The politics of falling UK home prices

[drbubb]

There are a lot of people retiring at the moment (demographic bulge), and most will be aware of the banking/soveriegn debt crisis unfolding. Many will look at property investment as a way of "inflation proofing" their capital, while deriving a better yeild than is available through saving accounts or annuities.

 

Also because of the building restrictions in the UK, there may well not be an oversupply of housing despite the bubble. That rents are proving "sticky" would support this. Banks own estate agency/lettings agency chains and could simply rent out reposessed homes rather than become glutted with decaying houses as in America/Spain.

Makes some sense,

But why then, are prices sliding, and days-to-sell picking up? (see charts, above)

 

Given the Bearish evidence, the Burden of proof is now on the Bulls to find something that supports their case.

[alexreeve]

Makes some sense,

But why are prices sliding, and days-to-sell picking up?

 

The Burden of proof is on the Bulls now

Bubbles pop because high prices stimulate supply eventually leading to massive oversupply, this has not happened in the UK because of byzantine planning restrictions. So what causes the crash? Demand contraction (availability of money not fanciful desire). There is plenty of money, although it is becoming more and more concentrated (which recession should remedy, if the government stopped changing the rules to help). Provided those who have the money see no better investment opportunities there is no dramatic drop-off in demand. The perception is that housing is inflation-proof, provides an excellent yeild in the current low yeild environment, is relatively safe from counterparty risk/government seizure (although I doubt the average cash rich person would think of it in those terms, just that it cannot just vanish overnight in the way a paper financial asset can).

 

I don't see how you have an HPC in the UK without a systemic collapse, banks and big government go "to the woodshed". This will never be politically expedient.

 

Anecdotally, i'm not seeing much in the way of sliding home prices in my part of the southeast, and I'm not seeing much of a tightening of mortgage availability either. House prices and rental prices seem to have been essentially flat for a few years.

[drbubb]

I have to say, I find some of the comments that I am reading here to be mystifying. It as if some are not looking at the data or the charts that I am providing.

 

Perhaps they do not believe the data, and/or the charts are in invisible colors.

 

So here's another one:

 

Gentlemen, the house price data is showing us that a nice clear slide in prices has begun, and it would be surprising if it did not pick up momentum (given the rise in supply suggested by increasing days-to-sell.) It can easily move on into a full blown crash. An accelerating slide is already underway, and this drop is happening without any rise in rates.

 

Already, the annualised 6months figure is -5%, and if the NSA Halifax figure for November is unchanged, then the year-on-year change for the H&N index in November will be +0.06% = ie virtually unchanged. And it is likely that Halifax will be negative, and my favorite indicator will go negative in November, and more negative in December. The 6 months annualise figure will be -5.8% for November if Halifax is flat.

 

The usual pattern would be that the year-on-year change will follow it there within a few months. Headline reports of -5% and increasing falls are going to undermine the bullish complacency which seems to persist for some odd reason.

 

I don't see how you have an HPC in the UK without a systemic collapse, banks and big government go "to the woodshed". This will never be politically expedient.

 

Anecdotally, i'm not seeing much in the way of sliding home prices in my part of the southeast, and I'm not seeing much of a tightening of mortgage availability either. House prices and rental prices seem to have been essentially flat for a few years.

 

I'd ask you this: where are you getting your local information?

How up-to-date anm reliable is it? What are the local factors that make it different from the clear slide shown in the National data?

 

I would expect the National trend to win out, and whatever loacl strength you are seeing will soon fade, as the message of year-on-year negative changes gets out and is more widely accepted.

[tinecu]

House prices are down a lot in any currency other than GBP sterling.

 

As long as the pound is pathetically weak I can't see house prices dropping much as property would become insanely cheap with insanely cheap mortgages to boot for foreign buyers.

 

I am contrarian on the pound and think it is massively undervalued (or maybe this isn't contrarian anymore).

 

I'm not buying property just now but I own a flat in London and am renting in East Midlands.

 

There is no temptation to sell my flat as the mortgage is dirt cheap and the rent extortionate (I couldn't afford to rent it myself!).

 

I'm not sure how many people are on low rate life time tracker mortgages but I can't see them ever selling up as any capitol losses over the years will ultimately be offset by the savings on the mortgage interest.

