Are MN homeowners as deluded as HPCers?

[Cybercynic]

Last few days there has been spike in the number of posts on potential house price declines. In the UK prices have already dipped more than 3% since August. I find it amusing that many HPCers are frequenting MN to report such news and potentially express glee on those that have bought.

However, even more amusing is the response of home owners suggesting how prickly they are to the remote possibility of house price declines. (PS: I am a homeowner and bought 20 years ago. While I have made equity gains over the years, I support overall declines in prices otherwise I feel my kids will be forever renting in this country).

While I hold no brief for doomsayers and think most of those are crazies, I believe the homeowners on this forum are turning increasingly prickly at facts and they offer the following standard responses to prospect of price reductions:

Response#1: House is not an investment it is a home. OR if you buy for long term you will always be okay

Counter: Ok then stop worrying about what doomsayers say. Let the prices decline by 10-25% and be okay with it.

Response#2: UK prices will never go down because it is an island and we just 'love' immigration

Counter: Please check out what is happening in Australia and New Zealand. Both factors apply there and they already have >10% yearly declines so far and more is expected

Response#3: If prices decline I will simply refuse to sell. Nobody can force me to sell.

Counter: Yes, you don’t need to sell because you can refuse to participate in the market. However, that does not stop price decline just as prices went up even when you refused to sell your own property in a rising market. House prices are determined at margins. Valuations are based on comparable transactions (whether you sell or nor). Unless there is a sellers strike announced similar to the train strike next week, not sure how this argument stands.

Response#4: There wont be any re-possessions

Counter: Agreed there will be few repossessions. It takes a long time to repossess and therefore, Banks will work with borrowers to find ways to make sure homes are not taken away. But one does not need forced sales to price declines. Australia, Canada, New Zealand, Sweden have all seen declines in the last 1 year without repossessions. And as I said earlier, UK has had declines >3% since Aug. And we are not even in recession yet officially. House prices are a function of affordability and I for one do think that era of <1% interest rate is over and average will hover around 4-5% for some time and with those rates you cannot have rapid growth.

Response#5: If one hopes for price reductions throughout, one must be a horrible person 'cause some people will feel pain

Counter: HPI has caused more pain to generations. And therefore, please explain a situation when we can have affordable housing without price declines. Affordability either comes with consistent wage growth and that aint happening without rampant inflation and resulting interest rate increases. So please let us know what advise they have for the younger generation to become home owners and who want affordable housing. And please do not suggest council housing since you will need to first check the govt finances to make that suggestion

I hope you understand the concept of national averages and median. I am sure you did not expect me to tell you city by city and neighbourhood wise price stats. Do not attribute a message not in my post. When we discuss counties we either discuss averages or medians. I am sure in some desirable places in the UK prices are still rising but we are discussing macros here. Macros determine health of economy.

House values are all just fantasy money until the cash is actually in your bank account. We bought our current house at the very bottom of the market (sheer bloody luck) and it's more than doubled in "value" and is sold etc at the moment for a nice "gain" - however the prices for sale around here have dipped a little bit since then so there's the potential it might fall through... will cross that when we come to it really.

We didn't buy to make money - we bought because we were sick of shitty landlords and magnolia walls. We wanted the stability for the kids and we've lived here going on 10 years now as a result.

Precisely, the general public need to wake up to this.
Of course “they” are going to resist it. But the reality of the situation is less people means that there’s more to go around. Which may dilute house prices, but there will be massive resistance from the banks and everybody else with a vested interest to ensure that doesn’t happen so the only logical way around it is to increase peoples purchasing power. Saves face.

They said exactly the same in the 70s.

Did they, I thought they had a bigger working age one then?

The ageing population is a good thing for the younger generation because the ageing generation will not want to work, and therefore they will have to pay the smaller younger fitter generation to do the work

Disagree, wages may rise but so will taxes as there aren't enough workers to support the demands on the NHS & social care. I actually think the economy is pretty screwed because the gov hasn't prepared for the shifting demographic & we already have so much inter generational inequality. Hopefully I'm wrong.

Over the last two years, there has been exponential wage growth

But what about the decade before that?

I think it depends where you are. Traditionally where I am houses take weeks but more often months to sell. In the last couple of years though it's now days. And that's still the case. But have seen a few relisted due to the interest rate increase meaning the potential buyer couldn't afford the new mortgage payment.

I think house prices will drop here too, but later down the line. Demand is currently outstripping supply.

Yep. In my outer Melbourne suburb houses are selling in 2 days and for huge money.

I'm waiting for this HPC here as I'd like to buy a bigger house, but it's not here yet (if it ever comes).

I think it's hard for the public to get their head around because the government have always had the leverage of a large pool of unemployed people, mostly people didn't understand the significance and implications of this and therefore they don't realise that the power structure is very different when we have an oversupply of jobs

Someone said to me that Wales had sorted the jobs market 48% of us work in public sector. No idea if this is true

Surely unions have more power at a time when we have a labour shortage?

less workers are in them.

