Property Market Price Outlook

[Dod101]

Why do falling prices equal rising rents, (except on yield of course) Falling property prices ought to mean more people can afford to buy.

I don't have an explanation of why it happens. Its something I've noticed over 25 years investing in property. When the property sales smarket talls or goes into reverse, rents tend to rise. And vice versa. During the meteoric rise in prices starting in the late 90s, rents around here were broadly static for a decade.

You could well be right about the reasons.


Edit to add a missing word!

I am not trying to be clever. What you say is interesting but when prices fall it ought to produce an increased demand The housing market is not a 'normal' market, though. There is a FOMO effect I think. It would probably be helpful for Government of somebody to advise buyers of how markets actually work. I remember, when I bought my last house, a big step up valuewise from my previous one, I took advantage of a slump in the demand for North Sea oil and was happy to relieve a younger couple of their rather expensive house when they were forced sellers close to one Christmas, he having lost his job. I discovered afterwards that he of course had a very big mortgage and could not service it. I had access to cash and was thus effectively a cash buyer. That is how markets are supposed to work.

Dod

Well I’m alright Jack. It is nice that you were able to profit so well from the other man’s misfortune and unemployment.

What utter nonsense. What would you have had me do? Help him out with his mortgage? In fact I did well out of my buy and at the same time was able to help this couple out of their problem (a mortgage they could not service) I held that house for 19 years and when I sold it the price was about six times what I bought it for, although a lot of that would have been down to inflation I have no doubt. That is capitalism and why one of my neighbours runs a rather nice Bentley and a Range Rover for the wife. He is better off than me no doubt. I can only manage a Q5.

Dod

[CliffEdge]

Why do falling prices equal rising rents, (except on yield of course) Falling property prices ought to mean more people can afford to buy.

I don't have an explanation of why it happens. Its something I've noticed over 25 years investing in property. When the property sales smarket talls or goes into reverse, rents tend to rise. And vice versa. During the meteoric rise in prices starting in the late 90s, rents around here were broadly static for a decade.

You could well be right about the reasons.


Edit to add a missing word!

I am not trying to be clever. What you say is interesting but when prices fall it ought to produce an increased demand The housing market is not a 'normal' market, though. There is a FOMO effect I think. It would probably be helpful for Government of somebody to advise buyers of how markets actually work. I remember, when I bought my last house, a big step up valuewise from my previous one, I took advantage of a slump in the demand for North Sea oil and was happy to relieve a younger couple of their rather expensive house when they were forced sellers close to one Christmas, he having lost his job. I discovered afterwards that he of course had a very big mortgage and could not service it. I had access to cash and was thus effectively a cash buyer. That is how markets are supposed to work.

Dod

Well I’m alright Jack. It is nice that you were able to profit so well from the other man’s misfortune and unemployment.

What utter nonsense. What would you have had me do? Help him out with his mortgage? In fact I did well out of my buy and at the same time was able to help this couple out of their problem (a mortgage they could not service) I held that house for 19 years and when I sold it the price was about six times what I bought it for, although a lot of that would have been down to inflation I have no doubt. That is capitalism and why one of my neighbours runs a rather nice Bentley and a Range Rover for the wife. He is better off than me no doubt. I can only manage a Q5.

Dod

Q5 disgraceful machine, though not as disgusting as a Bentley or a Range Rover.

[absolutezero]

I think things are going to get quite sticky in the UK. There is a strong possibility that many companies, faced with increased wage demands and vastly increased energy bills are simply going to padlock the doors and call it a day. Then is is a case of what do folk do to pay their mortgages? Some will have locked in to low rates for the next year or two but have not factored in a loss of income from one (or both) wage earners. Thus, there is a chance of a repeat of the 90s when keys were handed back to the estate agent. It's happened before and can happen again.

"But but but house prices only ever go up. My house is my pension. You can't go wrong with pwoperdee."

[absolutezero]

There are lots of considerations when buying property that are of equal importance to the price paid......geo' location, area, type, features, facilities, condition, tenure, potential, ground rent, lease length etc etc. Buying the right property for the right price is still the goal for most.

Wrong. Price paid is the aggregate of all those decisions.
The house can be a dump, in a lousy area and have an outside toilet. Ask £10,000 for it and it will sell. Ask £300,000 for it and it won't.
The ONLY thing that matters is the price.

