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Post by valueinvestor123 on Sept 18, 2017 9:27:42 GMT
There is weakness in the property prices. I went to look at some flats in London, and many are not selling plus many sell for 15-30% under the asking price. Apart from sentiment (Brexit, general election etc), I cannot really see what reasons there are. Rates are still low and there are no (obvious) economic woes (no major ones anyway).
It seems reasonable to me that it might be the start of a correction in the property market.
My question is: which platforms are most/least likely to withstand a significant correction? My concern is that some valuations of property collaterals might be over-bloated. Perhaps this has been discussed before (if so, please point me to a thread) but has anyone performed a 'stress-test' for each platform?
Thanks, vi123
Disclosure: the platforms I invest with, in the correct ranking order by magnitude:
1. Lendy (biggest for me by quite a large margin, mainly due to convenience of automated bidding and not having to log in all the time and constant supply of loans).
2. OctopusChoice (seems safest: but high exposure to London market, which is the first to be slowing down currently)
3. FundingSecure (straighforward. probably as risky as Lendy, but I can't tell)
4. AssetzCapital (a strange one: very motivated team but my main concern is that there is too much confidence/over-reliance on their internal models (which by definition don't take into account unpredictable market or company conditions). Lack of transparency (although it is getting better). Good recovery rates (I think?) which is the only reason I am still sticking.
I also invest smaller amounts with Thincats, Mintos, PropertyMoose (ouch).
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pikestaff
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Post by pikestaff on Sept 18, 2017 11:45:59 GMT
You don't say what price bracket you were looking in or where, but I think a correction to residential property prices is overdue inside the M25 and I have very little exposure there. In more affordable parts of the country I think the risks are lower for now. A significant rise in interest rates could hit hard but I don't expect that for the foreseeable future. I'd also be wary of Irish property (both sides of the border) because of Brexit risk and because of the history of boom and bust.
As for platforms, the only ones I'm on (apart from RS) are AC and TC. None of my property loans on AC worry me particularly. TC loans are often tranched, and where I have lent inside the M25 or in Northern Ireland it's been senior debt. I've lent to a couple (one in Camden and the other in Northern Ireland) where I expect the junior lenders to take a hit.
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alender
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Post by alender on Sept 18, 2017 11:57:42 GMT
There is weakness in the property prices. I went to look at some flats in London, and many are not selling plus many sell for 15-30% under the asking price. Apart from sentiment (Brexit, general election etc), I cannot really see what reasons there are. Rates are still low and there are no (obvious) economic woes (no major ones anyway). The reason is the additional taxes on buy to let with the additional risk of interest rate rises. This no doubt will increase the risks to P2P investors and only time will tell how good the P2P platforms have been in accessing the risk, this is one to keep a close eye on. Any info in this area will be very useful. I was speaking to a representative of Landbay a few weeks ago about the previous rate reduction who kept saying how safe they are but would not accept the risk is increasing as house prices fall.
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Post by mrclondon on Sept 18, 2017 13:22:41 GMT
I went to look at some flats in London, and many are not selling plus many sell for 15-30% under the asking price. I'd be interested to know the price range and rough area of London. London property prices are hard to figure at present. The house next to mine (other half of my semi townhouse, 4 bed in inner SE London) was a distressed sale a couple of months ago and achieved a sale price of something like 92% of OMV (sealed bids as far as I'm aware which were to be submitted 3 working days after a single "open day" for viewings). New build blocks of flats near me generally have overnight queues when the sales are released to secure the better units (better views being the main driver), typical price range £500k-£1m+. But I am aware of major issues in SW London (assumed to be brexit related for lack of a better explanation), and there does seem general weakness much above £1m.
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pikestaff
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Post by pikestaff on Sept 18, 2017 17:41:44 GMT
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Post by valueinvestor123 on Sept 18, 2017 21:47:30 GMT
I went to look at some flats in London, and many are not selling plus many sell for 15-30% under the asking price. I'd be interested to know the price range and rough area of London. London property prices are hard to figure at present. The house next to mine (other half of my semi townhouse, 4 bed in inner SE London) was a distressed sale a couple of months ago and achieved a sale price of something like 92% of OMV (sealed bids as far as I'm aware which were to be submitted 3 working days after a single "open day" for viewings). New build blocks of flats near me generally have overnight queues when the sales are released to secure the better units (better views being the main driver), typical price range £500k-£1m+. But I am aware of major issues in SW London (assumed to be brexit related for lack of a better explanation), and there does seem general weakness much above £1m. It was around Paddington and the prices were in the region of a million.
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Post by valueinvestor123 on Sept 18, 2017 21:50:18 GMT
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puddleduck
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Post by puddleduck on Sept 19, 2017 7:31:16 GMT
This post I'm afraid is one that gets my hackles rising about - I find many people are USA-centric / London centric when reporting news or other subject and appear to think if something is happening in any of those places it happens everywhere!
I invest in properties in an area where its still fairly easy to get rental yields of 13-15% and sadly I can see prices rising - your 'correction' is actually going the other way, as folks sick of paying frankly silly London prices look elsewhere for value. A few auctions I've attended recently have seen a sharp rise in investors from outside the area, sadly with deeper pockets than local buyers, which is pushing prices up.
