Are we there yet ?

[TheCountOfNowhere]

1 minute ago, Parkwell said:

The conditions are looking good and the signs are there but this time I’m not going to underestimate the stupidity of government intervention or the madness of crowds. I won’t let myself get carried away until at least two of the three major indices show annual drops. Hopefully that will happen by the end of the year. Otherwise I fear this will be a very protracted ‘crash’.

 

My bed would be the tory property loons or Carnage wll through everything at keeping prices flat at this new insane level, not caring or realising the damage they are doing.

The market will continue to grind to a halt, people will continue to get angry, then a week after Carnage leaves it'll plumment.

[tomandlu]

Until IRs rise, I'm voting "No (but increasingly stagnant)".

[Greg Bowman]

1 hour ago, Talking Monkey said:

Greg you lucky get, Elvis or Sinatra, your dad must have been a classy fella

He was and thanks!!

[ThePrufeshanul]

6 hours ago, canbuywontbuy said:

It's still a long long way off.  The danger is that we have a "crash" that knocks 20% off house prices, then it continues upwards.  That's a mere retracement when looking at the Himalayan HPI growth charts over the last 15 years.  20% takes us back 2, 3, 4 years....big deal.  Prices would need to be slashed by 60% to 80% to get to affordable. 

Yes, and the other worry is inflation. A rate of even 4% for a few years will help towards the bulk of the "correction". 

Do we need a subprime-style black swan to trigger things? 

[Kurt Barlow]

On 10/07/2017 at 8:56 PM, TheCountOfNowhere said:

Are we there yet ?

Still need to see what HM Govt have up their sleeve to forestall the inevitable

HTB 3,4 5....

Printy printy

Fiddle with Stamp duty

Go easy on foreign investors

My money is on allowing FTB's under 40 to access pension funds for a deposit. That will get things bubbly again.

Edited July 11, 2017 by Kurt Barlow

[Dreamcasting]

People should stop wasting their thoughts on house prices crashing. They won't. What is however happening, is all your wealth is slowly being taken away from you. You can't protect yourself either as TPTB have got everything covered. Cash doesn't cut it - you're going to be eaten alive soon with inflation, but interest rates will not rise. The outcome will likely be hyperinflation and a completely worthless currency (this applies to all currencies BTW). Council tax and probably some new property tax to be introduced will see to any idiot trying to protect their wealth through property. When you're spending £1000 per month on the new property tax, property will be very unattractive. Gold and silver will continue to be supressed - we're probably looking at gold at £2p per ounce, and silver at £1. Stocks and shares will do well, but the average punter will lose big time.

If you do end up winning whatever you do, it will just be through pure luck. Sadly, the majority of people are about to lose everything.

[Maynardgravy]

[Princekie]

The ingredients are all there:

Rising inflation
Potential rate rise
Stagnating economy 
Unrealistic house prices
Mass baby boom die off

The next year is going to be interesting. I might just post a few interesting snippets of house price crashes in my area, including one unfortunate buyer who bought in a desirable Yorkshire Dales village 12 years ago (brand new home) for £201,000......and can't sell at £155,000. Olde worlde 3 bed cottage in South Lakes.....bought in 2004 for £193,000....fully renovated and not selling at £134,000. Charming three bed cottage in Eden valley, refurbed with balcony...bought 2012 for  over £200,000, repossessed by the bank and sold at £109,000.
Lots of evidence out there to suggest house prices are ready to fall off a cliff. I'll grab the popcorn...

[Thorn]

41 minutes ago, Dreamcasting said:

People should stop wasting their thoughts on house prices crashing. They won't. What is however happening, is all your wealth is slowly being taken away from you. You can't protect yourself either as TPTB have got everything covered. Cash doesn't cut it - you're going to be eaten alive soon with inflation, but interest rates will not rise. The outcome will likely be hyperinflation and a completely worthless currency (this applies to all currencies BTW). Council tax and probably some new property tax to be introduced will see to any idiot trying to protect their wealth through property. When you're spending £1000 per month on the new property tax, property will be very unattractive. Gold and silver will continue to be supressed - we're probably looking at gold at £2p per ounce, and silver at £1. Stocks and shares will do well, but the average punter will lose big time.