[CliffEdge]

But the resulting lack of rental property and increase in rents will result in much homelessness.

The point has been made elsewhere in the thread, but I feel the need to point out that the houses will remain in existence, in the roads and streets. One way or another, people will still live in them.

But what could happen is that the landlord wants out of doing long-term rentals, but doesn't want to sell. That happened with me in 2003. The decision not to sell worked out as we had 4 more years of rip-roaring house price appreciation. So what I did was effectively change the use of the housing units.

From that point on I only did short-term rentals. This was before Airbnb, but I would find people who wanted a place for, say 3 to 6 months. So yes, people were still living in them. But the result was that there were fewer homes available for long-term rental but no increase in the homes available for sale.

You see this a lot in desirable vacation areas, where the locals can't find affordable housing because so much of the housing stock is holiday lets or second homes.

So if landlords are deterred too much there could be a marked decrease in long-term rentals and an increase in short-term rentals and other changes of use.

I also let one flat commercially. A woman who imports high-end fashion from Italy wanted a home setting to store and display her clothing lines, and where clients could visit. She paid a market rent but nobody stayed or lived there.

It's happened in the seaside town where I live. I was chatting to a couple sitting by the door of the cafe the other day. I'd just been reading Rebus but needed to get home. They live just back from the front, near to a popular pub. All around them they've lost their neighbours, the houses have been bought up for rental and now become holiday lets. The nearby shop has just closed. A big building, double fronted, we think it will be converted to holiday apartments.
It's just not worth the hassle of providing long-term rentals for people unless you're a big business,

[Mike4]

I don't have an explanation of why it happens. Its something I've noticed over 25 years investing in property. When the property sales smarket talls or goes into reverse, rents tend to rise. And vice versa. During the meteoric rise in prices starting in the late 90s, rents around here were broadly static for a decade.

You could well be right about the reasons.


Edit to add a missing word!

I am not trying to be clever. What you say is interesting but when prices fall it ought to produce an increased demand The housing market is not a 'normal' market, though. There is a FOMO effect I think. It would probably be helpful for Government of somebody to advise buyers of how markets actually work. I remember, when I bought my last house, a big step up valuewise from my previous one, I took advantage of a slump in the demand for North Sea oil and was happy to relieve a younger couple of their rather expensive house when they were forced sellers close to one Christmas, he having lost his job. I discovered afterwards that he of course had a very big mortgage and could not service it. I had access to cash and was thus effectively a cash buyer. That is how markets are supposed to work.

Dod

Well I’m alright Jack. It is nice that you were able to profit so well from the other man’s misfortune and unemployment.

What utter nonsense. What would you have had me do? Help him out with his mortgage? In fact I did well out of my buy and at the same time was able to help this couple out of their problem (a mortgage they could not service) I held that house for 19 years and when I sold it the price was about six times what I bought it for, although a lot of that would have been down to inflation I have no doubt. That is capitalism and why one of my neighbours runs a rather nice Bentley and a Range Rover for the wife. He is better off than me no doubt. I can only manage a Q5.

Dod

Q5 disgraceful machine, though not as disgusting as a Bentley or a Range Rover.

And the best I can manage is a ten year old van!

I suppose I could just about manage a Matchbox Bentley like this if I saved up....

[scotview]

If I could add one other point which might affect future market valuations.

We are getting quotes for solar panels and storage batteries. We already have a BEV and zappi charger. So, this should give some energy security and hopefully payback. The battery will also provide energy security in the event of rolling power cuts, always the optimist !

We might also install a gas stove for cosmetic reasons but also to provide additional heating security.

A recent EPC survey rated out home as upper C but with solar it would be rated as mid B. Again this "should" make the property more attractive.

Do you think that energy related enhancements will in any way increase future property values or at least mitigate possible forthcoming price falls. Or will all property simply be lumped into one indiscriminate "basket" ?

[Mike4]

But the resulting lack of rental property and increase in rents will result in much homelessness.

The point has been made elsewhere in the thread, but I feel the need to point out that the houses will remain in existence, in the roads and streets. One way or another, people will still live in them.

But what could happen is that the landlord wants out of doing long-term rentals, but doesn't want to sell. That happened with me in 2003. The decision not to sell worked out as we had 4 more years of rip-roaring house price appreciation. So what I did was effectively change the use of the housing units.

