How far will house prices fall [volume 4]

How far will house prices fall [volume 4]

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V6Alfisti

3,305 posts

226 months

Monday 30th July 2018
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turbobloke said:
Some questions if I may.

Do we all have operational Mk I crystal balls meaning we all really do know?!

What's normal, and when will it be reached?
I know you are playing devils advocate but ... of course not, but we do have the benefit of history and correlation.



I thought it was common knowledge to know that assets increase when money is cheap, when money isn't cheap the reverse happens, then add fuel to the fire when people see an asset value flying and fear of being priced out...until it reaches such a point where either a buyer cannot afford it or the surrounding fuel starts to dissipate. A bubble.

Noticed any trends with investment assets like classic cars, watches and houses in recent years?

Normal - Certainly not anywhere in the 0-2% range, at no point between 1975 and 2008 did interest rates drop below 3.5% until we had the global crisis which led to today's state of affairs. It is not a coincidence that house values of gone up so much on a pretty much global scale with a few exceptions.

The average over that same period was about 7% but even taking away some of the higher interest rates over that period, I think it's fair to say that even the lowest base rate of 3.5% is not an unreasonable place to be. You didn't think 0.5% was going to last/normal?

Edited by V6Alfisti on Monday 30th July 17:16

V6Alfisti

3,305 posts

226 months

Monday 30th July 2018
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Shnozz said:
Of course none of us have a crystal ball but if I did, whatever I see before us looks pretty grey and stormy.
Absolutely and history supports a number of those fears, I cannot comprehend anyone with knowledge thinking it will be the status quo when the cost of borrowing goes up against a back drop of the highest salary to house value disparities in recorded history.

Even with all the QE, HTB e.t.c the market in large parts of London are falling over itself. That doesn't take imagination, its happening right now.

p1stonhead

25,489 posts

166 months

Monday 30th July 2018
quotequote all
V6Alfisti said:
turbobloke said:
Some questions if I may.

Do we all have operational Mk I crystal balls meaning we all really do know?!

What's normal, and when will it be reached?
I know you are playing devils advocate but ... of course not, but we do have the benefit of history and correlation.



Economics 101 to know that assets increase when money is cheap, when money isn't cheap the reverse happens.

Noticed any trends with investment assets like classic cars, watches and houses in recent years?

Normal - Certainly not anywhere in the 0-2% range, at no point between 1975 and 2008 did interest rates drop below 3.5% until we had the global crisis which led to today's state of affairs.

The average over that same period was about 7% but even taking away some of the higher interest rates over that period, I think it's fair to say that even the lowest base rate of 3.5% is not an unreasonable place to be. You didn't think 0.5% was going to last/normal?


Edited by V6Alfisti on Monday 30th July 17:05
I think the main point is that the government isn’t going to allow rates to go up to a point such as 7% where it would bankrupt half the country who have ever known the interest rates we’ve had for ten years. They’ll do anything to stop that happening. No government wants to be within 1000 years of being in power when such a thing occurred.

V6Alfisti

3,305 posts

226 months

Monday 30th July 2018
quotequote all
p1stonhead said:
I think the main point is that the government isn’t going to allow rates to go up to a point such as 7% where it would bankrupt half the country who have ever known the interest rates we’ve had for ten years. They’ll do anything to stop that happening. No government wants to be within 1000 years of being in power when such a thing occurred.
That's why my crystal ball said a figure half that, but certainly not overnight.

However in all seriousness the loan values as a proportion of salary are so much higher now, even modest 0.25% increases are making people think twice, as I suspect many expected house prices to keep on rising and rates to stay super low for many more years to afford the monthlies.

p1stonhead

25,489 posts

166 months

Monday 30th July 2018
quotequote all
V6Alfisti said:
p1stonhead said:
I think the main point is that the government isn’t going to allow rates to go up to a point such as 7% where it would bankrupt half the country who have ever known the interest rates we’ve had for ten years. They’ll do anything to stop that happening. No government wants to be within 1000 years of being in power when such a thing occurred.
That's why my crystal ball said a figure half that, but certainly not overnight.

