply quantitative easing, to inflate house prices. Some day they might decide to crash the house of cards by tightening money supply and raising interest rates. They can then 'repossess' to gorge themselves on gaining property. But until they decide to do that, they can just keep on printing and people will keep on borrowing and buying. They can print for as long as they like. Quote Link to comment Share on other sites More sharing options...
A third of everything Posted June 27, 2017 Share Posted June 27, 2017 5 hours ago, anonlymouse said: As someone who's outside of the market (FtB living with family paying peppercorn rent), I can stay solvent longer than the market can stay irrational. It's my patience that's wearing thin Exactly the same here, and I know of more too...! Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 2 hours ago, adarmo said: No. IRs will raise once inflation in the BoE model looking 2 years ahead becomes entrenched. Public sector pay rises are not necessarily enough to do this. Further, the BoE's mandate could change from inflation 2 years out 2% +/-1% to a higher rate, or "economic stability etc. Ir rises are one way to decrease the mortgage size taken. Real wage decreases are another. Time will tell if inflation outstrips wage growth. If it does then house prices are in trouble even without ir rises. The precedent for this is 2010 to 2012 when real terms wage falls caused house price falls despite low interest rates. Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 1 hour ago, thisisthisitmaybe said: Some good points. It all comes down to people rising up against the government, which colludes with the banks to create hpi. A few years ago I thought nothing would change unless there was a popular revolution. I still think that is the case. Hence why political developments are so important, particularly the growing divide between the old and the young. In the long term yes. But the long term looks good for those wanting lower house prices given the rise in young people power at the voting booth and sentiment shifting to wanting lower house prices. But that is the long term. In the short term real terms house prices will decline due to reduced real terms wages. This is pretty much a certainty as was seen in 2011 for the same reasons. We could debate all day about long term trends, but in the next few years house prices will decline in real terms, this is basically a lock Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 1 hour ago, Giordano Bruno said: I would have agreed with you about six years ago. I now have a different perspective as to how the system works. As I see it, the bankers control the money and the politicians. Also, the bankers couldn't give a tinker's curse for the welfare of the people or of the nation. The bankers will do what suits them which, at the moment, is to print money, i.e. apply quantitative easing, to inflate house prices. Some day they might decide to crash the house of cards by tightening money supply and raising interest rates. They can then 'repossess' to gorge themselves on gaining property. But until they decide to do that, they can just keep on printing and people will keep on borrowing and buying. They can print for as long as they like. The govrrnments and boe and banks have limited power. They cannot prevent market forces from taking hold. The uk is looking like it was in 2010 to 2012 now, when house prices creeper down despite qe and low interest rates. There is nothing they can do to stop lower house prices unless they can get us real terms wage increases, which they cant. Obviously all this means that house prices may not be more affordable, but their real terms value will decline until real terms wage growth returns. When will this be? It could be a long time due to brexit. The other pressures on the housing market such as brexit, the political shift and possible ir rises (anticiapted before 2018 due to the chief economist comments and fed rises) could help house prices fall further, but those are all unknowns. For those wanting lower house prices the worst case scenario is 1% house price growth in 2018 which is a real terms fall. The other factors could lead to significant falls but it is better to not speculate on that. Real terms wage falls is going to lower house prices because it means people have less money available to pay mortgages. As cost of living outstrips wage growth it also means forced sellers who took on a mortgage they can no longer afford as more of their money is now needed for other things whilst their wage growth lacks behind this inflation. Real terms wage falls has the sane effect of higher interest rates. We should get both soon, then watch out for larger falls. But real terms wage falls reduces the money available for mortgages. Interest rate rises increase mortgage costs. Both have the same effect if lower average mortgage affordence, which means lower morgage sizes on average, which means lower house prices on average. Forced sellers from real termmwage decreases also happen due to the same effect. Quote Link to comment Share on other sites More sharing options...
henry the king Posted June 27, 2017 Author Share Posted June 27, 2017 You wont see the effect of real terms wage decreases in the housing data until winter fwiw. Any lowering house price data before then spells for even bigger falls from this effect. Of course real terms wages could go up again, but i find that doubtful. Quote Link to comment Share on other sites More sharing options...
macca13 Posted June 27, 2017 Share Posted June 27, 2017 (edited) What about the 1 million homeless predicted by 2020 in Shelter report, https://www.theguardian.com/society/2017/jun/24/social-housing-poverty-homeless-shelter-rent What about the 300'000 CCJ's already this year https://www.theguardian.com/money/2017/may/15/county-court-judgments-bank-of-england-mps-debt What about Government debt hitting £2 Trillion http://www.telegraph.co.uk/business/2016/11/23/britains-debt-mountain-set-hit-2-trillion-2020s/ What about American interest rate rises What about S24 in full effect by 2020, If the rental market sells up and people cant afford to buy who does? What about our £25 billion housing benefits that is rising at record speed, What happens when generation rent retire with crap pensions and no money? What about the tightening today of banks reserves, some say this could be the equivalent of an IR rise as banks capital (11 billion) will have to be held in reserve reducing lending capabilities, this combined with stricter criteria for lending could push up lenders rates. It could also push the just about managing on cheap credit over the tipping point. The thing is we are facing so many financial problems in the very near future, civil unrest, voter dissatisfaction and possibility of mass unemployment with automation.. I cant see house prices surviving such mass pending disasters. The magic money tree will run out of leaves.. Edited June 28, 2017 by macca13 Quote Link to comment Share on other sites More sharing options...
Guest TheBlueCat Posted June 28, 2017 Share Posted June 28, 2017 I have concluded after 25 years of watching the market that house prices can stay irrational longer than I can stay alive. Quote Link to comment Share on other sites More sharing options...