If you do end up winning whatever you do, it will just be through pure luck. Sadly, the majority of people are about to lose everything.

Right. Fair points. But here's the sort of question that makes the subject extremely hard for people not to 'waste your thoughts on'- have you ever been evicted with your family?

[zugzwang]

55 minutes ago, Dreamcasting said:

People should stop wasting their thoughts on house prices crashing. They won't. What is however happening, is all your wealth is slowly being taken away from you. You can't protect yourself either as TPTB have got everything covered. Cash doesn't cut it - you're going to be eaten alive soon with inflation, but interest rates will not rise. The outcome will likely be hyperinflation and a completely worthless currency (this applies to all currencies BTW). Council tax and probably some new property tax to be introduced will see to any idiot trying to protect their wealth through property. When you're spending £1000 per month on the new property tax, property will be very unattractive. Gold and silver will continue to be supressed - we're probably looking at gold at £2p per ounce, and silver at £1. Stocks and shares will do well, but the average punter will lose big time.

If you do end up winning whatever you do, it will just be through pure luck. Sadly, the majority of people are about to lose everything.

Only works if you're energy self-sufficient. Otherwise, trashing your currency will leave you with oil > $100bbl, soaring unemployment and a runaway stagflationary depression, compounding your debts not inflating them away. Think 1974... on steroids.

[canbuywontbuy]

7 hours ago, ThePrufeshanul said:

Yes, and the other worry is inflation. A rate of even 4% for a few years will help towards the bulk of the "correction". 

Do we need a subprime-style black swan to trigger things? 

There would need to be an almighty crash to really have a celebration.  It's nice to see the sentiment changing, but let's see how far it goes.  The worst thing that can happen is that a small crash occurs, then prices go back up, and then that would truly put the lid on house prices - it would kind of feel like prices are a one-way ratchet (albeit with minor retracements). 

[ThePrufeshanul]

I agree - in some ways it's helpful that a "perfect storm" is developing otherwise i think the chances were quite high that a 20% correction would take place before recovering. 

There are only so many shocks to the system that this wheezy economy can take however. The idiocy of preceding governments coupled with Brexit, Trump and a hung parliament is all pointing towards the right direction.

[Barnsey]

14 hours ago, Dreamcasting said:

People should stop wasting their thoughts on house prices crashing. They won't. What is however happening, is all your wealth is slowly being taken away from you. You can't protect yourself either as TPTB have got everything covered. Cash doesn't cut it - you're going to be eaten alive soon with inflation, but interest rates will not rise. The outcome will likely be hyperinflation and a completely worthless currency (this applies to all currencies BTW). Council tax and probably some new property tax to be introduced will see to any idiot trying to protect their wealth through property. When you're spending £1000 per month on the new property tax, property will be very unattractive. Gold and silver will continue to be supressed - we're probably looking at gold at £2p per ounce, and silver at £1. Stocks and shares will do well, but the average punter will lose big time.

Cue Durhamborn...

[TheCountOfNowhere]

14 hours ago, Princekie said:

The ingredients are all there:

Rising inflation
Potential rate rise
Stagnating economy 
Unrealistic house prices
Mass baby boom die off

The next year is going to be interesting. I might just post a few interesting snippets of house price crashes in my area, including one unfortunate buyer who bought in a desirable Yorkshire Dales village 12 years ago (brand new home) for £201,000......and can't sell at £155,000. Olde worlde 3 bed cottage in South Lakes.....bought in 2004 for £193,000....fully renovated and not selling at £134,000. Charming three bed cottage in Eden valley, refurbed with balcony...bought 2012 for  over £200,000, repossessed by the bank and sold at £109,000.
Lots of evidence out there to suggest house prices are ready to fall off a cliff. I'll grab the popcorn...

