Ridiculous listing prices

Crashy_Time

MobileSaver said:

GDB2222 said:

MobileSaver said:

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading.

I agree in principle but even then, pretty much whichever way you slice the pie, it would appear to contradict the "biggest downturn in living memory" claim.

I said the economy is in the biggest downturn in living memory, and you agreed! No idea what there could be to argue about TBH?

Crashy_Time

Mickey666 said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

Getting_greyer said:

OK, so you're anyone tje drop in transactions is due to banks not willing to loan to as many people, therefore there is now less buyers available whom are able and willing to pay current prices.

Yes, it all hangs on the price of credit and the availability of credit. Some people won`t get the loans they need, some will rent cheaply and stay out of the bubble, others will try to save deposits but this will take years in some cases and also keep them out of the transaction figures (see the mad scramble when SD was cancelled for evidence of this desperation to buy into something you can`t really afford) Many will only be participants on two wages, all their savings and loans from family, any disruption to their incomes or rising mortgage rates will see them in trouble.

But there won't be cheap rents if mortgage rates increase and landlords increase their rents to cover their costs. 

Stamp duty is a minimal cost in the house buying process in most cases.

Many landlords don`t have mortgages, rents are driven by wages and employment levels not landlord costs, smart landlords who don`t want voids and double council tax know what to do IMO.

So in your opinion landlords rent out houses for the love of it not the money?

Your posts get more bizarre by the day!! 

No, landlords are influenced by market conditions like any other business.

Yes, and part of the market conditions are things like their costs and their capital employed.  Even if a landlord owns a property outright and has no mortgage costs, that doesn't mean they can charge a very low rent based on wages (assuming they're serious about acting like a business) because they have their capital employed in the business, on which they will expect a certain return.

Simplistically, their capital employed is the value of the property and the rent they charge is the required return on that capital.  If the rental income is too low then they are better off selling the property and investing that capital somewhere else, such as the stock market.

So, wages and employment levels are a factor but they are not the DRIVING factor you seem to think they are because the Landlord has alternative investment options whereas those looking to rent have no alternative (other than buying) for the simple reason you continually ignore - everyone NEEDS somewhere to live and the only choice is to rent or buy. 

What alternative investment options does someone with three empty BTL or AirBnB`s on mortgages have at the moment? If people don`t pay rent from wages where is the rent money coming from? Your thinking is the sort of thing that might get said in a BTL seminar, but it just isn`t real world thinking I`m afraid, many people who were hooked into BTL know zero about investment and investment returns and the options for generating returns, they just know that they need a tenant in place or they are running a money pit.

Crashy_Time

Mickey666 said:

GDB2222 said:

MobileSaver said:

Crashy_Time said:

1. How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?
2. How do you explain report after report confirming people are moving away from urban areas to less-urban areas with bigger properties and bigger gardens if people cannot afford them?
3. How do you explain house prices increasing by 6% if we are in the "biggest downturn in living memory"?

1. Zero interest rates and government support schemes, no way this level of pricing can survive interest rate increases.
2. EA`s are trying to bang the drum for their rural business..."Look...EVERYONE is buying THIS now!" It is just basic out of date advertising tactics, will have absolutely zero baring on underlying fundamentals, and will disappear like smoke when Covid disappears.
3. Are you talking asking or actual sold?

1) So if interest rates rise there WILL BE a house price crash?

2) So the report THAT YOU LINKED TO was false and they lied about people moving from inner London to bigger properties on the peripheries creating so much demand that they had to move staff around? Why would you link to such a false article?

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading. At least, theoretically. For example, suppose more houses are being sold at the moment than a year ago, and fewer flats. Houses tend to be more expensive, so the average price per transaction goes up. Likewise, there may be more transactions in expensive areas than a year ago. It is actually extremely difficult to construct an unbiased housing price index. 

I live in East Finchley, which includes Bishops Avenue, where houses sell for £50m, as well as lots of ordinary houses. One of the Bishops Avenue houses selling totally skews the local statistics.

Depends.  If the £50m house was bought last year for, say £47.5m, then that's a £2.5m increase which sounds a lot but is still only 5%.  It would be pretty daft to use that example to say that house prices in East Finchley have increased by £2.5m, but rather more reasonable to say they've increased by 5%.