London may well be due a 'correction' as the frankly ridiculous prices people pay for a frankly fairly undesirable area all told have never seen to have much of a link to reality or value. There have always been much better places to live, with much cheaper housing - I think people are finally cottoning on to this.
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Post by bluechip on Sept 19, 2017 8:19:13 GMT
We are overdue a recession, interest rates have been too low for too long. The country and people in general carry a lot of debt and there is less of a buffer now to protect us from a recession. Aside from the other points mentioned above I think this is a key one.
Wealthy individuals and corporate's are starting to restructure and prepare for a recession, this means less speculative investment in property. It also means banks will be less eager to lend to debt burdened buyers as they will likely not be able to withstand a 1% rise in interest rates, (they were bitten hard in 2007/8/9 because of lending to subprime borrowers). Capital controls in China will be effecting the capital, which will trickle out to the regions. We have seen more regulation on lenders to subprime borrowers take effect on those annoying adverts we see on TV and other things like that, which is a sign that banks are having to reign it in.
I predict there will be an uptick in SME insolvencies very soon as well. Carney intimated that rates may need to go up soon - time to invest in insolvency practitioners, auctioneers, gold, ETF's that short the stock markets and other things like that. Well that's what I'm doing, I'm closing all my trades on individual stocks that carry large amounts of debt as a matter of urgency, I've sold out of my Lendy, FC Ratesetter, MoneyThing, Lendinvest, Landbay and Funding Secure. Just stuck with the ones nobody wants or are overdue (a lot). Only thing I am keeping open is my instant (ish) Assetz account as I think I can react quickly if necessary.
We are due a major correction across the board, property will be hit in a big way. We're all Doomed. lol, but seriously prepare for volatility is my advice.
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pikestaff
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Post by pikestaff on Sept 19, 2017 9:57:05 GMT
Indeed and I was on the wrong side of that when I moved out of London in the early 90s. I took a 15% hit to sell, at what turned out to be near the bottom of the market in London, only to see the house that I bought (near Bedford) fall in value by a similar amount over the next 18 months. Circumstances are very different now from what they were then, of course. Interest rates are much lower and London prices have got more extreme. (I doubled my mortgage when I moved out of London but the house I sold is now worth more than the one that I bought.) Hence I think any correction is more likely to be London focused, unless interest rates go up by more than a couple of % which I don't expect any time soon.
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r00lish67
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Post by r00lish67 on Sept 19, 2017 10:09:44 GMT
We are overdue a recession, interest rates have been too low for too long. The country and people in general carry a lot of debt and there is less of a buffer now to protect us from a recession. Aside from the other points mentioned above I think this is a key one. I'm not saying you're wrong, but the problem is that people have been saying this since about 2012 - interests rates were too low ("for 5 whole years!"), a 3 year bull run in stocks - "that must be due to end". Look where shorting the market then would have got you then, or in 2014, or in 2016. My opinion (not advice, not professional etc). 1) None of us talking here are Goldman Sachs et al, otherwise we wouldn't be wasting our time with P2P. Unless you're them or a one in million investor, or are doing something very naughty with insider trading, then you do not have an edge in the market in knowing when the next big trends are going to happen. Even GS et al don't know most of them. 2) Shares are a long term asset, they will go down and sharply at times but given adequate diversification they will also come back again (i.e don't invest in just Japan) and have historically at least performed fabulously given enough time. The long term trend has always always been up - if you short, and are wrong, then the market may never dip down again to the levels you want. 3) The bad things you predict will happen, and indeed are more likely now to happen than before because performance does often tend to revert to mean, underperformance follows over. But, as above, no-one knows when this will be and backing out now entirely may mean the loss of several years of gains (or may not). I'm largely just spouting fairly generic passive investing mantra here, but I do agree with it. As to what this means I do personally: a) I've slightly pared back shares as of about 6 months ago but retain quite a strong investment. If I was mentally stronger I should have just kept it all given that I have a reasonably long investment outlook. (I'm not as much of a robot as my avatar). b) I very much still do P2P, but like many others have moved away from unsecured SME lending and various types of property loans too. I am cynical by nature, but have learned to be twice as cynical now with lending proposals. Finding what I call good loans seems to get harder every day, but they are still there. c) I keep an eye out for cash deals e.g. regular savers, bonuses on current accounts etc. d) I try to avoid at all costs having cash sitting at 1% easy access - something which I'm not achieving at present due to Funding Circle's latest lending "innovations" 
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Post by oldnick on Sept 19, 2017 12:39:10 GMT
Indeed and I was on the wrong side of that when I moved out of London in the early 90s. I took a 15% hit to sell, at what turned out to be near the bottom of the market in London, only to see the house that I bought (near Bedford) fall in value by a similar amount over the next 18 months. Circumstances are very different now from what they were then, of course. Interest rates are much lower and London prices have got more extreme. (I doubled my mortgage when I moved out of London but the house I sold is now worth more than the one that I bought.) Hence I think any correction is more likely to be London focused, unless interest rates go up by more than a couple of % which I don't expect any time soon. And by sheer dumb luck I experienced the converse - leaving the Greater London area at or near the previous peak and buying further out in time to catch the wave a second time. Not rubbing it in though  . I do wonder whether accumulated positive or negative life experiences like that lead investors to tend towards 'half full' or 'half empty' investment philosophies when faced with the same data.
