End of the asset bubble?

[Candellara]

So, with the availability of "cheap money", mortgages increasing, the finance industry tightening - are we going to see the end of the asset bubble?

Well documented on the Rolex thread but are we also going to see the classic and modern classic market now deflate?

Let's face it, everything got way overheated so are we finally due this market correction / adaptation? (blue-chip cars being the possible exception?)

The tide seems to be against it along with fuel costs, electrification etc so is the only safe haven in property (rents still rising due to lack of housing availability and gold etc? Be interesting to see where this goes? Mods - maybe this should be in Finance section?

Interested to hear everyone's view.

Edited by Candellara on Thursday 14th July 19:24

[moles]

Housing will start to go. There is no shortage of housing in the uk outside of the south east. All the housing has been scooped up by second home owners amateur BTL landlords and air b&b. When the st hit the fan this inventory will suddenly come back online.

[Candellara]

moles said:

Housing will start to go. There is no shortage of housing in the uk outside of the south east. All the housing has been scooped up by second home owners amateur BTL landlords and air b&b. When the st hit the fan this inventory will suddenly come back online.

Yes, i think so in terms of property prices - over inflated and the lack of cheap money will see this come down. I'm sure it is already.

What's the collective MO?

Stocks / pensions etc - personally i'm buying but who knows where the bottom is. Property - i'm holding, as it's long term and everyone needs somewhere to live but i'm not highly geared. Focus most certainly is on eradicating debt though. Again, not highly geared but mortgage increases and interest rates are certainly something i'm conscious of.

Car's, holidays and other nice to have's - certainly starting to be a bit more prudent as to how the overall household funds are disseminated.. I guess the old adage of "it's not how much money you make but how much you keep" is certainly in my mind. Would i now spend a significant amount of money on a toy or a "nice to have" - probably not - hence my question. A viewpoint that the economy doesn't really need at the moment, but a view nonetheless.

Edited by Candellara on Thursday 14th July 20:06

Edited by Candellara on Thursday 14th July 20:07

Edited by Candellara on Thursday 14th July 20:09

[KarlMac]

I really hope so but there’s too many people with too much to lose for it to ever happen.

[Candellara]

KarlMac said:

I really hope so but there’s too many people with too much to lose for it to ever happen.

Time will tell and no doubt demand will dictate. The overriding question: What's the difference between an asset and a liability?

Edited by Candellara on Thursday 14th July 20:24

[Welshbeef]

KarlMac said:

I really hope so but there’s too many people with too much to lose for it to ever happen.

With too many people who have lots of dry powder to hoover up any fire sales.

[grumbledoak]

I think we've printed a lot more money than we built houses these last couple of years.

[rossub]

Car market has to pop.

Nowhere near enough people are actually willing to pay the stupid speculative prices being asked for all sorts of stuff.

[Jamescrs]

I dont think the car market will pop any time soon, more of a slow release of pressure maybe but the lack of raw materials is still keeping supply of new cars low which will maintain prices.

I fully expected house prices to start dripping but houses where I live in a desirable part of Leeds are still going up fast and people are still buying. I cant believe the prices myself at this point to be honest.

I do wonder what will happen this winter, I can forsee things will start biting in October/ November when gas and electric prices increase again and people have to turn the heating back on.

Personally I've cur down on the non essential purchases to keep my cash in the bank in reserve still maintaining my investments into savings plans but luxury purchases have stopped.

[Phooey]

I think there's been a few contributing factors to the asset bubble but it all comes back to too long a period of cheap borrowing.

We seem to of bought ourselves into a period of abnormal activity in most assets, and silliness in others. It can't carry on now interest rates are rising, and inflation and living costs are increasing at their highest rate for (40?) years.

There's a saying which goes something along the lines of "when the tide goes out we will see who has been swimming naked"

[Kawasicki]

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

[Welshbeef]

Kawasicki said:

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

Maybe because the tenants cannot afford the higher rent.

[Tagteam]

Candellara said:

KarlMac said:

I really hope so but there’s too many people with too much to lose for it to ever happen.

Time will tell and no doubt demand will dictate. The overriding question: What's the difference between an asset and a liability?

Edited by Candellara on Thursday 14th July 20:24

Unfortunately we are due a market correction, and with rising interest rates , recession looming (look at the fall in oil prices) , energy caps up another 50 per cent. It’s on its way . Already banking stocks taken a large hit which is a good indicator …

[Jamescrs]

Kawasicki said:

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

Doesn't work like that, the rent has to be competitive in the market otherwise no tenant and no rental income

[Welshbeef]

Jamescrs said:

Kawasicki said:

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

Doesn't work like that, the rent has to be competitive in the market otherwise no tenant and no rental income

Let’s say you were on 2.5% fixed and remortgage is 5% and let’s say £300k mortgage ….. Tennant will not be accepting a near 100% rent increase would they

[ChocolateFrog]

Does seem mad when average house prices even in deprived areas of the North are 10 times average income.

[Kawasicki]

Welshbeef said:

Kawasicki said:

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

Maybe because the tenants cannot afford the higher rent.

If most landlords increases rent… then what option do the tenants realistically have?

[okgo]

ChocolateFrog said:

Does seem mad when average house prices even in deprived areas of the North are 10 times average income.

Where?

[Welshbeef]

Kawasicki said:

Welshbeef said:

Kawasicki said:

If I owned a BTL, why would I not just increase rent to cover increased cost of borrowing?

Maybe because the tenants cannot afford the higher rent.

If most landlords increases rent… then what option do the tenants realistically have?

If they cannot afford it they cannot afford it.

I’d assume they would issue termination / notice. & for uplifts you cannot do it instantly there is a notice of uplift.

[ChocolateFrog]

okgo said:

ChocolateFrog said:

Does seem mad when average house prices even in deprived areas of the North are 10 times average income.

Where?

Lots of places. I live in Doncaster and I'd be amazed if the real average income is much above £22k a year, probably less.

Houses that were £50k pre pandemic are now £100k+

Houses that you'd want to live in we're £130k (like mine) now £200k 4 years later.

Nice detached houses on large plots were £400k, now £600k+

Wages haven't changed at all in that time.