i am glad you commented this, I should have included it so i will pin the comment. One genuine question can people be evicted without the court processing it? I guess what I am asking is does the delay mean less repossessions and allow the home owner to remain in the home ?
No, the repossession process requires court involvement and an onerous fiduciary duty on any lender looking to enforce this right. Lenders are in the money business, not the property business (counterintuitively). Repossession is a last resort for all parties. The increase in repossession could be skewed from the covid ‘payment holiday’ which non payers would have taken advantage of, whether precipitated by covid or not. Impossible to tell so, as the original comment says, not a very reliable data point
@@bcvids999 thanks for this. So could it be implied that the lack of movement in court is another factor limiting supply as people cannot be evicted due to the delays?
In spite of how everyone is frightened and calling the crash, there is already an excessive amount of demand waiting to absorb it, which is another reason it's less likely to happen that way. This forecast was not made in 2008, at least not by the general public, as I will explain below. The ownership rate peaked in 2004, according to the other comment. We reached a peak in the second quarter of 2020 and are currently at the median level. From 2008 to 2012, it fell by 3%, and in the second quarter of 2020, it dropped from 68 to 65.
Because they are used to bull markets, most people find it difficult to handle a decline, but if you know where to search and how to get around, you can make a sizable profit. It depends on how you plan to enter and leave.
Given that we are not accustomed to such uncertain markets, the fact that the US stock market has been on its longest bull run ever makes the widespread anxiety and excitement comprehensible. There are opportunities if you know where to go, as you noted that it wasn't difficult for me to earn more than $780k in the previous 10 months. Since I was aware that I would need a reliable and strong plan to get through these tough times, I engaged a portfolio advisor.
@@danieljackson87 My portfolio has been in the gutter for the entire year, so I started researching new ways to profit in the market, but everything I tried just seemed to miss the mark. Please let us know the name of your financial advisor.
@@andrewlogan7737 It was run by Julie Anne Hoover, who I learned about and got in touch with thanks to a CNBC interview. Since then, it has served as the point of entry and departure for the games we have emphasized. A search on the internet can be done if tracking is necessary.
I don’t have a crystal ball to know what will happen in the future with house prices but as my Dad (who was banker) always would say to me about property: “For as long as there is demand for houses (less being built than bought) The average house price will never go below what the average person can just about afford” - in other words, unless we see a big reduction on wages and increases to interest rates (which has happened already). The increase in interest rates will certainly affect what people can afford, along with the temporary stamp duty relief ending therefore it’s very reasonable to assume that house prices will reduce and as you put it, it’s a correction. I don’t think we’ll see huge crashes but the energy prices are definitely not helping with affordability.
I totally agree. Since 20 years ago I've not seen prices drop( depending where you live) and i really believe they won't drop much at all, mainly through supply and demand.
Inflation hit people a lot harder than a crashing stock or housing market as it directly affects people's cost of living, that people immediately feel the impact of its not surprising negative. Market sentiment is so high now. We really need help to survive in this economy. The fin market have underperformed the US economy as fear of inflation hammers the price stocks and bond. My portfolio of $250k is down to $192k any recommendations to scale up my returns during this crash will be highly appreciated.
The elements around the stock market generate tons of useful and useful info if you want to make money you need to understand the fundamentals and keep your mind steady by carefully picking apart recc and options of others on business that you want to or are Invested in.
We have been on a recession since the beginning of 2022, but big media and governments around the world didn't want to admit it. We need to be wise and use our brains. Knowledge is power and I'd like all the family to be powerful!! Just purchased some AMA550X with the Guidance of my coach.
@@Mariegot7770 Actually I've been thinking of reaching a portfolio-adviser, my $150k stocks been loosing everything it gained since 2020 who is your coach?
@@simeonebarret6716 Sure, not sure if I'm permitted to mention this on here but conduct a Search on “Elizabeth Ernst David" she's been in the news when she revived so many company in 2019.
Now is a good time to review your financial plan with your Financial Analyst. If you don’t have a plan, take the time to establish one. Determine whether there are opportunities to rebalance your portfolio to more appropriately reflect your investment objectives, your risk tolerance level, and the current market environment.
The problem with lowering interest rates this time round is that we have inflation. Printing money isn't so easy now. Interestingly in London, since I bought my property in 2014 it has (on average) not really moved. It's in the countryside / non-urban where it shot up post pandemic.
I would agree with Damien's prediction of 10-15% falls if it were only for rising interest rates. But he doesn't talk about the effects of energy, fuel and food inflation and the recession, which is why I think that 15-20% "correction" from the over stimulation of the market during the pandemic, PLUS a 15-20% fall from the effects of inflation and recession and interest rates.
Here is a theory, buying a house when interest rates are high resulting in lower prices is the best time to buy. My logic behind this is that you make your money when you buy the house and if interest rates are high, then there is a good chance that you will be paying a lower rate in the future when you remortgage. Effectively you dont always pay the same rate and when I dropped from 3.5% to 1.5% it was a nice little bonus. Also, the amount you owe on your house reduces over time, however the amount you get paid increases, even if that is only to keep track of inflation. Maybe I am talking a load of rubbish. I got lucky, bought a house in Altrincham 6 years ago and seen it go to the moon in value. Personally I think the 1-1.5% interest rates will be talked about in a similar way to my parents talk about the 15% interest rates they faced back back in the day. I dont know what the future holds, but I have a 12 month emergency fun and I put £200 a month extra into my standard stocks and shares isa for my 6 month old daughter when she comes to buy a house in the future, because I think she is going to need all the help she can get.
Well done for being responsible financially and your daughter will definitely be ahead of everyone else if you continue with £200 a month. My family was quite poor so could only provide the minimum £10 a month. I ended up taking it out recently (it took years cause NatWest customer service is non-existent) I got £3,200 and that’s after a pandemic and a dip in the market too. Looking to reinvest this money during this period. If the market continues similar to 2003+ your daughter should be on £60,000-£70,000 in 18 years. That’s a great amount. Whilst £3000 isn’t much (I’ve saved up more than double working part time for the last year 😭) I’m still grateful.
My auntie has house in Altrincham as well so can confirm. 3 bed detached that was valued at £480k in 2019 but then was revalued at £710k at the peak in 2021! That’s over £100k a year just in appreciation. 🤯 Insane.
Good in theory but the issue is with the banks requiring your income to match the house price including the interest rates, this means that you may have been able to afford a 200k house at 2.9% interest on your salary but you won't necessarily be able to afford a house at 170k at 7% interest. That's the main issue. Even if you CAN afford it, the banks are turning people away because they think they're "too high risk". So while in theory it seems "better" it isn't doable.
The problem is the rich are getting even richer. So the money you give your daughter will be minuscule compared to the money they give their children. With the housing almost certainly still constrained. Your money & their money will be chasing the same assets. - unfortunately this is a situation you can never compete in successfully. 🙏🏻 Accumulating wealth at the top end is going to make a lot of problems in the future. It’s already starting. It’s a major cause of inflation now I think. They must be taxed, May my tongue turn black for saying it 🤣
Great video again, love the insight - worth noting as well the story that broke yesterday about a re-introduction of interest only mortgages for owner occupiers. This will mean fewer people will need to sell when it comes to remortgage, further stifling supply.
Yeah, stifling supply REALLY helps when you have payments and no buyers and no renters ready to pay double or triple rent due to high interest rates. But hey, it's recession, so next month central bank will DEFINITELY drop interest rates into negative 15 percent to prop up the economy to the moon, right? Because there was never a period in history where recession developed into a depression, let alone the Great Depression, right? It just CANNOT BE! Right? And prior to 1999 the world did not exist at all, right? Relax and enjoy the show, folks. I went through this at least twice already, now it's... Everyone's turn! Global economy downturn!
Spot on fella, exactly my thinking and well done for going against the crowd, the reasons and rationale you applied are sound IMO. Lets wait and see...1 new subscriber earned here. Carry on not being sheep to the YT finance crowd.
If people expect a crash, there will be low-ball offers, sellers will be spooked, and this creates a feed-back loop. It will be only in pockets but it will happen.
If the government built there house with low profit margins those 340,000 homes would make 14 billion a year, the beauty of it being you can use the rest of the money to invest in 340,000 homes the next year and the year after. This would cause economic growth, they could have them located on brownfield sites rejuvenating inner city areas and the helping the high street. But the issue is the government is Neo-liberal which means it cannot impede businesses ability even when they are solving a market failure, as it's possible developers might build those houses even though we know they can't and won't.
A healthy correction would mean property is 4x income, which is quite a way off. There's also the consideration that a 30% nominal fall could be a lot more in real terms if you factor in inflation.
Watched this video as soon as you uploaded it but I couldn't comment to let you know that you're an asset(no pun intended) to the community and you put out so much quality, so had to come back to comment
See if this helps.... If you think of your house as a home, where you live, then the property price is almost irrelevant. I say' almost' because if you find yourself in negative equity and have to move, then this will be a problem. Fortunately, there are very few people in this situation, compared with the 1980's. On the other side, if your house has doubled in price you can't 'spend' that increase or ask for the extra value to be transferred to your bank account. It might give you a warm fuzzy feeling at night, but that is all. Property value is largely illusionary, particularly if you see a house as a home, not an investment.
