Nationwide Nov -1.4%

[80percentfalls]

59 minutes ago, 80percentfalls said:

Let me fix this for you.

2300 * 70%, thats already not correct, if you spend all your 70% on top of your rent which was at least 30% of your take home, definitely not lower than the mortgage and never saved anything you will never buy a house regardless of price.

 

Most people who will be in a position to buy should save at least third of their salary. So as far as house buyers the living costs increase is 2300 * 33% * 10% = 75, so you actually have 200-75 = 125 more to spend on mortgate which is definitely enough to cover mortgage increases as per below.

 

If you earn 35K the max mortgage you can take is 4.5x of that, lets say you had 25% deposit, so its 118000K mortgage with 500pcm at 2% last year. Put up interest rates from 2% to 5% and you will have a 690 mortgate, but as you are not dumb you going for the discounted 3.5% tracker rate at the moment, thats 591, a 91 increase, bamm you are 125-91 = 34 BETTER OFF.

This is not counting that when inflation starts to bite people will be much tighter with costs.

I made a slight mistake in my calculations the 4.5x 35K is the max mortgage someone could take on regardless of deposit, so thats 157.500 at 2% its 668, on 3.5% its 789, thats a 121 increase for 25 years, still 4GBP BETTER OFF with the absolute MAXIMUM mortgage taken.

[sta100]

58 minutes ago, henry the king said:

I disagree.

Firstly, I'd say mortgage cost is about 35% more. I'd say most big lenders have gone from about 1% rates to about 5.5% rates. I know the averages are different but they can be misleading.

I would say something like 60% of "housing" is bought with mortgage money. Whatever the average LTV is (sometimes it is 0). Lets say 60%. Then, in my mind, 35% mortgage increase impacts only 60% of house values.

So, we should see falls of about 35% of 60%. Which is about 21%. Then, you are right, cost of living has an impact. So does HTB going and sentiment. So you can probably add a few more %.

Hence why I think 15-25% falls in nominal terms equating to about 25-40% falls against wages. 

That is what I think is "baked in" - as in the minimum realistic fall is 15% nominally - that fall would require government intervention - otherwise I think it will be more like 25%. Things could fall more if things happen (like the Fed hikes further than expected right now).

15% if demand for property remains the same as it has previously.

If the Country is a mess people will look to get out. It's already less attractive to come here and work given the devaluation of the currency.

We have limited industry here and people trading houses to each other, it looks like a house of cards to me.

Edited December 1, 2022 by sta100

[80percentfalls]

56 minutes ago, mynamehere said:

This sounds equally nonsensical. Not least because trackers will be going up with base rate increases in 2 weeks

On my phone so don’t have the numbers but when I did the maths it worked out the 6% wage increase covers about half the increase in mortgage payment. All Uk median figures. 
 

So that would account for 10-15% drop on its own. 
 

However there are various other forces acting both up and down. 
 

based on todays release I think the drop be closer to 15 than 10. 

I made a calculation with the hpcer's number and all figures add up.

We will never see this low nominal values in our lifetime, apart from the next half-one year.

But even that one is not a big help, as actually buying will be 30% percent more expensive than up to july or last year.

[henry the king]

27 minutes ago, sta100 said:

15% if demand for property remains the same as it has previously.

If the Country is a mess people will look to get out. It's already less attractive to come here and work given the devaluation of the currency.

We have limited industry here and people trading houses to each other, it looks like a house of cards to me.

I agree it will be more than 15%.Actually my calculation said 21% from mortgage rates.

I said 15-25% nominally in expectation of props.

Even with props I see large falls

Edited December 1, 2022 by henry the king

[henry the king]

25 minutes ago, 80percentfalls said:

I made a calculation with the hpcer's number and all figures add up.

We will never see this low nominal values in our lifetime, apart from the next half-one year.

But even that one is not a big help, as actually buying will be 30% percent more expensive than up to july or last year.

Well the average house is going DOWN £1k a week right now.

So who cares about ifs and buts. Pointless discussion.

What IS happening is a HPC. Right now. In all the data. Zoopla. NW. HF. RICS. All down.

[Nomadd]

28 minutes ago, henry the king said:

Well the average house is going DOWN £1k a week right now.

So who cares about ifs and buts. Pointless discussion.