 

IMO: The UK must continue to inflate away the debt [QE again and again]. Otherwise the Banks will fall over. If house prices start to fall seriously the government will print money to buy them (e.g. council houses). The story for the consumer will be that they have less and less money to spend on housing and more and more must be spent on fuel and food.

[tinecu]

Anecdotally, i'm not seeing much in the way of sliding home prices in my part of the southeast, and I'm not seeing much of a tightening of mortgage availability either. House prices and rental prices seem to have been essentially flat for a few years.

 

http://www.home.co.uk/guides/time_on_marke...urrey&all=1

 

Time on Market is on the rise and quickly. Soon to be as bad as the during the worst part of the first leg down.

[drbubb]

http://www.home.co.uk/guides/time_on_marke...urrey&all=1

Time on Market is on the rise and quickly. Soon to be as bad as the during the worst part of the first leg down.

EXACTLY.

Here's a clearer version on the chart above

 

The purple shaded area shows when Yoy changes are negative

[alexreeve]

I'd ask you this: where are you getting your local information?

How up-to-date anm reliable is it?

Local papers, conversations with many people I know who are buying houses at the moment. It's not reliable data, I did say anecdotal.

What are the local factors that make it different from the clear slide shown in the National data?

It is where the bankers/city lawyers live (because of excellent transport links to the square mile), does that make a difference?

 

I have no desire to move (or buy an investment property), so it makes no difference to me whether house prices crash or not in my area. Obviously the secondary effects of a general crash would effect me as much as anyone.

 

Coming back to the focus of this thread - Regardless of whether they will succeed or not, I see nothing to suggest that the political will/need to prevent the crash has altered at all.

[ecoface]

Makes some sense,

But why then, are prices sliding, and days-to-sell picking up? (see charts, above)

 

Given the Bearish evidence, the Burden of proof is now on the Bulls to find something that supports their case.

 

I'm not a bull, but...

 

Look at previous Autumns (pre 2007) before we get too excited.

 

I would also like to add something to this thread in that I am absolutely staggered no one seems to have mentioned.

 

Small house price falls and increases are pretty meaningless IN REAL TERMS adjusted for inflation.

 

I keep having this beef with associates and friends who look at me blank in the face, I think, because they are so used to CPI and RPI at less than 2% for the last 10-15 years, so they don't understand the impact of 5-6% inflation will have on house prices.

 

I personally think that QE will keep NOMINAL falls from snowballing.

 

But in REAL terms those falls will look very bad.

 

Do any of you have any indices that show house prices in real terms?

 

 

[John Doe]

You can get a BTL mortgage for "way less" than 5%?

 

The best deal I see is 4% and that is variable. The thing will barely be washing its face at that rate. And that's without taking in to account maintenance costs. Typically you need a yield of approaching 10% to be safe. Record low BOE interest rates has not exactly filtered all the way thru to mortgage rates. The spread between BOE and the mortgage rate is just widened significantly. Thus helping recapitalise the banks.

Five year BTL fixed at <5% (and lots of other deals)

 

http://www.lovemoney.com/news/make-good-pr...?source=1000578

 

BTL is coming back

 

** Edit Not that I approve **

[John Doe]

The UK banks are now approaching a level of capitalisation where they will be able to withstand a property downturn.

 

You are only considering those people directly employed by the government in some way. The real effect of cutbacks will be on those indirectly employed by the government. Many Firms with government contracts are already finding things difficult. It is in this sector that the major job losses will occur.

Excellent point, but, the banks are still not marking to market, so I think they are nowhere near to a point where they could withstand a 20 or 30% fall in assets.

For example, RBS was recently shown to have ~half of it's loans to Eire's banks underwater (And Lloyds in similar position)

 

I agree on the jobs front, but, again, everyone was expecting far worse (including all the secondary job losses) and now it will not be anywhere near as much as was feared only a month or two ago.

[geisaver]

Mortgage credit is reduced, but it is still available, and at extremely low rates (esp to those with a half decent deposit). LTV's are rising again (95% now available) albeit at higher rates. In fact, if it were not for the reduction in credit, the current low IR's would be fuelling a major boom.

 

As for the regulators, lets wait and see what the government actually do, not what they say. Unless the market has recovered significantly, I can't see any big changes in addition to those the lenders have already imposed on themselves.

