Housing Crash UK: House Prices Down 15%!

The Halifax House Price Index for September 2023 is out, and it’s not good news for the UK Property Market.

Add to the mix we’ve also got a bank on the verge of collapse, and are we about to see a market capitulaiton?

Let’s crunch the numbers!

Link to the July 2023 BoE Financial Stability Report:
https://www.bankofengland.co.uk/financial-stability-report/2023/july-2023
______________________________________________________________

Looking to get started in Property?

Download my White Paper on how to invest in the current property market here:

http://robstewartglobal.com/white-paper/

Get Your 2 Week Free Trial Of Property Data – The Market Leading Property Analytics Tool here:

https://propertydata.co.uk/a/rs

Register for the Property Cashflow Secrets Masterclass here:

http://robstewartglobal.com/property-cashflow-secrets/

Looking for a strategy that’s tailored to you for the next 12 months and beyond?

Apply for a Strategy Call with me now and we’ll see if we’re a good fit to work together:

https://robstewartglobal.com/strategy

[Music] [Applause] [Music] oh we’re going to be talking about two things today number one Halifax HPI which is showing that house prices continue to come down despite the property balls and despite the rhetoric that goes in their house price index about resilience we are seeing more Falls and the other thing I want to talk about is Metro Bank uh and what’s going on in the banking system and is that a cause for concern going forward for the next 3 six months with the property Market how are those two linked first of all a very good morning to everybody I know I usually go live in the evening but it’s Friday uh we do have things to do in the evenings on Fridays um if you can see me and hear me please give me a thumbs up and please type something in to the comments as we are live um please put your questions in as we go along if you’re watching on the replay again please put your questions or your comments in as I ask them as if we’re on the live and I’ll always come back and answer them for you for those of you who are new and welcome to all the new subscribers from the last week or so on these live streams my aim is to cut through the headlines cut through the BS look at what’s actually going on with the data to enable everybody to make better decisions with their money and their Investments specifically in the property space but also in wider business space as well so that’s what we’re going to be covering today let’s crack on uh without further Ado and see what we have in the figures now I don’t know if you’ve managed to have a look at the HPI um that was released this morning the headlines are we have another month change of 4% down now this is actually for me um more than I was expecting because if you remember last or beginning of this week we talked about Nationwide which was reporting a level month for September um when we looked at the actual figures the Little Porky pies that Nationwide were telling is that on a um non-seasonally adjusted basis on a nominal basis house prices actually came down but they reported a 0% rise or fall so level for Nationwide but Halifax have reported a 4% monthly change drop uh we’re on a a minus 1.8% quarterly change um which is starting to add up and the annual change has also increased in terms of negativity from minus 4.5% uh in the last report to minus 4.7% in this so we are seeing continuation of the house price drop okay so let’s dive into this in terms of what it’s actually saying um it’s making quite a big deal here okay about- 4% in September compared to minus 1 8% in August now for those of you who watch Regular you remember when August came out I was actually pretty surprised to see that minus 1.8% figure um they’re kind of saying and we’ll go into the rhetoric in a minute and have a look at how they uh they have well in fact let’s just let’s just go into the rhetoric now let’s look at this headline they put in UK house prices fell again in September but pace of monthly decline slows yes fantastic we had a massive drop in August we had a less of a drop um this month so they line is pace of decline slows no I actually fundamentally disagree with this and as we go through this data I’m going to show you actually the pace of decline is increasing when we zoom out and look at a half on half or a year on year basis right the pace of decline is actually accelerating so I think that’s a materially um misleading statement or comment which is the very first line in the HPI so you know when you read that if you don’t know anything else that’s going on you might well go okay look we’re starting to bottom out no let’s just look at the trends and we will do in a second um 4.7 to- 4.5 they make a big deal that we pretty much unchanged no the year on year has dropped more um they still they’re still hanging on to this um this rhetoric that we’re still way above the prepandemic levels um look the pre-pandemic levels of property are like four years ago now that we’ve had we had huge growth huge cons of easing huge house PR price inflation over that period I don’t know why we’re still relating what’s going on now to something that ha you know know a level that was four um you know started four years ago we saw a massive surge with a completely different set of economic circumstances and the Ric still seems to be that because we’re above where we were pre pre-co that everything’s brilliant no we’ve gone up we’re coming down every time we go down on a month-to-month basis more people are falling into negative equity which actually causes uh you know more of an issue in terms of The Wider acceleration of U of issues especially when affordability starts becoming an issue and we’ll talk about that later um as well