However in all seriousness the loan values as a proportion of salary are so much higher now, even modest 0.25% increases are making people think twice, as I suspect many expected house prices to keep on rising and rates to stay super low for many more years to afford the monthlies.
To be fair, anyone who would suffer because of a 0.25% increase are likely sailing very close to the wind in a lot of aspects of their financials. It’s hardly anything on a ‘normal’ mortgage.

tannhauser

1,773 posts

214 months

Monday 30th July 2018
quotequote all
p1stonhead said:
V6Alfisti said:
p1stonhead said:
Overvalued compared to incomes. Thats not the same. Foreign investors dont have 'incomes' which means its pointless. Not only locals can buy.
We all know that as soon as interest rates reach a normal average, house prices definitely will not be maintained.
Normal based on?

ten years is 'normal' in my book. Its certainly been a much longer constant rate than ever before. Doesnt that count as 'normal'?
No it bloody doesn't. This has been ten years of unprecedented, abnormally low interest rates due to a spineless Government and BOE. Not normal at all, and completely unsustainable.

p1stonhead

25,489 posts

166 months

Monday 30th July 2018
quotequote all
tannhauser said:
p1stonhead said:
V6Alfisti said:
p1stonhead said:
Overvalued compared to incomes. Thats not the same. Foreign investors dont have 'incomes' which means its pointless. Not only locals can buy.
We all know that as soon as interest rates reach a normal average, house prices definitely will not be maintained.
Normal based on?

ten years is 'normal' in my book. Its certainly been a much longer constant rate than ever before. Doesnt that count as 'normal'?
No it bloody doesn't. This has been ten years of unprecedented, abnormally low interest rates due to a spineless Government and BOE. Not normal at all, and completely unsustainable.
Says who?

Anyone on a 20 year mortgage would be more than half through on these ‘unsustainable’ rates if they secured it ten years ago.

You can fix right now for 5 years at under 2% and 10 years at under 3%. A 2.7% (available to me right now) ten year fix could get me within 4 years of finishing my mortgage and i would be 45 having never experienced any BOE rates above 0.5% as a homeowner.

Rates will not go up past 2% BOE for at least 5 years IMO

Again - see my previous comment about partially playing devils advocate.

Edited by p1stonhead on Monday 30th July 18:50

turbobloke

103,744 posts

259 months

Monday 30th July 2018
quotequote all
p1stonhead said:
tannhauser said:
p1stonhead said:
V6Alfisti said:
p1stonhead said:
Overvalued compared to incomes. Thats not the same. Foreign investors dont have 'incomes' which means its pointless. Not only locals can buy.
We all know that as soon as interest rates reach a normal average, house prices definitely will not be maintained.
Normal based on?

ten years is 'normal' in my book. Its certainly been a much longer constant rate than ever before. Doesnt that count as 'normal'?
No it bloody doesn't. This has been ten years of unprecedented, abnormally low interest rates due to a spineless Government and BOE. Not normal at all, and completely unsustainable.
Says who?

Anyone on a 20 year mortgage would be more than half through on these ‘unsustainable’ rates if they secured it ten years ago.

You can fix right now for 5 years at under 2% and 10 years at under 3%. A 2.7% (available to me right now) ten year fix could get me within 4 years of finishing my mortgage and i would be 45 or with a bit of overpaying would clear it easily.

Rates will not go up past 2% BOE for at least 5 years IMO

Edited by p1stonhead on Monday 30th July 18:48
Soon after brexit - negative rates anyone?

Low odds.

p1stonhead

25,489 posts

166 months

Monday 30th July 2018
quotequote all
turbobloke said:
p1stonhead said:
tannhauser said:
p1stonhead said:
V6Alfisti said:
p1stonhead said:
Overvalued compared to incomes. Thats not the same. Foreign investors dont have 'incomes' which means its pointless. Not only locals can buy.
We all know that as soon as interest rates reach a normal average, house prices definitely will not be maintained.
Normal based on?

ten years is 'normal' in my book. Its certainly been a much longer constant rate than ever before. Doesnt that count as 'normal'?
No it bloody doesn't. This has been ten years of unprecedented, abnormally low interest rates due to a spineless Government and BOE. Not normal at all, and completely unsustainable.
Says who?

