staintunerider Posted December 3, 2023 Share Posted December 3, 2023 4 minutes ago, Clarky Cat said: Unfortunately I will likely have to buy within the next 6 months. Rental availability is so poor that it's not an option. It's definitely a risk but this correction so far seems like it's going to be a drawn-out, real-terms affair unless we get a massive recession soon. There's a very nice downward slope on the Nationwide real-terms chart with a similar profile to the early 90s crash. It's now back to 2013 Q4 or 2003 Q2, so I suppose the question is, at what point is the "real" house price going to represent the time to buy? the time to buy is years away unfortunately....it's a difficult dilemma.... Quote Link to comment Share on other sites More sharing options...
staintunerider Posted December 3, 2023 Share Posted December 3, 2023 (edited) 1 hour ago, staintunerider said: https://www.zerohedge.com/markets/recent-homeowners-lose-over-200-day-property-value-each-day Tail end Charlies of a ponzi scheme always get taken to the woodshed first...... The next round of rate cuts by the Fed will send housing prices higher, one last time. That will be your chance to unload investment properties. This comment is probably on the mark....this is what faber said a few rate cuts over the short term but the long term trend is higher rate cycle.....that will crush prices over the long term... For HPI fans...Faber has said on real estate inflation can push prices up because of the inflated costs to construct a home......I completely disagree with his logic on this...houses are never priced on build costs...it's like saying my 31 year old car costs x to build today...property pricing does not work this way and houses really are depreciating assets that have been ponzified into appreciating assets... And if rates are going up the costs to service debt for those who bought at peak are simply too high because current prices are mega bubble prices built on cheap money and easy credit...and now new buyers cannt raise the credit to buy the same.....its all unsustainable without huge wage inflation which they dont want because it feeds inflation... So yeah we're going to get repeated bouts of inflation....higher rates.....and i cannot see real estate here in the UK resisting a massive correction..... Here's some tasters of trouble in real estate and this is just early doors and remebr a lot of folk in the us have fixed rates for 30 years many at 3%...we don't here...a lot of people will get in trouble....new entrants cannot afford the credit its a self fulfilling downward cycle... https://wolfstreet.com/2023/11/27/prices-of-new-houses-drop-further-18-year-over-year-sales-drop-high-inventories-rise-further-supply-jumps/ https://wolfstreet.com/2023/11/28/most-splendid-housing-bubbles-in-america-november-from-2022-highs-san-francisco-11-seattle-10-las-vegas-6-phoenix-6-portland-5-denver-5-dallas-5-san-diego-2-los-angeles/ The americans eg the fed...have form on hanging real estate out to dry aka post 08 and same again....we have had nothing but govt meddling to keep the ponzi going ...all sorts of props including the lowest rates in history... Prices here are simply unsustainable in the new paradigm....and I highly suspect like the fed finally TPTB have secretly washed their hands of it because they are all out of tricks....and theyre probably rubbing their hands to profit from the fallout... Edited December 3, 2023 by staintunerider Quote Link to comment Share on other sites More sharing options...
staintunerider Posted December 3, 2023 Share Posted December 3, 2023 36 minutes ago, spyguy said: I watched Selling HW Charlie's Five fact Friday, where this came up, again. I think everyone's missing the big glaring whoop whoop wtf!!! NW are - or at least were- THE posh mortgage provider to London/SE. Many tales of senior NW employees being turned down as they did not earn enough. Just jumped their hurdle n you borrow at much lower rates than tne plebs. 260k buys fkall in London/SE. NW are basically not operating in their traditional market. NW are hugely exposed to BTL I think you mentioned ? Is that regional or no pun intended nationwide ? Nationwide a mutual is run like a bank and lends to BTL to make profit thereby feeding the ponzi and providing credit to BTL Landlords to outbid Owner Occupiers.... A total betrayal of what a building society is was supposed to be ! No building society should lend to BTL period! Quote Link to comment Share on other sites More sharing options...
