Are UK House Prices about to peak?

[dealtn]

I don't think anyone has mentioned the shortage of housing. We aren't building enough, there are more buyers than there are properties in some areas of the country. There is also a massive shortage of rental property. Doesn't supply and demand influence sale prices ?

I think it was mentioned earlier
And the fact that at the last record there were 600k empty properties (or 2 years+ worth of proposed building) in the UK
Not sure how it all adds up but it feels a bit like the market might be a bit manipulated

Of course it is manipulated. If the correct number of houses were built in the UK then there would be no shortage and house prices would then move closer to a reasonable multiple of average UK earnings instead of the current 12x average earnings.

But no government wants a house price collapse when they are in government and so the correct number of houses to meet demand are never built by the government of the day.

So UK house prices are largely manipulated by various schemes such as never building enough houses, help to buy, right to buy, absurdly low interest rates, in order to keep UK house prices artificially high.

It’s a bit like a Ponzi scheme.

How are you deciding the "correct" number of houses to be built?

[vand]

House prices are at a peak, and yet the Housebuilders have been getting smashed from pillar to post over the last year.

These two trends will not continue; one will reverse.

Not necessarily. House prices may start to fall a lot now, and housebuilders may continue to fall, but at a slower rate.

So you agree with me...

[Mike4]

I don't think anyone has mentioned the shortage of housing. We aren't building enough, there are more buyers than there are properties in some areas of the country. There is also a massive shortage of rental property. Doesn't supply and demand influence sale prices ?

I think it was mentioned earlier
And the fact that at the last record there were 600k empty properties (or 2 years+ worth of proposed building) in the UK
Not sure how it all adds up but it feels a bit like the market might be a bit manipulated

Of course it is manipulated. If the correct number of houses were built in the UK then there would be no shortage and house prices would then move closer to a reasonable multiple of average UK earnings instead of the current 12x average earnings.

But no government wants a house price collapse when they are in government and so the correct number of houses to meet demand are never built by the government of the day.

So UK house prices are largely manipulated by various schemes such as never building enough houses, help to buy, right to buy, absurdly low interest rates, in order to keep UK house prices artificially high.

It’s a bit like a Ponzi scheme.

How are you deciding the "correct" number of houses to be built?

The thing is, there is no 'correct' number of houses needed. As the price of accommodation falls, people tend to buy more of it to live more extravagantly. So a feedback loop occurs supporting house prices and rents.

So no matter how many or how few houses governments 'build', there will never be 'enough' and prices will always be 'unaffordable' to those at the bottom of the heap.

[dealtn]

I don't think anyone has mentioned the shortage of housing. We aren't building enough, there are more buyers than there are properties in some areas of the country. There is also a massive shortage of rental property. Doesn't supply and demand influence sale prices ?

I think it was mentioned earlier
And the fact that at the last record there were 600k empty properties (or 2 years+ worth of proposed building) in the UK
Not sure how it all adds up but it feels a bit like the market might be a bit manipulated

Of course it is manipulated. If the correct number of houses were built in the UK then there would be no shortage and house prices would then move closer to a reasonable multiple of average UK earnings instead of the current 12x average earnings.

But no government wants a house price collapse when they are in government and so the correct number of houses to meet demand are never built by the government of the day.

So UK house prices are largely manipulated by various schemes such as never building enough houses, help to buy, right to buy, absurdly low interest rates, in order to keep UK house prices artificially high.

It’s a bit like a Ponzi scheme.

How are you deciding the "correct" number of houses to be built?

The thing is, there is no 'correct' number of houses needed. As the price of accommodation falls, people tend to buy more of it to live more extravagantly. So a feedback loop occurs supporting house prices and rents.

So no matter how many or how few houses governments 'build', there will never be 'enough' and prices will always be 'unaffordable' to those at the bottom of the heap.

And yet some insist the market is manipulated and needs controlling so the "correct" outcome is achieved.

[servodude]

I think it was mentioned earlier
And the fact that at the last record there were 600k empty properties (or 2 years+ worth of proposed building) in the UK
Not sure how it all adds up but it feels a bit like the market might be a bit manipulated

Of course it is manipulated. If the correct number of houses were built in the UK then there would be no shortage and house prices would then move closer to a reasonable multiple of average UK earnings instead of the current 12x average earnings.

But no government wants a house price collapse when they are in government and so the correct number of houses to meet demand are never built by the government of the day.

