(inspired by the "Last Bull" thread):

WHAT SHOULD WE BE DEBATING NOW?
(if indeed, the original HPC debate has been won)

1/ How long to the bottom?
2/ How will a HPC effect the rest of the economy?
3/ Will it EVER make sense to buy?
4/ Does it make sense to buy outside the UK, rather than here?
5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/
6/ What's the best buying tactic in a weak market?

Note:
Question 5 (above)
has taken on a life of its own, on another thread:
http://www.housepricecrash.co.uk/forum/ind...?showtopic=8280

and so did Question 2:
http://www.housepricecrash.co.uk/forum/ind...showtopic=10768

PLEASE feel free to spin off other questions, or spawn new threads
with question 7, 8, or 9... or whatever. This website likes debate!

I like a nice mass debate.

WHAT SHOULD BE THE DEBATE?
(if indeed, the original debate has been won)

1/ How long to the bottom?
This long ..............................
2/ How will a HPC effect the rest of the economy?
Yes
3/ Will it EVER make sense to buy?
hopefully!!
4/ Does it make sense to buy outside the UK, rather than here?
Depends on individual circumstances, ie job, cash in bank, you must not go blind!!
5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/
Depends if your name is Tony blair
6/ What's the best buying tactic in a weak market?
Research!!

Beings a simple layman, heres the best answers I can provide..


1. My prediction is 4 to 5 years, this period of prices falls being more accelerated than previous ones due to the "communication age" and the fact any panic selling from BTL will happen in quite a short space of time.

2. Recession I would have thought. But perhaps thats putting the cart before the horse, perhaps its the coming recession that will truly see the housing market off. Or perhaps recession and HPC go hand in hand and a HPC is the inevitable trigger for a recession. Either way I predict rising unemployment with possible inflationary pressures aka stagflation. The more I think about it the less a deflationary cycle seems to be a valid proposition, especially with fiat currency.

3. Yes, if buying is cheaper than renting then why wouldn't it? Ultimately buying a home isn't all about investment, we all need somewhere to live so even in a prolonged period of falls(10+ years) there comes a point where the negative equity is acceptable over renting a property.

4. Yes, especially if you can do your UK based job and not be based in the UK. If that were possible for me, I'd be off tommorow, I see little other reason to stay.

5. The banks should take gearing into account, therefore seeing BTLers as being more exposed to risk than OO's. Therefore, in general, BTL would be seen in a different way. Additionally, a person with BTL interests should be more readily made to sell up to pay other debts they may have over OO's

6. Sit on the sidelines Short builders and DIY related companies I guess, long on industries that benefit in a recession(pawn brokers etc.).

1/ How long to the bottom?

Minimum of 4 years from summer 2004 peak, but more likely to be 6 years imo.

2/ How will a HPC effect the rest of the economy?

Next 2-3 years could be sticky. I forecast a increase in the number of McJobs as the Govt invents new ways to keep the employment figures high, but decreasing international competitiveness. I hope and pray we don't see a DEEP recession, but a mild recession to strip out some dead wood is probably required. The country has become too complacent and needs a kick up the ar$e.

3/ Will it EVER make sense to buy?

Sure. When it becomes cheap to do so. The idea of owning your own home and doing what you want with it is still appealling.

4/ Does it make sense to buy outside the UK, rather than here?

Not as a first home. As a 2nd/holiday home, yes for sure. Not for me though. People buying abroad just to "get on the ladder" is nuts, though.

5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/

Homeowners should be given a bit more slack imo.
LL's falling behind on one property probably means their whole portfolio is in trouble and needs to be looked into sooner.

Ironically, the LLs probably hold the key to market supply, and if they get cold feet then there will be far more downward pressure on prices than if homeowners have to sell up.

6/ What's the best buying tactic in a weak market?

No idea. Probably auction for the best bargains.
Look for signs of desperate sellers. If the house is spick 'n spam when you go to view it, it probably means they're desperate to sell

(I almost didnt spot this new thread up here!)