funny old thing sorry I’ve got a moth in here that’s bizarre uh funny old thing south of England is still sees the most downward pressure on property prices that’s to be expected um and reflects very much what we saw on the Nationwide so let’s look at the graphs um on this uh we can see that the dark blue line here if I just zoom in on this dark blue line is the year on year so if we look at the trends we’re pretty much seeing a um you know direct Trend coming down interestingly the purple okay this purple line is the month or month change and when you look at it here if we just zoom in on this by the way I’m so glad to be back on the iPad we got the iPad back um it looks like it’s come up right these graphs can be so misleading because this is a bit of a visual illusion when you look at this graph it looks like we’ve had a month- on-month tick up to the uninitiated probably go oh look we’re we’re going back up slightly or everything’s everything’s cool we’ve reversed the trend we haven’t reversed Trend and those of you who watch regularly will know I I talk about that the most important thing for us to look at here are the overall Trends we need to really put trend lines in on everything to assess Direction rather than month-on-month variations okay so I think that’s a misleading month if we actually rechart this and put a um a sort of red line horizontal red line onto that chart of where we are on this month um you can see that red line if you go to towards the axis on the left hand side is still negative right so negative minus point4 the reason we’ve got that tick up is because August was such a large drop of minus 1 1.8 or whatever it was so here we’re negative .4 and if you look at that negative point4 we’re still pretty much you know a bigger drop month on month than than all of this period here you know all of those months are sitting above the red line all of those months are certainly sitting above the red line and that was our little spring bounce that we had we’ve only really got uh three months in the last 12 that have been bigger drop than this month we’ve got we’ve got that one we’ve got that one and we’ve got that one um this is following Min budget so when I look at that um when we get rid of the you know the visual Illusions it’s still a pretty significant pretty significant drop i’ would suggest uh what does that do to house prices um as the overall so remember this is uh month on-month quarteron quarter year-on-year percentage changes this is the graph of actual house price and again let’s just Trend it let’s just chart it okay we have a very definite Trend you know coming down here so anybody who still says that we’re you know we’re not in a uh declining property Market I I think we have to be realistic here okay we definitely are on a trend basis yes it’s it’s not in a straight line you know we had our big mini budget spiked down we then had our spring bounce and uh last month I was talking about potential double top in terms in terms of that now when you look at the ons data um if you remember last month’s on data is actually showing I think showing a slightly higher bounce um than the alifax now the Halifax and the on are probably the two most closely correlated when you look at both of them their models their honic regression models are pretty similar um in terms of how they calculate it but the on don’t forget includes cash purchases so my and um probably includes different uh sort of metrics or methodologies for new build something in that on data is talking about quite skew in the new builds um and I’m not sure if that filters through quite the same into the model that Halifax uses which is why I think on the on data we’ve seen what it look looks like more of a double top whereas on the Halifax you know we’ve we’ve definitely come down more and now we you know we’re definitely definitely trending down so let’s maintain uh the watch of this trend as we go forward um let’s look at some of the language uh that’s used um Kim Kinard excuse me director from Halifax uh is saying there you go minus 4.7% largely unchange from minus 4.5% in August no it’s it’s further down on a year-on-year basis what I haven’t actually got the data is what the month- on month was the year that’s just dropped out so when we’re calculating year on year we have to be aware of what the preceding Year’s data is just like when we go through the CPI data um that’s really important to to understand um because we could still be having massive drops but if the year before had a you know big skew or big spike or drop that’s going to skew that year- on-year data so we have to see it in the context of that um again look they’re saying still remain £40,000 higher than March 2020 guys we are in massive inflationary environment and we have been for two years now okay we are in what’s what’s what’s inflation the last print 6.8 6.9% um so we’re seeing minus if you see year on year minus 4.7% drop in nominal house prices but inflation is year onye 6.8 6.9% up right that’s a big gap in real house prices that’s important to understand um again rhetoric house price resilience they still say resilience right if you look at this does that look like we’ve got a lot of resilience going on no this is property property takes ages it’s glacial Pace it doesn’t just suddenly capitulate like stocks and shares so we can keep holding on to this resilience if we want but for completely forgetting those macroeconomic factors of real house prices versus nominal house prices and the rate of change of things um it does say you know more resilient than expected over the period despite higher mortgage rates still filtering in right the mortgage rates we’ve seen over the last 12 months we’re still not feeling the effect youve still got 110,000 people every