Are we expecting BOE to remain at 4.75% on 8th February 2025?

MobileSaver

Sarah1Mitty2 said:

wheldcj said:

All that will happen is that the current younger generation and the future generations ability to own property will largely dictated by whether your parents (and more so grandparents) pass down their own property wealth.   And yes I understand how the class system has worked for generations but this will be far deeper engrained.   Meritocracy will be out of the window.

I think what will happen is that interest rates will decimate house prices and those with large mortgage debt will struggle and those with no mortgage debt will have to get used to their house being worth a lot less.

I think that like almost all your predictions over the last decade or so you will be proved to have been very wrong once the dust settles...

Regardless, you've predicted what will happen to homeowners but what effect do you think current and future interest rates will have on renters like yourself over the next few years? Do you think it will be easier and cheaper to rent or harder and more expensive?

hildosaver

Sarah1Mitty2 said:

wheldcj said:

All that will happen is that the current younger generation and the future generations ability to own property will largely dictated by whether your parents (and more so grandparents) pass down their own property wealth.   And yes I understand how the class system has worked for generations but this will be far deeper engrained.   Meritocracy will be out of the window.

Not really how a "market" works, if ability to pay is taken away something has to give, I think what will happen is that interest rates will decimate house prices and those with large mortgage debt will struggle and those with no mortgage debt will have to get used to their house being worth a lot less. What you describe is what happens when cheap debt keeps getting given out, that train has gone now it looks like.

House prices will no doubt go down a bit in the short term but I guarantee they will be back up and going even higher than before in five years from now. Basic supply and demand will dictate this due to the fundamental problem in the UK of lack of housing and lack of sufficient house building for the population. If you think otherwise you are mistaken.

Altior

hildosaver said:

Sarah1Mitty2 said:

wheldcj said:

All that will happen is that the current younger generation and the future generations ability to own property will largely dictated by whether your parents (and more so grandparents) pass down their own property wealth.   And yes I understand how the class system has worked for generations but this will be far deeper engrained.   Meritocracy will be out of the window.

Not really how a "market" works, if ability to pay is taken away something has to give, I think what will happen is that interest rates will decimate house prices and those with large mortgage debt will struggle and those with no mortgage debt will have to get used to their house being worth a lot less. What you describe is what happens when cheap debt keeps getting given out, that train has gone now it looks like.

House prices will no doubt go down a bit in the short term but I guarantee they will be back up and going even higher than before in five years from now. Basic supply and demand will dictate this due to the fundamental problem in the UK of lack of housing and lack of sufficient house building for the population. If you think otherwise you are mistaken.

Let's dig into that a little. If you had a magic wand, specifically how many more houses would you build and in what time span?

What would you expect the UK population to be by the end of it given the current run rate, and what kind of average house price to average income multiple are you anticipating at the end of the project? 

(we won't get into the vastly complex infrastructure and public service capacity issues around the plan, to reduce complication)

Altior

In my opinion, the 'build more houses' mantra is trotted out by commentators in the media, politicians and online. Without being challenged. As an answer.

Unfortunately, they have little clue of what they talk about. There are multiple regions of the UK that have housing that would be deemed comfortably affordable TODAY. Building more properties in those areas will not significantly impact the prices in the desirable areas.

If they ever began to build enough new properties in desirable areas to tangibly reduce the multiple (they may no longer be so desirable as a side issue), all that would happen is that you would get internal migration. That is to say that the people with means who were on the edge of being able to live where they preferred to live, would then be able to do it, maintaining the demand and prices in the more desirable areas. Then of course, you have this pretty much open to anyone with the means, globally. Technology and globalisation has made it a world market in effect, not a local market. 

The truth is that the changes that have made the situation what it is today are not reversible in the short or medium term by policy. We could get a decade long global depression, a total collapse of fiat currency, world war or some other catastrophic event. But then we would all be obviously worse off.

dougson

Altior said:

wheldcj said:

Not true.  My LTV is well below 50% I have fixed my rate for 7 years so have no benefit personally.  UK property is a ponzi scheme in my opinion, those who have made silly borrowing decisions etc are often normal people on normal wages with normal savings buying a bang average house.   Save for a massive correction in property prices we have essentially stopped any of the next generation (without a significant push up from the bank of mom/dad/nan/grandad) from ever owning their own house.

