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North London Rent Girl

Guardian - Some might pray for a house price crash, but be careful what you wish for

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Patrick Collinson says we should hope for a slow decrease in house prices - 1-2% below wage rises (what are those again?) each year - not a full-on crash, do we realise just how awful a proper crash would be? He's pretty tenant-friendly usually but what seems to me to be missing from this, as from so many msm articles, is an understanding of the sheer nihilism and desperation of people in a country where you can't buy and neither can you rent securely, so the life-preliminary of a secure roof over your head is basically not available to you. What do you lot think? I don't care how bad the consequences are, let it all burn down - and I've been very lucky with renting. It's interesting that about the worst thing anyone can think of is that credit will dry up. It wouldn't last forever and might it not be a less bad consequence than the consequences we're living with now?

https://www.theguardian.com/money/2017/aug/29/house-price-crash-price-dublin-economy

Edited by North London Rent Girl

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And he bases all of that on what exactly? Sounds like a real muddling of cause and effect (and even then I don't see why his scenario is all that bad anyway).

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32 minutes ago, North London Rent Girl said:

Patrick Collinson says we should hope for a slow decrease in house prices - 1-2% below wage rises (what are those again?) each year - not a full-on crash, do we realise just how awful a proper crash would be? He's pretty tenant-friendly usually but what seems to me to be missing from this, as from so many msm articles, is an understanding of the sheer nihilism and desperation of people in a country where you can't buy and neither can you rent securely, so the life-preliminary of a secure roof over your head is basically not available to you. What do you lot think? I don't care how bad the consequences are, let it all burn down - and I've been very lucky with renting. It's interesting that about the worst thing anyone can think of is that credit will dry up. It wouldn't last forever and might it not be a less bad consequence than the consequences we're living with now?

https://www.theguardian.com/money/2017/aug/29/house-price-crash-price-dublin-economy

' It is memories of the early 1990s that should restrain anyone’s glee at the prospect of a property crash. Many of those who had taken out big mortgages could no longer afford the repayments. About 250,000 homes were repossessed between 1989 and 1993, wrecking countless lives. A much greater number were haunted by negative equity, trapped in homes they couldn’t sell. '

And mnay of those who refused to take out insnae mortgages could then afford to buy.

Its market. Prices were rest at the level at which people could buy.

Entitled pr1ck does not want to default on his 10x mortgage.

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32 minutes ago, Riedquat said:

And he bases all of that on what exactly? Sounds like a real muddling of cause and effect (and even then I don't see why his scenario is all that bad anyway).

The best bit are the comments from someone calling himself "buy let" I'm sure everyone on here will love him :lol:

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28 minutes ago, spyguy said:

' It is memories of the early 1990s that should restrain anyone’s glee at the prospect of a property crash. Many of those who had taken out big mortgages could no longer afford the repayments. About 250,000 homes were repossessed between 1989 and 1993, wrecking countless lives.

 

Have you ever tried suggesting that perhaps a tenant getting kicked out of their home is not a completely different thing from someone losing their home because they can't pay the mortgage? People think these two things are totally different. The two main differences, as far as I can see, are that:

1. if you're a tenant, you have never had the illusion of security - upside or downside, what do we think? and

2. you have to be very unlucky or to really go some to get a house you have a mortgage on repossessed, whereas, if you're a tenant, you can get kicked out at any time for absolutely no reason whatsoever, you have no control over it.

But you'd be called a drama-queen if you were to say that getting kicked out of your rented home 'wrecked your life'. Imagine, 'about x number of tenants were given notice on their homes between 1989 and 1993, wrecking countless lives'. See? We just don't rate it as a traumatic life experience.

ho hum

edit: I dislike the article more now am rereading bits - 'about 250,000' is not 'countless'. And which of you clevers has the latest stats for private renters - where are we, 10 million?

Edited by North London Rent Girl

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The prices of 3 years ago  would take 30% off round here and hardly any houses have sold in that time.

A house price crash would be 60% off.

Its funny that nobody feels sorry for me and that my kids are nearly 10 and dont have a garden yet.

Yes I could move out to a worse area and have a garden I dont deserve sympathy......neither do those who outbid me by paying 400k for houses i bid 350 for.

Edited by Fromage Frais

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1 hour ago, North London Rent Girl said:

Patrick Collinson says we should hope for a slow decrease in house prices - 1-2% below wage rises (what are those again?) each year - not a full-on crash, do we realise just how awful a proper crash would be? He's pretty tenant-friendly usually but what seems to me to be missing from this, as from so many msm articles, is an understanding of the sheer nihilism and desperation of people in a country where you can't buy and neither can you rent securely, so the life-preliminary of a secure roof over your head is basically not available to you. What do you lot think? I don't care how bad the consequences are, let it all burn down - and I've been very lucky with renting. It's interesting that about the worst thing anyone can think of is that credit will dry up. It wouldn't last forever and might it not be a less bad consequence than the consequences we're living with now?

https://www.theguardian.com/money/2017/aug/29/house-price-crash-price-dublin-economy

I read as...the banker puppets have got house prices to a level whereby bankers balance sheets look solvent now they want to manage it down over  a generation so 99% of the population dont string them up.


