Ridiculous listing prices

Mickey666

The economy didn't really shrink though did it?  It was shut down, so of course it shrank.  It would have been remarkable if it hadn't.

Crashy_Time

Getting_greyer said:

Crashy_Time said:

Getting_greyer said:

Crashy, what am supposed to take from the plumplot link?  I'll attempt to work it out.
1.  34% drop in transactions means prices will fall.  This is because the 34% signals buyers are unable to pay the asking price, sellers won't budge so sale falls through. End state more buyers and sellers stay put.  The 1.6% increase in prices that occurred in the same time frame is likely to turn negative as sellers become desperate to sell, at the same time as transactions explode.
2. 1.6% increase in average prices is just the tail of years of substantial HPI. This means less people can now afford to pay asking prices. Sellers believe this as the 34% of transactions that didn't happen is due to sellers believing now is a bad time to sell.  End state less properties come to market but less people can afford the asking price. End state HPI will plateau without other external factors.
3. The 34% is a reduction in houses going to market means undersupply.  Prices have risen by 1.6% as there is more competition for less properties. End state buyers are willing and able to pay more from a smaller selection. HPI continues.
4. The 34% is a signpost that sellers can't afford to move.  At the same time buyers can't afford to buy. The 66% that did and the 1.6% increase in prices is just due to central banks/vested interest mind control. But prices will fall.

Am I in the ball park with any of them?

What effect do you think rising rates/inflation will have on the 66%, or the ending of furlough or other props to the economy?

OK, so we're bringing the labour market into the equation.  I will answer this, but can you please acknowledge that I was asking what specifically you were alluding to by posting a link to plumplot. You make a lot of references to transactions being low compared with various base years.  I was asking what does that mean.  Transactions are low, ok you're link back that up, but what do you think the reason is and what do you think that means going forward.  I did offer a few suggestions but I guess you think it's something else?

It means that banks can tighten lending criteria to filter out the riskiest borrowers, a decent number of transactions can still go ahead, and we can all pretend that headline stats are achievable prices for all houses! The banks get to keep their balance sheet price bubble, sellers get to keep their dreams of how much they might get for their house, and the buyers who take part still believe that they won`t go into negative equity! Win Win Win..........unfortunately it all depends on strong employment, low rates and sentiment plus loads of money printing and taxpayer backed props to the housing market! I think sentiment turned against the bubble a long time ago...most sensible people realise now that high house prices don`t benefit ordinary people, employment is struggling but government are trying to keep bailing out the lifeboats so that there isn`t a collapse in rent/mortgage payments, and I think there is a good chance of mortgage rates starting to be pushed higher as all the printing just has less and less effect each time. (The Fed played a blinder in printing us out of the March collapse though, a pension that I had in deferral due to the crisis eventually got transferred worth quite a few thousand more than before the crisis! Win Win....keep printing boys!)

Crashy_Time

Mickey666 said:

The economy didn't really shrink though did it?  It was shut down, so of course it shrank.  It would have been remarkable if it hadn't.

The question is though, how many of the businesses closed down will be able to re-open at their previous level, or even re-open at all?

Getting_greyer

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.

Crashy_Time

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.

Getting_greyer

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. 

RelievedSheff

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.

RelievedSheff

Mickey666 said:

Crashy_Time said:

Mickey666 said:

The economy didn't really shrink though did it?  It was shut down, so of course it shrank.  It would have been remarkable if it hadn't.

The question is though, how many of the businesses closed down will be able to re-open at their previous level, or even re-open at all?

That's a fair question, but it's a different issue to the point you posted regarding the economy slowing by a record amount in the last 100 years (when was the last time the country was locked-down?  Right, never before!).

I've no doubt that many businesses have been seriously wounded by the lockdown, some fatally, but we won't know the full impact until later this year - assuming restrictions are gradually relaxed over the next few months.

However, I think we can be equally sure that the lockdown has resulted in a pent-up demand for many things as well, so who knows what the end result will be?  A friend has worked all through the various lockdowns and has saved so much this year because of not being able to go on holidays or out to eat every week that he's been over-paying his mortgage and is planning a lump sum repayment before the end of the tax year.   Another friend had to close her shop and wind that business up but is planning to start anew when things get back to normal . . . whenever that may be.

Predicting the economic future seems to be fraught with difficulty even in normal times but in these are genuinely unprecedented times (not forgetting any Brexit effects) so accurate prediction is almost certainly impossible.

Fully agree with this. We have been unaffected by Covid, we have both worked throughout and our situation is far from unique. 

We have saved far more than we have ever done before and we have some big purchases planned for later in the year as and when the economy reopens. Again I'm sure we are far from unique in this respect. 

At the same time we know people for whom business is booming during lockdown and others who are struggling. 

It really is swings and roundabouts but for a lot of people lockdown has not been a bad thing.

MobileSaver

Crashy_Time said:

MobileSaver said:

Crashy_Time said:

The economy and property bubble was in trouble before Covid

Really?!?!

How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?

Crashy_Time said:

people who couldn`t afford bigger properties with bigger gardens then certainly can`t afford it now,

You keep stating this as a fact and yet report after report proves you wrong (including I might add articles that you yourself have linked to!)

Crashy_Time said:

What would the thought process be that drives a seller to do this in the middle of the biggest downturn in living memory?

Probably acting on actual real-world verifiable facts rather than misguided opinions from HPC fanatics:

UK house prices reach new high

Prices ended 2020 up 6% on the previous year on pent-up demand and stamp duty holiday

House prices up 6% is the "biggest downturn in living memory"?!?! LOL

So just to be clear, you are saying that these headlines are just not true?

https://metro.co.uk/2021/02/12/uk-economy-shrank-by-9-8-in-2020-faster-than-any-point-in-100-years-14068920/#metro-comments-container

Er, yes, that headline was true. I have answered your question so please can you answer mine?

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"?

Mickey666

MobileSaver said:

Crashy_Time said:

MobileSaver said:

Crashy_Time said:

The economy and property bubble was in trouble before Covid

Really?!?!

How do you explain house prices have been rising for the last ten years if the "property bubble was in trouble"?

Crashy_Time said:

people who couldn`t afford bigger properties with bigger gardens then certainly can`t afford it now,

You keep stating this as a fact and yet report after report proves you wrong (including I might add articles that you yourself have linked to!)

Crashy_Time said:

What would the thought process be that drives a seller to do this in the middle of the biggest downturn in living memory?

Probably acting on actual real-world verifiable facts rather than misguided opinions from HPC fanatics:

UK house prices reach new high

Prices ended 2020 up 6% on the previous year on pent-up demand and stamp duty holiday

House prices up 6% is the "biggest downturn in living memory"?!?! LOL

So just to be clear, you are saying that these headlines are just not true?

https://metro.co.uk/2021/02/12/uk-economy-shrank-by-9-8-in-2020-faster-than-any-point-in-100-years-14068920/#metro-comments-container

Er, yes, that headline was true. I have answered your question so please can you answer mine?

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"?

I'll risk a guess for 3 - I suspect Crashy is using a drop in transactions as a definition of downturn, which I suppose it could be, except that it also (further) reduces supply, which increases demand, hence house prices rising even though transactions are low.
But I'm stumped on 1 & 2