House prices to plunge 35 per cent in no-deal Brexit

[warrior88]

15 hours ago, Tempus said:

So says Mark Carney. 

"House prices would fall by 35 per cent over three years following a chaotic no-deal Brexit, according to a briefing given by Mark Carney to the cabinet today." https://www.thetimes.co.uk/edition/news/house-prices-would-plummet-in-no-deal-brexit-says-carney-csgr9j0hj

Do we believe him on that one? ?

 

 

If this means Brexit no-deal , than I support this to normalize the house prices.

[rantnrave]

Comment from an estate agent on Property Industry eye getting positive support:

https://www.propertyindustryeye.com/

Robert May

September 14, 2018 at 08:24 #9

It is wrong to blame a likely fall in house prices on Brexit, to do so is masking Mr Carney’s failure to increase interest rates in 2014.

The government  and the bank of England have a bit of a quandry, our economy is reliant on the  artificially high value of our property stock but the high value of property is causing a generational disparity between those who own property and those that want to own property.

Interest rates used to be an effective way of controlling the economy but because that control  has been effectively disabled because of the reliance on property values, there is no real control over the economy.  Blame it on Brexit seems to be emerging as a very convenient way of  disguising the fact that our economy has not properly recovered from the crash in 2008.

[ftb_fml]

3 hours ago, Lord D'arcy Pew said:

There's a global correction on the way. Prices will plummet in Canada, Australia and over here.

Many economies are running a "bricks & mortar" standard, they will fair the worst.

The bottom line, IMO.

 

It seems to me that our economy has been circling the drain for decades; the last 10 years illustrating a period of ever-more desperate props to stimulate growth, along with all the nasty side effects this cheap debt has created (asset bubbles and wealth inequality).

We're long overdue a natural correction and Brexit will both serve as a catalyst that accelerates this process as well as the excuse the establishment can use to simultaneously wash their hands of the whole disgraceful situation and blame the years of misery to come on the voting public.

It appears that the spectre of Brexit has already had a profound and measurable effect on our economy; first it's knocked a good 20% off the strength of our currency versus the Euro, which continues to drive up real-world inflation. Secondly it could be argued that it's singularly responsible for the flat-lining / decline in house prices in the three most expensive cities in the UK (London, Oxford, Cambridge) - curiously, according to Hometrack, the distinct upward price trend in these three areas came to a distinct halt in June 2016. Certainly no bad thing, but arguably a measure of its effect on sentiment.

I think we're in for another, possibly worse sentiment-driven hit when we actually leave; obviously worse in the event of a "no deal" situation. I was fuzzy-headed thanks to lies on both sides and found it hard to make a rational decision at the time of voting. However, it's now becoming patently more obvious to me that this whole shitshow has nothing but negative connotations for the country; it'll either be bad or terrible depending on how abysmally the bunch of idiots negotiating on our behalf handle it.

What good is possibly going to come of this? Our economy is massively service-centric and it's increasingly unsustainable model of operation relies on both cheap imported labour and disposable income to survive; both of which will be / is already being cut substantially by our weak currency.

We import a lot and export little. We've snubbed our nearest trading partners and are desperately clutching at straws trying to court favour with inferior alternatives so much further away. We're looking at shipping food greater distances around the globe from countries with inferior standards of food quality and animal welfare. We're aiming to buy products of lower quality to avoid dealing with Europe - presumably because they'll be far more expensive due again to the weak currency and less favourable trading conditions.

Come March the decline will really gather pace. Maybe another 20% hit to the currency when the horrors of the "deal" (or indeed not) are released. Far greater consumer price inflation and asset deflation. A further drop in consumer spending, falling wages and rising unemployment. This will be the backdrop for the house price correction; sadly not some rosy fall while everything else continues to go swimmingly.

While it can only benefit us through further driving negative sentiment, Carney's announcement is just setting the scene for the inevitable blaming of Brexit for the coming correction that results mainly from such irresponsible, greedy and unsustainable management of our economy over the past 30+ years.

I believe there will be a significant correction, but will this still be a cause for celebration within the context of a defunct economy and decaying society?

Edited September 14, 2018 by ftb_fml

[hurlerontheditch]

32 minutes ago, longgone said:

eghairdontcare Fri 14-Sep-18 09:47:46

I had a mild panic about this as we are looking to move to a property valued about double ours so it's certainly a jump. However, if we buy it then we'll be there long enough to ride out any drop in value. 

