Nationwide Nov -1.4%

[henry the king]

4 minutes ago, mynamehere said:

Very interesting! 

If all the other stuff holds true, eg 3% mortgage rate, then yes it seems highly likely we will get a string of these kinds of drops which may take us -ve yoy within a couple of months.

We still 20% off peak to get back to covid but this does suggest it might be a bit quicker than prior corrections

We also will start to see the impact of no HTB in the data. I would guess that will not be fully seen till the spring though.

It is by the spring that we see the full impact of the rise in mortgages after the mini-budget. Then, the average mortgage rate buying a house will be over 5%, not the current 3% according to their data. By spring, most of the mortgages agreed in the summer (which was when the last of the cheap money was around - it flipped in August with the 0.5% base rate hike) - will be gone from the buyers pool.

That will be when we see the largest impact on housing. So I expect falls like this until April at least due to the fact that these older mortgages will gradually work out of the system each month.

Sentiment will help too. Buyers no longer desperate with FOMO offering 10k over asking. Now they will strike a hard bargain. That alone will bring prices down too. 

Perfect storm.

Edited December 1, 2022 by henry the king

[henry the king]

6 minutes ago, zugzwang said:

Economists were expecting a 0.4% fall.

Aimed for the Moon, landed on Mars.

 

 

And still think only 8% falls overall lol.

We are already at 3.6% and haven't even seen the impact of higher rates yet much at all. 

[BURIAL]

1 minute ago, henry the king said:

New builds are still crazily inflated.

We know that new builds went up 25% or something over the second year of covid whilst pre-built houses went up way less - at 8.6%.

Where I am looking there are still trying to flog them for £440k or something when pre-covid they were  legitimately more like 310k. 40% increase. 

And that is completely unsustainable in this area. There is no way those who bought at 440k are going to be able to remortgage affordably in this area. The wages are not good enough.

No remortgage + HTB payments start in 4 years. I'd be worried.

I'm already worried and I have only had offer accepted... I'm due to exchange in January and I'm slightly worried If I pull out, I lose a good rate, if I don't pull out, I pay a higher property price (I already negotiated below asking)

[henry the king]

1 minute ago, bvrial said:

No remortgage + HTB payments start in 4 years. I'd be worried.

I'm already worried and I have only had offer accepted... I'm due to exchange in January and I'm slightly worried If I pull out, I lose a good rate, if I don't pull out, I pay a higher property price (I already negotiated below asking)

When I enquired in the summer of 2021 I was told it was asking or nothing (with no extras). 

 

 

[SE10]

24 minutes ago, Nomadd said:

If you halve that figure - as it's two months - then the annual compounded rate is just under 15%.

If you take this months figure in isolation, then the annual compounded rate is just over 18%.

So in real terms house prices would drop by about a quarter in a year...

[SE10]

24 minutes ago, Nomadd said:

If you halve that figure - as it's two months - then the annual compounded rate is just under 15%.

If you take this months figure in isolation, then the annual compounded rate is just over 18%.

So in real terms house prices would drop by about a quarter in a year...

[spyguy]

3 hours ago, fellow said:

Down £4,514 in one month!

Mr n Mrs Bloggs.

100k house.

Doubles in value  (100% increase)- 200k, 100k increase in value

Falls 30% - 60k down.

If Mr n Mrs Bloggs have carried on with their life, paying down the mortgage, working etc. then nothing rally changes.

However ...

If Mr n Mrs Blogg have extracted 100k of equity, got ill advised mid life full sleeve tattoos, bought n Evoke, leveraged up wiht a 4+ io btl properdee portfolio ...

Fked.

 

[henry the king]

8 minutes ago, SE10 said:

So in real terms house prices would drop by about a quarter in a year...

Wages are 6% or something. SO against wages this HPC is massive. They need +0.5% MoM every month just to keep pace with wages.

So this month was -1.9%. 

YoY prices are now DOWN against wages.

Edited December 1, 2022 by henry the king

[PropertyMania]

2 hours ago, BorrowToLeech said:

The wealth effect of housing (that increased house prices lead to increased spending as people feel richer) is a myth that has been debunked.

My favourite piece of evidence for this was a paper showing that increased house prices led to a wealth effect for non-home owners, which is clearly stupid. 

The myth comes from the fact that increases in the availability of credit lead to both increased spending and increased house prices. So there is definitely a correlation, but it is not a causal effect.

In fact the population as a whole consumes almost all the housing it owns, by living in it. We aren’t, on aggregate, ‘long’ housing (there’s no significant surplus we could, say, export) and so we don’t get richer when houses become more expensive. 

Not sure I agree. Part of the problem of the massively generous tax breaks of home ownership is that people overconsume it as an investment. Having empty bedrooms made sense (until now)

[BorrowToLeech]

10 minutes ago, PropertyMania said:

Not sure I agree. Part of the problem of the massively generous tax breaks of home ownership is that people overconsume it as an investment. Having empty bedrooms made sense (until now)

Indeed, but that comes at the cost of other people who are under-consuming (kids stuck at home, multiple occupancy flat shares).

In any case, what you are taking issue with is the explanation I gave for why we don’t really see wealth effects after correcting for credit availability. My explanation could be absolute nonsense but it doesn’t change the observation. 

[BorrowToLeech]

1 hour ago, Nomadd said:

If you halve that figure - as it's two months - then the annual compounded rate is just under 15%.

