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Interest rates will never go up...


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I know someone selling a flat in Camberwell around £475k. It was valued at £500k so they nudged the initial asking price down to generate interest.  5 weeks, one viewing, no interest so given up.

ps I have no real idea of comparisons and it’s way out of my geographic area but they said very little seems to be selling.  

How are your friends doing selling flats in the city?  Impression I have been getting is that’s proving harder than many thought. 

I posted a similar anecdote last week.  Someone trying to sell their flat in London, has offered 700K for a house in Bedford even though the local wages earners would struggle to pay £200K...but cant sell, they lowered asking price, no interest whatsoever, none, nada, negatory good buddy.  They've now given up, another over priced chain goes pop.

If you can't sell something what's it worth ? 

Nothing.

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I think we need to define what the word 'crash' actually represents, if you think this is a circa 50% fall in house prices, it isn't going to happen, we would need a Greek level crisis for something like that to happen in the UK and large scale emigration.

If you are talking a out a 10/15% crash, then I belive we are currently in the midst of one and this is more realistic.

Ultimately there are a few unknowns right now since most of the property bubble is located within London and the South East because this is where most economic growth is concentrated. With the pandemic and the absolute gutting of central London, this is undoubtedly going to have an effect on the city and the wider market, by how much is anyones guess. However with the WFH revolution, I wouldn't be surprised if some economic activity starts to shift away from London  to other regional cities, I actually believe BREXIT will also have this affect.

As to whether people should buy, there is no perfect or right answer as everyone's circumstances are different. Personally I will be looking to buy a flat in London once I'm back there and my office reopens. My reasons are quite simple, I hate sharing and mentally need my own space and you can't put a price on this.

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I think we need to define what the word 'crash' actually represents, if you think this is a circa 50% fall in house prices, it isn't going to happen, we would need a Greek level crisis for something like that to happen in the UK and large scale emigration.

If you are talking a out a 10/15% crash, then I belive we are currently in the midst of one and this is more realistic.

Ultimately there are a few unknowns right now since most of the property bubble is located within London and the South East because this is where most economic growth is concentrated. With the pandemic and the absolute gutting of central London, this is undoubtedly going to have an effect on the city and the wider market, by how much is anyones guess. However with the WFH revolution, I wouldn't be surprised if some economic activity starts to shift away from London  to other regional cities, I actually believe BREXIT will also have this affect.

As to whether people should buy, there is no perfect or right answer as everyone's circumstances are different. Personally I will be looking to buy a flat in London once I'm back there and my office reopens. My reasons are quite simple, I hate sharing and mentally need my own space and you can't put a price on this.

If a crash of that level manifests itself i look forward to cheaper monthly payments on my mortgage. 

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Because he makes the same assertions repeatedly and gets them wrong. Must be like falling off a ferry and watching everyone else sail off without a care in the world while you're left floundering and far behind. 

Just seen Natwest doing a 5 year fixed for 1.49%. That's amazing!!

The Herald of Free Enterprise ferry?

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I think we need to define what the word 'crash' actually represents, if you think this is a circa 50% fall in house prices, it isn't going to happen, we would need a Greek level crisis for something like that to happen in the UK and large scale emigration.

If you are talking a out a 10/15% crash, then I belive we are currently in the midst of one and this is more realistic.

Ultimately there are a few unknowns right now since most of the property bubble is located within London and the South East because this is where most economic growth is concentrated. With the pandemic and the absolute gutting of central London, this is undoubtedly going to have an effect on the city and the wider market, by how much is anyones guess. However with the WFH revolution, I wouldn't be surprised if some economic activity starts to shift away from London  to other regional cities, I actually believe BREXIT will also have this affect.

As to whether people should buy, there is no perfect or right answer as everyone's circumstances are different. Personally I will be looking to buy a flat in London once I'm back there and my office reopens. My reasons are quite simple, I hate sharing and mentally need my own space and you can't put a price on this.

Interesting if you look where the offices that have been announced for shutting and staff WFH (for now) by the big firms, Deloitte, PWC, banks etc. etc. its not the Canary Wharf or city office.. but Southampton, Leeds, Guilford yadda yadda.

Seems counterintuitive but if you think.. if we are only going to have one or two offices in UK, where do you want them? Well where every one else is so.. London and maybe Manchester, as that's the get together points.. not Bournemouth and Chesterfield. 

Edited by captainb
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Interest rates will never go up? I do wonder. Given that we are much closer to "peak human" than most people imagine, it might be that markets are just reacting to this demographic reality. Rates do seem to have some sort of relationship with demographics, being highest in recent times when the boomers were booming all over the world: starting their own families, supporting relatively few old people, paying tax, buying houses, developing careers etc etc. Inflation was the problem then.

