How far will house prices fall [volume 5]

[V6Alfisti]

stongle said:

With thanks to Limpsfield for explaining whom Albert is.

In short Monetary policy is pretty much done on economy steering. The last time the G7 Central Banks got together, they wanted to hand the torch of to someone (anyone) else. We're so far down the chuff of loosening, QE etc; its just free money to go. The problem in the UK market is VERY much BREXIT influenced and dependency on foreign money. The game bag is full of tools to keep the foreign money (and firms business etc) coming in; not only in London BUT regionally too. Some of the options are pretty Nuclear (think Corporation Tax, Fiscal policy and Sovereign Investment) - but they are ALL doable and preferable to any house price collapse.

So your thoughts center on corporation tax (presumably reducing it), Fiscal policy (government spending on property? and making taxation more beneficial to property ownership/investment?) and funds that invest in property.

I guess so, although interesting the UK gov seems to have increased taxation i.e BTL and Stamp Duty. Let's see what else they will pull out the bag, it will need to be quite something to beat the 5% drop in interest rates/introduction of help to buy that was seen following 2008 ! That's also assuming the UK Gov still have the motivation to prop house prices given recent events and the strength of the millennial vote. Who knows, lets see.

[hyphen]

In papers today, New Zealand restricting foreign buyers of homes unless they have a resident visa.

[number2]

My tuppence, from my micro-market:

I'm in the process of selling in order to up-size. In theory prices decreasing is good - value of my place goes down less than the places I'm looking to buy.

In practice, a bit more tricky.

I've had very little interest in my place - I'd say no realistic viewings in 4 months. One viewing was for someone who wanted a ground floor flat (I'm not), two others didn't turn up, a neighbour showed some interest, and I dragged a couple in (before I went to market) who I noticed were with an agent viewing similar properties. Another viewing is booked in for the coming week.

The agent initially placed too high a price on my property - in my view - BUT, I gave them carte blanche as they are the experts and my view is well... my view... and they're getting paid for something.... (fixed fee in my case, although bricks & mortar). Reduced price now by almost 10% and I'm happy with that.

I will bite a hand off at what I consider a reasonable offer [will be clarified] and move into rented. The issue is that - as was pointed out earlier, volumes are falling through the floor - and there appears to be very little liquidity. I can't afford to price in the liquidity/risk premium unless I have confidence that it will also be available when I buy, so I'll need to hold tight. It's the start of a potentially deflationary spiral which we won't enter as nothing will sell as everyone will be waiting for tomorrow... so we'll stagnate while the forced sellers are cleared out. Maybe. I've been seeing the same properties on and off RM for 18 months.

While my expectations of return don't determine market price, if I sell at the current guide price, it will be a 6% p.a. nominal return (on total prop. value) over a 7 year period. Hardly earth shattering. It's a [once] desirable, Listed, apartment btw.

[loafer123]

number2 said:

My tuppence, from my micro-market:

I'm in the process of selling in order to up-size. In theory prices decreasing is good - value of my place goes down less than the places I'm looking to buy.

In practice, a bit more tricky.

I've had very little interest in my place - I'd say no realistic viewings in 4 months. One viewing was for someone who wanted a ground floor flat (I'm not), two others didn't turn up, a neighbour showed some interest, and I dragged a couple in (before I went to market) who I noticed were with an agent viewing similar properties. Another viewing is booked in for the coming week.

The agent initially placed too high a price on my property - in my view - BUT, I gave them carte blanche as they are the experts and my view is well... my view... and they're getting paid for something.... (fixed fee in my case, although bricks & mortar). Reduced price now by almost 10% and I'm happy with that.

I will bite a hand off at what I consider a reasonable offer [will be clarified] and move into rented. The issue is that - as was pointed out earlier, volumes are falling through the floor - and there appears to be very little liquidity. I can't afford to price in the liquidity/risk premium unless I have confidence that it will also be available when I buy, so I'll need to hold tight. It's the start of a potentially deflationary spiral which we won't enter as nothing will sell as everyone will be waiting for tomorrow... so we'll stagnate while the forced sellers are cleared out. Maybe. I've been seeing the same properties on and off RM for 18 months.

