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House Price Crash Forum

Nationwide Index Dec 2020


rantnrave
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I am stepping out of the market at the moment. This is the final mania in my view, and the very worst time to buy a house. Low supply, high demand, cheap credit, false sense of security from Furlough, demand bought forward, boredom.

 

While WFH has become semi permanent, come April many will be hankering to spend 2-3 days a week in the office, and many others will have no choice. A friend of mine has a tele-sales business, and while there is no logistical reason why this shouldn’t be successful with WFH, he has noticed a massive drop off in productivity and will be cracking the whip to insure everyone is in the office 5 days a week once COVID s dealt with. 

SD savings will be extended in one way or another, maybe just to cover off all sales with contracts exchanged by March 31st, or a tapering of re-introduction.

When furlough finally ends, and unemployment starts to rise, real IRS will rise with it, and 90% loans will be hard to come by again. However, the government will probably step in to underwrite it as they believe 100% that rising house prices is good for people and the economy. They are fundamentally evil and should be strung up by their private parts due to the social harm this policy has caused.

 

May just buy gold and bitcoin instead.

Edited by HovelinHove
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.

When furlough finally ends, and unemployment starts to rise, real IRS will rise with it,

There's no evidence of this happening despite the theoretical justification

 

 

and 90% loans will be hard to come by again.

Again no evidence

 

 

However, the government will probably step in to underwrite it as they believe 100% that rising house prices is good for people and the economy. They are fundamentally evil and should be strung up by their private parts due to the social harm this policy has caused.

.

Ok, agreed with this bit

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I am seeing stuff selling at stupid prices - it will be the rush to beat the stamp duty reintroduction in April. 

One thing I have noticed is how fast mortgage rates are rising. From the last time I really looked in the summer we're up 0.5% which is a good 25% higher. 

I'm talking HSBC premium, which used to be the very best. 

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I am stepping out of the market at the moment. This is the final mania in my view, and the very worst time to buy a house. Low supply, high demand, cheap credit, false sense of security from Furlough, demand bought forward, boredom.

 

While WFH has become semi permanent, come April many will be hankering to spend 2-3 days a week in the office, and many others will have no choice. A friend of mine has a tele-sales business, and while there is no logistical reason why this shouldn’t be successful with WFH, he has noticed a massive drop off in productivity and will be cracking the whip to insure everyone is in the office 5 days a week once COVID s dealt with. 

SD savings will be extended in one way or another, maybe just to cover off all sales with contracts exchanged by March 31st, or a tapering of re-introduction.

When furlough finally ends, and unemployment starts to rise, real IRS will rise with it, and 90% loans will be hard to come by again. However, the government will probably step in to underwrite it as they believe 100% that rising house prices is good for people and the economy. They are fundamentally evil and should be strung up by their private parts due to the social harm this policy has caused.

 

May just buy gold and bitcoin instead.

How many people are on furlough now? Its come down a lot. 

Also, who are they in general? If you owned a pub or restaurant with all the staff on furlough you still have to fund all the other costs including rent while your buis is shut. You must hope to open up again... Otherwise fold and staff off furlough and unemployed. 

Post furlough in April or May expectation is said pub or restaurant can open again and have revenue thus requires staff to work shifts.. 

Notion that once furlough ends, everyone will shift on it into unemployment is a large overstatement of what will probably happen. Whether said bar etc can survive a full year is another question,but it won't be a cliff edge shift. 

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I am seeing stuff selling at stupid prices - it will be the rush to beat the stamp duty reintroduction in April. 

One thing I have noticed is how fast mortgage rates are rising. From the last time I really looked in the summer we're up 0.5% which is a good 25% higher. 

I'm talking HSBC premium, which used to be the very best. 

One provider does not the market make. 

Just looking at MSE, Virgin Money FIXED for 5 years! 1.29% (65% LTV) -  I currently pay 1.98% so this is a significant drop!

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Highest house prices during a pandemic. Only from a Tory government. Push the prices higher. Let's see £300k average house price across the country. The higher they rise, the harder the fall. The danger is current price where it is not quite high enough to fall but unaffordable for most first time buyers.  

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NW mortgage sales peaked at ~14% in 2017.

Since then, theyve fallen to 11%.

https://www.statista.com/statistics/508378/nationwide-mortgage-market-share-uk/

NW have always been  a minor player. They are getting more minor as they run out of capital and have crank in lending.

Despite the excitement, UK mortg7age sales are still at multi-decade/all time lows.

Sure, theres some boost of very very very low mortgage sales.

However .... most of those sales will fall before exchanging.

And the excitement is just sales pulled from 2021+.

After March, the market will fall into even lower multi-decade lows and falling prices.

The fallout from Covid to London/Se housign isnt going to be nice.

 

 

 

 

 

 

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How many people are on furlough now? Its come down a lot. 

Also, who are they in general? If you owned a pub or restaurant with all the staff on furlough you still have to fund all the other costs including rent while your buis is shut. You must hope to open up again... Otherwise fold and staff off furlough and unemployed. 

Post furlough in April or May expectation is said pub or restaurant can open again and have revenue thus requires staff to work shifts.. 

Notion that once furlough ends, everyone will shift on it into unemployment is a large overstatement of what will probably happen. Whether said bar etc can survive a full year is another question,but it won't be a cliff edge shift. 