But for the foreseeable future, it's deflation. Once low birth rates set in (as they are all across the world) it's much harder to see where the prospects for "growth" (at least as we used to understand it) are. And so the value of the world's primary form of debt (i.e. money) turns down.

The debt bubble is imploding - it began in 2008, when the aggregated wisdom of financial markets first clocked what I'm describing here: that was the tipping point. Now we have central banks shovelling ever-increasing quantities of fiat into the vortex, but none of that can turn round the underlying driver: demographics.

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Interest rates will never go up? I do wonder. Given that we are much closer to "peak human" than most people imagine, it might be that markets are just reacting to this demographic reality. Rates do seem to have some sort of relationship with demographics, being highest in recent times when the boomers were booming all over the world: starting their own families, supporting relatively few old people, paying tax, buying houses, developing careers etc etc. Inflation was the problem then.

But for the foreseeable future, it's deflation. Once low birth rates set in (as they are all across the world) it's much harder to see where the prospects for "growth" (at least as we used to understand it) are. And so the value of the world's primary form of debt (i.e. money) turns down.

The debt bubble is imploding - it began in 2008, when the aggregated wisdom of financial markets first clocked what I'm describing here: that was the tipping point. Now we have central banks shovelling ever-increasing quantities of fiat into the vortex, but none of that can turn round the underlying driver: demographics.

With immigration at record levels the "growth" in the UK population hasnt actually slowed down as a raw demographics suggests.

Its still running at roughly the same as in the 70s etc.

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With immigration at record levels the "growth" in the UK population hasnt actually slowed down as a raw demographics suggests.

Its still running at roughly the same as in the 70s etc.

That's not the point though - we are importing humans to try and compensate for our own declining fertility. When those humans settle here, their own native-born children behave just like the rest of us, and have children at a low rate. 

Meanwhile, fertility is coming down quite quickly all over the world, even in Bangladesh, Nigeria etc, and the pools of cheap labour start to shrink. Yes, there will be some disruption and more migration due to climate change - but its certain than global population will start to shrink much sooner than most people think. It's already baked in. And, in spite of the recent parochial trend in Western politics, capital is still global - money markets are international, even with Brexit we're a very very long way from autarchy. The course of future interest rates is largely a response to inflationary pressures worldwide, or - as we're starting to see - colossal deflationary pressures...

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The Herald of Free Enterprise ferry?

No. 

I guess the lame point your trying to make is that you're better of jumping from the house market ferry so you don't drown in it. The overwhelming majority of ferries don't sink and jumping is almost certainly suicide. 

The point Adarmo is making is that everyone else is sailing off with their lives and getting on with stuff. Sure, it'd be awesome if we'd all been able to buy 5 bed detached houses on the outskirts of market towns for £50k but that ain't the reality, and it never was. 

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Two couples are leaving the city, cashing in pokey flats for family homes. Others are doing it to get more flexible accommodation for future lockdowns (mainly gardens). 

It's funny how the population views covid. In January most people and govt institutions were complacent, expecting a single wave and a v shaped economic dip. I thought it was much more serious and would take longer to run its course.

Now we're well into it, realistically we'll be clear of it in a few years time.

Is that really a justification to overpay by a 6 figure sum on a bigger garden? Just a few more years of on and off successively better managed mini lockdowns? 

Edited by Si1
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That's not the point though - we are importing humans to try and compensate for our own declining fertility. When those humans settle here, their own native-born children behave just like the rest of us, and have children at a low rate. 

Meanwhile, fertility is coming down quite quickly all over the world, even in Bangladesh, Nigeria etc, and the pools of cheap labour start to shrink. Yes, there will be some disruption and more migration due to climate change - but its certain than global population will start to shrink much sooner than most people think. It's already baked in. And, in spite of the recent parochial trend in Western politics, capital is still global - money markets are international, even with Brexit we're a very very long way from autarchy. The course of future interest rates is largely a response to inflationary pressures worldwide, or - as we're starting to see - colossal deflationary pressures...

A reduced work force is inflationary as labour becomes more scarce??

Edited by Si1
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That's not the point though - we are importing humans to try and compensate for our own declining fertility. When those humans settle here, their own native-born children behave just like the rest of us, and have children at a low rate. 

Meanwhile, fertility is coming down quite quickly all over the world, even in Bangladesh, Nigeria etc, and the pools of cheap labour start to shrink. Yes, there will be some disruption and more migration due to climate change - but its certain than global population will start to shrink much sooner than most people think. It's already baked in. And, in spite of the recent parochial trend in Western politics, capital is still global - money markets are international, even with Brexit we're a very very long way from autarchy. The course of future interest rates is largely a response to inflationary pressures worldwide, or - as we're starting to see - colossal deflationary pressures...

