Can housing ever actually drop?

MaxiRobriguez

Voyager2002 said:

dude7691 said:

I know in the past that has always been the case, but we have a government at the moment who when a pandemic hit nearly the first thing they did was cut property taxes effectively to zero for the majority of the market! No doubt they will come down at some point, but over my time horizon for purchasing I'm guessing not. My best hope really is a few years of single digit growth only so I don't get completely priced out! 

That real terms comparison is remarkable actually, shows you how much a bubble 2008 really was in hindsight. When it comes to house price to incomes however, that's the kicker as we're sat at 08 valuations and likely to go higher. Of course it's not as bad here as in some countries (China for example 40:1), but 8.4:1 (roughly) is quite a significant increase from 20 years ago where it was half that! 

It appears very cyclical and if that was a stock I'd say it was a buy, because it's about to break all time high and push to a new cyclical high, that only further affirms my suspicion there's a lot more room for this market to run, to the detriment of FTB's unfortunate enough to not have been born 5-10 years earlier!

At the beginning of the pandemic there was a wide expectation that the housing market would collapse. The government wished to prevent this (they rely on home-owners for votes) and so introduced the stamp duty 'holiday'. No one either hoped nor expected that it would lead to the current boom. Anyway, the general expectation is that there will be some kind of correction after the end of the 'holiday'.

Which shows how thick some people in senior positions really are.

The pandemic has impacted young people in sectors like hospitality more than others. These people are renters.

The pandemic has not really impacted older folk in professional sectors, and indeed these people have been able to save more money by avoiding travel into work. These people are owners.

It shouldn't have been a surprise that people earning well in secure work and saving more, who have a new driver to move into homes with more space, would seek the opportunity to do so if given a massive tax dodge.

There wasn't a need to do the stamp duty cuts with furlough in place. That put a floor under loss of earnings for those in weaker positions and at the bottom of the housing ladder, allowing the wider market to remain liquid.

That the stamp duty freeze was extended despite having clear hindsight that the decision rocketed house prices was beyond ridiculous. 

dude7691

Voyager2002 said:

At the beginning of the pandemic there was a wide expectation that the housing market would collapse. The government wished to prevent this (they rely on home-owners for votes) and so introduced the stamp duty 'holiday'. No one either hoped nor expected that it would lead to the current boom. Anyway, the general expectation is that there will be some kind of correction after the end of the 'holiday'. 

Absolutely, I for one thought that we may see prices fall as much as 10% at the time. Stock markets certainly took the brunt of it, and in the UK are still lingering below their 2020 highs. This is what I mean, they're so dependent on that demographic that they will do anything. Yeah, I'm not expecting that personally. There's always an excuse for them to keep going up, it'll be the 95% LTV mortgages now that'll get snapped up by high earners to leverage their capital more than they could with 90% LTV. For someone with 95% LTV, they can now buy twice as many properties as on 90% LTV with the same deposit, or equivalently a house worth double the value for the equivalent deposit. 

dude7691

kuratowski said:

Roll up, roll up, get 'em while they're expensive 

Haha Just because they're expensive doesn't mean they can't go up more

dude7691

MaxiRobriguez said:

Which shows how thick some people in senior positions really are.

The pandemic has impacted young people in sectors like hospitality more than others. These people are renters.

The pandemic has not really impacted older folk in professional sectors, and indeed these people have been able to save more money by avoiding travel into work. These people are owners.

It shouldn't have been a surprise that people earning well in secure work and saving more, who have a new driver to move into homes with more space, would seek the opportunity to do so if given a massive tax dodge.

There wasn't a need to do the stamp duty cuts with furlough in place. That put a floor under loss of earnings for those in weaker positions and at the bottom of the housing ladder, allowing the wider market to remain liquid.

That the stamp duty freeze was extended despite having clear hindsight that the decision rocketed house prices was beyond ridiculous. 

I couldn't agree more with this.

From what you've read here you might assume I support Labour or the liberals but on balance I think the Cons have still been better than Labour would have been (especially under Corbyn). That still hasn't stopped me thinking this was a massive mistake however, I don't blindly defend any party and the SDLT cut was the main thing I thought showed economic mismanagement. 

Yep, I can say as a young person self employed my income has fallen. I only started in Nov 2019 though so I'm not eligible for any grants as my history isn't substantial enough. 

Yep, being able to not have to renew a season ticket or run a car has pushed savings rates up massively. Lockdown itself was already going to be enough to support the property market because it prompted lifestyle changes, SDLT & 95% mortgages guaranteed just fuelled the fire. 