Successive gov'ts have got rid of council housing, allowing wholesale cheap-priced sell off, tax incentives to buy to let investors, upcapped mortgage lending which inflated prices with too much demand and not enough supply, and there isn't any new council-owned social housing as far as I know? The Tory's won't build or fund social housing, who will?
Think you are spot on with this analysis :) Most of the downside risks are exaggerated, reality is people need homes and with the current demographic - supply mix we will see the market supported. Also agree a 10-25% correction would be expected and normal under these circumstances. But likely in 1-2 years rates will drop again and the market will begin to boom again as credit loosens up. Houses are the biggest asset for most individuals. The government is forced to support this or risk bankrupting the entire country...
@@DamienTalksMoney what do you think of Maverick of Wallstreet? He talks a big game, but in the time I've watched him his analysis was able cash in the cheques his big mouth had written...
Anything can crash, housing prices don't only go up. When we are talking about 20 or 30 year mortgages the policies of the current Government don't matter, mass housing construction from the public sector could be instigated in a year, houses would be built in 5 years in enough quantity to start bringing prices down and completely destroy the "investment" of owning a house (or multiple)
@@alangordon3283 every house is, you are investing extra money in it compared to renting. The alternative being living somewhere else and investing the difference in an alternative, whether that be stocks, gold, art, crypto or beanie babies...Obviously some things are better than others.
@@mramg6038 It's actually the planning permission to build on that land that has the value, not the land itself. Land with no scope for planning sells for as little as £3000 per acre...
The contrarian view is that property will crash 30% and I think when this cost of living crises runs its course property will have fallen 30%. I think it's already proberly down 10%. Inflation is 11% and doesn't look to be coming down anytime soon, base rates will rise. Base rates should actually be 12% now but due to public and private debt that will never happen but 5% base rates seem possible. UK needs a massive social house building scheme to address the supply/demand issue. Won't happen with this government, look at the big donors to the party and join the dots. Prices are about 50% overvalued but due to supply/demand factors property prices are kept high. However, affordability will likely see prices come down significantly. Difficult to put an exact number on the falls but 30% seems very possible. Good video bud 👍
@@bcvids999 it means based on average wages (price to income ratios) prices should be a lot lower than they are but lack of supply has inflated house prices over the decade.
@@user-gz6tx6yp3v the market crashed in the 90s, I remember that well. This recession will be a big one, things are only just starting to bite, wait till 2023. Just my view.
How do you explain 3 consecutive months of price drops insisting l including the November drop which is the biggest since 2009? Remember that the drops Reigate to activity 3-4 months before they are reported, so there mini budget debacle was not a cause. The UK has been in a sustained food, energy and mortgage interest crisis which has led to £400ish drop in disposable income, per month. The effects of interest rates and energy is yet to properly filter through as winter needs to hit and people need to roll of their 1% rates.
I hope you are right, but I do think there is too much downward pressure on house prices right now and I expect a slow slide in house prices ( I think the word crash is extreme). However, over time.. house prices only go one way, and that way is up regardless. We will know more come may/June as the land registry and current graphs won't reflect the true trajectories just yet.
There slowing down due to materials capping their profit. They know that due to high interest and stamp duty have made it harder to sell the house that are built
UK house prices are subject to significant regional variation in terms of demand. London for example is more heavily influenced by foreign investors. There isn't one homogenous 'property market'. Prices didn't 'crash' after 2007 so I wouldn't hold my breath this time around.
Without question prices will drop how far and how long it will affect the property market we are in uncharted territory. There is many mortgage holder have overstretched themselves in the last 15 years. But with any negative information passed through into the media can create a bigger problem in the long term. This is where I believe any negative information will be suppressed and artificially downgraded, just like are inflation problem. There is many mortgage advice and economists stating that there will be a soft or moderate land and it will only last 1/2 years. This will be fake news at its best and will artificially stimulating the housing bubble. Unfortunately there will be never enough house building to supply demand in the UK due not enough certified tradesmen and materials rocketing in price. I like your articulated view in your video 👍 3:07
The idea that developers “hoard” land is a common misconception. They need to have land with planning permission ready to go to move builders from one completed site to the next. It can take ages to get planning permission with no guarantee of success so they need to plan ahead and bet on multiple sites. It’s also true that some planning constraints make a site unprofitable if building costs go up or house prices come down, so obviously they have to wait - can’t force them to work at a loss. At the end of the day house builders make money selling houses not sitting on land. “Land banks” are a necessary function of planning ahead and sometimes a symptom of economic trouble - they’re not a way to profit in their own right. If you want more houses the government has to change the system so it proactively allocates land, buys it, designs the buildings, builds the infrastructure, then sells the parcels to developers. That takes the burden of risk away from the developers.
..a tory government beholden to a million mortgage debt junkies who've got themselves into way too much debt to buy property way over priced....but hey ...they're good for it. They signed their mortgage agreement in the knowledge that they're good for payments for the next 20 yrs ...also...apparently ...they've been stress tested in order to get the free mortgage cash in the first place. Mortgage Interest rates rise to a modest 6pc or so and it turns out they ain't good for it at all - and the tory home price pumping government is all too keen to bail the pathetic wasters out by allowing them to pay interest only. No standing on their own two feet ,no taking the consequences for their actions- can't do that else they'd be forced to sell up and bring homes prices crashing down....and can't do that ...not in the uk ...cos homes prices are only allowed to go up. Any respite for renters who landlord has pushed their rents up ?
Buy to let was positively encouraged years ago with mortgage tax break incentives, since removed. With all the cost increases and maintenance etc costs on top it surely isn't worth the hassle any more and hopefully a lot of houses will come back on the market for people to own and live in. Councils need to return to building/owning council houses to supply the needs of low income households.
Fantastic analysis ,I totally agree ,landlord of 10 properties for over 15yrs ,in that epc at "C" in 2025 another angle of the equation to factor in as well, when I started normal % mortgage btl was at 4 to4.5% ,average since ww2 5% ,and landlords made that work
Anecdotally I know so many people that are 'waiting' for things to drop before buying/investing. I'm one of them lol . I'm already involved in property and know lots of people that are. I just can't see a big crash. 10% maybe, a few areas maybe more but on the whole, no.
I'm glad that despite your optimism you still admitted a 10/15% correction is likely. Few points to consider 1) many property developers can't sit on land as investors expect their return in a certain time frame 2) if developers sit on projects waiting for better times that will result in unemployment = mortgage arrears = house repossessions. 3) wages to house price ratio is the same as before the financial crash 4) inflation doesn't disappear over night, anyone remortgaging in the next 18 months will likely be at a minimum doubling their payments, has that been stress tested?
Hi Pearse, Thank you for this! I worked for a developer and while I know there is pressure from investors. Long stop dates are normally set 2/3 years after the planned completion date so that can give you 5 or so years of wiggle room contractually before clients can request funds back. I believe stress testing requirements assume rates of 4/6% when assessing affordability so yes I do believe mortgage companies will have done this. This video was just one side of the argument I have presented the more bearish perspective in another video.
Top video Damo, as ever. I suspect your prediction will turn out to be correct, and in actual fact we’re probably already there given the recent falls, factored in with inflation which probably gives us a relative 10%+ decline. What comes next is the realisation of that decline, the panic generated by the news cycles (even though it’s technically already happened), and another subsequent fall. A relative 20% decline is very likely IMO.
Balanced argument in the conclusion which differs somewhat to the headline for the video. My background, property renovation and worked on a dealing room for years. Overall good video, learned a lot from the supply / demand details in depth. Also the Manchester property revival through currency fall through brexit - but not sure the extent of the benefit from this precisely but yes it is a tangible positive for property prices. Wasn’t sure about the fixed rate for 5 years - it is common there’s a mismatch between bank fixed rates and base rates so people on floating would get hit by a hike and that doesn’t indicate the future of the base rate at all. With U.K. inflation one of the highest in developed nations it looks like base rate might be raised further or held at current levels which may impede foreign investment due to pound strength. Agree with the conclusion but wanted to make sure this was clarified. I think the key indicator in the short term is inflation and monetary management / yields. Long term supply and demand. If CPI inflation calms down, we will see a rise in property prices. Otherwise not so. I very much look forward to the next video! Also the other argument about recession = print money it will be fine, doesn’t actually work like that anymore. Fingers crossed that it does though
Damien, remember that housing usually removes natural capital - green space relieves flooding/drought, higher agricultural output (pollinators), less soil erosion, better water quaility, micro climate regulation, etc. Building everywhere means we all pay more in the end
The other problem on the supply side is we don't currently have a single builder in the UK able to provide a house of a sensible quality. Only a crazy or brave person would buy a new build.
