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Mr Yogi

Very Simple Analysis For Use On The Idiots...

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First-time buyers have almost completely disappeared from the market, as tighter credit has rendered any property purchase impossible.

Buy-to-let investors have almost completely disappeared from the market for the same reasons, and also because rental returns are dismal.

Virtually ALL housing chains require either a FTB or a BLT to be the first link in the chain, buying the cheapest house or flat.

Therefore almost no-one is going to be able to complete on the sale of their house.

So what will get the market moving again?

Is there any other answer than huge price reductions across the board?

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That's likely, but there are alternatives; stagnation being one of them

No, because some people have to sell, even if volumes fall to 50% or less of their usual levels, there will still be sales, and these will be the forced sales which could accelerate the decline in headline rates.

With regard to the original post, not every BTL is the bottom of a chain, there are loads who have gone into city centre new builds.

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That's likely, but there are alternatives; stagnation being one of them

Not with every estate agent in the country imploring their clients to slash their prices.

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Not with every estate agent in the country imploring their clients to slash their prices.

Jeees! I did say that it was *likely* for heaven's sake! I just said there was an alternative scenario.

Crikey, if you're not 100% pure thoroughbred devout bear on here you're no bear at all!

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That's likely, but there are alternatives; stagnation being one of them

I guess that by "stagnation" you mean an inflationary led house price correction, in which case you're right. Unless the full amount of the correction occurs instantly or we lurch into deflation then, by definition, at least some portion of the correction will occur through inflationary erosion. It's just a question of how much. My guess is that this crash will drag on for several years, so the inflationary component is likely to be significant.

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The doubt in my mind is whether rents will fall as far, or as fast, if at all, as house prices.

If they don't, the time that BTL becomes attractive again is that much sooner, and hence the demand starts again.

Edited by Marcos Scriven

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Stagnation could occur without inflation. What matters is forced sales. In the US, there are many forced sales so prices are crashing. It can happen over here - the main thing stopping a crash at the moment is the relatively good employment market (keeping rents, yields for BTL and house prices up).

If this employment continues, house prices may stagnate for several years rather than crash. However I dont believe this will happen - the money-earning part of the economy is the financial sector (1m employed). The financial markets are so dysfunctional at the moment that IMO there will be many redundancies precipitating a London housing crash.

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The doubt in my mind is whether rents will fall as far, or as fast, if at all, as house prices.

If they don't, the time that BTL becomes attractive again is that much sooner, and hence the demand starts again.

I don't think this will happen, for two reaons;

1. Banks are not going to bring back 90%+ LTV loans for BTL any time soon

2. For BTL to be attractive in a stagnating or falling house price environment, yields need to be much, much higher - we are talking 10% which was the sorts of yield rental properties had before the whole BTL phenomenon. With yields averaging less than 5% in london that is 50% falls with no change in rents.

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can't see the government being very happy for much longer with no turnover in housing as the need/rely on stampduty as an income.................... and all the other taxes that have been imposed over the last 10 years.

For some reason, keeping high house prices seems to be the only thing that seems to matter to the government . Keeps the sheep quiet ??

Stamp duty..................... hmmmmmmmmmmmmmmmmmm............................................. lets say you have paid £4K & added it to your mortgage over 25 years, & what if you move 3 times in that period ?

what if house prices plummet ? I wouldn't like the thought of paying approx 6% on stampduty especially on an asset that could fall. Nobody minds when thier house shoots up in value every year.

What

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...

...Virtually ALL housing chains require either a FTB or a BLT to be the first link in the chain, buying the cheapest house or flat.

Therefore almost no-one is going to be able to complete on the sale of their house.

:blink:

What is the source of this statement? Got a link? Figures?

My last purchase does not tie in with your thoughts at all.

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Not with every estate agent in the country imploring their clients to slash their prices.

We're still a long way from that.

