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Golden Shower

Hometrack +0.6%

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London leading the way...

LONDON, May 29 (Reuters) - British house prices rose 1.6 percent in the year to May, driven mainly by gains in London, with no monthly growth in prices reported across two-thirds of the UK, a survey showed on Monday. Property consultant Hometrack said house prices rose 0.6 percent on the month, driven by a 1.2 percent rise in London. The figures are not adjusted to account for seasonal variations in the market.

Hometrack May +0.6%

This is an interesting bit;

He said that prices were static across two-thirds of British postcode areas and warned that talk of higher interest rates and affordability constraints could cap future gains.
Edited by Golden Shower

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He said that prices were static across two-thirds of British postcode areas and warned that talk of higher interest rates and affordability constraints could cap future gains.

"The prospects for the second half of the year are not so good," he said, forecasting growth of just 3 percent in 2006.

Translation from Wrigglish:

HPC 2006/7!!!!!!!!!!!! :P

The greatest fools have just bought.......

Edited by karhu

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Translation from Wrigglish:

HPC 2006/7!!!!!!!!!!!! :P

The greatest fools have just bought.......

Or maybe we will have just what he says we will have, no gains.

I am personally expecting to see a very boring dull flat market for many years to come now, that is unless there is a shock.

Prices could still well fall without a trigger, but it will be slowwwww, a decade even

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Translation from Wrigglish:

HPC 2006/7!!!!!!!!!!!! :P

The greatest fools have just bought.......

Hi

Sorry to be pedantic Wiggle doesn't do the blurb anymore

Also I see they have revised up their 2006 prediction from 1% to 3%

and some blurb on hte breakdown

Hometrack's survey for this month showed that house prices rose across 38% of the country with values falling in only 2% of postcodes. Prices increased by 1.2% in London over May and by 0.6% in the south-east and 0.5% in East Anglia. Values remained unchanged in the east Midlands and grew by 0.1% in three regions (Yorkshire and Humberside, the north and the north-west).

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Or maybe we will have just what he says we will have, no gains.

I am personally expecting to see a very boring dull flat market for many years to come now, that is unless there is a shock.

Prices could still well fall without a trigger, but it will be slowwwww, a decade even

I agree, if there is a crash it will probably be over a long drawn out period and driven by inflation. I would actually be suprised if it keeps up with inflation, the start of the year has been much stronger than I expected.

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Sam

Don’t bank on it. This isn't Florida where HPI is historically a steady 3 to 4% a year (well it was until they flooded the market with cheap post 9/11 money). This is the UK and we’re in pretty uncharted territory. If prices aren’t' going up they’re going down. Property has many costs associated with its ownership. A lot of people who either bought in the last 2 to 4 years and or have entered the BTL market without thinking it through, are in for a shock.

The amount of newbie BTL’ers out there is under reported. Due to mort/insurance/tax fraud. According to the Letting/Managing agents I know, many landlords are feeling pain, that up until now was outside their experience.

A lot of people are just about to learn some facts of economic life.

Pablo Silver or Lead?

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London leading the way...

Hometrack May +0.6%

This is an interesting bit;

"future gains". That's one way of describing it. Alternatively, we could call it "future punishing rises in the cost of basic living". I'm getting sick of the the language used to describe HPI. If supermarkets doubled the cost of food, would that be described as "gains"?

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Guest wrongmove

If supermarkets doubled the cost of food, would that be described as "gains"?

It depends who you are talking to: victims of the rise (customers), or beneficiaries (management, share holders).

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I don't see how prices could remain flat and the mraket boring.

I may have got this wrong but the way i see it is this.

FTB priced out

Market being driven by BTL and speculators

Current activity and gains is 'froth'

So if property stops being a good investment e.g no gains/potential loss interms of rents not covering mortgage - then investors stop entering the markt.

This removes momentum. Prices then need to return to those affordable by FTB = house price falls.

Surely it is not the people already in the market that are the issue - it is those on the margin, those about to enter the amrket that are important.

Or have I got this wrong.

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Depends on what you see as flat. I can see a situation where it oscillates around zero, some drops, some gains but nothing much happening. Which brings the question, which investors would want to get involved in such a market?

The problems with the FTB/BTL argument is that FTBs are creating demand for BTL. Is this too simple?

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Depends on what you see as flat. I can see a situation where it oscillates around zero, some drops, some gains but nothing much happening. Which brings the question, which investors would want to get involved in such a market?

The problems with the FTB/BTL argument is that FTBs are creating demand for BTL. Is this too simple?

You are assuming that FTBs will rent the same sorts of properties they would otherwise buy. One aspect of the "rent is dead money" mantra is that people object to paying high amounts (a high proportion, say over 40% of their income) in rent, while they are often prepared to pay high amounts (very high proportions of their incomes, as "lie to buy" implies) to own. So many if not most would-be FTBers are likely to rent lesser properties than they would be prepared to buy.

If this is indeed the case, and it certainly seems to be - which is why TTRTR and the other slumlords of his ilk are doing well - it suggests that the extent to which BTL simply substitutes for FTB is limited.

