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

HAMISH_MCTAVISH

padington wrote: »

Sheet, you're making me think sitting on 85% equity might be a little too risk averse ...

In my opinion the current artificial repressing of house prices through mortgage rationing is starting to end, and the lowest house building in a century is about to meet the biggest generational bulge of FTB age people in history.

We're already seeing prices shooting upwards as the fundamentals of supply and demand re-assert themselves after years of artificial mortgage drought.

We are currently at 10%+ year on year price growth despite lending remaining at far below long term averages....

So imagine what will happen once lending gets back to something resembling normality, at levels some 30% to 40% higher than today?

Soaring population and the existing million house shortage will almost certainly mean prices continue to rise, a situation worsened dramatically by the last 7 years of mortgage rationing causing house building to fall to the lowest levels in a century, and the next boom will likely be the biggest ever as a result.

Remember in the last boom, we had several years of 20% plus a year price rises, people should be careful not to get caught out this time around, it could easily happen very quickly indeed.

Regardless, the likeliest outcome by far is a near doubling in house prices in real terms over the next cycle, as the mortgage market and wider economy recover, and millions of FTB age people run into the worst housing shortage in history....



Of course, other opinions may vary.....

But they've mostly been wrong so far

The number of FTB age people is going to rise every year until the mid 2020's, peaking at levels nearly 50% higher than in the last crash.

It will be 2035 before there are as few people of average FTB age competing for housing as there were last year.

Only the most blinkered of bears thinks that is a situation likely to lead to prices falling....

padington

Crashy_Time wrote: »

Big difference between an estate agent and a buyer who can actually complete the transaction?

This is London, it appears that the asking prices for rent for places like mine may have gone up by 15% just this month. It's a HOT market right now.

HAMISH_MCTAVISH

Crashy_Time wrote: »

Most people can`t benefit though, because they can`t sell their house!

There's a housing shortage!

Most people don't want to sell their house!!!

padington

HAMISH_MCTAVISH wrote: »

In my opinion the current artificial repressing of house prices through mortgage rationing is starting to end, and the lowest house building in a century is about to meet the biggest generational bulge of FTB age people in history.

We're already seeing prices shooting upwards as the fundamentals of supply and demand re-assert themselves after years of artificial mortgage drought.

We are currently at 10%+ year on year price growth despite lending remaining at far below long term averages....

So imagine what will happen once lending gets back to something resembling normality, at levels some 30% to 40% higher than today?

Soaring population and the existing million house shortage will almost certainly mean prices continue to rise, a situation worsened dramatically by the last 7 years of mortgage rationing causing house building to fall to the lowest levels in a century, and the next boom will likely be the biggest ever as a result.

Remember in the last boom, we had several years of 20% plus a year price rises, people should be careful not to get caught out this time around, it could easily happen very quickly indeed.

Regardless, the likeliest outcome by far is a near doubling in house prices in real terms over the next cycle, as the mortgage market and wider economy recover, and millions of FTB age people run into the worst housing shortage in history....



Of course, other opinions may vary.....

But they've mostly been wrong so far

How will we know when boring is back to normal ? Is that when you start seeing offers for 100% mortgages again ?

HAMISH_MCTAVISH

padington wrote: »

How will we know when boring is back to normal ? Is that when you start seeing offers for 100% mortgages again ?

I take it you mean "lending" is back to normal....

Lending will be back to normal when a good job, a decent credit file, and a 10% deposit can get you a mortgage at rates around 1.5% above base rate, and around 0.75% higher than a 25% deposit mortgage.

Watch for margin compression as base rates rise, that'll tell you competition is returning to the market, and then cross check against M4 to ensure the broad money supply is rising through credit creation.

padington

HAMISH_MCTAVISH wrote: »

I take it you mean "lending" is back to normal....

Lending will be back to normal when a good job, a decent credit file, and a 10% deposit can get you a mortgage at rates around 1.5% above base rate, and around 0.75% higher than a 25% deposit mortgage.

Watch for margin compression as base rates rise, that'll tell you competition is returning to the market, and then cross check against M4 to ensure the broad money supply is rising through credit creation.

Thanks, were did you learn this stuff ? Economics degree ?

the_flying_pig

HAMISH_MCTAVISH wrote: »

..
...

H, where the heck did you find that chart?!?

Given the highly unusual theories and language in it i can only speculate that... did *you* draw it, by any chance?!?

the_flying_pig

padington wrote: »

Thanks, were did you learn this stuff ? Economics degree ?

:rotfl:

Home economics maybe (pun intended).

gbsilp

Rota wrote: »

It will if they are given more free guaranteed money. Want to bet that can't happen again?

Like in 2008 where the environment became risky and they were given free guaranteed money? I don't recall mortgage spreads reducing to less than 100bps, in fact quite the opposite where they remain still. New capital rules and RAROCs have effectively put a floor on spreads at around current levels.

Crashy_Time

HAMISH_MCTAVISH wrote: »

In my opinion the current artificial repressing of house prices through mortgage rationing is starting to end, and the lowest house building in a century is about to meet the biggest generational bulge of FTB age people in history.

We're already seeing prices shooting upwards as the fundamentals of supply and demand re-assert themselves after years of artificial mortgage drought.

We are currently at 10%+ year on year price growth despite lending remaining at far below long term averages....

So imagine what will happen once lending gets back to something resembling normality, at levels some 30% to 40% higher than today?

Soaring population and the existing million house shortage will almost certainly mean prices continue to rise, a situation worsened dramatically by the last 7 years of mortgage rationing causing house building to fall to the lowest levels in a century, and the next boom will likely be the biggest ever as a result.

Remember in the last boom, we had several years of 20% plus a year price rises, people should be careful not to get caught out this time around, it could easily happen very quickly indeed.

Regardless, the likeliest outcome by far is a near doubling in house prices in real terms over the next cycle, as the mortgage market and wider economy recover, and millions of FTB age people run into the worst housing shortage in history....



Of course, other opinions may vary.....

But they've mostly been wrong so far

The number of FTB age people is going to rise every year until the mid 2020's, peaking at levels nearly 50% higher than in the last crash.

It will be 2035 before there are as few people of average FTB age competing for housing as there were last year.

Only the most blinkered of bears thinks that is a situation likely to lead to prices falling....

Are you still smoking the crack pipe Hamish?