You raise a very interesting topic. The second derivative for world population growth has already gone below zero, so at some future point, in theory, world population will start shrinking. But until that point, I don't see how population growth can be a deflationary factor when, despite the rate of growth slowing, it is still growing. 

In my mind deflationary pressures are predominantly due to our incredible (and growing) efficiency at meeting demand. In previous decades, supply had a hard time matching demand and that coincided with very high rates of population growth (boomer generation) in the countries with the highest spending power. The result was high inflation and high interest rates.

What we have now is, as you point out, slower growth (but still growth) in population but importantly, our technology and globalisation has meant supply easily meets demand in goods and services. Result is lower inflation (in these components) and lower interest rates.

Our issue, and the reason that many of us are on this website is that this decade long downtrend in global interest rates has translated into huge increases in the cost of assets bought using credit - houses. Every developed country (and many non) in the world is suffering from and complaining about the same thing. House prices have run away from earnings - and this is primarily due to the cost of credit dropping to almost zero. 

 

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Interesting if you look where the offices that have been announced for shutting and staff WFH (for now) by the big firms, Deloitte, PWC, banks etc. etc. its not the Canary Wharf or city office.. but Southampton, Leeds, Guilford yadda yadda.

Seems counterintuitive but if you think.. if we are only going to have one or two offices in UK, where do you want them? Well where every one else is so.. London and maybe Manchester, as that's the get together points.. not Bournemouth and Chesterfield. 

Interesting comment, my own company did not renew their lease on our small Birmingham office. I still think there will be a shift to the regions, I'm not only referring to offices but economic activity in general. With Brexit, the Dover port won't be at full capacity and there will be a shift to regional ports in my opinion, I can't see busineses doing the same. 

Also the government are already talking about moving some government functions outside of London which should help too. 

I could be wrong, but I think BREXIT happened in part because of regional economic inequalities, so the government will have to do something especially if they want to keep the red wall after BREXIT.

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How are your friends doing selling flats in the city?  Impression I have been getting is that’s proving harder than many thought. 

Both bought around 2015 for 180K and 205K in Edinburgh. 

The 205K one is under offer at 285K. I should know in the coming weeks if the deal has gone through but its someone in the same block so I suspect they might not back out.

The 180K one is a really nice modern flat that's a bit out from the centre of the city. It sold for 220K in 2005 (perhaps when it was first built), then sold a few more times for 180K & 210K around 2008-2010. My friends have completed a sale at 265K and they didnt even paint a single room.... makes me sick!!!

There are tonnes of flats on in Edinburgh but the madness continues... they all seem to be selling... regardless of prices still being up on recent years.

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I could be wrong, but I think BREXIT happened in part because of regional economic inequalities, so the government will have to do something especially if they want to keep the red wall after BREXIT.

A lot of the Brexit regions were also in receipt of EU regeneration funds. Some of the most generous were in the North East.  The Brexidiots promised that the funding would be matched pound-per-pound with the magic £330M pw that was also going to the NHS, Farmers, and Tax Cuts.

Let's see how long the new Blue wall lasts.

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Both bought around 2015 for 180K and 205K in Edinburgh. 

The 205K one is under offer at 285K. I should know in the coming weeks if the deal has gone through but its someone in the same block so I suspect they might not back out.

The 180K one is a really nice modern flat that's a bit out from the centre of the city. It sold for 220K in 2005 (perhaps when it was first built), then sold a few more times for 180K & 210K around 2008-2010. My friends have completed a sale at 265K and they didnt even paint a single room.... makes me sick!!!

There are tonnes of flats on in Edinburgh but the madness continues... they all seem to be selling... regardless of prices still being up on recent years.

Have they sold in order to upgrade?

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It does look to me like the aspiring middle classes will go bust first, as they thought debt = wealth.

They are poor and have always been poor, but debt made them feel rich.  Anyone who has to work in a job selling their time is working class.

The real middle class is smart with money and don't have to work very hard in non jobs to service debt.

The property bubble has been fueled by insecure working class types borrowing bent fiat from desperate banks.

All desperate fookwits together, but the wheels are coming off now and they are all about to go to the wall.......banks and punters both.

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It does look to me like the aspiring middle classes will go bust first, as they thought debt = wealth.

They are poor and have always been poor, but debt made them feel rich.  Anyone who has to work in a job selling their time is working class.

The real middle class is smart with money and don't have to work very hard in non jobs to service debt.

The property bubble has been fueled by insecure working class types borrowing bent fiat from desperate banks.

All desperate fookwits together, but the wheels are coming off now and they are all about to go to the wall.......banks and punters both.

Oh man.

😂😂😂😂😂😂😂

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Any different?