Soz patrick, it's a crash or nothing.


Might as well leave the country is this isnt fixed sooner rather than later.

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My objection to this argument for eternal house price inflation is that it depicts any crash as the problem, not the policies that led to the crash.

The author cites Dublin as an example of what can go wrong without mentioning it's currently repeating all the mistakes it made last time. He glosses over the role that irresponsible lending has played in every crisis. "Banks would halt lending, not just for property but to the wider economy" - no mention that banks have been lending little but mortgage credit for the past decade.

Even now, the consensus is that 2007/8 was just a liquidity crisis in derivative products, as though that had nothing to do with the gross overvaluation of the underlying assets based on unsustainable lending. The very real suffering that followed was a direct consequence of just this kind of greed and denial.

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22 minutes ago, North London Rent Girl said:

edit: I dislike the article more now am rereading bits - 'about 250,000' is not 'countless'. And which of you clevers has the latest stats for private renters - where are we, 10 million?

You can get a ballpark figure by using the ONS average household size (2.4, link) and the number of PRS households as per the latest English Housing Survey (4.5m, link). That puts you a bit closer to 11m. 

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26 minutes ago, North London Rent Girl said:

But you'd be called a drama-queen if you were to say that getting kicked out of your rented home 'wrecked your life'. Imagine, 'about x number of tenants were given notice on their homes between 1989 and 1993, wrecking countless lives'. See? We just don't rate it as a traumatic life experience.

ho hum

Collinson is as daft as a brush. The key premise ("Let's have this kind of correction not that kind of correction") is very silly indeed. We have a volatile housing market. You're going to get wild movements. You are not going to get the kind of movements you want just because you want them. There is no substance to his click-bait embarrassment of a piece; he's basically saying "I want a pony".

Here you go, Patrick.

tumblr_inline_mos65czs4u1qz4rgp.gif

Regarding the matter of why the misfortunes of renters are counted as nothing but the possibility of an owner-occupier being forced to sell (and possibly having to sell at a loss) is taken to be the end of the world, I think that Faisal Islam nailed it when he mocked the UK economy as a 'domocracy'. Capital gains from your house (and the ability to extract them via mortgage equity withdrawal) are taken to be the best (and possibly only) way in which to achieve financial security.

I think the unspoken message is that people who have clambered onto the ladder had somehow been saved from the fiery hell of renting. If they lose their home then they are returned to hell. People who are still renting are already in hell, so the fact that they get pushed from pillar to post is kind of irrelevant. Renters are taken as people who have nothing to lose and therefore the possibility of them losing anything when a Section 21 notice hits the doorstep is meaningless by definition. I think that's the guiding principle in Collinson's (lack of) thinking.

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5 minutes ago, thewig said:

fear, fear, fear.

 

Fear is all they have. :rolleyes:

 

Indeed. Collinson has no credentials to discuss the economy. His field is ISA best buys. He should have stuck to it and avoided buy to let.

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3 minutes ago, Si1 said:

Indeed. Collinson has no credentials to discuss the economy. His field is ISA best buys. He should have stuck to it and avoided buy to let.

I preferred his earlier work on whether or not your credit card will still work after it's been through the washing machine. Not sure he has a great deal to add to the role of credit in the modern economy outside of these laundry-based musings.

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1 minute ago, Bland Unsight said:

I preferred his earlier work on whether or not your credit card will still work after it's been through the washing machine. Not sure he has a great deal to add to the role of credit in the modern economy outside of these laundry-based musings.

Maybe he actually misunderstands the terms liquidity, solvency, money velocity, leverage (thinking it's a soap powder manufacturer), fractional reserve (being the split of detergent between the pre wash and main wash compartments) - of course a fiat based monetary system is based on buying nippy Italian cars. This guy should be next BoE governer.

 

rtsnixx.jpg

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From article in op

The eight biggest banks have been stress-tested by the European Banking Authority so that they can withstand house price falls of 35%, unemployment soaring to 12% and interest rates jumping to 4%. We’re told the majority will (just) remain standing.



FOUR PERCENT = JUST remain standing ......

AND interesting that fairly normal numbers like 12% unemployment and 4% irs are placed next to 35% HPC.

The point he doesn't make is that those who need a mortgage will mostly not be offered one. There would be immediate winners who have a lot of cash as well as immediate losers, at present uk.gov is lining up the highly leveraged btler as immediate loser.

If a violent HPC does come to pass the main winners will be next generations [now 25 and below]. I think there are only a few [%] of current working adults [25-45] who will have cash to benefit. It will be too late for most by the time dust has settled and mortgages are available on the newly reaosonably priced houses. Just sad, a whole generation screwed over by the generations above them.

