How far will house prices fall [volume 5]

[kingston12]

Joey Deacon said:

MX-6 said:

So as per usual the government are planning to prop up the housing market. Boris is talking of "long term, fixed rate" 95% mortgage for FTB's, it seems to be some sort of guarantee scheme like HTB but it's light on details.

https://metro.co.uk/2020/10/06/first-time-buyers-t...

I guess it's a good thing, for FTB's getting onto the so called ladder and for existing owners/sellers as well. It will go some way to help prop up current prices, so those wanting a crash might be disappointed.

The HousePriceCrashers must be going mental. For months they have been calling peak and expecting massive falls and the government once again do everything they can to stop prices falling.

If this comes off then the market will go crazy, suddenly there will be millions of people added to the market who could never have afforded a house otherwise. We will go back to open house inspections and houses going to sealed bids.

You’d hope that most of the people from the House Price Crash site would have worked out what is going on by now.

The expectation of a crash was very valid in the early 2000s, but then the game changed so completely that it is impossible to go back.

The government have thrown everything at supporting house prices since then, so why would anyone expect them to suddenly stop now.

Now we are in a situation where Boris is trying to ‘fix the broken housing market’ by breaking it even more in a traditional sense.

[Shnozz]

NickCQ said:

Burwood said:

And your kids live in Devon. Pretty crap moving to cash in and not see your family.

Other locations are available...
The South of the UK is not so large / I don't need to see my family so frequently that I would be meaningfully restricted by the drive time.

Not sure Devon is a great example. I originally hail from Southampton and had a big client in Plymouth. The road network to get to that part of the country is very slow and you can add the further hour it took me to drive the M3/A3 to London (add another hour non-rush times to get to East London).

Leeds > London (or Soton) takes me less time.

I do think its a fair point about wanting to be in short (time) distance from family in later years. My mum suffered a heart attack last week and its awful not being able to get to visit her at present. Part of that is Covid/quarantine related but nonetheless even if I was within the UK, its a 4 hour trip and I couldn't stay for a lengthy period due to work. Having her 15 mins down the road would be a lot better right now.

[rm163603]

Mining Subsidence Man said:

Just back from my 6 week ban for upsetting someone. This is as bad as facebook for good-think enforcement.

Back in the SW mining world. We are flying x10 with nitrous oxide and 10 bar boost. We have never been so busy ever. It is incredible. I know some people on here were calling me "things" for varying my view on a weekly basis, over the last 6 weeks, accounting for that, we have been busy, more busy and now flat out. I've got all sorts of projects on. More and more new builds. The big site I've got have are banging out 3 phases in the time they would have done about 1 and a bit. Investors are pitching in. I've got 3 very big luxury mansions with holes under them and a guy selling a block of flats with a massive shaft in the front garden. My last (6 weeks ago) assessment was that the residential stuff was slow, but developers and new builds were flying. Now it's all flying.

I was stood yesterday (social distancing) around a dug out shaft with 3 blokes talking about how mad the building industry has gone. I can't speak for the rest of the country, but down here property is at fever pitch. I remember calling the estate agents bullstters for saying it was mental and we weren't seeing it, but it's worked it's way through conveyancing and it is flying.

Interestingly, I gather a fair few bounceback loans have found their way into BTL. I gather the market for these is strong. Everything has a sold sign.

The hospital is still empty, I haven't had any calls for supply teaching, which is good, because I don't need it. I have done more work since lockdown than we did in the whole of last year. Interestingly, the hot tubs place has pretty much done the same thing, also the guys selling "eco campers" (VW conversions) are selling tens of these. They are flat out.

It seems all of the funny money is still circulating and certain sectors of the economy, namely things relating to property and things relating to leisure are flying. My BIL took over a very well known soft surfboard factory and since lockdown, they've been more busy. Either surf hire places restocking their boards with funny money, or people wanting boards with their furlough spare time, etc. It is quite a thing to contemplate what is happening.

When is it going to stop.... That's what we are all asking. I was asking that last time and it's just carried on more and more, busier and busier.

If the funny money is going to stop, the musical chairs game will stop shortly afterwards. It seems to me that certain people are making a fortune in this. For the first time in a while, I can say that if this keeps up, I will be earning VERY good money. Surely, that can't happen though?!?!?

how will this be paid for?

Surely, we're going to have a proper period of inflation now.

To summarise. WTF?

I've also heard several tales of bounceback loans making their way into property.

I suppose if you're a property developer then it's a completely kosher use of the money...

[anonymous-user]

rm163603 said:

I've also heard several tales of bounceback loans making their way into property.

I suppose if you're a property developer then it's a completely kosher use of the money...

Surely these BBLs are paid into a company account, so if you take the money out to spend you have to pay tax on it? Or is it, as I suspect going to be a case of the government turning a blind eye? I am certain so many people are going to just close companies or default that they will never be able to chase everybody and will just give up.

