Has the market peaked?

kilby_007

ruperts wrote: »

London - maybe, although it's more likely to be a quick 'pause for breath'.

Elsewhere - no. In many places they've barely reached the 2007 peak yet never mind a new one.

Anecdotally, I know of at least one major house builder who is still pressing ahead at pace because their profits are sky high.

What exactly does "pause for breath" mean? I keep hearing this in the media but it sounds like a nonsense cliche to me. Did buyers just collectively agree to have a few months off from house hunting? Or did prices get so insane that nobody wants to play the inflation game any more?

Don't forget how utterly unaffordable prices were in 2007. Thanks to a number of government schemes and meddling with monetary policy the crash never really played out, so we're back at 2007 prices (in my area it's 2007 + 20%) and wages have barely increased at all.

What do you think is likely to happen now?

MobileSaver

LdnFtB wrote: »

I changed prices to value as value is clearly the issue at stake

The very definition of a straw man argument... once you realise you are losing the debate, simply pretend your opponent said something else entirely, refute that false statement and then try to claim victory. Seriously, that's more than a little bit sad and pathetic even for an ardent HPCer.

Tiners

Well BTL has been the main driver of the market in recent years and that's now being disincentivised to a large extent,
There also seems to be little indication that the govt/BoE are willing and able to continue with all the various housing market props that have been in place post 2008.

It certainly feels like affordability and subsequently prices have plateaued for now.

Crashy_Time

http://www.telegraph.co.uk/personal-banking/mortgages/house-prices-falling-many-regions-should-anyone-take-95pc-mortgage/


The headlines and general sentiment towards property now is just so so different to the crazy days of bubble mania, even LLL is on a late night slot.....:rotfl:

Ithaca

juniordoc wrote: »

Whilst salaries are stagnant, how can prices go up? Income multiples are the highest on record, and lenders are getting stricter, not more liberal.
An interest rate rise now looks less than 12 months away, these are not conditions that will promote house price rises so yes, I would say they are at a peak.

Salaries are only stagnant if you're in the same role. People still progress through their careers and earn more money. We bought our first house in 2007 when our household income was £32k (my wife was a medical student at the time). When we bought again in 2015 our household income was £90k (wife had nearly qualified as a GP). We couldn't necessarily buy the same size house as we could have in 2007, but we and others in our situation still create a demand-driven market which will drive prices up.

lush_walrus

Everything seems quiet at the moment, but that's to be expected we are awaiting an election which most struggle to predict after the last few polls. On top of that the outcome for this could not be further apart, Corbin bringing us closer to comunism than the uk has ever been and may taking us pretty far right. The economy and general population is waiting for this.

In saying that I've not seen a slow down in sales nor developers buying sites. But we are in the magical south east / London / Home Counties. London prices have definitely slowed the rest still rising for us.

amateur_house

Ithaca wrote: »

Salaries are only stagnant if you're in the same role. People still progress through their careers and earn more money. We bought our first house in 2007 when our household income was £32k (my wife was a medical student at the time). When we bought again in 2015 our household income was £90k (wife had nearly qualified as a GP). We couldn't necessarily buy the same size house as we could have in 2007, but we and others in our situation still create a demand-driven market which will drive prices up.

At the other extreme there are people doing the same job they were 10 years ago but earning less due to so called 'restructures'. I, for one, have been in the same job 15 years but was given a new job title and a 10% pay cut 3 years ago, and had a 1% rise each year since. It​ will take me another 7 years to be earning the same as I was in 2014. I know of several people at various organisations in this same situation. Many others all over the country are in the same boat, thanks to the 'austerity' measures implemented by the government.

kilby_007

Ithaca wrote: »

Salaries are only stagnant if you're in the same role.

That doesn't make sense. The salaries are still stagnant. one person's promotion is mutually exclusive of (overall) salary stagnation. We can't all just get a promotion!

Ithaca

kilby_007 wrote: »

That doesn't make sense. The salaries are still stagnant. one person's promotion is mutually exclusive of (overall) salary stagnation. We can't all just get a promotion!

I agree, but I think my point is that with limited housing supply as long as there are people who can move up the salary bands, or generate money from their own business etc, there will still be a competitive market that will drive prices up.

There are also people who are able / willing to move to different areas which can also push local prices higher... where we are in Warwickshire we have a lot of people in their 30s and early 40s in professional jobs moving out of Greater London, so they will sell their 3 bed house in London and use the equity plus their higher salaries to "outbid" locals on 4-5 bed homes.

hutman

There needs to be a bit more reasoning to this bit than the ample slanging matches between “yeah yeah heard this before” vs crashy’s.

There is a lot of factors involved in house prices which need to be dissected properly:

Wages
Inflation
Supply
Demand
Immigration
Government Intervention
Monetary policy – Interest rates
Demography
Foreign Ownership


I would say, as FTB with a deep breath that for London we probably wont have a crash, (cooling effect whatever you want to call it) but if one of the above were to tilt exogenously & unexpectedly; especially one of the higher weighted items such as rates then we have hope.

Inflation outstripping wages as a long awaited knock on from sterlings fall will be very concerning to Carney and his crew. Monetary policy tends to converge with the Fed and it has already started its anaemic rate increases. Thus the average consumer who is leveraged and finds his/hers spending power reduced will be at the mercy of inflation adjusting measures.


I would consider the below as things that may swing it – but would need significant political courage to achieve their central aims.

Brexit – uncertainty
Inflation – erosion of disposable income