 

Speech here by the mortgage policy manager at the FSA in October. She is well aware of problems with non-income verified mortgages in previous years - yet declares 43% of mortgages in Q1 2010 were non-income verified!! She is telling people who want a mortgage without verifying their income to ignore banks and go to a mortgage broker!!

 

So we have legitimate concerns about lenders’ assessment of affordability.

 

It’s hardly surprising that there are issues when you consider the volume of mortgages where incomes were not verified. These have expanded rapidly in the past decade and in recent years accounted for 40-50% of all mortgage applications.

 

Self-certification mortgages have been more or less withdrawn from the market by lenders, following the credit crunch. But non-income verified mortgages continue in the form of ‘fast track’. Even in Q1 this year, this accounted for 43% of mortgages sold.

 

So what’s wrong with fast-track? We are well aware that lenders’ fast-tracking processes can be ‘gamed’ by brokers who know the rules and who know where to place cases where they don’t want to provide evidence of income. And with the demise of self-cert, the point of least resistance becomes fast-track. Fast track would simply develop into self-cert by another name. We read the mortgage blogs and have seen many brokers comment on how easy and open to abuse the fast track process is.

 

In the past, non-income verified mortgages have not always been low risk – there has been a significant amount of this type of lending at high LTVs, including 15% of all applications above 95% LTV in 2007 and around 40% of applications at 85-90% LTV. If we leave fast tracking as it is, there will be a natural relaxation of criteria, as we saw in the past.

http://www.fsa.gov.uk/pages/Library/Commun...0/1020_lb.shtml

 

Speech here by Housing Minister Grant Shapps in November.

The Housing Minister, Grant Shapps, says he himself would have failed to get a mortgage had new proposals for the mortgage market drawn up by the City watchdog been in effect when he bought his home.

Speaking at the National House-Building Council's annual lunch, Mr Shapps said: "I think it was about the moment I realised that I wouldn't have a mortgage if the Mortgage Market Review (MMR) changes went through that I kind of thought that this might be going a step too far."

 

He continued: "There is no point in closing the door after the horse has bolted"

http://www.independent.co.uk/news/business...er-2145051.html

 

Before the CSR I was tracking 3 houses close to me at £400k, £395 & £370k which aren't cheap for the area. When the CSR turned out to be just more spending and with what I read above and other things I've been wondering if perhaps I should buy one. I didn't but someone else has - all three have gone under offer in the last 10 days.

[tallim]

.... Over the next few months, as house prices continue to drift down we should be asking ourselves the following questions:

 

1. What can the government do to prevent the second down leg?

2. What are they doing now, or have already done to prevent it?

 

Unless the answers to these two questions are broadly the same then the government is not genuinely acting to support prices and the falls will increase.

 

I like that.

 

Here's a quick summary from me on the major themes that should influence house buying, when I've had a think about it I'll try and consider what ways Government policy could effect them, please add any I've missed;

 

+ Employment Stability Perception and Actuals

+ Salary Stability Perception and Actuals

+ Media Sentiment (including advertising)

+ Family and Friends Sentiment

+ Mortgage Rate and Availability Expectations and Actuals

+ House Price Expectations and Actuals

+ Housing Availability Expectations and Actuals

+ Direct Family Pressures

+ Attractiveness of Renting (for FTB)

+ Price of Renting (for FTB)

+ New Housing Supply

+ Availability of Funding for Banks and Building Societies to provide Mortgages

+ Risk policies in Banks and Building Societies on Mortgages

+ Risk policies of regulators on Mortgages

+ Return on BTL investments Expectations and Actuals (for BTL)

+ Return on other investment classes Expectations and Actuals (for BTL)

 

[geisaver]

I like that.

 

Here's a quick summary from me on the major themes that should influence house buying, when I've had a think about it I'll try and consider what ways Government policy could effect them, please add any I've missed;

 

+ Employment Stability Perception and Actuals

+ Salary Stability Perception and Actuals

+ Media Sentiment (including advertising)

+ Family and Friends Sentiment

+ Mortgage Rate and Availability Expectations and Actuals

+ House Price Expectations and Actuals

+ Housing Availability Expectations and Actuals

+ Direct Family Pressures

+ Attractiveness of Renting (for FTB)

+ Price of Renting (for FTB)

+ New Housing Supply

+ Availability of Funding for Banks and Building Societies to provide Mortgages

+ Risk policies in Banks and Building Societies on Mortgages

+ Risk policies of regulators on Mortgages

+ Return on BTL investments Expectations and Actuals (for BTL)

+ Return on other investment classes Expectations and Actuals (for BTL)

Inflation expectations? Property seen as a hedge against inflation?