From that point on I only did short-term rentals. This was before Airbnb, but I would find people who wanted a place for, say 3 to 6 months. So yes, people were still living in them. But the result was that there were fewer homes available for long-term rental but no increase in the homes available for sale.

You see this a lot in desirable vacation areas, where the locals can't find affordable housing because so much of the housing stock is holiday lets or second homes.

So if landlords are deterred too much there could be a marked decrease in long-term rentals and an increase in short-term rentals and other changes of use.

I also let one flat commercially. A woman who imports high-end fashion from Italy wanted a home setting to store and display her clothing lines, and where clients could visit. She paid a market rent but nobody stayed or lived there.

It's happened in the seaside town where I live. I was chatting to a couple sitting by the door of the cafe the other day. I'd just been reading Rebus but needed to get home. They live just back from the front, near to a popular pub. All around them they've lost their neighbours, the houses have been bought up for rental and now become holiday lets. The nearby shop has just closed. A big building, double fronted, we think it will be converted to holiday apartments.
It's just not worth the hassle of providing long-term rentals for people unless you're a big business,

It also happens in reverse.

Many years ago on holiday in Weymouth, we walked past a cute little terrace about 100 yards back from the seafront. It was 3pm and as it happened, the EA was nearby and they were free to show us around. We bought it on the spot and used it a few times for weekends away, but Weymouth was a long drive and we lapsed into rarely using it. So we put it on the rental market and a lovely old couple took it. They absolutely loved living there and we got on brilliantly, and they stayed there 15 years or so until both eventually died.

Then we sold it as it was only 1m above high tide level and what with sea levels rising due to global warming, getting rid before everyone realises seemed a Good Idea.

[Mike4]

It's just not worth the hassle of providing long-term rentals for people unless you're a big business,

What a load of ol' tosh.

I've been providing long term rentals for 25 years and its like a part time hobby, but the income shows its anything but a hobby. I earn more from the rentals nowadays than from working full time.

[Tara]

Why do falling prices equal rising rents, (except on yield of course) Falling property prices ought to mean more people can afford to buy.

I don't have an explanation of why it happens. Its something I've noticed over 25 years investing in property. When the property sales smarket talls or goes into reverse, rents tend to rise. And vice versa. During the meteoric rise in prices starting in the late 90s, rents around here were broadly static for a decade.

You could well be right about the reasons.


Edit to add a missing word!

I am not trying to be clever. What you say is interesting but when prices fall it ought to produce an increased demand The housing market is not a 'normal' market, though. There is a FOMO effect I think. It would probably be helpful for Government of somebody to advise buyers of how markets actually work. I remember, when I bought my last house, a big step up valuewise from my previous one, I took advantage of a slump in the demand for North Sea oil and was happy to relieve a younger couple of their rather expensive house when they were forced sellers close to one Christmas, he having lost his job. I discovered afterwards that he of course had a very big mortgage and could not service it. I had access to cash and was thus effectively a cash buyer. That is how markets are supposed to work.

Dod

Well I’m alright Jack. It is nice that you were able to profit so well from the other man’s misfortune and unemployment.

What utter nonsense. What would you have had me do? Help him out with his mortgage? In fact I did well out of my buy and at the same time was able to help this couple out of their problem (a mortgage they could not service) I held that house for 19 years and when I sold it the price was about six times what I bought it for, although a lot of that would have been down to inflation I have no doubt. That is capitalism and why one of my neighbours runs a rather nice Bentley and a Range Rover for the wife. He is better off than me no doubt. I can only manage a Q5.

Dod

So you obviously see housing as just another product to make money out of. Just like shares. But housing is not just like shares. Decent and affordable housing is a necessity for everyone in society. It should not be just reserved for the rich and fortunate, and for well off people like yourself.

And if you don’t understand this at an advanced age, then it is fairly hopeless trying to explain it to you now. Anyway, no need for you to worry about all those “less fortunate” in society who cannot afford to buy a house at 12x average earnings. The most important thing now is to maintain your constantly increasing wealth and your expensive Q5 car.

[Dod101]

I don't have an explanation of why it happens. Its something I've noticed over 25 years investing in property. When the property sales smarket talls or goes into reverse, rents tend to rise. And vice versa. During the meteoric rise in prices starting in the late 90s, rents around here were broadly static for a decade.

You could well be right about the reasons.


Edit to add a missing word!

