Housing market

[mandryka]

This is starting to get me down now, everything I enquire about has already gone no matter how soon I phone.

Latest one got listed yesterday, just phoned them and they're fully booked and only taking names and numbers now, which is a complete waste of time.

I assume people are sat around refreshing pages all day and getting in seconds after they've been listed, I don't stand a chance if that is the case.

This can't be sustainable can it?

If the agents know you're looking they may contact you before it's listed. If you're renting, have your referees ready to respond quickly. Renting in London will be very hard if you have ccjs or your verifiable annual income is less than 35× monthly rent.

 

[andyoz]

House prices crashed here (NI) in 2008, a lot of them halved. They were grossly over inflated prior to this due to the amount a borrowing on offer.
Slowly over the next 10-12 years the economy recovered and house prices crept up, a little every year. Back to 'normal' .
During the past couple of years we've seen another boom in the property market, due to Covid restrictions people who would have otherwise spent their money on the High Street or holidays were now looking to spend on property, a demand for more space, home offices, bigger gardens, etc, they've also been spending alot on home renovations now that they see the price they can get, demand is outstripping supply, prices are rising, people bidding up £5-10K at a time.
Two of the houses we looked at had been bought prior to the crash, the vendors in both cases were only getting back up to the prices of what they paid originally in 2007.
According to the quarterly reports the bubble or boom had started to plateau in the last quarter of 2021, this of course will be partly due to the season but from my observations the market is beginning to slow.
With the increases in the cost of living driven by Gas and fuel prices and a return to working in the office rather than home, High Street shopping and holidays I think people will start to think twice about moving to a bigger property. I also think the Bank of England will increase Interest rates a few times over the next year.
We sold our house during the summer, it went on the market in the 2nd week in June and was sold (sale agreed) within 5 days. Great for us. Unfortunately I couldn't get my lovely wife to get her head out of the sand to look at properties before ours went to market. We've had 3 sales fall through for a variety of reasons. Our 4th sale agreed seems to be going through okay, fingers crossed.
@matt j I set up instant alerts within a certain area and price range with Propertypal and Propertynewsni, I'm sure something similar is available in your desired area, the house we currently have a sale agreed on only was online for a few minutes, it turned out the estate agent had made a mistake as the vendor didn't want to be bothered with viewings on the run up to Xmas but as I had saw it and phoned immediately we got a viewing the next day, made an offer of the asking price which was accepted. Hopefully you'll have a bit luck and find the right place for you.

NI and Ireland was really intense. Even now, there are still buyers from circa 2008 that are in trouble with the banks. Last month, I was offered TWO in the same Belfast street 'off the books' by an agent working on behalf of banks that are finally closing up shop on a buyer of multiple properties during the Celtic tiger - the seller has never managed to got their head above water from back then...nearly 15 years!!

If the principle amount of the mortgage is wrong no amount of low interest rates can save some that have gone in too deep.

It's incredible the shit that sits in a system for decades.

 

[davidsrsb]

SE Asian housing markets are still stalled, just like the stock markets.
Not as bad as China though

 

[matt j]

This latest one was a rental, I've more or less given up on owning. But even rentals are gone same day.

 

[mentalp]

Renting in London will be very hard if you have ccjs or your verifiable annual income is less than 35× monthly rent.

That's scary - by that criteria I'd need to be earning more than twice as much as I do for a place equivalent to where we live now ( based on Zoopla's estimated rental value) and we're in Zone 4

 

[mandryka]

That's scary - by that criteria I'd need to be earning more than twice as much as I do for a place equivalent to where we live now ( based on Zoopla's estimated rental value) and we're in Zone 4

Well hard but not impossible. With less than 35× (or maybe 36x now I think about it) income the credit check comes back with a red flag. Many agents will try to persuade the landlord to take the tenant anyway, and some landlords will be ready to take the risk.

There are major changes to the law governing domestic tenancy agreements imminant, and significant changes to the law governing the types of properties rentable in England are expected too. These will have an impact on the supply side I expect - both of rentals and sales.

 

[Enfield boy]

IMHO the following need to happen for a market reversal:

1. IR’s to meaningfully rise, say to 5% (still historically very low). That should flush out enough of the debt junkies.

Your debt junkies are my young owners trying to stop filling rapacious landlords coffers


2. Govts to stop throwing money around and bailing everyone out.

Govt has only bailed out banks and big business, even UC is a subsidy to crap employers


3. Banks to get the jitters, tighten lending criteria and reduce forbearance.

Doing what they always do then, offering an umbrella when it's not raining.


4. Govt to stop everything to ‘help’ people buy a house, it just further inflates prices.

Agreed, most help to buy eligible properties are overpriced and the owners often struggle to sell at the price they paid. Again a con, to help businesses not aspiring home owners.


5. Forced sales to return (see 1, 2 and 3 above). This is the key to prices falling.

Lenders in the past didn't seem bothered to get the best price knowing the victims would have a judgement against them for any shortfall

Of course, the biggest issue is that govts absolutely love high house prices (for the reasons we all know) and will continue to do virtually anything to pump in more air. It’s one big mirage I’m afraid but we have little choice but to participate. The increased cost of living will bite and could take some heat out of the market but it’s tinkering around the edges. You’ll know we’re heading for trouble when you see people putting £20 of fuel in their (leased) £50K+ motor.

