Doesn't it feel good? Seeing the madness that was the HP boom, becoming what may (probably) be a terrific crash.

I was brainwashed into thinking that I HAD to own the property that I live in, and if my circumstances were any different a year ago, I probably would have bought.

A combination of girlfriend issues, common sense, and, I do not want to play down the role that this very forum has played (A SINCERE THANK YOU TO ALL CONTRIBUTORS ON THIS FORUM), I find myself with a sizeable amount of cash which I was planning to use as a deposit.

What I have a problem with is this.

If there is a crash, which most people reading this are expecting, surely this will have a catastrophic effect on the economy. And not just to the UK. There are housing bubbled, credit bubbles all over the world, and the scale of the resultant depression may be something never before experienced?

All of a sudden, who cares about the house market?

I am no economist, but there are many people on this forum who show a high degree of understanding over all these things, and I would like to see a few more discussions on what we can do to prepare ourselves for the eventuality of a megarecession (Please note – megarecession first coined here by unklmic).

Of course that may never happen, but there are no doubt many people on this forum sitting on their deposits, equity from the previous house.

What would happen if the horror story pans out?

What would happen if your savings are all in internet savings accounts?
What about precious metals? Is it enough to have paper instruments based on the metals, or should you need to hold the metal itself?
Government bonds?
Pound v Euro v dollar?
Shares in general?
How about physical cash?

I am not a doom mongerer, but it would be interesting to get peoples views on how to prepare for the worst.

It would also be very interesting to get your views for preparing for what is the more likely scenario – HPC followed by a recession.

Lets not stop gloating (that’s fun), but also it would be sensible to think about and prepare for the consequences of the event were are all cheering on.

Once again, a big THANK YOU to all contributors – you did your part in helping me avoid what could(would) have been the biggest mistake in my life.

Depends on what you think is going to happen.

If its only a recession, try and make sure you have a safe (well, as safe as possible) job, and as much savings (in safe places, not bad investments) as possible.

If its a bit of a Bruno-esque outcome, then I'd suggest investing in Guns, nice big guns. Oh, and knives. Maybe explosives.
You want to be ready when we get anarchy in the UK

Somehow get a second passport so you'll be able to escape to somewhere else!

you best have a word with bruno(if you can find him)

Usually at the point everyone starts saying the economy will never recover and house prices will never go up is a great time to buy and normally the turning point.

I could buy right now where I want to live and for the size of house I want. In fact I could buy the rental property I'm in if I wanted to. But I choose not to because of the stupid prices. (I am not going to throw my equity into the UK (we are gonna crash) PLC Pot

Once the average house price versus average wage hits about 3.5 I will seriously start to consider buying a house again (as much as it will probably hit about 3 at the bottom) I don't particularly want to wait until the bottom.

I will still be looking to get a reduction on the asking price and will be wanting everything that I can get my hands on.

I am self employed and don't have enough hours in the day to service my current clients let alone bring on more. In a turning market I'm getting ready to employ people this year. So I'm reasonably well protected. However I don't assume that everything will be okay and for that reason do not spend the money in the bank as that would be a foolish thing to do.

The sensible ones are going to coming out on top at the bottom of this cycle. For a few years of people thinking you are crazy you get the benefit of financial freedom in the long run.

If we have a house price crash then we will have a recession.

Personally I'm hoping that all those nice folks who are demanding a crash so they can afford a property suddenly find themselves unemployed and spending all their savings just to exist comfortably.

I think it far more likely that we have 5 years of slowly subsiding prices. The amount and length of fall will depend on the area. A few areas will finish with house prices down 75% from last September prices. Most areas will suffer a 30% fall. More desirable areas will see falls of approx 10 - 15%.

Perhaps we are leaving the 'denial phase' and entering the 'mad max phase', if so i'd better invest in some leather chaps and a supercharger for the wifes car.

A contrarian view is that a 'correction' to more normal ratios of HP's to incomes releases cash into consumption of goods and services as opposed to paying interest on loans for unproductive assets. Anyway, I will not be gloating, but will be glad once the average person/family can afford n average place to live.

Better watch what we wish for!

Violent crime up 6%

http://news.bbc.co.uk/1/hi/uk_politics/4204843.stm

Depends how you define a "crash". The link between consumer spending and house prices is much weaker than in the past.




Nice, real nice piece of worl you are aren't you IS. How about wishing for small children to be run over while playing in the street for your next display of unpleasantness?

In fairness, he did warn us. "Ignorant Steve"...

Not a nice sentiment at all but no worse than wishing house prices to crash which will inevitably hurt those people who have bought in the last couple of years. People in glass houses and all that, zz.

Many fewer people will be affected by negative equity this time than last time, as FTB's, who are the group of buyers who usually have the highest LTV ratios, have been locked out of this current property market for quite some time now (which is probably a blessing in disguise) and so the only ones who will be hurt by house price falls are BTLers and speculators, who I doubt anyone will shed a tear over. I do not expect to see the mass repossessions in this crash that we saw in the last.