True. I've commented on another post that a family member avoided buying a shoddy 2 year old Persimmon property recently due to the INDEPENDENT surveyor showed massive problems with build quality and insulation which meant the walls and more would have to be taken down/sorted to put the house right. The estate agent tried to get my family member to have a survey done by his 'mate surveyor', no doubt to get the house sale effected by finding little fault. Plus, our council Worcester City Cpuncil is NOT adopting roads on new estates leaving it incumbent on the new residents to form a management committee to in some/all? cases complete the roads and or be responsible for future maintenance costs. What builders are Persimmon etc using to get such shoddy results?? Buyer beware!
As someone who is in the infustry, the problem is not in house shortages, the problem is the new builds are absolute sh!t, I’d rather rent than buy a sh!thole the size of a train cart… the problem is the houses being built are simply no good…
@@DamienTalksMoney exactly, and for what they are and the expense on it, it is just not worth it… better make less but better. Less is more! Hit me up if you’re still in property development and need design and build services
Our local council isn't adopting new roads where houses are being built. They expect the residents to form a management committee and pay for future costs (and maybe even finishing the road off not sure?) themselves. What an absolute shower.
I’m a bricklayer and build new homes and they have stopped building on my site got work till Xmas then I’m being laid off haven’t sold a house for 2 months
In the south east where I live there are thousands upon thousands of houses being built - can certainly see some small fall from here but long term the only way is up
We only need all the extra houses on a temporary basis. With the population crashing in our European neighbours. How long is it going to be before the same thing happened in the UK. What we need is more prefabricatedHouses designed to last 50 years. Easy to construct an easy to remove. Otherwise otherwise what will we do with all the extra houses in 50 years time.
Interesting point this, one thing I did notice is the expectation that population growth will flatten off in the U.K. eventually. So you might not be wrong
We need environmentally friendly well insulated housing whether that is old or new. 228K empty houses need bringing back into use. Lots to be done. We just need to vote in a govt to do it.
@@musicloverUK Check out the truth about population.What we could do is give a temporary use on greenfield sites. Maybe 50 years. Then the buildings can be removed after that as we probably will no longer need them. Houses built in factories like boxable. No foundations required.
Thanks, another informative and funny video. I hope house prices eventually halve. But they won't as the major parties aren't interested in doing anything. So I'm voting Green in the vague hope they will bring about affordable, well insulated new housing utilising solar panels, batteries and air source heat pumps and subsidise EVs and making older houses more insulated and cheaper to run. Our modest 'modern' 3 bed house we bought in 1995 for £80k is now worth £300k (more actually as we've improved/extended it). Stupid money. Now our kids can't afford to buy their own.
I don't think the scope of the question is wide enough. Perhaps we should be asking what does the economy and society get for a Housing Market that is being deliberately rigged to maintain a housing bubble? Who are the winners and who are the losers in an economy where the purchasing value of telephone number, ever inflating house prices exclude first time buyers from the market because of affordability, together with the deflating value of sterling? Why are ordinary British people going to be excluded over time from the British housing market because of wealthy people competing with each other to snap up the only safe most people truly understand? After all, the era of cheap money is over, and even Boris Johnson envisaged that not even lifetime mortgages would cover the value of a home, and intergenerational mortgages were just over the horizon. Is that a good thing, when in real terms the growth in earnings is always trending down?
Home prices are modestly dropping at 1-2% per month. This however is not a "crash." Considering home prices doubled between 2020-2022, they will continue to drop but nothing like 2008. Somewhere in the middle of the Ramsey camp vs the doom and gloomers. Maybe a 25% drop from the peak bubble prices. This scenario could play out differently though if many people start loosing jobs and inflation doesnt significantly drop soon.
For a different take on the supply side arguments you should check out the economist Ian Mulheirn's work. His view is that the UK has a surplus of housing, and there is no shortage of supply - with the story of a lack of housing largely based on faulty projections by DCLG. His paper 'Tackling the UK Housing Crisis: Is Supply the Answer?' is worth a read.
It’s completely dependent on the economy. They’ve done all they can in the way of stimulus and money printing. To the point of triggering high inflation. There’s literally nothing the government or banks can do now. Any more borrowing or money printing would be disastrous as the Truss budget showed. The demand will drop if the economy continues to tank.
To the best of my knowledge around 50% of homebuyers are also first time buyers who are hit hardest with the interest rate hike. They're usually younger so at the bottom of their career ladder, ergo earn less, which means less money landed to them. And with current interest rates many wouldn't be able to afford the monthly payments anyhow. 50% of the market is a huge drop in demand. I'd also ad that from 2025 one won't be allowed to let a house that has a lower EPC rating than C. This'll cause a sellout of older properties in the near future in my opinion as many landlords won't swallow the cost of the necessary upgrades so this will increase supply. But I agree with you that we won't see a crash like the 2008 one was and this is going to be more of a price correction.
You can't really drive up value you can only allow prices to rise against earnings of the buyers, once the delta is realised you have to see a fall in price if its not supported. Low interest rates was the support.
The most important argument you are missing mate is factoring in a very long recession which will lead to a big spike in unemployment. That is when the real fun starts.. The current employment scenario is the best we will have for next decade or so.. Unemployment, higher rates and unaffordable house prices, we have all ingredients in place for a crash.. The only variable for me is to see what kind of Government and central bank intervention we will have..
Well they’re certainly falling - I’m looking at an apartment at the moment which is on for £210,000. An identical apartment in the same building last summer would have been marketed for £260,000. I still think they may even be some better bargains later this year.
The "£800 a month mortgage... already paying £1500 pm rent" analogy is completely meaningless. A fresh £800 mortgage equates to about £138k at 5% ... and no £138k property in the land would rent out for ANYTHING LIKE £1500pm.
Yep. This the the thing the "I pay £250000pm rent but the bank won't give me a £2.50pm mortgage." crowd always miss. Yeah they will, they just want some equity first to reduce risk and a cheeky look at your spending habits. Then they will stress yest you. And if you can't save for a deposit whilst paying rent (like we did) then how are you going to save for repairs whilst paying a mortgage? 🤡
There is only one truly safe asset in the world right now. U.K. housing. - both parties have vastly underfunded house building for 40 years. It started with Thatcher’s sell of, of council houses. She stated that they produce labour voters. So she tried to make them disappear. - it worked. Now with money in banks giving no interest ( or not enough by far ) people buy houses. Thus further constraining demand. The population is growing in the U.K. with one of the worst urban overcrowding’s of any European country. The government have made laws for landlords too for years. Giving protections, no fault evictions etc. There is way more but it all adds up to a demand so deep that no recession will touch the sides. Even if it’s a 5 year recession. - put your money into housing - London, Edinburgh, Manchester etc… "safe as houses" 👍🏻 ignore the fools that don’t seem to understand the market and the reasons for it. - good video.
I think there will be some strong regional trends we will see in the next few months, I don't think it's one answer for the whole of the UK. Did London not continue to rise or at least sustain during the last crash?
In the beginning of the video Damien mis-uses term "Demand" (e.g. due to net immigration) while it's actually a classic problem in economics of unlimited wants and limited resources. The reality is - these "wants" for a living space are not backed by tenant'/owner' purchasing power (although the issue is partially covered later on via FX depreciation {international capital mobility} and/or mortgage rates). It would also be great to see clearer distinction between nominal and real terms. While at inflation (or a bit closer to context - wage/income growth) of say 15% in nominal terms there might be an increase (for instance 5%) at the same time in real terms we might see a drop (of roughly 10%) But after all property aren't part of consumer prices anyways and as was already covered - other components are also eating up disposable income pie.
Amazing video and thank you for breaking it down!! Despite the economic downturn, I'm so happy 😊I have been earning $ 60,000 returns from my $7,000 investment every 12days.
She is also my personal trader, crypto analyst and account manager. With an initial invested capital of $8000, it yielded returns of over $22000 within two weeks of trading. I was really impressed by the profit Actualized.
It may not go down in value. The rub is, no one will be able to afford it either. That means it is a bad investment if you cannot raise money on an asset that won't sell. A bit like owning a million dollar note that is worthless. It's all very well talking the market up on UA-cam but the reality is property has been overpriced for at least the last two decades if not longer. You can put the prices up all you like, but that doesn't make it a good asset to have if you can't sell it. Same for rents. When people can't afford the rents and landlords can't dispose of their properties that's when the whole house of cards will come tumbling down. I can hear the wailing and the gnashing of teeth as I write.
I think it's sad that there are so many people living alone for whatever reason, divorce, bereavement, etc. How can they afford to, too? We are mostly social beings and should live in company. Perhaps the cost of living crisis will bring more people together, singletons letting out a room of their house, like I did when I was single. I hope when I am old I am not on my own but will make every effort to avoid this if I am bereaved first.
Absolute Bull locks in UK. Gunwharf Quays Portsmouth a plush apartment that sold for £500,00 in 2008 that are now valued at under £400,000. From the top that is a 40% drop and that is what every house should now be reduced by. When the mortgage is 40% more then every house must be 40% less. It is a fact here and houses up for sale sold for more in 2007 and 8 than the asking price today. Everyone better be honest or they will be sued.