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3 minutes ago, ebull said:

If a violent HPC does come to pass the main winners will be next generations [now 25 and below]. I think there are only a few [%] of current working adults [25-45] who will have cash to benefit. It will be too late for most by the time dust has settled and mortgages are available on the newly reaosonably priced houses. Just sad, a whole generation screwed over by the generations above them.

This 'you won't be able to get a mortgage' argument is the biggest load of crap. When the market turns sharply the banks pull the really risky products (e.g. 95% LTV self-cert interest only last time around). 

At any time the banking sector (which walks and talks like a cartel) is moving around the line between the most marginal borrower who will be granted a mortgage and the most marginal borrower who won't. The dodgiest of the dodgy borrowers are not reading and posting on HPC. When the lenders get nervous it helps prudent borrowers because it removes competition at auction. The herbert who will borrow themselves bankrupt is excluded from the auction because the bank won't lend them the money to bid. Take the example of tighter lending standards in the BTL sector (e.g. higher interest cover ratios). This is great for other borrowers who can still borrow.

Even when prices were falling at an annualised rate of 20% in 2009-ish people were taking out mortgages and buying houses.

The other reason why this argument is a total load of crap is that it doesn't separate cause from effect. Whilst the banks do set internal lending targets they don't publicise them so none of us can know how much they wished to lend. A collapse in lending volumes can also be explained by the unwillingness of borrowers to borrow because prices are falling, so why buy today if you are prepared to wait?

If lending practices tighten up and lenders want deposits that is great news for people who've saved deposits.

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46 minutes ago, ebull said:

The point he doesn't make is that those who need a mortgage will mostly not be offered one. There would be immediate winners who have a lot of cash as well as immediate losers, at present uk.gov is lining up the highly leveraged btler as immediate loser.

 

The idea that banks will stop lending due to a crash is utterly false. Banks need to lend to survive so they will continue lending (as was seen in 1989 onwards)...

Now I don't suspect loans will be easy to get because they will need a suitable deposit to allow for subsequent potential loses but I doubt anyone with a 10%+ deposit will have much of a problem getting a loan... 

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3 hours ago, North London Rent Girl said:

Patrick Collinson says we should hope for a slow decrease in house prices - 1-2% below wage rises (what are those again?) each year - not a full-on crash, do we realise just how awful a proper crash would be? He's pretty tenant-friendly usually but what seems to me to be missing from this, as from so many msm articles, is an understanding of the sheer nihilism and desperation of people in a country where you can't buy and neither can you rent securely, so the life-preliminary of a secure roof over your head is basically not available to you. What do you lot think? I don't care how bad the consequences are, let it all burn down - and I've been very lucky with renting. It's interesting that about the worst thing anyone can think of is that credit will dry up. It wouldn't last forever and might it not be a less bad consequence than the consequences we're living with now?

https://www.theguardian.com/money/2017/aug/29/house-price-crash-price-dublin-economy

Who needs a secure roof over your head when your likely to be made redundant at the drop of a hat and not be able to pay that mortgage anyway - even if it is an affordable one due to lower prices. We will all be über drivers for each other.....

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38 minutes ago, Houdini said:

The idea that banks will stop lending due to a crash is utterly false. Banks need to lend to survive so they will continue lending (as was seen in 1989 onwards)...

Now I don't suspect loans will be easy to get because they will need a suitable deposit to allow for subsequent potential loses but I doubt anyone with a 10%+ deposit will have much of a problem getting a loan... 

So HPI at MINUS10% a year or more and banks will be lending at 90% LTV ?

OK then.

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39 minutes ago, Yvonne said:

Bring on 40% falls, where I live that would only take us back to 2009 prices which were already high.

 

My budget is £270k. If prices fall 40% that means I could buy somewhere currently on rightmove at £450k. I'd love to believe it but those drops, when expressed in pounds, just seem huge. I'm not saying it won't happen but after so long renting... Dare I dream?

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21 minutes ago, Richmond said:

Who needs a secure roof over your head when your likely to be made redundant at the drop of a hat and not be able to pay that mortgage anyway - even if it is an affordable one due to lower prices. We will all be über drivers for each other.....

I was surprised how the UK escaped vast redundacies in 08/09.....unlike Europe and rest of the world. What we have now are zombie companies kept alive on free cash and zero ir's....this time around I imagine it will be much much worse as the pain was delayed, and hence no recovery. State workers mainly having no appreciation of job security, until proper austerity is needed, that hasnt happened yet, and the last of the greater fools are still adding to their 'portfolios'. The last 10 years have been catastrophic for some, I expect they will be beter prepared to survive the next 10.

Productive work will support you...uber drivers will be surplus to requirements imo ;-) as teh shity will become a just a shell of its former self...cant taper a ponzi scheme as they say!

 

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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