Housing market outlook worst 'for 20 years

[Triassic]

I see in the news that the housing market outlook worst 'for 20 years' http://www.bbc.co.uk/news/business-46891187 

 

Is this a good or bad thing and what effect will it have on the self build market?

[epsilonGreedy]

5 minutes ago, Triassic said:

Is this a good or bad thing and what effect will it have on the self build market?

 

 

Brexit is a distorting but transient factor so probably not worth burning brain cycles on.

 

In the short term, likely SB factors are:

1. Very slight softening of plot prices.
2. More challenging LTV estimates for mortgage purposes.
3. Easier to find building trades looking for work.

Item 3 is the more significant for me.

[jamiehamy]

Exactly, worse for whom? For those lucky enough to be in the ladder and worried about a hit on values? Or worse for those who can't get in it's because of inflated prices? Whoever its worse for surely that means it's better for someone else? 

[ProDave]

 

 

It will harm self builders who want to sell an existing house to fund a new build but then find that house won't sell and they are stuck.  Something I know a lot about.  Just as it will harm someone that wants to move to a bigger house but can't sell the old one.

 

My experience having been through 3 house market downturns, is the ambition to move on, move up etc  is still there but you are completely thwarted in your ambitions if you cannot sell.  And that all seemed in the past to be down to first time buyers simply not existing at that time.

 

It won't help get all the houses built that our politicians tell us we need, as no builder will build houses that don't sell.

 

If they are only predicting it will be as bad as 1988 it won't be that bad. I lived through that I was thwarted at my first attempt to move up from my 1 bedroom starter home because nobody even came to view it. A year later I tried again and sold it.  That is nothing in comparison to the 10 years of house market stagnation we have had here since 2008

 

 

[DavidFrancis]

The actual RICS press release doesn't seem as "traumatic" as the BBC's take on it. See https://www.rics.org/uk/news-insight/latest-news/press-releases/residential-market-survey-december-2018/

 

And price expectations for NW England are still on the rise, so you're OK!

[nod]

9 minutes ago, epsilonGreedy said:

 

Brexit is a distorting but transient factor so probably not worth burning brain cycles on.

 

In the short term, likely SB factors are:

1. Very slight softening of plot prices.
2. More challenging LTV estimates for mortgage purposes.
3. Easier to find building trades looking for work.

Item 3 is the more significant for me.

Prices are still rising here

All the major players are grabbing as much land as they can

Building trade as busy as I’ve known it for thirty years 

Wages are still rising 

[the_r_sole]

 

 

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Edited September 26, 2019 by the_r_sole

[Bitpipe]

I'd suspect that if the market is cooling, potential buyers (especially first timers) will be inclined to wait to see if prices fall further. Which will lead to sellers dropping prices to stimulate interest and furthering the phenomenon.

 

[jamiehamy]

28 minutes ago, ProDave said:

 

 

It will harm self builders who want to sell an existing house to fund a new build but then find that house won't sell and they are stuck.  Something I know a lot about.  Just as it will harm someone that wants to move to a bigger house but can't sell the old one.

 

My experience having been through 3 house market downturns, is the ambition to move on, move up etc  is still there but you are completely thwarted in your ambitions if you cannot sell.  And that all seemed in the past to be down to first time buyers simply not existing at that time.

 

I lived through that I was thwarted at my first attempt to move up from my 1 bedroom starter home because nobody even came to view it. 

 

 

I'm not disagreeing, in fact, you highlight my next point. Where are first time buyers? I sold my 1bed flat through luck and didn't have to market it. If I did, I knew I'd be lucky to sell. How on earth are we at a place where a nicely slecced 1bed flat in a nice area with great connections at 60k is not snapped up? I don't know, but as you say, first time buyers are not there. A friend of mine is 26,good job, stays with parents, goes following football every single weekend round Europe. No inclination to buy his own place. I know other people who will only rent. And complain incessantly about things that wouldn't be an issue if they owned. 

 

If house prices stall or fall, that IS good news for some people but they appear not to want to capitalise on that. So the whole thing stagnated. 

 

Is is a generational thing? People no longer aspire to own? Why not? 