So UK house prices are largely manipulated by various schemes such as never building enough houses, help to buy, right to buy, absurdly low interest rates, in order to keep UK house prices artificially high.

It’s a bit like a Ponzi scheme.

How are you deciding the "correct" number of houses to be built?

The thing is, there is no 'correct' number of houses needed. As the price of accommodation falls, people tend to buy more of it to live more extravagantly. So a feedback loop occurs supporting house prices and rents.

So no matter how many or how few houses governments 'build', there will never be 'enough' and prices will always be 'unaffordable' to those at the bottom of the heap.

And yet some insist the market is manipulated and needs controlling so the "correct" outcome is achieved.

Do you mean "insist" as in "they demand it should be" or "they assert that it is"?

My recollection is of a bunch of various schemes (govt and otherwise) designed to encourage new buyers
- are they no longer a thing?

[dealtn]

Of course it is manipulated. If the correct number of houses were built in the UK then there would be no shortage and house prices would then move closer to a reasonable multiple of average UK earnings instead of the current 12x average earnings.

But no government wants a house price collapse when they are in government and so the correct number of houses to meet demand are never built by the government of the day.

So UK house prices are largely manipulated by various schemes such as never building enough houses, help to buy, right to buy, absurdly low interest rates, in order to keep UK house prices artificially high.

It’s a bit like a Ponzi scheme.

How are you deciding the "correct" number of houses to be built?

The thing is, there is no 'correct' number of houses needed. As the price of accommodation falls, people tend to buy more of it to live more extravagantly. So a feedback loop occurs supporting house prices and rents.

So no matter how many or how few houses governments 'build', there will never be 'enough' and prices will always be 'unaffordable' to those at the bottom of the heap.

And yet some insist the market is manipulated and needs controlling so the "correct" outcome is achieved.

Do you mean "insist" as in "they demand it should be" or "they assert that it is"?

Both (though not always the same people holding both views).

[servodude]

How are you deciding the "correct" number of houses to be built?

The thing is, there is no 'correct' number of houses needed. As the price of accommodation falls, people tend to buy more of it to live more extravagantly. So a feedback loop occurs supporting house prices and rents.

So no matter how many or how few houses governments 'build', there will never be 'enough' and prices will always be 'unaffordable' to those at the bottom of the heap.

And yet some insist the market is manipulated and needs controlling so the "correct" outcome is achieved.

Do you mean "insist" as in "they demand it should be" or "they assert that it is"?

Both (though not always the same people holding both views).

That's positively poetic

[Tara]

House prices are at a peak, and yet the Housebuilders have been getting smashed from pillar to post over the last year.

These two trends will not continue; one will reverse.

Not necessarily. House prices may start to fall a lot now, and housebuilders may continue to fall, but at a slower rate.

So you agree with me...

Perhaps we agree, but I thought you were implying that either UK house prices may start to collapse soon, or UK housebuilders may start to rise soon. You did not really say if you thought one was cheap or the other expensive. I think both of them are expensive.

So if you think that UK house prices will start to fall a lot now, and UK housebuilders will continue to fall, then we are in agreement.

[1nvest]

Around half of owned houses are owned outright, mortgage free.

House/gold price ratio is relatively low, takes considerably fewer ounces of gold to buy a house than at other times. Stock/gold ratio is moderately high. Perhaps a ranking of stocks being the relatively highest, then gold, then houses. Buying a property can be a good defence against high/rising inflation, and at current gold ratio levels looks better valued than either stocks or gold.

Whilst mortgaged property demand might decline with rising interest rates, others in a position to buy outright might look to buy for rising rental yields and a inflation hedge. For those looking to buy using a mortgage higher interest rates might be countered with longer repayment years, maybe a increase to 50 or even 100 years (generational) rather than former 25 to 30 year mortgages. Such a policy change could see both outright and mortgaged based purchase demand increase rather than fall.

The UK tends to prop up its housing market in a similar vein to how the US props up its stock market. As they say, don't fight the Fed. Similarly selling to instead rent and looking to buy back in at a lower price is fraught with risks, more inclined to not work out as expected/intended.

The markets are pricing in short lived inflation, so higher interest rates for a while before falling back down again. When I had a mortgage in the 1980's at one point the interest rate increased to something like 15%+ levels which at that time for me was a considerable strain, prices dropped, negative equity ...etc. but riding through that and it all later came good.

