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Am I a dreamer? Will house prices come down?


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16 hours ago, Drifty said:

I don't know how credible this is but they are predicting a decreasing of 6.2% in first quarter of this year!

https://propertyindustryeye.com/house-prices-set-to-fall-sharply-in-q1-2021/

A lot is going to depend on government financial support to people, when that stops and we are back to some level of normalcy, all those people on furlough aren't going to be going back to their jobs, there will be a hit on unemployment. In this situation I can't see interest rates increasing and we could move to negative IRs which will further increase property prices. Time will tell.

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Just remember there is no such thing as 'what you are willing to pay for the property and what you think it is worth'. I have seen this said on the forum many times and it makes me chuckle (there is a lot more to it behind the scenes). 

At the end of the day, central bankers control how much house prices (assets) are 'worth' through issue of credit (debt) to ensure the wealth effect and living standards of the baby boomers are maintained at the expense of the younger generation. Wages and house prices were disconnected in 1998 (left wing cannot moan about high house prices caused by Tony Blair and his policies! ). Now there is a divide of wealth between the rich and poor, young and old, working class and upper class (middle class being slowly wiped out). 

Simple formula to understand, being:

House prices = household income + mortgage rates + supply/demand

Household income likely not to change much due to covid. Public sector having pay freezes and heavy job losses and no or low rises in the private sector. Also, the threat of tax increases to pay for covid and baby boomers pensions. 

Mortgage rates (base rate plus risk premium) are manipulated by the central bankers as they have reduced the base rate to 0.1% and reduce the lenders risk (premium) by buying mortgage backed bonds (lenders offloading the riskier bonds to central bankers). Will we see the base rate go negative? Will we see central bankers buy even more riskier mortgage backed securities and hold them on their balance sheets? 

Supply/demand - It is well known there is a under supply of housing coupled with high demand (no stamp duty at mo and baby boomers buying up first time buyers properties for BTL  resulting in major price increases at the other end of the housing scale). Also, in my area, baby boomers are blocking all housing developments further restricting supply and they moan that the younger generation has been 'social cleansed' out of the area and their children are now living 50-100 miles away - I wonder why?......Demand will remain high and supply restricted. We will likely see build to rent sector overtake houses for sale sector. 

Government are slowly setting to scene 'build back better', 'global reset', 'UN agenda 2030' whatever you want to call it 'you own nothing and be happy' - the new business model is the rental model. Some well known companies offer furniture for rent now for passive income!

The new property business model will be build to rent fully supported by the Government. The government does not care about the small BTLer retail investor. Over the last couple of years, there has been alot of institutional investors (pension funds etc) registering as Social Landlords (rents will be controlled) for build to rent instead of local authorities as they can not afford to fund and build. Pension funds need to find income from somewhere as the bond market is effectively 'dead' and stocks are risky (globals market having the highest P/E ratio in its history). Passive income from renting will pay for future pensions coupled tax from the employed (rich or the lucky 1s who will have a job in the future!).

As stated by the Bank of England (2019), 1% increase in 'real' interest rates will cause 20% drop in house prices. With the increase in the money supply (due to money printing), holders with high value mortgages will not have to keep a eye on inflation but we all know Interest rates will never go up as there is too much debt in the system (common sense). Central bankers will target unemployment rate and not inflation first.

The system reset is the rental model (property and EV cars etc) and the use of MMT with tax controlling inflation and not by interest rates. Interest rates will never go up. State pensions must likely be replaced by workplace pensions and universal basic income paid to all (paid for by money printing and recovered by taxes). The Bank of England will join the HM treasury so no more government borrowing, just money printing (the are effectively doing that now). 

Just look at the main market indicators now and it provides the evidence that the system is close to the end. The end game is near but when? Do you want to be the last person to the party? Do you want to keep dancing at the party until the music stops? 

IMO, keep dancing because the music will not stop just yet but when it does it will be sudden. Buy a house now as it will be one of your only chances these coming years and blame baby boomers and left wing policies on the forced move towards socialism and eventually communism which we once feared many years ago. Free market capitalism has been dead for a while. 

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My current guess is that we're in for a re-run of the ""roaring twenties" and asset prices, including housing will continue to tick up as people are hungry to get back to living.  Interest rates to remain low + continued demand outstripping supply mean's prices are only gonna go one way.

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1 minute ago, Martin_JD said:

My current guess is that we're in for a re-run of the ""roaring twenties" and asset prices, including housing will continue to tick up as people are hungry to get back to living.  Interest rates to remain low + continued demand outstripping supply mean's prices are only gonna go one way.

we had the roaring 20s last decade, this is the great depression

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1 minute ago, sta100 said:

we had the roaring 20s last decade, this is the great depression

Then come the authoritarian demagogues and their troll followers - see the frequent posters here :)

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1 hour ago, Martin_JD said:

My current guess is that we're in for a re-run of the ""roaring twenties" and asset prices, including housing will continue to tick up as people are hungry to get back to living.  Interest rates to remain low + continued demand outstripping supply mean's prices are only gonna go one way.