🇬🇧 housing market will never crash like how the 🇺🇸 market did or does as we don’t have enough homes on this island.. we are trying to play catch up each year but its getting more and more out of hand.
Inflation in 12-18 months time could be substantially reduced given it's a 12 month rolling metric. Most of the inflation of the last year has arguably been caused by 'one off' events, so it's not expected to be permanent.
@@JansonSmith Exactly this. Inflation will start to fall sharply in March-April because inflation is, as you said, a 12 month rolling metric. Politicians and Central bankers will pat themselves on the back for doing absolutely nothing. Prices will remain high but the metric will show that inflation has fallen so central banks will begin to drop rates again in order to prop up property and equity markets again.
A broad review which is useful. However - I think there's a massive elephant in the room here. And that is interest rates. You say that we should expect to have interest rates go down to help stimulate growth - that is correct in theory. However what's also correct in theory is that interest rates need to track/be above inflation rate. Current base rate is completely ineffective. So I agree they will come down but from what peak? Only six months ago the all knowing BoE said inflation was transitory. Which of course it wasn't. Now we hear that we need to use interest rates to tame inflation. The problem is we are simply not using interest rates - not yet anyway. Wake me up when rates are above inflation basically. Also "healthy correction" as you refer to is not the salary to value ratios we saw even just before COVID. There is nothing healthy about that situation. Any healthy market does not require help to buy/other sham interventions etc Post GFC we have had quite a crazy economic situation of high QE and basement rates...
A well argued thesis, well presented as always. Correction of 10-15 makes sense with a slow recovery in 2024. Selling price realism reins in asking prices and eventual realised values.
There are a few problems with your logic. 1) Immigration is driven by opporturnuties/jobs so an uptick in unemployment and these new households may be gone, 2) if you can't pay your rent... you will not, 3) I know a few people that can't pay their mortgages at higher rates as they weren't stress tested at the upcoming interest rates, 4) during the pandemic there was plenty of money, let's see what happens once all of that is gone and 5) there is plenty of speculation at the high end property market and what these investors will do is anyone guess.
Couldnt find anything wrong with Damien's logic?? No one has a crystal ball, he is looking at the likely near future without saying he is right or knows it all. He has put another video out as he said looking at another scenario. Leaving that aside, hopefully buy to let will become unsustainable and a lot of houses come back on to the market and bring prices down. Along with more affordable, well insulated well built environmentally friendly social housing to provide for those on lower incomes. Yeah some hope!
Yes I'd love to retire and buy a cheaper property in Spain to live a healthier end of life, speak Spanish, enjoy the local culture and cuisine, however the sh!tshow that is Brexit has stopped any average person doing that unless they have a minimum €2,000 monthly income (with any extra householders having €500+ income) . So thank you little Englanders and the f@ckwits who couldn't be arsed to get off their sofas and vote, the 2% majority of voters got their zenophobic way. Shame that they have helped the UK become a worse place to live. The fishing waters which they so desperately wanted to possess will be empty of life after we finish polluting the seas anyway 🤷♀️. Rant over. Saludos
Your missing something , the burden on Landlords and partucularly overseas owners of property due to the new legistlation pertaining to overseas entities is going to lead to huge liquidations by these owners of uk property i believe capital flight from uk real estate that can easily be taxed or have restrictive covenants put on it will be massive I am an overseas entrepreneur who this years exited all my property next year there will be a stampede to exit prices will be pummeled so i think your wrong .
@@DJWeiWei They are providing housing that is not being provided adequately by the government , there will now be a huge housing crisis with rising rents due ro lack of private rental property
This supply shortage of houses in the U.K. is such full of rubbish there’s 5 million more homes than the number of families that live in them. The demand is so high because investors and non savers have a opportunity to buy when in the past they didn’t.
Hi mate, I made a video around 4 months ago where I said that I didn’t think the platform was safe anymore and I felt people should take their money off. I have linked it below incase you missed it at the time. I hope you didn’t have much money on the platform mate. ua-cam.com/video/m_CvMh_v1wM/v-deo.html
@@DamienTalksMoney thanks mate I didn't have anything on it I just work in payments and keep an eye on defi... And you always have good insights on it so was curious to get your take!
House prices will fall not as a sudden crash but incrementally due to inflation, interest rates and lower incomes. The market is propped up by government and large scale property investors. The government won't have the ability to keep doing this as the fiscal situation worsens and the return for property investors is reduced as people can only afford so much due to higher living costs and lower incomes.
This is a very good video. Glad you pointed out the stress tests. I have clients coming out of 5 year fixeds saying they can't afford the new rates. I point out their income has already been stress tested on rates higher and looking at their bank statements, they don't need those 2 takeaways a week and a Costa coffee every day on their walk to work...
I think the stress testing practices in your industry will ultimately be the thing that saves the housing market from a real mess! It is nice to see that we did learn from 07/08 and have maintained some good practices since then. Really appreciate your insight mate and thumbs up considering your professional back ground
It's just a shift in mentality. We've been at these rates before, quite a few times. These are normal rates. People got too used to having low rates and surplus cash for luxurious things. Things are back to normal now, so people do have to spend less. Something I ask the majority of my clients is to go through at least 1 month bank statement, preferably 3 and total up how much they spend on Supermarket Food, Takeaways, Days Out, other non essential items like Amazon purchases, Costa/Starbucks etc. People say, "We only spend £400 on food a month" and you look at them, family of 4, Nespresso machine on the side, takeaway boxes hanging out the bin. You look at their bank statements and it's triple that, sometimes quadruple. People live paycheck to paycheck, being frivolous, hardly anyone saves because "we can't afford to save". If you're in a position to get/have a mortgage, I guarantee you I'll find surplus cash to save. It's all about financial education, people trying to keep up with the Jones. There's a town near me, a posh area, lovely big houses, flash cars, everything else to match. Most people living here are keeping up with the Jones', they're putting their champagne lunch on credit cards, they've loans coming out of every orifice. I just want to bash all their heads together. Anyway, quite a rant for a Saturday morning. It's supposed to be my day off. I'm going to go back to bed and try and get out the correct side.
@@buytolet-landlords Sounds to me like you got out on the right side lad! I know plenty of people like you say who on the face of it seem to be doing very well but are a job loss away from ruin. Low rates and the cheap debt that gives you has allowed people to build up quite the lifestyles. When i was a child a takeaway was a once in a month thing... A real treat. I know people now who barely cook and order every meal
Re the repossession claims. The court system in the UK is years behind. So the data isn't that valuable.
i am glad you commented this, I should have included it so i will pin the comment.
One genuine question can people be evicted without the court processing it? I guess what I am asking is does the delay mean less repossessions and allow the home owner to remain in the home ?
Good point!
No, the repossession process requires court involvement and an onerous fiduciary duty on any lender looking to enforce this right. Lenders are in the money business, not the property business (counterintuitively). Repossession is a last resort for all parties. The increase in repossession could be skewed from the covid ‘payment holiday’ which non payers would have taken advantage of, whether precipitated by covid or not. Impossible to tell so, as the original comment says, not a very reliable data point
Repurposing high streets shuttered shops up and down the country will go some ways to help supply.
@@bcvids999 thanks for this. So could it be implied that the lack of movement in court is another factor limiting supply as people cannot be evicted due to the delays?
In spite of how everyone is frightened and calling the crash, there is already an excessive amount of demand waiting to absorb it, which is another reason it's less likely to happen that way. This forecast was not made in 2008, at least not by the general public, as I will explain below. The ownership rate peaked in 2004, according to the other comment. We reached a peak in the second quarter of 2020 and are currently at the median level. From 2008 to 2012, it fell by 3%, and in the second quarter of 2020, it dropped from 68 to 65.
Because they are used to bull markets, most people find it difficult to handle a decline, but if you know where to search and how to get around, you can make a sizable profit. It depends on how you plan to enter and leave.
Given that we are not accustomed to such uncertain markets, the fact that the US stock market has been on its longest bull run ever makes the widespread anxiety and excitement comprehensible. There are opportunities if you know where to go, as you noted that it wasn't difficult for me to earn more than $780k in the previous 10 months. Since I was aware that I would need a reliable and strong plan to get through these tough times, I engaged a portfolio advisor.
@@danieljackson87 My portfolio has been in the gutter for the entire year, so I started researching new ways to profit in the market, but everything I tried just seemed to miss the mark. Please let us know the name of your financial advisor.
@@andrewlogan7737 It was run by Julie Anne Hoover, who I learned about and got in touch with thanks to a CNBC interview. Since then, it has served as the point of entry and departure for the games we have emphasized. A search on the internet can be done if tracking is necessary.
the quality on these videos has seriously ramped up, insane to see!
100k coming close mate, light work
Yes my guy!! Hope you are well lad
@@DamienTalksMoney alls well mate!
