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I did think that we would revisit 14 as gapes to be filled
Denny your guess is as good as mine, there is nothing to say it won’t drop a small amount but I think we have found a new bottom??
Will our SP DROP ANY MORE ? Stevebt If this happen.
The house builders aren’t going to start new sites off with no sales or very few in a time when not many people are buying.
"New Government figures showing a sharp fall in the number of new housebuilding sites breaking ground has prompted accusations against developers of constraining supply to maintain high profit margins.
Data from the Department for Levelling Up, Housing and Communities, led by Michael Gove, showed the number of sites where building work started on site was 21,300, down 68 per cent between 1 July and 30 September, compared to the same point a year ago."
"Charles Breen, owner of mortgage broker Montgomery Financial, told the Newspage agency the fall in housebuilding was 'a cynical ploy from developers to constrain supply so as to keep the prices up and their profit margins high, and ultimately serve their shareholders.' "
That’s it Gary. Endowment not indemnity. My mind is not what it once was!
I am not an expert on this, but it probably will keep on paying the dividend, with no increase in payout untill things get better, only just a guess.😁😁
Crossley ... "why I was paying £546 I’m unsure".
Could it be & as I'm of the same age as your good self, a lot of owners chose (or were rather ill informed / mis sold) endowment policies.
That could be it mate.
But what effect will CRST’s looming update have on the sector tomorrow? With the dividend looking like it might get severely slashed or maybe completely suspended ?
Any views on this?
Yes, quite likely, perhaps as soon as tomorrow.
Here we go, onwards and upwards!!
Afternoon Dowsie
I initially bought my first house with my best mate as we both wanted to get on the property ladder in early 1988.It was the only way to get in. I was 20 and just come out of my time as an apprentice at RR. My initial payments were lower and over 25 years. I think there was no such thing as fixed rates back then, or not much interest, but like I said the £546 was in ‘90. I believe the BOE rate was 15.5% so why I was paying £546 I’m unsure. Maybe it was something to do with the good old indemnity?
Crossly I borrowed 31k on my 2nd house and when interest rates went up to 15% I was paying 330 pounds a month my take home pay was 600 pounds a month and I had 2 children so just to keep the house my wife got a pt job in the evenings BTW my mortgage was over 25 years how many years was yours over when you borrowed 35 k
That was my highest payment. Think it was 08/91. Had a good year or two of the rise in house prices at the back end of the eighties then, well, we know what happened then.
Those figures represent a figure of 18.5%!
In comparison, still owe just over 255k with interest only payments of £353 per month.
Due to the cost of living crisis i want the stock market to drop 15% LOL so i can get some more shares
“ old repayment book out. 35k mortgage. Payment £546.30”
Tell kids that today and they won’t believe you!!!!
Your and my mortgages were probably during the period of a proper house price crash and substantial negative equity.
Apologies, should have said H2 unit figures.
Just dug my Woolwich (remember them?) old repayment book out. 35k mortgage. Payment £546.30
Meconopsis, thanks for the reply on Friday. I’m pleased it was a best guess. Having built an extension of my own.
That doesn't leave much headroom is they run low on disposable income.
Might I add, there’s also the mortgage charter that’s been launched by the government that pretty much all lenders have signed up to. You can extend the length of your mortgage, switch to interest only. On the average of 189.5k @4% that would still enable you to live in your own home for £630 a month if needs be. Things really are not comparable to the 1990’s. Attitudes have changed. Oh, I remember my 35k mortgage in the late eighties/ early nineties when I was twenty something myself.
The subject could quite easily read
Housing market still looks uncertain although H2 figures have improved over H1 figures for both TW & PSN.
Maybe that’s not negative enough for some though?
Stt1 - it's the macro stuff that's the worry - I agree. But it's a reason to exit or go short of the whole market - rather than being a house builder-specific issue.
Thanks for the reply stt1.
I think you're conflating sector issues (should I be long in house builders) with macro stuff (should I be long in anything other than defence shares and gold).
Government debt is an important worry, but it's mortgage debt that drives the housing market. Mortgage arrears and repossessions were significantly up last year (https://www.ukfinance.org.uk/news-and-insight/press-release/mortgage-arrears-and-possessions-q3-2023#). That pressure will ease as rates go down.
With respect to Home REIT, I disagree that you can compare the distressed sale of an investment trust - who are very specifically invested in homes to rent in the third sector - with house builder sales. Home REIT isn't a house builder.
We certainly have house builders facing issues - as the collapse of Stewart Milne Homes and difficulties at Crest demonstrate. But Stewart Milne Homes has been for sale since December 2022 and none of the trade buyers was interested.
"Agree but the problem is for those whose with 2-5yr fixed rate mortgages, due to re remortgage, the rates are still significantly higher, double what they have been used to. "
And that's what all the mortgage stress test nonsense was about when they took those mortgages.
What has been generally missed in all the noise about mortgages is that a significant minority of mortgage holders haven't yet been touched by the rate rises. If you took out a five year fix 3-4 years ago then you'll have missed the worst of it.
People also miss that people can choose to remortgage onto a lower rate as rates drop - albeit with a penalty.