 

[Mr Punter]

The BBC article mainly focuses on sales volumes, not house prices.

[the_r_sole]

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Edited September 26, 2019 by the_r_sole

[Big Neil]

I think the government focus, the thing which obviously drives regulations through various schemes and what not, is completely wrong. IT is skewed far too much in favour of bolstering industry and has nothing (in our reality not that of the political arena) to do with actually getting homes built or first time buyers into homes. It seems like these are likely the things immediately affecting the housing market as a whole, albeit not the only things of course.

 

Take first time buying as an example. So obviously it's not impossible to save and buy a place. Some people have the good fortune financially speaking of having an inheritance or family who give them money as well. So we'll ignore them for now because they'll be fine one way or another. What you then have is those people who 'generally' are struggling to find a deposit because of rising rental prices amongst other factors. So then our leaders in Westminster instigate various schemes. First time buyer ISAs, part ownership, Help to buy  etc. none of these really solve the issue.

What you then have are houses built by volume builders such as Wimpy etc, which are frequently either below the normal free-market requirements of Janet and John who have their nice pile of cash, and are often more expensive anyway. But it's fine because enough pressure has been brought to bear on some banks and building societies to provide financial services to buy part of these but where the rates are sometimes nothing like as good as if you were buying a full house. So now Janet and John's poorer friends Beth and Bob are off the statistics list of people who want to buy their own house but can't afford it, and own their own house. Never-mind that they only own 25 percent of it, still have to pay rent on the rest and will have an horrific interest rate rise after 2 or three years, effectively putting them in the same position as they were before they bought.

In addition to this the subsidy is also given to people who in reality could afford a house, just not where they WANT. Help to buy is available i think on houses up to about half a mill. even at the 20% loan level that means buyers using this option have 400 grand to spend. Simply ridiculous!

 

Now consider all the government subsidised regeneration and sell offs. For example there was an area in Salford just off Langworthy Road which some years ago was rows and rows of two up two down terraces. Mostly boarded over with that metal sheeting, the odd one kept like a palace. They were all sold off to Urban Splash, renovated, and flogged off for something in excess i think of 130k. So now there's all those houses at prices un-affordable for a lot in the area, in an area which although being regenerated still isn't the nicest. So people who do buy them are more likely to find themselves in negative equity if they aren't quite careful.

 

Now consider if instead of making Messrs Wimpy, Redrow and Persimmon make 10% of their stock (or whatever the number actually is)available to 'affordable (a joke term in it's current form) housing schemes', they were just told that they had to give 10% of their land to a  local self-build scheme and provide services to the plots. Now I, the first time home buyer and excited self builder can have my first time home, build it myself so i get what i want, and am then building the equity for myself instead of paying an industry it's profit margins. Then in however long it may be I can go buy another house or build another one, with less of a mortgage burden.

 

Likewise lets think of all these houses Salford City council sold to a developer... Sell them for a quid to a first time buyer. Then say to that first timer here you go, there's 10 grand's worth of vouchers you can ONLY go and spend at local builders merchants and DIY type suppliers registered on this list, but you can only have this money of you match it with your own be that through a loan or whatever. Now you have people who are renovating those houses for a fraction of what a developer is selling them for. Yet again, better equity growth. And there are so many things a local authority could do to help this. For example you might get the local constructions colleges involved so the things like brickwork, plastering, electrical etc etc get done at a fractional rate for the owner, to a verified quality and standard. So here you have educated people, you've given them future prospects for their careers and homes and you've given them a viable opportunity to own the roofs over their heads.

 

Now i'm not saying i've addressed all of the areas that need addressing, but there's no way that the options i've outlined above aren't better than what we have available already. And yes yes, there's lots to consider but this post is long enough already, and i don't have the time to  compile a research document  with the whole A-Z of requirements.

 

there has to be a better way. and I think we can demonstrate it ourselves.

[Big Neil]

sorry for the rant by the way........I'm not really angry, just Impassioned...

Edited January 17, 2019 by Big Neil

[Mr Punter]

8 minutes ago, Big Neil said:

sorry for the rant by the way........I'm not really angry, just Impassioned...

