Jump to content
House Price Crash Forum

Recommended Posts

Let look at the situation objectively. I am not in a position to determine what would happen with the housing market next. 

Factors that are popping the market up 

1. Quantitative easing, it continues to drive the cost of borrowing down and increase the money supply and hoping to increase the velocity of money (it buys government bonds and they are being spent on the public sectors or investment)

CAPM theory - Price = Money supply x velocity of money and then divided by Quantity of goods. 

2. Stamp duty holiday, it effectively gives you a 3% discount for a house that costs 500K

3. Furlough scheme - help maintain income for people who otherwise would struggle and foreclose. (Reduce supply) 

4. Banning of Eviction and mortgage payment free holiday - not interest free. This keeps the supply of houses low. (Reduce supply)

5. Lack of massive social housing building programme - compare to the 60s. (reduce supply)

6. Help to buy - increase money supply to new housing market 

Factors that are driving the price down

1. Unemployment - it reduces the velocity of money 

2. Credit crunch - certain groups of people are now finding it more difficult to raise finance. 

3. Higher saving rate during lockdown - reduce the velocity of money. 

4. Plan for the Relaxation of planning law - improve housing supply 

The government is interfering with the free market and hence it is not behaving like one. It is socialising loses and privatising profit. The market should have a correction but it won't allow it, at least not at the very moment. I understand we are all angry about this but we also need a practical solution. 

 

Link to post
Share on other sites
  • Replies 281
  • Created
  • Last Reply

Top Posters In This Topic

 

Let look at the situation objectively. I am not in a position to determine what would happen with the housing market next. 

Factors that are popping the market up 

1. Quantitative easing, it continues to drive the cost of borrowing down and increase the money supply and hoping to increase the velocity of money (it buys government bonds and they are being spent on the public sectors or investment)

CAPM theory - Price = Money supply x velocity of money and then divided by Quantity of goods. 

2. Stamp duty holiday, it effectively gives you a 3% discount for a house that costs 500K

3. Furlough scheme - help maintain income for people who otherwise would struggle and foreclose. (Reduce supply) 

4. Banning of Eviction and mortgage payment free holiday - not interest free. This keeps the supply of houses low. (Reduce supply)

5. Lack of massive social housing building programme - compare to the 60s. (reduce supply)

6. Help to buy - increase money supply to new housing market 

Factors that are driving the price down

1. Unemployment - it reduces the velocity of money 

2. Credit crunch - certain groups of people are now finding it more difficult to raise finance. 

3. Higher saving rate during lockdown - reduce the velocity of money. 

4. Plan for the Relaxation of planning law - improve housing supply 

The government is interfering with the free market and hence it is not behaving like one. It is socialising loses and privatising profit. The market should have a correction but it won't allow it, at least not at the very moment. I understand we are all angry about this but we also need a practical solution. 

 

"The government is interfering with the free market and hence it is not behaving like one" 

Whats new there? Has always been the case in one form or another since the bloomin Romans. 

 

Nobody should be shocked by things like QE it's been well broadcasted as have the continuing low rates. Most should have picked up now the distinct possibility of negative rates and charges in some form of holding cash. 

It might not be what you want to happen but that doesn't mean it won't. 

Link to post
Share on other sites
 

Why on earth would a FTB be looking at a house that's akin to the national average? A price that's actually significantly higher than averages in Scotland/Wales/Northern Ireland or indeed most of England as the figures are of course heavily skewed by London.

Are people not entertaining buying smaller houses and flats for 75-150K these days? 

Yeah I mean who ****** do these professionals earning decent wages think they are wanting to live in a house the size of what a postman could have afforded in the 80s. Shame on those greedy *****.

Edited by goldbug9999
Link to post
Share on other sites
 

. I understand we are all angry about this but we also need a practical solution. 

There has been a solution handed on a plate to everyone on this site. Its been the topic of a thread concerning something beginning with "B" which has been pinned to the top of this forum for a few years now (and was one of the longest running and most active threads a good few years prior to that).

In late 2013 I spent £10k from an aborted house purchase on said asset, this is now worth enough to buy me a decent house outright.

Link to post
Share on other sites
 

Yeah I mean who ****** do these professionals earning decent wages think they are wanting to live in a house the size of what a postman could have afforded in the 80s. Shame on those greedy *****.

Where do you live? Because the REGIONAL average house prices in many areas of the UK are below 200K. Why is it outrageous to suggest people buy a smaller/house flat first? How can you expect someone to decide to buy a 3 or 4 bed in their 40s and not pay a price in terms of interest?