[John Doe]

Good list, may I add

 

+ nesting instincts

+ nagging partner (present company excluded) could be classed under direct pressure

+ sense of ownership

+ not being messed about by landlords

+ wanting a home, not a house

+ wanting to make the home as you want it

+ outright ownership after mortgage paid (for me thats the big one)

 

Edit typo

[neil324]

Good list, may I add

 

+ nesting instincts

+ nagging partner (present company excluded) could be classed under direct pressure

+ sense of ownership

+ not being messed about by landlords

+ wanting a home, not a house

+ wanting to make the home as you want it

+ outright ownership after morgage paid (for me thats the big one)

 

None of that applies to BTL though. It does to FTB who want to buy for all of the above reasons but most can't get the credit to buy.

 

Another point raised so far some areas will fair better than others, which is true. My own area of Birmingham nothing is selling except sensibly priced stuff or repo's anything else is just sitting there. which i suspect is true for 80% of the UK.

[John Doe]

Before the CSR I was tracking 3 houses close to me at £400k, £395 & £370k which aren't cheap for the area. When the CSR turned out to be just more spending and with what I read above and other things I've been wondering if perhaps I should buy one. I didn't but someone else has - all three have gone under offer in the last 10 days.

Exactly, thats half the reason I got less bearish, along with the fact the government seems to have had a much larger bark than its bite in almost every other area where it was planning major changes.

 

Perhaps all the talk was to soothe the bond markets?

Perhaps they decided cutting to far too fast would actually cause more problems than it solved?

Or perhaps they realised with a CPI of ~3% for the term, the deficit would be automatically cut by £40B.

[tinecu]

I'm not a bull, but...

 

Look at previous Autumns (pre 2007) before we get too excited.

 

I would also like to add something to this thread in that I am absolutely staggered no one seems to have mentioned.

 

Small house price falls and increases are pretty meaningless IN REAL TERMS adjusted for inflation.

 

I keep having this beef with associates and friends who look at me blank in the face, I think, because they are so used to CPI and RPI at less than 2% for the last 10-15 years, so they don't understand the impact of 5-6% inflation will have on house prices.

 

I personally think that QE will keep NOMINAL falls from snowballing.

 

But in REAL terms those falls will look very bad.

 

Do any of you have any indices that show house prices in real terms?

 

Look at this report (page 8)

http://www.home.co.uk/asking_price_index/HAPIndex_AUG10.pdf

 

or perhaps we have a whizz among us who can extract the chart.

 

[Meralti]

I like that.

 

Here's a quick summary from me on the major themes that should influence house buying, when I've had a think about it I'll try and consider what ways Government policy could effect them, please add any I've missed;

 

+ Employment Stability Perception and Actuals

+ Salary Stability Perception and Actuals

+ Media Sentiment (including advertising)

+ Family and Friends Sentiment

+ Mortgage Rate and Availability Expectations and Actuals

+ House Price Expectations and Actuals

+ Housing Availability Expectations and Actuals

+ Direct Family Pressures

+ Attractiveness of Renting (for FTB)

+ Price of Renting (for FTB)

+ New Housing Supply

+ Availability of Funding for Banks and Building Societies to provide Mortgages

+ Risk policies in Banks and Building Societies on Mortgages

+ Risk policies of regulators on Mortgages

+ Return on BTL investments Expectations and Actuals (for BTL)

+ Return on other investment classes Expectations and Actuals (for BTL)

 

 

The whole point of my original post was that the only thing that is really holding up house prices is government policy, specifically the policies implemented by Brown and Darling in 2009. These policies were clearly designed to replace the funds that had been going into housing but were lost, and never recovered, in the credit crunch.

As explained by Bubb in a number of posts these are what are propping up the market, indeed what prevented a full scale collapse in 2009.

 

The point here is that these policies are subsidies designed to place a floor under prices thereby saving the banks and making Labour more electable in 2010.