single month coming off cheap fix rate debt of 2% or less every month that Gap I call it the gap of the amount people are paying versus the amount you know fixed in is widening um so it’s still filtering in and we’ll do over the next next 12 uh 12 months um it they do mention this as almost as if to caveat however as we’ve highlighted previous often a lag effect between rate increases and the full impact of higher mortgage costs on house prices they’re saying there’s more to come and when we look at this last bit uh of the HPI it says however with base rate now likely to be at or around its peak right we are seeing fixed rate mortgage of deals ease back from uh from recent highs wage growth also remains strong which has helped affordability yes this is true this is the important thing and I highlighted this and both hpis both indices are now saying this quite categorically many economists and financial markets predict that base rate will remain higher for longer with any significant Cuts appearing unlikely until inflation gets closer to the bank of England’s 2% Target now that 2% Target uh is unlikely probably to be felt next year into 2024 so again we’re starting to predict or the analysts the indices starting to predict this this higher interest rate environment even if the headline mortgage rates for the lenders right now are coming down because yes the swap rates have come down and nobody’s borrowing so the lenders are still fighting for business so yes the headline rates of um 2year fiveyear fixed rate mortgages are coming down swap rates have come down but let’s look at the long-term persistent level that this sits at I keep talking about it the peak figure is IR relevant how long they stay high is relevant and everybody’s now saying interest rates are going to be higher for longer than everybody expects okay so overall these factors are likely to keep mortgage rates elevated in comparison to recent years constraining biod demand and putting downward pressure on house prices into next year okay so even even Halifax now saying into next year into 2024 we’re going to still see house price house price drops um what’s your thoughts I put uh last time we went live I asked a question where do you think the base rate so let’s not talk about mortgage rates let’s talk about Bank of England base rate where do we think it’s going to Peak number one do you think it’s peaked number two where do you think it’s going to Peak if you don’t think it’s peaked and number three where do you think or when do you think we’re going to start seeing it come down again what’s your thoughts please put that in the comments uh now um by the way just uh before we go into the next slides as we’re up and running now uh I would like to ask you one favor I always ask this one favor um as you know my aim with these live streams and the aim with this channel is to cut through the BS that we get from dare I say it other fellow property channels money channels uh which is all hype and hyperboy and also cut through the BS that’s in the mainstream um to be able to give you realistic and Powerful content that gives you the actual ability to take ownership and control of your futures whether it’s Financial whether it’s Health whether it’s success whether it’s business okay that’s my aim that’s my mission is what I want to do um amazingly on YouTube we get a uh even though we got tens of thousands of views every single month I only get one subscriber for every 0.1% uh of sorry every subscriber is 0.1% of 0 1% of views okay so to be able to grow this channel it would help me massively to have a bigger subscriber rase with a bigger subscriber base a bigger channel the community grows we can put out more and better content I’m starting to look at bringing team in to help me grow this channel to put more stuff out more regularly and help get more content to you so my only request is please hit that subscribe button hit the like button to help us grow this community get more powerful content to help you take control of your future uh so go ahead please press subscribe now click the like button it’s the only thing I’ll ever ask you on this channel in return I’ll continue uh to do these live streams and work tirelessly to help you do that so that’s my request for you okay cool so let’s see where we are um the housing activity there’s not a huge amount of you here we kind of talked about it quite a lot um last week with uh with Nationwide the big thing here again is the I just want to reemphasize is the lending figures the mortgage approvals um year on year the August figure was 37.3% below August 2022 but if you remember when we talked about it on the last live stream is actually was at 20 to 30% below the 2019 trailing average so everything is freezing up okay we’re in a position and just to reemphasize my my hypothesis on this is we’re not in a case at the moment that people have run out of money so we haven’t seen mass unemployment we’re not seeing mass unemployment there’s still liquidity in the system so because house price is correcting it means people who don’t need to move won’t move so that’s constraining stock less stock coming on is actually cushioning the house price um the house price correction due to supply and demand um this could change very quickly if we get to a Tipping Point where more people are running out of liquidity cannot afford their mortgages because the mortgage you know or just affordability in general is starting to we more and I’m looking forward to the next data set of savings outflow um in the UK because we saw in the last quarter quite a massive Spike of UK savings account outflow now after sort of stockpiling for the last few years during conative eating and and you know all the free money sloshing around a lot of it’s now coming