The problem with this site is most people bemoan prices but they never reveal where they live. I'm going to start complaining about London prices even though I live 600 miles away.

Link to post
Share on other sites
 

There has been a solution handed on a plate to everyone on this site. Its been the topic of a thread concerning something beginning with "B" which has been pinned to the top of this forum for a few years now (and was one of the longest running and most active threads a good few years prior to that).

In late 2013 I spent £10k from an aborted house purchase on said asset, this is now worth enough to buy me a decent house outright.

Indeed and it’s still a solution. Buy some B and hold for a few years. Get out of filthy F. 

Link to post
Share on other sites
 

The problem with this site is most people bemoan prices but they never reveal where they live. I'm going to start complaining about London prices even though I live 600 miles away.

People don't want to dox themselves but I live in the south west, actually one of the cheaper towns and even here a small 3 bed terrace is 180k a modest 3 bed semi is 250k. Average wage probably 35k so a common wage for ordinary worker probably 25-30k. So were looking at least 6x multiples for most people. 

People want (and a reasonable right) to want to use an average job to buy an actual house (not a rabbit hutch studio) in places that are decent to live and work, not some backwater shithole commuting hundreds of miles.

Could YOU afford you current house on your current wage ? probably not I'm guessing, but hell rather than address a social an economic travesty, lets just get everyone to who hasn't yet bought to go live on a northern sink estate. Genius idea.

 

 

Edited by goldbug9999
Link to post
Share on other sites
 

People don't want to dox themselves but I live in the south west, actually one of the cheaper towns and even here a small 3 bed terrace is 180k a modest 3 bed semi is 250k. Average wage probably 35k so a common wage for ordinary worker probably 25-30k. So were looking at least 6x multiples for most people. 

People want (and a reasonable right) to want to use an average job to buy an actual house (not a rabbit hutch studio) in places that are decent to live and work, not some backwater shithole commuting hundreds of miles.

Could YOU afford you current house on your current wage ? probably not I'm guessing, but hell rather than address a social an economic travesty, lets just get everyone to who hasn't yet bought to go live on a northern sink estate. Genius idea.

 

 

But you are ignoring the assumption that I would make that people buying a 3 bed terrace are unlikely to be first time buyers. They are likely to be couples + / - children who need the space for a family. When you then take 2 people earning 25k per year for arguments sake, that gives them the money for a 3 bed terrace or a semi (going on your figures) depending on deposit size. Does a 25 year old party animal have a need for a 3 bed terrace? They might want one, but I'm not upset by the fact that they can't have one. 

 

We brought a 4 bed terrace over the summer, so the answer to the latter part of your question is yes we could afford our current large (London) house on our current salaries. This has come about through a lot of hard work saving, and some luck in terms of me settling down with someone who had also done similar over the last decade. This has allowed us to bypass the starter homes and go straight to a family home, which we hope to fill with a family in the coming years. On my own, I would have had no chance, but I could have brought a 1 bed 2 bed at a push flat in this area. 

 

I would also state that given you don't seem to be talking about London, your average wage calculation is way out. The average wage for London is around the 37k mark, so assuming you are talking outside of the M25 it is likely to be lower. What has happened over the past 30 years or so is that it is uncommon for women to not have careers, and to be quite good at them too! Growing up my mother taught part time and my dad was the bread winner. There are plenty of young couples with combined salaries in six digits around London at least, and house prices have responded accordingly. Coupled with limited supply, low interest rates, historically easy lending and global movement of skilled workers it has had the effect on prices that it has. I don't agree that high house prices are a good idea, and I joined this site in 2003 thinking things were crazy then, but facts don't care about your feelings. 

Edited by Twenty Something
Link to post
Share on other sites
 

People don't want to dox themselves but I live in the south west, actually one of the cheaper towns and even here a small 3 bed terrace is 180k a modest 3 bed semi is 250k. Average wage probably 35k so a common wage for ordinary worker probably 25-30k. So were looking at least 6x multiples for most people. 

People want (and a reasonable right) to want to use an average job to buy an actual house (not a rabbit hutch studio) in places that are decent to live and work, not some backwater shithole commuting hundreds of miles.

Could YOU afford you current house on your current wage ? probably not I'm guessing, but hell rather than address a social an economic travesty, lets just get everyone to who hasn't yet bought to go live on a northern sink estate. Genius idea.

 

 

The prices you reference are similar to my area but I’d add that it’s not unreasonable to suggest a young couple or individual start off by purchasing a smaller flat initially. That gets the multiplier down dramatically. 