That seems pretty sad to me.

The stats don't bear this out. 

I would be interested to see how this graph would look if extended back to 2000 or earlier,because this graph is telling me we still haven't reached the level we were at before a global financial crash.

If we accept that covid 19 mostly killed the elderly, who would have been more likely to own property, it stands to reason there would be a small peak in first time buyers after 2020, the year covid started to hit the UK and that's all I'm seeing here in this graph tbh. 

Altior

This was the claim that the graph was in response to:

we have essentially stopped any of the next generation (without a significant push up from the bank of mom/dad/nan/grandad) from ever owning their own house.

Evidently that is not the case. A longer time span would be useful, however the graph does show I feel that it is correlated with the usual economic cycle. So I would predict a fall away in this and the next few years (not exactly a brave call!)

sevenhills

It seems logical to me that we should have a new build housing target which reflects the increasing population. So this year's target would be the 600,000 net immigration,  plus or minus life expectancy numbers. So last year we were over 300,000 short. There are also more single people,  as there are more elderly.

Altior

It's births and deaths as well as immigration. But even in very simplistic terms, that plan means you are only standing still. 

How about having net migration of 300K ? 

That is a lot easier to achieve than building hundreds of thousands of new homes, and providing the associated furniture, services and infrastructure around it (school places, GPs, hospital beds, energy, roads, refuse collection, water, sewage, police, fire service etc etc etc). 

MattMattMattUK

Altior said:

hildosaver said:

Sarah1Mitty2 said:

wheldcj said:

All that will happen is that the current younger generation and the future generations ability to own property will largely dictated by whether your parents (and more so grandparents) pass down their own property wealth.   And yes I understand how the class system has worked for generations but this will be far deeper engrained.   Meritocracy will be out of the window.

Not really how a "market" works, if ability to pay is taken away something has to give, I think what will happen is that interest rates will decimate house prices and those with large mortgage debt will struggle and those with no mortgage debt will have to get used to their house being worth a lot less. What you describe is what happens when cheap debt keeps getting given out, that train has gone now it looks like.

House prices will no doubt go down a bit in the short term but I guarantee they will be back up and going even higher than before in five years from now. Basic supply and demand will dictate this due to the fundamental problem in the UK of lack of housing and lack of sufficient house building for the population. If you think otherwise you are mistaken.

Let's dig into that a little. If you had a magic wand, specifically how many more houses would you build and in what time span?

What would you expect the UK population to be by the end of it given the current run rate, and what kind of average house price to average income multiple are you anticipating at the end of the project? 

(we won't get into the vastly complex infrastructure and public service capacity issues around the plan, to reduce complication)

Roughly as a baseline and it would take time to scale up, two million a year for the next decade. On top of that a significant reduction in immigration and a requirement for house building at a rate of 60% of immigration above the two million (eg 250k immigrants, additional dwellings must be built).

As for what that would do to house prices, beyond bringing them down, there are two many complicated factors to give a solid answer. My guess would be that firstly they would stop rising and secondly they would slowly drift downwards 10-20% over the course of the decade, but supply and demand are complicated interactions.

I would ban foreign ownership of UK residential property, abolish stamp duty for primary homes but charge it at a flat rate of 10% on all second homes and 25% any home beyond a second. Any company purchasing property would pay 25% stamp duty, when purchasing a company that owned property the property element would require paying stamp duty at the 25% rate unless the property was a publicly traded (to stop people using LTD as a container to avoid stamp duty). 

sevenhills

Altior said:

It's births and deaths as well as immigration. But even in very simplistic terms, that plan means you are only standing still. 

How about having net migration of 300K ? 

That is a lot easier to achieve than building hundreds of thousands of new homes, and providing the associated furniture, services and infrastructure around it (school places, GPs, hospital beds, energy, roads, refuse collection, water, sewage, police, fire service etc etc etc). 

If you are doing it the other way around, house building is generally less than 200,000 so net immigration would need to be below 200,000