Same for you too! Hope all is well on your end :D
I don’t have a crystal ball to know what will happen in the future with house prices but as my Dad (who was banker) always would say to me about property: “For as long as there is demand for houses (less being built than bought) The average house price will never go below what the average person can just about afford” - in other words, unless we see a big reduction on wages and increases to interest rates (which has happened already). The increase in interest rates will certainly affect what people can afford, along with the temporary stamp duty relief ending therefore it’s very reasonable to assume that house prices will reduce and as you put it, it’s a correction. I don’t think we’ll see huge crashes but the energy prices are definitely not helping with affordability.
I didnt wait this long for it not to crash
They won't ever crash. You might see up to 15% down on average but they will be spread over 12 months.
With the amount of redundancies happening already there's bound to be one
I totally agree. Since 20 years ago I've not seen prices drop( depending where you live) and i really believe they won't drop much at all, mainly through supply and demand.
Inflation hit people a lot harder than a crashing stock or housing market as it directly affects people's cost of living, that people immediately feel the impact of its not surprising negative. Market sentiment is so high now. We really need help to survive in this economy. The fin market have underperformed the US economy as fear of inflation hammers the price stocks and bond. My portfolio of $250k is down to $192k any recommendations to scale up my returns during this crash will be highly appreciated.
The elements around the stock market generate tons of useful and useful info if you want to make money you need to understand the fundamentals and keep your mind steady by carefully picking apart recc and options of others on business that you want to or are Invested in.
We have been on a recession since the beginning of 2022, but big media and governments around the world didn't want to admit it. We need to be wise and use our brains. Knowledge is power and I'd like all the family to be powerful!! Just purchased some AMA550X with the Guidance of my coach.
@@Mariegot7770 Actually I've been thinking of reaching a portfolio-adviser, my $150k stocks been loosing everything it gained since 2020 who is your coach?
@@simeonebarret6716 Sure, not sure if I'm permitted to mention this on here but conduct a Search on “Elizabeth Ernst David" she's been in the news when she revived so many company in 2019.
Now is a good time to review your financial plan with your Financial Analyst. If you don’t have a plan, take the time to establish one. Determine whether there are opportunities to rebalance your portfolio to more appropriately reflect your investment objectives, your risk tolerance level, and the current market environment.
The problem with lowering interest rates this time round is that we have inflation. Printing money isn't so easy now. Interestingly in London, since I bought my property in 2014 it has (on average) not really moved. It's in the countryside / non-urban where it shot up post pandemic.
I would agree with Damien's prediction of 10-15% falls if it were only for rising interest rates. But he doesn't talk about the effects of energy, fuel and food inflation and the recession, which is why I think that 15-20% "correction" from the over stimulation of the market during the pandemic, PLUS a 15-20% fall from the effects of inflation and recession and interest rates.
Exactly that , completely ignoring those facts for some reason .
Here is a theory, buying a house when interest rates are high resulting in lower prices is the best time to buy. My logic behind this is that you make your money when you buy the house and if interest rates are high, then there is a good chance that you will be paying a lower rate in the future when you remortgage. Effectively you dont always pay the same rate and when I dropped from 3.5% to 1.5% it was a nice little bonus. Also, the amount you owe on your house reduces over time, however the amount you get paid increases, even if that is only to keep track of inflation. Maybe I am talking a load of rubbish. I got lucky, bought a house in Altrincham 6 years ago and seen it go to the moon in value. Personally I think the 1-1.5% interest rates will be talked about in a similar way to my parents talk about the 15% interest rates they faced back back in the day.
I dont know what the future holds, but I have a 12 month emergency fun and I put £200 a month extra into my standard stocks and shares isa for my 6 month old daughter when she comes to buy a house in the future, because I think she is going to need all the help she can get.
Well done for being responsible financially and your daughter will definitely be ahead of everyone else if you continue with £200 a month. My family was quite poor so could only provide the minimum £10 a month. I ended up taking it out recently (it took years cause NatWest customer service is non-existent) I got £3,200 and that’s after a pandemic and a dip in the market too. Looking to reinvest this money during this period. If the market continues similar to 2003+ your daughter should be on £60,000-£70,000 in 18 years. That’s a great amount.
Whilst £3000 isn’t much (I’ve saved up more than double working part time for the last year 😭) I’m still grateful.
My auntie has house in Altrincham as well so can confirm. 3 bed detached that was valued at £480k in 2019 but then was revalued at £710k at the peak in 2021! That’s over £100k a year just in appreciation. 🤯 Insane.
@@TheGoldenboyo tax free as well if it’s your primary residence
Good in theory but the issue is with the banks requiring your income to match the house price including the interest rates, this means that you may have been able to afford a 200k house at 2.9% interest on your salary but you won't necessarily be able to afford a house at 170k at 7% interest. That's the main issue. Even if you CAN afford it, the banks are turning people away because they think they're "too high risk". So while in theory it seems "better" it isn't doable.
The problem is the rich are getting even richer. So the money you give your daughter will be minuscule compared to the money they give their children. With the housing almost certainly still constrained. Your money & their money will be chasing the same assets. - unfortunately this is a situation you can never compete in successfully. 🙏🏻
Accumulating wealth at the top end is going to make a lot of problems in the future. It’s already starting. It’s a major cause of inflation now I think. They must be taxed, May my tongue turn black for saying it 🤣
Great video again, love the insight - worth noting as well the story that broke yesterday about a re-introduction of interest only mortgages for owner occupiers.
This will mean fewer people will need to sell when it comes to remortgage, further stifling supply.
Great point thank you for sharing mate!
Yeah, stifling supply REALLY helps when you have payments and no buyers and no renters ready to pay double or triple rent due to high interest rates.
But hey, it's recession, so next month central bank will DEFINITELY drop interest rates into negative 15 percent to prop up the economy to the moon, right?
Because there was never a period in history where recession developed into a depression, let alone the Great Depression, right? It just CANNOT BE! Right? And prior to 1999 the world did not exist at all, right?
Relax and enjoy the show, folks. I went through this at least twice already, now it's... Everyone's turn! Global economy downturn!
Chill out mate
Spot on fella, exactly my thinking and well done for going against the crowd, the reasons and rationale you applied are sound IMO. Lets wait and see...1 new subscriber earned here. Carry on not being sheep to the YT finance crowd.
If people expect a crash, there will be low-ball offers, sellers will be spooked, and this creates a feed-back loop. It will be only in pockets but it will happen.
If the government built there house with low profit margins those 340,000 homes would make 14 billion a year, the beauty of it being you can use the rest of the money to invest in 340,000 homes the next year and the year after. This would cause economic growth, they could have them located on brownfield sites rejuvenating inner city areas and the helping the high street. But the issue is the government is Neo-liberal which means it cannot impede businesses ability even when they are solving a market failure, as it's possible developers might build those houses even though we know they can't and won't.
The big issue is the government are useless at everything. I wouldn't back them to build one house a year
A healthy correction would mean property is 4x income, which is quite a way off. There's also the consideration that a 30% nominal fall could be a lot more in real terms if you factor in inflation.
It is in some parts of the country.
Watched this video as soon as you uploaded it but I couldn't comment to let you know that you're an asset(no pun intended) to the community and you put out so much quality, so had to come back to comment
See if this helps.... If you think of your house as a home, where you live, then the property price is almost irrelevant. I say' almost' because if you find yourself in negative equity and have to move, then this will be a problem. Fortunately, there are very few people in this situation, compared with the 1980's. On the other side, if your house has doubled in price you can't 'spend' that increase or ask for the extra value to be transferred to your bank account. It might give you a warm fuzzy feeling at night, but that is all. Property value is largely illusionary, particularly if you see a house as a home, not an investment.
Successive gov'ts have got rid of council housing, allowing wholesale cheap-priced sell off, tax incentives to buy to let investors, upcapped mortgage lending which inflated prices with too much demand and not enough supply, and there isn't any new council-owned social housing as far as I know? The Tory's won't build or fund social housing, who will?
I am at a stage to like videos w/o watching on this channel now. A milestone!
Haha you legend! Thank you
Think you are spot on with this analysis :) Most of the downside risks are exaggerated, reality is people need homes and with the current demographic - supply mix we will see the market supported. Also agree a 10-25% correction would be expected and normal under these circumstances. But likely in 1-2 years rates will drop again and the market will begin to boom again as credit loosens up. Houses are the biggest asset for most individuals. The government is forced to support this or risk bankrupting the entire country...
Property prices are already in decline, more property are selling for under asking price in the last 3 months prices have declined 10% already
Yeah i agree I say the exact same in the video
@@DamienTalksMoney at the end you said a 10/15% drop is likely. When he is saying 10% has already happened. You didn't say the exact same thing pal.
Spot on content! The detail and editing is top notch- keep up the great work
Thank you mate!
Then what happens if UK would have a brand-new government after 2024...
Such a good, much needed, and engaging content creator. You and James Shack are my go to UA-cam financial gurus.
James makes incredible videos
@@DamienTalksMoney look forward to the next video mate!