We're not in a fast moving area though, we've had 1 viewing in a week. So I am worried about finding a buyer for ours.

I am wondering what effect it will have on our potential buyers though. Will they run for the Hills now? Or put in crazy low offers. Personally our house is not overpriced when I look at comparable houses on the market so I was hoping for something close to asking price. Not so sure now.

[Si1]

3 minutes ago, ftb_fml said:

The bottom line, IMO.

 

It seems to me that our economy has been circling the drain for decades; the last 10 years illustrating a period of ever-more desperate props to stimulate growth, along with all the nasty side effects this cheap debt has created (asset bubbles and wealth inequality).

We're long overdue a natural correction and Brexit will both serve as a catalyst that accelerates this process as well as the excuse the establishment can use to simultaneously wash their hands of the whole disgraceful situation and blame the years of misery to come on the voting public.

It appears that the spectre of Brexit has already had a profound and measurable effect on our economy; first it's knocked a good 20% off the strength of our currency versus the Euro, which continues to drive up real-world inflation. Secondly it could be argued that it's singularly responsible for the flat-lining / decline in house prices in the three most expensive cities in the UK (London, Oxford, Cambridge) - curiously, according to Hometrack, the distinct upward price trend in these three areas came to a distinct halt in June 2016. 

I think we're in for another, possibly worse sentiment-driven hit when we actually leave; obviously worse in the event of a "no deal" situation. I was fuzzy-headed thanks to lies on both sides I found it hard to make a rational decision at the time of voting. However, it's now becoming patently more obvious to me that this whole shitshow has nothing but negative connotations for the country; it'll either be bad or terrible depending on how abysmally the bunch of idiots negotiating on our behalf handle it.

What good is possibly going to come of this? Our economy is massively service-centric and relies on both cheap imported labour and disposable income to survive; both of which will be cut substantially by our weak currency.

We import a lot and export little. We've snubbed our nearest trading partners and are desperately clutching at straws trying to court favour with inferior alternatives so much further away. We're looking at shipping food greater distances around the globe from countries with inferior standards of food quality and animal welfare. We're aiming to but products of lower quality to avoid dealing with Europe - presumably because they'll be far more expensive due again to the weak currency and less favourable trading conditions.

Come March the decline will really gather pace. Maybe another 20% hit to the currency when the horrors of the "deal" (or indeed not) are released. Far greater consumer price inflation and asset deflation. A further drop in consumer spending, falling wages and riseing unemployment. This will be the backdrop for the house price correction; sadly not some rosy fall while everything else continues to go swimmingly.

While it can only benefit us through further driving negative sentiment, Carney's announcement is just setting the scene for the inevitable blaming of Brexit for the coming correction that results mainly from such irresponsible, greedy and unsustainable management of our economy over the past 30+ years.

I believe there will be a significant correction, but will this still be a cause for celebration within the context of a defunct economy and decaying society?

What?

[ftb_fml]

3 minutes ago, Si1 said:

What?

By all means indulge me with an alternative viewpoint.

[hurlerontheditch]

24 minutes ago, GregBowman said:

Because in the biggest crash in living memory 1989 -1996 falls average over that period were  21% and that was with double digit interest rates and no housing crisis through excessive immigration - just because you want something doesn't mean it's going to happen 

The overpaying thing is interesting in that that has to be offset against rent. I rented a tiny three bed semi for £1700 a month until we bought again. Then got a bigger house like I used to have. Forget  convenience, my own place etc - that rent would be £85k over 5 years if rents didn't rise. The interest element on the mortgage is is £24k over that period . Therefore it can drop approx. 9% which is quite a big drop and still I am better off. Hence why there will still be demand in good areas

did you not pay stamp duty when you purchased then? pretty handy that!

[GregBowman]

12 minutes ago, hurlerontheditch said:

did you not pay stamp duty when you purchased then? pretty handy that!

 Never been good with numbers sorry so revised would be £35k up over 5 years if prices never go up or takes up 5% of a drop

[disenfranchised]

This is all designed to soften Brexiters up for a bad deal.

The BoE have been stress testing banks for large house price drops, they were accepting the possibility of them before a Brexit vote, let alone all this Noel Edmunds 'deal or no deal' stuff.

Can we now have a clear acknowledgment from the Tories and Labour that houses are significantly overvalued? Of course not.

Edited September 14, 2018 by disenfranchised

[rantnrave]

Is Carney talking real or nominal prices?