Though it raises the good point that when transactions are low, prices are an unreliable guide, which is maybe where Crashy goes astray.  In a recession, people tend to 'hunker down' and sit tight to weather the storm.  Some people will be forced to move during the storm of course and if conditions are not good they may end up selling low. 

But extrapolating that to a market 'crash' is dangerous because the majority of people probably had no intention of selling at that price and, as pointed out before, a 'theoretical' crash has no effect on them at all - they have their home, they pay the same mortgage, nothing has changed for them.

Then, when the storm passes, more people start looking around to move and prices suddenly 'recover' back to their previous levels or more.  But it's not so much a recovery, more the case that very few people would ever sell so low in the first place and they are merely picking up again where things left off before the 'crash'.  In other words, the 'crash' was just a temporary blip rather than a market correction.  We've seen it time and time again and many of us have lived though it, negative equity and all, and survived to tell the tale.

"Someone says...Barracuda!....people go....What?"............"Someone says...Crash!.....people start panicking (and putting a LOT of energy into convincing everyone it isn`t so!) LOL.

(Paraphrased from "Jaws" 1975)

A property crash isn`t "theoretical" it is just a property crash, the value of your house goes down whether you are interested in selling or not!

Crashy_Time

Getting_greyer said:

OK. If lenders are more careful with who they lend to, it assumes higher earners are proportionaly more prevalent in the buyer market. do you see a scenario where "nicer" homes increase but 1 bed flats are decrease? Notwithstanding location. 

No, I think lenders will be doing a lot of "down-valuation" going forward, to protect themselves basically.

Mickey666

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

Getting_greyer said:

OK, so you're anyone tje drop in transactions is due to banks not willing to loan to as many people, therefore there is now less buyers available whom are able and willing to pay current prices.

Yes, it all hangs on the price of credit and the availability of credit. Some people won`t get the loans they need, some will rent cheaply and stay out of the bubble, others will try to save deposits but this will take years in some cases and also keep them out of the transaction figures (see the mad scramble when SD was cancelled for evidence of this desperation to buy into something you can`t really afford) Many will only be participants on two wages, all their savings and loans from family, any disruption to their incomes or rising mortgage rates will see them in trouble.

But there won't be cheap rents if mortgage rates increase and landlords increase their rents to cover their costs. 

Stamp duty is a minimal cost in the house buying process in most cases.

Many landlords don`t have mortgages, rents are driven by wages and employment levels not landlord costs, smart landlords who don`t want voids and double council tax know what to do IMO.

So in your opinion landlords rent out houses for the love of it not the money?

Your posts get more bizarre by the day!! 

No, landlords are influenced by market conditions like any other business.

Yes, and part of the market conditions are things like their costs and their capital employed.  Even if a landlord owns a property outright and has no mortgage costs, that doesn't mean they can charge a very low rent based on wages (assuming they're serious about acting like a business) because they have their capital employed in the business, on which they will expect a certain return.

Simplistically, their capital employed is the value of the property and the rent they charge is the required return on that capital.  If the rental income is too low then they are better off selling the property and investing that capital somewhere else, such as the stock market.

So, wages and employment levels are a factor but they are not the DRIVING factor you seem to think they are because the Landlord has alternative investment options whereas those looking to rent have no alternative (other than buying) for the simple reason you continually ignore - everyone NEEDS somewhere to live and the only choice is to rent or buy. 

What alternative investment options does someone with three empty BTL or AirBnB`s on mortgages have at the moment? If people don`t pay rent from wages where is the rent money coming from? Your thinking is the sort of thing that might get said in a BTL seminar, but it just isn`t real world thinking I`m afraid, many people who were hooked into BTL know zero about investment and investment returns and the options for generating returns, they just know that they need a tenant in place or they are running a money pit.

What does any business do when there is no money coming in?  It changes and goes elsewhere, even if only to bankruptcy.  No Landlord is going to subsidise a loss-making property because tenants can't pay the asking price.  Sure, that will have some downward pressure on rent but only to a certain point before the Landlord gives up, sells up and takes his capital to invest elsewhere.  There are plenty of other investment opportunities aren't there?  In fact, if your continual prediction of a housing price crash is to believed then the smart money will already be selling up while they can! 

You're right that without tenants landlords are running a money pit but if you think that makes the landlords dependent on tenants thereby given them any significant power then I'm afraid you're in for a big shock because it's the capital employed in their business that has the power and that is even easier to relocate than the tenants.