While my expectations of return don't determine market price, if I sell at the current guide price, it will be a 6% p.a. nominal return (on total prop. value) over a 7 year period. Hardly earth shattering. It's a [once] desirable, Listed, apartment btw.

Very interesting - thank you.

Roughly where are you?

[number2]

loafer123 said:

Very interesting - thank you.

Roughly where are you?

Hi Loafer, sorry, a general area would have been useful. An affluent commuter town a few miles outside the M25.

[Croutons]

hyphen said:

In papers today, New Zealand restricting foreign buyers of homes unless they have a resident visa.

Your point being what exactly?

It's a Labour government enacting a populist policy to try and appease the young who are priced out. Whoda thunk it?

The total number of foreign buyers is fk all, and it is only in the centre of Auk and Wellington where foreigners buy lots (and high priced stuff anyway that locals don't want, as they buy further out to have space).

There are other things they could do which would easily calm the markets, but they don't want to ps off all voters.

[wisbech]

number2 said:

My tuppence, from my micro-market:

I'm in the process of selling in order to up-size. In theory prices decreasing is good - value of my place goes down less than the places I'm looking to buy.

In practice, a bit more tricky.

I've had very little interest in my place - I'd say no realistic viewings in 4 months. One viewing was for someone who wanted a ground floor flat (I'm not), two others didn't turn up, a neighbour showed some interest, and I dragged a couple in (before I went to market) who I noticed were with an agent viewing similar properties. Another viewing is booked in for the coming week.

The agent initially placed too high a price on my property - in my view - BUT, I gave them carte blanche as they are the experts and my view is well... my view... and they're getting paid for something.... (fixed fee in my case, although bricks & mortar). Reduced price now by almost 10% and I'm happy with that.

I will bite a hand off at what I consider a reasonable offer [will be clarified] and move into rented. The issue is that - as was pointed out earlier, volumes are falling through the floor - and there appears to be very little liquidity. I can't afford to price in the liquidity/risk premium unless I have confidence that it will also be available when I buy, so I'll need to hold tight. It's the start of a potentially deflationary spiral which we won't enter as nothing will sell as everyone will be waiting for tomorrow... so we'll stagnate while the forced sellers are cleared out. Maybe. I've been seeing the same properties on and off RM for 18 months.

While my expectations of return don't determine market price, if I sell at the current guide price, it will be a 6% p.a. nominal return (on total prop. value) over a 7 year period. Hardly earth shattering. It's a [once] desirable, Listed, apartment btw.

That’s still 2-3 times inflation and/or wage increases over the same period. Which is approx a 20-25% drop in affordability

Interesting charts on the beeb comparing home ownership rates at age over time, for 25 year olds it has dropped from 40% to 25% ISTR

[jdw100]

hyphen said:

In papers today, New Zealand restricting foreign buyers of homes unless they have a resident visa.

Yes I saw that as well.

My ex moved back to NZ and says it’s really changed in terms of demographics- lots of wealthy Americans, Swiss, Germans etc in the area whereas 15 years ago they would have been a real novelty. She’s not in or near a big city either. House prices have significantly increased as well.

Lots of countries have different responses to the issue of rich foreigners coming in and buying up properties.

I was in Malaysia recently and was thinking I quite fancied a little apartment in George Town at some point. They have a system where you have to spend at least (off top of my head £150,000). Aim being to stop foreign investors buying up swathes of cheaper properties.

Where I live now, as a foreigner you would have to lease a property. 25 years is a standard term. You can buy through a nominee type arrangement but you’d be a bit mental (in my opinion) to do so as these agreements don’t generally stand up in court.

As I’m married to a citizen we can now buy land and property -until I was married I couldn’t even buy a scooter or car in my name.

Edited by jdw100 on Thursday 16th August 03:00

[wisbech]

JDW - even that is recent. At one stage lawyer was telling us to divorce, sign prenup and remarry (we didn’t have prenup and for family reasons my FIL wanted to give my wife land) but the constitutional court ruled that that was sex discrimination (we didn’t bring the case!) as if a man married a foreign woman he could still buy/ have land without prenup

Still the case that you have a year to sell/ change to leasehold title if your partner dies, as can’t have land in your name.