Any links ?

 

 

[TheCountOfNowhere]

13 hours ago, zugzwang said:

Only works if you're energy self-sufficient. Otherwise, trashing your currency will leave you with oil > $100bbl, soaring unemployment and a runaway stagflationary depression, compounding your debts not inflating them away. Think 1974... on steroids.

Petrol down about 5-8% this year, will filter through to inflation rate soon.

People putting their prices up are loosing customers.

The pool of idiots willing to buy a house must be approx 0 now.

The banks can't survive if they dont lend.

The need something big to lend on.

They need higher IRs and lower house prices.

If they are ready/able to take a 50% plunge in prices then the loons paying 600K for a 1 bed flat in a city no one can now afford to live in are fooked.

 

 

[Sterling Loss]

15 hours ago, Dreamcasting said:

People should stop wasting their thoughts on house prices crashing. They won't. What is however happening, is all your wealth is slowly being taken away from you. You can't protect yourself either as TPTB have got everything covered. Cash doesn't cut it - you're going to be eaten alive soon with inflation, but interest rates will not rise. The outcome will likely be hyperinflation and a completely worthless currency (this applies to all currencies BTW). Council tax and probably some new property tax to be introduced will see to any idiot trying to protect their wealth through property. When you're spending £1000 per month on the new property tax, property will be very unattractive. Gold and silver will continue to be supressed - we're probably looking at gold at £2p per ounce, and silver at £1. Stocks and shares will do well, but the average punter will lose big time.

If you do end up winning whatever you do, it will just be through pure luck. Sadly, the majority of people are about to lose everything.

Contains some truth IMO; focusing on house prices as part of a dysfunctional, unstable economy risks bias towards thinking what you want to happen will happen. The scale of problems from pumping up property for 20 years isn't going to be resolved by house prices falling to a sane level while leaving the rest of the economy intact. Someone has to pay a huge price.

It does look harder now though for Govt to print to bail out the bankers again as sentiment has partly changed,  people are more aware that high house prices are a disaster and QE is just free cash.  Also, the cash support needed for property will keep increasing while the economy stagnates.  There's no point owning property if it's valued in a worthless currency, unless King John is due a comeback. But the only alternative is a catastrophic recession. 

Short term, it seems likely we'll get more of the same, new housing props to keep the system going while the public sector crashes and private sector gets squeezed.  Govt may have to accept falling prices rather than crash sterling, I hope, but the impact on economic activity/stability will be negative, barring a miracle.  Longer term, we're in for a shock/system reset at some point. 

Meanwhile, last week Hammond said we're tantalisingly close to a high wage, high growth economy.  He may not be around when there's some explaining to do.

 

[zugzwang]

1 hour ago, TheCountOfNowhere said:

Petrol down about 5-8% this year, will filter through to inflation rate soon.

People putting their prices up are loosing customers.

The pool of idiots willing to buy a house must be approx 0 now.

The banks can't survive if they dont lend.

The need something big to lend on.

They need higher IRs and lower house prices.

If they are ready/able to take a 50% plunge in prices then the loons paying 600K for a 1 bed flat in a city no one can now afford to live in are fooked.

 

 

I've got a modest stash of gold as insurance if I'm wrong but I've never really subscribed to the hyperinflation scenario. Modern economies are very different animals to that of Weimar Germany. The latter had a much smaller energy budget vs GNP and was vastly less dependent on international trade and imports than the UK is today, it thus survived the hyperinflation relatively unscathed. Many middle-class German families were wiped out, of course, which left a lingering suspicion of paper money as 'Jew confetti' for years afterwards (and perhaps to the present day) but the economy as a whole recovered very quickly. Returning the enormous Ruhr coal fields to full production after the French left helped considerably. Post WWII hyperinflations and superinflations, on the other hand, have left enduring scars on those countries that have experienced them: Hungary, Argentina, Venezuela, Zimbabwe, Iraq etc. 

