How far will house prices fall [volume 4]

[fido]

Sweden is in deflation and their rates reflect this. The EU is looking to go the same way. The UK is fortunately experiencing a bit of growth so not in the same boat, though I would also revise my previously inaccurate statements that rates will kick off here! They might go up half percent next year or after but not expecting any large rises. The point is we're all used to and have geared up our borrowing to near zero rates so it wouldn't take a lot to kill the market.

[Pork]

fido said:

The point is we're all used to and have geared up our borrowing to near zero rates so it wouldn't take a lot to kill the market.

I think thats right for the last decade or so. Prior to that, I think people were generally a little more reserved and a bit more aware. It seems now that if you don't borrow all you can, and simply live within your means, you're a mug.

[Magog]

ClaphamGT3 said:

Finally, we continue to see the rise of PRS as an industrialised model (Tottenham, for example) as well as an increasing number of funds looking to buy and operate existing stock. We should not underestimate the extent to which this will create a new paradigm in the value of residential stock in certain areas.

I'm very cynical about institutional PRS, and the way it has emerged out of RSLs with the support of sovereign wealth funds. Not to disagree with you that it will probably be a far larger part of Britain's housing mix, but it's definitely another nail in the coffin for the idea of the 'property owning democracy'.

[jonah35]

Pork said:

fido said:

The point is we're all used to and have geared up our borrowing to near zero rates so it wouldn't take a lot to kill the market.

I think thats right for the last decade or so. Prior to that, I think people were generally a little more reserved and a bit more aware. It seems now that if you don't borrow all you can, and simply live within your means, you're a mug.

Borrowing as much as you can has been the way to make money. 20 odd year olds making £200k tax free on flats in London in a few years beats saving for a lifetime.

Living within your means means that you have been missing out recently.

Strange world.

[Sheepshanks]

Magog said:

ClaphamGT3 said:

Finally, we continue to see the rise of PRS as an industrialised model (Tottenham, for example) as well as an increasing number of funds looking to buy and operate existing stock. We should not underestimate the extent to which this will create a new paradigm in the value of residential stock in certain areas.

I'm very cynical about institutional PRS, and the way it has emerged out of RSLs with the support of sovereign wealth funds. Not to disagree with you that it will probably be a far larger part of Britain's housing mix, but it's definitely another nail in the coffin for the idea of the 'property owning democracy'.

I don't think it's been mentioned here but I saw it reported the other day that 20% of homes in the UK are now owned by private landlords and the Government forecasts that to increase to 33%.

[Welshbeef]

Sheepshanks said:

I don't think it's been mentioned here but I saw it reported the other day that 20% of homes in the UK are now owned by private landlords and the Government forecasts that to increase to 33%.

Out of total housing stock what % is mortgage free?


Part of the reason for me raising this is during. 2014 I know two people in their early 30's who have lost relatives and have found themselves in the position of inheriting money to the point they are or will be mortgage and debt free both in houses which they will not be upgrading from (they had stretched to the forever home).
What both are doing is now buying buy to let's both 2 each with the idea that these are paid off by rental income over the next 25 years - one already has one child and planning a second the other not yet got any kids but would love to have two. So you can see the idea here to give the houses to then in 25 years time debt free so they are set up for a great start in life.

[turbobloke]

Welshbeef said:

Sheepshanks said:

I don't think it's been mentioned here but I saw it reported the other day that 20% of homes in the UK are now owned by private landlords and the Government forecasts that to increase to 33%.

Out of total housing stock what % is mortgage free?

An article I read last year claimed that just under two-thirds of households were mortgage-free. The numbers may well have changed since then.

[turbobloke]

This isn't the same article and while the numbers are different it's an earlier snapshot with a prediction. It's not inconsistent with a figure of over 60% now, but then it's not in close agreement either.

http://www.dailymail.co.uk/news/article-2206964/Ma...

Somebody in the right line of work is bound to know.

[Welshbeef]

turbobloke said:

An article I read last year claimed that just under two-thirds of households were mortgage-free. The numbers may well have changed since then.

So a third are mortgaged - anywhere between a day to go on the mortgage to just starting off a 25/30/35 year mortgage. Do we have any info on the weighted average remaining age/length of the total UK mortgage book.

[vonuber]

Quick question: in my job I alone am PM'ing my part on about 11 new 50+ storey towers in Canary Wharf alone targeted at the high end market - probably around ~5,000 flats total.
They are a mixture of pre-planning and construction - and there are more being lined up based on the enquirers we are getting from developers.

At what point will there not be the demand for these? I'm interested because at the moment it's my main line of project work (and one I am struggling to keep on top of given the sheer volume of work).

[turbobloke]

Welshbeef said:

turbobloke said:

An article I read last year claimed that just under two-thirds of households were mortgage-free. The numbers may well have changed since then.

So a third are mortgaged - anywhere between a day to go on the mortgage to just starting off a 25/30/35 year mortgage. Do we have any info on the weighted average remaining age/length of the total UK mortgage book.