Looks like it so far (no house price collapse without interest rate rises.)

We're in such a mountain of debt however, that house prices could get swept away in any avalanche ?(Eg another banking crisis)

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Interesting if you look where the offices that have been announced for shutting and staff WFH (for now) by the big firms, Deloitte, PWC, banks etc. etc. its not the Canary Wharf or city office.. but Southampton, Leeds, Guilford yadda yadda.

Seems counterintuitive but if you think.. if we are only going to have one or two offices in UK, where do you want them? Well where every one else is so.. London and maybe Manchester, as that's the get together points.. not Bournemouth and Chesterfield. 

I might be misinterpreting your message but it sounds again like London will be ok because it you have one office in the U.K. it will be there. 

However these large firms had a massive presence in London ie on a Gresham St, Old Broad St, Threadneedle St, Strand, etc indeed our company had possibly 20 large offices and training centres now it has 4. 

In Leeds, Manchester and Edinburgh the city probably had 2 or 3 large offices and that has moved to one. 

So the overall impact has most effect in London particularly when we factor in Property prices (offices and residential)  

So I do agree....if Barclays for example keep one large office in the U.K. it will be in a London...but London’s starting point and therefore the impact I believe will be very much felt and impact office space moving toward 

 

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I might be misinterpreting your message but it sounds again like London will be ok because it you have one office in the U.K. it will be there. 

However these large firms had a massive presence in London ie on a Gresham St, Old Broad St, Threadneedle St, Strand, etc indeed our company had possibly 20 large offices and training centres now it has 4. 

In Leeds, Manchester and Edinburgh the city probably had 2 or 3 large offices and that has moved to one. 

So the overall impact has most effect in London particularly when we factor in Property prices (offices and residential)  

So I do agree....if Barclays for example keep one large office in the U.K. it will be in a London...but London’s starting point and therefore the impact I believe will be very much felt and impact office space moving toward 

 

If you read from the asset owners perspective, so far the hits have come in the lower priced sector. People are withdrawing from the business parks - rent collection has been as low as 60% some are reporting. It might be the nature of the businesses based there as well. Central london rent collection is still 98% even though the offices are only 20% occupied. 

People always assume in a downturn, cheap will do well.. or reward will spread out, etc etc. However in reality there is often a rush to "quality" and the stuff that found a buyer at a price, i.e its cheap for a reason.. drops off the radar into not used.

For prime, the story isnt so bad yet. From British land who have a mix of stuff:

 

 

 

London Offices

Following the completion of 100 Liverpool Street, occupancy across our London offices is 95% as at 30 September. Office leasing activity from 1 April to 31 August covered 55,000 sq ft, on average 6% ahead of March ERV. Activity has understandably been subdued, given the challenges of physically viewing space. 

So far, our occupiers have been primarily focused on the near-term challenge of returning to work safely.  Longer term, Covid-19 will undoubtedly cause many businesses to consider how to use their space most productively, but our conversations suggest there is a consensus that high quality office space will remain key to enable them to perform at their best.  As part of this, we expect demand to focus still further on the highest quality, most sustainable prime office space such as we are delivering at our three mixed use London campuses. In the short term though, as we indicated in May, macro uncertainties relating to both Covid-19 and Brexit will impact activity.  Whilst investment volumes remain subdued, prime central London offices are generally transacting around 5% lower than pre Covid levels.

4.   Developments

We reached practical completion at 100 Liverpool Street in late September and the building is now 93% pre let or under offer including space allocated to Storey. At 1 Triton Square, which is fully pre-let to Dentsu Aegis, productivity on site has increased and we currently expect Practical Completion in April 2021.

We are making good progress at Norton Folgate, with demolition completed and pre-construction and enabling works at an advanced stage. We expect to place the main build contract for this exciting mixed-use development soon.

At Canada Water we expect to draw down the head lease in the coming months, having secured planning permission in May 2020. A claim for judicial review was refused permission by the High Court in August, and whilst the claimant has applied for an oral hearing which will take place in late October, we are confident with respect to the outcome of this process. We are excited about commencing work on site so that the substantial public benefits of the masterplan can be delivered as soon as possible.

 

Edited by captainb
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Have they sold in order to upgrade?

One bought something of similar value, though it’s a family home with a garden. So the smart move Id say given city prices will be hit harder.  
 

The others... er... you’re gona love this... they’ve bought a massive 450k detached house and maxed out the term until they are 70 years old to make it more affordable. I know they have decent amount of equity but when I heard the term was being increased like that I began to question whether or not they could afford it. The council tax alone is £350 per month. 
 

I might have to delete this post as that pair are actually family and I’m notorious for my HPC banter!!!

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  • 441 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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