 

The period of crises has now passed, as I have pointed, out the banks are approaching a point were they are effectively recapitalised and a much less dependant on high prices to remain solvent. The data points to a scenario where the effects of direct and indirect subsidies are wearing off; prices are sliding by around 0.5% month on extremely thin volumes. If nothing changes then this trend is set to continue.

 

The collation is already implementing plans to remove a significant chunk of the funds available to tenants on housing benefit and also reducing the amounts payable in mortgage relief to the unemployed. These moves are bearish for property.

 

As I have pointed out before the government has a simple choice:

 

Continue supporting property from the public purse to the tune of billions a year or remove the subsidies, causing prices to fall. It isn't yet certain that they are definitely going for the second option. If they rip out all support we will see a crash and this could be electorially damaging.

 

The point of tracking what the government does is to be able to have a good idea of where they're heading, in both policy and action. So far its bearish for property. If rates rise we'll see a crash for sure.

 

Most of the entries your list are not government policies or actions. The list is not meant to be a collection of reasons to own property verses perceived risk and their effects on sentiment or psychology. This sort of thing has been done to death.

 

As stated above - it is the policies of the old Labour government that have held up prices. They will only stay up if those policies and there associated subsidies are both continued and increased. This is what needs to be monitored.

 

 

 

 

 

 

 

 

[John Doe]

You guys must be having some difficulty in reading this chart:

 

The upturn in Jun coincides with the downturn in UK home prices, which began a more pronounced slide in June. Since then, we have seen the H&N Index perform as follows:

Just a small point, this chart is the "average time on market".

 

You really need to look at the "median time on market". The fall between the high and the recent trough coincides with a large number of properties coming onto the market, bringing the average down. With the number of properties coming to market recently reducing, this explains some of the extremes.

 

The median is also up, but by nowhere near the same amount.

[d2thdr]

I have no desire to move (or buy an investment property), so it makes no difference to me whether house prices crash or not in my area. Obviously the secondary effects of a general crash would effect me as much as anyone.

.

 

So would it not be prudent to not set a base at this stage with a potential of future strife? being flexible is the name of the game.

[purechatterbox]

Based on my observation this is because more people are choosing to come back to the rental market. The reason behind this is the fear that further price reductions in the housing market may occur. Another reason is the difficulty of obtaining a mortgage since the credit crunch in 2007. I guess people should not anticipate the outcomes, for their anticipation worsens the phenomenon further.

[purechatterbox]

Based on my observation this is because more people are choosing to come back to the rental market. The reason behind this is the fear that further price reductions in the housing market may occur. Another reason is the difficulty of obtaining a mortgage since the credit crunch in 2007. I guess people should not anticipate the outcomes, for their anticipation worsens the phenomenon further.

[tallim]

...

The point of tracking what the government does is to be able to have a good idea of where they're heading, in both policy and action. So far its bearish for property. If rates rise we'll see a crash for sure.

 

Most of the entries your list are not government policies or actions. The list is not meant to be a collection of reasons to own property verses perceived risk and their effects on sentiment or psychology. This sort of thing has been done to death.

...

 

Sorry, I didn't really explain my post very well, I was in a rush to go out for dinner and it probably should have been done and saved locally to my computer rather than posted.

 

The idea was to further expand on each point and see if there was any Government policy, or rather change in Government policy compared to 2 years ago, when the market props were most explicit, that would affect each item.

 

e.g.

 

Employment Stability

- Government cuts announced at emergency budget 2010 have been clearly articulated as having an effect on the number of people in jobs, so policy is negative compared to 2 years ago.

Attractiveness of Renting

- Tenancy Deposit Scheme was in place in 2007 and there have been no further developments of Government policy, so Government is neutral on this.

Family and Friends Sentiment

- Not aware of any Government policy that would affect this, so Government is neutral.

 

etc...

 

I don't have time to think it through properly today.

[drbubb]

Look at this report (page 8)

http://www.home.co.uk/asking_price_index/HAPIndex_AUG10.pdf

That's August.

You should be looking at something more up-to-date

 

"The whole point of my original post was that the only thing that is really holding up house prices is government policy, specifically the policies implemented by Brown and Darling in 2009. These policies were clearly designed to replace the funds that had been going into housing but were lost, and never recovered, in the credit crunch..."

(etc, see above)

 

I think Merlati's arguments are well made, and show this government has a different attitude, and more than just getting re-elected in mind. They see the damage that was done by Labour-shortermism, and want to behave different. They have a mission which is different than re-electing an "abysmal prime minister."