@@DamienTalksMoney agreed
@@DamienTalksMoney what do you think of Maverick of Wallstreet? He talks a big game, but in the time I've watched him his analysis was able cash in the cheques his big mouth had written...
Anything can crash, housing prices don't only go up. When we are talking about 20 or 30 year mortgages the policies of the current Government don't matter, mass housing construction from the public sector could be instigated in a year, houses would be built in 5 years in enough quantity to start bringing prices down and completely destroy the "investment" of owning a house (or multiple)
My house isn’t an investment which is probably the case for the majority.
@@alangordon3283 every house is, you are investing extra money in it compared to renting.
The alternative being living somewhere else and investing the difference in an alternative, whether that be stocks, gold, art, crypto or beanie babies...Obviously some things are better than others.
Any glance at Britains house building record bar a decade after WW2 will tell you it’s highly unlikely we will ever build enough to meet demand.
@@mramg6038 It's actually the planning permission to build on that land that has the value, not the land itself.
Land with no scope for planning sells for as little as £3000 per acre...
@@alangordon3283 lol….😂
The contrarian view is that property will crash 30% and I think when this cost of living crises runs its course property will have fallen 30%. I think it's already proberly down 10%.
Inflation is 11% and doesn't look to be coming down anytime soon, base rates will rise. Base rates should actually be 12% now but due to public and private debt that will never happen but 5% base rates seem possible.
UK needs a massive social house building scheme to address the supply/demand issue. Won't happen with this government, look at the big donors to the party and join the dots.
Prices are about 50% overvalued but due to supply/demand factors property prices are kept high. However, affordability will likely see prices come down significantly. Difficult to put an exact number on the falls but 30% seems very possible.
Good video bud 👍
Inflations 18% bud
What does it even mean to say something is overvalued except for supply/demand factors?
@@bcvids999 it means based on average wages (price to income ratios) prices should be a lot lower than they are but lack of supply has inflated house prices over the decade.
It's never crashed like that, and it never will. And if everyone thinks the market will crash, saying it won't is contrarian.
@@user-gz6tx6yp3v the market crashed in the 90s, I remember that well. This recession will be a big one, things are only just starting to bite, wait till 2023. Just my view.
How do you explain 3 consecutive months of price drops insisting l including the November drop which is the biggest since 2009?
Remember that the drops Reigate to activity 3-4 months before they are reported, so there mini budget debacle was not a cause.
The UK has been in a sustained food, energy and mortgage interest crisis which has led to £400ish drop in disposable income, per month. The effects of interest rates and energy is yet to properly filter through as winter needs to hit and people need to roll of their 1% rates.
He's doesn't have to eat , heat his house and he's got a fixed rate mortgage for 30 years .
I hope you are right, but I do think there is too much downward pressure on house prices right now and I expect a slow slide in house prices ( I think the word crash is extreme).
However, over time.. house prices only go one way, and that way is up regardless.
We will know more come may/June as the land registry and current graphs won't reflect the true trajectories just yet.
There slowing down due to materials capping their profit. They know that due to high interest and stamp duty have made it harder to sell the house that are built
UK house prices are subject to significant regional variation in terms of demand. London for example is more heavily influenced by foreign investors. There isn't one homogenous 'property market'. Prices didn't 'crash' after 2007 so I wouldn't hold my breath this time around.
Without question prices will drop how far and how long it will affect the property market we are in uncharted territory.
There is many mortgage holder have overstretched themselves in the last 15 years. But with any negative information passed through into the media can create a bigger problem in the long term.
This is where I believe any negative information will be suppressed and artificially downgraded, just like are inflation problem.
There is many mortgage advice and economists stating that there will be a soft or moderate land and it will only last 1/2 years.
This will be fake news at its best and will artificially stimulating the housing bubble. Unfortunately there will be never enough house building to supply demand in the UK due not enough certified tradesmen and materials rocketing in price.
I like your articulated view in your video 👍 3:07
House real value will crash as if houses don’t keep up with inflation that means it’s worth less
The idea that developers “hoard” land is a common misconception. They need to have land with planning permission ready to go to move builders from one completed site to the next. It can take ages to get planning permission with no guarantee of success so they need to plan ahead and bet on multiple sites. It’s also true that some planning constraints make a site unprofitable if building costs go up or house prices come down, so obviously they have to wait - can’t force them to work at a loss. At the end of the day house builders make money selling houses not sitting on land. “Land banks” are a necessary function of planning ahead and sometimes a symptom of economic trouble - they’re not a way to profit in their own right. If you want more houses the government has to change the system so it proactively allocates land, buys it, designs the buildings, builds the infrastructure, then sells the parcels to developers. That takes the burden of risk away from the developers.
Another excellent video with well a balanced view underpinned by insights. Keep em coming. Great stuff.
Thank you 🙏🏻
..a tory government beholden to a million mortgage debt junkies who've got themselves into way too much debt to buy property way over priced....but hey ...they're good for it. They signed their mortgage agreement in the knowledge that they're good for payments for the next 20 yrs ...also...apparently ...they've been stress tested in order to get the free mortgage cash in the first place.
Mortgage Interest rates rise to a modest 6pc or so and it turns out they ain't good for it at all - and the tory home price pumping government is all too keen to bail the pathetic wasters out by allowing them to pay interest only.
No standing on their own two feet ,no taking the consequences for their actions- can't do that else they'd be forced to sell up and bring homes prices crashing down....and can't do that ...not in the uk ...cos homes prices are only allowed to go up.
Any respite for renters who landlord has pushed their rents up ?
Buy to let was positively encouraged years ago with mortgage tax break incentives, since removed. With all the cost increases and maintenance etc costs on top it surely isn't worth the hassle any more and hopefully a lot of houses will come back on the market for people to own and live in. Councils need to return to building/owning council houses to supply the needs of low income households.
Fantastic analysis ,I totally agree ,landlord of 10 properties for over 15yrs ,in that epc at "C" in 2025 another angle of the equation to factor in as well, when I started normal % mortgage btl was at 4 to4.5% ,average since ww2 5% ,and landlords made that work
They have already gone down 10-15 % and they have a lot further to go
Anecdotally I know so many people that are 'waiting' for things to drop before buying/investing. I'm one of them lol . I'm already involved in property and know lots of people that are. I just can't see a big crash. 10% maybe, a few areas maybe more but on the whole, no.
I must admit i am one of these people waiting myself mate! haha
Lot of repossessions coming down the tracks next couple of years, people are struggling now, prices of everything is going up, wages cant keep pace
I'm glad that despite your optimism you still admitted a 10/15% correction is likely. Few points to consider 1) many property developers can't sit on land as investors expect their return in a certain time frame 2) if developers sit on projects waiting for better times that will result in unemployment = mortgage arrears = house repossessions. 3) wages to house price ratio is the same as before the financial crash 4) inflation doesn't disappear over night, anyone remortgaging in the next 18 months will likely be at a minimum doubling their payments, has that been stress tested?
Hi Pearse,
Thank you for this! I worked for a developer and while I know there is pressure from investors. Long stop dates are normally set 2/3 years after the planned completion date so that can give you 5 or so years of wiggle room contractually before clients can request funds back.
I believe stress testing requirements assume rates of 4/6% when assessing affordability so yes I do believe mortgage companies will have done this.
This video was just one side of the argument I have presented the more bearish perspective in another video.
Top video Damo, as ever. I suspect your prediction will turn out to be correct, and in actual fact we’re probably already there given the recent falls, factored in with inflation which probably gives us a relative 10%+ decline. What comes next is the realisation of that decline, the panic generated by the news cycles (even though it’s technically already happened), and another subsequent fall. A relative 20% decline is very likely IMO.
Will you sell if the only asset you have (I am making an assumption that you are not an investor) drops 20% in value? Or will you hold it?
Balanced argument in the conclusion which differs somewhat to the headline for the video. My background, property renovation and worked on a dealing room for years. Overall good video, learned a lot from the supply / demand details in depth. Also the Manchester property revival through currency fall through brexit - but not sure the extent of the benefit from this precisely but yes it is a tangible positive for property prices. Wasn’t sure about the fixed rate for 5 years - it is common there’s a mismatch between bank fixed rates and base rates so people on floating would get hit by a hike and that doesn’t indicate the future of the base rate at all. With U.K. inflation one of the highest in developed nations it looks like base rate might be raised further or held at current levels which may impede foreign investment due to pound strength. Agree with the conclusion but wanted to make sure this was clarified. I think the key indicator in the short term is inflation and monetary management / yields. Long term supply and demand. If CPI inflation calms down, we will see a rise in property prices. Otherwise not so. I very much look forward to the next video! Also the other argument about recession = print money it will be fine, doesn’t actually work like that anymore. Fingers crossed that it does though
Will be around 20% off.