Well we just saw transactions hit a 16 year high only a few days ago, liquidity has not been the issue as you said, largely thanks to furlough. Combining that and the reduction in travel costs, plus the ability to pick up side gigs while off work, liquidity was always going to be there without all this extra nonsense. 

Well house prices have now gone up way more than the maximum possible saving on the SDLT, which was 15k I believe (2% of 125k + 5% of 250k). If you wanted that £500k house, you now have to pay £545k for it, and you saved £15k in SDLT, so you're now paying £30k + interest extra (I know it goes on the mortgage but still). False economy in my eyes, it couldn't even help the middle/upper classes who stood to benefit the most. Not to mention, FTB's were already only going to save a maximum of 10k from this, not 15k because they were exempt up to 300k and paid 5% on the remainder up to 500k, clearly disproportionate. 

Voyager2002

MaxiRobriguez said:

Voyager2002 said:At the beginning of the pandemic there was a wide expectation that the housing market would collapse. The government wished to prevent this (they rely on home-owners for votes) and so introduced the stamp duty 'holiday'. No one either hoped nor expected that it would lead to the current boom. Anyway, the general expectation is that there will be some kind of correction after the end of the 'holiday'.

Which shows how thick some people in senior positions really are.

The pandemic has impacted young people in sectors like hospitality more than others. These people are renters.

The pandemic has not really impacted older folk in professional sectors, and indeed these people have been able to save more money by avoiding travel into work. These people are owners.

It shouldn't have been a surprise that people earning well in secure work and saving more, who have a new driver to move into homes with more space, would seek the opportunity to do so if given a massive tax dodge.

There wasn't a need to do the stamp duty cuts with furlough in place. That put a floor under loss of earnings for those in weaker positions and at the bottom of the housing ladder, allowing the wider market to remain liquid.

That the stamp duty freeze was extended despite having clear hindsight that the decision rocketed house prices was beyond ridiculous. 

Yes, hindsight is a wonderful thing.

MaxiRobriguez

Voyager2002 said:

MaxiRobriguez said:

Voyager2002 said:At the beginning of the pandemic there was a wide expectation that the housing market would collapse. The government wished to prevent this (they rely on home-owners for votes) and so introduced the stamp duty 'holiday'. No one either hoped nor expected that it would lead to the current boom. Anyway, the general expectation is that there will be some kind of correction after the end of the 'holiday'.

Which shows how thick some people in senior positions really are.

The pandemic has impacted young people in sectors like hospitality more than others. These people are renters.

The pandemic has not really impacted older folk in professional sectors, and indeed these people have been able to save more money by avoiding travel into work. These people are owners.

It shouldn't have been a surprise that people earning well in secure work and saving more, who have a new driver to move into homes with more space, would seek the opportunity to do so if given a massive tax dodge.

There wasn't a need to do the stamp duty cuts with furlough in place. That put a floor under loss of earnings for those in weaker positions and at the bottom of the housing ladder, allowing the wider market to remain liquid.

That the stamp duty freeze was extended despite having clear hindsight that the decision rocketed house prices was beyond ridiculous. 

Yes, hindsight is a wonderful thing.

Not surprised to hear such a retort which is why I finished my mini-rant with the stamp duty freeze extension by six months.

You can't claim ignorance whilst making a decision for an event that has already happened and which has full data sets readily available. 

The initial decision to freeze stamp duty is forgivable, but it should have been withdrawn early, not extended further.

zagfles

dude7691 said:

MaxiRobriguez said:

Which shows how thick some people in senior positions really are.

The pandemic has impacted young people in sectors like hospitality more than others. These people are renters.

The pandemic has not really impacted older folk in professional sectors, and indeed these people have been able to save more money by avoiding travel into work. These people are owners.

It shouldn't have been a surprise that people earning well in secure work and saving more, who have a new driver to move into homes with more space, would seek the opportunity to do so if given a massive tax dodge.

There wasn't a need to do the stamp duty cuts with furlough in place. That put a floor under loss of earnings for those in weaker positions and at the bottom of the housing ladder, allowing the wider market to remain liquid.

That the stamp duty freeze was extended despite having clear hindsight that the decision rocketed house prices was beyond ridiculous. 

I couldn't agree more with this.

From what you've read here you might assume I support Labour or the liberals but on balance I think the Cons have still been better than Labour would have been (especially under Corbyn). That still hasn't stopped me thinking this was a massive mistake however, I don't blindly defend any party and the SDLT cut was the main thing I thought showed economic mismanagement. 

Yep, I can say as a young person self employed my income has fallen. I only started in Nov 2019 though so I'm not eligible for any grants as my history isn't substantial enough. 