A bit more digging shows that the median mortgage outstanding is £75k and the total debt (both recent but not this year) is £847,911,798,000 if that helps! Fag packet arithmetic suggests it hangs together (ish) if we take about 11.3 million households @ £75k with ~55% - rather than just over 60% - of households mortgage-free. It's late, median, mean etc (disclaimer!).

[turbobloke]

There are probably numerous sources with different housekeeping methods which give different results. Must get back to work...

[WCZ]

just bought a flat in Manchester city center, would be nice if prices were stable/rose there

[Welshbeef]

turbobloke said:

A bit more digging shows that the median mortgage outstanding is £75k and the total debt (both recent but not this year) is £847,911,798,000 if that helps! Fag packet arithmetic suggests it hangs together (ish) if we take about 11.3 million households @ £75k with ~55% - rather than just over 60% - of households mortgage-free. It's late, median, mean etc (disclaimer!).

So roughly 3x average UK salary, clearly that high level masks thousands who are struggling and will default/on the mortgage while others its nothing (and I dare say anyone living in the SE UK if you said you had a mortgage of £75k remaining most would consider it a negligible debt especially as 3/5 series cars can get close to that sort of money).

Anyway see below certain areas are clearly going to have a boost due to dramatic changes in journey time to London meaning those who wouldn't look outside London suddenly have a real contender so more real demand. HS2 no doubt will do the same.
http://www.getreading.co.uk/news/local-news/crossr...

[Sheepshanks]

Welshbeef said:

Out of total housing stock what % is mortgage free?


Part of the reason for me raising this is during. 2014 I know two people in their early 30's who have lost relatives and have found themselves in the position of inheriting money to the point they are or will be mortgage and debt free both in houses which they will not be upgrading from (they had stretched to the forever home).
What both are doing is now buying buy to let's both 2 each with the idea that these are paid off by rental income over the next 25 years - one already has one child and planning a second the other not yet got any kids but would love to have two. So you can see the idea here to give the houses to then in 25 years time debt free so they are set up for a great start in life.

I know a fair number of people who have bought a couple of BTLs when their kids were small, with the theory being the houses would more or less pay for themselves and they'd have somewhere for their kids to live in when they were older. Also, although I don't know anyone who has done this for a few years now, people bought houses in the cities their kid(s) went to uni in, and then kept it as a BTL - I guess I haven't seen that happening for a while as student BTL is quite an uncertain investment now.

OTOH, there's a bunch of early to mid-40's people in our office in the SE who took on hefty IO mortgages 15 yrs ago thinking that the capital sum would be a trivial amount after 25yrs and they're now starting to get very nervous as they've made no alternative provision and relatives show no signs of doing the decent thing.

[Magog]

Sheepshanks said:

Magog said:

ClaphamGT3 said:

Finally, we continue to see the rise of PRS as an industrialised model (Tottenham, for example) as well as an increasing number of funds looking to buy and operate existing stock. We should not underestimate the extent to which this will create a new paradigm in the value of residential stock in certain areas.

I'm very cynical about institutional PRS, and the way it has emerged out of RSLs with the support of sovereign wealth funds. Not to disagree with you that it will probably be a far larger part of Britain's housing mix, but it's definitely another nail in the coffin for the idea of the 'property owning democracy'.

I don't think it's been mentioned here but I saw it reported the other day that 20% of homes in the UK are now owned by private landlords and the Government forecasts that to increase to 33%.

Sounds like this article;

http://www.telegraph.co.uk/finance/personalfinance...

Based on this report; http://www.paragon-group.co.uk/file_source/Files/M...

Typical press release to try and get the Company/CEO's name in the papers, but it does make reasonably interesting reading.

I wonder how long it will be before the government moves against private landlords with smaller portfolios in terms of heavier regulation/taxes. We can't have the proles engaging in rentier capitalism seems to be the sentiment of both sides.

[burwoodman]

There is a distinct difference between the new build development market and normal used housing stock. there is a 15%(?) premium for new and I wouldn't be suprised if some developers get taken down due to sheer greed. Im not surprised Z above has his views but London indices are not driven by 5M properties. It's the middle that is growing stromgly

The point with general house prices crashing is that there needs to be a catalyst.What is that then? The economy is growing and banks are lending more sensibly. I predict a slow but 30% falls. No way. The index will be higher this time next year

[Magog]

More about the increase in the numbers who are going to be renting here;

http://www.theguardian.com/money/2014/oct/30/gener...

[burwoodman]

Magog said:

More about the increase in the numbers who are going to be renting here;

http://www.theguardian.com/money/2014/oct/30/gener...

In countries like Germany and Finland it's 65% renters. The uk will get there. I realise I'll be buying my kids houses and planning now when they are under 5

[z4RRSchris99]

Battersea power station phase 3 launches today. Another 500 flats to Asian investors thinking they will cash in