To me it is helicopter money

[98elise]

Joey Deacon said:

rm163603 said:

I've also heard several tales of bounceback loans making their way into property.

I suppose if you're a property developer then it's a completely kosher use of the money...

Surely these BBLs are paid into a company account, so if you take the money out to spend you have to pay tax on it? Or is it, as I suspect going to be a case of the government turning a blind eye? I am certain so many people are going to just close companies or default that they will never be able to chase everybody and will just give up.

To me it is helicopter money

Why would the government/HMRC turn a blind eye to fraud?

If you take cash out of the business then it's going to be taxed. You could take it as a director's loan, but then you need to pay interest to the company (and of course the loan is repayable). There is a corporation tax hit after a certain time.

[MX-6]

Halifax is reporting that UK mortgage applications at a 12 year high now, so demand is stronger than ever it seems despite prices being what they are.

https://www.theguardian.com/business/2020/oct/07/u...

[anonymous-user]

MX-6 said:

Halifax is reporting that UK mortgage applications at a 12 year high now, so demand is stronger than ever it seems despite prices being what they are.

https://www.theguardian.com/business/2020/oct/07/u...

Can well believe it, if you have a 20% deposit the deals are crazy cheap. I have two going through at the moment, a BTL at 1.61% and a residential at 1.59%

£180K BTL interest only at £241 a month. If you have the deposit sitting in a marcus account earning 0.7% or NS&I earning 0.01 why wouldn't you buy a BTL with it?

Looks like even the HousePriceCrash cultists are starting to get it

"This thing has legs now, right through till April next year, there will be a mad rish to buy after christmas, look prices are shooting up, we're losing our jobs, we need to buy now, it'll cost ups 3% more etc etc etc, then Boris' criminal government sub-prime 0.1% 50 year inter-generational mortgages will be wheeled in

Give it up folks, they have beaten us, our money is worthless."

Edited by anonymous-user on Wednesday 7th October 12:37

[okgo]

They're more expensive now than they were at the beginning of the year.

I can't get my mortgage now.

[p1stonhead]

Record average price again. £250k.

What pandemic/economic meltdown/brexit

[anonymous-user]

p1stonhead said:

Record average price again. £250k.

What pandemic/economic meltdown/brexit

The problem is it appears that those who are in low paid jobs are being most effected by the recession/redundancy. Pubs, Retail, Cinema, Travel, Dining etc. have all been effected but lots of other industries where people can work from home are busier than ever.

Plus, those that can work from home are actually saving money on not having to commute, buy work clothes, lunch etc. Plus they can look to buy a bigger property outside of London as they no longer need to commute every day.

I think there are still a lot of people out there who have deposits and can get mortgages or simply have access to family money.

Unfortunately as ever it effects the poorest most and creates an even bigger wealth divide.

[PrinceRupert]

Joey Deacon said:

The problem is it appears that those who are in low paid jobs are being most effected by the recession/redundancy. Pubs, Retail, Cinema, Travel, Dining etc. have all been effected but lots of other industries where people can work from home are busier than ever.

Plus, those that can work from home are actually saving money on not having to commute, buy work clothes, lunch etc. Plus they can look to buy a bigger property outside of London as they no longer need to commute every day.

I think there are still a lot of people out there who have deposits and can get mortgages or simply have access to family money.

Unfortunately as ever it effects the poorest most and creates an even bigger wealth divide.

Yup. I don't know any professional who is at risk of redundancy. In fact one US law firm in London just chucked its NQs a 25k pay rise (from 105k to 130k, at 25...) ...

[number2]

The circumstances dictate that a large proportion of jobs going are at the lower end of the pay scales and aren't affecting the housing market - which is the focus of this thread.

We might expect the effect to work through the economy, but it hasn't yet, and when it does is likely to be so diluted as to not have much of an impact.

Money not spent in the plethora of lunchtime eateries (or similar) is going into savings or in circulation elsewhere.

Anything to do with house refurbishments/property is as active, if not more so, than it always has been. People are shopping for food and 'stuff' as much as ever. It's all just shifted around a bit.

[Helicopter123]

p1stonhead said:

Record average price again. £250k.

What pandemic/economic meltdown/brexit

The property market is quite heavily rigged by the government, and now that Boris has remembered he is a Tory it looks as if further demand is going to be created via 95% mortgage deals at long-term fixed rates.

While there will be the odd bump in the road, those (still) waiting for a large decline in prices are likely to find themselves disappointed.

[PrinceRupert]

John Locke said:

They look utterly scummy; divide the ask by ten, and I still wouldn't bother viewing. I find it hard to believe that anyone with enough brains to accumulate the capital, or earn enough to borrow, to buy at those prices is willing to live in such dumps.

They are both fairly average London family homes. Both look pretty decent and modern inside.

[NickCQ]

PrinceRupert said:

Yup. I don't know any professional who is at risk of redundancy. In fact one US law firm in London just chucked its NQs a 25k pay rise (from 105k to 130k, at 25...) ...

