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

hpc_troll

wotsthat wrote: »

Recovering economy, increasing population housing shortage.....zzzzz

But the same 'supports' were in place in 1989 and 2008. Why can they be relied on now, when they were inadequate to forestall market corrections in the past?

Demand without the ability to pay is no demand at all. The supply of credit is tightening. Compare the growth rates in secured lending today to the growth rate in the 1997-2008 phases - 10% HPI needs commensurate credit growth to support it. It isn't there.

Average Weekly Earnings including bonuses grew by just 0.3% in the three months to May, which annualises to 1.2% pa, below CPI, meaning real wages are falling and there is less money left over to pay for mortgages and rents.

The idea that housing shortages determine prices is a dog that won't hunt. And I'm not sure how a young Polish girl working in Starbucks and living in an HMO with 8 others is going to be moving the prices paid as much as a cap on high loan to income lending and a market adjustment to the removal of interest only mortgages.

If lots of people are running off false narratives about HPI trends, housing shortages and immigration, they might be able to bid up some prices in some markets, but not on a continuing basis - to do that we need lots and lots of lending, which again, we don't got.

We still have areas of the country where prices are 20% below peak and still falling.

How much is high end London property putting a gloss on national aggregate statistics? What happens if the flow of foreign money (China, Russia) reverses? What happens if the speculative money in Prime Central London investment funds starts to flow out? What happens to sentiment if these changes start to weigh on house prices inflation indices?

wotsthat wrote: »

How many times have you argued the housing market has been at a tipping point in your time on HPC? How many times have you been right?

No wonder you want to hit the big bear reset button on a daily basis.

Off topic and ad hominem

mystic_trev

hpc_troll wrote: »

Off topic and ad hominem

We're more than welcome for HPC users to post on the Forums here. Unlike HPC you won't get banned for having a positive or negative view on House Prices, it's an Open Debate.

We would appreciate it if you respect other peoples views, and don't post 'Off topic' for any views you disagree with.

carslet

Jack_Johnson_the_acorn wrote: »

Not enough houses to be a crash & prices aren't out of reach for those who usually buy.

If house prices dip by 20% it only puts them back to a level seen 2 yrs ago. Hardly a crash.

I personally think house prices are too high, but I must say you got it right here.

wotsthat

hpc_troll wrote: »

But the same 'supports' were in place in 1989 and 2008. Why can they be relied on now, when they were inadequate to forestall market corrections in the past?

Demand without the ability to pay is no demand at all. The supply of credit is tightening. Compare the growth rates in secured lending today to the growth rate in the 1997-2008 phases - 10% HPI needs commensurate credit growth to support it. It isn't there.

Average Weekly Earnings including bonuses grew by just 0.3% in the three months to May, which annualises to 1.2% pa, below CPI, meaning real wages are falling and there is less money left over to pay for mortgages and rents.

The idea that housing shortages determine prices is a dog that won't hunt. And I'm not sure how a young Polish girl working in Starbucks and living in an HMO with 8 others is going to be moving the prices paid as much as a cap on high loan to income lending and a market adjustment to the removal of interest only mortgages.

If lots of people are running off false narratives about HPI trends, housing shortages and immigration, they might be able to bid up some prices in some markets, but not on a continuing basis - to do that we need lots and lots of lending, which again, we don't got.

We still have areas of the country where prices are 20% below peak and still falling.

How much is high end London property putting a gloss on national aggregate statistics? What happens if the flow of foreign money (China, Russia) reverses? What happens if the speculative money in Prime Central London investment funds starts to flow out? What happens to sentiment if these changes start to weigh on house prices inflation indices?

Yes these arguments that have been made many times here. As you note there are a lot of 'what ifs'.

hpc_troll wrote: »

Off topic and ad hominem

Not really. If you'd been asked 'are we at a tipping point?' any day during your time on HPC you would have made almost identical eloquent arguments and been wrong every time. You've not said whether you STR'ed in 2012 but it's a concern that you've never run the sums to assess the current position and, more bizarrely, don't see the point. It's not off topic - I'm just wondering about your credibility as an expert witness.

I'm rubbish at making predictions about house prices - I've been too bearish every year of my home owning journey. That's why I'm vague about my predictions - in the current environment I see +10%/ -10% within the same range of certainty albeit with a bias towards the positive.

Know your limitations - I don't want to have to make major life decisions based on my ability to predict house prices. I went for the safe bet of buying a house knowing that, with a fair wind, I'd one day be mortgage and rent free.

hpc_troll

mystic_trev wrote: »

We're more than welcome for HPC users to post on the Forums here. Unlike HPC you won't get banned for having a positive or negative view on House Prices, it's an Open Debate.

