Brexit Doom

[Old Greg]

Are you saying that banks 'call in' mortgages on homeowners in negative equity? Never heard of that one before and surely self-defeating for the banks?

Residential mortgage "Margin Calls" are a housepricecrash forum fantasy / meme.

[jamesbrown]

Housing prices are being driven down by economic weaknesses and uncertainty, which are bad.

A little premature, I feel. We're talking about Rightmove asking price statistics, which are notoriously noisy, month to month, and typically show a fairly large decline in July and/or August, because the summer market is slow. You'll see similar declines in 2013/14/15, I expect. I think we're all agreed that London and the SE is in the midst of a spectacular bubble, but it's difficult to see Brexit as a catalyst for large declines, given the historically low supply at present. The collapse in supply over recent years is really astonishing. It's halved in my part part of the SE over the last year or two. Demand would need to drop off a cliff, and I don't see any evidence of that. It would be unfortunate it the market collapsed, given the misery that would cause, but it has been primed to head in one direction or the other, very rapidly, for the past several decades. Indirectly, Brexit probably won't help with an extended period of low rates and QE, but it also offers the political cover for fundamental supply-side and tax policy reforms. The Autumn Statement and 2017 Budget will be revealing.

[Old Greg]

A little premature, I feel. We're talking about Rightmove asking price statistics, which are notoriously noisy, month to month, and typically show a fairly large decline in July and/or August, because the summer market is slow. You'll see similar declines in 2013/14/15, I expect. I think we're all agreed that London and the SE is in the midst of a spectacular bubble, but it's difficult to see Brexit as a catalyst for large declines, given the historically low supply at present. The collapse in supply over recent years is really astonishing. It's halved in my part part of the SE over the last year or two. Demand would need to drop off a cliff, and I don't see any evidence of that. It would be unfortunate it the market collapsed, given the misery that would cause, but it has been primed to head in one direction or the other, very rapidly, for the past several decades. Indirectly, Brexit probably won't help with an extended period of QE, but it also offers the political cover for fundamental supply-side and tax policy reforms. The Autumn Statement and 2017 Budget will be revealing.

All forward indicators are informative but not definitive. We do have an awful low of forward indicators looking dodgy. We then have a second wave potentially to come depending on the EU exit settlement. Let's hope it's not this: http://en.wikipedia.org/wiki/Carthaginian_peace

[eek]

Residential mortgage "Margin Calls" are a housepricecrash forum fantasy / meme.

Linky? I'm not aware of anyone on HPC who believe margin calls exist within owner occupier mortgages. BTL mortgages are rather different although the only examples that are mentioned related to NRAM.

[ChimpMaster]

Anyone who believes the tripe being spewed by media on Brexit impact on house prices is quite simply being fooled. The property market does not react that quickly; not like the stock market (the FTSE being up over 20% since Brexit... Boom!).

Recent price activity in the UK housing market is purely a result of government intervention. The 3% additional SLDT caused a spike in demand and hence prices in Q1 this year. Much of the rise is now unwinding and I would expect prices to fall even further given the impact of the SLDT changes.

But there is a much bigger beast lurking in Section 24 of the Finance Bill, which will drastically restrict the amount of relief individuals can claim on their property investments. This will start to bite from April 2017 onwards and many investors are preparing for this now by (a) not buying as much property as they would have, and (b) selling portfolios. Many left holding will be liable to taxation > rental income and so will fail to pay the mortgage; even if they survive and make a profit, the lenders will revalue values downwards on re-mortgage (already are increasing rental cover %) and hence the re-mortgage loans won't cover the original loans.

Both of these tax changes were devised and announced last year. The property market is now beginning to feel the impact of them and we will see a far greater pronounced effect over the next 2 years.

[Old Greg]

Linky? I'm not aware of anyone on HPC who believe margin calls exist within owner occupier mortgages. BTL mortgages are rather different although the only examples that are mentioned related to NRAM.

Just from memory, matey. Long time since I've hung around there so I may have mis-remembered.

[Old Greg]

Anyone who believes the tripe being spewed by media on Brexit impact on house prices is quite simply being fooled. The property market does not react that quickly; not like the stock market (the FTSE being up over 20% since Brexit... Boom!).

Recent price activity in the UK housing market is purely a result of government intervention. The 3% additional SLDT caused a spike in demand and hence prices in Q1 this year. Much of the rise is now unwinding and I would expect prices to fall even further given the impact of the SLDT changes.

But there is a much bigger beast lurking in Section 24 of the Finance Bill, which will drastically restrict the amount of relief individuals can claim on their property investments. This will start to bite from April 2017 onwards and many investors are preparing for this now by (a) not buying as much property as they would have, and (b) selling portfolios.

Both of these tax changes were devised and announced last year. The property market is now beginning to feel the impact of them and we will see a far greater pronounced effect over the next 2 years.

The rightmove index is a forward indicator so will react more quickly that Sold prices. As said above, it is useful but not definitive so needs caution.

[CretinWatcher]

Given the demographics of those who voted for Brexit I can't see how dying (which a lot of them will do naturally at some point in the near future) is bearing the brunt of it....

I meant Northeners

[CretinWatcher]

Let's hope it's not this: http://en.wikipedia.org/wiki/Carthaginian_peace

Not possible, after all we hold all the cards, dont'cha know

[Old Greg]

Not possible, after all we hold all the cards, dont'cha know

After if we have salt ploughed into our land, we can sell the salt!