HovelinHove Posted October 8, 2021 Share Posted October 8, 2021 I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. Quote Link to comment Share on other sites More sharing options...
shlomo Posted October 8, 2021 Share Posted October 8, 2021 7 minutes ago, HovelinHove said: I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. Now you are on the other side you do not want a crash, just joking, I think as people have less money more houses will come on the market Quote Link to comment Share on other sites More sharing options...
GenZ Posted October 8, 2021 Share Posted October 8, 2021 Wage inflation is the best way out of this, average house should around 4 x household income long term trend Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 8, 2021 Share Posted October 8, 2021 (edited) I don’t think wage inflation will matter. Prices went up a notch as a result of the free money, government props and WFH movement that saves lots of families thousands a year. Prices have peaked and will erode/deflate over the next year now. You can already see that in the sold prices from July as well as general observations on rightmove etc. There are too many overpriced houses now stuck on the market now where I look. The sort that did sell for these daft prices 6-9 months ago. The games up. Edited October 8, 2021 by Pmax2020 Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted October 8, 2021 Share Posted October 8, 2021 (edited) 35 minutes ago, HovelinHove said: I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. Welcome to the otherside 👍. Wages are increasing, although builders/trades men are taking advantage of the recent surge in renovations. I've just had my bathroom done and it took a month to get someone, family friend done me a favour. With a decent price also. I don't believe tradesmen wages will hold up for that reason though. They'll creep upwards with inflation overall. The main factor, I see is minimum wage... £6.25 or somthing in 2014, nearly £9. If that moves to £10/11 by the end of 2022. We will see alot more price increases and movement in the market. Edited October 8, 2021 by Speed1987 Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted October 8, 2021 Share Posted October 8, 2021 4 minutes ago, Pmax2020 said: I don’t think wage inflation will matter. Prices went up a notch as a result of the free money, government props and WFH movement that saves lots of families thousands a year. Prices have peaked and will erode/deflate over the next year now. You can already see that in the sold prices from July as well as general observations on rightmove etc. There are too many overpriced houses now stuck on the market now where I look. The sort that did sell for these daft prices 6-9 months ago. The games up. Your perception is that they are overpriced... I feel they are fairly priced and the market agrees as people are paying for them. Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 8, 2021 Share Posted October 8, 2021 1 minute ago, Speed1987 said: Your perception is that they are overpriced... I feel they are fairly priced and the market agrees as people are paying for them. It isn’t that simple though. Just because an incredibly small number of people paid 10-15% over the asking price these last 18 months doesn’t make their homes worth that figure. Fair enough if these prices sustain over 2 or 3 years, then you could argue that it’s a shift we’ll all face if we choose to move. I think there’s evidence prices are already falling however so I don’t accept that the figure some stupid people paid earlier this year is vindicated. People pay stupid prices for things every day in all walks of life. If prices hold then you can use the ‘market agrees’ line but they are already falling. Quote Link to comment Share on other sites More sharing options...
robson1111 Posted October 8, 2021 Share Posted October 8, 2021 32 minutes ago, Speed1987 said: The main factor, I see is minimum wage... £6.25 or somthing in 2014, nearly £9. If that moves to £10/11 by the end of 2022. A person earning£10/11 is not going to be buying a house. Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted October 8, 2021 Share Posted October 8, 2021 (edited) 17 minutes ago, Pmax2020 said: It isn’t that simple though. Just because an incredibly small number of people paid 10-15% over the asking price these last 18 months doesn’t make their homes worth that figure. Fair enough if these prices sustain over 2 or 3 years, then you could argue that it’s a shift we’ll all face if we choose to move. I think there’s evidence prices are already falling however so I don’t accept that the figure some stupid people paid earlier this year is vindicated. People pay stupid prices for things every day in all walks of life. If prices hold then you can use the ‘market agrees’ line but they are already falling. House prices just went up 1.7% MoM, £4400.. So you are stating "there’s evidence prices are already falling", but the actual data suggests different. I can agree that through the colder months less properties sell, but there's no current drop or slow down. An incredibly small amount of people didn't pay 10-20% over... the money supply increased and that's the new price. Simples. Edited October 8, 2021 by Speed1987 Quote Link to comment Share on other sites More sharing options...