Anyone on a 20 year mortgage would be more than half through on these ‘unsustainable’ rates if they secured it ten years ago.

You can fix right now for 5 years at under 2% and 10 years at under 3%. A 2.7% (available to me right now) ten year fix could get me within 4 years of finishing my mortgage and i would be 45 or with a bit of overpaying would clear it easily.

Rates will not go up past 2% BOE for at least 5 years IMO

Edited by p1stonhead on Monday 30th July 18:48
Soon after brexit - negative rates anyone?

Low odds.
Not beyond the realms of possibility. IIRC Japan did it 3-4 years ago?

Rovinghawk

13,300 posts

157 months

Monday 30th July 2018
quotequote all
One of my places is becoming vacant shortly- I think it's time to sell.

There are various personal reasons for wanting to sell but in addition to these I think the market is going to stagnate at best, the government are actively attacking landlords and the attacks will increase plus there is the risk of a near-future labour government making me feel the need to acquire some flight assets & a foreign bolthole.

Time to sell up, take the money & prepare to run.

Zonergem

1,368 posts

91 months

Monday 30th July 2018
quotequote all
Can't see negative rates unless there was demand to hold sterling anyway for security reasons (hence negative rates as applied to CHF or to long term German gilts). Far more likely is an increasingly weak pound and imported inflation.

OzzyR1

5,701 posts

231 months

Monday 30th July 2018
quotequote all

As this is nearly due another volume, this was the third post in Nov 2012.

jonny70 said:
how far will they fall by the time we get to page 500?
Can't be bothered to find precise numbers but it looks in the area of £180K to £225K rise

Wonder what the next 500 pages will bring...



Edited by OzzyR1 on Monday 30th July 20:17

JBR58

1 posts

90 months

Monday 30th July 2018
quotequote all
fido said:
ashleyman said:
Armageddon is already happening because of Trump & Brexit. It is in advertising anyway.
Yeah, it's terrible at the moment .. it took me a whole 3 weeks from viewing to exchange to sell a property last month. I'm still waiting for the doom and gloom to spread to the supply-side - the most realistic vendor I have come across so far is willing to sell me their place for only 5% over the surveyor valuation.


Edited by fido on Thursday 19th July 10:49
Yep. If a house is up for sale for longer than a couple of weeks where I live there's something wrong with it! It's been like this for the 3 years +, and no sign of letting up. ...oh, and don't even think of going in lower than the asking if you want to be considered as a serious buyer.

Keep waiting for the slowdown but I can't see it happening this year - too much demand





Zonergem

1,368 posts

91 months

Monday 30th July 2018
quotequote all
JBR58 said:
Yep. If a house is up for sale for longer than a couple of weeks where I live there's something wrong with it! It's been like this for the 3 years +, and no sign of letting up. ...oh, and don't even think of going in lower than the asking if you want to be considered as a serious buyer.

Keep waiting for the slowdown but I can't see it happening this year - too much demand
Wild guess but are you in York? I straight-out offered full (and generous) asking price this morning on first viewing of an off-market property and it was 20k over and heading to sealed bids within an hour.

rival38

485 posts

144 months

Monday 30th July 2018
quotequote all
Linked below is a story about a subject that i dont think is getting much attention.
Mr Corbyns plan to give the BoE a ‘dual mandate’ in order to facilitate political descisions as to which areas of the economy credit is to be targetted at / avaiable for.

Full on centralised planning / command economy here we come......?

Good for housing? I doubt it, in fact proabably not good for much.

https://mises.org/wire/british-left-unveils-plan-w...


V6Alfisti

3,305 posts

226 months

Monday 30th July 2018
quotequote all
p1stonhead said:
Says who?

Anyone on a 20 year mortgage would be more than half through on these ‘unsustainable’ rates if they secured it ten years ago.

You can fix right now for 5 years at under 2% and 10 years at under 3%. A 2.7% (available to me right now) ten year fix could get me within 4 years of finishing my mortgage and i would be 45 having never experienced any BOE rates above 0.5% as a homeowner.

