Thursday, December 18, 2014

Perfect storm?

4 Reasons Why House Prices Are Set To Plunge Next Year

House prices in the UK may fall significantly in 2015. Here’s why.

Posted by hpwatcher @ 01:30 PM (8000 views)
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13 thoughts on “Perfect storm?

  • Only 4, give me 1/2 hour I am sure I could come up with 50

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  • strange where have I heard this before………oh yes I remember , it was on this site about 6 years ago lol

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  • brickormortis says:

    I want sensible house prices like the next ma (if I can find him) but I don’t buy a crash right now, although a moderate correction to the recent hysteria-fuelled mania I do. Here is why:

    1. Nationwide are currently offering a TEN YEAR FIX at 3.49% and a FIVE YEAR FIX at 2.84% (4 year is somewhere near 2.29%). It is simply unrealistic to talk of interest rate rises against a backdrop of falling rate of inflation. Looking at the new mortgage wars, it seems that everyone is pricing in low rates for a long time. If the housing market is putting the brakes on and the global economy is entering a period of the jitters again, then we are not going to see rates rise and while interest rates are low, house prices will remain high, especially when not enough houses are being built. There are plenty of people with plenty of cash chasing a small pool of housing, made even more competitive by favourable allowances to landlords and those building their property empires. Many that are not can now fix mortgages which see out the remainder of their mortgages at historically ludicrously low interest rates. When there are houses available for those without or with little deposit, the government will always cook-up some hair brained scheme in the short term to ‘help them out’.

    2. Inflation means that key stuff (not just tat) is getting cheaper and in many cases, considerably so. Fuel used to account me about £170 in monthly outgoings. It is now closer to £140. That may not seem like much but it is equivalent to a small after tax pay rise in the modern day. Supermarket competition is also serving to drive down prices. Try shopping online at Morrisons instead of Tescos and Sainsubry’s and pick up your weekly beer load at Aldi or Lidl and you will be quite surprised at how much further you can save. £100 spent at Morrisons would have been nearer £140 at Tescos. That was a ten day/two week shop. That’s a saving near £100 per month for our family.

    More importantly than everything: if interest rates do not rise, kiss goodbye to (significantly) falling prices. Simple as that.

    Anyway, gotta go and chomp my way through some Morrisons mince pies.

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  • Astonishingly shallow analysis

    1. Russia?
    2. oil crash?
    3. eurozone?
    4. China slow-down?
    5. OECD crackdown on tax havens?
    6. end of QE in USA?
    7. inability of ECB to launch proper QE?

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  • The only reason given for ‘more supply’ is ‘investors cashing in’. They obviously don’t believe any house-building targets.

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  • Given that the article is essentially a puff-piece promoting the Motley Fool’s share tips and stockmarket investment in general, there’s a chance you all might be asking a bit too much by way of hard-hitting analysis.

    I agree largely with brickormortis. If rates rise any time soon, it won’t be by the will of the BoE. I would add to Brickormortis’ bullet points the stamp duty reforms.

    I would also say that it’s not entirely clear that a Chinese slowdown will result in less London house-buying by the Chinese. The Chinese, Russians and other kleptocratic emerging market magnates buy UK property because they’re afraid of their govt.’s suddenly confiscating their money. The Chinese slowdown surely increases the likelihood of wealth taxes, taxes on savings interest etc. The slowdown arguably gives wealthy Chinese more incentive to get their money out of Yuan. The contraction of disposable income caused by the slowdown/hard landing is only part of the picture.

    The Russians have been frozen out for 6 months now so that’s not going to be bearing down on prices. As for the EZ situation, if anything it implies a repeat of 2010 when the Greeks and Italians started buying because they were trying to divest themselves of Euros in case they ended up stuck with drachmas/lire.

    The mansion tax and CGT changes are more compelling reasons to believe the market is about to fall than anyone has mentioned, but short of a wider global economic crisis unfolding, it’ll just be more stagnation.

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  • Access to credit is the key, all else is nothing.

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  • Not true in London anymore. Even nationally FTBs just aren’t that important anymore because BTLs complete almost as many chains and, whilst credit conditions obviously affect them, mmr didn’t affect them much at all.

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  • In the spring lots of pensions cash will be released after Osborne’s changes.

    More BtL buyers will result, I think.

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  • reticent, agreed about BTL. We were looking around Haringey, and pretty much all the agencies had sweet deals with BTL. They get the sale and the BTL investor rents via same agency. The kickback is that FTB and second time buyers get manipulated out of sales with various devious means and the BTL investor gets a lower price, the vendor gets DEFRAUDED.

    We were pretty much frozen out of the market. Barely squeezed in to find a place in Enfield. No wonder so many people are renting.

    It should be illegal for any estate agent to rent out properties they have sold, due to conflict of interest. But vendors themselves could stop the practice overnight by volunteering that policy if only they were aware of it.

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  • Not true in London anymore. Even nationally FTBs just aren’t that important anymore because BTLs complete almost as many chains and, whilst credit conditions obviously affect them, mmr didn’t affect them much at all.

    You incorrectly assume I am talking about FTB. What about those who need to borrow to ‘trade up’? Moreover, that is not born out by the facts. Look at the massive effect that FLS has had both on London and UK nationally…little to do with BTL.

    In the spring lots of pensions cash will be released after Osborne’s changes.
    More BtL buyers will result, I think.

    Tax will need to be paid on that. The conservative obsession is thinking that higher house prices will enable them to win a general election outright. I don’t see that happening – the days of single party government are clearly over.

    I would also like to remind all – thinking about BTL – that HMRC are recruiting a LARGE team of tax inspectors, to ensure that the correct tax is being paid. For the most part, BTL is only lucrative without tax, as the usual cost of buying is so high.

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