Time to Bottom?
"My prediction is 4 to 5 years, this period of prices falls being more accelerated than previous ones "

YOU COULD BE RIGHT, easily, And maybe longer.

But I tend to think there may be a "trade-able low" around mid-to-late 2006,
because that may be when the stock market crash hits a crisis, and some
Property owners may be forced to sell at low prices

1. Dont care, very patient. But I think a couple of years will be the trough of bad sentiment, and the rate of falls will slow.

2. Complete phycosis amonst the masses. My business is frantically tryin to do more biz overseas.

3. Depends on your circumstances. With a family yes, if you are a jet setting multi billionaire like your goodself then no

4. I dont agree with this unless you are spending a signficant time livin there. It is just as wrong to deprive a poor eastern europen of a property as it is to deny the indigenous popultion of ones one country.

5.

Should home owners and land lords be treated the same way. ABSOLUTELY NOT. The later have an unviable business model and should face commercial realties.

6

Best tactic is to exploit sellers worst fears, this will be very easy as falling prices accelerate. If you are smart and get a 20% discount on an assent that has already fallen 20% you could be buying at the bottom 2 years ahead of the real bottom.

1. Faster than last time, because of:
availability of non-VI information, desire for equity preservation => more STR? (too late perhaps but a LOT is at stake this time) BUT pent-up demand on the sidelines could make it V-shaped.

However as most people have only an interest in 1 property average prices (values) are not very meaningful and buyers will have to find their own bottom for the particular property they wish to buy. See 6. below.

2. Been debated to death before:
HPC > less high street consumer spending > recession/slow-down > redundancies > less consumer spending...

For those OOs [80%+ at a guess] who can sit tight and maintain their payments, they may not notice that HPs have fallen but they will be affected by the overall falling confidence and knock-on effects of the financially over-stretched getting into distress.

3. Yes I think so. Other than the current financial benefits and option value, renting is still not as satisfactory as buying for most people who want to raise a family or put down roots somewhere.

4. To live or for investment? I have done so myself. As long as the yield makes sense, why not?

5. I suspect lenders will try to show humanity and leniency early on to OOs - and be seen to do so. At some later stage they will revert to type and will be more worried about their own balance sheets. BTL'ers will be forced to sell any non-performing asset almost immediately.

6. Find at least 2 or 3 properties that you like equally (impossible in reality, but you get the idea). Let it be known to each vendor and EA that you have a wide choice. Put in offers that make your partner/dog/ancestors blush, but do it with a calm voice on the phone. Explain that you have no chain, an X% deposit and finance ready to go. Say you'd like a decision by 11am tomorrow, but sooner would be preferable. Never reveal to the EA what your real budget is or what your 'must-haves' are. Once you've agreed the price, don't be tempted to gazunder pre-exchange - be decent and honest (yes it does matter).

Comments?

JY

All IMHO!!

1/ How long to the bottom?

Freefall by the end of the year. Plateau, then more falls. 4-5 years

2/ How will a HPC effect the rest of the economy?

Retail sales decline, job loses, increased taxes as treasury revenue falls

3/ Will it EVER make sense to buy?

Yes, when prices return to long term averages, which may not be the bottom of the falls.

4/ Does it make sense to buy outside the UK, rather than here?

Depends where you want to live/retire.

5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/

Homeowners should be allowed some slack. BTL investors should be treated as a normal business investor and in the event of failure the bank should follow normal rules, eg screw you for all they can to get their money back.

6/ What's the best buying tactic in a weak market?

Try to think as an individual and don't follow the herd.

1. We have to reach the top first, in many parts of the UK prices continue to rise. However in three years we will see the real effects of the debt driven economy, bottom I reckon will be seven years from now.

2. HPC will not affect the economy at all. It is the economy that will be the driver behind the HPC.

3. This very same question was asked by many right up till 1998, and those that took the plunge on the 50K three bed detached are quids in today.

4. Buy outside the UK at your peril, it is becoming hot potatoes abroad when locals see themselves priced out of the market and want someone to blame for their woes.

