Do you believe house prices will be lower in 2025 than now ?

[Locke]

1 hour ago, TryingToWin said:

When the entire industry  told you to buy a house coz prices are only going up, did you call them all trolls?

Were they all trolling and all the figures and sales happening for last 10 years are all some elaborate prank?

Or were you just wrong?

I remember in 2009, the people being labelled as trolls were the ones saying prices are only going up.
I think time has proven who the trolls are.

 

There's a difference between "bricks and mortar are always a safe investment" and "the governbank is launching perverse incentives for house price inflation and historically will not stop until the wheels fall off."

The former is trolling, the latter is a frank prediction.

I, personally, won't play the game in its current state where any tiny rise in interest rates is going to obliterate house (and asset) prices. Once interest rates are back up at 7, 9, 12%, I will think about it, but I recognise that I am risking a significant extension of the circus.

[Slimline]

Nominally, I don’t expect anything meaningful falls wise. In Real terms, inflation will eventually rocket and we’ll see falls in that sense.

Cash in the bank will be significantly devalued.

Edited May 1, 2018 by Slimline

[anonlymouse]

54 minutes ago, Si1 said:

Where in the country?

London.

It is a bit of a back of a fag packet calculation (and one I'm loathe to make) but BTL starts to stack up again in terms of yield and taxes when prices are around 200*monthly rent. I think at the moment in my neck of the woods they're running at about 250-280*monthly rent so there's a good 25% drop coming if S24 results in landlords exiting the market.

Of course if rents go down then the breakeven for BTL goes down with it but at the moment I think that puts a floor under prices.

[SurreyVisitor]

13 minutes ago, Locke said:

I, personally, won't play the game in its current state where any tiny rise in interest rates is going to obliterate house (and asset) prices. Once interest rates are back up at 7, 9, 12%, I will think about it, but I recognise that I am risking a significant extension of the circus.

But this is very unlikely to happen, like a junkie addicted to heroin, the government cannot turn off the money taps.  They will do everything they can to keep rates near zero and keep printing the money.  They have discovered the secret to the miracle economy, virtually zero interest rates and can never go back.

[Si1]

1 minute ago, anonlymouse said:

London.

It is a bit of a back of a fag packet calculation (and one I'm loathe to make) but BTL starts to stack up again in terms of yield and taxes when prices are around 200*monthly rent. I think at the moment in my neck of the woods they're running at about 250-280*monthly rent so there's a good 25% drop coming if S24 results in landlords exiting the market.

Of course if rents go down then the breakeven for BTL goes down with it but at the moment I think that puts a floor under prices.

That must be pretty marginal at 200x monthly rent. And don't forget markets tend to undershoot.

[anonlymouse]

5 minutes ago, Si1 said:

That must be pretty marginal at 200x monthly rent. And don't forget markets tend to undershoot.

Yeah they'll undoubtedly be an overcorrection, emotions being what they are.

A 1:200 Rent:House Price Ratio is the requirement of the PRA regs (145% mortgage interest coverage at interest rates of 5.5%, with a max 75% LTV). It'd give a gross yield of around 24% before costs & taxes and maybe 4-5% net. Certainly not my cup of tea in terms of risk/reward and the amount of work required but obviously it appeals to some.

[Si1]

1 minute ago, anonlymouse said:

Yeah they'll undoubtedly be an overcorrection, emotions being what they are.

A 1:200 Rent:House Price Ratio is the requirement of the PRA regs (145% mortgage interest coverage at interest rates of 5.5%, with a max 75% LTV). It'd give a gross yield of around 24% before costs & taxes and maybe 4-5% net. Certainly not my cup of tea in terms of risk/reward and the amount of work required but obviously it appeals to some.

Yes, I'm sure some will buy into that, and technical professional Landlords or corporate property schemes will do fine out of that. That's mildly overvalued but still representing a future dividend stream, diversification etc. It'll still undershoot.

[winkie]

4 hours ago, happyguy said:

who cares ? live for today not 7 years time you could be hit by a bus by then when anything can happen.

Who says not living for today.......the past is history, the future is a mystery,  today is the present that is why they call it a gift.

[Guest]

Yes it could happen, but will it, I have no idea.

The way I am seeing it is the housing market  is a load of  fat well looked after chickens that have been force fed to gain some weight. they are living in a little open air coup made of crappy flimsy bamboo which is then covered in netting.

Circling that haven are 100 hungry greedy foxes just looking for that one weak spot and then it's all over and  very rapidly. They might never find a weak spot, the flimsy coup might hold up, but my money is on just one of those foxes finding a way.

[locky82]

34 minutes ago, inbruges said:

Yes it could happen, but will it, I have no idea.