 

893 words. Phew!

[Bitpipe]

34 minutes ago, jamiehamy said:

IIs is a generational thing? People no longer aspire to own? Why not? 

 

 

I wonder if it's related to a fear of putting down roots when the work environment is not as certain, or there is an individual restlessness or uncertainty over what they want to do and where they want to do it.

 

Certainly when life choices crystallise somewhat, finding a partner, starting a family, settling into a career then a secured place to live (i.e. ownership) becomes more of a priority.

 

And this is not a dig at Millennials or whatever demographic follows them (Xenialls I think they're called) just a reflection that each generation faces a different dynamic and set of priorities and the fixed elements of society (housing modes, transport etc) take longer to change to catch up.

 

 

[Big Neil]

8 minutes ago, Mr Punter said:

893 words. Phew!

 

Is that a record for this forum???????

[the_r_sole]

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Edited September 26, 2019 by the_r_sole

[nod]

29 minutes ago, Mr Punter said:

 

893 words. Phew!

??

[jack]

25 minutes ago, Big Neil said:

Is that a record for this forum???????

 

893 a record? That's a typical post for some of the more wordy posters (myself included).

[Ferdinand]

Suspect the record will be more like 3k.

[Big Neil]

 

right - there's a challenge. Can I include quotes?

[AliG]

The latest thing propping up the market is Airbnb and corporate ownership.

 

I have rented a place in London for years. Just a basic one bed, near to work. A basic one bed in central London costing around £500k and costing me £1700 a month in rent.

 

I would quite like to buy something so that I can decorate and renovate it, I deliberately stay in a tired place as the rent on something newer would be closer to £2500 a month and it is just wasted money.

 

The trouble is I can't because it has reached the point that hardly anything ever comes up for sale. The building I live in and the one next door comprise almost 200 apartments. There have maybe been 3 for sale in my building in the last year and none in the newer building next door.

 

Over time flats have been bought by nightly let companies. These companies and Airbnb's charge around £150 a night, so more than 2.5x what I pay in rent. Even if they only have 50% occupancy, they have a nice little business. Due to this plus stamp duty, people are less and less willing to move and turnover is falling. I reckon that normally 1 bed flats turn over every 7 or 8 years and there should be 10-20 flats a year for sale, but there is very little choice now if you do want to buy in a more popular area.

 

This is another way that the market has become skewed. The property market is not like the stock market. People actually need homes to live in and there is a finite supply due to planning controls. As this is the case it is appropriate to regulate ownership. At the moment the availability of flats is effectively being reduced by turning them into hotel rooms in cities. In London you also have the issue of foreign buyers using them as a store of wealth. regulation should encourage houses to be used as homes and not investments.

 

[epsilonGreedy]

25 minutes ago, AliG said:

The latest thing propping up the market is Airbnb and corporate ownership.

 

 

Social housing is also getting caught up in the Airbnb phenomenon.

 

At the end of the day Airbnb is just a new market making technology, it does not destroy housing and instead works it more intensely. Likewise with Uber, instead of high priced regulated taxi fares funding a load of blokes to spend most of the day chatting with other drivers in a slow moving rank we now have Uber's "surge" pricing giving intelligent regulation of supply and demand.

 

32 minutes ago, AliG said:

Over time flats have been bought by nightly let companies. These companies and Airbnb's charge around £150 a night, so more than 2.5x what I pay in rent.

 

 

This does create a more vibrant tourism industry that generates employment for locals.

 

33 minutes ago, AliG said:

This is another way that the market has become skewed.

 

 

There is more, in Peterborough a new breed of social housing landlord is evicting lifelong social housing tenants because the landlords know the same people will end up on their books at much higher rentals because Councils have a duty to provide emergency housing.

 

37 minutes ago, AliG said:

In London you also have the issue of foreign buyers using them as a store of wealth. regulation should encourage houses to be used as homes and not investments.

 

 

Not just London. In my last village 2.5 hours away from London there was a fabulous house probably 2500 sq ft 5-beds and great location. No one lived there for 3 years and instead I witnessed a handful of fleeting day visits by people in white flowing middle eastern clothing.