ExiledMatty Posted June 28, 2017 Share Posted June 28, 2017 Unless there are foreign investor restrictions then prices are going nowhere. The £ will be further trashed due to Brexit and national debt, making it my enticing. I am watching this play out from Asia. Depressing to pick up an Indonesian paper and see adverts for properties in the UK. The rich indos are just joining the scramble for bargains along with the rest of the Far East. Quote Link to comment Share on other sites More sharing options...
Lavalas Posted June 28, 2017 Share Posted June 28, 2017 Some pictures of all those adverts would make for a very interesting thread. Quote Link to comment Share on other sites More sharing options...
longgone Posted June 28, 2017 Share Posted June 28, 2017 9 hours ago, macca13 said: What about the 1 million homeless predicted by 2020 in Shelter report, https://www.theguardian.com/society/2017/jun/24/social-housing-poverty-homeless-shelter-rent What about the 300'000 CCJ's already this year https://www.theguardian.com/money/2017/may/15/county-court-judgments-bank-of-england-mps-debt What about Government debt hitting £2 Trillion http://www.telegraph.co.uk/business/2016/11/23/britains-debt-mountain-set-hit-2-trillion-2020s/ What about American interest rate rises What about S24 in full effect by 2020, If the rental market sells up and people cant afford to buy who does? What about our £25 billion housing benefits that is rising at record speed, What happens when generation rent retire with crap pensions and no money? What about the tightening today of banks reserves, some say this could be the equivalent of an IR rise as banks capital (11 billion) will have to be held in reserve reducing lending capabilities, this combined with stricter criteria for lending could push up lenders rates. It could also push the just about managing on cheap credit over the tipping point. The thing is we are facing so many financial problems in the very near future, civil unrest, voter dissatisfaction and possibility of mass unemployment with automation.. I cant see house prices surviving such mass pending disasters. The magic money tree will run out of leaves.. You are assuming the system will stay in its current form. System will be changed to appear to help the impoverished while giving greater powers to the rich not that they need any. They could tear the whole lot up rearrange everything. Quote Link to comment Share on other sites More sharing options...
adarmo Posted June 28, 2017 Share Posted June 28, 2017 15 hours ago, henry the king said: Ir rises are one way to decrease the mortgage size taken. Real wage decreases are another. Time will tell if inflation outstrips wage growth. If it does then house prices are in trouble even without ir rises. The precedent for this is 2010 to 2012 when real terms wage falls caused house price falls despite low interest rates. A real wage decrease might, cet. par., decrease the real mortgage size, but not the mortgage size. If inflation outstrips wage growth then it does not follow that house prices are in trouble. You might find the charts in the below articles of interest. http://www.bbc.co.uk/news/business-39945782 http://www.cityam.com/214768/nationwide-house-price-index-uk-house-prices-hit-new-record-high In the face of empirical evidence you must accept that what you think should happen is not what will happen, or what should have happened is not what actually happened. Quote Link to comment Share on other sites More sharing options...
adarmo Posted June 28, 2017 Share Posted June 28, 2017 23 hours ago, henry the king said: The main argument is that real term wages will decrease and this will (1)hit house prices. This is coupled with the fact the boe and government (2) cannot do much more intervention from here. Then we have slowing growth and business confidence both in the uk and around the world. The latest gdp figures were bad and all the surveys for the general economy weak, which (3) suggests weaker or negative growth to come for the next few years. A (4) weak economy hurts house prices and (5) so do lowering real terms wages. These are all facts that you can (6) research for yourself if you like. The (7) other reasons listed are speculative, of course some believe brexit will be good for the economy for example. But the main thrust of the post is that lower real terms wages and a weakening economy (8) will hurt house prices. This is not rocket science and i am surprised to see anyone arguing it. (9)The data is all there to back up what i am saying. Fwiw, i am not a natural bear who sees economic disaster coming every year. I just go by the data and the data looks bad for uk living standards, uk growth and thus, house prices. The political climate shifting also will play an impact but probably more in the longer term as policies take time to develop. There is political shift towards an emphasis on helping younger people and housing is included in this. 1 no, it might hit real house prices 2 really? MIRAS? Negative interest rates, taking ownership of private debt.... I listed the ones that popped to mind earlier and I'm sure the BoE and govt could do better than I 3 suggests, not is. Even if growth is subdued like it was in 2010 (when house prices grew at 10%) there's no direct link 4 see point 3 5 no, the links I posted in my earlier response clearly show falling real wages and rising house prices 6 I did, but I'm really interested in yours 7 all of your reasons are speculative 8 see points 3 and 4 9 where is the data please? Oddly I am a very cautious and risk averse individual, not really a bear but always assess worst case scenario. I just disagree with your opinion. You're going by the data, but which data? do you have links or tables? There is a political shift in appearing to help younger people for sure, this doesn't necessarily translate though. H2B and shared ownership and Lifetime ISAs are all sold to the electorate as 'help' (as is housing benefit) but that help just ramps prices. Quote Link to comment Share on other sites More sharing options...
Wayward Posted June 28, 2017 Share Posted June 28, 2017 8 hours ago, ExiledMatty said: I am watching this play out from Asia. Depressing to pick up an Indonesian paper and see adverts for properties in the UK. The rich indos are just joining the scramble for bargains along with the rest of the Far East The ease at which foreigners can 'invest' in UK resi property is clear evidence if any more were needed that our leaders care nothing for the welfare of the populace. Quote Link to comment Share on other sites More sharing options...
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