Yep, being able to not have to renew a season ticket or run a car has pushed savings rates up massively. Lockdown itself was already going to be enough to support the property market because it prompted lifestyle changes, SDLT & 95% mortgages guaranteed just fuelled the fire. 

Well we just saw transactions hit a 16 year high only a few days ago, liquidity has not been the issue as you said, largely thanks to furlough. Combining that and the reduction in travel costs, plus the ability to pick up side gigs while off work, liquidity was always going to be there without all this extra nonsense. 

Well house prices have now gone up way more than the maximum possible saving on the SDLT, which was 15k I believe (2% of 125k + 5% of 250k). If you wanted that £500k house, you now have to pay £545k for it, and you saved £15k in SDLT, so you're now paying £30k + interest extra (I know it goes on the mortgage but still). False economy in my eyes, it couldn't even help the middle/upper classes who stood to benefit the most. Not to mention, FTB's were already only going to save a maximum of 10k from this, not 15k because they were exempt up to 300k and paid 5% on the remainder up to 500k, clearly disproportionate. 

House prices are like climate change. Politicians know what should be done and they know what wins them votes. Which way do you think they go?

Labour won the 1997 election having made a big issue about negative equity in the 90's. Gordon Brown promised not to let house prices get out of control in his first budget in 1997. Then watched them skyrocket over the next 10 years while boasting about the cause - ie lowest mortgage rates since the 60's.

The current temporary blip cause by the daft stamp duty cut will likely be reversed when it ends.

Scottex99

dude7691 said:

Scottex99 said:

You seem like a smart kid, no offence intended, I'm almost 40. And props for getting qualified and having your head so screwed on at a young age.

Cool intro btw, kind of "odd" but cool if it's working for you.

One thing I would say is things change, in theory there's years and years and years for making money if you have the right blend of hard work, grabbing opportunities and luck.

I've done almost every option listed in this thread. I went to uni and bummed around, scraping a general, I've got my own place in UK (lucky to come from middle class family who helped with deposit). I've moved abroad and work abroad now. I've worked for peanuts and I've made more in a month than some people make in a year.

Anything can happen would be my point plus there's plenty more to life than money, but GL for sure!

Hi There

I appreciate that, I like to think I'm semi-decent at articulating myself  

It is a weird way to live that's for sure, I do feel kind of forced into it what with the current state of the economy. I guess being fascinated by economics since the age of 14 as well, I know the power of compound interest all too well and I wanted to get try and just save as much as possible as quickly as possible so it works for me rather than against me (like it is for a lot of people I know ). I'm hoping once I've got a permanent roof over my head I'll be able to settle down a little more with a stable income and less worries about the economy. 

That's absolutely right yeah, I'm aware I've got time on my side and I don't want to squander away my youth on just making money because there's years to do that. It's just that dilemma in my head of the compound interest thing versus the fact you're only "young" once, but what is young nowadays ahaha, as long as you're in good health  

That's great as you have such a broad experience, and I resonate with that to some extent. I've worked for £4.30 an hour when I was 16-17 to scrape enough money to buy a 15 year old car and get insured, but months later traded risky assets and made about £30k in 6 weeks, but lost a good chunk of it after that, still got out net positive thankfully and learned some very valuable lessons! I also pursue other hobbies such as music production and cycling so I do spend money on things I enjoy, over 10 years a bicycle works out very cheap so I have no problem at all paying £400 upfront for one (I did back in 2018). Frugality I see as a way of always ensuring I have money for what I want, but only if I really, really want it.

Thanks for your good wishes and contributions, good luck to you also  

Haha, nice. Wasn't crypto was it? That's what I do for a living

Thrugelmir

dude7691 said:

kuratowski said:

Roll up, roll up, get 'em while they're expensive 

Haha Just because they're expensive doesn't mean they can't go up more

Interest rates can hardly go any lower nor mortgage terms be extended any longer.  With earnings not growing either in real terms for many. There comes a point when the eventual next sizable shift can only go one way. 

You can pay what price you like for a Tesla share. Isn't going to change the long term future direction. That's based on factors which are beyond everyone's control. 

Voyager2002

zagfles said:

Labour won the 1997 election having made a big issue about negative equity in the 90's. Gordon Brown promised not to let house prices get out of control in his first budget in 1997. Then watched them skyrocket over the next 10 years while boasting about the cause - ie lowest mortgage rates since the 60's.

I was paying a mortgage over this period. Interest rates were not particularly low until after 2008. They had been low in the late 1980s, fuelling the boom, then went to high levels after 1989 putting many people into negative equity before declining to historically reasonable amounts.