5. Banks duty is first and foremost to the shareholders and the markets. They should act accordingly, and will do exactly that. We no longer live in a world of any moral value, and it is a computer that will make the decision to repossess not the sentiments of a Bank Manager. It should be noted that BTL Landlords generally have much more equity in a property than recent FTB'ers. The general rule is three months non payment and its curtains. It is irrelevent to a Bank the status of a person, and talk is cheap, they just want their money and thats fair enough, they are not a charity after all.

6. The best buying tactic in a weak market is not to buy at all. Buy on the up, not the down.

One interesting aspect of this one I think is those BTLers on non-BTL mortgages without the lenders' permission. I reckon there are thousands of these. When things start going awry, the lenders will start auditing mortages to find out if they are really on BTL properties. I bet they could work this out somehow. At which point if the BTLers are found out they would I guess be liable for at least the difference in interest, which might be substantial, if not significant other costs too.

ouch.

La frugalista

If the value of the largest asset that most people own has no bearing on the economy, I don't know what does.



Not like the situation here in the UK then? Oh I get it: irony.



Well that's what the herd will think, so it must be right.

I could easily be wrong here, but I'm sure I remember TTRTR (remember him?) suggesting that the small print on proper BTL mortgages meant that the banks could call in any examples of negative equity and ask for the difference to be made up. Otherwise the banks would effectively have an unsecured loan on their books...

Anyone know about this?

1/ How long to the bottom?

3 Years

2/ How will a HPC effect the rest of the economy?

Severe Recession it will bring down government

3/ Will it EVER make sense to buy?

Yes, 3 years from now, better still build your own!!

4/ Does it make sense to buy outside the UK, rather than here?

Spanish style 'Land Grab' may fragment Europe market and frighten off buyers, it may become unacceptable to own holiday homes whilst homelessness increases


5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/

hard to answer, as they would be both, money borrowed against primary property for BTL portfolio.[COLOR=red]

6/ What's the best buying tactic in a weak market?


Pitch in at the point that you can afford long term; you can never accurately predict the bottom or the top that is just pure luck.

1/ How long to the bottom?
2 Years with prices falling 40% from the peak
2/ How will a HPC effect the rest of the economy?
The HPC started June 2004 and will be acellerated by the recession which started yesterday, today DOW down 200 points. The public are starting to realise that the spending spree that has been financed by inflated house prices has got to come to an end.
3/ Will it EVER make sense to buy?
Yes, prices 3.5 x Earnings or 10 x Annual Rent
4/ Does it make sense to buy outse the UK, rather than here?
If you are sure of local market, I am not
5/ What should the banks do with late payers:
Banks will act in their own best interests if it pays to offer further finance they will, if it pays to reposes they will.
6/ What's the best buying tactic in a weak market?
If you must buy the consider buying a smaller less expensive house to minimise your exposure to the market

I think there's another question that needs answering:

(7) How would a 40% fall in house prices and the inevitable recession this would cause affect the national psychology?

Many feel rich and don't save becuase of the equity in their properties, take a lot of that away and you no longer have upbeat people positive about their futures you have depressed people wondering where it all went wrong, and, considering the general immaturity of britons these days, they'll be looking for someone else to take the blame.

I think there are many people and relationships sustained by the feel-good factor of continuous, conspicuous consumption. Removing this distraction would cause a lot of personal and inter-personal conflict, especially if debt is involved. Too many people's main pleasure in life is shopping - take that away and they'll be very unhappy indeed.

All in all I think a house price crash could cause the UK to come apart at the seams. This is why, after last time, the Government should have done everything it could to avoid the boom in the first place.

Very good point. The "feel-good factor" is largely down to rising house prices. When the value of your main asset falls, the feel good factor quickly melts away and you're left with a mountain of debt. Discretionary spending gets cut back, which hits the economy, which causes unemployment, which affects sentiment... it's all a vicious cycle.