henry the king Posted October 8, 2021 Share Posted October 8, 2021 (edited) Yes they will somewhat. But I would still expect house prices to stay flat in nominal terms in 2022 even in the "best" scenario (for HPI people). Which will mean a 5% decline. But in a scenario where inflation takes off then rates will raise faster and it will cause nominal house price declines. Not everyone will benefit from higher wages and if inflation takes off then wage rises won't keep pace with inflation. Unions are too weak Also remember the current rises are due to a 1 time increase in savings as nobody could go on holiday or waste money going out. Edited October 8, 2021 by henry the king Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 8, 2021 Share Posted October 8, 2021 40 minutes ago, Speed1987 said: House prices just went up 1.7% MoM, £4400.. So you are stating "there’s evidence prices are already falling", but the actual data suggests different. I can agree that through the colder months less properties sell, but there's no current drop or slow down. An incredibly small amount of people didn't pay 10-20% over... the money supply increased and that's the new price. Simples. I don’t believe the nationwide report the data accurately. Why would they? I base my view on actual sold prices. I check them every month for various areas around Scotland and I can see 13% yoy rises that’s been touted about is ********. Quote Link to comment Share on other sites More sharing options...
winkie Posted October 8, 2021 Share Posted October 8, 2021 If a trades person has to live in a high cost area they will charge more to do a job, not as if there are an excess of skilled trades people, they are also in great demand now......you could bring them in from other areas of the country and put them up whilst they do the job. Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted October 8, 2021 Share Posted October 8, 2021 33 minutes ago, Pmax2020 said: I don’t believe the nationwide report the data accurately. Why would they? I base my view on actual sold prices. I check them every month for various areas around Scotland and I can see 13% yoy rises that’s been touted about is ********. Actual sold prices are up though... I don't really understand how you can argue against that, seen as you can see it. Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 8, 2021 Share Posted October 8, 2021 53 minutes ago, henry the king said: Yes they will somewhat. But I would still expect house prices to stay flat in nominal terms in 2022 even in the "best" scenario (for HPI people). Which will mean a 5% decline. But in a scenario where inflation takes off then rates will raise faster and it will cause nominal house price declines. Not everyone will benefit from higher wages and if inflation takes off then wage rises won't keep pace with inflation. Unions are too weak Also remember the current rises are due to a 1 time increase in savings as nobody could go on holiday or waste money going out. I agree with much of why you say. We can’t underestimate how important a part these incredibly low interest rates have played in house prices, even over the last 18 months. In 2006 I put down 5% deposit on an 90k flat which cost £500 per month interest only!!!! A young person today could buy a 200k house with a 95% LTV that’s only £100-150 per month more as a REPAYMENT mortgage!!! Minimum wage has doubled since then. Quote Link to comment Share on other sites More sharing options...
Pmax2020 Posted October 8, 2021 Share Posted October 8, 2021 1 minute ago, Speed1987 said: Actual sold prices are up though... I don't really understand how you can argue against that, seen as you can see it. Because I could give lots of examples of houses they are barely up 10% over the last 3 years let alone 12 months. Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted October 8, 2021 Share Posted October 8, 2021 Just now, Pmax2020 said: Because I could give lots of examples of houses they are barely up 10% over the last 3 years let alone 12 months. Maybe those examples would be a good contribution to this thread or your argument. Quote Link to comment Share on other sites More sharing options...
henry the king Posted October 8, 2021 Share Posted October 8, 2021 (edited) 12 minutes ago, Pmax2020 said: I agree with much of why you say. We can’t underestimate how important a part these incredibly low interest rates have played in house prices, even over the last 18 months. In 2006 I put down 5% deposit on an 90k flat which cost £500 per month interest only!!!! A young person today could buy a 200k house with a 95% LTV that’s only £100-150 per month more as a REPAYMENT mortgage!!! Minimum wage has doubled since then. Agreed. I think the 2020-21 house rises are due to low IR and people saving money due to furlough/no commute/everything being shut. The data showed people saved more than ever before in 2020 due to these factors. So now way more people can put that money into housing. Which when coupled with the mortgage payments you mention = very high house prices I don't think we are ever going back to 1970-1990 house prices because I think the world has changed with technology and globalisation. But I think its pretty obvious that the latest "boom" isn't based on a thriving economy, but more on 1 time factors like low IR, huge government stimulus (Stamp duty cut, furlough, universal credit increase, etc), and people saving money not doing other things (everywhere was shut). As these factors unwind, HPI ends. Edited October 8, 2021 by henry the king Quote Link to comment Share on other sites More sharing options...
dugsbody Posted October 8, 2021 Share Posted October 8, 2021 2 hours ago, HovelinHove said: I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. Where do you live? Because it has been like this since I owned my first house 8 years ago. Quote Link to comment Share on other sites More sharing options...
