Are prices due to crash?

[haydnw2]

Thank you, I didn't know that facility existed.

You can also use filters on search results on eBay to select either "Sold items" or "Completed items" (the latter including those whose time expired without bids/a sale).

 

[2into1]

If the housing market is in crisis, no one has told my area on the edge of Greater Manchester / start of the Derbyshire hills. Still affordable by many standards, but pricing still rising and selling quickly.

 

[Elmo3]

Surely what happens in the housing market doesn’t necessarily reflect in the leisure vehicle market? There does seem to be an obsession with the value of things - constantly.
Maybe people are just happy with their house but still want to spend on their free leisure time, holidays, we’ll-being, etc. Enjoy life and all that!

The over leverage will catch up with people. Could well be another 0.5% hike in base rate next week. The BoE have been woeful in their forecasting, I can see us getting to 6%+, which means 8%+ mortgages. That’s going to hurt for many and probably enough to have an impact. Once motivated / forced sales start, they are difficult to stop. Remember that prices of everything are set on the margin. You might not need to sell, but the person who does is going to need to accept a new reality. A Cali is a discretionary, luxury item, plenty of which have been bought on finance. If someones new mortgage deal means their payment doubles, things like the Cali could well have to go, and quickly, just to stem another monthly payment, let alone raise cash. Nothing is immune.

 

[Calimili]

The over leverage will catch up with people. Could well be another 0.5% hike in base rate next week. The BoE have been woeful in their forecasting, I can see us getting to 6%+, which means 8%+ mortgages. That’s going to hurt for many and probably enough to have an impact. Once motivated / forced sales start, they are difficult to stop. Remember that prices of everything are set on the margin. You might not need to sell, but the person who does is going to need to accept a new reality. A Cali is a discretionary, luxury item, plenty of which have been bought on finance. If someones new mortgage deal means their payment doubles, things like the Cali could well have to go, and quickly, just to stem another monthly payment, let alone raise cash. Nothing is immune.

people don't understand that when they are getting a Mortgage with variable rate because it is at the time cheaper they are in fact taking a leveraged unhedged punt on the Interest rate market.

 

[Elmo3]

people don't understand that when they are getting a Mortgage with variable rate because it is at the time cheaper they are in fact taking a leveraged unhedged punt on the Interest rate market.

Indeed. Even with fixes, I believe the most common is 2 years. Up until fairly recently you could get a 10 year fix at 3%. At the time, folks on trackers would have thought they were mugs. Well, they’ll soon come off their 2% and onto 6%+. The last proper property meltdown of the early 90’s was caused by a mere doubling of base rates. Don’t think we’ve ever had a period of high inflation where rates haven’t had to go higher than the inflation rate to combat.

 

[Californication69]

Not a good forecast for some.
Going to be a rocky road ahead for the over stretched.
Such is life.

 

[soulstyledevon]

This time last year my mortgage was £1700 a month.
I’m now fixed at £1900 for 10 years.
I just had a quick look, the cheapest fixed would now cost me over £2300…

Over the next 12-18 months there will be lots of families dropping off their low 1.8/2% fixed rate mortgages for a whopping new one. Mixed with current inflation levels, it’s tough out there.
Even if inflation drops to 5%, it’s still 5% on the current inflated prices. I guess it’s the price to pay for printing £700b…

 

[Calimili]

Quite honestly, I am not worried about an imminent price crash of Calis. For Cali prices to crash, the big whites prices need to collapse catastrophically first. A family with less disposable monthly cash can drop a second (or first) car and use/keep a Cali instead.
The same family with a big white, there is no discussion , the big white has to go.

 

[Kayleigh]

Price crash? Not on Autotrader …

 

[calibeach76]

Price crash? Not on Autotrader …

View attachment 109768

Absolutely crackers

 

[Amarillo]

Indeed. Even with fixes, I believe the most common is 2 years. Up until fairly recently you could get a 10 year fix at 3%. At the time, folks on trackers would have thought they were mugs. Well, they’ll soon come off their 2% and onto 6%+. The last proper property meltdown of the early 90’s was caused by a mere doubling of base rates. Don’t think we’ve ever had a period of high inflation where rates haven’t had to go higher than the inflation rate to combat.