"Annual growth of 6.9 per cent in regular weekly earnings, excluding bonuses, was the highest outside the pandemic period in the private sector, the Office for National Statistics said on Tuesday — although workers have seen their pay fall sharply in real terms as consumer prices have risen even faster"

"Public sector workers have suffered a much bigger hit to living standards, with their earnings growing by just 2.7 per cent over the same period, one of the biggest gaps recorded between the private and public sectors, the ONS said."

FT

We are not pleased with huge energy price rises, so I am always surprised that anyone sees house price rises as a good thing.
Buying and selling houses seems to be a dominant part of the UK economy which in itself should be a cause for concern for the entire thinking population. Overly manipulated by successive governments. To what end?

Was just about to say that OP couldn't be DeadHouseBounce because of the lack of 'lol's

True there's usual the lols and the weird mix of upper case letters. Perhaps he's trying to look less predictable.

Biggest irony on here is the OP constructing a whole imagined argument and then countering it! Desperate or what!

OP contrary to a lot of posters I think you’ve made some excellent points!

HPC are a bit house price obsessed, trying to time the market with a sprinkle of misogyny thrown in for good measure. MN is a bit of echo chamber of why their house is different or they just won’t sell.

I think it’s the British obsession with property it makes up majority of economy and has been a great provider of the wealth effect. As wages have stagnated houses have increased more than salaries making people feel richer despite relatively low incomes. We are also quite risk adverse as a country so see property as a safe bet over investing in the stock market.

I will say this as a financial economist. House prices are going down by a lot just as they have boomed by a lot. The house prices we have seen have been fuelled by low interest rates. We now have increasing interest rates raising the costs of mortgages combined with inflation increasing the cost of everything else. All this as we enter a global recession. This is not to find joy in people’s misfortunes it will be a horrible time for many but we will get through it.

This ^ (except I'm not a financial economist).
We were discussing financial institutions supporting struggling homeowners a while back.

www.ft.com/content/456b41ec-ae6f-48c5-b4e2-d35c877799e8

'Some of the UK’s largest banks have agreed measures with the government to help struggling borrowers as they brace for a surge in late mortgage payments.'

I agree, it’s definitely difficult to get people out of the tugging the fur lock mentality, but it is filtering through. We are trying to hire at the moment and the last two people we’ve offered rolls to have gone into resign and been offered more money than we were offering to stay and we were offering a 20% pay rise on the current basic.

For every person that accepts the counter offer and stays, there will be another colleague who hopefully here’s about that scenario, either then replicates it or makes the move. Either way if we use the house price crash analogy, the new price has been set.

It comes is absolutely no surprise whatsoever the Facebook and Twitter massively over hired for a very short period of time, and then very publicly announced redundancies of people who basically didn’t really have a role to perform in the first place. It’s all part of the shit show.
The public have got to see through it.

The public have got to see through it
it feels like a 'the tide has gone out and now we can see who was swimming without a bathing suit' situation, coupled with 'cant fool all of the people all of the time' kind of thing

It would be wonderful if things worked out 'like the 1970s' but that's very unlikely.
The underlying economic situation is totally different, the situation with regards cheap energy and other resources it totally different, demographics are totally different and the unions are no where near as powerful and governments and central banks seem very determined to crush inflation which is likely to take some time.
It would be wonderful if public sector workers (and private sector workers) could all obtain pay rises in advance of inflation (would need to be in advance of inflation because of tax rises) but it's very unlikely in reality for the reasons and above and those given by @bibbif.
It's far more likely that people will be made redundant and that businesses will close from 2023 onwards, sadly.

@Angeldelight81 -I'm still wondering what the 'recession proof' sector is that you work in where you have had a 200% pay rise since 2018. Whether this sector exists or not, it's not at all representative. As you can see, real wages have been stagnant since the GFC. I'm not even sure if this is net or gross. This figure is presumably average so will include some individuals in, for example, finance or corporate law who have had huge increases, clearly suggesting that others have had significant falls.

mainlymacro.blogspot.com/2022/06/why-has-uk-real-wage-growth-been-so-low.html

Sadly most wont, it’s frustrating.

They are 'seeing through it'. Multiple sectors are out on strike or planning strikes. What is less certain is whether this will lead to wage increases that are in advance of inflation.

no, it’s not a property forum. This is a topic within a parenting forum.

You are showing your true colours mate.

Many thanks for noting my 'true colours'. Have fun.

Why are there so many posts referencing the HPC crew recently?

I’ll happily continue to respond that I bought my house as a home. I’m not worrying about prices. I’d rather own than rent.

Hopefully that will continue to prove amusement for some, we need more lols on these threads 🙄

@JesusInTheCabbageVan - completely unrelated, but did you see this thread? I couldn’t tag you in it, made me chuckle.

www.mumsnet.com/talk/_chat/4702604-calling-jesus-in-the-cabbage-van

Thank you @Furries, I don't know how I missed that!