We would appreciate it if you respect other peoples views, and don't post 'Off topic' for any views you disagree with.

I thought that just ignoring the parts of posts that I wasn't going to address because they were off topic would be inappropriate, and I couldn't see a better way of dealing with the problem of a lot of off topic posting other than pointing out that some parts of some posts were IN MY OPINION in point of fact, off topic. If you disagree, skip reading my posts. No harm, no foul.

Again, the discussion of some other forum (irrelevant, hence off topic) merely breaks up the thread and confounds debate.

Most importantly, how, in a debate, is my expression of the view that someone else is off topic disrespectful? If I am wrong and they are on topic, they can make that argument. If I was wrong to label the comment off-topic, I'll accept that I am wrong, apologise and address the argument they make. If they choose not to, we can draw various conclusions from that.

Determining that an argument is irrelevant because it has no bearing on the matter at hand is a totally legitimate part of a calm and reasoned debate.

Asking me not to point out which arguments are irrelevant as I attempt to debate three or four people at once is in my view not a legitimate thing to expect, and to cloak the request in the language of politeness and decency is I feel an attempt to deliver a low blow.

If the only rudeness you can determine is judging some posts off topic and you propose to withhold your welcome unless I desist, then what you are offering is no welcome and no debate.

System

Rota wrote: »

I think you have hit the nail on the head. This is the whole reason HPC have been so spectacularly wrong over the last decade. Taking a day by day approach, as opposed to a 20 year view will never pay off.

Summed up nicely by "I can't buy yestersday".

No, but you could have done. You made a crap decision, deal with it.

Blooloo

@ wotsthat:
In other words, you simply dont know if we have reached a tipping point.

Which is sensible...

In the same vein, the poster asking for apologies should see that a persons opinion is as valid on the bear side as it is on the bull side..one has to be wrong...indeed, the bull could at first be right, later to be proved wrong by events, and vice versa..If you are in the housing game for earning, then its a risk you take.

wotsthat

Blooloo wrote: »

In the same vein, the poster asking for apologies should see that a persons opinion is as valid on the bear side as it is on the bull side..one has to be wrong...indeed, the bull could at first be right, later to be proved wrong by events, and vice versa..If you are in the housing game for earning, then its a risk you take.

People on HPC want to end up as homeowners.

Why not just buy a house and pay down the mortgage asap instead of worrying about playing bulls and bears?

saguk1234

Because the price is too high! Unaffordable.

hpc_troll

wotsthat wrote: »

If you'd been asked 'are we at a tipping point?' any day during your time on HPC you would have made almost identical eloquent arguments and been wrong every time. You've not said whether you STR'ed in 2012 but it's a concern that you've never run the sums to assess the current position and, more bizarrely, don't see the point. It's not off topic - I'm just wondering about your credibility as an expert witness.

I think that we disagree about one very important thing, which is how a debate should be conducted. In my opinion opposing ideas should be set forth and those ideas should be challenged.

You are proposing a different model wherein the opponent is modelled at least in part as an "expert witness" and therefore the focus moves from the ideas to the credibility of the individual.

Two things.

Firstly, I do not concede that the attempt to move from ideas to the individual is a legitimate tactic.

Secondly, Let me characterise the method that you propose for assessing credibility. We imagine an individual and we imagine a time the may have chosen to buy (or remain as an owner occupier). We then compare the balance of mortgage payments, capital gains or losses, transaction fees, and the cost of any repairs against what they would have paid in rent had then not bought (or chosen not to remain as an owner occupier) and any interest income that obtained from not having surrendered a portion of their saving to furnish a deposit.

The weakness of this proposal is that it cannot deal with people who did not buy for some other reason. For example, you might expect to have to move jobs in short order and not want the anxiety of managing the letting of your home. In this case your decision whether or not to buy is not determined by the individual's desire to own or rent, much less their commitment to either as a "strategy", yet by definition that you, wotsthat, offer, this renders the renter either credible or not credible depending on the outcome of the calculation. It therefore follows, for you but not for me, that if the calculation determines that renting was more expensive then pointing out that they would have been better off had they bought becomes, under your analysis, a legitimate way to rebut their arguments. I do not accept that this is a legitimate way to conduct debate. It is a gold-plated Grade A ad hominem argument.

Whether intentionally or unintentionally you are continually trying to reframe a debate about what house prices do next as a chance to take stock on the financial consequences of buying at various points in the past against the financial consequences of being unable to buy or having chosen not to buy. In my opinion you have yet to make a compelling argument to support your position regarding the future path of prices and you have failed to mount a compelling rebuttal of any of the points that I have put forward.