Damien, remember that housing usually removes natural capital - green space relieves flooding/drought, higher agricultural output (pollinators), less soil erosion, better water quaility, micro climate regulation, etc. Building everywhere means we all pay more in the end
My rent always goes up by around 5% every year, based on the RPI over the last 12 months. This year it's just gone up 14% 😮
I started renting in 2009 paying £650 a month. Now I'm paying £1115 a month. Is that around £40 a year ish
@@chrishart8548 £40 a year? Um..... Where did you study accountancy? lol - I suspect you meant to use %?
@@ArcanePath360 I did put an ish at the end of my sentence. Feel free to work out the % if you wish... it's £465 over 14 years
@@chrishart8548 I'm sorry, I mis-read your comment to mean something totally different. Not sure where my brain was at earlier. My bad
The other problem on the supply side is we don't currently have a single builder in the UK able to provide a house of a sensible quality. Only a crazy or brave person would buy a new build.
When working for a developer I saw first hand just how bad the quality of some new builds are.
True. I've commented on another post that a family member avoided buying a shoddy 2 year old Persimmon property recently due to the INDEPENDENT surveyor showed massive problems with build quality and insulation which meant the walls and more would have to be taken down/sorted to put the house right. The estate agent tried to get my family member to have a survey done by his 'mate surveyor', no doubt to get the house sale effected by finding little fault. Plus, our council Worcester City Cpuncil is NOT adopting roads on new estates leaving it incumbent on the new residents to form a management committee to in some/all? cases complete the roads and or be responsible for future maintenance costs. What builders are Persimmon etc using to get such shoddy results?? Buyer beware!
I bought a property October 22, according to online valuations the property is up 3.4%.
As someone who is in the infustry, the problem is not in house shortages, the problem is the new builds are absolute sh!t, I’d rather rent than buy a sh!thole the size of a train cart… the problem is the houses being built are simply no good…
Yeah I know this all to well working with developers. Some of the blocks of apartments that were built won’t be standing in 40 years imo.
@@DamienTalksMoney exactly, and for what they are and the expense on it, it is just not worth it… better make less but better. Less is more! Hit me up if you’re still in property development and need design and build services
Our local council isn't adopting new roads where houses are being built. They expect the residents to form a management committee and pay for future costs (and maybe even finishing the road off not sure?) themselves. What an absolute shower.
I’m a bricklayer and build new homes and they have stopped building on my site got work till Xmas then I’m being laid off haven’t sold a house for 2 months
In the south east where I live there are thousands upon thousands of houses being built - can certainly see some small fall from here but long term the only way is up
We only need all the extra houses on a temporary basis. With the population crashing in our European neighbours. How long is it going to be before the same thing happened in the UK. What we need is more prefabricatedHouses designed to last 50 years. Easy to construct an easy to remove. Otherwise otherwise what will we do with all the extra houses in 50 years time.
Interesting point this, one thing I did notice is the expectation that population growth will flatten off in the U.K. eventually. So you might not be wrong
We need environmentally friendly well insulated housing whether that is old or new. 228K empty houses need bringing back into use. Lots to be done. We just need to vote in a govt to do it.
@@musicloverUK Check out the truth about population.What we could do is give a temporary use on greenfield sites. Maybe 50 years. Then the buildings can be removed after that as we probably will no longer need them. Houses built in factories like boxable. No foundations required.
Thanks, another informative and funny video.
I hope house prices eventually halve. But they won't as the major parties aren't interested in doing anything. So I'm voting Green in the vague hope they will bring about affordable, well insulated new housing utilising solar panels, batteries and air source heat pumps and subsidise EVs and making older houses more insulated and cheaper to run.
Our modest 'modern' 3 bed house we bought in 1995 for £80k is now worth £300k (more actually as we've improved/extended it). Stupid money. Now our kids can't afford to buy their own.
I don't think the scope of the question is wide enough. Perhaps we should be asking what does the economy and society get for a Housing Market that is being deliberately rigged to maintain a housing bubble? Who are the winners and who are the losers in an economy where the purchasing value of telephone number, ever inflating house prices exclude first time buyers from the market because of affordability, together with the deflating value of sterling? Why are ordinary British people going to be excluded over time from the British housing market because of wealthy people competing with each other to snap up the only safe most people truly understand? After all, the era of cheap money is over, and even Boris Johnson envisaged that not even lifetime mortgages would cover the value of a home, and intergenerational mortgages were just over the horizon. Is that a good thing, when in real terms the growth in earnings is always trending down?
Home prices are modestly dropping at 1-2% per month. This however is not a "crash." Considering home prices doubled between 2020-2022, they will continue to drop but nothing like 2008. Somewhere in the middle of the Ramsey camp vs the doom and gloomers. Maybe a 25% drop from the peak bubble prices. This scenario could play out differently though if many people start loosing jobs and inflation doesnt significantly drop soon.
For a different take on the supply side arguments you should check out the economist Ian Mulheirn's work. His view is that the UK has a surplus of housing, and there is no shortage of supply - with the story of a lack of housing largely based on faulty projections by DCLG. His paper 'Tackling the UK Housing Crisis: Is Supply the Answer?' is worth a read.
Basic economics 🤷supply & demand
SDLT is a major friction and certainly stopped me moving so freely
It’s completely dependent on the economy. They’ve done all they can in the way of stimulus and money printing. To the point of triggering high inflation. There’s literally nothing the government or banks can do now. Any more borrowing or money printing would be disastrous as the Truss budget showed.
The demand will drop if the economy continues to tank.
To the best of my knowledge around 50% of homebuyers are also first time buyers who are hit hardest with the interest rate hike. They're usually younger so at the bottom of their career ladder, ergo earn less, which means less money landed to them. And with current interest rates many wouldn't be able to afford the monthly payments anyhow. 50% of the market is a huge drop in demand.
I'd also ad that from 2025 one won't be allowed to let a house that has a lower EPC rating than C. This'll cause a sellout of older properties in the near future in my opinion as many landlords won't swallow the cost of the necessary upgrades so this will increase supply.
But I agree with you that we won't see a crash like the 2008 one was and this is going to be more of a price correction.
You can't really drive up value you can only allow prices to rise against earnings of the buyers, once the delta is realised you have to see a fall in price if its not supported. Low interest rates was the support.
The most important argument you are missing mate is factoring in a very long recession which will lead to a big spike in unemployment. That is when the real fun starts.. The current employment scenario is the best we will have for next decade or so.. Unemployment, higher rates and unaffordable house prices, we have all ingredients in place for a crash.. The only variable for me is to see what kind of Government and central bank intervention we will have..
Well they’re certainly falling - I’m looking at an apartment at the moment which is on for £210,000. An identical apartment in the same building last summer would have been marketed for £260,000. I still think they may even be some better bargains later this year.
The "£800 a month mortgage... already paying £1500 pm rent" analogy is completely meaningless.
A fresh £800 mortgage equates to about £138k at 5% ... and no £138k property in the land would rent out for ANYTHING LIKE £1500pm.
Yep. This the the thing the "I pay £250000pm rent but the bank won't give me a £2.50pm mortgage." crowd always miss. Yeah they will, they just want some equity first to reduce risk and a cheeky look at your spending habits. Then they will stress yest you. And if you can't save for a deposit whilst paying rent (like we did) then how are you going to save for repairs whilst paying a mortgage? 🤡
There is only one truly safe asset in the world right now. U.K. housing. - both parties have vastly underfunded house building for 40 years. It started with Thatcher’s sell of, of council houses. She stated that they produce labour voters. So she tried to make them disappear. - it worked.
Now with money in banks giving no interest ( or not enough by far ) people buy houses. Thus further constraining demand. The population is growing in the U.K. with one of the worst urban overcrowding’s of any European country. The government have made laws for landlords too for years. Giving protections, no fault evictions etc.
There is way more but it all adds up to a demand so deep that no recession will touch the sides. Even if it’s a 5 year recession. - put your money into housing - London, Edinburgh, Manchester etc… "safe as houses" 👍🏻 ignore the fools that don’t seem to understand the market and the reasons for it. - good video.
Need a correction. Houses are certainly not worth what they sell for, i have 5 and find it ridiculous
I think there will be some strong regional trends we will see in the next few months, I don't think it's one answer for the whole of the UK. Did London not continue to rise or at least sustain during the last crash?
In the beginning of the video Damien mis-uses term "Demand" (e.g. due to net immigration)
while it's actually a classic problem in economics of unlimited wants and limited resources.
The reality is - these "wants" for a living space are not backed by tenant'/owner' purchasing power
(although the issue is partially covered later on via FX depreciation {international capital mobility} and/or mortgage rates).
It would also be great to see clearer distinction between nominal and real terms.
While at inflation (or a bit closer to context - wage/income growth) of say 15% in nominal terms there might be an increase (for instance 5%)
at the same time in real terms we might see a drop (of roughly 10%)
But after all property aren't part of consumer prices anyways and as was already covered - other components are also eating up disposable income pie.
You are the man Damien, thank you for your amazing insights!!!