The way I am seeing it is the housing market  is a load of  fat well looked after chickens that have been force fed to gain some weight. they are living in a little open air coup made of crappy flimsy bamboo which is then covered in netting.

Circling that haven are 100 hungry greedy foxes just looking for that one weak spot and then it's all over and  very rapidly. They might never find a weak spot, the flimsy coup might hold up, but my money is on just one of those foxes finding a way.

In this analogy who are the greedy foxes? Market forces? And it’s the government with its self ‘printing’ feed machine that is doing the fattening up, it’s gonna take something special to stop that machine. 

Edited May 1, 2018 by locky82

[Bland Unsight]

6 hours ago, TryingToWin said:

If I asked you in 2008 about prices in 2015, would you also give the same answer?

I'm really trying to understand some of you guys, because, well, look what's happened in the last 7 years?

Buying has been better than renting pretty much for all eternity.

We are getting to the point where its getting embarrassing. Can you imagine in 2028 you saying the same thing with the price of a 3 bed semi at 2billion? ?

Can you be convinced you've been wrong?

TL;DR - An insistence that it's always the right time to buy is bubble mania. The UK residential property market has a storied history of boom-bust cycles and the 'It's always the right time to buy, whatever the price' attitude is a big part of how the mania works. Posting on HPC advocating mania is pretty daft. Part of what draws lots of people here is the question of how to operate in a world where the mania of others weighs so heavily on houses prices. I don't know who you think you're talking to - or talking about - but they exist primarily in your drab and predictable troll imagination.

There's no way that you've actually been reading the forum; the idea that the forum thinks house prices are going down is dubious. Going over this for what feels like the hundredth time:

• there are vocal posters who are convinced that house prices are going to continue rising
• there are vocal posters who anticipate prices holding their current level
• there are vocal posters who think prices will fall
• there are vocal posters who argue that it's not possible to know which way prices are going to move

It's obviously just plain trolling to rock up and start dishing out nonsense about "you guys" needing to be "convinced you've been wrong". For me it's just an interesting question; when do prices next shift direction and for how long, how fast and how far will they move. Compare these two charts of the Land Registry price data:

London

North East

In the North East house prices went nowhere for a decade. In London they stalled for about four years then went up 70% (and then stalled again perhaps - or maybe they've just started a period of sustained falls - who knows?). It's clearly a complicated market.

Many people are drawn to the forum because they are puzzled as to why with good incomes from professional work they can't afford to buy when the record shows that parents, aunts, uncles and grandparents with much more modest jobs were able to buy housing. Your perspective, which is predicated on posters choosing not to buy, may be accurate for some posters but it will be inaccurate for others

People are also drawn to the forum because they know full well that the UK housing market has boom-bust cycles and whilst buying at the 'right time' is a blessing buying at the 'wrong time' can be a curse. You won't need to go far to find an anecdote about a couple or a pair of mates who bought together expecting not to be anchored to the purchase only to find themselves trapped together for five or ten hateful years because their timing was bad and they got stuck in negative equity and thus stuck with each other.

People ought to make informed choices. House purchases should be informed by the reality that over a ten year horizon there's a non-trivial chance that the price of a house in the UK could fall and then fail to recover the loss in value. It's just a daft trolling to conflate people discussing the reality of house price volatility with your own troll fantasy of a bunch of people posting on a forum all convinced that a house price crash is always just around the corner.

Personally, I don't know where London house prices will be in ten years. They might be up, but they might be down. I think anyone who makes their plans on the basis of your insistence that they'll definitely be up is asking for trouble and if they avoid trouble it'll be luck not judgement that saved them. None of this is an academic matter. There are lots of people in the North East with interest-only mortgages who absolutely screwed themselves in 2007 for the next decade and change by stretching to pay 2007 prices they couldn't actually afford. Will the crop of London 2017 buyers fare better? Time will tell.

Is it always the right time to buy? If you can afford it, then probably, yes, it is always the right time to buy, but nobody can know the future; if you want a house today then you have to pay today's prices. By the same token it's always the right time not to buy - because, again, you don't know the future. There are people who've poured two massive BOMAD deposits and a 40% London Help to Buy equity loan trying to get onto the 'housing ladder' in London over the last couple of years. Past experiences of things like Barratt Dreamstart (link) show that doesn't always work out.

People need to take the resources they have and find a way to secure a lifetime's supply of shelter. It's a challenging issue for many households and this forum is a place where we can discuss that issue. Trolls can't subtract from the forum's content and they certainly aren't a reliable witness on what the forum is for or what its posters think.

 

Edited May 1, 2018 by Beary McBearface

[Simhadri]

5 hours ago, TryingToWin said:

Feel free to post a graph though, showing how if we wait another 200 years you might be right.

?

[Neverwhere]

5 hours ago, Si1 said:

What do you call someone who's never understood why Aristotle was such a Big Thing - an ea is my best guess these days.