Noticed that prices in Bali are coming down, not sure about Jakarta

Edited by wisbech on Thursday 16th August 04:45

[Croutons]

anonymous said:

[redacted]

This one?

https://www.thedailymash.co.uk/news/society/expert...

[limpsfield]

Croutons said:

This one?

https://www.thedailymash.co.uk/news/society/expert...

And this one too

https://www.thedailymash.co.uk/news/business/coupl...

A COUPLE who bought a house are suddenly interested in ‘the economy’, their friends have confirmed.

Friend Joanna Kramer said: “Every conversation ends up being about the economy, like they’re Warren fking Buffet or something. Honestly, no one cares if interest rates go up by quarter of a per cent, or the pound drops against the yen.

[kingston12]

number2 said:

In theory prices decreasing is good - value of my place goes down less than the places I'm looking to buy.

In practice, a bit more tricky.

Indeed. I've found that the houses that I'd like to move to rise faster in percentage terms than mine during the 'good' times, and seem to continue to rise slightly in the 'bad' times whilst the value of mine is falling!

Hardly an ideal situation, but is more to do with screwed-up supply and demand than anything else.

[stongle]

V6Alfisti said:

So your thoughts center on corporation tax (presumably reducing it), Fiscal policy (government spending on property? and making taxation more beneficial to property ownership/investment?) and funds that invest in property.

I guess so, although interesting the UK gov seems to have increased taxation i.e BTL and Stamp Duty. Let's see what else they will pull out the bag, it will need to be quite something to beat the 5% drop in interest rates/introduction of help to buy that was seen following 2008 ! That's also assuming the UK Gov still have the motivation to prop house prices given recent events and the strength of the millennial vote. Who knows, lets see.

Millennial vote? We've got bigger problems now, and the case for intervention (on the housing market) is significant (and way beyond monetary tinkering).

BREXIT = All (prior) Bets are Off. UK is globally the 2nd largest services exporter, and we're handling BREXIT with the competence of the keystone cops. Soft Brexit is a bag of sh*te we either have cake and eat it all (yum yum) or be prepared to stick a stake into the heart of clowns in the EU, and that means pretty digital actions (we'd have been better off in, or letting the EUR blow up before taking our toys but the dye is cast). We're the only G7 nation with slowing growth, and business investment is <4% when it should be at 10%.

Fiscal Spend (required given lack of business investment) will not be directly on property but carefully considered infrastructure investments (outside London) to regenerate regions. We should also have a Sovereign Wealth Vehicle (along the lines of Norges) doing similar with very strict investment parameters. Tax revenues won't keep up with spend, so we need to borrow (and the BoE just put up rates). Of course the off held wisdom is we need to keep parity with the Fed; but the markets not buying that.

The BTL taxes and affordability measures previously implemented (when no one really believed a BREXIT was a real possibility); were really to throttle back rampant house price inflation - not to push the market into reverse. Pushing the market into reverse when its debt financed is insanity (to put that into perspective Eurozone bank balance sheet is 300% of the 28 member combined GDP - inc UK), we need to gradually de-lever. We are a service / consumer led economy that requires (perceived) wealth to fire it, consumption generates growth. Attack peoples wealth (even if distribution is unfair); on top of the BREXIT mess could mean pretty sh*tty results for UK Plc, I don't think the Govt can afford to let Houses prices wilt too much (and those advocating it really are a bit special as well - they don't exist in a vacuum).

Well, you'd have thunk it - but they don't seem to get in front of anything - so we'll probably f**ked (way beyond the comedy anecodotes and Tonker's never ending house search). And whilst the prognosis for London property is pretty bearish, a less than favourable BREXIT outcome means places like Bournemouth could become a frikkin bloodbath (see how the purple rinse brigade like their BREXIT choices when that chicken comes home to roost).

Edited by stongle on Thursday 16th August 14:14

[loafer123]

Personal projection there, I think.

London flats in Manor Park off £800 psf is insane.

Bournemouth houses off £350psf not so much.

And as for Brexit...it willl make little difference to 90% of the country and only a bit more to the other 10%. If anything, the weak pound is attracting more capital.

