So will the prices start going down soon?

[Notmyyearthisyear]

Because right now they seem to increase by at the rate of 10% a month!!! Every time I look, and I look every day, I can afford less than the day before 🤣🤣 Surely this cannot continue…

@Bringsexyback

Debt as I say it’s extremely difficult to evict somebody could take up to 2 years.

Divorce people are already just having to live under the same roof where they like it or not post split.

Death well by that point you’re not gonna care are you, however what I am also seeing locally is that the five bedroom houses which you’re absolutely right are expensive to run are being snapped up again by Landlord‘s and filled with single young men, you could rent out a four bedroom property to a family for about £12-1400 a month or you could rent out a room for £500 each per month. And they probably put one in the living room as well.

A friend of mine is living in supported accommodation whereby servicemen who are medically discharged live in nice big old properties the landlord receives £900 a month per room for these people. The disadvantage of course is that they could potentially trash the place at a moments notice they’re not particularly mentally stable however the finance appears to outweigh the risk.

Debt - banks don’t come under the same category as landlords. Private landlords have to go through the court eviction process which can now take years, banks can legally do it within 3 months.

www.ticfinance.co.uk/after/

Divorce - because low interest rates and affordability has enabled that to happen. That’s no longer going to be the case going forward which means forced sales at whatever price. Sitting on property wont be an option.

Death/HMOs - this is all changing with the government recent ‘levelling up’ standards and requirements. HMOs will require thousands on them to be brought up to standard. So much so many will just exit the market instead

www.landlordzone.co.uk/information/are-goves-levelling-up-plans-a-step-too-far-for-landlords/

@Lightscribe - as I say I have practical experience of the fact that the banks will not start repossession proceedings within a year of paying absolutely nothing, I then went on to pay half for another year nothing not even a court letter or threatening we can do this type letters if I didn’t stick to the arrangement. So as long as people are making some sort of contribution towards the mortgage it doesn’t even get in front of a judge. At the point where it does get in front of a judge the mortgage application is going to be scrutinised and the lender is going to have to prove that this was affordable with the interest rates rising and given they didnt do that for a very long time the can and do say say no.

But equally if God for bed it does get down that particular road and the property is repossessed the lender then has to prove that they got the best possible price for the property so they won’t be discounting it.

And RE your HMO comment I have a property that I rent out that is always exceeded the standards requested by the government, it’s built-in to the business plan I don’t want to be responsible for the death of a tenant.

Pretty much everyone I know holds themselves to the same standard.

The Local letting agent wouldn’t entertain taking on your property unless it was in good condition they just don’t want to hassle, which is fair enough.

@lightscribe
House prices are linked to debt and salaries. They have gone way out of kilter and that has to correct to mean.
Do you think this historical mean might be affected by the fact that mortgages were previously based on a single income rather than today's duel income?

[quote Didyousaysomethingdarling]@lightscribe
House prices are linked to debt and salaries. They have gone way out of kilter and that has to correct to mean.
Do you think this historical mean might be affected by the fact that mortgages were previously based on a single income rather than today's duel income?[/quote]
And its entirely possible the correction will be salaries rising not house prices dropping

Salaries will rise in demand sectors that have a shortage of skilled workers. The pandemic caused two problems in staff shortages, both at the bottom and top.
The bottom end was pushed to change jobs/rely on universal credit/furlough (or non eligible returned home). The top end retired early thanks to bumper pension pots linked to stock market all time highs. Both of these resulted in massive shortages of staff.
Wages have started to reflect that as businesses have to compete for staff, (this is a tell tale sign having gone from a 40 disinflation cycle into an inflationary one) this is also why inflation will not be transitory. Once base wages rise, they generally can’t come back down, and the extra business, materials, product, supply chain and logistical costs are passed onto the consumer. This in turn makes things more expensive so less things are bought as people tighten purse strings. This is called stagflation and will make companies with high overheads go bust which causes recession.
So all in all wages will rise but the sectors will be limited in which they do (ie NHS, police etc won’t be able to get near a 7.5% inflation rate). In turn recessions in general make less jobs available, that’s why house prices are not inflationary in these circumstances.

I think it's very unlikely that incomes will rise significantly across the board and definitely not as much as rates of inflation (CPI also under estimates the rate). Taxes on individuals and businesses are going up significantly, cost of energy and supplies have risen significantly and will continue to rise. I don't see where the money for big pay rises will come from. Ditto investment.
Prices will be much more related to cost and availability of debt rather than supply.
If the tables turn and confidence is lost in housing as an investment, more properties could start to come on to the market from investors who don't see housing as a good investment anymore.

Equally, @Lightscribe- it may be that rather than general wage increases, businesses will lay off more staff as the rising cost of living bites, leading to higher unemployment, less spending on the higher prices and stagflation, as you say.

