Are UK House Prices about to peak?

[Mike4]

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.

And after UK house prices have collapsed, what do you predict will happen next?

[Mike4]

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.

I remember a poster naming himself "bialystock" on TMF 25 years ago expressing this exact same opinion. The feeling that houses were grossly overpriced was widespread around then. Anyone paying £45k for a three bed semi in Reading was clearly nuts and setting themselves up for bankruptcy in the coming price crash. He even sold his five-bed house in Westbourne Grove for £300k and boasted he would buy it back again for £150k six months later, IIRC.

Being desperate myself not to "miss out" on the crazy Ponzi scheme profits you so scornfully write about, I took on "huge debt", poured it all into property and, well put it this way, so far my head is still above water (ok my ankles are still a bit wet) and nowadays my property income exceeds my working income from my job. Property has been very kind to me.

[absolutezero]

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.

I remember a poster naming himself "bialystock" on TMF 25 years ago expressing this exact same opinion. The feeling that houses were grossly overpriced was widespread around then. Anyone paying £45k for a three bed semi in Reading was clearly nuts and setting themselves up for bankruptcy in the coming price crash. He even sold his five-bed house in Westbourne Grove for £300k and boasted he would buy it back again for £150k six months later, IIRC.

Being desperate myself not to "miss out" on the crazy Ponzi scheme profits you so scornfully write about, I took on "huge debt", poured it all into property and, well put it this way, so far my head is still above water (ok my ankles are still a bit wet) and nowadays my property income exceeds my working income from my job. Property has been very kind to me.

The problem is the mindless, non-questioning groupthink among the British that 'you can't go wrong with property'.

Granted, since the mid90s "they" have always bailed out mortgage holders.
But the options for that are fast running out with everything else that's going on.

I think there is a small chance the cavalry may come to bail out mortgage holders this time, but all considered I really don't think so.

What if it really is different this time?

[absolutezero]

nowadays my property income exceeds my working income from my job. Property has been very kind to me.

So what?

My stocks and shares tinkering income beats my working income too.
Stocks and shares have been very kind to me.

So what?
Are you telling me that all will be ok in the stock market as it's always been very good to me so far?*
Look forwards, not backwards.

*Got news for you. Everything will be going down when TSHTF.

[servodude]

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.

I remember a poster naming himself "bialystock" on TMF 25 years ago expressing this exact same opinion. The feeling that houses were grossly overpriced was widespread around then. Anyone paying £45k for a three bed semi in Reading was clearly nuts and setting themselves up for bankruptcy in the coming price crash. He even sold his five-bed house in Westbourne Grove for £300k and boasted he would buy it back again for £150k six months later, IIRC.

Being desperate myself not to "miss out" on the crazy Ponzi scheme profits you so scornfully write about, I took on "huge debt", poured it all into property and, well put it this way, so far my head is still above water (ok my ankles are still a bit wet) and nowadays my property income exceeds my working income from my job. Property has been very kind to me.

It's timing though init?
I bought my first place in 2002 after 18 months of work having spent 9 and a bit years at uni. (On the aforementioned 102% mortgage). Made 30% in three years - moved a bit further out of Edinburgh so we'd have two bedrooms - and then sold again in early 2008 to f**k off overseas.
Guy I sold to would have been selling at a nominal loss for nearly a decade.

I've known folk end up living in basements because of negative equity - and my mum's brother swung himself from a tree in London park because of it
- it's not one way street by any means

[Mike4]

nowadays my property income exceeds my working income from my job. Property has been very kind to me.

So what?

My stocks and shares tinkering income beats my working income too.
Stocks and shares have been very kind to me.

So what?
Are you telling me that all will be ok in the stock market as it's always been very good to me so far?*
Look forwards, not backwards.

*Got news for you. Everything will be going down when TSHTF.

You really haven't been following the thread have you?

The "So what?" is that tara's mindless bleating about property being a Ponzi scheme you can only lose money on, is not necessarily always the case.

[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.