If less money is diverted into the absurd house price bubble and instead goes into equities, that could give a big boost for UK companies, so the the net effect could be positive.

If it does create recession then the weaker businesses will be wiped out, which is a good thing.

Why is this attitude any different to that of those who sought to see the market explode for their own gains (BTLs, for example) - their concerns weren't for the FTBs that were being squeezed out of the market, so why should you criticise those who are hoping for sensible prices, ie: a crash?
Glass houses, indeed...

Agree, let's cut the humbug. A house price crash will hurt some people.

But hey, no pain no gain!

I wasn't criticising anyone, simply pointing out that wishing pain on other people is equally despicable whichever group you wish it on. And, of course, there will be ordinary people who bought a home during the last two years who a crash will hurt badly; not every purchase in that time has been to a BTL landlord, lots of people have bought their first home.

"For a few years of people thinking you are crazy you get the benefit of financial freedom in the long run. "

Well said, JPJH

There are benefits in getting out before the crowd, and getting in before them too.

The crowd is looking towards Gold and precious metals, but is not yet much IN gold or gold shares. How oftne do they come up at dinner parties? (They do at mine, but then many think me "strange" in my views, however right they have proven in the long run.)

So I am HEAVILY into mining shares, but looking for the next game, because I want to strat moving there when the crowd joins me.

Dr B

Nanotech. It will go the same way as the tech boom did. Thing is most analysts don't understand what it is or what it does. Thats the beauty of it. The applications are endless. The possibilities bordering on crazy.

Real products are hitting the market. There's quite a few US firms but my money is on the Asian firms as they have more funding in general and less of the public "grey goo" fear. They also don't have the next quarter profits syndrome.

If you make a killing send me a cheque. If you make a loss don't send me a bill.

JPJH,

It may work for some, but it looks like a total crap-shoot on the unknown and the untested to me

I suggest a 'Megarecession' is the same as a depression. See 1929/30.
Gives the wealthy West in it's ivory tower a taste of how the rest of the world has to struggle and cuts down on wasted resources, is that such a bad thing?

Looking at the excellent HPC graphs on this bubble compared to previous ones we are in unknown territory. The tension reminds me of the 'buy me a Cross bow for xmas' type of unknown situation in the Survivalist Y2k meltdown scenarios of a few years ago.

"An American Economic Armgeddon is unavoidable":
http://www.voiceswest.com/kor/1211-17.mp3

argues this interview

Let me start off by saying that the coming recession has the potential to be much more than the "garden variety" slowdown predicted. But, as usual, the economy will "eventually" recover and house prices move higher but not after significant pain. How much pain? Well, to be blunt, considerable.

I think it is far too early to set limits and entry points. There is an old wall street adage - "Don't try to catch a falling knife".

As we get closer to the end the papers will talk about the "end of the capitalism" and all the rest. At this point we may consider an investment in real estate. A warning to the impatient - this could still be a few years off.

Acting in favour of a deep recession is the global nature of the problem. When house prices have shot up in former eastern block soviet satellites then one has to wonder about the "fundamentals" of the market.

Hedge funds are running wild at the moment and it appears as thought they have "bet the house" on certain trends which seem destined to reverse. That is "long" Euro, stock markets and bonds.

Simply put if you wish to be uber safe then gold and some physical cash are in order. I would recommend the following portfolio;

Cash : Up to 5% (popular in Japan during the downturn)
Gold : Up to 5% (just in case...)
"Short" term treasuries OR very safe bank: the rest.

Note: very safe bank is one that has minimal exposure to the housing bubble.

The American Dollar (as I have stated previously in this forum) is good in the short term.

But for most people I think it best to just lower their exposure to stocks and save some more.

If you are a bit of a gambler "short" the housing sector. But only if you have money to lose.

Any other thoughts out there?

I'M WITH DR BUBB.

I went long on mining/commodities last year,but i must confess I have more of a leaning towards physical gold,I'm just waiting to see how this iran situation develops.

iran isn't just about oil,its about arms(and russia is a primary exporter to iran)
russia already has a bloody nose over ukraine,so they won't take to kindly to losing an arms customer.

There is an economic TSUNAMI heading this way and the only thing to do is run for the hills. Get out of the way as quickly as possible!!!

My objective is not to become rich but to avoid becoming poor.

Therefore I have tried to reduce my mortgage as much as possible (so it is only around 25% of the current house value) and I have liquidated most speculative investments (OK, I must admit I still have a few shares in pharma and telecom ). In any case I can manage OK it if interest rates rise a couple of percent and I think I could cope for a while if I lost my job.

C:
"I have tried to reduce my mortgage as much as possible"

Me too.
I sold out and went into cash and mining shares.
So daring at the time. Looks right now

economic tsunami is quite a good phrase!

funny how the animals and remote societies that rely on understanding the environment survived,and the so called more advanced who lost this ability perished.the financial world by all accounts does baer some similarities.

just goes to show it pays to heed warning signs.

Mining stocks are good again. Nanotech often uses exotic metals like palladium.

I'm thinking about a little mining stock portfolio; a mix of gold & raw materials for new-materials (nano, lcd)