It's seems clear to me that what worked provisionally in the 1920s (with limited collateral damage the Germans cleared their unserviceable war reparations and sent the French occupying forces packing) is unlikely to succeed today. Yet the status quo is manifestly unsustainable. No country can carry on borrowing at the rate the UK is and retain the confidence of its creditors indefinitely. If current price hyperinflation is de facto impossible then asset price hyperdeflation becomes inevitable.

 

 

Edited July 12, 2017 by zugzwang

[Society of fools]

I put my finger on a clear NO vote as there is simply not enough evidence yet that the psychology of a falling market has sunk into the general UK populace. 

For many people, its like those villagers who live less than 1 km below a massive, visibly cracking dam wall being asked if they are worried about it ever breaking apart. The answer is usually no, because the consequences of such an eventuality are simply unthinkable. 

For many people, rising house prices are like a background mood music, soothing and reassuring. The only thing that makes them sure that they will end their working lives financially healthy, in the face of non-existent salary rises and risible pension returns.To imagine that the music might someday stop is unfathomable. 

I just think of one of my wife's better  London-based friends. 5 years ago she was renting, perhaps with 100 K in pounds saved up between her and her partner. Now she has a 5 bedroom house with a 1 million pound mortgage ( I bet its IO, because their household income simply wouldn't be high enough to service a real mortgage). She also has an investment property in one of London's outer suburbs- a two bedroom apartment- which she bought with Help to Buy, that was about 250 K sterling more debt. 

Telling somebody like her that London properties might decline in price by 25%, 35 %, 40%, or even more over the next 5 years would simply be met with utter stunned disbelief. Such an eventuality couldn't be possibly allowed to happen because it would mean the shattering of her whole world.  

And there are millions like her. House prices only ever ever ever go up, and that cannot change, or the world will end................

[Freki]

I wonder for how many people does "the big short" feel like a horror movie 

[TheCountOfNowhere]

1 hour ago, Society of fools said:

I put my finger on a clear NO vote as there is simply not enough evidence yet that the psychology of a falling market has sunk into the general UK populace. 

For many people, its like those villagers who live less than 1 km below a massive, visibly cracking dam wall being asked if they are worried about it ever breaking apart. The answer is usually no, because the consequences of such an eventuality are simply unthinkable. 

For many people, rising house prices are like a background mood music, soothing and reassuring. The only thing that makes them sure that they will end their working lives financially healthy, in the face of non-existent salary rises and risible pension returns.To imagine that the music might someday stop is unfathomable. 

I just think of one of my wife's better  London-based friends. 5 years ago she was renting, perhaps with 100 K in pounds saved up between her and her partner. Now she has a 5 bedroom house with a 1 million pound mortgage ( I bet its IO, because their household income simply wouldn't be high enough to service a real mortgage). She also has an investment property in one of London's outer suburbs- a two bedroom apartment- which she bought with Help to Buy, that was about 250 K sterling more debt. 

Telling somebody like her that London properties might decline in price by 25%, 35 %, 40%, or even more over the next 5 years would simply be met with utter stunned disbelief. Such an eventuality couldn't be possibly allowed to happen because it would mean the shattering of her whole world.  

And there are millions like her. House prices only ever ever ever go up, and that cannot change, or the world will end................

Whatever you do then don't send her this link !!!!

http://www.thisismoney.co.uk/money/mortgageshome/article-4006074/Chelsea-homeowners-suffer-13-drop-property-values-house-prices-prime-central-London-fall-nearly-5.html

5 years ?  Went up 100% in 3 years. Can easily go down 50 in 1.

[Talking Monkey]

2 hours ago, Society of fools said:

I put my finger on a clear NO vote as there is simply not enough evidence yet that the psychology of a falling market has sunk into the general UK populace. 

For many people, its like those villagers who live less than 1 km below a massive, visibly cracking dam wall being asked if they are worried about it ever breaking apart. The answer is usually no, because the consequences of such an eventuality are simply unthinkable. 