"Compared to 1990s, nowadays 2 partners take on the mortgage at 5-6x income and use a significant portion of their income on the mortgage. That doesn't leave much headroom is they run low on disposable income. They can't work any more. Previously, it used to be 1 person took on the mortgage at 3-4 x their income, so if needed a partner could look for part time work to make up the shortfall. "
Is that the 1990s when I my mortgage consumed 80% of my take home pay and I was living on toast for 2 years?
IF you cannot afford a mortgage sell up as you are living beyond your means rain in your spending simple
Banks CEOs meet the Chancellor.Today 19:50
Something different to discuss.
Ideas on the outcome of the meeting?
Some kind of tax relief/ advantage for Banks to help people in Mortgage payment struggle, guessing ? . Political move but will be welcome for those in need .
Meconopsis
Sorry for the delay in replying to your post last Sunday.
I agree with the vast majority of your post.
"You can’t equate a distressed sale with the state of the housing market for house builders. "
I think you can because sellers are distressed due to need of money, whether that be due to high debt or affordability.
"I don’t know where you get the supporting evidence for there being “a huge debt crisis”."
Official figures which show govn debt is around 100% of GDP. A lot of govn around the world built up huge debt since GFC. Look at China where the housing market is collapsing. I think the assumption was interest rates and inflation will remain low but nobody allowed for the biggest pandemic in 100yrs.
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/march2023
Local councils going bankrupt, Birmingham is just one with loss of hundreds of jobs.
Businesses closing down.
Number of individuals with high debt.
"One thing to remember about interest rate cuts is they take effect more quickly than interest rate rises. If the interest rate falls then you can make a choose to remortgage to a lower rate. You don’t do that when rates rise."
Agree but the problem is for those whose with 2-5yr fixed rate mortgages, due to re remortgage, the rates are still significantly higher, double what they have been used to. Compared to 1990s, nowadays 2 partners take on the mortgage at 5-6x income and use a significant portion of their income on the mortgage. That doesn't leave much headroom is they run low on disposable income. They can't work any more. Previously, it used to be 1 person took on the mortgage at 3-4 x their income, so if needed a partner could look for part time work to make up the shortfall.
In terms of govn help as the GE is due. Govn help only makes things worse and pushes the problem further down the road.
I think govn need to look at whether there is a 'cartel' with the HBs. It certainly looks that way to me.
I believe the huge debt is a pack of cards which will collapse.
There's also the increasing threat of the war in the ME spreading. That together with the other conflicts/potential conflicts around the world, so there's increasing likely to be a stock market crash. HBs sps are not immune to stock market movements.
Londoner - I agree with you on every point except the outturn. Both parties will support buying over renting.
Mortgages end rents are for life, I was speaking to a couple who just paid £200k for a psn home pretty close ro where they have rented for 10 years, I asked them why they bothered if they so close and they replied 'in 10 years they have paid £85k in rent which could of went towards reducing a mortgage debt.'
if you're palnning for a pension isn't it better to be rent free??
Meconopis, thanks for your response. You say,
"The RIGHT thing to do would be to build many more homes for rent and move to the German approach where people don’t expect to buy until their parents die and they inherit.
But that’s political suicide."
If it's the right thing to do, then why wouldn't that be the direction of travel. Savills monitor the Build to Rent (BtR) sector. This is from their 2023 Q3 report:
“The third quarter of 2023 saw a record number of Build to Rent (BtR) homes under construction, at 59,043, despite a slowdown in starts in response to economic headwinds.
Notably, Northern Ireland began construction on its first BtR scheme, signalling a key moment for the growth of the sector in the region.
There are now 92,140 completed BtR homes across the UK, an 11% rise year on year. BtR continues to expand its reach and the number of local authorities with BtR in their planning pipeline has reached 200 for the first time, primed to deliver over 112,500 more homes.
The Single Family Housing (SFH) sector, in particular, continued to expand strongly, with over 28,000 homes now in the planning pipeline (11% of all BtR homes).”
It’s only in the last couple of years that I’ve heard the term ‘Build to Rent’, though in a time past we called it ‘Council Housing’. The difference today is that it is private development leading the way, with it would appear, local authorities returning to the provision of homes for rent.
From almost a standing start the numbers Savills describe are impressive. 59,043 BtR homes under construction represents a significant proportion of total homes under construction - although I couldn’t find a number for homes under construction I’d guess the c.200K completions is a guide.
Single Family Housing representing 11% all BtR homes may be an indicator of acceptance of the challenge of home ownership. An inheritance of a home or a deposit isn’t available to all.
Looking into the currently available schemes for first time buyers I came across this:
https://www.propertyreporter.co.uk/almost-half-of-first-time-buyers-are-getting-help-from-government-schemes.html
The First Home scheme looks attractive for those that qualify.
But, back to the future, and possible changes under Labour.
I’m from the Thatcher generation, so remember the dinner table discussion on the housing market. For the young folk of today, housing is still a very important issue but perhaps their more accepting of alternatives to home ownership.
On your point ‘political suicide’, I expect there to be a continuation of limited support for first time buyers, but I can’t see any political party offering anything like the level of support provided under Help to Buy. It should be clear to everyone that the answer is simple – build more houses of all tenures.