'We've reached a tipping point' Signs of house price weakness

Blooloo

Rota wrote: »

Yeah, those aren't big costs allocated over the life of a mortgage. Sure it might take a bit of effort but that's life. Getting told I can't paint walls, change curtains or have a dog would really annoy me.

no, over the life of your tenancy...ie, how long you have the place.

Renters can paint walls, change curtains and dogs/pets according to the contract they choose to sign.

As most people these days are forced into a market (buying) where they have the most affordable (cheapest) property, these are invariably the smallest properties, so come the marriage, sprogs, care needs, car, games room, dining room, requirements, these invariably lead to people moving up the ladder, which in a rising market means a bigger mortgage, or you live a life of cramped overcrowding.

renting is in my case, a lifestyle choice. It may, or may not be more expensive.

CLAPTON

Zither wrote: »

Sure, I take your point. And am only speaking from an anecdotal perspective. But everything I 'seem' to read indicates that a lot of the decrease in unemployment is more to do with growth in part-time jobs, zero-hour contracts etc.

The move to smaller working weeks is fascinating stuff - automation of employment (like cashier-less tills in Tescos, for example) (which are a pain in the bum btw!!) seems to mean fewer jobs for everyone. Automation of other jobs through machines, improved software could mean fewer people needed to carry on doing jobs that currently require manual intervention. I haven't got a sense for how the economy will develop to replace these lost jobs yet.

Totally see what you're saying about supply and demand though. Just wonder at what point a lack of wages/employment (as I see things) will undercut demand (if no-one can afford the actual supply).

Indeed so, automation has destroyed jobs since the plough was invented, so it's pretty surprising there are any jobs left especially remembering the vast increase in population since then.




Supply and demand together determine price.


If wages fall significantly (unlikely at the moment ) then the price of houses will fall
Properties in low wage economies are cheaper than here for that very reason.

Zither

Jack_Johnson_the_acorn wrote: »

we haven't seen 20% each year, its only risen at that pace this year and that clearly isn't sustainable over a long period, and nobody on here is saying it is. But if we continually restrict credit during a massive housing shortage we will continue to see a build up in demand that eventually leads to a surge in hpi.

Yes, sorry I was generalising a bit there. Mostly just referring to the YOY figures that seem to be coming from London at the mo. Nationwide (including London) is just 0-5% tho.

A bit like in my previous post tho I'm not sure at what point affordability undercuts demand. Probably got the wrong idea but IMO value is a function of demand and if people can't afford to buy then demand might fall, and therefore so would prices?

Rota

Zither wrote: »

Sure, I take your point. And am only speaking from an anecdotal perspective. But everything I 'seem' to read indicates that a lot of the decrease in unemployment is more to do with growth in part-time jobs, zero-hour contracts etc.

The move to smaller working weeks is fascinating stuff - automation of employment (like cashier-less tills in Tescos, for example) (which are a pain in the bum btw!!) seems to mean fewer jobs for everyone. Automation of other jobs through machines, improved software could mean fewer people needed to carry on doing jobs that currently require manual intervention. I haven't got a sense for how the economy will develop to replace these lost jobs yet.

Totally see what you're saying about supply and demand though. Just wonder at what point a lack of wages/employment (as I see things) will undercut demand (if no-one can afford the actual supply).

CLAPTON beat me to it. I was going to say pretty much what he said. When I walk out to lunch I look around and Ive never, ever seen so many tower cranes or scaffolded buildings. People need to be working on these construction sites. Maybe a few laid off tesco checkout operators went to college and upskilled?

Welcome to the debate. :T

Rota

Blooloo wrote: »

no, over the life of your tenancy...ie, how long you have the place.

Renters can paint walls, change curtains and dogs/pets according to the contract they choose to sign.

As most people these days are forced into a market (buying) where they have the most affordable (cheapest) property, these are invariably the smallest properties, so come the marriage, sprogs, care needs, car, games room, dining room, requirements, these invariably lead to people moving up the ladder, which in a rising market means a bigger mortgage, or you live a life of cramped overcrowding.

renting is in my case, a lifestyle choice. It may, or may not be more expensive.

We arent going to agree bloo but you buy a smaller place, build up equity and get a bigger one. That's how you end up with an asset at the end of the journey. You do it your way, Ill do it mine.