For many people, rising house prices are like a background mood music, soothing and reassuring. The only thing that makes them sure that they will end their working lives financially healthy, in the face of non-existent salary rises and risible pension returns.To imagine that the music might someday stop is unfathomable. 

I just think of one of my wife's better  London-based friends. 5 years ago she was renting, perhaps with 100 K in pounds saved up between her and her partner. Now she has a 5 bedroom house with a 1 million pound mortgage ( I bet its IO, because their household income simply wouldn't be high enough to service a real mortgage). She also has an investment property in one of London's outer suburbs- a two bedroom apartment- which she bought with Help to Buy, that was about 250 K sterling more debt. 

Telling somebody like her that London properties might decline in price by 25%, 35 %, 40%, or even more over the next 5 years would simply be met with utter stunned disbelief. Such an eventuality couldn't be possibly allowed to happen because it would mean the shattering of her whole world.  

And there are millions like her. House prices only ever ever ever go up, and that cannot change, or the world will end................

How does a couple  with 100K in savings 5 years later end up with well over a million in mortgage across the 2 properties.

I just cannot see how a 20-25% fall can be enough, things are so stretched and younger cohorts are so saddled with student debts and rubbish work pensions that only a huge crash would allow them to buy a house and save for a pension and start a family, something along the lines of 40-50% is needed.

[TheCountOfNowhere]

15 minutes ago, Talking Monkey said:

How does a couple  with 100K in savings 5 years later end up with well over a million in mortgage across the 2 properties.

I just cannot see how a 20-25% fall can be enough, things are so stretched and younger cohorts are so saddled with student debts and rubbish work pensions that only a huge crash would allow them to buy a house and save for a pension and start a family, something along the lines of 40-50% is needed.

20% is needed in NI

50% is needed in Northants.

70% is needed in London.

We were well on the road to 50% down in real terms in 2011, then Osborne decided to buy an  election (IMHO).

They could easily have keep prices down and waited for wages to catch up, most would have been happy with that I think.

No we are back to square 1 only people are much angrier and the collapse will be much more painful.  We've leaving the EU, Scotland could leave the UK and peoples futures are looking bleak.  I attribute all of this to the actions of Brown, the Bankers ( Central or otherwise ) and Osborne.

What a **** of a "man"

Edited July 12, 2017 by TheCountOfNowhere

[Talking Monkey]

2 minutes ago, TheCountOfNowhere said:

20% is needed in NI

50% is needed in Northants.

70% is needed in London.

We were well on the road to 50% down in real terms in 2011, then Osborne decided to buy an  election (IMHO).

No we are back to square 1 only people are much angrier and the collapse will be much more painful.

What a **** of a "man"

Totally agree with those percentages, I just don't know how London prices got so insane, a million quid for a modest terrace on the edge of zone 3, utter madness.

[Maximus Skepticus]

3 hours ago, Talking Monkey said:

Totally agree with those percentages, I just don't know how London prices got so insane, a million quid for a modest terrace on the edge of zone 3, utter madness.

Never been to a car auction, and you seem to be the only bidder but teh price keeps going up!?! 

[Society of fools]

8 hours ago, Talking Monkey said:

How does a couple  with 100K in savings 5 years later end up with well over a million in mortgage across the 2 properties.

I confess that I do not know, but my better half is fairly sure that the savings figure is accurate, as her friend didn't have a pot to p*ss in 10 years ago. Literally nothing. 

The Household income was healthier than the savings, we'd estimate it is probably about 160,000 pounds between the two of them. But that's gross, so that would still be taxed heavily.

7 hours ago, Talking Monkey said:

Totally agree with those percentages, I just don't know how London prices got so insane, a million quid for a modest terrace on the edge of zone 3, utter madness.

. Yeah, the million pound house referred to is in Sidcup. Sidcup is not Chelsea.

To add insult to injury I was looking at Bloomberg's interactive house price map for London, and it informed me that Sidcup real estate prices had risen 6% in the last year. She no doubt thinks that million pound mortgage- so far at least- is a bloody good investment.......