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pa
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Post by pa on Sept 20, 2017 8:54:11 GMT
I live in London and would much prefer to live outside it.
The only problem with that is commuting. I'm not going to swap being crammed in like sardines in a can for twenty minutes on the Tube as I do now with being crammed in like sardines in a can for over an hour each way on several Tubes/trains/buses and paying several thousand pounds more for the privilege.
In effect people like me are clogging the market up as we are not moving on to bigger properties (I've had my flat for 17 years) either in London (because the prices are silly) or outside London (as you can easily spend an extra 500 hours a year commuting) and constraining supply.
For me, at the moment I see the property market stagnating as people - who are well within their rights to do so - are asking well above what buyers can stretch too. If people could afford to they would have bought already. (Without getting into a debate over semantics) This is different from a slowdown as demand is still there, it's just the buyers and sellers are too far apart to make a deal.
Hopefully the market will just tread sideways and value will catch up with price in a few years.
At the moment even though people are stretched they are paying their mortgages. "Officially" unemployment and interest rates are low. If this were to change I think that we'd be in trouble as the demand wouldn't be there when supply became available. We'd find a lot of people over-leveraged again.
I always think that its a bad idea to write your predictions down but after the next recession - whenever that is - I wouldn't be surprised to see 50,60 or 75-year mortgages being offered as people have to increase the term in order to be able to afford repayments.
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IFISAcava
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Post by IFISAcava on Sept 20, 2017 12:53:49 GMT
I live in London and would much prefer to live outside it. The only problem with that is commuting. I'm not going to swap being crammed in like sardines in a can for twenty minutes on the Tube as I do now with being crammed in like sardines in a can for over an hour each way on several Tubes/trains/buses and paying several thousand pounds more for the privilege. In effect people like me are clogging the market up as we are not moving on to bigger properties (I've had my flat for 17 years) either in London (because the prices are silly) or outside London (as you can easily spend an extra 500 hours a year commuting) and constraining supply. For me, at the moment I see the property market stagnating as people - who are well within their rights to do so - are asking well above what buyers can stretch too. If people could afford to they would have bought already. (Without getting into a debate over semantics) This is different from a slowdown as demand is still there, it's just the buyers and sellers are too far apart to make a deal. Hopefully the market will just tread sideways and value will catch up with price in a few years. At the moment even though people are stretched they are paying their mortgages. "Officially" unemployment and interest rates are low. If this were to change I think that we'd be in trouble as the demand wouldn't be there when supply became available. We'd find a lot of people over-leveraged again. I always think that its a bad idea to write your predictions down but after the next recession - whenever that is - I wouldn't be surprised to see 50,60 or 75-year mortgages being offered as people have to increase the term in order to be able to afford repayments. That's the issue, right? Wait until interest rates rise and then see what happens.
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pa
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Post by pa on Sept 20, 2017 17:11:28 GMT
I live in London and would much prefer to live outside it. The only problem with that is commuting. I'm not going to swap being crammed in like sardines in a can for twenty minutes on the Tube as I do now with being crammed in like sardines in a can for over an hour each way on several Tubes/trains/buses and paying several thousand pounds more for the privilege. In effect people like me are clogging the market up as we are not moving on to bigger properties (I've had my flat for 17 years) either in London (because the prices are silly) or outside London (as you can easily spend an extra 500 hours a year commuting) and constraining supply. For me, at the moment I see the property market stagnating as people - who are well within their rights to do so - are asking well above what buyers can stretch too. If people could afford to they would have bought already. (Without getting into a debate over semantics) This is different from a slowdown as demand is still there, it's just the buyers and sellers are too far apart to make a deal. Hopefully the market will just tread sideways and value will catch up with price in a few years. At the moment even though people are stretched they are paying their mortgages. "Officially" unemployment and interest rates are low. If this were to change I think that we'd be in trouble as the demand wouldn't be there when supply became available. We'd find a lot of people over-leveraged again. I always think that its a bad idea to write your predictions down but after the next recession - whenever that is - I wouldn't be surprised to see 50,60 or 75-year mortgages being offered as people have to increase the term in order to be able to afford repayments. That's the issue, right? Wait until interest rates rise and then see what happens. IMHO - Yes. We have a whole generation that haven't really any experience interest rates. It's not just in the housing market, people just assume they'll have access to cheap credit. I hope that this doesn't happen, but it would be interesting to see how companies that have effectively used cheap debt to fund share buybacks deal with a fall in their share price. They can either sit on the loss, causing their share price to fall when it makes it onto the balance sheet or sell to go flat causing their share price to fall. Doesn't seem like a good place to be to me.
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