I thought I was mad getting a ten year fix on our residential mortgage at 2.49%. I’m lovin’ it now!!!

The bad news is that I have three other mortgages ending their 5 year fix in early November. I’m desperately looking for what to do. The least worst option looks to be 5.74% fixed for 5 years with zero fees. That is a 2.6 times increase in what I am currently paying - but I can lock into that rate six months ahead of renewal.

 

[Elmo3]

I thought I was mad getting a ten year fix on our residential mortgage at 2.49%. I’m lovin’ it now!!!

The bad news is that I have three other mortgages ending their 5 year fix in early November. I’m desperately looking for what to do. The least worst option looks to be 5.74% fixed for 5 years with zero fees. That is a 2.6 times increase in what I am currently paying - but I can lock into that rate six months ahead of renewal.

Every time I listen to a commentator the expectation of where rates will end up increases! Seems to be 6% base rate now.

 

[Amarillo]

Every time I listen to a commentator the expectation of where rates will end up increases! Seems to be 6% base rate now.

These things can change fairly quickly. When I bought my first flat my mortgage rate was 15.75%. On a £40,000 loan I was paying £525 per month interest plus paying into an endowment policy.

Currently my 3 BTL mortgages of £85,000, £75,000 and £65,000 (£225,000 total) comes to £411 per month interest.

It is not that 4.5% base rate is bad, but that less than 2% base rate was exceptionally good.

 

[The Merle]

Price crash? Not on Autotrader …

View attachment 109768

That will be a lazy dealer VAT mistake they do them all the time

 

[RockinNRollin]

It's going to be a very challenging time for some in the near future; many (myself included as I got my first mortgage in 2012) are used to very low interest rates which has softened the impact of explosive house prices. While there is a slight taper in house prices, it isn't compensating for the interest rate jumps, so as mentioned above, those on very low rates taken out in the last 2-3 years will be hitting some marked changes. The situation is worsened for those stretched and I know from personal experience that lenders almost encourage mortgages that are really too much of a financial burden (from memory, they will tell you how much your repayments would be if rates climbed to X%, but until recently I suspect most people who haven't had mortgages prior to the financial crisis would never imagine it would happen). It doesn't help that a worrying proportion of people don't understand the basic mathematics of interest rates, assuming a 2% jump in their rate equates to a 2% jump (or a similar nominal figure) in their repayments.

It's all a bit of a mess. Cali's are luxury good really though, but ones that are multi-purpose (i.e. daily transport as well as their leisure capacity). I suspect that will work in their favour and unless the "staycation" bubble bursts (unlikely given air fares are only going one way) I think their residuals will be strong for as long as there isn't something overly restrictive on ICE vehicles.

 

[Elmo3]

It's going to be a very challenging time for some in the near future; many (myself included as I got my first mortgage in 2012) are used to very low interest rates which has softened the impact of explosive house prices. While there is a slight taper in house prices, it isn't compensating for the interest rate jumps, so as mentioned above, those on very low rates taken out in the last 2-3 years will be hitting some marked changes. The situation is worsened for those stretched and I know from personal experience that lenders almost encourage mortgages that are really too much of a financial burden (from memory, they will tell you how much your repayments would be if rates climbed to X%, but until recently I suspect most people who haven't had mortgages prior to the financial crisis would never imagine it would happen). It doesn't help that a worrying proportion of people don't understand the basic mathematics of interest rates, assuming a 2% jump in their rate equates to a 2% jump (or a similar nominal figure) in their repayments.

It's all a bit of a mess. Cali's are luxury good really though, but ones that are multi-purpose (i.e. daily transport as well as their leisure capacity). I suspect that will work in their favour and unless the "staycation" bubble bursts (unlikely given air fares are only going one way) I think their residuals will be strong for as long as there isn't something overly restrictive on ICE vehicles.