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

TJH

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

[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

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

If the share price keeps falling and then it pays you 16% of that a year, with the 16% drop in the share price plus the falling price, it doesn't take long to make the shares worth a hell of a lot less.

[absolutezero]

nowadays my property income exceeds my working income from my job. Property has been very kind to me.

So what?

My stocks and shares tinkering income beats my working income too.
Stocks and shares have been very kind to me.

So what?
Are you telling me that all will be ok in the stock market as it's always been very good to me so far?*
Look forwards, not backwards.

*Got news for you. Everything will be going down when TSHTF.

You really haven't been following the thread have you?

The "So what?" is that tara's mindless bleating about property being a Ponzi scheme you can only lose money on, is not necessarily always the case.

But neither is the "I'm alright, Jack, it's been great to me, and balls to the younger ones" bleating.

[Tara]

nowadays my property income exceeds my working income from my job. Property has been very kind to me.

So what?

My stocks and shares tinkering income beats my working income too.
Stocks and shares have been very kind to me.

So what?
Are you telling me that all will be ok in the stock market as it's always been very good to me so far?*
Look forwards, not backwards.

*Got news for you. Everything will be going down when TSHTF.

You really haven't been following the thread have you?

The "So what?" is that tara's mindless bleating about property being a Ponzi scheme you can only lose money on, is not necessarily always the case.

But neither is the "I'm alright, Jack, it's been great to me, and balls to the younger ones" bleating.

Exactly.

These people who never stop telling everyone about the huge money and fortunes they have made from owning UK houses never seem to give a thought to the consequences of their greed, and the terrible effect that it has had on younger generations in the UK who can no longer afford a house.

They will also then selfishly act as “Bank of Mum and Dad” by giving a 50k house deposit to their children so that they can also continue the UK housing Ponzi scam, and so that their children can also exclude the children of the less fortunate from ever buying a house.

I sometimes wonder if these people would be so selfish and uncaring if their greed was causing half of the population to be priced out of the market in other necessities such as bread or water or shoes? Sadly, the answer is probably yes.

[CliffEdge]

nowadays my property income exceeds my working income from my job. Property has been very kind to me.

So what?

My stocks and shares tinkering income beats my working income too.
Stocks and shares have been very kind to me.

So what?
Are you telling me that all will be ok in the stock market as it's always been very good to me so far?*
Look forwards, not backwards.

*Got news for you. Everything will be going down when TSHTF.

You really haven't been following the thread have you?

The "So what?" is that tara's mindless bleating about property being a Ponzi scheme you can only lose money on, is not necessarily always the case.

But neither is the "I'm alright, Jack, it's been great to me, and balls to the younger ones" bleating.

Exactly.

These people who never stop telling everyone about the huge money and fortunes they have made from owning UK houses never seem to give a thought to the consequences of their greed, and the terrible effect that it has had on younger generations in the UK who can no longer afford a house.

They will also then selfishly act as “Bank of Mum and Dad” by giving a 50k house deposit to their children so that they can also continue the UK housing Ponzi scam, and so that their children can also exclude the children of the less fortunate from ever buying a house.

I sometimes wonder if these people would be so selfish and uncaring if their greed was causing half of the population to be priced out of the market in other necessities such as bread or water or shoes? Sadly, the answer is probably yes.

Oh. Rubbish! You haven't listened to a word you've been told on this thread.

[ReformedCharacter]

These people who never stop telling everyone about the huge money and fortunes they have made from owning UK houses never seem to give a thought to the consequences of their greed, and the terrible effect that it has had on younger generations in the UK who can no longer afford a house.

They will also then selfishly act as “Bank of Mum and Dad” by giving a 50k house deposit to their children so that they can also continue the UK housing Ponzi scam, and so that their children can also exclude the children of the less fortunate from ever buying a house.

I sometimes wonder if these people would be so selfish and uncaring if their greed was causing half of the population to be priced out of the market in other necessities such as bread or water or shoes? Sadly, the answer is probably yes.

