There will not be a crash

The_Dangerman

dannyboycey wrote: »

He will also have a hell of a job releasing any of that 50% and selling will be even harder. Just hope his noose... sorry... portfolio isn't too big.

So there will never be a good time to sell from now until I die? I doubt that very much.

dannyboycey

The_Dangerman wrote: »

So there will never be a good time to sell from now until I die? I doubt that very much.

Sorry?? Don't see the correlation between your comment and my post at all. A good time to sell would be when you can do so at a profit - could be now (very unlikely, but not impossible) or it could be 10 years down the line. Who knows.

Paul_N_4

The_Dangerman wrote: »

No.

In my last point I was arguing that potential BTL landlords aren't going to be put off because they can't lose even if there is a crash, which I'm also arguing, that there won't be. It really is difficult to lose on property(though not impossibe - standard disclaimer)

Why won't recent BTL landlords be financially stable? What's going to happen to them? Nothing, they will just keep renting their houses out and laugh all the way to the bank provided they have at least a medium term outlook.

Relax, take it easy, chill out! Everything will be fine!

The same reason a lot of recent FTBs might find themselves in trouble. Coming off a fixed rate to find their mortgage repayments have shot up, and depending on their LTV, uncompetitive rates should they be able to remortgage. There is also the risk of negative equity in a falling market, especially on a high LTV, and especially on new build flats that many BTL lenders now don't want to touch. So they may have no choice but the lenders SVR, which they may find hard to stomach especially when they may also be subsidising the rent to pay the mortgage anyway.

Hypothetical of course. I'm sure all BTLers done their homework before hand and the above will not happen to any of them under any circumstances.

danm

My tuppence.

House prices will slow, i don't think there is any doubt about it.

But crash!?!?.......how do you define a crash. If house prices were to fall 10%, then this puts them back to where? Jan 2007 maybe?

HPC threads and the site of the same name have been around for years. If you say somthing for long enough, then you'll be right eventually. Predicting that prices will fall is not difficult. If someone can tell me how much they'll fall, and when the slowdown will stop then i'll be impressed. Blanket statements that a crash is immenent is pretty pointless imo.

Picking up on Generali's earlier comment about bubbles and they burst for no apparent reason....i think that sentiment is a great indicator. Not of the so called experts, but of market participants. Stocks that go down tend to keep going downwards, and stocks that rise tend to keep rising (obviously to a point), but generally markets exhibition a 'jump on the bandwagon approach'.

the sentiment in the UK is still typically (rightly or wrongly) that people need to get on the ladder as soon as they graduate. We should be a nation of home-owners etc. etc. and why the fundamentals and signals suggest the market is heading downwards, sentiment may keep it higher than some people would otherwise suspect.

Also, i think the fundamental in supply and demand have changed. Regulation, immigration, sovereign wealth etc all play a part in the housing market. Just because in 199X, a house cost 2x salary for example, doesn't meant that this is the correct price. Wages are typically higher now (allowing for inflation) and the demographics have changed considerably. Maybe now the equilbrium is that house should cost 4x salary

its a changing landscape and not easily comparable to 'what happenned then'

The_Dangerman

dannyboycey wrote: »

Sorry?? Don't see the correlation between your comment and my post at all. A good time to sell would be when you can do so at a profit - could be now (very unlikely, but not impossible) or it could be 10 years down the line. Who knows.

Quite simple, you offered an opinion that it will be difficult to realise the equity at the moment. To that I agree, somewhat, or at least now is not the best time to sell.

However, you presupposed that I want, or need to sell at this moment. I don't, I am quite happy to keep them, at least in the short term. I may sell a couple to invest in several more it the medium term, but I have no urgency to do this.

mpsavuk

"If we look at our landscape, we are an island. It isnt going to get bigger and we have a shortage. Since we cant access more land, keep tight control on greenfield sites and have a need for housing, demand still outstrips supply."

People have been spouting this guff for years. But they only need to look at what happened to Japans prices from 1990 to date, they crashed up to 90%!

On an Island that's not getting any bigger, just like the UK.

Generali

Paul_N wrote: »

The same reason a lot of recent FTBs might find themselves in trouble. Coming off a fixed rate to find their mortgage repayments have shot up, and depending on their LTV, uncompetitive rates should they be able to remortgage. There is also the risk of negative equity in a falling market, especially on a high LTV, and especially on new build flats that many BTL lenders now don't want to touch. So they may have no choice but the lenders SVR, which they may find hard to stomach especially when they may also be subsidising the rent to pay the mortgage anyway.

Hypothetical of course. I'm sure all BTLers done their homework before hand and the above will not happen to any of them under any circumstances.

There are a lot of assumptions here in this (and a lot of other posts - I'm not singling you out Paul N).

It's not in a lender's interests to reposses - they lend to someone because they want a nice steady income stream not because they want to own someone's des res (one careful owner). So what happens? You may well find that the lender will cut a deal - ok your fixed rate at x% has come to an end and you can't afford x+2% but you've kept up your payments so pay us x+1%.

Alternatively, and this has been done before in the US, the lender sellers the debt (or the official receiver does) to a distressed debt fund at a discount to the face value of the debt). They then call the 'home owner' and offer to let him or her pay off the debt in one hit a a substantial discount. The debtor borrows sub prime (and this sort of borrowing has long been with us and probably always will) and despite paying a huge interest rate ends up quids in and in their home. The debt owner ends up making a profit even allowing for the fact that he's going to have to reposess a few real basketcases.

The_Dangerman

Paul_N wrote: »

The same reason a lot of recent FTBs might find themselves in trouble. Coming off a fixed rate to find their mortgage repayments have shot up, and depending on their LTV, uncompetitive rates should they be able to remortgage. There is also the risk of negative equity in a falling market, especially on a high LTV, and especially on new build flats that many BTL lenders now don't want to touch. So they may have no choice but the lenders SVR, which they may find hard to stomach especially when they may also be subsidising the rent to pay the mortgage anyway.

If the rate was fixed for, say, 5 years - which is not uncommon, then their rent will have gone up in those 5 years, perhaps by the rate of inflation, perhaps more, perhaps less, but it will undoubtably be more. That will likely cover much of the additional cost of borrowing.

Hypothetical of course. I'm sure all BTLers done their homework before hand and the above will not happen to any of them under any circumstances.

Just because some BTL LL are greedy doesn't mean the problem is with the property market, it means the problem is with them.

adr0ck

mpsavuk wrote: »

"If we look at our landscape, we are an island. It isnt going to get bigger and we have a shortage. Since we cant access more land, keep tight control on greenfield sites and have a need for housing, demand still outstrips supply."

People have been spouting this guff for years. But they only need to look at what happened to Japans prices from 1990 to date, they crashed up to 90%!

On an Island that's not getting any bigger, just like the UK.

you cannot compare the uk housing market to japans

when we stop living in houses over 25 years old then you can compare the uk market with the japanese

adr0ck

the japanese replace there housing stock every 25 years