However, we are getting 20%+ fee discounts from Magic Circle firms on M&A diligence work, which we haven't seen for years, so there must be some revenue pressure.

[MX-6]

Joey Deacon said:

p1stonhead said:

Record average price again. £250k.

What pandemic/economic meltdown/brexit

The problem is it appears that those who are in low paid jobs are being most effected by the recession/redundancy. Pubs, Retail, Cinema, Travel, Dining etc. have all been effected but lots of other industries where people can work from home are busier than ever.

Plus, those that can work from home are actually saving money on not having to commute, buy work clothes, lunch etc. Plus they can look to buy a bigger property outside of London as they no longer need to commute every day.

I think there are still a lot of people out there who have deposits and can get mortgages or simply have access to family money.

Unfortunately as ever it effects the poorest most and creates an even bigger wealth divide.

I very much agree with that assessment.

I've said it previously here, I don't think house prices are too high as such, it's more an issue of wages for working class/unskilled/semi-skilled type jobs have lagged real inflation. The government have intervened with measure like national minimum wage and raising the income tax threshold, but it seems to me that real buying power has declined over maybe the last 10, 20 years. There are quite a lot of job sectors for the middle class/professional/skilled workers in the UK which pay very well and have seen good rises in pay over those years - banking/finance, IT/telecomms, legal, pharmaceutical/medical, engineering, marketing/sales, design, senior management, aviation, etc. Even many public sector professionals are very well renumerated relative to those on minimum wage earning. So there seems to be quite a divide that has opened up, which I think is doing some interesting things to house prices - differences between certain areas and different types of properties.

Apparently the UK average salary is £29,600, that includes both full time and part time. The average for full time only is £35,400. The average house price in the UK is now about £237,800, so it's quite easy to see how the average working couple can afford to buy the average house. In reality there are a lot of people on low incomes who just won't be in the running to buy. I'd be really interested to know what the average household income is for house buyers, I suspect it would be significantly more than the national average household income across the board.

[PrinceRupert]

NickCQ said:

However, we are getting 20%+ fee discounts from Magic Circle firms on M&A diligence work, which we haven't seen for years, so there must be some revenue pressure.

I work at a Magic Circle firm, our M&A / PE teams are definitely quieter than they were. My corporate support department has remained busy and we have recruited quite a few extra heads despite lockdown, and a few other teams also remain busy (noticeably restructuring and insolvency for obvious reasons). PE is starting to pick back up. Promotions and pay rises were put on hold back this year and are to be reviewed at the tail end of this year, but not holding out for big rises (not like last year). We know the UK firms can't compete with the US firms on wages, and the White and Case pay rises that I mentioned is to bring them more in line with their US rivals than the UK firms (though interesting they chose to do it now and not last year when salaries were going mad). However, I do not expect we will be making fee earners redundancies, which did happen across the industry in 2008/09. The only stories I have heard of lawyer redundancies have been in big real estate teams in regional firms.

[MX-6]

John Locke said:

2gins said:

Just been looking at my benchmark area of SW London this morning, not much coming on or so it appeared; I put the upper bound from 700 to 800k and.... there they are! So now it looks like £700k+ for a 3 bed mid terrance in reasonable condition, on the wrong side of town with rubbish public transport and minimal local amenities (West Twickenham). A year ago it was £600k+ with total refurb crackpot / dead old ladies houses from 500k.
Haven't looked for any LR sold prices yet, its probably too soon to see where they end up. But if that's the true state of the market we won't bother. Sit tight until our eldest leaves primary school and then leave London. That means another 4 years in a 2 bed flat with 2 kids, but we can't afford 700k anyway so that's that.

Even if we could make that work, 700k for that is just insanity. Example

https://www.rightmove.co.uk/property-for-sale/prop...

This one a bit less mad but still about 80k over true worth:

https://www.rightmove.co.uk/property-for-sale/prop...

They look utterly scummy; divide the ask by ten, and I still wouldn't bother viewing. I find it hard to believe that anyone with enough brains to accumulate the capital, or earn enough to borrow, to buy at those prices is willing to live in such dumps.

I think that's putting it a bit strongly, but I would agree that in many parts of the country houses like this are 10 a penny and would be inhabited by a relatively low income family.

[okgo]

MX-6 said:

I think that's putting it a bit strongly, but I would agree that in many parts of the country houses like this are 10 a penny and would be inhabited by a relatively low income family.

And until recently, the same could be said of that area. If you had money you'd be in Hampton Hill/Hampton/Twickenham proper. Everything north, west and southwest of there isn't all that pleasant.

[GlenMH]

PrinceRupert said:

Yup. I don't know any professional who is at risk of redundancy. In fact one US law firm in London just chucked its NQs a 25k pay rise (from 105k to 130k, at 25...) ...

I know 2 architects who have been made redundant but I haven't heard of any other professionals who are at risk at the moment - although there is quite a lot of murmurings coming from the engineers employed at RR due to the collapse in air travel.