zlb
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Post by zlb on Oct 10, 2018 7:52:57 GMT
Ok, so most people believe that it's not a good idea to buy before Brexit.
I've heard on a grapevine that the government is warning institutions to adjust valuations as a price crash is due within 25 years. Possibly fuelled by other market conditions.
A friend says he's ok with what he's got because the rent is high (people will always need to rent), and the value of the property is immaterial because he bought it such a long time ago. Although he's had to adjust a sale price down by approx 5% in London.
What are the implications for all of the btl platforms? Might contact the companies concerned.
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kaya
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Post by kaya on Oct 10, 2018 8:35:56 GMT
25 years? Is that serious?
At the present rate of change in society, the world will be almost unrecognizable in 25 years. I always laugh at economic projections that look decades ahead.
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invester
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Post by invester on Oct 10, 2018 9:35:00 GMT
It must mean 2-5 years.
If we're going on 25 years then we could also predict that a house price explosion is also likely, fuelled by other market conditions.
It has to be business as usual, people aren't going to stop renting houses, and without a massive change in supply/demand there won't be a large change in the rental figures.
People will simply arrange their affairs in the most efficient way (ie holding BTL in a limited company).
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copacetic
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Post by copacetic on Oct 10, 2018 14:17:30 GMT
Take long term economic and market predictions with a pinch of salt. There are just too many variables at play to make accurate predictions.
There was an article this morning about self driving cars for example.
How do you reliably predict the effects that will have? Millions of people out of work as taxi drivers, delivery drivers, car manufacturers and a host of related industries. Will that lower house prices because there will be less buyers? Will those people be reemployed in building houses, increasing supply and reducing prices further? What about the rest of the people who benefit from more disposable income because their transport costs are a lot cheaper - will that extra income lead to inflated house prices if the supply stays the same? What about climate change and flooding reducing housing supply? I'd love to see the model that claims to accurately predict all those effects.
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michaelc
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Post by michaelc on Oct 10, 2018 15:02:12 GMT
Isn't the main variable interest rates? If those go back to 5% and beyond that would trigger a crash as a significant number would be forced to sell. I guess one scenario is "hard" (some would say "clean") brexit might force sterling down and that might prompt an interest rate rise. Another one is a trade deal is confirmed and the markets become a lot more relaxed allowing the pound to rise and interest rates to stay broadly low. Unless interest rates really do go up and fast, I reckon we won't see any big falls in house prices even if demand weakens further. If that happens we'll see a continuation of the status quo where people don't want to sell for too low a figure and if not forced to won't put their house on the market. So overall property turnover will remain stagnant. My reckoning is worth nothing of course  |
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zlb
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Post by zlb on Oct 10, 2018 21:07:05 GMT
It must mean 2-5 years. If we're going on 25 years then we could also predict that a house price explosion is also likely, fuelled by other market conditions. It has to be business as usual, people aren't going to stop renting houses, and without a massive change in supply/demand there won't be a large change in the rental figures. People will simply arrange their affairs in the most efficient way (ie holding BTL in a limited company). it was a phonetic 25. Could have been a worst case scenario where action had to be taken by larger institutions like banks have to adjust to hold larger reserves.
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angrysaveruk
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Post by angrysaveruk on Oct 11, 2018 7:51:47 GMT
In my opinion next financial crisis is probably going to involve currency devaluation in western countries combined with high levels of inflation. Although house prices are over valued people will always need somewhere to live.
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zedi
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Post by zedi on Oct 11, 2018 9:26:19 GMT
Isn't the main variable interest rates? If those go back to 5% and beyond that would trigger a crash as a significant number would be forced to sell. I guess one scenario is "hard" (some would say "clean") brexit might force sterling down and that might prompt an interest rate rise. Another one is a trade deal is confirmed and the markets become a lot more relaxed allowing the pound to rise and interest rates to stay broadly low. You forgot the inflation in your equation. Inflation helps borrowers to lower their debts in real terms and it´s only inflation that will trigger the interest rate rise. The central banks don´t care about devaluation of currencies, their goals are stable prices, not stable exchange rates. However a massive devaluation of the pound sterling would lead to an increase in inflation so these two effects are closely related. The point is that you cannot conclude that a rising interest rate would automatically force a sell-out on the property market because there are also adverse effects, especially the borrowers with long-term fixed interest rates would benefit from such a scenario. The borrowers who already repaid most of their debts (because the contracts are already running for some years) wouldn´t probably face big problems as well. The ones who operate with huge LTVs and only short-term loans would be harmed severly by a rising interest rate because they probably couldn´t offset the much higher interest payments by increasing rent (due to inflation). So the question is how huge is the influence of the later sector to the general house prices? Is it really significant to cause a real crash or will the house prices mostly only fall in real terms and not so much in GBP (which would have fallen in value as we assumed as the starting point of the discussion)?
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zedi
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Post by zedi on Oct 11, 2018 9:28:31 GMT
In my opinion next financial crisis is probably going to involve currency devaluation in western countries combined with high levels of inflation. I wouldn´t call it a financial crisis, I would call it a solution to the debt crisis...and I don´t think it´s an unlikely event.
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angrysaveruk
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Post by angrysaveruk on Oct 11, 2018 13:04:00 GMT
In my opinion next financial crisis is probably going to involve currency devaluation in western countries combined with high levels of inflation. I wouldn´t call it a financial crisis, I would call it a solution to the debt crisis...and I don´t think it´s an unlikely event. Well it is going to cause alot of problems for the financial system and hardship. Everything from food to petrol to electricity is going to increase. But yes it is inevitable and will solve the underlying economic inbalances - our standard of living is not sustainable.
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cb25
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Post by cb25 on Oct 11, 2018 13:32:59 GMT
I wouldn´t call it a financial crisis, I would call it a solution to the debt crisis...and I don´t think it´s an unlikely event. ... our standard of living is not sustainable. Why specifically?
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angrysaveruk
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Post by angrysaveruk on Oct 11, 2018 14:01:56 GMT
... our standard of living is not sustainable. Why specifically? Because we consume more than we produce hence the massive trade deficit. Limited resources, more countries competing for resources etc
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orvilorvil
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Post by orvilorvil on Oct 11, 2018 15:10:34 GMT
There’s such little stock on agents books at the moment it’s hold prices up as demand is relatively high.
So much uncertainty around Brexit and interest rates few are willing to make big commitments and I think happy in the main to sit on their property until things are resolved.
Depending on what happens in the next few months, next year could make for an interesting housing market.
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happy
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Post by happy on Oct 11, 2018 15:40:39 GMT
Other market conditions = Global pandemic = 20% population loss in 1st world economies = no housing shortage = price crash.
Just a thought, we are long overdue it according to many experts.☹
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ozboy
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Post by ozboy on Oct 11, 2018 15:44:58 GMT
Blimey, and your handle is happy ?!!!  |
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