I feel I’m from a generation where most couples with kids both tend to work. So average salaries and ultra low interest rates mean 4 or 5x your combined salary doesn’t end up being a huge out going. 

I think the problem is simply that nice house is really desirable. With these low rates, a young couple can afford to say cheerio to £700-1000 of their £2500-3500 take home income for a mortgage that gets them a great home. 

Edited by Pmax2020
Link to post
Share on other sites
 

 

In late 2013 I spent £10k from an aborted house purchase on said asset, this is now worth enough to buy me a decent house outright.

Actually ‘said asset’ has no worth at all (except perhaps a reasonable argument for the cost of mining) but that doesn’t matter as long as you exchange it for something that does.  

A great decision with that 10k investment no question although it would seem scary keeping the whole lot riding on BTC.  A house sounds like a great way to diversify....

Link to post
Share on other sites
 

Actually ‘said asset’ has no worth at all (except perhaps a reasonable argument for the cost of mining) but that doesn’t matter as long as you exchange it for something that does.  

A great decision with that 10k investment no question although it would seem scary keeping the whole lot riding on BTC.  A house sounds like a great way to diversify....

Said asset has current worth circa £13,700.

Link to post
Share on other sites
 

Actually ‘said asset’ has no worth at all (except perhaps a reasonable argument for the cost of mining) but that doesn’t matter as long as you exchange it for something that does.  

A great decision with that 10k investment no question although it would seem scary keeping the whole lot riding on BTC.  A house sounds like a great way to diversify....

Diversification makes some sense, especially when selling part of an illiquid asset of inflated value into a currently depressed, liquid one. 

I’d argue you are suggesting doing the reverse.

Edit - what *could* make sense is to buy a house with the max mortgage possible at the longest possible lowest fixed interest rate as diversification - then you have hard money and lots of leveraged fiat. But sell the crypto? Come on 😂

Edited by Frugal Git
Link to post
Share on other sites

I am not a fan of this wretched little thread which seems to be dripping in self pity and petulance.

I have said on these hallowed pages previously that the period we have just been through is analogous to the Phony war of Sept 1939 to May 1940. What we have all seen so far with house prices has confirmed that in my mind.

We all have a long way to go and just because we haven't got what we want so far doesn't mean that a HPC is done for; far from it. This crisis hasn't even got started yet and our debtor population have so far been shielded from any real pain.

At some point that is going to change. Its WHEN not IF.

This is not the end or the beginning of the end; but it is the end of the beginning ...and as such we all have to be patient. I understand that we all want to have a total COVID collapse of the housing market but on reflection no government of any colour will allow that if it can be possibly avoided. This is especially true if such a collapse it is bought about by the devastation wrought by a collapsing economy.

The Andrew Marr show this morning was quite enlightening IMPO and the link to it is here:-

 

Mr Marr had 2 guests on that gave a peak behind the scenes; one was The Chancellor and the other was the Director of the institute of fiscal studies. The following is a brief synopsis of what they said, for direct quotes please see the link.

Paul Johnson, Direct or of the institute of fiscal studies @ 20:30 on the link

https://en.wikipedia.org/wiki/Paul_Johnson_(economist)

  • There has been a huge reduction in economic output, probably the biggest in history.

  • The economy is now at least 10% smaller than it was this time last year,

  • We have borrowed at least £350Bn to deal with the pandemic, and this is dependent upon what the government does next. IMPO this implies it could be more! The 350Bn figure represents the largest fraction of national income outside of the two world wars.

  • This crisis is much much bigger than the financial crisis.

  • There will be a need for more borrowing over lockdown and over the next 2 – 3 years. This is obviously far more borrowing than we were expecting.

  • If this continues, with a smaller economy, borrowing will stay high and debt will rise becoming unsustainable at some point. This will “eventually” lead to tax rises.

  • Andrew Marr:- “If we dont start to pay off the debt within a relatively short period by raising taxes then the danger is that IR’s will shoot up and the country will become bankrupt”. The definition of “relative” seems to be into the 2020’s.

  • We dont know at what point all of this becomes unsustainable; as and when it does the consequences could be dreadful.

  • The big judgement is when to stop borrowing and start taxing.

  • The BoE now holds nearly £1Tn of govt debt.

  • CB’s can be expected to sell this govt debt at some point in the future.

  • BREXIT:- A no deal would under normal circumstances be expected to take between 1 and 2% off of the economy. This would be expected to take us from normal growth into a recession. However in the context of COVID there is enormous uncertainty especially as to what the short term impact of BREXIT will be.