I am not trying to be clever. What you say is interesting but when prices fall it ought to produce an increased demand The housing market is not a 'normal' market, though. There is a FOMO effect I think. It would probably be helpful for Government of somebody to advise buyers of how markets actually work. I remember, when I bought my last house, a big step up valuewise from my previous one, I took advantage of a slump in the demand for North Sea oil and was happy to relieve a younger couple of their rather expensive house when they were forced sellers close to one Christmas, he having lost his job. I discovered afterwards that he of course had a very big mortgage and could not service it. I had access to cash and was thus effectively a cash buyer. That is how markets are supposed to work.

Dod

Well I’m alright Jack. It is nice that you were able to profit so well from the other man’s misfortune and unemployment.

What utter nonsense. What would you have had me do? Help him out with his mortgage? In fact I did well out of my buy and at the same time was able to help this couple out of their problem (a mortgage they could not service) I held that house for 19 years and when I sold it the price was about six times what I bought it for, although a lot of that would have been down to inflation I have no doubt. That is capitalism and why one of my neighbours runs a rather nice Bentley and a Range Rover for the wife. He is better off than me no doubt. I can only manage a Q5.

Dod

So you obviously see housing as just another product to make money out of. Just like shares. But housing is not just like shares. Decent and affordable housing is a necessity for everyone in society. It should not be just reserved for the rich and fortunate, and for well off people like yourself.

And if you don’t understand this at an advanced age, then it is fairly hopeless trying to explain it to you now. Anyway, no need for you to worry about all those “less fortunate” in society who cannot afford to buy a house at 12x average earnings. The most important thing now is to maintain your constantly increasing wealth and your expensive Q5 car.

Since you know nothing about me other than what I have posted you are making a lot of assumptions, most of which are utter nonsense. The house I mention was my family home for all of the 19 years I held it. The fact that I made a large nominal profit from it was neither intended nor planned. SO i got off my behind at the age of 21 and did something with my life, but sadly life is seldom a smooth run and if I gave you my personal life story you might think differently. I know only too well about the other side of life (not that I am particularly wealthy in any sense of that term). You have no idea whether for instance I give to charity, have had significant personal misfortunes or not. Please reserve you silly comments to those that you know about.

Dod

[ReformedCharacter]

Decent and affordable housing is a necessity for everyone in society. It should not be just reserved for the rich and fortunate...

It might be more productive if you explained exactly how 'everyone in society' could get decent and affordable housing. I'm sure your proposals would be interesting.

RC

[Tara]

Decent and affordable housing is a necessity for everyone in society. It should not be just reserved for the rich and fortunate...

It might be more productive if you explained exactly how 'everyone in society' could get decent and affordable housing. I'm sure your proposals would be interesting.

RC

I can give you a few proposals that would certainly make housing more affordable for everyone in society.

1) No second home ownership allowed, or third or fourth etc.
2) CGT of up to 100% on any actual gains or unrealized gains from property.
3) Council tax banding overhauled to make properties pay % of value, increasing from less than 1% for lower cost homes homes to perhaps 10% as property value rises.
4) All new house building allowed on all green field sites.

How is that for starters? Housing would soon become more affordable. There will also be many other ways to solve the problem.

It is not difficult for any government to make housing more affordable for everyone in society.

[monabri]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

[richlist]

Decent and affordable housing is a necessity for everyone in society. It should not be just reserved for the rich and fortunate...

It might be more productive if you explained exactly how 'everyone in society' could get decent and affordable housing. I'm sure your proposals would be interesting.

RC

I can give you a few proposals that would certainly make housing more affordable for everyone in society.

1) No second home ownership allowed, or third or fourth etc.
2) CGT of up to 100% on any actual gains or unrealized gains from property.
3) Council tax banding overhauled to make properties pay % of value, increasing from less than 1% for lower cost homes homes to perhaps 10% as property value rises.
4) All new house building allowed on all green field sites.

How is that for starters? Housing would soon become more affordable. There will also be many other ways to solve the problem.

It is not difficult for any government to make housing more affordable for everyone in society.

I was under the impression that the private rental sector fulfilled an urgent housing need. There aren't many council homes available to rent since they were sold off at a discount. But if those private rented homes are not allowed it doesnt automatically follow that the people renting will buy them. There is already a shortage of rental property, by not allowing private landlord you will reduce rental stock further. You will create a much larger housing crisis than already exists. Many landlords have already decided that legislation is far to onerous for them and it's been reported this week that it the Gov' go ahead with their plans to abolish no fault evictions many more will sell up.