out so we’re in that race of people’s liquidity versus versus cost so the whole the whole Market is still pretty much uh pretty much teased up now this is the last one uh second thing or no this the last one I talk want to talk about the the Halifax just to go back to here pace of monthly decline line slows that’s the headline of this this this report let’s just crunch these numbers so this is now the data for the last 12 months on a month-by-month basis and an annual change if you look at I’ve put it here H1 and H2 so half one half two I know it’s not calendar year it’s just the last the trailing 12 months if you remember last uh it was about this time last year so you can see it here these two months here oh sorry I’ve kind of gone over that this was mini budget time that’s November December so this is this is po this is kind of what happened post mini budget last year we saw that big correction on the Halifax in terms of house price now it didn’t it didn’t correlate with the Nationwide the Nationwide was a shallower longer more drawn out whereas in the Halifax we had this big dip down F many budget then we had a much bigger bounce in the spring but even with those two months we had a minus 2.4% and a minus 1.3% change if we look at the first six months of the last year we’re at minus 1.7 when we tally all those up I know it’s not quite as linear as that when we look at the last six months okay so what’s that that’s effectively April May June July August September with minus 3.3% so even with that skew and little Spike down of of house prices uh we are twice the decline in the last six months compared to the first six months of the trailing 12 months so for me that is showing that we are actually accelerating okay and when we see when we see those two months drop out um drop out of the data okay that’s going to effectively if you see here we’ve now got what’s that January February March 2 1.2.8 that’s a 2.2% up again I know it’s not as linear as that because you know figures on figures but just just bear with me in terms of very crude statistical analysis here when that q1 okay when this q1 2023 falls out so when we go into Q2 2024 okay this data is going to be falling out and we’re probably going to see I would imagine depending on what’s going on a month-by-month basis over the next six months that year on year to be starting to add up quite a lot okay so when that little bounce comes out um if we just look at that on the the actual graph okay if I just take oh no it’s it’s going to take all of them off don’t worry about it too much when effectively that this bit here falls out of the data and we’re starting our year on Year from there if we continue to go down okay that year on- year is starting to to add up quite a lot and don’t forget um year on Year sorry let me go back into that year on year um is not Peak trough if it’s going to take us three years four years to get Peak to trough the year on year becomes vaguely irrelevant it’s the peak to trough figure that we really care about okay lovely that is um what I want to talk about on Halifax just to reemphasize uh I did the figures or looked at the Nationwide realterm um house prices so inflation adjusted house prices we just had Q3 data come out um you can see how far below the red trend line we are with realterm house prices which means every month right now house prices are devaluing on a realtime basis right so that Equity that equity in your property is devaluing when you account for inflation and we’re looking we’re starting to look very cheap here right if if you chart this kind of I I will chart it more accurately um at a at another time but if we kind of go vague vague chart there I know I put that slightly too low we not far off the the the trough we had post um post financial crisis and again just to just to reemphasize here look how long this takes right this is when we went into financial crisis just before financial crisis that is sort of 2007 to 2013 pretty much a six year sixy year period in terms of real time real time house prices when we go into a um into a correction crash whatever you want to call it will take longer than nominal house prices Peak to trough okay we can see it again if we go here to here here we’re effectively 89 to 9596 again 7 years so Peak to trough 7 years here Peak to trough 7 years here it’s going to be interesting to see what happens here actually um you know if we’re going Peak to trough seven years then we’re going into what 2027 28 probably 28 until we hit real time um but we’re not far off in terms of inflation adjusted house prices where we were back in back in 2002 so house price looking quite cheap from a realterm perspective right now and that continues to adjust uh and if you look Peak trough in the current cycle okay we are currently 15% down which is where the the headline and the sort of thumbnail for this video came out with right now we’re 15% down pickt in terms of realterm uh house prices not nominal inflation adjusted which for me is fairly significant already I’ve always said I’m probably going to expect that sort of um coming up to I would say 30% uh Peak to trough inflation adjusted house prices I’ve always said we’re going to be much higher in terms of inflation adjusted versus nominal nominal is being balanced and softened um by uh by the wage growth by inflation it’s kind of flattering if you like the nominal house prices which is why people say that they’re resilient well they’re not resilient in terms of their actual value they’re coming down very quickly I think that’s something that’s super important that I want to say um I’m just going to go through some questions now team um before we talk about Metro and the banking system so let me just come off here uh let me just put my speckies on