How far will house prices fall [volume 4]

[turbobloke]

fido said:

anonymous said:

[redacted]

Think of it in BigMacs. Your 250k of debt is currently worth 50,000 BigMac (£5 each). Rampant inflation makes you £250k debt worth 50 BigMacs, but a BigMac now cost £5000. You can see the problem for society as a whole ..

I'm lovin' it.

[WCZ]

fido said:

(£5 each)

where are you buying yours? much cheaper here in Manchester for a Bigmac

[Mr Whippy]

XJ40 said:

otherwise you'll get worse off of course...

So it's the same net result as a 'crash', just you don't really see it happening as it's backwards and slow.

[Pork]

anonymous said:

[redacted]

If it's reflected in wage inflation too.

Today, if you're on £30k a year, a pint of milk is £0.50p and have £120k mortgage.

If inflation rockets, you're earning £60k, milk is £1, your mortgage is £120k still.

Nominally, your morgtgage remains the same but is now twice your earnings not four times, as it was. Unfortunately, everything else has doubled in price so although the mortgage is more manageable, your pension is only going to go half as far. But let's not worry about that much, much, MUCH bigger problem, that'll be on someone's else's political watch.

That's my simple understanding anyway.

[98elise]

anonymous said:

[redacted]

Think of it in BigMacs. Your 250k of debt is currently worth 50,000 BigMac (£5 each). Rampant inflation makes you £250k debt worth 50 BigMacs, but a BigMac now cost £5000. You can see the problem for society as a whole ..

Like Zimbabwe? Everyone's a billionaire but a loaf of bread costs 500,000,000 scoobies or whatever the currency is?

I have an envelope full of Zimbabwe notes. They are in the million and trillion dollar range. Got them from ebay for about 3p

[anonymous-user]

Mines increased by around 50% since this 'how far will priced fall' thread started in 2012...

[010101]

Mr Whippy said:

010101 said:

Mr Whippy said:

Something will work well, the eventual deflation of debt by rampant inflation.

At that point interest rates will go up.

It's been the goal since day one of the 2007/2008 crash. They bailed out to stop a crash. They want to do an inverted crash and it'll happen once they've pumped enough pretend money into the system.

By my math, the volume of liquidity applied multipled by wage inflation achieved equals sweet fanny can we please denounce Keynes as wrong.

Did Keynes say the wage inflation would be instantaneous upon generating the liquidity?

The liquidity is sat in banks and bubbled balance sheets far away from the plebs salaries... for now.

So QE1 started in the UK March 2009. Seven years is a very long time for experimental monetary policy to have no intended results. Maybe the currency transmission mechanism is just a bit responsible for the lack wealth distribution.
Keynes also believed in the abundance of capital as a background economic non-event.
I have a good idea that we are going to find out that it is'nt.

[Dave_ST220]

Jimboka said:

Mines increased by around 50% since this 'how far will priced fall' thread started in 2012...

It started way before then Most seem to be falling up too.....

[turbobloke]

Dave_ST220 said:

Jimboka said:

Mines increased by around 50% since this 'how far will priced fall' thread started in 2012...

It started way before then Most seem to be falling up too.....

Upwards falling of around £8k per year over the past 10 years isn't that far but this is tractor toting territory and it's far enough as falls go.

[Mr Whippy]

010101 said:

Keynes also believed in the abundance of capital as a background economic non-event.
I have a good idea that we are going to find out that it is'nt.

Me too. Sadly. But if it means a rebalancing of salaries vs assets then I'm all for it in the longer run.

[V6Alfisti]

A couple of interesting articles, which seems to be cutting through some of the smoke screen.

http://www.cityam.com/235213/why-you-shouldnt-just...

and then the usual reporting on Nine Elms in it's continual spiral downwards but there is an interesting graph near the end that shows volumes against previous years e.g. 30-40% lower volumes than in 2014

http://www.bloomberg.com/news/articles/2015-09-08/...