  • There are plenty of BREXIT costs still to come.

 

Rishi Sunak @ 39:40 in the link.

  • Its a very difficult picture; the economy is experiencing significant stress.

  • 0.75 Million have lost their jobs so far with a forecast of more to come.

  • There is more stress to come.

  • It is clear that Lockdown 2.0 will end on 02 Dec 2020 but it will be replaced by the regional Tiered system that may be as stringent.

  • Now is the right time to focus on responding to the crisis and this will be at the centre of the spending review this week.

  • We are borrowing and enormous sum.

  • Lots of references to "the right thing to do"...remind you of anyone from 10 years ago?

 

Re reading through that lot its clear to me that it is not going to be business as usual when this crisis ends. If I were given the choice on Jan 01 2020 of carrying on as normal or being where we are now...I know what I would have chosen. It just hasnt been as catastrophic WRT HPI as we hoped it would be in the spring, thats all.

It is also clear to me that TPTB are focused on hosing money all over for the duration of the crisis. They seem to be placing all their eggs in the vaccine basket in the hope that we are going to come out of this next year. Now where have we heard that before? If that is not the case then they intend to carry on until they bankrupt the country.

There will be no measures taken to reduce the debt anytime soon but Sunak (who is a known hawk) must be in a stronger position now than he was when he had to extend the furlough scheme.

So we are not going to see much HPC action for a while, but IMPO when we do there will be some real action...either in nominal prices or in the form of a full blow currency crisis.

Its definitely time to protect yourselves!

Link to post
Share on other sites
 

The prices you reference are similar to my area but I’d add that it’s not unreasonable to suggest a young couple or individual start off by purchasing a smaller flat initially. That gets the multiplier down dramatically. 

Wouldn't do anything of the sort in my area, where house prices for a 3 bed are just slightly lower. It's by no means universal for flats to be significantly cheaper than houses in a locality. The tendency over the last couple of decades to try and call all the new build/conversion flats luxury accommodation (they're not, of course) has seen to that.

Link to post
Share on other sites
 
  •  

There will be no measures taken to reduce the debt anytime soon but Sunak (who is a known hawk) must be in a stronger position now than he was when he had to extend the furlough scheme.

So we are not going to see much HPC action for a while, but IMPO when we do there will be some real action...either in nominal prices or in the form of a full blow currency crisis.

Its definitely time to protect yourselves!

Saw this earlier. Economic shock?

https://www.bbc.co.uk/news/uk-55032782
 

Chancellor Rishi Sunak is to announce an extra £3bn for the NHS - but has warned that people will soon see an "economic shock laid bare" as the country deals with the Covid pandemic

 

Link to post
Share on other sites
 

Diversification makes some sense, especially when selling part of an illiquid asset of inflated value into a currently depressed, liquid one. 

I’d argue you are suggesting doing the reverse.

Edit - what *could* make sense is to buy a house with the max mortgage possible at the longest possible lowest fixed interest rate as diversification - then you have hard money and lots of leveraged fiat. But sell the crypto? Come on 😂

Most dotcom investors wouldn’t sell either 😂

Link to post
Share on other sites

Reading the KPMG Nov economic forecast for 2021, they are predicting a worse GDP loss than last crash and 7.8% unemployment by May 2021 which is on par with 2008.  I can’t see HPC like 2008 as the banks are solvent but some sort of crash is on the cards.  

Link to post
Share on other sites
 

Reading the KPMG Nov economic forecast for 2021, they are predicting a worse GDP loss than last crash and 7.8% unemployment by May 2021 which is on par with 2008.  I can’t see HPC like 2008 as the banks are solvent but some sort of crash is on the cards.  

Perfect 2022 cash buying opportunity for the new Bitcoin wealthy. 

Link to post
Share on other sites
 

I don’t dabble myself in bitcoin, sorry I did not give it a flutter.  I am hoping to get into it if there is a buying opportunity 

Dont wait, buy before it breaks the 2017 ATH of $20k, when it does, there is no previous price resistance and it could easily 5 x to 10 x in 2021, , when the old 2013 high of $1200 broke in early 2017, it went up 17 x to $20k, and in 2013, when the old high of $290 broke, it went up to $1200. Billionaires and Institutions, smart money, are pushing the price up this time, hardly any retail buyers. Paypal gave access to retail buyers in the USA six weeks ago, they will give the same to the rest of their worldwide customers in Q1 2021.  I would buy before the of 2020, and as soon as possible, my last purchase was £2.5k's worth @ $11500 in late October.

Just my opinion. Wish you luck. 

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 442 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.