It's happening already. Retailers such as Courts & Allders have already gone to the wall, and High St profits warnings are two a penny at the moment.

On the positive side, our consumption of cheap imported tat will be severely curtailed.

If you read the Andrew Farrow paper on the homepage it makes the point that BTL is a missallocation of money, therefore once the falls start the money will be reallocated to normal pensions or other investments. This will cause an acceleration of price falls.

I cannot see anytime in the near future whereby confidence will be restored in pensions. Longbridge already before its shut is talking about having to reduce the pensions of existing retirees, and the pensions of the existing staff.

When the recession hits the UK many othere companies will be in the same boat selling the employees down the river.

Pensions in the UK are a discrace, and it is for that reason that any spare cash you have should be directed to reducing personal debt, and not lining the pockets of company directors and the taxman.

1/ How long to the bottom?

I'd dare to hope the bottom comes so quickly it surprises everyone. Actually, the speed with which media reporting of the economy has turned on a sixpence, and the speed with which retailers are closing here makes be think it could be a fast fall to the bottom.

2/ How will a HPC effect the rest of the economy?

I think there will be a recession, although this will not be the fault of the HPC, just another symptom of the consolidation period after the insane credit bubble.

3/ Will it EVER make sense to buy?

Yes. After a time we will buy when we can do so without it being financially reckless, paying a very large deposit. We want a house 'paid off' well before we're done working, just like my Grandad.

4/ Does it make sense to buy outside the UK, rather than here?

If you are independently wealthy, a teleworker, or have a business plan to make it work then why not? Although if it means economically cleansing other countries via BTL speculation then no because that just inflicts UK housing misery on more people.

5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/

One tried to buy a home, the other tried to make a killing. If they are going to give any slack it should be directed at owner occupiers.

6/ What's the best buying tactic in a weak market?

Playing it cool. Without rises prices and the resultant panic to buy any old junk you can be really picky. As there are thousands of pretty much indentical, equal properies in our town it should be possible to make very low offers on many properties to see who's keenest to sell.

1/ How long to the bottom?

2-3 years with a further stagnation period of 3-5 years where inflation will probably grow quicker than house prices.

2/ How will a HPC effect the rest of the economy?

Marginal rise in interest rates. Less profit for retailers. 50% reduction in Estate Agents. Slow down in construction industry but not a grinding halt. Some business closures but nothing on the scale of the last crash. Long term public spending projects will take the sting out of the tail.

3/ Will it EVER make sense to buy?

Yes, if you can afford it.

4/ Does it make sense to buy outside the UK, rather than here?

Don’t care.

5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/

Perhaps the question should be…

Can a bank be held accountable in a court of law for irresponsibly lending?

6/ What's the best buying tactic in a weak market

Buy a property that you WANT to live in!

1. (How long to the bottom)
I believe a similar decline could be plotted by mirroring the increase on graphs showing the rise in prices. ‘parabola’
I think 2 years fast drop another 4 years bottoming/stagnating

2. (How will a HPC effect the rest of the economy)
The recession we’re already in will worsen. Unemployment rising, economic stagnation

3. (Will it EVER make sense to buy)
Yes before you lose your job!, money in the Bank means you won’t be eligible for aid/benefits , money in property gives you
some entitlement to benefit.

4. (Does it make sense to buy outside the UK, rather than here)
I don’t know or would want to guess the answer? better the devil you know!

5. (What should the banks do with late payers)
This question worries me, I think if there is a massive default on loans the Government will legislate a rescue package
which I believe will mean taking peoples homes off them making the Banks landlords

6. (What's the best buying tactic in a weak market)
Negotiate the best price sooner rather than later, don’t leave it too long or you’ll miss another boat.