I appreciate you outlined the conditions that would lead to people with negative equity being made homeless but the use of terms like "debt junkie" are offensive for the vast majority of home buyers. In the event of the property market crashing anyone who loses their job or has to renegotiate a fixed term mortgage could find themselves homeless.

 

[Snufkin]

In the event of the property market crashing anyone who loses their job or has to renegotiate a fixed term mortgage could find themselves homeless.

As do people renting if their landlord wants their property back, what’s the difference?

 

[Ponty]

I appreciate you outlined the conditions that would lead to people with negative equity being made homeless but the use of terms like "debt junkie" are offensive for the vast majority of home buyers. In the event of the property market crashing anyone who loses their job or has to renegotiate a fixed term mortgage could find themselves homeless.

Unfortunately, this is what happens when we have over a decade of ‘emergency’ interest rates. Rather than take the pill at the time, the can has been kicked repeatedly down the road and is now the size of a supertanker. At some point, we’re going to to have to pay the piper which will mean a correction and pain for the over leveraged who cannot service their commitments. Bail outs amount to sticking another propeller on the supertanker heading towards land. The alternative conclusion is that the next (even current) generation will rent from the bank for life, which could of course be the plan.

 

[andyoz]

What I don't think enough buying with small deposits are factoring in is the potential for negative equity (it can happen) and how that affects your access to the best mortgages when your current one is up for renewal. Once in negative equity, you're the banks pawn and end up on their least attractive products. So the era of super low interest rates (and the reason many have gone 'all in' recently) can soon evaporate for the ones that need it the most to stay afloat.

 

[sean99]

Since many governments are heavily in debt themselves there is little to no incentive to raise interest rates or reduce inflationary policies (QE, help to buy etc). Would the UK government be able to finance itself with IR at 5% and the housing market in freefall (with the resultant decrease in tax revenues).
I think the decision was made back in 2008 or earlier that the currencies (GBP, USD, AUD) would all be destroyed before any hint of deflation is allowed.

 

[clivem2]

It's interesting to look at some mortgage figures vs interest rates.

A £250k repayment loan over 25 years @2.3% may cost £1,100 pm
@5% it'll be £1,460pm

Is that difference of £360pm enough to cause a crash? Maybe with energy costs added in...more possibly, it would be a lull.

 

[Ponty]

Well hard but not impossible. With less than 35× (or maybe 36x now I think about it) income the credit check comes back with a red flag. Many agents will try to persuade the landlord to take the tenant anyway, and some landlords will be ready to take the risk.

My latest tenant came back with 75x. There are plenty of people around who are by no means stretching themselves. As a landlord, it’s all about risk management (no need to tell you that!).

 

[molee]

No point looking to history. People looking to buy a roof over their head are now competing with buyers with hard ie foreign currency looking for zero return so long as the asset is in a jurisdiction that will protect property rights. Even if one is not competing head to head they will be competing with someone who was and failed. For centuries the British could take or buy cheap abroad, now the boot is on the other foot.

 

[andyoz]

Since many governments are heavily in debt themselves there is little to no incentive to raise interest rates or reduce inflationary policies (QE, help to buy etc). Would the UK government be able to finance itself with IR at 5% and the housing market in freefall (with the resultant decrease in tax revenues).
I think the decision was made back in 2008 or earlier that the currencies (GBP, USD, AUD) would all be destroyed before any hint of deflation is allowed.

The government was quick enough to walk away from the Stamp Duty trough over Covid though - one of the dumbest economic decisions ever that no one seemed to question at the time.

 

[davidsrsb]

...People looking to buy a roof over their head are now competing with buyers with hard ie foreign currency looking for zero return so long as the asset is in a jurisdiction that will protect property rights. Even if one is not competing head to head they will be competing with someone who was and failed. For centuries the British could take or buy cheap abroad, now the boot is on the other foot.

You can ask why, after Brexit, the government has not imposed restrictions on foreign buyers, as most other countries do

 

[molee]

You can ask why, after Brexit, the government has not imposed restrictions on foreign buyers, as most other countries do

Would open a can of worms given UKs role in offshore banking. Love and marriage/horse and carriage. Brexit means offshore banking will BE the UK economy going forward, City of London already knackered.

 

[Mike Reed]

A tennis colleague and husband sold their house in June last year but the seller of their buying property added £20K to exchange as THEY hadn't found anywhere. They've been renting (incl AirBNB) since. Their capital is diminishing and they're paying rent AND prices has escalated since. NOT a nice place to be, esp. as he's a bee-keeper !!!

Not sure if the boom extends to flats on under 100 yr. leases outside London. The lease factor alone, esp. if there's no garden, would limit price increases, I'd've thought. There is a shortage of rental prop's though so maybe BTL interest is rampant again.

 

[paulfromcamden]

I am very sure that the housing market will never be allowed to collapse because it is most people's barometer of how well they and the wider economy are doing..

It's also, as you hint at, where most people's wealth is tied up. A property crash sounds great on the face of it if you can't afford to buy your own home but landing millions of people with negative equity wouldn't be great.

I've given up trying to predict the property market. There's a two bed flat in our street (in a much grander building) up for £750k...

 

[Sue Pertwee-Tyr]

I've said before that if it happens this time, the banks should take the haircut, not the owners. It is, after all, the banks that have enabled the bubble to grow by their lending policies. So they should bear their fair share of the risk. If the market crashes, any negative equity situations should allow a mortgagee to remortgage at 100% of new market value, and write off the negative equity.