Just seen a flat for sale, in decent condition, which is priced 8% above its last sold price in 2006. Hefty fall in real terms.

[hurlerontheditch]

 

 

17 minutes ago, GregBowman said:

 Never been good with numbers sorry so revised would be £35k up over 5 years if prices never go up or takes up 5% of a drop

a flat in my block which was purchased in September 2015 for 660k, it is now on the market for 630 and has been on the market for 6 months now. my guess its value would be closer to 560. that's 100k reduction in value. Stamp duty was 23k. Maintenance fees have been 5.5k. assume interest payments on a 400k mortgage would be around 10k. assume selling fees of 6k. that's a total loss of 154k. the rental for that period would be 40k. So out of a deposit of 260k only 100k of it would be left after selling

[zugzwang]

The Telegraph is suggesting that Carney is going to become a British citizen and follow Mervo the Clown into the Lords.

Canada doesn't want him back. The bum's here for life.

 

[GregBowman]

15 minutes ago, hurlerontheditch said:

 

 

a flat in my block which was purchased in September 2015 for 660k, it is now on the market for 630 and has been on the market for 6 months now. my guess its value would be closer to 560. that's 100k reduction in value. Stamp duty was 23k. Maintenance fees have been 5.5k. assume interest payments on a 400k mortgage would be around 10k. assume selling fees of 6k. that's a total loss of 154k. the rental for that period would be 40k. So out of a deposit of 260k only 100k of it would be left after selling

Leasehold flats as purchases are a losers game - not sure we are disagreeing - didn't my original post say they will bear the brunt of any correction ?

That's not much less than my current house in a very nice area 30 mins from London on a slow train or 17mins by fast train.

People move to suburbs

US link but sure the same over here - The massive over supply of flats will ensure they crash, but the truth is good family homes in decent areas that aren't in employment black spots or long commutes away are in short supply 

 

[hurlerontheditch]

3 minutes ago, GregBowman said:

Leasehold flats as purchases are a losers game - not sure we are disagreeing - didn't my original post say they will bear the brunt of any correction ?

That's not much less than my current house in a very nice area 30 mins from London on a slow train or 17mins by fast train.

People move to suburbs

US link but sure the same over here - The massive over supply of flats will ensure they crash, but the truth is good family homes in decent areas that aren't in employment black spots or long commutes away are in short supply 

 

agreed. but in high population areas not everyone can have a house with a garden

[Ah-so]

1 hour ago, GregBowman said:

Because in the biggest crash in living memory 1989 -1996 falls average over that period were  21% and that was with double digit interest rates and no housing crisis through excessive immigration - just because you want something doesn't mean it's going to happen 

Not sure the living memory point is that relevant. What was the worst tsunami in living memory prior to the 2004 Boxing Day tsunami? 

Plenty of countries have had worse falls than 21% - Japan has had 50% over 30 years.

And arguments based on not having the same conditions as the previous time so not having anything to worry about are very weak - circumstances always change and the underlying factors are always different. 

And prices do fall I'm nice areas - this is where prices are currently falling fastest and furthest. 

Just because you want something not to happen doesn't mean it won't. 

[Bruce Banner]

3 minutes ago, Ah-so said:

Not sure the living memory point is that relevant. What was the worst tsunami in living memory prior to the 2004 Boxing Day tsunami? 

Plenty of countries have had worse falls than 21% - Japan has had 50% over 30 years.

And arguments based on not having the same conditions as the previous time so not having anything to worry about are very weak - circumstances always change and the underlying factors are always different. 

And prices do fall I'm nice areas - this is where prices are currently falling fastest and furthest. 

Just because you want something not to happen doesn't mean it won't. 

You saved me typing much the same thing.

 

[Si1]

the biggest crash in living memory was during the second world war.

[GregBowman]

1 minute ago, Ah-so said:

Not sure the living memory point is that relevant. What was the worst tsunami in living memory prior to the 2004 Boxing Day tsunami? 

Plenty of countries have had worse falls than 21% - Japan has had 50% over 30 years.

And arguments based on not having the same conditions as the previous time so not having anything to worry about are very weak - circumstances always change and the underlying factors are always different. 

And prices do fall I'm nice areas - this is where prices are currently falling fastest and furthest. 

Just because you want something not to happen doesn't mean it won't. 

Maybe we have a different view of nice areas...