um and see what we’ve got in terms of if got any questions or comments um we got Matt hey how you doing Matt um good to have you on uh here we got hey we can hear L here fantastic Stafford these figures translate similarly to commercial property prices good question Stafford so commercial property prices have already capitulated they capitulated last year um H2 2022 saw a Circa 30% drop in real in not not in real disregard that in nom prices okay so back end of 2020 now just to Cave at that again they had a massive Spike Post coid in terms of value for commercial property um back half of last year capitulated I think it’s actually closer to 40% um reason being because commercial property is valued not on bricks and mortar but on yield-based valuations and uh there’s an inverse relationship with interest rates um yields and values so because the interest rates are going up investors need higher yield so you know if you can stick your money in the bank at 5% interest rate why would you take 5% in a in a property which has got more faf more risk you know maintenance all that sort of stuff so with interest rates going up the yields on property go up as well higher yield means you have to be able to buy it cheaper for the same rent let’s assume rent roll stays the same um you have to be able to buy it cheaper to get that high yield so effectively with yields going up prices come down asset prices come down um and that’s an important Concept in the commercial World which is why commercial property significant if iFly devalued last year and while I still believe that commercial property right now is the very best opportunity for Value Arbitrage if you’re an investor yourself to buy commercial use permitted development to get it changed into residential and get an immediate uplift on a price per square foot basis by arbitraging that value so yeah good question um Stafford uh Stafford reckon base rate to rise next time 0.25% um I think i’ probably in agreement with you wait and see the CPI figures uh Matt I know we speak about this regularly Matt um agree it hasn’t peaked you still reckon 5.75 to six that’s going to be interesting if we get up to there stay there for a year or so um Stafford again saying house prices look cheap versus inflation yeah agreed um and K still not sure how people are buying in London um so that there look there is still liquidity in the system I think that’s worth saying um Bank of M and Dad is not exhausted yet um liquidity uh you know don’t forget whenever we look at statistics we’re looking at overall statistics we’re looking at uk-wide statistics there’ll be demographic especially in the in in in London you know City who are still getting huge pay packets bonuses all of that sort of stuff um and still want to buy regardless they don’t actually care too much about house prices you’ve also got a lot of foreign investment coming in uh Middle East Far East that goes into London because you know they just they want to park it in Prime real estate um there we go we’ll continue let’s have a talk about Metro Bank so blim me it’s almost four four months ago now that we were talking about um Silicon Valley Bank um going under and the potential shock waves that are sending through and then pretty soon after Silicon Valley went don’t forget credit s went and that caused some real shock waves and I remember putting a video out about you know are we at the start of another financial crisis and we kind of came to the conclusion at that point that um you know after credit s went everything sort of stabilized settled down again but we weren’t going to be surprised if something else happened well here we go we got we got Metro Bank um in trouble at the moment um interestingly this is taken this morning don’t be surprised there’s another run on UK bank and you got a nice picture of Northern Rock so people go oh Northern Rock didn’t know they exist anymore they don’t it’s just a picture from when we had the last run on UK Banks but Metro Bank um is uh looking to raise a lot of Finance right now um to uh to bolster its its basically capitalization um there are various capitalization metrics uh they have to hit through FCA Regis legislation get after the last financial crisis all this was massively tightened up um so Metro Bank is seriously struggling at the moment however let’s not get too carried away with metr bank um getting getting in trouble uh whether it gets bailed out or not or claps is or not it’s not like this is a something that’s been triggered recently if we look at the Metro Bank share price and look the reason I talk about stuff like that this I think it’s important to understand contextually what’s happening because you can go into the news have a look at oh we’ve got another you know we’ve got a financial institution about to go under and go it’s a systemic issue that’s going to drag the whole UK banking system down and I’m not saying I’m not saying that’s not the case I’m not saying there’s not systemic issues but after 2008 there are so many more safeguards put in place um it should be more difficult for something like this to happen and there is a big difference between UK banking system and American banking system um in America you’ve got a lot more sort of smaller Regional Banks um they will be more exposed so silic when you look Silicon Valley Bank okay they were exposed to a lot of sort of tech um tech companies were banking with them a lot of deposits from tech companies of course last year was terrible for for Tech world so a lot of those businesses were taking their deposits out and effectively creating a run on deposits which meant that Silicon Valley Bank had to liquidate some of its Investments to keep their capitalization um ratios correct on their balance sheet so again talking about