Mickey666

Crashy_Time said:

Mickey666 said:

GDB2222 said:

MobileSaver said:

Crashy_Time said:

1. How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?
2. How do you explain report after report confirming people are moving away from urban areas to less-urban areas with bigger properties and bigger gardens if people cannot afford them?
3. How do you explain house prices increasing by 6% if we are in the "biggest downturn in living memory"?

1. Zero interest rates and government support schemes, no way this level of pricing can survive interest rate increases.
2. EA`s are trying to bang the drum for their rural business..."Look...EVERYONE is buying THIS now!" It is just basic out of date advertising tactics, will have absolutely zero baring on underlying fundamentals, and will disappear like smoke when Covid disappears.
3. Are you talking asking or actual sold?

1) So if interest rates rise there WILL BE a house price crash?

2) So the report THAT YOU LINKED TO was false and they lied about people moving from inner London to bigger properties on the peripheries creating so much demand that they had to move staff around? Why would you link to such a false article?

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading. At least, theoretically. For example, suppose more houses are being sold at the moment than a year ago, and fewer flats. Houses tend to be more expensive, so the average price per transaction goes up. Likewise, there may be more transactions in expensive areas than a year ago. It is actually extremely difficult to construct an unbiased housing price index. 

I live in East Finchley, which includes Bishops Avenue, where houses sell for £50m, as well as lots of ordinary houses. One of the Bishops Avenue houses selling totally skews the local statistics.

Depends.  If the £50m house was bought last year for, say £47.5m, then that's a £2.5m increase which sounds a lot but is still only 5%.  It would be pretty daft to use that example to say that house prices in East Finchley have increased by £2.5m, but rather more reasonable to say they've increased by 5%.

Though it raises the good point that when transactions are low, prices are an unreliable guide, which is maybe where Crashy goes astray.  In a recession, people tend to 'hunker down' and sit tight to weather the storm.  Some people will be forced to move during the storm of course and if conditions are not good they may end up selling low. 

But extrapolating that to a market 'crash' is dangerous because the majority of people probably had no intention of selling at that price and, as pointed out before, a 'theoretical' crash has no effect on them at all - they have their home, they pay the same mortgage, nothing has changed for them.

Then, when the storm passes, more people start looking around to move and prices suddenly 'recover' back to their previous levels or more.  But it's not so much a recovery, more the case that very few people would ever sell so low in the first place and they are merely picking up again where things left off before the 'crash'.  In other words, the 'crash' was just a temporary blip rather than a market correction.  We've seen it time and time again and many of us have lived though it, negative equity and all, and survived to tell the tale.

"Someone says...Barracuda!....people go....What?"............"Someone says...Crash!.....people start panicking (and putting a LOT of energy into convincing everyone it isn`t so!) LOL.

(Paraphrased from "Jaws" 1975)

A property crash isn`t "theoretical" it is just a property crash, the value of your house goes down whether you are interested in selling or not!

A 'real' property crash would indeed be a 'real crash'.  But extrapolating a 'crash' from a few lower priced sales when transaction volumes have fallen is not a 'real' crash and is why prices bounce back so quickly as we've all seen time and again in the various recent recessions.

Perhaps I'm misunderstanding your definition of a 'crash'.  Mine would be something like at least 50% drop in prices, not 15-20%.  Besides 10% is pretty much in the noise of asking and offered prices anyway so even a 20% nominal fall might only be a 10% drop in practical terms.

As for the value of my house, well we've had that discussion before - I really, honestly, don't care because it doesn't affect me one iota, nor does it affect the majority of home owners who don't have a mortgage.  It also won't affect the minority of home owners who do have a mortgage as long as they continue to pay their mortgage.   Whatever the market value, the houses are still homes and that has an intrinsic value in its own right and always will have.

SpiderLegs

GDB2222 said:

MobileSaver said:

Crashy_Time said:

1. How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?
2. How do you explain report after report confirming people are moving away from urban areas to less-urban areas with bigger properties and bigger gardens if people cannot afford them?
3. How do you explain house prices increasing by 6% if we are in the "biggest downturn in living memory"?

