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

ukcarper

Blooloo wrote: »

The problem is this...when rates are low, people can afford to lever up more...when rates then rise, those same people cant lever up anymore therefore the market price falls.

With leverage of say 5 times, a 20% drop wipes you out.

BTL of course have to maintain a contractural LTV...this means cash going out to the bank to restore the LTV, it means your equity is gone accross the board and your windmilling in the good times strikes at your heart.

Unscrupulous BTL dont give a monkeys cuss of course...its all borrowed money after all.

Your posts are nonsense why would a price drop of 20% wipe them out and I don't believe you can get a 100% BTL.

chucknorris

Thrugelmir wrote: »

People have become infatuated with property treating if it's the holy grail of investing. Like everything in life, with hindsight it can all be rationalised into cause and effect. Over leveraging with debt is still a national pastime . Hence the what appears to be the heavy handedness of the FCA , PRA and BOE. A very gradual tightening of the thumbscrew on both lenders and borrowers alike.

I don't think that I will invest in property any further, I might buy a second home in Southern Spain or the Algarve, but it will be a second home for us to live in during the winter months, definitely NOT an investment. What I am looking for now, is lower risk consolidation (pension DB and SIPP, NISA and non NISA shares).

chucknorris

ukcarper wrote: »

Your posts are nonsense why would a price drop of 20% wipe them out and I don't believe you can get a 100% BTL.

Thanks, I really can't be bothered responding to some on here, so thanks for doing it.

System

Philuk wrote: »

No, 35%. An increase of 50% would require a drop of 35% or so to be offset 100 x 1.5 =150 and 100/150 = 0.67%. Price increased by 20% over the last 12 months with no particular underlying reasons. The current price level is not anchored/very volatile. We have a good 20% of real structural decrease to go through though.

I was looking at your price of 309k and the land reg price of 618k. Like I say I may have misread something.

gbsilp

Rota wrote: »

Isn't that the whole point of wanting a crash? Otherwise you haven't positioned yourself for the thing you have been waiting 20 years for.

Not really. I would just like my son's generation to not have to wait until the age of 40 to buy (he's currently 8).

I do however find it amusing that someone not saying when they are going to buy is considered "cornering" someone.

Jack_Johnson_the_acorn

gbsilp wrote: »

Not really. I would just like my son's generation to not have to wait until the age of 40 to buy (he's currently 8).

I do however find it amusing that someone not saying when they are going to buy is considered "cornering" someone.

When we're constantly told that they're waiting for a certain point but won't or can't say what that point is then they're most definitely cornered. Their whole argument consists of waiting for a crash, we're simply asking what the crash looks like? Because by not answering it would seem that they don't know what they're waiting for.

gbsilp

Jack_Johnson_the_acorn wrote: »

When we're constantly told that they're waiting for a certain point but won't or can't say what that point is then they're most definitely cornered. Their whole argument consists of waiting for a crash, we're simply asking what the crash looks like? Because by not answering it would seem that they don't know what they're waiting for.

I'd be waiting for some notion of "value". Problem is though, it's like hard core !!!!!!, difficult to describe but you know it when you see it.

Personally, I think I'd see value at around 35% off in real terms. Problem is that this could happen via wage inflation with no nominal price increases, or just nominal price drops.

Rota

ukcarper wrote: »

Your posts are nonsense why would a price drop of 20% wipe them out and I don't believe you can get a 100% BTL.

From HPC so you can work it out backwards from there.

Rota

Blooloo wrote: »

winning betting on one horse is going to be a temporary game.

Of course, people selling the "secrets" of the housing market will only speak of winners.

Others will extract the michael from people who have possibly been accused of having made the error of taking a low paying job ( maybe a medical orderly or nurse), and in the next glossy ad tell us that you can get on the housing gravy train for 0% down and no income at all.

They will also say the last drops in 2008ish were caused by a nawked mortgage market...they wont mention the costly props government have felt they had to pay to support the market.

They wont mention that these props cant go on without causing serious damage to the economy...all they see is rising house prices and the road to riches...mostly through selling seminars and "exclusive" membership to BMV inside deals.

I didn't learn anything from this post. Any-hoo, A quick recap to your points

- long term prices always go up. Buy in a major city and you are a winner. I choose London personally as I know it.
- Nurses/teachers get key worker homes.
- The govt didn't prop up the housing market they propped up the banks HTB was after the GFC
- Yes they can, and they will.

Well done for not mentioning Ponzi, Liar Loan or Bankster.

gbsilp

Rota wrote: »

From HPC so you can work it out backwards from there.

I think what was said was that BTL mortgages have covenants in them that the LTV ratio must be maintained above some level (80% in that example). Theoretically if prices drop 10% then the LTV rises to 89% and the bank is entitled to ask for a principal repayment of 9% such that the LTV is reduced back to 80%.

I don't know if this is true or not, maybe chucknorris or other BTL mortgage holder could kindly confirm or deny if it's true.

If it's true, it also obviously depends on the banks appetite to foreclose if principal repayment is not forthcoming but you're still paying the interest etc....