yields and uh and and asset prices if you got a bond right and interest rates have gone up yields have gone up the bond value is going to go down you’re selling bonds at a at a loss um or losing lots of money and it makes people very jittery they start doing a run on the banks and it goes uh it starts to go you know out of business and claps eventually so that’s what happened in America now is that going to happen in the UK um metr bank’s been in trouble for a while this is the share price chart for metrobank so I know the headlines talk about like 30% drop this week stuff like that you can see uh what’s that 28 Metro Bank peaked at um a significant share price and it’s been in trouble since sort of end of 2018 beginning beginning of 2019 this is not a sudden case of a wellestablished profitable bank with a sustained High share price suddenly getting into trouble this has been having issues for a while um obviously now compounded by the global financial situation it’s interesting I was reading into some of this this morning um they’ve been asking Regulators to get some clearances they haven’t got it that’s me means they have to recapitalize uh more um they’ve also got some bonds that they need to re effectively refinance coming into next year now that’s an issue because again you can’t just you can’t sell the bond at a depressed price because it it would be you need to get the capital from somewhere to basically pay that off and get it back up to what what you owe on it so if you’re going to refinance it it’s going to be on a much higher rate to refinance going to cost them more to carry that and that’s going to you know sort of eat into their profit margins but what I’m trying to say here is this is not a one-off uh sudden Bank going into trouble has been having issues for a while I’m not going to go into all of those um right now um when I was looking at that I started to do some research uh this morning into the state of the UK banking system just to get an idea of where we are because of course this could very very quickly if we do see other Banks start to go down and we do see um uh you know mortgage uh mortgage books getting sold off all that sort of stuff that can clearly impact lending uh can cause credit crunch credit crunch will tighten that property um property correction very quickly so we need to keep an eye on it because if it does happen it that will have a material impact on the UK property Market but um Bank of England last put out a financial stability report in July 2023 so about a quarter old now um and just to sort of go to the highlights there’s there’s three main sectors they look at they look at household and business finance they look at bank resilience and they look at non-bank Finance now I’m going to do more I’m going to do probably a standalone video on this report just to talk through it at the moment there they’re very happy with bank resilience um I’ll show you a couple of graphs in a bit now whether this is fudged or not is you know you can read it I’ve linked to it in the description to this um to this stability report if you have a lookout Bank of England are pretty confident that bank resilience is good right now we talk they are talking about that household and business finances are under pressure and clearly if we are looking at housing market household finances under pressure is going to impact into house prices over the the coming coming months and years um the thing they are concerned about is non-bank finance sorry I put a tick there I shouldn’t put tick there that should be a big big cross and actually that should probably be in red um they’re concerned about non-bank Finance so if you just read the statement here non-bank financial institutions continue to need more resilience we are working internationally to achieve this so so that’s not looking too hot at the moment they also talk about the the you know let’s just come off red because red is clearly clearly bad let go yellow current risk global economic Outlook is highly uncertain and a risk environment is challenging so you know when you read through that that that those language patterns there are concerns kind of systemically in what’s going on um right now but if we just go to some of these graphs I wanted to um this is they they have a non-technical overview to help people like me read it uh and be able to understand what they’re talking about but they’ve they stress tested the banking system so don’t forget this is Major you it says major UK Banks say not all UK Banks so I don’t know whether Metro comes under that but major UK banks are resilient they did a large stress test which showed that um and I wonder if we’ve got here we’ve got the here we go they stress tested unemployment rate to 88.5% inflation at 17% and house prices by Falling Falling to by 31% okay so that’s quite a major stress test and with that major stress test uh it brought back this is the capital ratio on bank’s balance sheet let’s not get too technical here let’s just say the lower this is the worse it is for the banks so uh stress testing now okay came down to there and this is the hurdle rate that things start breaking basically so they’re saying banks are pretty resilient based on all the you know all the extra layers that were put in after 2008 so they’re not too concerned about Banks or major Banks let’s have a look at households this is an interesting um uh couple of things we found on households this chart here shows mortgage payments the increase in mortgage payments um over uh well between by the end of 23 and and the end of 26 so this blue okay this blue is the increase in mortgage payments by the end of this year so we’re coming to the end of this year um this is mortgage payments that going to increase by up to2 200 a month 200 to 