We're still at the vendor getting fed up with his agent and changing agents stage - and where the new agent puts the property on the market at the same price as the old agent. Funnily enough, despite saying he had people on his list looking for this very type of property, the new agent fails to sell it and by the time the third agent is instructed - perhaps after a 'rest from the market' finally, someone has the balls to say 'the market is tight, I don't think you will achieve what you are looking for at the moment'.

A war of attrition takes place. Those agents with the deepest pockets will hold out the longest. They'll keep prices up - and take more instructions on as a result - whereas those facing being unable to pay the office rent this month will slowly withdraw from the market and shut up shop. Finally, the ones with deep pockets realise they cannot afford for estate agency to become a hobby, so they start getting hard nosed with vendors. The whole process seems to take at least 18 months. We're still quite a way from the end game.

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:blink:

What is the source of this statement? Got a link? Figures?

My last purchase does not tie in with your thoughts at all.

He did say almost :lol:

People do get ahead of themselves. sales volumes are down 20%. It's a huge drop, but it's far from "no-one".

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:blink:

What is the source of this statement? Got a link? Figures?

My last purchase does not tie in with your thoughts at all.

OK, so give me an example of a chain which does not have a FTB or a BTL at the end of it...

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We're still a long way from that.

We're still at the vendor getting fed up with his agent and changing agents stage - and where the new agent puts the property on the market at the same price as the old agent. Funnily enough, despite saying he had people on his list looking for this very type of property, the new agent fails to sell it and by the time the third agent is instructed - perhaps after a 'rest from the market' finally, someone has the balls to say 'the market is tight, I don't think you will achieve what you are looking for at the moment'.

A war of attrition takes place. Those agents with the deepest pockets will hold out the longest. They'll keep prices up - and take more instructions on as a result - whereas those facing being unable to pay the office rent this month will slowly withdraw from the market and shut up shop. Finally, the ones with deep pockets realise they cannot afford for estate agency to become a hobby, so they start getting hard nosed with vendors. The whole process seems to take at least 18 months. We're still quite a way from the end game.

Oh I dunno --- They could always just keep the party going and urge the potential "buyers" to take out a LIAR LOAN!

:lol::P

Edited by eric pebble

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OK, so give me an example of a chain which does not have a FTB or a BTL at the end of it...

To be fair, in it's simplest form - A straight house swap. e.g. A young couple upsizing at the same time and old couple downsize.

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First-time buyers have almost completely disappeared from the market, as tighter credit has rendered any property purchase impossible.

Buy-to-let investors have almost completely disappeared from the market for the same reasons, and also because rental returns are dismal.

Virtually ALL housing chains require either a FTB or a BLT to be the first link in the chain, buying the cheapest house or flat.

Therefore almost no-one is going to be able to complete on the sale of their house.

So what will get the market moving again?

Is there any other answer than huge price reductions across the board?

Huge inflation across the board caused by the falling pound?

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The OP is totally correct in what he is saying, but people have different opinions of what constitutes a "FTB".

What the OP is saying is that, in every chain there are 2 ends... at one end, someone is selling but not buying, either a BTL selling up or an STR etc. At the other end there need to be someone buying but no selling... a FTB, a BTL or a returning STR.

In 2005 most of the FTBs walked away from the market. STRs arn't expected to start buying again until after the crash. BTLs stopped buying about a month ago when finance dried up.

So to sum up what the OP is saying, BTL can't sell up and leave the market because there is no-one buying at the bottom of the chain.

All the current chains will collapse as people buying at the bottom pull out and wait out the crash/wait to see what happens, or more notably find their mortgage offer times out and doesn't get renewed or get renewed on much worse terms.

It's worth noting that what people see as signs of a active market... lots of "sold" boards, are in fact a sign of stuck chains. Once a sale completes, the new person moves in and takes down the "sold" sign.

In a couple of weeks all the chains should callapse at the same time when the mortgage offers expire, they will all go back on the market, and prices will fall off a cliff.

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  • 295 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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