dugsbody Posted October 8, 2021 Share Posted October 8, 2021 59 minutes ago, Pmax2020 said: I don’t believe the nationwide report the data accurately. Why would they? Because they're regulated and will be fined a lot of money if they don't. And because the people who write the software which arrives at the figures will be tech people and the odds that every tech person passing in and out of the department responsible for it would just keep shtum about a bank publishing blatantly fudged data is implausible. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted October 8, 2021 Share Posted October 8, 2021 2 hours ago, HovelinHove said: I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. Tory boi buys a house and immediately starts ramping! Since inflation is rising faster than wages those nightmare tradesmen that you're pretending to have employed are in fact getting a real terms pay cut. Then there's this: Public sector net borrowing (excluding public sector banks, PSNB ex) was estimated to have been £20.0 billion in August 2021; this was the second-highest August borrowing since monthly records began in 1993. Public sector net borrowing (PSNB ex) was estimated to have been £91.3 billion in the financial year-to-August 2021; this was the second highest financial year-to-August borrowing since monthly records began in 1993. Public sector net borrowing (PSNB ex) was estimated to have been £320.5 billion in the financial year ending March 2021, an increase of £22.5 billion compared with our previous estimate; largely as a result of recording, for the first time, expected expenditure of £20.9 billion on calls under the government loan guarantee schemes. Quote Link to comment Share on other sites More sharing options...
Dorkins Posted October 8, 2021 Share Posted October 8, 2021 4 hours ago, HovelinHove said: I'm turning full VI now as I recently moved into my new home however, I have to say, that despite the huge potential for a crash that lurks out there, I think there is one thing that may really change things, and that is a big surge in wages of those with a trade. We have spent 3 months (of hell) having our new house renovated, and trying to get plumbers, electricians or plasterers etc is a nightmare and they are charging what they want. That is partly due to the surge in activity, but also lack of foreign cheap competition. I have spoken to lots of them and they are very happy about things and some young ones were talking of buying decent homes. Whilst I think the crazy rises of the past year will stop, I do think there are sufficient numbers of buyers of homes who are now earning enough to afford the prices being asked. If non-tradesmen are paying tradesmen more for the same service that's just moving money from one person's pocket to another, there is no increase in the total amount of money chasing houses. Probably less once you account for taxes. The tradesman might get a better house but the non-tradesman gets a worse one, all they are doing is swapping places. Quote Link to comment Share on other sites More sharing options...
shlomo Posted October 8, 2021 Share Posted October 8, 2021 1 hour ago, zugzwang said: Tory boi buys a house and immediately starts ramping! That is a bit over the top Quote Link to comment Share on other sites More sharing options...
HovelinHove Posted October 9, 2021 Author Share Posted October 9, 2021 15 hours ago, henry the king said: Yes they will somewhat. But I would still expect house prices to stay flat in nominal terms in 2022 even in the "best" scenario (for HPI people). Which will mean a 5% decline. But in a scenario where inflation takes off then rates will raise faster and it will cause nominal house price declines. Not everyone will benefit from higher wages and if inflation takes off then wage rises won't keep pace with inflation. Unions are too weak Also remember the current rises are due to a 1 time increase in savings as nobody could go on holiday or waste money going out. I think you are right in some ways. As inflation takes off people will have less money to spend on houses and IRs will rise. This will throttle opportunities for growth. On the other hand, if inflation is taking off, people will look to keep their money in property as protection. That is part of the reason that I bought now, that and the fact I was paying loony rent. I was genuinely worried about the large amount of cash that I had being devalued. We bought a house at 2018 prices, and having renovated would make at least 50-100k pure profit after all the costs of the refurbs and moving in just 3 months. I feel much happier being in this position than sitting on a pile of cash. If the price of property goes down, I will just ride it out and be living in a lovely home that I own not having to rely on the landlords whims, but if inflation burned my savings I would have been stuffed. If I was a young plumber or electrician and just worked my fingers to the bone this past year and managed to put aside 30k, I’d put it into a house or flat. Every day reading about inflation would make me want to move that money out of the bank. I sleep better now. Quote Link to comment Share on other sites More sharing options...
HovelinHove Posted October 9, 2021 Author Share Posted October 9, 2021 11 hours ago, Dorkins said: If non-tradesmen are paying tradesmen more for the same service that's just moving money from one person's pocket to another, there is no increase in the total amount of money chasing houses. Probably less once you account for taxes. The tradesman might get a better house but the non-tradesman gets a worse one, all they are doing is swapping places. The people who use tradesmen will typically have their own home, but young tradesmen have been priced out until recently. I have spoken to a couple of young electricians who were talking about buying now after years of bing frozen out.I have less money because they are earning more, but I just bought a house and borrowed a bit extra to pay the increased costs. Quote Link to comment Share on other sites More sharing options...
HovelinHove Posted October 9, 2021 Author Share Posted October 9, 2021 13 hours ago, dugsbody said: Where do you live? Because it has been like this since I owned my first house 8 years ago. West Sussex. Quote Link to comment Share on other sites More sharing options...
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