What IS happening is a HPC. Right now. In all the data. Zoopla. NW. HF. RICS. All down.

Well, let's not get too excited. At least another 15% to go just to blow off the COVID froth. Only then can the real HPC begin.

Still, it's a good start and a nice place to start the New Year from.

[user not found]

8 hours ago, suresh786 said:

Why not sell now and re-buy afterwards

I'm 45, FTB, kids 9 and 11, we were evicted in 2016 and 2020, I've lived in 8+ rentals, I've just had a garage built, a new patio, decorated 2 rooms, done loads of DIY jobs, plans for the garden.

It's a home ffs.

[henry the king]

4 minutes ago, Nomadd said:

Well, let's not get too excited. At least another 15% to go just to blow off the COVID froth. Only then can the real HPC begin.

Still, it's a good start and a nice place to start the New Year from.

A real HPC is always in real terms.

The average house in 1890 was probably 10 quid or something.

So against wages is what to consider. If wages are up 6% and houses are flat for a decade then suddenly houses aren't much. A 260k house in 2030 won't be equal to 260k now

[Unmoderated]

7 hours ago, scottbeard said:

Good news for the young people of the UK who, in a few years' time, might have the chance to buy the house that they ought to have been able to buy years ago.

Amen

[Maghull Mike]

The TAX hammer is next to fall.............CGT allowance from £12,500 down to £6,000 & then down to £3,000!

Div Tax etc, ZERO incentive to work in the UK.

Mike

[msi]

1 minute ago, Maghull Mike said:

The TAX hammer is next to fall.............CGT allowance from £12,500 down to £6,000 & then down to £3,000!

Div Tax etc, ZERO incentive to work in the UK.

Mike

It burns BTL'ers, and that is a price worth paying

[rantnrave]

3 hours ago, 80percentfalls said:

Why would I be annoyed, at the moment it is like 30% harder to buy a house on mortgage than in July, god bless I bought maybe I could never buy again, sorry for those missed out.

Are you familiar with the economic theory of the 'Greater Fool' (and by extension, the concept of the 'Greatest Fool')?

[rantnrave]

Are you in negative territory @Stjames83 from your purchase earlier in the year with this news?

Edited December 1, 2022 by rantnrave

[Maghull Mike]

1 minute ago, msi said:

It burns BTL'ers, and that is a price worth paying

Meantime in italy

Part of the budget plans includes slashing taxes for the self-employed by extending the 15% single tax rate from an annual income of €65,000 to €85,000, slashing VAT on certain essential goods by half, and conditionally reducing the retirement age to 62, provided that individuals have paid in at least 41 years of contributions.

[msi]

2 minutes ago, Maghull Mike said:

Meantime in italy

Part of the budget plans includes slashing taxes for the self-employed by extending the 15% single tax rate from an annual income of €65,000 to €85,000, slashing VAT on certain essential goods by half, and conditionally reducing the retirement age to 62, provided that individuals have paid in at least 41 years of contributions.

Nice of Germany to pay for that. Unfortunately we voted for SoVeRuNtY,innit?

[henry the king]

26 minutes ago, Maghull Mike said:

The TAX hammer is next to fall.............CGT allowance from £12,500 down to £6,000 & then down to £3,000!

Div Tax etc, ZERO incentive to work in the UK.

Mike

This hasn't even had an effect AT ALL yet.

And yet we know a lot of BTL investors will head for the exits ASAP. Before April if they can, but before next April failing that.

To avoid these MASSIVE tax changes.

Another thing which on its own could cause significant house prices drops. But right now it is just another thing along with 35% mortgage increases, -4% real wages, removal of HTB, end of QE and start of QT and other tax changes.

[80percentfalls]

1 hour ago, henry the king said:

Well the average house is going DOWN £1k a week right now.

So who cares about ifs and buts. Pointless discussion.

What IS happening is a HPC. Right now. In all the data. Zoopla. NW. HF. RICS. All down.

The only fact now is that it is 30% harder to buy on mortgage than in July.

30% fall and its still only gonna be the same effort to buy on mortgage as in July, we gonna be back at square 1.

Wake me up when its two times EASIER, before that its all dreaming.

And not even this 30% will happen as wage inflation is too high.

[80percentfalls]

33 minutes ago, rantnrave said:

Are you in negative territory @Stjames83 from your purchase earlier in the year with this news?