It’s the other way round. ZIRP has caused the explosion in house prices. The end of ZIRP will bring them back down again. It’ll just take a little time to filter through as motivated / forced sellers become more commonplace over the coming months / years as ultra cheap mortgage deals end.

 

[RockinNRollin]

It’s the other way round. ZIRP has caused the explosion in house prices. The end of ZIRP will bring them back down again. It’ll just take a little time to filter through as motivated / forced sellers become more commonplace over the coming months / years as ultra cheap mortgage deals end.

The UK has never really been ZIRP though (although we did get close); property prices were increasing fairly quickly even before interest rates plummeted; since the 70s, barring temporary dips in the late 80s and late 00s for obvious reasons, the overall trend has been upwards with inflation-adjusted house prices doubling roughly every 20 years. I think a strong housing demand partly driven by a (slowly) growing population will probably continue to fuel resilience and growth in property prices in the long term. The only thing likely to reverse this would either widespread unaffordability (by this, I mean literally swathes of property unaffordable to sufficient numbers that they won't sell) or a significant shift in housing demand (unlikely unless the govt decides to build a million council houses).

 

[Elmo3]

The UK has never really been ZIRP though (although we did get close); property prices were increasing fairly quickly even before interest rates plummeted; since the 70s, barring temporary dips in the late 80s and late 00s for obvious reasons, the overall trend has been upwards with inflation-adjusted house prices doubling roughly every 20 years. I think a strong housing demand partly driven by a (slowly) growing population will probably continue to fuel resilience and growth in property prices in the long term. The only thing likely to reverse this would either widespread unaffordability (by this, I mean literally swathes of property unaffordable to sufficient numbers that they won't sell) or a significant shift in housing demand (unlikely unless the govt decides to build a million council houses).

We’ve had well over a decade of ultra low rates / ZIRP, and all the QE. Remember, they were supposed to be emergency interest rates following the financial crash in 2009. Maintaining these emergency rates is what’s pumped up asset prices. Now it’s ending, asset prices will adjust accordingly.

 

[RockinNRollin]

We’ve had well over a decade of ultra low rates / ZIRP, and all the QE. Remember, they were supposed to be emergency interest rates following the financial crash in 2009. Maintaining these emergency rates is what’s pumped up asset prices. Now it’s ending, asset prices will adjust accordingly.

I get that and agree it fuelled a particularly steep increase in values, but average BOEBR has been around 7% over the very long term and said previously there's still overall growth in prices even adjusted for inflation; we're still not up at that long term average rate yet, so I think there may be a temporary shrinkage in values while the market stabilises in reaction to rate changes etc.., then it'll find its feet and prices will creep upwards again (albeit far more slowly than over the last 10 years).

 

[Elmo3]

I get that and agree it fuelled a particularly steep increase in values, but average BOEBR has been around 7% over the very long term and said previously there's still overall growth in prices even adjusted for inflation; we're still not up at that long term average rate yet, so I think there may be a temporary shrinkage in values while the market stabilises in reaction to rate changes etc.., then it'll find its feet and prices will creep upwards again (albeit far more slowly than over the last 10 years).

If we reach a 7% base rate (which we might well) , it’s game over for a lot of people (actually, 5 is game over for many, particularly over leveraged landlords with no resilience). It will take a little time to flush through the market and establish an equilibrium based on new cost of borrowing levels. Of course, long term, folks will likely be fine, as long as they don‘t run out of cash in the short term and become a forced seller. That’s where things like quick sales of Cali’s come in, even more so if it’s a lumpy monthly payment on top of a doubling mortgage etc.

 

[Mansfieldman750]

We’ve had well over a decade of ultra low rates / ZIRP, and all the QE. Remember, they were supposed to be emergency interest rates following the financial crash in 2009. Maintaining these emergency rates is what’s pumped up asset prices. Now it’s ending, asset prices will adjust accordingly.