[Tara]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

But that is the problem. The acquisition of housing wealth over the last 20 or 30 years has done enormous harm to society as a whole and the younger generation in particular. A single person on average UK earnings could easily afford an average price house in the 1980s. But now it is impossible. If your idea of Capitalism means that a person on average earnings can no longer afford a decent home, then what use is it?

[monabri]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

But that is the problem. The acquisition of housing wealth over the last 20 or 30 years has done enormous harm to society as a whole and the younger generation in particular. A single person on average UK earnings could easily afford an average price house in the 1980s. But now it is impossible. If your idea of Capitalism means that a person on average earnings can no longer afford a decent home, then what use is it?

I graduated in 84 ( Science degree 2:1). My first job was with "British Aerospace" up North but I left for a better paid job near Bicester. I could not afford a house....my salary was insufficient to get a mortgage. My salary at the time was actually a couple of thousand higher than my father's. I clubbed together with another colleague and we took out a mortgage on a 50:50 basis ( cheaper than renting). Then house prices increased further! So, I'd refute the " easily afford an average price house in the 80s".

[CliffEdge]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

But that is the problem. The acquisition of housing wealth over the last 20 or 30 years has done enormous harm to society as a whole and the younger generation in particular. A single person on average UK earnings could easily afford an average price house in the 1980s. But now it is impossible. If your idea of Capitalism means that a person on average earnings can no longer afford a decent home, then what use is it?

Rubbish. A single person on average earnings could not ever easily afford an average price house. They would have to scrimp and scrape and save like we all did to buy a starter home or flat. Nowadays young people seem to feel entitled. I wonder why.
Your ideas are so wrong that I find it frightening that someone can be so misguided. What's worse is you are certainly not alone.

[Tara]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

But that is the problem. The acquisition of housing wealth over the last 20 or 30 years has done enormous harm to society as a whole and the younger generation in particular. A single person on average UK earnings could easily afford an average price house in the 1980s. But now it is impossible. If your idea of Capitalism means that a person on average earnings can no longer afford a decent home, then what use is it?

Rubbish. A single person on average earnings could not ever easily afford an average price house. They would have to scrimp and scrape and save like we all did to buy a starter home or flat. Nowadays young people seem to feel entitled. I wonder why.
Your ideas are so wrong that I find it frightening that someone can be so misguided. What's worse is you are certainly not alone.

Yes I am certainly not alone, and you will probably find that my views are shared by the majority of the UK public. Also probably shared by most Labour MPs and probably even most Conservative MPs.

House prices were about 3x average earnings in 1997, and they are about 12x average earnings now.

If you cannot see that there is a housing affordability crisis in the UK, and that UK house prices are absurdly overvalued, then you must be very uninformed.

https://conservativehome.com/2022/08/22 ... r-housing/

[monabri]

I'm afraid it's called Capitalism...some folk have more than others either by luck, by birth or by hard work...sometimes all three. As long as the wealth is acquired honestly and " does no harm " then one should be free to spend it as one choses.

But that is the problem. The acquisition of housing wealth over the last 20 or 30 years has done enormous harm to society as a whole and the younger generation in particular. A single person on average UK earnings could easily afford an average price house in the 1980s. But now it is impossible. If your idea of Capitalism means that a person on average earnings can no longer afford a decent home, then what use is it?

Rubbish. A single person on average earnings could not ever easily afford an average price house. They would have to scrimp and scrape and save like we all did to buy a starter home or flat. Nowadays young people seem to feel entitled. I wonder why.
Your ideas are so wrong that I find it frightening that someone can be so misguided. What's worse is you are certainly not alone.

Yes I am certainly not alone, and you will probably find that my views are shared by the majority of the UK public. Also probably shared by most Labour MPs and probably even most Conservative MPs.

House prices were about 3x average earnings in 1997, and they are about 12x average earnings now.

If you cannot see that there is a housing affordability crisis in the UK, and that UK house prices are absurdly overvalued, then you must be very uninformed.

https://conservativehome.com/2022/08/22 ... r-housing/

https://www.mirror.co.uk/news/uk-news/u ... ers-313276

"The average wage in 1997 was £16,500 a year, according to the Office for National Statistics.
In the same year the average house price was £75,762 - around five times people's salaries."