He cant be in negative territory as at the moment its still like 30% harder to buy the same house for the average person.

Maybe he couldve never bought if he doesnt buy this year.

[Timm]

8 hours ago, suresh786 said:

Why not sell now and re-buy afterwards

For the record, we also bought this year.

Granted, we sold our old place for more than we paid for the new one and we also doubled the floorspace (we sold a stone barn conversion for a dilapidated XLA). But we still bought this year - all sorts of people have all sorts of reasons for buying at bad times, and not all of them are fools. (For the avoidance of doubt, I am a bit of a fool).

We could have STR'd instead of DTR, after all, I STR'd in 2007 and it worked out (just), but I don't think my heart could cope with doing it again. Plus, I've got a wife and kid now, we want to stay in the village and the value of a home is, IMHO worth more (even now) than the house in which that home resides.

Finally, STR is a very risky strategy - as demonstrated by one of the earliest posters on this site - a financial planner who STR'd in (I think) 2003 and was not able (for whatever reason) to take advantage of the GFC dip in 2008 onwards.

[80percentfalls]

40 minutes ago, rantnrave said:

Are you familiar with the economic theory of the 'Greater Fool' (and by extension, the concept of the 'Greatest Fool')?

Dunno about dreaming and theories.

The FACT is that today if you want to buy my house for the same price with the same fix mortgage your mortgage pcm is 160% of mine.

If I add the gain in the value the mortgage pcm would be 216% of mine.

Ofc people are not dumb and they would go for a tracker rate, which would only be 175%.

I literally have nightmares about not buying.

[scottbeard]

Just now, 80percentfalls said:

I literally have nightmares about not buying.

Then buying to put your mind at ease was no doubt the right individual financial decision for you at the time.

That doesn't alter the fact that 20-40% nominal falls are going to happen over the next 2 years.

[Quicken]

2 hours ago, henry the king said:

I disagree.

Firstly, I'd say mortgage cost is about 35% more. I'd say most big lenders have gone from about 1% rates to about 5.5% rates. I know the averages are different but they can be misleading.

I would say something like 60% of "housing" is bought with mortgage money. Whatever the average LTV is (sometimes it is 0). Lets say 60%. Then, in my mind, 35% mortgage increase impacts only 60% of house values.

So, we should see falls of about 35% of 60%. Which is about 21%. Then, you are right, cost of living has an impact. So does HTB going and sentiment. So you can probably add a few more %.

Hence why I think 15-25% falls in nominal terms equating to about 25-40% falls against wages. 

That is what I think is "baked in" - as in the minimum realistic fall is 15% nominally - that fall would require government intervention - otherwise I think it will be more like 25%. Things could fall more if things happen (like the Fed hikes further than expected right now).

That seems like a very strange way of doing the maths: 35% of 60%.

Most buyers (mortgage free or not) are also sellers. The base of a housebuying chain is nearly always a FTB or a BTL. BTL is looking much less attractive as an investment (about time), and FTB's generally pay the highest mortgage rates with their smaller deposits. Look at affordability changes on FTB mortgages to see the coming drop. The new build market will be interesting next year...

[mynamehere]

It’s looking more likely we will str. Not really out of choice. I’d pay good money to avoid moving twice. But OH has run out of patience so we will rent for 12 months. 
 

I don’t  think there is ever a strong case for STR for purely financial purposes. The risk reward doesn’t add up 

[BaldED]

1 hour ago, TBC said:

I'm 45, FTB, kids 9 and 11, we were evicted in 2016 and 2020, I've lived in 8+ rentals, I've just had a garage built, a new patio, decorated 2 rooms, done loads of DIY jobs, plans for the garden.

It's a home ffs.

Sounds like you've had a rough ride.

Hopefully all this insanity is coming to an end. But unfortunately I expect a lot of pain coming for a lot of people. I'm hoping the ones feeling it are the ones that helped to create this f*°king mess.

[80percentfalls]

2 minutes ago, scottbeard said:

Then buying to put your mind at ease was no doubt the right individual financial decision for you at the time.

That doesn't alter the fact that 20-40% nominal falls are going to happen over the next 2 years.

20% maybe in the very worst apocalypse scenario, 40% highly unlikely.

They will stop raising rates at 10% falls and at 15% they will have all schemes plus a few we dont even think right now.