You sound like chicken licken … the sky is showing no sign of falling in from where im sitting

House prices rarely go down, there is often a sharp rise followed by a leveling off for a few years, if you’re on the ladder and moving, selling and buying in the same market it’s not really an issue.
First time buyers find it much more difficult

@Bringsexyback

You sound like chicken licken … the sky is showing no sign of falling in from where im sitting

www.telegraph.co.uk/business/2022/02/20/political-class-still-doesnt-really-understand-inflation/

People often make the mistake that because something’s always been the case in their life experience, that will continue to always be the case.

The key to that is being proactive and not reactive and to hedge against changing economic environments. Something that even the government struggles with.

Paywall removed

12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fbusiness%2F2022%2F02%2F20%2Fpolitical-class-still-doesnt-really-understand-inflation%2F

People hoping for a crash must be ignorant to the macro economic conditions that precede it. Do you think a crash happens in isolation and you can buy a cheap house and live happily ever after. No. It follows seriously painful inflation (more so than we have now. Or is followed by equally painful deflation as we saw for a little while in 2008. It goes hand in hand with a recession and unemployment. A cheap house if no good if you have no job to pay the mortgage. Be careful what you wish for.

@swirlsy

Which is why my advice is to future proof as much as possible.

How do suggest to future proof?

Yep @Lightscribe (DB would be proud of you!).

I remember the 89-93 crash - buying a house in a nice part of Bristol for half the price paid by my neighbour the year before. Negative equity was a misery for some people. Of course, if you didn't have to move then you could just sweat it out. But this time, prices increasing will flush out the JAM's.

@Bringsexyback

You sound like chicken licken … the sky is showing no sign of falling in from where im sitting

Hopefully the sky won't fall. I don't think anyone has suggested that they want this. Of course, an actual crash as opposed to stagnation would mean other macroeconomic problems. My first post stated various facts that the economy is currently encountering which could lead to more difficulties. Even the Bank of England Governor has stated on record that we are in for a difficult time. What are your reasons for thinking this is all incorrect and not happening? Just because something hasn't happened before it doesn't fall that times don't change.

@XVGN- what are JAM's?

People are talking about interest rates going up- and yes, they are- but they're going to remain very low by historic standards. I predict a slow down, maybe even flattening, but a crash? Doubt it very much, and let's hope not because it'll come with all kinds of shit and ultimately favours no one on a wider scale.

Stagnation is much more likely than a full crash.

The issue atm is the lack of property on the market. No one wants to move upwards due to concerns about the cost of living.

That puts extreme pressure at the bottom of the market.

It means people are sitting tight. If there is a credit crunch and there is a buy to let bubble burst (which i think is more likely than a crash), it might allow more people to take a chance.

But thats it. Until its not financially beneficial to buy to let theres going to be ongoing issues.

I think JAM is just about managing

Jams - just about managing.

@sst1234

People hoping for a crash must be ignorant to the macro economic conditions that precede it. Do you think a crash happens in isolation and you can buy a cheap house and live happily ever after. No. It follows seriously painful inflation (more so than we have now. Or is followed by equally painful deflation as we saw for a little while in 2008. It goes hand in hand with a recession and unemployment. A cheap house if no good if you have no job to pay the mortgage. Be careful what you wish for.

Other economic sectors do very well in recessions and asset crashes. That’s why allocation, readjustment and balance for long term investing is key.

Monetary cycles don’t care what anyone wishes for, even governments (they don’t control central banks) it’s just understanding why they happen and where we are currently and balancing exposure to changing financial environments accordingly.

@bettycarver

People are talking about interest rates going up- and yes, they are- but they're going to remain very low by historic standards. I predict a slow down, maybe even flattening, but a crash? Doubt it very much, and let's hope not because it'll come with all kinds of shit and ultimately favours no one on a wider scale.

It’s how quickly they go up is key. JP Morgan has pencilled in 9 rate hikes to March next year. The US $ is the reserve currency, so that affects us and global trade/debt also.

www.barrons.com/amp/articles/jpmorgan-now-expects-nine-straight-fed-rate-increases-until-march-2023-51645298667

@Lightscribe you seem very invested in wanting a housing crash ...

[quote bettycarver]@Lightscribe you seem very invested in wanting a housing crash ... [/quote]
What have I exactly on any of the above that says anything of what I ‘want’ to happen? It’s facts of what’s happening now and what’s expected in reaction to inflation the near future. It’s totally irrelevant what I ‘think’ or ‘want’ to happen.
Investments should be devoid of any emotion. That’s why personally my property isn’t an investment, it’s a home and I couldn’t care either way.

[quote bettycarver]@Lightscribe you seem very invested in wanting a housing crash ... [/quote]
I would like homes to become affordable for our kids and young adults. If that means my home falls by 50% then I'm cool with that. Who wouldn't be?

How do suggest to future proof?

@Riverlee so it depends on individual circumstances & market but if I was the typical 30 yr old buyer in London who wanted dc soon I would skip the flat stage. I would buy a house near schools. Ideally a house that had room to extend if needed & when circumstances allowed. Ideally you want to make less property moves imo.