88Crash

I was being flippant about the million, even in 2005 its still an awful lot of money, plus I have found over the years, if you laugh about such things, it doesn't seem so bad (or at least laugh to yourself) If you don't the other options are less pleasant (I've known a couple of people to commit suicide for financial problems involving less than a million)

My name refers to the last HPC - 1988 I was there and very much involved in property and although the statistics and graphs show us the official crash started in late 89'-90 it actually started in August 88' I lost over one million (on paper) Quite simply had a site like HPC been around then (or the internet for that matter) and if I had been fortunate enough to get a non VI propaganda perspective on the housing market, I may and I stress may have pulled out before Aug 88 with a lot more money I knew even then that the Halifax & Nationwide figures were BS, but I believed the BBC and other respected national news channels and newspapers - whoops! PS One million was a lot of money back in 88'

Your observation probably applies to most of the UK BTL'rs are dropping out of the equation big time on new builds (and thats going by what I have seen this weekend) What happens next?

The new breed of housebuilders are not like lemmings (lemmings are furry and cute) They have always worked on a simple principal - buy land - build houses - sell them They will continue to do this regardless, they didn't just steam into the market like BTL'rs - they have been doing this for years, except this time round they have envolved! During the last HPC the largest players Barratts, Wimpey, Persimmon were much smaller companies and the whole sector was more fragmented. Some of the big players like Wilson Connolly were in essence, a family businesses That has changed dramatically in the last few years recently Taylor Woodrow bought Bryant Homes and then bought Wilson Connolly and they not only need to sell 10,000+ homes this year - they WILL sell them How will they sell them? draw your own conclusions

I am sure this will be the case, but I think you are missing one point The people that will sit tight, will also be the majority of the same people that have been sitting tight for the last 5 years or more In other words, the people that have had F**k All to do with this current boom They may have MEW'ed and they may have had vaulations from EA's but to effect the UK house prices you have to be buying or selling Everybody else is just an observer This applies equally to a booming market like the last 5-7 years and NOW in a falling market Sitting tight will not have the desired effect unless EVERYBODY does it and that is highly unlikely

I Agree Although a lot of threads start in a constructive way and this includes all sides of the the argument, once a couple of people start having a dig at each other - it degenerates pretty quickly and the point is lost Not saying you guys and girls shouldn't have a go at each over - but time and a place! I wonder if its worth pinning a topic at the top of the forum, maybe call it 'Outside' Then when a couple of people are having a go, rather than carry on and ruin the thread for everybody else, you can type in "See you outside" Then you can both go to the appropriate place, the pinned topic called 'Outside' and continue Bit like a pub fight only without the fighting

Seems that some of the most popular threads are the ones that turn into a slanging match between a few people - entertaining reading, but not all that constructive Housebuilders won't be the most exciting topic, but they are a good indicator of the way the UK market is going They can't afford to sit around in denial, they have to sell and the big guys will have a development in virtually every area of the UK and that will have an effect on the market (I think) more than people realise As you already know there are lots of new builds in development and lots more planned The top 15-20 builders will build or if you like, introduce approx £10 billion worth of 'new stock' in the next 12 months - it will have to be sold and this can only add downward pressure on house prices across the UK This alone won't crash the market but it is a component that will have a far greater impact on the HPC, this time around Throw in the BTL component and my opinion is the HPC will be far quicker than most on this forum predict Finally, I've heard a few people say the market can't be going bad because look at these new buildings going up Remember the last HPC - Docklands and Canary Wharf in particular were nearing completion, the whole of the docklands was booming - it looked like it would go on forever It didn't and Olympia & York, one of the worlds largest builders went bust - Opps!

I supply the housebuilding industry (can't say more than that) Things are already a bit different and certainly visitor numbers and reservations are way down on last year Several of the majors are reporting in the next few weeks, but like Wimpey who reported last week, they will probably all report record profits and will say things will be OK (to be expected) A closer look at the figures will show they are from 2004 and benefited from a strong start to last year As GW said last week "visitor numbers so far this year are at the higher end of our expectations" Not the same as saying visitor numbers are back to the levels we enjoyed this time last year (define expectations - its very subjective) Builders are struggling to sell, hence all the incentives advertised (discounts in any other language) Q. Why would Housebuilders (en masse) suddenly knock 10-15% of the asking price in 2005 when there prices have been steadily going up for the last 7 years A. It's obviously a falling market Doh!

I suspect a majority of people are not actually landlords They are BTL'rs IMO big difference It is not only the recent BTL's - how many BTL's bought a few years back when the figures stacked up have retained a decent yield and cash reserve? I suspect many carried on buying and MEW'ing either for expansion or a good spend up (or both)

That assumes people will value property via mortgage payments Once Joe Public realise (in a few months time) the market is really going down, the actual mortgage will become a secondary consideration (within reason) The main concern will be what WILL a place be worth today and more importantly what will it be worth tomorrow?