1/ How long to the bottom?
2 years to a low level, then prolonged uncertainty lasting several years with small gains and losses. I think that the falls will be far quicker this time as the bubble has got so far out of hand. The reduction in MEW/earnings is already having a big effect on the economy, particularly retail. This will be exacerbated by post election IR rises and tax increases.
2/ How will a HPC effect the rest of the economy?
The HPC will dent consumer confidence (already has) and cause a slump in retail (already with us). This will cause higher unemployment, and harsher business conditions resulting in more unemployment. It will also reduce government tax revenues during a period of increased government spending, forcing the government to borrow or increase taxation.... not a good scenario.
3/ Will it EVER make sense to buy?
Depends. If you want a house for somewhere to live, then yes it will make sense to buy when it represents good value (work that out for yourself). If you want to invest in property as an investment then I think it will be a long time before property is a 'safe' investment despite lower prices. Could we see a Japan style effect on UK property - IMHO, possible, I'd give it a 20% chance.
4/ Does it make sense to buy outside the UK, rather than here?
Only if you actually want to live outside of the UK. I may move to France in a couple of years, but am well aware of the problems they have there too... the grass is not always greener. Some European nations are already in economic recessions, although not as severe as the effects I suspect we will shortly see in UK/US.
5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way?
I think that the banks should, as I believe they do, allow a low level of default without foreclosure (most banks allow a few months non-payment if you are up-front with them about difficulties). However, BTLers are likely to be far more extended on their portfolios, and will not have the means to dig their way out using earning... for most BTLs it will not be possible to repay the banks any negative equity to reduce their gearing, as they will not earn enough to pay the monthly amount wiped off their portfolio by the HPC.
6/ What's the best buying tactic in a weak market?
Don't buy unless you have done your sums. Research is critical. Must buy at a price that ensures you won't have negative equity and allows comfortable repayment and hopefully overpayment. Being able to take payment holidays if you lose your job for a short time would be useful. I personally will not take on more than 3x earnings maximum, and would prefer no more than 2.5x income. I would plan to pay this back in 10-12 years, no MEW (as if thats going to happen in volume for a while), no messing. I'm lucky to have a good job. At 2.5x income now I could buy a 1/2 bed flat with a reasonable deposit. After the HPC I suspect that I will be buying a 3/4 bed house in a nice area for the same money (That was about the price in 2001!).

Enjoy the HPC... Its going to be good to those with cash and liquid investments.

But I do feel very sorry for recent FTBers who have been conned.

But no pity for the BTLers and 'Lifestyle MEWing fools' who have pumped this bubble up with their greed and overspending.

Peace out :-)

1/ How long to the bottom? my guess 3 years and then another 3 bouncing on the bottom.

2/ How will a HPC effect the rest of the economy? it will take a lot of money out of circulation with effects on consumption generally.

3/ Will it EVER make sense to buy? of course if the price is right. Most people unless they work in the City know of no other way to invest.


4/ Does it make sense to buy outside the UK, rather than here? pass


5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way? They don't anyway


6/ What's the best buying tactic in a weak market? put in a silly offer, let them sweat and be prepared to walk away.

1/ How long to the bottom?
2 years
2/ How will a HPC effect the rest of the economy?
People will still over spend but now without assett value. Causing higher interest rates causing further HP falls inother words MELTDOWN
3/ Will it EVER make sense to buy?
Repo land will be here in 2 years
4/ Does it make sense to buy outside the UK, rather than here?
I have just sold and now renting in spain for two years, so i hope so.
5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way/
Repo is the only option for both, they wont get there money back otherwise.Tuff I know but hey what do I care.
6/ What's the best buying tactic in a weak market?
DONT! Just rent till the tide turns an d enjoy that smug feeling as the landlords world collapses around him. We are only at the start of a black period of extreme hardship for the UK property market. At the end of the day how can any FTB afford 150K for a strater home when they only earn 20K.

i have revived the Question 5 debate, on the last day of 2006

Attempting a Revival of this classic thread:
here: http://www.housepricecrash.co.uk/forum/ind...showtopic=62562

..with new questions:

7/
Can the market be saved from a crash again, as it was in late 2005?

8/
Is there an under-supply of housing, or was this a media myth, which grew up
amid excessive speculative demand?