If you take this months figure in isolation, then the annual compounded rate is just over 18%.

I get -13% (1-0.023)^6-1, what did I do wrong?

[Mandalorian]

4 hours ago, TBC said:

Am I right in think HPI is ignored by rate setters? Or might this encourage them to hold rates as they are?

If it goes YOY negative, they will probably put housing into the inflation basket to reduce the figures.

I'm only half joking.

[Bruce Banner]

Fed poised to slow pace of rate rises | Business | The Times

[PropertyMania]

10 minutes ago, BorrowToLeech said:

Indeed, but that comes at the cost of other people who are under-consuming (kids stuck at home, multiple occupancy flat shares).

In any case, what you are taking issue with is the explanation I gave for why we don’t really see wealth effects after correcting for credit availability. My explanation could be absolute nonsense but it doesn’t change the observation. 

Sure, property shouldn't get any tax exemption.

It would make sense that if you're sitting on a large asset, close to retirement and plan to downsize that high house prices could affect your spending habits positively. Quite hard to measure

[“Nasty Piece of work”]

2 hours ago, mynamehere said:

No for new mortgages within this sample.

You are away with the fairies if you “think” artificially low Interest Rates will support artificially high house prices.  The losers will be the Public, the only potential winners toady, greedy VIs.  I rejoice in the coming storm.

[mynamehere]

2 minutes ago, “Nasty Piece of work” said:

You are away with the fairies if you “think” artificially low Interest Rates will support artificially high house prices.  The losers will be the Public, the only potential winners toady, greedy VIs.  I rejoice in the coming storm.

 

I honestly don't know what you are trying to say here.

[“Nasty Piece of work”]

3 minutes ago, mynamehere said:

 

I honestly don't know what you are trying to say here.

Are you really this thick?

[Extreme_biker0]

1 hour ago, spyguy said:

Mr n Mrs Bloggs.

100k house.

Doubles in value  (100% increase)- 200k, 100k increase in value

Falls 30% - 60k down.

If Mr n Mrs Bloggs have carried on with their life, paying down the mortgage, working etc. then nothing rally changes.

However ...

If Mr n Mrs Blogg have extracted 100k of equity, got ill advised mid life full sleeve tattoos, bought n Evoke, leveraged up wiht a 4+ io btl properdee portfolio ...

Fked.

 

😆 

[Fromage Frais]

4 hours ago, Huggy said:

Indeed. A perfect storm that means I haven't been as confident of an HPC since 2008. We also have an exciting opportunity to see if savings > debt. I think they might be.

I still have a c2 year buying horizen, but then that's going to fall around a general election where everyone will be offering HPI. Tough call whether to jump in early should something pop up at the right price.

At this time the housing market is so bloated it cannot be saved.

The strategy is clear suck all all dry with tax rises let everything fall and then spend spend spend in the six months+ before the election.

There is no way I am making the same mistake as before assuming falling prices and a logical level .... only to be prevented from buying a suitable house where I liked by the government.

I now know when the government start another HTB or FLS type scheme rises are circa six months away.

I think nominal 20-30% with inflation doing the rest.  However I am not going to hold out for the last 10%  if that's corresponding with bailouts/subsidy.

1.4% per month over 12 months should see circa 80k off a 500k house.  I am not talking 80k off the fake asking prices which here would be £550K on a 2018 £450k (but never sold) I am talking 80k off last sold which during the covid boom was £500.

These drops are definitely going to get worse as rates are still rising and the chunky rises have not filtered into completions yet nor has recession and financial hardship which is incoming.

 

[mynamehere]

4 minutes ago, “Nasty Piece of work” said:

Are you really this thick?

Never mind!

Forget I asked

[Aidan Ap Word]

3 hours ago, BorrowToLeech said:

In fact the population as a whole consumes almost all the housing it owns, by living in it. We aren’t, on aggregate, ‘long’ housing (there’s no significant surplus we could, say, export) and so we don’t get richer when houses become more expensive. 

Worth printing on a page and sticking to my mirror for reminder during the HP-increases-mania phases ... though it seems the current HP-increases-mania phase is well and truly over.

[fellow]

Just thought I would point out we only need another -1.4% (non seasonally adjusted) fall over the next three months from the current £263,788 to go YoY negative against February 2022's price of £260,230.

This means we are pretty much guaranteed to be YoY negative by the beginning of March! We are already lower than March 2022's figure.

[Aidan Ap Word]

2 hours ago, henry the king said:

So its hard for them to do. I think the BoE is done with playing government games, their own reputation is at stake now. They will cover their own backs. Like how they did the minimum possible during the pensions crisis and are already selling those gilts back onto the market. They are also doing active QT now, when the government has no money. 

That feels so true ... and I think in some ways even more ... since the BoE must toe the international line or the UK currency gets caned ... just like when Truss/et al tried to break from the global convention/plan/narrative ... within days (hours?) the international verdict was seen ... as the US Fed do, the BoE must do also.

[Aidan Ap Word]

31 minutes ago, “Nasty Piece of work” said:

Are you really this thick?

I agree with the poster - I think you have massively misread his question.

I read his question to be: for the transactions that have seen these falls, how do they "peg" against the history of changing interest rates?

[2buyornot2buy]

Can someone please please please check on Joe. I'm worried about him. He's been awfully quiet. I wonder has something annoyed him.