500 and 500 plus so what this is saying by the end of this year 2 million people’s mortgage payments will be up by up to2 200 a month we’ve actually got that’s probably about2 300,000 people’s mortgage payments will be up by 500 a month now by the end of 2026 look team we are in 2023 they’re talking about another three years of this we’re now projecting this out for three years which again is another indication to me that these interest rates are going to be high and persistent for a long time now and this will affect longterm the housing market okay we’re going to have almost four million mortgages up by 200 a month we’re g to have almost a million mortgages up by 500 p a month that’s £500 a month there’s a significant increase in mortgage interest payments alone for households now obviously this is going to be with you know higher value properties higher income demographics but £500 for a million is a huge amount so you know if you look at that we got almost four to you got 5.75 six you got almost seven million households which are going to see those mortgage um payments increase um over the next three years 7 million that’s significant okay now we’ve got another graph here which actually uh I zoomed in on because I think this was was um more interesting to zoom in on they’re offsetting this discussion by saying regardless of that and although the proportion of income that UK households collectively spend on mortgage payments is expected to rise they’re caveat it should remain below previous Peaks okay so here we are now right and it’s saying by the end of 2026 we’re going to get to basically it’s going to go up from what’s that 6% to 8% now 6% to 8% doesn’t sound like a lot but that’s because this is talking about all all UK households now I don’t forget there’s I think it’s about a third of UK households have mortgages so two-thirds don’t have mortgages right so we you’re taking that third of the UK demographic and spreading it across every everyone but they’re saying we don’t expect it to Peak more than here and more than here right but these Peaks here and here are at the top of house price booms right so these mortgage payments are very much going up because house prices are going up so people are taking bigger mortgages and therefore they have more debt to service so you can see what happened at at the end of both these Peaks it went down because the housing market crashed in both these so this is this is your crash end of the 80s into the 90s right this is your this is your financial crash of 2008 right now we are going up but the house prices are coming down so that it’s for me that’s a completely different situation um and you know if the net effect of this going up up means people can’t afford stuff and therefore you have a correction well it’s going up now and we’re having a correction already so when we start peing over does that mean the correction accelerates when people literally cannot afford those mortgages anymore and the other thing that’s not being talked about this this is purely Debt Service ratio for mortgages we are still in a cost of living crisis um we are still seeing utilities are going to be high I I think people still seem to think um I was speaking to a friend yesterday it’s like oh you know it’s it’s all fine this winter because utility prices uh have come back down again um no that that’s kind of not not really true so because of where the government put their put their price cap um or guarantee or what energy price guarantee whatever it was called last last winter put that average house about was it two and a half thousand a year for an average home and then they gave basically 500 to everybody over a period of six months to offset that so you’re actually the average household is netting or spending two Grand a year on their on their utilities last winter this winter uh the government guarantee doesn’t Factor anymore because the price cap is below that but the price cap is just about two grand it’s actually just below 2,000 it’s about 19900 I think um as we go into into the final quarter of this year so when you look at it on an average basis it’s pretty much exactly the same that you’re going to be spending on an average basis now of course if you got a much bigger house then you’re going to benefit more because Energy prices have actually you know come down um and if You’ got a smaller house it’s not going to be as big uh an issue but we haven’t just suddenly come to the end of energy costs being high I’ve just refixed uh we got a large um HMO in my portfolio I fixed it two years ago uh I think on the electricity is a 20 it was 20p a kilowatt hour we fixed out I just had to refix again uh because we’re coming to the end of that um and refix at I think it’s 32p a kilowatt hour uh for electricity so it’s still going up 50% so our utilities for this this this sort of HMO when I probably I think it pretty much doubled when I fixed it two years ago went from I think it was like 11 P kilowatt hour something like that to 20 p a kilowatt hour almost doubled and now it’s going up another 50% so we’re certainly not at the end of this energy crisis cost of living crisis there’s still a lot of fragility in the system okay let’s just finish this off team so I know we’ve been uh rabbiting on for for a while um the third part uh of the um of the report looked at Market based finance and I’m not going to go into this or read it it’s got lots of very large words which are designed for most people to go that’s too that’s too difficult try and work out what that actually means basically saying the bank of England so people that lend or um uh you know sort of borrow or non bank that are not Banks there are concerned systemically from the bank of England and interestingly this was a letter that went out