(added to the 7 questions thread):



Possibly- they were frsh in 2005, but that's a long time ago.

Here are...

= = = SOME DEEPER QUESTIONS = = =

11/ Demographic disaster:
When will the demographic timebomb exploded- with baby boomers unloading their homes,
and fewer new family homes being needed?

12/ Property-in-Pension meltdown:
When will we start seeing sales from those who have put property in their pensions, and they
have decided to stop subsidising a loss-making investment? (= a liability, not an asset)

13/ Brown out:
Chancellor Brown made the bed that Prime Minister Brown is sleeping in. How long will
his troubled government survive, when he is the obvious one to blame for the falling property
market?

14/ Sterling fall:
How much longer will Sterling hold up? Isnt it likely to follow the Dollar into a black hole
if the BofE starts cutting rates?

15/ Vultures circling, what price works:
US Vulture funds are being set up to buy new properties at a 60% discount to original prices.
Will the UK need similar or larger discounts?

It the first time I have read this thread; I was surprised at the confidence that the crash had begun in 2005


1/ How long to the bottom?

A long, long time in inflation adjusted prices, I think a Japan type situation may come where even if loans are very cheap people hurt by the crash will not borrow.



2/ How will a HPC effect the rest of the economy?

Very badly,
Definately retail will be hammered and more banking collapses/bailouts.

Perhaps I have spent too much time reading doom and gloom on this site, I think we have lived through the biggest credit bubble in history every advanced nation except Germany and Japan have taken part, in addition to housing vitually every other asset has also experienced a boom, we also have peak oil and the reserve currency the US dollar is in trouble. The enevitable crash will be on a vast scale, we will be lucky to have a period as bad as the 1970's and could easily see something as bad as the 1930's



3/ Will it EVER make sense to buy?

Not as an investment again for 20 or more years, of course if you need a place to live in that will make sense much sooner.
Demographics suggests housing suitable for pensioners (e.g. small bungalows) may be more in demand so these may recover sooner.


4/ Does it make sense to buy outside the UK, rather than here?

I do not know.


5/ What should the banks do with late payers: Should they treat homeowners and BTL landlords the same way

They will do what suits the banks best.
Many BTL will go bankrupt.
Government may encourage the banks to keep homeowners in their own homes as it may be politically expedient.


6/ What's the best buying tactic in a weak market?

Look at lots of houses and make embarrasingly low offers.


7/
Can the market be saved from a crash again, as it was in late 2005?

No, the main driver widely available cheap credit is drying up fast.
Like the USA interest rate cuts will not reverse this now.


8/
Is there an under-supply of housing, or was this a media myth, which grew up
amid excessive speculative demand?

Rents are IMO less sticky than house prices, they would have risen rapidly if real shortages had existed due to immigration etc., they have risen by about the general inflation rate 3%pa for the last 10 years.

House prices have risen by 10%pa over the same period because there has been an investment bubble.

YES.
and that is one of the reasons that I revived the thread.

What is different this time:

+ UK BUilders decisively broke the 1-year (?) moving average in early 2007.
That never happened in 2005. I emphasized the importance of that when it happened.
It gave a great warning, and an early one too.

+ Credit has been tightened. Given the loses and foreclosures, and big problems in the
US, I do not see it going back to being loose again- not for many, many years

+ Bullish sentiment appears to be irrepairably broken

8/
Is there an under-supply of housing, or was this a media myth, which grew up
amid excessive speculative demand? // see: Myth Needs Debunking thread

A COLD WINTER COMING for UK Property

'The graph below shows the number of houses per agent,
rebased to zero at the beginning of each year, for the last 3 years.


The usual pattern, of more houses being offered for sale as we head into the spring and summer
occurred again in 2007. But what has NOT happened this year is the fall in supply, as:

+ Properties get bought in the fall, and
+ Unsold supply gets withdrawn

Are we seeing more-than-usual seasonal supply because BTLers are pushing properties into the market?

/source: http://www.housepricecrash.co.uk/forum/ind...showtopic=63295