It would be interesting to see the current stats. I think the peak was around 8.5 million in May. It dropped considerably July to October. However estimates now put us back to around 6 million I think. One thing we need to take into account is a lot will have been taken on with reduced hours and others will have gone onto UC. They are still worryingly high figures

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We'll see, I could be wrong and I think there is some risk ahead but then you've got the government potentially stepping in to act as a back-stop for the banks to start lending (who knows what they'll come up with next!).

You can always rely on the government to do the wrong thing when it concerns house prices. They've made it clear enough in the past that maintaining prices is their number one priority (make no mistake, they know exactly what the effects of HTB etc really are), and my fear is that next year, of all years, is not a time that they will be willing to let prices fall. The economy is going to be on the skids post Covid, with any additional Brexit fallout on top. Falling house prices would validate some remainer concerns and can't, IMO, be allowed to happen.

I'm increasingly pessimistc about the chances of any major correction in the forseeable. So much has changed since the last big one (90s); banks almost never foreclose, low interest rates are here quite possible for our natural life spans, governmnet now intervenes in ways that would have unthinkable back then, etc. We actually had a reasonable sized correction post GFC (prevented from being worse by all of the above). That was probably the time.

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. They've made it clear enough in the past that maintaining prices is their number one priority (make no mistake, they know exactly what the effects of HTB etc really are), and my fear is that next year, of all years, is not a time that they will be willing to let prices fall. 

I just think they have a serious problem with govt debt now which may prevent this.

(For example they're showing no signs of extending the stamp duty holiday)

Edited by Si1
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I should know the answer to this by now but does anyone know the answer to the following...

How do the NW and Halifax adjust for a tendency for higher value houses to trade in a particular period?  I don't know if this is the case but it is possible that since March 2020 the market has been made more of wealthy movers exchanging higher value houses whilst your average Joe has been static and watching.

Would this distort the figures to give a higher inflation rate as the average price will be higher??

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I should know the answer to this by now but does anyone know the answer to the following...

How do the NW and Halifax adjust for a tendency for higher value houses to trade in a particular period?  I don't know if this is the case but it is possible that since March 2020 the market has been made more of wealthy movers exchanging higher value houses whilst your average Joe has been static and watching.

Would this distort the figures to give a higher inflation rate as the average price will be higher??

They are supposed to mix adjust, even adjusting back in time, but I don't know how successful it is.

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Discussing a house price crash is a complete waste of time. The writing has been on the wall for years. Any decrease will be small, talking 5 to 8%, but considering the increase over the last 10 years, it's still a significant increase in real terms.

Forward looking to 2025, we're looking at a minimum 30% increase on today's prices, with the north seeing the biggest gains.

What people are not seeing is that there is absolutely no correlation between wages/income and house prices, and there is no reason why there should be.

 

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Discussing a house price crash is a complete waste of time. The writing has been on the wall for years. Any decrease will be small, talking 5 to 8%, but considering the increase over the last 10 years, it's still a significant increase in real terms.

Forward looking to 2025, we're looking at a minimum 30% increase on today's prices, with the north seeing the biggest gains.

What people are not seeing is that there is absolutely no correlation between wages/income and house prices, and there is no reason why there should be.

 

Is this in your Estate Agent user manual?

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Discussing a house price crash is a complete waste of time. The writing has been on the wall for years. Any decrease will be small, talking 5 to 8%, but considering the increase over the last 10 years, it's still a significant increase in real terms.

Forward looking to 2025, we're looking at a minimum 30% increase on today's prices, with the north seeing the biggest gains.

What people are not seeing is that there is absolutely no correlation between wages/income and house prices, and there is no reason why there should be.

 

Totally agree with this. People are trying to apply the principles of a fair market of the past. For the last two decades the game has been rigged in favour of cheats and junkies. Wanting to play fairly unfortunately means being left behind now.

 

Only an event that was out of the government’s control was ever going to bring about any sort of proper crash: Covid ‘should’ be it. We’ll know soon enough what effect that has on prices, if any at all. There could be a small drop of maybe 10-15%, but I think anything over that just won’t happen now.

 

I’d love an enormous price crash, but I just can’t see it happening anymore. Too many people and too much of the economy is wrapped up in the game now. 

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I would also like to add that I think the only other way prices would come down to anything resembling the old normal (3x single wage), is when the demographics shift to a majority of priced-out millennials. However, that’s many years away.

Having said that though, they may not even want to own their own homes. They’ve grown up not owning anything, and I feel there’s a definite ‘nudge’ to get people to accept a life of renting everything: Rent your home, lease your car, subscribe to your media - own nothing. 

To predict the future of our economy is to predict how corrupt those in power will be. 

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I would also like to add that I think the only other way prices would come down to anything resembling the old normal (3x single wage), is when the demographics shift to a majority of priced-out millennials. However, that’s many years away.

Having said that though, they may not even want to own their own homes. They’ve grown up not owning anything, and I feel there’s a definite ‘nudge’ to get people to accept a life of renting everything: Rent your home, lease your car, subscribe to your media - own nothing. 

To predict the future of our economy is to predict how corrupt those in power will be. 

Why would they ever return to 3x single wage? 

Women have careers now, unlike the majority in 1970..or are you expecting that to change as well? 

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It has been mentioned before on here, although the likes of Jonathan Davis dismiss it, but shortage of housing must be a factor.  If you compare England with France, similar size  population, but France is more than twice the size. France has about 36m residences and England 25m.  French house prices are 70% of those in the UK and the number of homeowners about the same (although I am sure UK used to be very much more).  Only house building ramping up can bring any competition, and sense, into the UK market, but there will need to be some difficult environmental decisions before UK can sort this out (if, with the available land, we can).

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