All true and meanwhile governments fanning the house price fire with help to buy schemes and stamp duty holidays.

 

[Amarillo]

(actually, 5 is game over for many, particularly over leveraged landlords with no resilience).

Don’t worry to much about us BTL landlords. We can sell up without losing our homes.

I think few have expanded their portfolios since the chancellor slapped a 3% stamp duty surcharge on second homes and investment properties in 2016. Price rises 2016 to 2023 are likely to exceed any price drops.

A flat I bought in 2012 for £130,000 (£78,000 mortgage; £52,000 equity) is now valued at £300,000 (£78,000 mortgage; £222,000 equity), a quadrupling in equity.

In that time I’ve paid about £20,000 in mortgage interest, about £20,000 in maintenance, £5,000 in insurance and received about £145,000 in rent.

 

[Mansfieldman750]

Don’t worry to much about us BTL landlords. We can sell up without losing our homes.

I think few have expanded their portfolios since the chancellor slapped a 3% stamp duty surcharge on second homes and investment properties in 2016. Price rises 2016 to 2023 are likely to exceed any price drops.

A flat I bought in 2012 for £130,000 (£78,000 mortgage; £52,000 equity) is now valued at £300,000 (£78,000 mortgage; £222,000 equity), a quadrupling in equity.

In that time I’ve paid about £20,000 in mortgage interest, about £20,000 in maintenance, £5,000 in insurance and received about £145,000 in rent.

Yup, sure beats working.
Now as the old Kenny Rogers song goes “ you gotta know when to hold them, know when to fold them “
Leave that one to you.

 

[Elmo3]

All true and meanwhile governments fanning the house price fire with help to buy schemes and stamp duty holidays.

Of course. High house prices win elections. Falling house prices lose them. They’ll do anything they can to keep the plates spinning. If we start seeing mass foreclosures, some sort of ‘rescue scheme’ wouldn’t surprise me. All of which further encourages people to borrow to the max if ultimately there’s a bail out should they hit trouble.

Don’t worry to much about us BTL landlords. We can sell up without losing our homes.

I think few have expanded their portfolios since the chancellor slapped a 3% stamp duty surcharge on second homes and investment properties in 2016. Price rises 2016 to 2023 are likely to exceed any price drops.

A flat I bought in 2012 for £130,000 (£78,000 mortgage; £52,000 equity) is now valued at £300,000 (£78,000 mortgage; £222,000 equity), a quadrupling in equity.

In that time I’ve paid about £20,000 in mortgage interest, about £20,000 in maintenance, £5,000 in insurance and received about £145,000 in rent.

As I said, the over leveraged with no resilience. Plenty of those around. They have to find cash every month to pay the hugely increased mortgage when the rent could be considerably lower. I’m a landlord too, but unleveraged, so very happy for landlords to leave the market and reduce supply. It’s going to get quite ugly IMHO.

 

[Amarillo]

Of course. High house prices win elections. Falling house prices lose them. They’ll do anything they can to keep the plates spinning. If we start seeing mass foreclosures, some sort of ‘rescue scheme’ wouldn’t surprise me. All of which further encourages people to borrow to the max if ultimately there’s a bail out should they hit trouble.


As I said, the over leveraged with no resilience. Plenty of those around. They have to find cash every month to pay the hugely increased mortgage when the rent could be considerably lower. I’m a landlord too, but unleveraged, so very happy for landlords to leave the market and reduce supply. It’s going to get quite ugly IMHO.

But my point is how many BLT landlords are over leveraged, given the 3% stamp duty surcharge introduced in 2016 almost killed off new investment purchases?

In February 2014 (last time I bought an investment property) I had £745,000 of mortgage debt and an estimated 45% equity.

Today I have £290,000 of mortgage debt and an estimated 89% equity.

I expect most BTL landlords are in a similar position having both reduced debt and benefitted from rising house prices.

By slapping on that 3% surcharge George Osbourne has (inadvertently) done BTL landlords a huge favour.