My best guess is always BTL landlord 

On 02/01/2018 at 10:37, TryingToWin said:

So, us nasty BTLers are pushing up the prices of homes.

 

[Wayward]

What happened to prices between 1988 and 1995...? But of course it is different this time. ?

[Parkwell]

In 2025 I think there's a reasonable chance they will be nominally lower. We will most likely have gone through a recession and other economic turbulence with little left in the bank to respond with. Debt high, businesses on small margins. No sign of wage increases. Hard to predict what the Labour govt will do. But a fall in the housing market is possible.

 

[SurreyVisitor]

Just now, Wayward said:

What happened to prices between 1988 and 1995...? But of course it is different this time. ?

It is, interest rates are near zero this time and the BoE will never put rates up due to Heroin like addiction people have to credit.

Interest rates were :

1988: 13%

1989: 15%

1990: 14%

1991: 13% down to 10.5%

1992: 10% down to 7%

1993: 6% down to 5.5%

Since 1995 property has been a licence to print money, lots of people are retired due to the BTLs they bought after 1995.

[Bland Unsight]

5 minutes ago, Neverwhere said:

My best guess is always BTL landlord 

FFS!

The arguments regarding the risks of buying into a frothy market are ridiculously exaggerated for buy-to-let investors compared to owner-occupiers. If TryingToWin is actually buy-to-let landlord (and not some spotty teen posing as a landlord and just trolling for the kicks in an old school troll fashion) then they're having a laugh.

Breaking it down:

• Owner-occupiers are seeking security of tenure so aside from any capital gain/loss angle and the difference between rent vs mortgage interest + maintenance they get a benefit from buying which is difficult to capture in cash terms; improved security of tenure.
• Owner-occupier mortgages never have margin call clauses which require the borrower to top-up the deposit if house prices fall but the same clauses are industry standard for commercial lending and buy-to-let mortgages are commercial lending so buy-to-let investors cannot necessarily ride out a sharp fall in house prices unless they have the cash on hand to top up the deposit
• Whilst the historical record is thin (one long boom and then a weird correction phase with unprecedented monetary policy intervention) the story thus far suggests that buy-to-let investment focuses in certain geographical and dwelling-type sub-markets (e.g. London flats) and amplifies the price volatility of those markets. If TryingToWin is arguing that 'you can't go wrong with property' then their argument is about twenty years out of date. Buy-to-let means you can go seriously wrong with property and you're more likely to be operating in a sub-market where the possibility to go seriously wrong exists.

 

If we change the question to "Will the price of a London flat be lower in 2025 than it is today?" then I'd change my vote to it being as likely as not that prices will be lower in 2025 than they are today.

 

[maverick73]

6 hours ago, Kosmin said:

Here is a reminder of the interest rate changes:

Thu, 02 Nov 2017	0.5000
Thu, 04 Aug 2016	0.2500
Thu, 05 Mar 2009	0.5000
Thu, 05 Feb 2009	1.0000
Thu, 08 Jan 2009	1.5000
Thu, 04 Dec 2008	2.0000
Thu, 06 Nov 2008	3.0000
Wed, 08 Oct 2008	4.5000
Thu, 10 Apr 2008	5.0000
Thu, 07 Feb 2008	5.2500
Thu, 06 Dec 2007	5.5000

 

Is the base rate likely to be reduced to -4%?

Is the government going to bail out every BTLer, IOer etc.? Even if any policymaker wanted to replicate the increases of the last 10 years, how could they?

Yes. They could have reset the system... but what would the people say

[Guest]

52 minutes ago, locky82 said:

In this analogy who are the greedy foxes? Market forces? And it’s the government with its self ‘printing’ feed machine that is doing the fattening up, it’s gonna take something special to stop that machine. 

Well you can use them in your analogy if you want ? 

In mine, recession, bond market, credit crunch, debt, war, recession again, Brexit, unemployment, inflation, deflation, no Brexit, did I mention recession... the list is endless

But the point is not what will cause a killing, one chicken being killed is manageable, but we have put the whole coup at risk by blowing the bubble to such a level and then risking so much on it

[Neverwhere]

3 hours ago, anonlymouse said:

A 1:200 Rent:House Price Ratio is the requirement of the PRA regs (145% mortgage interest coverage at interest rates of 5.5%, with a max 75% LTV).

The PRA don't specify an ICR, they require that lenders take into account recent tax changes in addition to other costs (letting agent fees, maintenance, voids, etc).

145% ICRs are not going to be enough to meet PRA requirements for higher and additional rate taxpayers, as per FreeTrader's posts here:

And here:

At the stress rate and a 145% ICR a higher rate taxpayer would be paying 69% of the rent in interest and 26.2% in tax, leaving only 5% of the rent left over to cover all other costs.