last Friday um that uh after identifying a lot of this sort of stuff the bank of England issued recommendations for financial institution utions uh to tighten up on various aspects which they haven’t done and the bank actually sent a letter open letter to them on Friday saying look we’ve told you to do this you’ve not done it you’re not heeding what we’re saying um you need to put more safeguards and processes in place um to basically uh you know uh watch out you can see this Bank of England down here Bank of England wrote to lenders on Friday to urge them not to underestimate the risk of loan defaults as higher inflation increased interest rates hit more vulnerable borrowers now this is households this is also business businesses um I started to go down a rabbit hole of looking at um uh business insolvencies over the last quarter it’s gone up hugely we’re going to do this on another video um but let’s just say there’s some system systemic issues in the financial system that clearly is a concern to the bank and as inflation stays high for longer and interest rates stay high for longer everything’s creaking a little bit uh we’ll see how this feeds in to the property Market there we go team um that is my overview of Halifax HP Pi for September 2023 um and a sort of little overview of the banking system Financial system um still not seeing from my point of view any leading indicators that showing any reversal in Trends if anything all the leading indicators are still showing an acceleration of things in the wrong direction for most people unless you’re sitting there you know wanting a massive housing crash to happen which some people some people do I know that and still still maintain my narrative we’re not going to see some big crash it’s going to be a slow long drawn out process probably prices declining way into next year if not into 2025 um I would imagine looking at this data cool any questions on that team um I’ll pass it over to you give me a thumbs up if that had some interest of what we’re looking into um if that helps you understand anything that’s going on at the moment um I keep meaning to create basically almost like a Target dashboard for all of the lagging and leading indicators that we talk about on these live streams so we can sort of on a monthly basis review it on a colorcoded system green to Red because I think I I I always want to clarify that I’m not here beating the drum saying I want everything to implode those of you who know me know I’m a I’m a property investor and a business owner and I don’t want the the whole system to destroy itself that’ be fairly fairly bad um however it is important to understand what’s going on because in a correcting Market there will be more opportunity depending what your models are so understanding that and being able to leverage that opportunity in an ethical way I think is really important as an investor or an active you know active business owner um whatever is uh whatever it is you do so uh I’ll pass over to you guys I’ll uh I’ll hang around for five minutes um if you’ve got any questions you want to ask or any comments um on that Christopher says um great video thank you very much Chris I very much appreciate that always appreciate the feedback from everybody um next week uh I do you know what I haven’t actually seen what date the next CPI print I don’t think it’s going to be next week is it I think it’s going to be the week after next so we’ve had quite a lot of what we what we tend to see in the in the month is the beginning of month we’re loaded with property data we get to the middle to the end of the month and we’re loaded with more economic data um so next week might be a little bit of a quieter week in terms of uh in terms of news um so uh you know we’ll see what I’m going to look more into that Financial stability report um and see if there’s anything interesting we can pick out and look at that but I thought it was quite telling just from a snapshot there um the debt to service ratio for households uh Rising into 2026 actually it still hadn’t peaked it it was starting to top out but it hadn’t peaked in 2026 so my thinking is this as I’ve always said it’s going to be take longer and be you know sort of um more drawn out than anybody thinks you know if anybody thinks we’re just going to suddenly crash and then bounce back up I can’t see it if anybody thinks we’re going to bottom now um and then start rising in 2024 I can’t see it I still think we’ll be um realtime price reduction in housing for a good few years potentially another five years from here right right I I wouldn’t be surprised if real realterm house price is still in decline in five years time unless unless inflation massively unders shoots okay if we go too too hard uh on the on the interest rate Bank ofle interest rate inflation massively undoes and then we can see those interest rates being being coming back more quickly but I don’t see that happening in 2024 um even on the the governments the ‘s own projections um you know we’re hitting targets probably into 2025 uh and maybe maybe an undershoot but I can’t see happening that quickly so still my my position remains longer more drawn out shallower but longer by the way shallower and longer does not mean it’s not going to be deeper pick to trough it’s just going to take longer to get to the get to the trough that’s my thoughts um hey great analysis um no worries of Tores uh hope that uh was useful for you um if there’s any more for anymore let me know uh otherwise must be almost lunchtime um and it is Friday so I hope everybody has a fantastic weekend um and I look forward to seeing you next week um on whatever whatever data we want to chat about next week so I’ll leave you to it team have a great weekend and I’ll see you next [Music] week