Wednesday, Jan 21, 2015

Lack of volume is the precursor to price falls.

Telegraph: Why I won't be buying a property'

The biggest barrier remains getting a deposit with 61pc unable to source the money needed, up from 57pc before.
Effective demand for houses at these insane prices has ground to a halt.Weak transaction volume in recent months suggests these prices are unsustainable

Posted by debtserf @ 09:48 PM (3763 views)
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11 Comments

1. libertas said...

Deposits will not be hard to come-by once rates go negative. I know plenty of folk with tens of thousands in the bank who will suddenly go out and buy whatever they can soon as they see negative interest rates eating at their savings.

Wednesday, January 21, 2015 11:03PM Report Comment
 

2. debtserf said...

You obviously didnt read the article, so will paste again: the biggest barrier remains getting a deposit, with 61% unable to source the money needed, up from 57%.

If they cant rustle up a deposit now, how pray will they manage it with banks eating further into their savngs?

Wednesday, January 21, 2015 11:18PM Report Comment
 

3. libertas said...

debtserf, they will simply pay somebody else's mortgage, supporting buy to let, supporting house prices.

Understand, mortgage rates now are so bloody cheap, and cheap rates are filtering down to low deposit mortgages now, big time. Soon as folk realise rates are falling there will be a stampede.

Thursday, January 22, 2015 06:37AM Report Comment
 

4. Catdog1121 said...

Interesting comments at the bottom, its a fight between who is more hated, bankers or landlords. Not sure why some people blame landlords so much, they are the effect of the current market conditions not the cause...

Thursday, January 22, 2015 08:26AM Report Comment
 

5. vinrouge said...

If property debt ever becomes that cheap to service interest-rate wise, then rents will surely follow suit. Bad news for current BTLers.

Thursday, January 22, 2015 08:36AM Report Comment
 

6. mark said...

Lib wouldnt they just move money into another country first ?

Thursday, January 22, 2015 01:05PM Report Comment
 

7. mombers said...

@4 vinrouge unfortunately interest rates have no bearing on rents. If they did, the multidecade slide in interest rates would mean that rents would have risen more slowly than general inflation, which is sadly not true...

Thursday, January 22, 2015 01:18PM Report Comment
 

8. debtserf said...

I think what you fail to understand is that even at these historic low interest rates, there is historic low demand for debt. They literally cant give it away. Activity is still way below the frothy peak of 10 years ago, and it does not support these inflated prices. The wealth that homeowners think they have is illusory anyway, since hpi is simply a measure of the extreme devaluation of our currency

So what if rates are so bloody cheap, if everyone is already so sated with debt that they cant afford to take on any more even if they wanted to. Leverage is a b*tch when you hit peak debt.

Thursday, January 22, 2015 03:25PM Report Comment
 

9. icarus said...

Indeed, the historic low demand (demand) for debt is a large part of the explanation for low interest rates (price), as in the classic supply-demand-price curves.

Thursday, January 22, 2015 08:03PM Report Comment
 

10. debtserf said...

Great theory, shame about the practice. You can see what they were trying to do, but all the QE and bond buying has just become an easy- money machine for the big banks. Now the ECB has doubled down, and the banks are already calling for MOAR.

Thursday, January 22, 2015 09:14PM Report Comment
 

11. stillthinking said...

The wealth of homeowners is no more illusory than the losses of savers.

I was having a chat with an old friend, it seems he bought in London in 2004 at 300,000, needless to say all on tick, deposit from bank of M&D. To put that into perspective I believed a correction was inevitable from 2005. After the rescue efforts and continuing bubble for London he sold for 700,000 and moved out of London where he now lives mortgage free.

I wonder about the couple who bought a 2 bedroom property for 700,000 but my point is that for many the wealth is not illusory. This situation is not pretend or illusory at all. I read some comment in the paper recently that stated that overpaying for property is meaningless because if you overpay by 25% or even 50%, in 10 years time that will be wiped out by the gain. This does seem to be true. I don't see anybody refusing to save in sterling even though it faces ongoing loss of value every year.

I think London is out but for the rest of the country we are off to the races the prices have bottomed out.

Thursday, January 22, 2015 11:18PM Report Comment
 

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