mitre101 Posted December 3, 2023 Share Posted December 3, 2023 2 hours ago, mitre101 said: The idea that "assuming people were paying the most they can afford 18 months ago" is where your logic falls down. The vast majority of folks taking out a new mortgage or renewing an existing loan a couple of years ago were not borrowing the maximum allowed by the lender. My wife and I bought a house in this period, a large part of our decision was the repayment cost. We went for a place which would still be affordable on one of our salaries (albeit at a stretch) should either be unemployed for a period. This was based on the rates at the time & although these have subsequently increased, the revised repayment is still easily affordable as a couple due to our buying considerations. Even if we had borrowed to the max at the time & were now struggling with increased interest rates, there are several options available the most obvious being switching to interest only for a period, extending the original term etc. 1 hour ago, scottbeard said: But if they didn’t then then why would they now? So you’re saying 18 months ago when it seemed to most people interest rates would stay low forever they were cautious, but now rates are back to normal people are happier to max out? I still cannot join the dots that day interest rise from 0% to 5% and house prices don’t change It's your belief, not mine, that all people are borrowing to the maximum allowed by a lender, whether it be a few years ago or today & now at the mercy of current interest rate rises. I said the opposite - most folks who took out a new mortgage or renewed in the last 3 years are OK as they did not overstretch in the first place. A different viewpoint: Around 23million properties total in the UK. Of those, c. 35% are rented, social housing etc. c. 65% are owner-occupied. Of the 65% / 15million owner-occupied properties; 42% are owned outright. That leaves around 8.5million properties with outstanding mortgages / loans. If the average mortgage term is 25 years, then statistical assumption would be that c. 1million of the 8.5million above were taken out or renewed in the last 3 years. Likely half of the 1million would be first time buyers with lower deposits. Even in 2020, a FTB would only be offered an initial rate of 2.50- 3.00%, not those 1.00-1.50% deals given to those with 50%+ equity at the time. If they originally borrowed £200K over 25 years at 3%, that would be £950/month If now 5%, that increases to £1,170/month - but if not overstretched £220/month extra easily affordable between two people. The non-FTB & those renewing deals in that period likely had the benefit of increased equity over Covid to reduce loan rates. Going forward, in the next couple of years, 2-3 million other households will have to face up to the end of their previous 1.00-1.50% 5-year fix. Many will have accrued equity so be considered for lower rates; if not - go interest-only, extend the term etc. There will be people who cannot now afford repayments but they are a tiny fraction of current mortgage-holders. Even though interest rates have increased substantially, the above is my opinion as to why the housing market has not decreased commensurately - a rate rise only affects a small percentage of the property market, not the whole. Quote Link to comment Share on other sites More sharing options...
mitre101 Posted December 3, 2023 Share Posted December 3, 2023 On 12/2/2023 at 10:59 PM, scottbeard said: Yes. House has been on the market 2 months with no offers, despite putting it on 5% below what the EA advised. Only one decent house for sale in the town we want to move to in that time and it’s now gone. House prices don’t really matter that much to me personally though since I’m selling a house I own outright to buy one only slightly more expensive. It doesn’t really matter what the prices are as long as what I sell and what I buy move similarly Just read back and seen this after my other post above. If you own a house already and only need to borrow a small amount to finance the new one, just get on with it!! Quote Link to comment Share on other sites More sharing options...
Loving The Crash Posted December 4, 2023 Share Posted December 4, 2023 8 hours ago, mitre101 said: Even though interest rates have increased substantially, the above is my opinion as to why the housing market has not decreased commensurately - a rate rise only affects a small percentage of the property market, not the whole. Fortunately your opinion is false and the opposite is true i.e. it only takes a small percentage of buyers to be affected to cause the market to tank. NW has prices down about 5% from peak based on its out of date data which excludes cash purchases. The actual fall right now is much higher and we are only just getting started. Quote Link to comment Share on other sites More sharing options...