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Depends on what you see as flat. I can see a situation where it oscillates around zero, some drops, some gains but nothing much happening. Which brings the question, which investors would want to get involved in such a market?

The problems with the FTB/BTL argument is that FTBs are creating demand for BTL. Is this too simple?

Yes, it's too simple. Peope who cannot buy create an increased demand for rental accomodation. But rents are woefully inadequate to make BTL a worthwhile proposition in a static or falling market. It's like if you bought a whole pile of chocolate bars for £1 each, and there were lots and lots of people prepared to buy them, but they will only pay 75p each. That you can easily sell all your stock still doesn't gain you a profit.

Billy Shears

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Or maybe we will have just what he says we will have, no gains.

I am personally expecting to see a very boring dull flat market for many years to come now, that is unless there is a shock.

Prices could still well fall without a trigger, but it will be slowwwww, a decade even

Dont you get it? The 'shock' is already happeneing and is Japan.

Look at all the volatity in stock markets in recent weeks. This is SMs reacting to just ripples in the pond. All Japan has done is half turned off the tap of free money. It will be fully turned off in a few more weeks. Then they will start to put up IRs...

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Yes, it's too simple. Peope who cannot buy create an increased demand for rental accomodation. But rents are woefully inadequate to make BTL a worthwhile proposition in a static or falling market. It's like if you bought a whole pile of chocolate bars for £1 each, and there were lots and lots of people prepared to buy them, but they will only pay 75p each. That you can easily sell all your stock still doesn't gain you a profit.

Billy Shears

You're example isn't really relevant. But the situation (at present) is rather simple. A BTLer acquires a property and rents it out; in many cases they are willing to top up the monthly costs by, say, GBP100 per month because this was less than they were pouring into pensions. From their point of view, they can continue this for 25 years and (in the case of a repayment mortgage) own the property outright, and cash it in when required. In the case of an IO mortgage, they can (potentially) sell and keep the capital gains.

If FTBs are priced out then they can be pretty sure of long term demand.

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You're example isn't really relevant. But the situation (at present) is rather simple. A BTLer acquires a property and rents it out; in many cases they are willing to top up the monthly costs by, say, GBP100 per month because this was less than they were pouring into pensions. From their point of view, they can continue this for 25 years and (in the case of a repayment mortgage) own the property outright, and cash it in when required. In the case of an IO mortgage, they can (potentially) sell and keep the capital gains.

If FTBs are priced out then they can be pretty sure of long term demand.

So long as you ignore the impact of all other parts of the market and all economic factors.

Wage decrease or increase slower than cost of living: Downward pressure on rents as people can't afford to pay out so much in rent

Interest Rates go up: BTLers have to increase the subsidy they are paying due to increased mortgage costs

I guess the big question is how much loss they will be willing to stem before they try and bail out.

If the subsidy is £100 then many will keep the BTL on, as its not too much and it is their pension :lol: But if they have £100K mortgage and IRs went up 2% then they would need to find an extra £160 a month extra.. so they then need to subsidise it to the tune of £260 a month.

If they then no longer expect capital appreciation then it won't look so attractive.

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So long as you ignore the impact of all other parts of the market and all economic factors.

Wage decrease or increase slower than cost of living: Downward pressure on rents as people can't afford to pay out so much in rent

Interest Rates go up: BTLers have to increase the subsidy they are paying due to increased mortgage costs

I guess the big question is how much loss they will be willing to stem before they try and bail out.

If the subsidy is £100 then many will keep the BTL on, as its not too much and it is their pension :lol: But if they have £100K mortgage and IRs went up 2% then they would need to find an extra £160 a month extra.. so they then need to subsidise it to the tune of £260 a month.

If they then no longer expect capital appreciation then it won't look so attractive.

You are quite right - it is impossible for me to factor in the "unknown unknowns" in my example. The world economy could tank spectacularly, or a natural disaster could hit Europe on Tuesday next week - in either case, all bets are off.

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I don't buy into the long, steady static period theory.

We all know that many buyers, leveraged up to their eye balls on IO mortgages, are banking on if not dependant on house price inflation.

There is no contingency plan for anything else.

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I just looked at hometrack's figures for my postcode for the last month (not sure it gets updated to latest figures for a couple of days though).

In the summary page it shows as +0.3%.

When you look at the detailed breakdown (the one with the blocky easy-to-understand graphs) for Detached, Semis, Terraces and Flats the figure is 0% - ie. Flat - no rises...... so how did they arrive at the 0.3% in their summary.

Might be a genuine mistake, but as I suspect these reports are auto-generated there might be something wrong with their calculations, especially the more they average them up. It gained 0.3% when averaging together a load of different property types (all at 0%).... now correct me if I'm wrong but the average of 0%,0%,0% and 0% is 0%, not 0.3%! FFS

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We all know that many buyers, leveraged up to their eye balls on IO mortgages, are banking on if not dependant on house price inflation.

There is no contingency plan for anything else.

succinctly put.

and hence why so many are so unwilling to consider even the possibility that prices can/will fall. That is something that simply does not happen. "Period".

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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