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It may not go down in value. The rub is, no one will be able to afford it either. That means it is a bad investment if you cannot raise money on an asset that won't sell. A bit like owning a million dollar note that is worthless. It's all very well talking the market up on UA-cam but the reality is property has been overpriced for at least the last two decades if not longer. You can put the prices up all you like, but that doesn't make it a good asset to have if you can't sell it. Same for rents. When people can't afford the rents and landlords can't dispose of their properties that's when the whole house of cards will come tumbling down. I can hear the wailing and the gnashing of teeth as I write.
I think it's sad that there are so many people living alone for whatever reason, divorce, bereavement, etc. How can they afford to, too? We are mostly social beings and should live in company. Perhaps the cost of living crisis will bring more people together, singletons letting out a room of their house, like I did when I was single. I hope when I am old I am not on my own but will make every effort to avoid this if I am bereaved first.
have you anything about getting taxed 10% on US stocks starting next year ?
Absolute Bull locks in UK. Gunwharf Quays Portsmouth a plush apartment that sold for £500,00 in 2008 that are now valued at under £400,000. From the top that is a 40% drop and that is what every house should now be reduced by. When the mortgage is 40% more then every house must be 40% less. It is a fact here and houses up for sale sold for more in 2007 and 8 than the asking price today. Everyone better be honest or they will be sued.
I hope they do tho
Can you do a video explaining etfs such as Qqq5 I don’t understand. There must be a catch
🇬🇧 housing market will never crash like how the 🇺🇸 market did or does as we don’t have enough homes on this island.. we are trying to play catch up each year but its getting more and more out of hand.
Struggling to see how CB would start lowering rates with inflation still persistent.
Yeah of course right now but a year is a long time .
Inflation in 12-18 months time could be substantially reduced given it's a 12 month rolling metric. Most of the inflation of the last year has arguably been caused by 'one off' events, so it's not expected to be permanent.
@@JansonSmith Exactly this. Inflation will start to fall sharply in March-April because inflation is, as you said, a 12 month rolling metric. Politicians and Central bankers will pat themselves on the back for doing absolutely nothing. Prices will remain high but the metric will show that inflation has fallen so central banks will begin to drop rates again in order to prop up property and equity markets again.
A broad review which is useful. However - I think there's a massive elephant in the room here. And that is interest rates. You say that we should expect to have interest rates go down to help stimulate growth - that is correct in theory. However what's also correct in theory is that interest rates need to track/be above inflation rate. Current base rate is completely ineffective. So I agree they will come down but from what peak? Only six months ago the all knowing BoE said inflation was transitory. Which of course it wasn't. Now we hear that we need to use interest rates to tame inflation. The problem is we are simply not using interest rates - not yet anyway. Wake me up when rates are above inflation basically.
Also "healthy correction" as you refer to is not the salary to value ratios we saw even just before COVID. There is nothing healthy about that situation. Any healthy market does not require help to buy/other sham interventions etc
Post GFC we have had quite a crazy economic situation of high QE and basement rates...
Not pre pandemic levels. They need to come to pre 2010 levels
Really good news. Benefits my knowledge and impressive journalism. 🙂
Dont forget owerall inflation. House prices hardly go oposit way. Zero sum more likely. Just keep investing.
People won't be able to afford them . And most for sale are rentals
Thanks for another great video Damo! Keep it up mate. 👏👏💪💪🖖
Thank you very much Damien for both videos about this topic!
You are so welcome! Thank you for watching them both
love this guys analysis and presentation style.
Love you mate
A well argued thesis, well presented as always. Correction of 10-15 makes sense with a slow recovery in 2024. Selling price realism reins in asking prices and eventual realised values.
Your 100% right another great video
Funny everyone saying will not crash mate do u see the cost of living, food, people are losing jobs etc 🤔 relax and watch, it is just starting.
Your video just keep getting better! Thanks Damien
There are a few problems with your logic. 1) Immigration is driven by opporturnuties/jobs so an uptick in unemployment and these new households may be gone, 2) if you can't pay your rent... you will not, 3) I know a few people that can't pay their mortgages at higher rates as they weren't stress tested at the upcoming interest rates, 4) during the pandemic there was plenty of money, let's see what happens once all of that is gone and 5) there is plenty of speculation at the high end property market and what these investors will do is anyone guess.
Couldnt find anything wrong with Damien's logic?? No one has a crystal ball, he is looking at the likely near future without saying he is right or knows it all. He has put another video out as he said looking at another scenario.
Leaving that aside, hopefully buy to let will become unsustainable and a lot of houses come back on to the market and bring prices down. Along with more affordable, well insulated well built environmentally friendly social housing to provide for those on lower incomes. Yeah some hope!
Good analysis .... again!
If you check what you can get in spain with 200k compared to Uk you will be shocked.. not just spain, 80% of the planet in fact....
Yes I'd love to retire and buy a cheaper property in Spain to live a healthier end of life, speak Spanish, enjoy the local culture and cuisine, however the sh!tshow that is Brexit has stopped any average person doing that unless they have a minimum €2,000 monthly income (with any extra householders having €500+ income) . So thank you little Englanders and the f@ckwits who couldn't be arsed to get off their sofas and vote, the 2% majority of voters got their zenophobic way. Shame that they have helped the UK become a worse place to live. The fishing waters which they so desperately wanted to possess will be empty of life after we finish polluting the seas anyway 🤷♀️. Rant over. Saludos
Your missing something , the burden on Landlords and partucularly overseas owners of property due to the new legistlation pertaining to overseas entities
is going to lead to huge liquidations by these owners of uk property i believe capital flight from uk real estate that can easily be taxed or have restrictive covenants put on it
will be massive I am an overseas entrepreneur who this years exited all my property next year there will be a stampede to exit prices will be pummeled so i think your wrong .
@@DJWeiWei They are providing housing that is not being provided adequately by the government , there will now be a huge housing crisis with rising rents due ro lack of private rental property
What's more likely is that they fall in dollar terms
This supply shortage of houses in the U.K. is such full of rubbish there’s 5 million more homes than the number of families that live in them. The demand is so high because investors and non savers have a opportunity to buy when in the past they didn’t.
There are 228,000 empty houses in the UK which need bringing back into use. That would help supply.
Hi mate, can we expect a video about your thoughts on blockfi filing for bankruptcy?
Hi mate, I made a video around 4 months ago where I said that I didn’t think the platform was safe anymore and I felt people should take their money off. I have linked it below incase you missed it at the time. I hope you didn’t have much money on the platform mate.
ua-cam.com/video/m_CvMh_v1wM/v-deo.html
@@DamienTalksMoney thanks mate I didn't have anything on it I just work in payments and keep an eye on defi... And you always have good insights on it so was curious to get your take!
House prices will fall not as a sudden crash but incrementally due to inflation, interest rates and lower incomes. The market is propped up by government and large scale property investors. The government won't have the ability to keep doing this as the fiscal situation worsens and the return for property investors is reduced as people can only afford so much due to higher living costs and lower incomes.
Yet another belter damo
Thank you 🙏🏻
Interesting video fella, as always 👍🏻
This is a very good video.
Glad you pointed out the stress tests.
I have clients coming out of 5 year fixeds saying they can't afford the new rates.
I point out their income has already been stress tested on rates higher and looking at their bank statements, they don't need those 2 takeaways a week and a Costa coffee every day on their walk to work...
I think the stress testing practices in your industry will ultimately be the thing that saves the housing market from a real mess! It is nice to see that we did learn from 07/08 and have maintained some good practices since then. Really appreciate your insight mate and thumbs up considering your professional back ground
It's just a shift in mentality.
We've been at these rates before, quite a few times. These are normal rates.
People got too used to having low rates and surplus cash for luxurious things.
Things are back to normal now, so people do have to spend less.
Something I ask the majority of my clients is to go through at least 1 month bank statement, preferably 3 and total up how much they spend on Supermarket Food, Takeaways, Days Out, other non essential items like Amazon purchases, Costa/Starbucks etc.
People say, "We only spend £400 on food a month" and you look at them, family of 4, Nespresso machine on the side, takeaway boxes hanging out the bin.
You look at their bank statements and it's triple that, sometimes quadruple.
People live paycheck to paycheck, being frivolous, hardly anyone saves because "we can't afford to save".
If you're in a position to get/have a mortgage, I guarantee you I'll find surplus cash to save.
It's all about financial education, people trying to keep up with the Jones.
There's a town near me, a posh area, lovely big houses, flash cars, everything else to match.
Most people living here are keeping up with the Jones', they're putting their champagne lunch on credit cards, they've loans coming out of every orifice.
I just want to bash all their heads together.
Anyway, quite a rant for a Saturday morning. It's supposed to be my day off.
I'm going to go back to bed and try and get out the correct side.
@@buytolet-landlords Sounds to me like you got out on the right side lad! I know plenty of people like you say who on the face of it seem to be doing very well but are a job loss away from ruin. Low rates and the cheap debt that gives you has allowed people to build up quite the lifestyles. When i was a child a takeaway was a once in a month thing... A real treat. I know people now who barely cook and order every meal
People who took on mega cheap mortgages with no thought to how they'd fund them with a hike back to normal interest rates were really stupid.