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

Jason74

chucknorris wrote: »

You could have the best of both worlds if prices crashed, buying your retirement home cheaply but waiting to dispose of your current properties when the market recovers (I know of course that you already know this, but I expect crashy will not). But I really don't anticipate prices crashing, I think they will rise outside of London and stagnate in London for a while (before creeping up again).

This seems about right to me, although I can see some less fashionable areas of london dropping a bit (and I mean 5-10% rather than a crash) before they start rising again.

chucknorris

Jason74 wrote: »

This seems about right to me, although I can see some less fashionable areas of london dropping a bit (and I mean 5-10% rather than a crash) before they start rising again.

I can't disagree, they have recently surged quite a bit which really surprised me, so I wouldn't be that disappointed with a 5% dip. I did look into the possibility of cashing in, but on the equity released after redeeming the mortgages, paying the CGT and estate agents, I would have to make about 5% just to cover the lost rental income, plus an allowance (say 3.5%) for long term capital growth. So selling isn't really an option at the moment, as there isn't anywhere decent to invest the money that would give anywhere near half that 8.5%, so I will probably keep them for another 10 years or so.

wotsthat

chucknorris wrote: »

You could have the best of both worlds if prices crashed, buying your retirement home cheaply but waiting to dispose of your current properties when the market recovers (I know of course that you already know this, but I expect crashy will not). But I really don't anticipate prices crashing, I think they will rise outside of London and stagnate in London for a while (before creeping up again).

I don't see prices crashing either for the foreseeable either but that's what I'd do. Use my pension tax free lump sum to buy a mansion for peanuts and just let out my other places for whatever rent I could get to create a little income until prices recovered. Don't really want to get into BTL as I head towards retirement but obviously won't look Crashy's gift horse in the mouth.

Do you think Crashy has spent too much time worrying about other people's housing situation and not enough on his own?

chucknorris

wotsthat wrote: »

I don't see prices crashing either for the foreseeable either but that's what I'd do. Use my pension tax free lump sum to buy a mansion for peanuts and just let out my other places for whatever rent I could get to create a little income until prices recovered. Don't really want to get into BTL as I head towards retirement but obviously won't look Crashy's gift horse in the mouth.

Do you think Crashy has spent too much time worrying about other people's housing situation and not enough on his own?

I think perhaps he can't face up to his past errors of judgement, so he has invented a scenario where buying wouldn't have worked for him.


I know what you mean about BTL and being older, I have recently looked at leasing to the council for longer term lets, and I may do this in a few years, the hit on the rent was minimal (they quoted some approx. figures over the telephone) and the management function virtually disappears. I would anticipate some hassle when they hand them back, but far less hassle than years of management.

HAMISH_MCTAVISH

Jason74 wrote: »

This seems about right to me, although I can see some less fashionable areas of london dropping a bit (and I mean 5-10% rather than a crash) before they start rising again.

That's entirely possible.

But when prices rise 100% and then fall 10%, then start rising again, it's a bit of a pyrrhic victory for the housing bears.

I rather suspect the current bout of triumphalism is a tad misguided, and more than likely to be reversed over the next few months....

System

I thought this was a forum generally aimed at grown ups.

There are 10 houses in a road and they all sold for 100k on the same day.

1 year later one of the houses is listed for 200k. After a week it's asking price is reduced to 175k and it sells for 150k.

Is this a house price rise or drop. Discuss.

dell12

Great 'wealth creation' too. 10 houses all worth £100k, 1 sells for £150k and we've just created £500,000.

lisyloo

Is this a house price rise or drop. Discuss.

The £200K and £175 are largely irrelevant.
I'd say it depends on wage inflation and also CPI - most likely 50% increase in a year is a rise but the point is we should with hold judgment until we have all the facts.

I thought this was a forum generally aimed at grown ups.

I'd like to see more grown up discussion rather than personal spats.

Is the concensus now that recent figures are a pause for breath because it's August and it happens every year?
Will we see a tipping point?
What will happen when interest rates rise 0.25%?
a) nothing
b) massive shock and awe as some people realise rates won't stay low forever

HAMISH_MCTAVISH

lisyloo wrote: »

Will we see a tipping point?

Interesting article in The Guardian about that....

The fundamentals that have driven the London price spiral – deeply restricted supply, a fast-growing population, cash buyers, investor-landlords and the capital's admittedly vulgar role as a safe haven for the global elite's billions – are still largely in place.

The irony is that the cheerleaders for a price crash want one thing only: to buy. With such a large reservoir of potential buyers, it's difficult to envisage much more than a pause in prices.

Independent analysts such as Capital Economics talk of 6% London price growth next year, and 2% the year after, which, though a long way short of the recent pace, still suggests a £500,000 apartment will be £540,000 in 2016.

Hardly the sound of a bubble popping.

House Prices Won't Collapse

Jason74

lisyloo wrote: »

The £200K and £175 are largely irrelevant.
I'd say it depends on wage inflation and also CPI - most likely 50% increase in a year is a rise but the point is we should with hold judgment until we have all the facts.



I'd like to see more grown up discussion rather than personal spats.

Is the concensus now that recent figures are a pause for breath because it's August and it happens every year?
Will we see a tipping point?
What will happen when interest rates rise 0.25%?
a) nothing
b) massive shock and awe as some people realise rates won't stay low forever

OK. I'll start. What I'm about to say is is limited to the London market, as that's the only area I really know a great deal about. So it might not be that relevant to the rest of the UK.


There are different views on how much of what is going on is seasonal, but I think the central view appears to be that part of the current slowdown is seasonal, but there is more to it than that. I'd certainly subscribe to that way of thinking, and take a view that the sealed bid madness of earlier this year has caused prices to overshoot a little, and that they'll now drop back a little as that overshoot corrects itself. I think you're looking 6-12 Months before you see meaningful rises from here, and prices wuill imho drop back a little before that happens.


In terms of a "tipping point", the answer imho is not really. The market is already dramatically cooling, and that should be no surprise given recent madness. Prices in most areas seem to have levelled off, and in some, they're actually dropping back a little as described above.


This process will imho continue for 6 - 12 months from here, but that imho actually might make this a good time to buy (I'm actually thinking about putting my money where my mouth is on this point and make the trade up to the "forever house" from my current little pad), as you have a little more time to make a sensible choice and negotiate on price, rather then having 20 minutes in a property with 40 other people and then having an hour to make the biggest financial decision you'll ever make and decide almost "in the dark" how much money you're willing to throw at it. The end of that nonsense is in itself leading to a dropping off of prices as people stop panic buying. Much as I hate to agree with Hamish on this, the simple fact is that the sheer number of people who want to buy will put a floor under prices and prevent a "tipping point" being reached


As for interest rate rises, the answer to your question is "none of the above" in relation to your A/B choices. Yes, it will spook the market a little, and will probably contribute a little to the cooling process described above. So hardly nothing. But certainly a long way from "shock and awe", and not a huge game changer imho.