Interestingly I have been thinking this for a while. A huge post C19 boom with all fire and glory but very little fuel and obviously finishing in a puff of smoke like 1929. 

However, in a bizarre way some things that have already done well during the pandemic eg Bitcoin and house prices I feel may actually grow a little more modestly (ie booming travel, eating out, retail etc will be the boom). 

I am hoping house prices might be a noticeable exception.  

Notice I say ‘hoping’ and ‘I feel’....rather than I am convinced. 😉

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It seems like a bit of a two tier market, houses perceived as having lots of space and room to work in getting snapped up and anything else seems to be sitting on the market. definitely getting the impression its cooling off though

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1 hour ago, sta100 said:

when i put mine on the market in August I had 10 offers within 3 days. now im seeing similar taking a while to go under offer.

Mixed bag of responses from others in this and other threads but this is what I am seeing in N Yorks. 👍🏻

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The only way this will go is a 2029 blow off top.

in a world where they can and do print endless money there is only one failure point, and that’s reaching a stage when even the most bullish can see it’s gone too far.

it will take a good few years

 

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2 minutes ago, jiltedjen said:

The only way this will go is a 2029 blow off top.

in a world where they can and do print endless money there is only one failure point, and that’s reaching a stage when even the most bullish can see it’s gone too far.

it will take a good few years

 

true, UN agenda. the system has already had two software changes, its due a hardware change like it or not. its coming 

Edited by mrlegend123
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2 hours ago, sta100 said:

when i put mine on the market in August I had 10 offers within 3 days. now im seeing similar taking a while to go under offer.

I have started to make some enquires and the market seems to have cooled off now.  The general feeling is that the end of SD holiday will result in people being unable to complete, lots of These houses will be coming back on the market at the same time.  As furlough ends and people are needing to sell there will be another glut of sales.  The other problem is the banks have 12 months of repos that have built up and will hit the market at the same time.  Landlords have 12 months of not being able to get tenants out so that houses can be sold, these houses will all come up for sale at the same time.  You can also expect a load of houses coming up for sale as couples decide to separate as the third lockdown finishes the marriage off.  I don’t think the drop will be too bad, more of a correction but I can’t see it being less than a 20% drop.  

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1 minute ago, mrlegend123 said:

true, UN agenda. the system has already had two software changes, its due a hardware change like it or not. its coming 

What's coming?!

Free market capitalism fell over and died in 2008! Industrial civilisation would have ended with Lehman Brothers were it not for the co-ordinated response of the world's central banks and treasuries. The UK's over-dependence on financialisation is what's sealed its fate: the burden of debt carry is now much too great and our core competences much too narrow for us to compete with the emerging market economies whose progress globalisation has ferociously accelerated. The best we can hope for is perma-stagnation and an ever-diminishing influence on the rest of the world. The alternative is a sovereign debt default and national bankruptcy.

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5 hours ago, mrlegend123 said:

Just remember there is no such thing as 'what you are willing to pay for the property and what you think it is worth'. I have seen this said on the forum many times and it makes me chuckle (there is a lot more to it behind the scenes). 

I’ve been interested in property prices for almost 15 years and naturally I quiz friends and colleagues when they buy/sell! I like to know if they considered historic prices. Did they research that particular street or consider how it would impact their finances if rates went up or prices fell. 
 

I can’t recall anyone buying without giving their bid a lot of thought. The many people Ive spoken to over the years all seem to do their research and give huge consideration as to how much to borrow. 
 

I do it myself - decrying others for wasting money or living above their means but I think broadly speaking people today are pretty savvy.

Prices are high because rates are low. People are happy to commit a large portion of their income to live in a nice place. 

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55 minutes ago, mrlegend123 said:

house prices will not go down. CB and Gov still have many tweaks which they can do such as negative rates and buying more mortgage backed bonds to reduce lenders risk. creating more demand by extending stamp duty etc. keeping the supply down. 

If they do negative rates. I'll take my money out of the bank. 

I know a few older people who have said the same.

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1 minute ago, Rachel88 said:

If they do negative rates. I'll take my money out of the bank. 

I know a few older people who have said the same.

put it in short-term money markets if you want to stay in cash. not sure what the rates would be tho props crap. plus liquidity snags during crashes 

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2 minutes ago, Rachel88 said:

If they do negative rates. I'll take my money out of the bank. 

I know a few older people who have said the same.

That’s what they want. 

They want you not to keep it in the bank.

they want you to put it elsewhere, literally anywhere else. 

 

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