 

Can governments stop a crash? If they could, I think that it would have been done in Ireland, etc. All they can do is delay things for a time, at the cost of a worse crash later.

 

Imagine this in the UK, because I reckon it is coming:

 

The roof falls in on Ireland's Millionaires Row

 

In 2007 Shrewsbury Road in Dublin was the sixth most expensive street in the world. Now, post-crash, homes have been abandoned and the tycoon residents have run for the hills

...

The sharpest drop has been at the top of the market."

== ==

"...where prices have crashed by 50% or more."

"... the sixth most expensive street in the world, ahead of Beverly Hills's Carolwood Drive and St Moritz's ritzy Via Suvretta. ...where prices have crashed by at least two-thirds. 'It's right in the centre of things; it's a street that's always achieved top prices'..."

/source: http://www.guardian.co.uk/world/2010/dec/0...-crisis-bailout

 

At some stage in a crash, you see that: The High End falls more, because wealth has been destroyed for everyone and even many of those who had money find they have to downsize their commitments. Some jeave the country for greener pastures elsewhere. While others are afraid to buy, and no long see property as a one way bet.

 

Niall O'Farrell, the founder of a chain of formalwear shops, Black Tie, who stars on the Irish version of the television show Dragons' Den. O'Farrell is trying to sell his house – initially for €14m, although the price has been drastically cut in recent weeks to €8m.

 

Derek Quinlan, the property magnate who part-owns Claridges hotel, is also looking for a buyer for his Shrewsbury Road residence, priced at €7.5m, after quitting Ireland in favour of Switzerland a year ago. Nobody is biting. A house hasn't changed hands on Shrewsbury Road for two years.

 

The UK is probably AT LEAST 18-24 months away from this realisation. It happens closer to the end than the beginning of the slide. And it takes time to destroy long-held confidence.

 

What can save the UK's property market from the same fate as those with other property bubbles?

 

Does the coalition have the same willingness to ruin the country's future for the sake of once-privileged landlords that the Brown regime had?

[drbubb]

Here's a quick summary

(DrB's EXCERPT...):

+ Media Sentiment (including advertising)

+ Family and Friends Sentiment

+ Mortgage Rate and Availability Expectations and Actuals

+ House Price Expectations and Actuals

+ Direct Family Pressures

At some point, actual economics will trump all the sentimental influences.

 

And I do think that when yoy growth goes negative is where the bullish sentiment really melts and the slide can pick up steam.

 

I have put the two charts together since they show that the speed of selling is now worse (ie slower) than it was for a similar level of year-on-year change:

 

 

To me, this suggests that people do have some memory of the firts leg down, and they are beginning to become reluctant to buy again.

 

The fact that Time-to-Sell is almost a perfect mirror image of the 6 months change is interesting. But I also find interesting how the momentum to the downside is perfectly reflected on both. It looks steady and relentless in both legs. Last time there was a brief pause around yoy flat. Will we see it in prices? Perhaps not. Since Time-to-Sell has gone rising steadily.

 

I think people need to remind themselves what Time-to-Sell represents. It is a ratio of Supply divided by Sales. The More supply and the less sales, the higher the Ratio goes. So what is happening now is that sales are deteriorating while supply is increasing.

 

Here's an excerpt from the recent November 10th Home report:

 

"Overall prices of homes on the UK market appear to be levitating... Early indications show that buyer interest is waning in the face of high stock levels on estate agent books. Price-cutting of property on the market continues to increase in frequency (a new 21 month record for October fueling the growing 'discount culture' in the UK housing market.

. . .

Typical (median) Time on Market for unsold properties has risen a further 9 days since last month and now stands at 118 days. Meanwhile the average (mean) Time on Market is also up 8 days to 192 days. These figures are consistent with the observation that somewhat fewer properties are entering the marketplace after the summer surge and those that are currently for sale are spending more time in agents' portfolios."

/source: http://www.home.co.uk/asking_price_index/HAPIndex_NOV10.pdf

 

What stopped the freight train to the downside last time was a move to ultra-low rates. That trick has been tried (along with the ramping up of Housing Benefits), and the BofE cannot cut rates to negative numbers.

 

Maybe this time prices will need to fall all the way down to genuinely affordable before the downwards momentum will be stopped.