[Lanark]

Ontario 20% down
https://www.cbc.ca/news/business/real-e ... -1.6521568

[Tara]

Ontario 20% down
https://www.cbc.ca/news/business/real-e ... -1.6521568

Australia house prices are also starting to collapse.

https://www.livewiremarkets.com/wires/s ... lised-rate

UK will follow soon.

[BullDog]

Ontario 20% down
https://www.cbc.ca/news/business/real-e ... -1.6521568

Australia house prices are also starting to collapse.

https://www.livewiremarkets.com/wires/s ... lised-rate

UK will follow soon.

Sydney and Melbourne, both markets in bubble territory and even more overheated than the UK. Prime candidates for the bubble bursting.

[moorfield]

UK will follow soon.

I think anyone selling this summer is doing well.

Let's have another 2% on interest rates, one of the coldest winters on record (sod's law innit, following one of the hottest summers on record), and an unresolved war in Ukraine to feed through by next spring...

[BullDog]

I think the local estate agents around here haven't got the memo yet. Prices seem to have hit an even more insane high. A newly built bungalow no bigger than most double garages that has just been built on a bit of land hacked off a garden has just gone on sale for £450,000. I realise that would be dirt cheap for some parts. But around here maybe 18 months ago, that kind of money would have bought a good 4 bed detached house with a garage of similar size to this bungalow.

[Tara]

I think the local estate agents around here haven't got the memo yet. Prices seem to have hit an even more insane high. A newly built bungalow no bigger than most double garages that has just been built on a bit of land hacked off a garden has just gone on sale for £450,000. I realise that would be dirt cheap for some parts. But around here maybe 18 months ago, that kind of money would have bought a good 4 bed detached house with a garage of similar size to this bungalow.

Well you can never underestimate the greed of UK estate agents, or even buyers and sellers. The unfortunate buyer of such an overpriced property will probably be desperate not to “miss out” on the Ponzi scheme, and so they will take on whatever huge debt their mortgage provider is willing to give them.

Give it a few years of rising interest rates, and negative equity, and the bank will probably have taken repossession of the property. They will probably then put it back on the market at less than half the price.

[BullDog]

I think the local estate agents around here haven't got the memo yet. Prices seem to have hit an even more insane high. A newly built bungalow no bigger than most double garages that has just been built on a bit of land hacked off a garden has just gone on sale for £450,000. I realise that would be dirt cheap for some parts. But around here maybe 18 months ago, that kind of money would have bought a good 4 bed detached house with a garage of similar size to this bungalow.

Well you can never underestimate the greed of UK estate agents, or even buyers and sellers. The unfortunate buyer of such an overpriced property will probably be desperate not to “miss out” on the Ponzi scheme, and so they will take on whatever huge debt their mortgage provider is willing to give them.

Give it a few years of rising interest rates, and negative equity, and the bank will probably have taken repossession of the property. They will probably then put it back on the market at less than half the price.

Totally understand that feeling. I live in a pretty moderately priced part of the world. Both my grown kids are educated young professionals. They stand no chance of ever buying a property in the village they grew up in. There's something wrong.

[vand]

As a side show from the housing market itself, the homebuilder shares are continuing to get utterly crushed.

I know some people here hold them and have handsome gains from buying when they were dirt cheap, but you can't be happy that they've basically been cut in since their peak.

[tjh290633]

As a side show from the housing market itself, the homebuilder shares are continuing to get utterly crushed.

I know some people here hold them and have handsome gains from buying when they were dirt cheap, but you can't be happy that they've basically been cut in since their peak.

If they carry on paying dividends, the price can go where it likes.

TJH

[absolutezero]

As a side show from the housing market itself, the homebuilder shares are continuing to get utterly crushed.

I know some people here hold them and have handsome gains from buying when they were dirt cheap, but you can't be happy that they've basically been cut in since their peak.

If they carry on paying dividends, the price can go where it likes.

TJH

Surely if they keep paying dividends then the price will just drop faster and faster as a dividend is just a return of some of the capital baked in to the share price already.

[absolutezero]

As a side show from the housing market itself, the homebuilder shares are continuing to get utterly crushed.

I know some people here hold them and have handsome gains from buying when they were dirt cheap, but you can't be happy that they've basically been cut in since their peak.

The market is forward looking. It has looked at the future of house prices and has priced the builders' shares accordingly.