You seem happy to call people selfish, uncaring and greedy and blame these people on the rise of house prices. Don't you think there are other factors that have had a much more significant effect on house price inflation? Admittedly, those other factors probably wouldn't fit with your own personal prejudices though. How do you feel about communism? That would surely address the inter-generational selfishness that you ascribe to those who wish to help their children.

RC

[1nvest]

These people who never stop telling everyone about the huge money and fortunes they have made from owning UK houses never seem to give a thought to the consequences of their greed, and the terrible effect that it has had on younger generations in the UK who can no longer afford a house.

Back in my younger years, shortly after buying my first home (a tiny one bed maisonette) as a younger-generation-individual, interest rates rose to north of 15% and the value of the property halved. Selling wasn't a option (paramount to being left with no place to live along with a large/expensive mortgage debt still outstanding). I was working 7 days/week, overtime every day, even had to move out for a while and back into mum/dads in order to rent it out just in order to help cover the mortgage when the interest rate peaked at around 17% IIRC. It can be difficult either way (such as compared to recent high prices, access to fixed low mortgage rates). Either way if you make the sacrifices (no holidays, working overtime/multiple jobs ..etc.) in order to become a owner occupier, then longer term that can yield benefits.

I paid around £40K for that place, that subsequently saw the value drop to something like £25K. In inflation adjusted terms £40K then = £135K recent inflation adjusted value, and a 15% mortgage on that = £20K/year interest only. I guess the same place today might cost £250K, but with recent options to have locked into perhaps a 4% interest rate, £10K/year interest only. Whilst we had the benefit of declining interest rates helping to push prices upward we were paying (saving) twice as much for that 'benefit'. In the opposite direction if you bought at £250K and later saw prices having halved, but had also drip fed another £10K/year into stocks, I suspect the outcomes would tend to equally compare overall. Fundamentally no difference.

[murraypaul]

These people who never stop telling everyone about the huge money and fortunes they have made from owning UK houses never seem to give a thought to the consequences of their greed, and the terrible effect that it has had on younger generations in the UK who can no longer afford a house.

So now just owning a house is greedy?

[Lanark]

How do you feel about communism? That would surely address the inter-generational selfishness that you ascribe to those who wish to help their children.

be careful what you wish for, a lot of under 30's are quite partial to communist ideas.

[absolutezero]

How do you feel about communism? That would surely address the inter-generational selfishness that you ascribe to those who wish to help their children.

be careful what you wish for, a lot of under 30's are quite partial to communist ideas.

Until they earn good money or inherit the parental home. Then they abandon them very quickly.

[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

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

If the share price keeps falling and then it pays you 16% of that a year, with the 16% drop in the share price plus the falling price, it doesn't take long to make the shares worth a hell of a lot less.

The answer lies in the free cash flow.

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

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

If the share price keeps falling and then it pays you 16% of that a year, with the 16% drop in the share price plus the falling price, it doesn't take long to make the shares worth a hell of a lot less.

The answer lies in the free cash flow.

TJH

And they will have less of that as house prices fall.

[tjh290633]

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

TJH

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

If the share price keeps falling and then it pays you 16% of that a year, with the 16% drop in the share price plus the falling price, it doesn't take long to make the shares worth a hell of a lot less.

The answer lies in the free cash flow.

TJH

And they will have less of that as house prices fall.

Not necessarily, as it is the value of land that varies, not the cost of building a house on it. Just compare the price of houses with the costs of rebuilding them.

TJH

[absolutezero]

Clearly, dividends will be cut as earnings fall. A prospective 16% forward yield for PSN is as clear a sign from the market as you can get that the cycle has peaked.

If the share price keeps falling and then it pays you 16% of that a year, with the 16% drop in the share price plus the falling price, it doesn't take long to make the shares worth a hell of a lot less.

The answer lies in the free cash flow.

TJH

And they will have less of that as house prices fall.

Not necessarily, as it is the value of land that varies, not the cost of building a house on it. Just compare the price of houses with the costs of rebuilding them.

TJH

Cost of building a house will rise as the raw materials rise in price. Squeeze those profits
I saw something the other day that said the cost of manufacturing tiles in Spain has risen by over 1000% (not a typo)