Rates will not go up past 2% BOE for at least 5 years IMO

Again - see my previous comment about partially playing devils advocate.

Edited by p1stonhead on Monday 30th July 18:50
The point about anyone on a mortgage ...accepted that was loose wording/thinking.

This thinking applies more to new first steppers/those who are pushing their luck abit, rather than those that have bought with a healthy deposit/retain savings or half way through a mortgage having bought at house prices nearly half what they are now. All to be taken in perspective.

You also use your own position to suggest this is the norm, I suspect many new entrants would not be in the same position.

The point about negative equity remains, if you were a new entrant to the market fixed at 2% for 5 years and house prices drop, and try to remortgage at new rates/equity...your approach fails quickly. No-one knows what the next 5-10 years, but I personally prefer to plan with some buffer.

On the point of 10 years of sub 0.5% being normal, I know you are playing devils advocate but hopefully you know as well as anyone that it isn't sustainable and causes multiple issues including inflation.


Edited by V6Alfisti on Monday 30th July 21:13

Newky Brown

1,372 posts

227 months

Monday 30th July 2018
quotequote all
Zonergem said:
JBR58 said:
Yep. If a house is up for sale for longer than a couple of weeks where I live there's something wrong with it! It's been like this for the 3 years +, and no sign of letting up. ...oh, and don't even think of going in lower than the asking if you want to be considered as a serious buyer.

Keep waiting for the slowdown but I can't see it happening this year - too much demand
Wild guess but are you in York? I straight-out offered full (and generous) asking price this morning on first viewing of an off-market property and it was 20k over and heading to sealed bids within an hour.
It's similar to where I am in Mansfield, not the most picturesque of towns but we've seen a few on rightmove, planned to go and have a look and they've sold in less than a week!

ooid

4,049 posts

99 months

Monday 30th July 2018
quotequote all
Slightly out of topic (or not)

Anyone familiar with Woodford Green area (London) ? I have been to Lexus dealer there recently, blimey there are some fantastic houses there with massive drive-ways! checking at Zoopla, they are not looking that expensive? (shy of 1 million or 1.5).. and not so far away from London with central line connection.

whistle

Tango13

8,398 posts

175 months

Monday 30th July 2018
quotequote all
Rovinghawk said:
One of my places is becoming vacant shortly- I think it's time to sell.

There are various personal reasons for wanting to sell but in addition to these I think the market is going to stagnate at best, the government are actively attacking landlords and the attacks will increase plus there is the risk of a near-future labour government making me feel the need to acquire some flight assets & a foreign bolthole.

Time to sell up, take the money & prepare to run.
yes

I've just relocated to Lincolnshire from Hertfordshire for work so I've had a search set up on Rightmove for the past year or so. I would honestly say there has been an imperceptible softening in the housing market compared to 12/18 months ago.

I've noticed that good properties in Lincolnshire at the right price are still sold before you can blink but others are having to reduce the asking by quite a lot and still not selling.

Flats where I used to live in Hertfordshire where I could walk out of my front door and be on the tube at Kings Cross inside the hour all on public transport are prime commuter territory...

A good 75% have been reduced from their original asking price, the other 25% will, imho need to reduce the asking if they want a realistic chance of selling, I sold 5% below what I wanted but still think the buyer paid too much.

Personally I'd get out now whilst there are still buyers about as I think any sort ot BTL property will at best stagnate pricewise and if Comrade Corbyn gets in the kick in the bks BTL landlords have received over the last year will seem like a lovers caress compared to the right royal screwing Corbyn will dish out.



Dindoit

1,645 posts

93 months

Monday 30th July 2018
quotequote all
OzzyR1 said:
As this is nearly due another volume, this was the third post in Nov 2012.

jonny70 said:
how far will they fall by the time we get to page 500?
Can't be bothered to find precise numbers but it looks in the area of £180K to £225K rise

Wonder what the next 500 pages will bring...
It’ll bring brick kickers who never actually buy but enjoy talking the market down. Plus ça change
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