Thrugelmir

CLAPTON wrote: »

If wages fall significantly (unlikely at the moment ) then the price of houses will fall
Properties in low wage economies are cheaper than here for that very reason.

Why won't wages fall?

More and more people in the UK lack a real skill or trade. We are dumbing down. Why work 12 hours a day for 30 years to build a business. When you can buy a BTL, sit back and collect the rent. While the property rises in value and provides your pension fund.

In the West we are bordering on arrogance. In our failure to see the way the world is changing.

Zither

Rota wrote: »

CLAPTON beat me to it. I was going to say pretty much what he said. When I walk out to lunch I look around and Ive never, ever seen so many tower cranes or scaffolded buildings. People need to be working on these construction sites. Maybe a few laid off tesco checkout operators went to college and upskilled?

Welcome to the debate. :T

Sure, yes! I wasn't trying to say that there won't be any further growth in the economy, just that the opportunities for growth will be fewer as automation takes over. As I see it, this might mean that lower-skilled jobs like cashiers, analysts (big-data), construction workers becomes less employable.

I remember reading a few months back about a new machine that could 'print' houses. Once 3D printing matures as a technology, and housing becomes further standardized, I can see construction being further automated too! There's definitely scope for development in the more specialized areas of the economy though - just not sure this can support current employment we move forward?

Funny you should say that - I was thinking that about cashiers myself the other day too - I wonder how many are 'proper' drop-outs and how many just cant find a job doing anything else because of oversupply of University graduates?

wotsthat

MARTYM8` wrote: »

Well surely if the price of the house was zero - she could buy it for nothing now so wouldn't need a mortgage.

Yes but it's never going to happen - even Bruce Banner has only been predicting 20 - 30% falls every year for a decade. Using a situation where prices fall to zero wasn't intended to show a likely possibility but the futility of Crashy's situation. Even if Crashy picked up a flat for nothing now they'll still have spent more money to own 100% of a house than someone who followed the more conventional route of getting a mortgage and paying the market price.

My aim has always been to find the cheapest practical way of being a home owner. I thought the aim of the average HPCer was the same but I'm beginning to see there's more to it.

You've probably hit the nail on the head. There's such an abhorrence/ fear/ misunderstanding about mortgages that the aim is to avoid them rather than finding the lowest cost route to home ownership.

Rota

wotsthat wrote: »

Yes but it's never going to happen - even Bruce Banner has only been predicting 20 - 30% falls every year for a decade. Using a situation where prices fall to zero wasn't intended to show a likely possibility but the futility of Crashy's situation. Even if Crashy picked up a flat for nothing now they'll still have spent more money to own 100% of a house than someone who followed the more conventional route of getting a mortgage and paying the market price.

My aim has always been to find the cheapest practical way of being a home owner. I thought the aim of the average HPCer was the same but I'm beginning to see there's more to it.

You've probably hit the nail on the head. There's such an abhorrence/ fear/ misunderstanding about mortgages that the aim is to avoid them rather than finding the lowest cost route to home ownership.

I realised this was the case when you there was never an answer to a very simple question. "At which level (year) or % off current prices would you find your local maket fair value and buy?".

When this was answered with the usual HPC buzzwords (Ponzi, MEW, IO Mortgages, Tulip) I came to the same conclusion you just have.

Anyone who actually wanted a crash realised 20% off in 2008-9 was this moment and bought in and left that site, getting told how big their mistake was as they signed off.

Zither

Thrugelmir wrote: »

Why won't wages fall?

More and more people in the UK lack a real skill or trade. We are dumbing down. Why work 12 hours a day for 30 years to build a business. When you can buy a BTL, sit back and collect the rent. While the property rises in value and provides your pension fund.

In the West we are bordering on arrogance. In our failure to see the way the world is changing.

Yes, I kind of agree with that.

I think wages have been falling (through inflation) more than people realise for the last few years. Whether people realise that they've got less money in their wallet/purse would be an interesting debate.

It seems to me that emphasis on short-term gains (via house price inflation) has been at the expense of actual job and skills creation which seems a bit cannibalistic in the long-term?

It'd be great to pass on a lovely house to my children but even better to pass on a sustainable career path.