At the stress rate and a 145% ICR an additional rate taxpayer would be paying 69% of the rent in interest and 31.2% in tax, leaving them already in negative territory before we've even considered any other costs at all.

Neither one of these scenarios would satisfy the PRA.

[Si1]

57 minutes ago, Neverwhere said:

My best guess is always BTL landlord 

 

BTLrs once had an Aristotle washing machine which wasn't bad and never pondered why it kept cropping up in cruise ship history talks.

[maverick73]

I do wonder if the UK will experience a population decline. A low pound is not attractive to migrants who want to milk the UK cow.

If the cow runs out of milk, and people go in search of milk, then empty rooms will lead to loss of earnings and loss of earnings will create a flood of over valued flats entering the mainstream...

Another major issue is inflation goes up as pound goes down... Oil becomes more expensive, and subprime cars enter the market. 

On the brightside, the centeral bank may adopt a EU / Japan style minus base rate to stimulate the economy... as i feel... 

Japanese stagflation has spread to the UK ?

[Neverwhere]

21 minutes ago, Beary McBearface said:

FFS!

The arguments regarding the risks of buying into a frothy market are ridiculously exaggerated for buy-to-let investors compared to owner-occupiers. If TryingToWin is actually buy-to-let landlord (and not some spotty teen posing as a landlord and just trolling for the kicks in an old school troll fashion) then they're having a laugh.

Breaking it down:

• Owner-occupiers are seeking security of tenure so aside from any capital gain/loss angle and the difference between rent vs mortgage interest + maintenance they get a benefit from buying which is difficult to capture in cash terms; improved security of tenure.
• Owner-occupier mortgages never have margin call clauses which require the borrower to top-up the deposit if house prices fall but the same clauses are industry standard for commercial lending and buy-to-let mortgages are commercial lending so buy-to-let investors cannot necessarily ride out a sharp fall in house prices unless they have the cash on hand to top up the deposit
• Whilst the historical record is thin (one long boom and then a weird correction phase with unprecedented monetary policy intervention) the story thus far suggests that buy-to-let investment focuses in certain geographical and dwelling-type sub-markets (e.g. London flats) and amplifies the price volatility of those markets. If TryingToWin is arguing that 'you can't go wrong with property' then their argument is about twenty years out of date. Buy-to-let means you can go seriously wrong with property and you're more likely to be operating in a sub-market where the possibility to go seriously wrong exists.

 

If we change the question to "Will the price of a London flat be lower in 2025 than it is today?" then I'd change my vote to it being as likely as not that prices will be lower in 2025 than they are today.

Supposedly "balls deep" since 2013 and SE located 

On 02/01/2018 at 11:02, TryingToWin said:

What kind of madness is this?

Not buying was a terrible decision ? we know that now.

I put off buying for a long time and from 2013 i started going balls deep (for my modest income level) in BTL and even with my late entry its been good to me. If you had bought over 10 years ago you'd be onto a winner.

On 02/01/2018 at 11:35, TryingToWin said:

You are right it is very location dependant. The SE in general has been crazy.

However, this one flops all over the place like a fish (they also claim to have only become an owner occupier in Luton, a year after they got heavily into BTL) so I wouldn't rule out spotty-teen-trolling-for-kicks.

Especially given their exceedingly poor understanding of the changes in BTL underwriting standards, though it amuses me to think that perhaps those are their pre-SS13/16 figures failing to meet even an inadequate 145% ICR at a 5.5% stress rate

[Neverwhere]

38 minutes ago, Si1 said:

BTLrs once had an Aristotle washing machine which wasn't bad and never pondered why it kept cropping up in cruise ship history talks.

[Guest]

8 hours ago, TryingToWin said:

If I asked you in 2008 about prices in 2015, would you also give the same answer?

I'm really trying to understand some of you guys, because, well, look what's happened in the last 7 years?

Buying has been better than renting pretty much for all eternity.

We are getting to the point where its getting embarrassing. Can you imagine in 2028 you saying the same thing with the price of a 3 bed semi at 2billion? ?

Can you be convinced you've been wrong?

You seem to believe that the passing of time proves your point, a man jumps from a 100 story building and as he passes each floor he screams out 99 times  "see I told you, you are all wrong I am fine and well and still alive"

You might well turn out to be right, maybe this will go on for far longer. But are you yourself not will to concede that everything but the kitchen sink was thrown at the banks, economy and housing market in order to save them, it is factual now that the banking system was hours from going under, is that good economic management?

So lets say we go through 2007/08 all over again, and after only 10 years, endless props, £375 billion QE, historical low interest rates and on the cusp of recession, what weapons would you now use to protect your precious high house prices, there just isn't nothing left.