1. Zero interest rates and government support schemes, no way this level of pricing can survive interest rate increases.
2. EA`s are trying to bang the drum for their rural business..."Look...EVERYONE is buying THIS now!" It is just basic out of date advertising tactics, will have absolutely zero baring on underlying fundamentals, and will disappear like smoke when Covid disappears.
3. Are you talking asking or actual sold?

1) So if interest rates rise there WILL BE a house price crash?

2) So the report THAT YOU LINKED TO was false and they lied about people moving from inner London to bigger properties on the peripheries creating so much demand that they had to move staff around? Why would you link to such a false article?

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading. At least, theoretically. For example, suppose more houses are being sold at the moment than a year ago, and fewer flats. Houses tend to be more expensive, so the average price per transaction goes up. Likewise, there may be more transactions in expensive areas than a year ago. It is actually extremely difficult to construct an unbiased housing price index. 

I live in East Finchley, which includes Bishops Avenue, where houses sell for £50m, as well as lots of ordinary houses. One of the Bishops Avenue houses selling totally skews the local statistics.

That’s why house price indexes do not use straight averages.

https://www.nationwide.co.uk/guides/buying-and-owning-a-property/the-nationwide-house-price-index

GDB2222

SpiderLegs said:

GDB2222 said:

MobileSaver said:

Crashy_Time said:

1. How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?
2. How do you explain report after report confirming people are moving away from urban areas to less-urban areas with bigger properties and bigger gardens if people cannot afford them?
3. How do you explain house prices increasing by 6% if we are in the "biggest downturn in living memory"?

1. Zero interest rates and government support schemes, no way this level of pricing can survive interest rate increases.
2. EA`s are trying to bang the drum for their rural business..."Look...EVERYONE is buying THIS now!" It is just basic out of date advertising tactics, will have absolutely zero baring on underlying fundamentals, and will disappear like smoke when Covid disappears.
3. Are you talking asking or actual sold?

1) So if interest rates rise there WILL BE a house price crash?

2) So the report THAT YOU LINKED TO was false and they lied about people moving from inner London to bigger properties on the peripheries creating so much demand that they had to move staff around? Why would you link to such a false article?

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading. At least, theoretically. For example, suppose more houses are being sold at the moment than a year ago, and fewer flats. Houses tend to be more expensive, so the average price per transaction goes up. Likewise, there may be more transactions in expensive areas than a year ago. It is actually extremely difficult to construct an unbiased housing price index. 

I live in East Finchley, which includes Bishops Avenue, where houses sell for £50m, as well as lots of ordinary houses. One of the Bishops Avenue houses selling totally skews the local statistics.

That’s why house price indexes do not use straight averages.

https://www.nationwide.co.uk/guides/buying-and-owning-a-property/the-nationwide-house-price-index

The Halifax and Nationwide indices are mix-adjusted. Curiously, I think they only started doing that in the 1980s/90s. They were publishing an index for about 30-40 years before that without mix-adjusting.

Surprisingly, perhaps, the ONS data is not mix-adjusted. Or, at least, it wasn't last time I looked.

SpiderLegs

GDB2222 said:

SpiderLegs said:

GDB2222 said:

MobileSaver said:

Crashy_Time said:

1. How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?
2. How do you explain report after report confirming people are moving away from urban areas to less-urban areas with bigger properties and bigger gardens if people cannot afford them?
3. How do you explain house prices increasing by 6% if we are in the "biggest downturn in living memory"?

1. Zero interest rates and government support schemes, no way this level of pricing can survive interest rate increases.
2. EA`s are trying to bang the drum for their rural business..."Look...EVERYONE is buying THIS now!" It is just basic out of date advertising tactics, will have absolutely zero baring on underlying fundamentals, and will disappear like smoke when Covid disappears.
3. Are you talking asking or actual sold?

1) So if interest rates rise there WILL BE a house price crash?

2) So the report THAT YOU LINKED TO was false and they lied about people moving from inner London to bigger properties on the peripheries creating so much demand that they had to move staff around? Why would you link to such a false article?

3) Actual sold, so how do you explain actual sold prices increasing by 6% if we are in the "biggest downturn in living memory"?

Prices ended 2020 up 6% on the previous year

Unless the 6% is adjusted for the type of property, it could be misleading. At least, theoretically. For example, suppose more houses are being sold at the moment than a year ago, and fewer flats. Houses tend to be more expensive, so the average price per transaction goes up. Likewise, there may be more transactions in expensive areas than a year ago. It is actually extremely difficult to construct an unbiased housing price index. 