[stongle]

loafer123 said:

Personal projection there, I think.

London flats in Manor Park off £800 psf is insane.

Bournemouth houses off £350psf not so much.

And as for Brexit...it willl make little difference to 90% of the country and only a bit more to the other 10%. If anything, the weak pound is attracting more capital.

I'm not predicting a massive recession; but nil / anemic growth is a poor result (vs global peers, and certainly for public finances). I'll counter you're specific points:

1) The biggest employer in Bournemouth is JP Morgan. They up their Ops unit to Poland and the area is f**ked - it supports a lot of other legal, services etc business locally. Now Jamie might not do it; but he's been pretty vocal re BREXIT thus far (and not outside the realm's of reality that at some point Trump decides US banks need to be fully supported in Kentucky / wherever). Rinse repeat for other cities with high concentrations of FS.

2) You'll massively misreading BREXIT impact. Staying in OR sticking one in the EUs eye are polar results but BOTH infinitely better than some soft / lamo result we're sleep walking towards. Business investment has collapsed in real terms 60% - No Jobs, house prices collapse

3) We potentially have a socialist Govt in waiting - OPENLY talking about capital flight controls - its not a welcome mat for foreign money, particularly from anywhere sensible (we've sanctioned Russian money to death). In services this magic wall of foreign money ain't flowing in - and elsewhere our productivity sucks balls (and we want to cut off the flow of cheaper foreign labour). And if devaluing the £ is an objective, Carney's way off script (not that anyone in the mkt believes him).

There are very few positive indicators for the UK economy (currently), house prices are going to feel the brunt of this (failing an outbreak of commonsense from the government).

[loafer123]

And back at you;

No, the biggest “employer” in Bournemouth is pensions.

Even if we lose 20% of trade with the EU, it still only reflects just over one year’s growth - like every country, the vast majority of our economy is internal.

There is nil chance of Corbyn getting in. He can’t even overtake May, for God’s sake, and she’s laughable.

[stongle]

loafer123 said:

And back at you;

No, the biggest “employer” in Bournemouth is pensions.

Even if we lose 20% of trade with the EU, it still only reflects just over one year’s growth - like every country, the vast majority of our economy is internal.

There is nil chance of Corbyn getting in. He can’t even overtake May, for God’s sake, and she’s laughable.

Eh? Pensions won’t save working age people will it. JP is the single biggest private sector employer.

And the rest is usual NPE opinion.

Anyhoo, in my area of London we had the lowest reduction in sales; but seems to be softening. Near Neighbour had SSTC 3bed semi needs refurb at 680 (Fulham we are not), but just been remarketed as buyers pulled out. Not ideal as I might have to sell as we are reviewing non UK locations for our business (FS, but we’re looking for a base outside Europe so I’m on the wrong side of a regional arbitrage).

[hyphen]

loafer123 said:

Personal projection there, I think.

London flats in Manor Park off £800 psf is insane.

Bournemouth houses off £350psf not so much.

And as for Brexit...it willl make little difference to 90% of the country and only a bit more to the other 10%. If anything, the weak pound is attracting more capital.

Making a difference or not is not the question though? House prices reflect confidence, and if the papers and Carney etc are splashing doom and gloom as they have been doing for over a year now, confidence reduces

[FocusRS3]

hyphen said:

Making a difference or not is not the question though? House prices reflect confidence, and if the papers and Carney etc are splashing doom and gloom as they have been doing for over a year now, confidence reduces

Over the last 18 months I've noticed how prices on property has been reduced in my area.

My road is all very individual houses, expensive area with great commuter links into London and will be right at the Hub of Crossrail when it starts. One poor bloke has been trying to sell his house for over 2yrs now and hasn't had a single offer.

When the housing mkt is Bid you never see a 'For Sale', in our road but right now there are plenty

[V6Alfisti]

stongle said:

Millennial vote? We've got bigger problems now, and the case for intervention (on the housing market) is significant (and way beyond monetary tinkering).

Edited by stongle on Thursday 16th August 14:14

Yes in respect of losing power to Labour. If they want to keep power for another term, although there was some mumblings that they didn't given the likely fall out of Brexit.