Quid Game Posted December 4, 2023 Share Posted December 4, 2023 8 hours ago, mitre101 said: It's your belief, not mine, that all people are borrowing to the maximum allowed by a lender, whether it be a few years ago or today & now at the mercy of current interest rate rises. I said the opposite - most folks who took out a new mortgage or renewed in the last 3 years are OK as they did not overstretch in the first place. A different viewpoint: Around 23million properties total in the UK. Of those, c. 35% are rented, social housing etc. c. 65% are owner-occupied. Of the 65% / 15million owner-occupied properties; 42% are owned outright. That leaves around 8.5million properties with outstanding mortgages / loans. If the average mortgage term is 25 years, then statistical assumption would be that c. 1million of the 8.5million above were taken out or renewed in the last 3 years. Likely half of the 1million would be first time buyers with lower deposits. Even in 2020, a FTB would only be offered an initial rate of 2.50- 3.00%, not those 1.00-1.50% deals given to those with 50%+ equity at the time. If they originally borrowed £200K over 25 years at 3%, that would be £950/month If now 5%, that increases to £1,170/month - but if not overstretched £220/month extra easily affordable between two people. The non-FTB & those renewing deals in that period likely had the benefit of increased equity over Covid to reduce loan rates. Going forward, in the next couple of years, 2-3 million other households will have to face up to the end of their previous 1.00-1.50% 5-year fix. Many will have accrued equity so be considered for lower rates; if not - go interest-only, extend the term etc. There will be people who cannot now afford repayments but they are a tiny fraction of current mortgage-holders. Even though interest rates have increased substantially, the above is my opinion as to why the housing market has not decreased commensurately - a rate rise only affects a small percentage of the property market, not the whole. Exactly this. Been saying it for ages. I think another figure for the above is that something like 0.4% of the mortgaged properties are in arrears and of that, about 5-700 a month are repossessed. The figures could be slightly different to that, can’t be bothered looking it up again. Who then knows why people are repossessed. Sure, some overstretched, but redundancy, terminal illness, divorce and so on. Point is sometimes down to just bad luck rather than couldn’t afford it. How much influence these small numbers will have on the market? In my view not a lot. Prices are falling sure, but in my view it’ll be another 2008-2012. Couple more years of mostly down with some months up, and then back up we go as wages catch up. We brought about 4 years ago at the start of C19 and already got a significant buffer of equity. I imagine most up and down the land will be similar. Quote Link to comment Share on other sites More sharing options...
Quid Game Posted December 4, 2023 Share Posted December 4, 2023 8 minutes ago, Loving The Crash said: Fortunately your opinion is false and the opposite is true i.e. it only takes a small percentage of buyers to be affected to cause the market to tank. NW has prices down about 5% from peak based on its out of date data which excludes cash purchases. The actual fall right now is much higher and we are only just getting started. How’s the crash going then? Are we in a crash now or is it still pending? What sort of falls are we going to have? Over what time period? Quote Link to comment Share on other sites More sharing options...
scottbeard Posted December 4, 2023 Share Posted December 4, 2023 9 hours ago, mitre101 said: Just read back and seen this after my other post above. If you own a house already and only need to borrow a small amount to finance the new one, just get on with it!! I am doing! FFS My house has been on the market for 2 months and I spent the 3 months before that touring the areas I wanted to move to to find the ones I liked. I thought it was possible to both get on with my life and at the same time discuss the economics of house prices on this board. Anyway thanks for your first detailed post of thoughts on maths and economics . No thanks for your second post telling me how to live my life. Quote Link to comment Share on other sites More sharing options...
Loving The Crash Posted December 4, 2023 Share Posted December 4, 2023 2 hours ago, Quid Game said: How’s the crash going then? Are we in a crash now or is it still pending? What sort of falls are we going to have? Over what time period? Thank you for these questions. As we're on a NW thread, I'll reply using the NW 'UK House prices adjusted for inflation' data series': https://www.nationwidehousepriceindex.co.uk/resources/f/uk-data-series This is the series that gives us the nice blue line graph and the red line of best fit on the HPC homepage. To answer your questions, the crash is going very well, but still has a long way to go. The peak in real prices was in Q3 2007 at £334,634 and now, over 15 years later stands at £260,181 - a decline of around 20%. So bad news for anyone who bought in cash from 2008 onwards, but not disastrous - yet. Long term data shows that the red line of best fit is approximately horizontal and so we'll probably get back to real prices of around £130k. I would say we are several years yet from the bottom. However, a lot of the falls will come over the next year or two - I would say approximately 30%, but could be more. So chin up 🙂 Quote Link to comment Share on other sites More sharing options...