Combined with global economic issues, brexit e.t.c, affordability being the joke that it is. You would probably expect house prices to drop (as they are in many areas e.g. I have been seeing asking price drops in Kilburn, Hampstead, Warwick Ave, Kentish Town e.t.c back to figures not seen for 12 months +, whilst new build prices are through the roof. I received an email for a 1 bed new build in Ladbroke Grove for £795k and a 2 bed at £965k +. Just crazy.

However HTB 40% and demand from BTL pre April will keep things ticking over for a few more months imo.

UBS put Hong Kong and London in red bubble territory last year (London was the highest)http://www.theguardian.com/money/2015/oct/29/london-house-prices-most-overvalued-world-ubs

Look what has happened to HK since.... http://www.bloomberg.com/news/articles/2016-02-18/...

However London is London, who knows where it will go.

Edited by V6Alfisti on Wednesday 24th February 10:20

[turbobloke]

V6Alfisti said:

I received an email for a 1 bed new build in Ladbroke Grove for £795k and a 2 bed at £965k +. Just crazy.

Those are real asking prices in the real world which reflect somebody's view of the market position in the real world.

Even so

[V6Alfisti]

turbobloke said:

Those are real asking prices in the real world which reflect somebody's view of the market position in the real world.

Even so

I see what you are saying, but how many have they sold? I am not personally privy to that information. It sounds like a Nine Elms disaster to me. There is a difference between setting a price and actually getting people to part with the cash i.e HK's issue at the moment.

When 1 bed flats in Notting Hill are £750k in a period property, I struggle to see who would want a 1 bed flat for more in neighbouring Ladbroke Grove.

Edit: A quick rightmove check actually shows 1 bed flats at around 45 sqm in Notting Hill starting at around £500k. So even more ludicrous.

Edited by V6Alfisti on Wednesday 24th February 10:37

[turbobloke]

V6Alfisti said:

turbobloke said:

Those are real asking prices in the real world which reflect somebody's view of the market position in the real world.

Even so

I see what you are saying, but how many have they sold? I am not personally privy to that information. It sounds like a Nine Elms disaster to me. There is a difference between setting a price and actually getting people to part with the cash i.e HK's issue at the moment.

When 1 bed flats in Notting Hill are £750k in a period property, I struggle to see who would want a 1 bed flat for more in neighbouring Ladbroke Grove.

Edit: A quick rightmove check actually shows 1 bed flats at around 45 sqm in Notting Hill starting at around £500k. So even more ludicrous.

I suspect we're in violent agreement here

[V6Alfisti]

turbobloke said:

I suspect we're in violent agreement here

Ah, my bad

[z4RRSchris]

all good news at the moment. I think the press are 6 months behind.

Morgan Stanley 20% fall coming . - it's already happened

http://www.standard.co.uk/business/morgan-stanley-...

TW think nine elms is fked:

http://www.standard.co.uk/business/taylor-wimpey-b...


http://www.standard.co.uk/business/jim-armitage-ba...

[ClaphamGT3]

Things in the prime & super prime market are cooling for sure and I think we'll see a fair few developers who did their appraisals predicated on the market rising up to meet the hurdle catch a cold but I'm yet to see it quite as apocalyptically as you Chris.

Are you at MiPIM by the way? We could have pistonheads drinks one evening....

[z4RRSchris]

ClaphamGT3 said:

Things in the prime & super prime market are cooling for sure and I think we'll see a fair few developers who did their appraisals predicated on the market rising up to meet the hurdle catch a cold but I'm yet to see it quite as apocalyptically as you Chris.

Are you at MiPIM by the way? We could have pistonheads drinks one evening....

nah, I was going to go but have bailed. off to Singapore HK KL instead.

you can get a 25/30% discount at plenty of schemes now. that's a huge drop

[Justayellowbadge]

I think even the most bullish have come to accept new build PCL is going to be a bit choppy, the question is the extent of the impact on more traditional properties.

Not seeing an issue so far with Georgian//Victorian stuff, well done, in z2/3, but heavy drops in Nine Elms and the like could make the contrast with a 1M 2 bed in Fulham/Chiswick/West Ken somewhat questionable...

[z4RRSchris]

I think as the delta between new and old stock narrows you'll see pressure on old stock pricing