I live in East Finchley, which includes Bishops Avenue, where houses sell for £50m, as well as lots of ordinary houses. One of the Bishops Avenue houses selling totally skews the local statistics.

That’s why house price indexes do not use straight averages.

https://www.nationwide.co.uk/guides/buying-and-owning-a-property/the-nationwide-house-price-index

The Halifax and Nationwide indices are mix-adjusted. Curiously, I think they only started doing that in the 1980s/90s. They were publishing an index for about 30-40 years before that without mix-adjusting.

Surprisingly, perhaps, the ONS data is not mix-adjusted. Or, at least, it wasn't last time I looked.

ONS data is mix adjusted.

Crashy_Time

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

RelievedSheff said:

Crashy_Time said:

Getting_greyer said:

OK, so you're anyone tje drop in transactions is due to banks not willing to loan to as many people, therefore there is now less buyers available whom are able and willing to pay current prices.

Yes, it all hangs on the price of credit and the availability of credit. Some people won`t get the loans they need, some will rent cheaply and stay out of the bubble, others will try to save deposits but this will take years in some cases and also keep them out of the transaction figures (see the mad scramble when SD was cancelled for evidence of this desperation to buy into something you can`t really afford) Many will only be participants on two wages, all their savings and loans from family, any disruption to their incomes or rising mortgage rates will see them in trouble.

But there won't be cheap rents if mortgage rates increase and landlords increase their rents to cover their costs. 

Stamp duty is a minimal cost in the house buying process in most cases.

Many landlords don`t have mortgages, rents are driven by wages and employment levels not landlord costs, smart landlords who don`t want voids and double council tax know what to do IMO.

So in your opinion landlords rent out houses for the love of it not the money?

Your posts get more bizarre by the day!! 

No, landlords are influenced by market conditions like any other business.

Yes, and part of the market conditions are things like their costs and their capital employed.  Even if a landlord owns a property outright and has no mortgage costs, that doesn't mean they can charge a very low rent based on wages (assuming they're serious about acting like a business) because they have their capital employed in the business, on which they will expect a certain return.

Simplistically, their capital employed is the value of the property and the rent they charge is the required return on that capital.  If the rental income is too low then they are better off selling the property and investing that capital somewhere else, such as the stock market.

So, wages and employment levels are a factor but they are not the DRIVING factor you seem to think they are because the Landlord has alternative investment options whereas those looking to rent have no alternative (other than buying) for the simple reason you continually ignore - everyone NEEDS somewhere to live and the only choice is to rent or buy. 

What alternative investment options does someone with three empty BTL or AirBnB`s on mortgages have at the moment? If people don`t pay rent from wages where is the rent money coming from? Your thinking is the sort of thing that might get said in a BTL seminar, but it just isn`t real world thinking I`m afraid, many people who were hooked into BTL know zero about investment and investment returns and the options for generating returns, they just know that they need a tenant in place or they are running a money pit.

What does any business do when there is no money coming in?  It changes and goes elsewhere, even if only to bankruptcy.  No Landlord is going to subsidise a loss-making property because tenants can't pay the asking price.  Sure, that will have some downward pressure on rent but only to a certain point before the Landlord gives up, sells up and takes his capital to invest elsewhere.  There are plenty of other investment opportunities aren't there?  In fact, if your continual prediction of a housing price crash is to believed then the smart money will already be selling up while they can! 

You're right that without tenants landlords are running a money pit but if you think that makes the landlords dependent on tenants thereby given them any significant power then I'm afraid you're in for a big shock because it's the capital employed in their business that has the power and that is even easier to relocate than the tenants.

 ? Many landlords don`t have "capital", they have outstanding debt to the bank on their BTL and outstanding debt to the bank on their primary residence, many will be in trouble now if they have lost tenants or have tenants who won`t leave and can`t/won`t pay, and they will be in deeper trouble if they have mortgages and rates rise. The whole point about property is that it is an ILLIQUID asset, any "capital" tied up in it is going to be very ILLIQUID. Many landlords are running loss making or barely break even portfolios, and that was before Covid! However if landlords do "relocate" their capital the house doesn`t relocate, someone buys it to either live in or rent out.