Nice areas with house price falls

If you own the house or have the means to pay off the mortgage (many of us have mortgages because of cheap money) then price movement is to some extent irrelevant.

It's not an argument is it. I have lived in detached houses since 96 and it's always the same boom or bust. There are only so many houses built in good areas and there always seems to be a big demand for them (you can always do a deal maybe because of the price is high six figure)

To me a good area is:

Safe

Green

Decent Pubs and restaurants

Within 10 minutes of a tube station or very frequent trains to London (currently I have a choice of three lines delivering each between 3-4 trains an hour even off peak and peak) low mileage to London 20 miles or less (good for Saturday night trips in)

A nice area is not just a house in a field whatever standard it's built to. My house will fall in price but relatively I doubt not to the magnitude Carney is describing.

 

 

[GregBowman]

11 minutes ago, Bruce Banner said:

You saved me typing much the same thing.

 

Pure old supply and demand Bruce - They ain't making any more land and they aren't building anymore 100 year old suburbs/villages

Whilst Ford is struggling people are paying £20k + for a 1992 Sabb 900 - same thing 

[rockerboy]

2 hours ago, longgone said:

eghairdontcare Fri 14-Sep-18 09:47:46

I had a mild panic about this as we are looking to move to a property valued about double ours so it's certainly a jump. However, if we buy it then we'll be there long enough to ride out any drop in value. 

We're not in a fast moving area though, we've had 1 viewing in a week. So I am worried about finding a buyer for ours.

I sold up in 2007 (because of this site) and downtraded to a cheaper property (mortgage free and eternally grateful).

I now reckon that in the last ten years, the reduction in expenditure reduced by well over 6 figures in real terms. 

Maybe you don't need to worry really - you are in the better position right now. If this moment in UK history (Brexit) plays out as we all think it could - consider a low mortgage is a good idea (deleveraged etc)

 

[thewig]

project fear round two - because it worked out so well for the establishment last time

 

 

[winkie]

1 hour ago, disenfranchised said:

This is all designed to soften Brexiters up for a bad deal.

The BoE have been stress testing banks for large house price drops, they were accepting the possibility of them before a Brexit vote, let alone all this Noel Edmunds 'deal or no deal' stuff.

Can we now have a clear acknowledgment from the Tories and Labour that houses are significantly overvalued? Of course not.

They are significantly overvalued simply because the cost of borrowing is so cheap, lending has been easy.....but buying overvalued houses with cheap borrowing is not cheap.......there is no ladder unless can create own equity by repaying what can whilst rates are low or wages will have to grow to meet the cost of the next rung or both.......past times the winners were the ones that could ride out the falls in value, they still had a home to live in....years gone by they did not have the benefit of such low interest rates (all be it less debt)......for anyone with debt it's far better to have falling values than rising interest rates.

 

 

[winkie]

41 minutes ago, hurlerontheditch said:

agreed. but in high population areas not everyone can have a house with a garden

Don't live in a high population area if you would like a garden....choices.

[darkmarket]

7 minutes ago, winkie said:

for anyone with debt it's far better to have falling values than rising interest rates.

Apart from the 35% drop in house prices, the model also assumed a base rate increase to 4%. I'm not sure if it then incorporated the impact of that increase into further house price decreases, seems not.

[Fromage Frais]

2 hours ago, rantnrave said:

Comment from an estate agent on Property Industry eye getting positive support:

https://www.propertyindustryeye.com/

Robert May

September 14, 2018 at 08:24 #9

It is wrong to blame a likely fall in house prices on Brexit, to do so is masking Mr Carney’s failure to increase interest rates in 2014.

The government  and the bank of England have a bit of a quandry, our economy is reliant on the  artificially high value of our property stock but the high value of property is causing a generational disparity between those who own property and those that want to own property.

Interest rates used to be an effective way of controlling the economy but because that control  has been effectively disabled because of the reliance on property values, there is no real control over the economy.  Blame it on Brexit seems to be emerging as a very convenient way of  disguising the fact that our economy has not properly recovered from the crash in 2008.

This.

It is also hypocritical for Carney to blame brexit etc etc

51.9% leave 48.1 remain

Circa 60% households homeowners 40% not

houseprice crash.co.uk exisits so its logical to assume people would like to own.

Ergo no stupid housing bubble = more happy people with status quo = remain vote 

35% seems a bit of a logical figure as this would be about right for the property crash we should have had.

Edited September 14, 2018 by Fromage Frais