Tuesday, Sep 07, 2010
Has the writer just bought a house?
Motley Fool: House price crashes are rarer than you think!
What goes up, must come down. Yet since the Fifties, house-price crashes have been surprisingly infrequent...
Posted by mr g @ 03:33 PM (1252 views) Add Comment
12 Comments
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1. str 2007 said...
Yeah,
Since the fifties they've had a scheme in place to increase prices by slowly allowing higher levels of borrowing and lower deposits coupled with double digit inflation during the seventies, to create the illusion of ever rising prices.
This model had been extended all the way to offering loans to people on an interest only basis with little or no deposit requirement and no proof of income required.
In the end upto 50% of mortgage applicants went down this route as they'd been completely priced out of housing - ironically because of this business model.
In the end the scheme collapsed causing a worldwide financial crisis.
This resulted in interest rates in most developed countries being dropped to historically low levels to try and support the scheme.
Despite these unprecidented efforts after a small blip up house prices resumed their inevitable downward trajectory.
It was obvious to the majority the direction things would take.
This however didn't stop persistant journalists and vested interests trying to convince the general public black was white.
2. Joestrange said...
What this article and stats fail to take into account surely is inflation, inflation is never static. If house prices increase a small amount and inflation is high thats as good as a crash is it not?
3. mick rupert said...
In the coming hyperfinflationary depression there will never be another "crash" for a while ;-)
I'm kidding of course. Interesting how the list of figures are all nominal... pretty telling!! Inflation? What's that?? LOL
4. Crunchy said...
1. str 2007 said....'persistant journalists'
Being a gentleman has it's place.
It's not here and now, if indeed such righteous actions are legally permitted in this here, now or near future.
Le Crunch.
5. drewster said...
House price crashes are rare. So are banking crises; so are 0% interest rates (rates are currently the lowest ever in the Bank of England's 300-year history); so are coalition governments.
Lots of things are rare, but as we're discovering, that doesn't mean they don't happen. We're living in a very turbulent time where lots of things which experts claim "rarely happen" seem to be happening all-too-often.
6. Iguana said...
I thought I was reading something penned by assetz for a moment, having lived through more than the timespan of the article and having been involved in a great number of house moves during that time, I can say with the certainty of having 'been there' that there were other 'real' housing crashes - 69/70 73/76 79/82 stick in my mind. In reality house prices are always on the way up or on the way down, such is the nature of markets.
7. Crunchy said...
3. mick rupert
Have you considered a crash of civilisation next.
It's been in a bubble for long enough.
That will be the mother of them all.
When that happens negative equity will mutate to negative entity.
8. estrader said...
Reminds me of a joke.
Passenger: "How often do planes like this crash?"
Air Hostess: "Just Once"
9. easybetman said...
Someone in Fools spotted that as well - House Price did not really crash often, but the value of Sterling in your pocket
crashes very frequently indeed and hence it makes it looks like HP does not crash
10. Seenitallbefore said...
When gambling certain events are rare:
For instance when playing roulette - - if you let 3 reds or 3 blacks go one after the other then start betting on the the opposite
so - red - red - red - (bet on black) then 6/10 you will win .
also if you double your bet for 4 times ie
red red red (start betting black) red (double bet on black) red (doouble again on black) red (double again on black) then black
you hit jackpot 90% of the time- but the problem is the 10 % of the time you lose much more than you won initially
11. Stevenl said...
@ drewster
Sooo right my friend! Lights going out is rare too, do you think it might happen? Speaking as a young bedsit renter - could be fun! Then a US government bond crash would be pretty rare too, no? Ouch!
12. uncle tom said...
TMF used to carry well thought through articles, but now its just shallow sensational junk..
Cliff D'Arcy can write much better material - he should change his employer..