Debate House Prices


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The Next Nail in the Coffin

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Comments

  • chucknorris
    chucknorris Posts: 10,793 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 28 March 2016 at 10:36AM
    wolfplayer wrote: »
    Hold onto the view, if it eases your mind, that other BTLing landlords going to be in market to buy from you, in the near future.

    But I don't particularly need to sell to other landlords, why would I? I also don't believe that a crash is just around the corner either, although I don't see any (real term) rises either.

    I am also not trying to time the market and sell at the top, no one knows where capital values will go, but what I can do is calculate when dividend income is about the same level as my rental profits. So IMO it is far more sensible to base my decision mainly on income, not capital values.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • michaels
    michaels Posts: 28,769 Forumite
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    wolfplayer wrote: »
    That might be more of a fine balance than you realise.

    Holding to the end in real estate, and you can get stuck.

    You only have to read a few of the BTL stories about Clause 24 to read landlords complaining about all the new regulations, laws and taxes, and making the astonishing claim that they can't sell to FTBs or upsizers, because such buyers have no chance of affording.

    The BTLing landlords just need to put it all together. Some are going to have to drop their prices by a long way in order to sell. And lower prices, when there are a few such sales, bring down values for all other owners.

    Hold onto the view, if it eases your mind, that other BTLing landlords going to be in market to buy from you, in the near future.
    Um you do realise the lower the capital value of a btl the higher the yield and the less likely that it is possible to achieve anything remotely similar in another investment. Property will never be anything other than a low liquidity high transaction cost investment so why would increasing yields encourage people to sell? I don't see many but the most naïve stock pickers suggesting buy high and sell low being a winning strategy.
    I think....
  • michaels
    michaels Posts: 28,769 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I also think there is a misunderstanding of where the boe sees the risk in btl. It is not the risk to the landlords or the banks of btl loans that concern them but the risk to housing market stability and hence stability of the whole economy from having a large share of the housing market held by owners who can choose to leave the market (something homeowners can't really do).
    I think....
  • economic
    economic Posts: 3,002 Forumite
    just sold my flat - am wondering if there is a perfect storm brewing for a property correction/crash in london.

    - BTL changes
    - EU vote
    - confidence in the economy
    - financial services contracting

    only positives really are rates to remain lower for longer and there is still quite a lot of demand from FTB (but this can easily be gone once we start to see fears of recession and job losses).

    should i buy now or wait?
  • cells
    cells Posts: 5,246 Forumite
    Rinoa wrote: »
    I can see why they don't like BTL. Housing benefit is out of control. The long term effect of more people renting is an ever increasing cost to the exchequer.


    Depends on location. In much of the north and Midlands where a house can be rented for £600 a month and the landlord hands 45% back to the state plus capital taxes on sale and stamp duty on purchase that's probay lower cost than building an additional social house to put the HB tenant into
  • cells
    cells Posts: 5,246 Forumite
    michaels wrote: »
    I also think there is a misunderstanding of where the boe sees the risk in btl. It is not the risk to the landlords or the banks of btl loans that concern them but the risk to housing market stability and hence stability of the whole economy from having a large share of the housing market held by owners who can choose to leave the market (something homeowners can't really do).

    Well the UK is many different markets so we can test that theory.

    Hackney is very high portion as BTL. Enfield is much less so.

    So for the theory of Landlords will bail out and cause a problem in doing so should have shown up as a bigger crash in high BTL areas in 2008-2011. However that was not the case the crash in prices was about the same but the recovery was stronger.

    So its a hood theory that landlords will panic sell but the data suggests its not the case at all. If anything landlords seem to see the value before the general population and help prices recover faster.
  • cells
    cells Posts: 5,246 Forumite
    But I don't particularly need to sell to other landlords, why would I? I also don't believe that a crash is just around the corner either, although I don't see any (real term) rises either.

    I am also not trying to time the market and sell at the top, no one knows where capital values will go, but what I can do is calculate when dividend income is about the same level as my rental profits. So IMO it is far more sensible to base my decision mainly on income, not capital values.


    Depending on your local market and the type of property you may have to sell to a landlord. Or maybe I should say that in some parts landlords are the market. In Hackney I would guess some 80% of transactions are between landlords and depending on the exact part of Hackney and type of property it probably increases towards 99%. If landlords were taken out of the market the clearing price would almost certainly be lower.

    I think this applies to most of zone 2.

    Of course there would be quite a big impact on the composition of the households on such areas were tenants living 4 wage earners to a property displaced by owner couples living 1.5 wage earners to a property.
    So of it happens expect the trains and busses to be a lot more full as the 4 workers on z2 and 1.5 workers in z4 trade places
  • cells
    cells Posts: 5,246 Forumite
    Generali wrote: »
    Yes.

    Bear in mind that indices often don't reflect real prices. With property markets, often liquidity simply dries up as people don't want to "give their house away" so instead of selling their house at the market price they simply wait for the market to come back to them.

    Anyone that follows the housing market in an area will know a couple of properties on at stupid prices that have been hanging about for years. If you look at the chart on page 7:

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508738/UK_Tables_Mar_2016__cir_.pdf

    then you can see the effect I mean. Yes, a part of that is almost certainly due to HAMISH's mortgage famine but a big chunk will be people either simply withdrawing their houses from the market or pricing them so high that they might as well have done.

    You can see a similar effect in the data table on page 11 albeit less pronounced as the data is annualised which flattens out the effect a bit.

    As an aside it's interesting to note that the decline in volumes in England and Wales has largely been recovered whereas the declines in Scotland and NI haven't (down 27% and 35% respectively).


    Transactions are somewhat based on new build levels. One new build will lead to some 3 transactions.

    In the crash new builds crashed nearly 100k units a year and that would explain a big part (300k) of the crash in volimes. New builds are recovering from the lows and again it will explain some 300k of the uplift in transactions
  • cells
    cells Posts: 5,246 Forumite
    Rinoa wrote: »
    I can see why they don't like BTL. Housing benefit is out of control. The long term effect of more people renting is an ever increasing cost to the exchequer.

    Less renters needs the return of interest only self cert 10% down mortgages. And 0% down prime borrower mortgages.
  • cells
    cells Posts: 5,246 Forumite
    Generali wrote: »
    I agree but you don't need a weatherman to tell the where the wind blows.

    I wonder if this is about the professionalisation of the industry as much as anything. At the moment nobody knows where the risks lie and anecdotally there seems to be a lot of stuff like non-compliance with the rules on letting.

    I suspect that the Government wants to see large landlords letting to thousands of tenants. The BoE wants to understand who has borrowed what against what collateral.


    I think you are overreacting to this.

    Government wants more tax money so they hit landlords who have little choice bit to vote for them.

    They may want more owners and fewer renters but that's got more to do with mortgages than landlords especially in half the country where houses are cheap but renting is increasing nonetheless

    You are probably correct in that the direction of travel is more taxes on landlords but I don't think the direction of travil is lower house prices especially in the north and Midlands that are just recovering prices
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