Quid Game Posted December 4, 2023 Share Posted December 4, 2023 12 minutes ago, Loving The Crash said: Thank you for these questions. As we're on a NW thread, I'll reply using the NW 'UK House prices adjusted for inflation' data series': https://www.nationwidehousepriceindex.co.uk/resources/f/uk-data-series This is the series that gives us the nice blue line graph and the red line of best fit on the HPC homepage. To answer your questions, the crash is going very well, but still has a long way to go. The peak in real prices was in Q3 2007 at £334,634 and now, over 15 years later stands at £260,181 - a decline of around 20%. So bad news for anyone who bought in cash from 2008 onwards, but not disastrous - yet. Long term data shows that the red line of best fit is approximately horizontal and so we'll probably get back to real prices of around £130k. I would say we are several years yet from the bottom. However, a lot of the falls will come over the next year or two - I would say approximately 30%, but could be more. So chin up 🙂 The issue I have with real prices however is that it doesn’t help people today. If I want to buy a house today, the ONS suggests I’m going to pay around 300k for the average property. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/september2023 If the real price is £260k, that doesn’t help with the sums. Sure it could help you set a number in your head that you are willing to pay, it could inform you as to whether prices are high or low currently, it could as you say lead you to conclude prices have been falling 20% since 2007, but you are still going to have to stump up nominal prices. Prices have demonstrably gone up hugely during the last few years alone, and that’s the number that will ultimately matter to anyone in the market as opposed to well what should it be if you adjust for inflation. I can see the value for projection of real prices but not for the here and now where the question being asked is can I afford this house today. Quote Link to comment Share on other sites More sharing options...
Housepricecrash91 Posted December 4, 2023 Share Posted December 4, 2023 The only things that can be keeping the market going is inheritance, large deposits, and maybe the belief that the current interest rates are only temporary... and rates will drop by a few 100 basis points. Prices are falling gradually, but we've now had over a year of 'high' interest rates. The rental market is so bad in this country that I'm guessing people are largely happy to pay close to current asking price due to wanting a stable place to live. Also if you're staying long term (5-10 years) then you may not lose any money when it comes to selling. Quote Link to comment Share on other sites More sharing options...
Pebbles Posted December 4, 2023 Share Posted December 4, 2023 3 hours ago, Loving The Crash said: Fortunately your opinion is false and the opposite is true i.e. it only takes a small percentage of buyers to be affected to cause the market to tank. NW has prices down about 5% from peak based on its out of date data which excludes cash purchases. The actual fall right now is much higher and we are only just getting started. How can you say this the land registry doesnt show this yet. One of the great frustrations of this site is to ignore evidence of no crash. People blame rightmove for being a VI likewise nationwide and halifax yet when this data is confirmed by the land registry months later these same people then say to ignore the data as it out of date. Quote Link to comment Share on other sites More sharing options...
wighty Posted December 4, 2023 Share Posted December 4, 2023 3 hours ago, scottbeard said: I am doing! FFS My house has been on the market for 2 months and I spent the 3 months before that touring the areas I wanted to move to to find the ones I liked. I thought it was possible to both get on with my life and at the same time discuss the economics of house prices on this board. Anyway thanks for your first detailed post of thoughts on maths and economics . No thanks for your second post telling me how to live my life. lol He thinks you have nearly all the cash. Most up sizing still need to sell their current house to finance the new one. I know what it's like, having giving up the process 6 months ago. I'd have come down in price if the ones I wanted did too, but they wouldn't. (remember the "prices holding" term you didn't like) Not worth the effort in today's market. Like many mine is off the market. Quote Link to comment Share on other sites More sharing options...
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