The above is fact - what will happen next remains to be seen Houses may stagnate for years - waiting for salaries to catch up However, we have had a few HPC's before in the UK, but if you consider things tend to move a bit faster now (Global markets/technology/finance/informaton etc, etc,) then in the 70's and 80's. Don't be surprised if this HPC moves a bit faster

You may have done very well out of a single deal, but I think most people on this forum are looking at the overall picture Skilled property developers and landlords make money in a rising and a falling market but lesser skilled people don't (BTL'rs spring to mind)

I don't think it just debt - nowadays too many people expect too much (fed by media/adverts etc,) In monetary terms average UK wages approx 25K Average lifstyle expectation cost - 50K plus This either leads to debt to acheive expected life style (for a few years at least) or people that, as you point out are far better off than they used to be - feel disatisfied with life shame really - you only get one life!

I think its more a case of a HPC will bring on the dealyed recession that should have happened a few years back BUT was avoided thats to HPI and the resultant consumer/credit/MEW boom

Just an observation - if she is wealthy why is she buying a cheap 100K property for her son? Doesn't she like him?

I think when you use the term 'Crash' in conjunction with House Prices, you have to factor in a longer time frame, I would say a couple of years is 'within a short time' relative to property Then you will have the paper world and real world, for example a home that was 100K may be worth 75-80K on paper in 2 years time and that value will remain as long as you don't have to sell Remember that the vast majority of people have neither bought or sold during this current boom and apart from MEWING and dinner party conversation, in reality have had F**K all do do with house prices In 2 years time if you HAVE to sell (repo'd for example) that same 100K home will probably sell for 50-60K (40-50% drop) If its like this within 2 years, I think HPC would be a reasonable definition

A HPC will not be very nice and certainly the majority affected will be Joe Public However UK house prices need to drop by approx 50% to return them to back to anything like the long term norm The UK has had a big spend up and at some point it has to be paid back To illustrate how out of sync the market has become, 90% of FTB's can't afford to buy the 'product' Can you imagine a situation where Nokia or Sony or Ford priced their products so high 90% couldn't afford to buy? Apart from FTB's and I don't know the exact figure, but the majority of people that have bought a home during the last few years could'nt afford the same purchase at at todays prices HPI stopped a recession/massive slowdown in the UK, however HPC no matter how painful will be the inevitable consequence - forget the big economic arguments - its just common sense

Its probably better that way. If Joe Public had a better understanding of what the UK's wealth is spent on and how much of that is wasted, they would be upset Also remember that a lot of UK taxpayers money goes into government or overseas projects that benefit British Business This oftens amounts to a distribution of wealth that Joe Public would not like know about in detail The masses paying in loads of money - British company directors making millions and don't forget they create lots of OK paying jobs for Joe Public in return

No problem - in 10 years time my wife will have false teeth and won't need the dentist!

You are quite right about SA house prices. I used SA only as an example of quality of life v house prices and that specfic example was 2 years ago Sadly they have also got into the global house price boom House prices have doubled or even trebled in SA over the last few years, although during the same period beer prices have remained remarkably stable!

munimula, I think you will find once the denial phase is over, the HPC will be far quicker than even the most bearish bear could imagine Many references have been made to the last HPC Initially to support the boom - "don't worry IR's are much lower etc," Then to support the gentle slowdown theory "IR's are low, lots of employment etc" Q. If its so good out there, why does a .25% IR increase make any difference, last HPC it went up by several % before the cracks started to show A. In 2005 some people are 'up to their necks in debt - far more than the official figures would indicate

DENIAL!

Sales in January have exceeded our expectations translation = We expected to sell F**k ALL - so at least 2 sales is better than what we expected

Funnily enough one reason is our high house prices! My wifes local dentist is South African, but for major dental work we go to her other South African dentist in Cape Town The money we save by using a South African dentist in South Africa pays for both our flights She goes to the dentist and I go to the pub where I get 4/5 beers for the price of one in the UK Back to house prices Our local dentist has to pay a high price his business premises, yet in Cape Town the other dentist pays a fraction compared to UK, for superior premises When our local dentist goes back home to his house in Surrey, its a nice detached 4 bed worth 500K When our South African dentist goes back home to his house its a 6 bed with swimming pool that cost him 125K One has to earn and lay out a lot more money to live the same lifstyle BECAUSE of property I use SA as an example, but the same applies to many of our European neighbours

I think the 'Except for the "It'll take years"' bit is spot on Many of us think the UK housing market is overvalued (understatement) and is already on the way down All booms throughout recent history have resulted in crash But although history has a habit of repeating itself the dynamics may be different this time For example in 2005 official BTL figures 500k+ properties unofficial BTL properties - F**k knows People overextended on MEW - ???? Credit cards and unsecurd loans that have been 'reinvested' in property ??? Dodgy mortgages/self certs/buy to lie (by definition) no official figures It's only my opinion and I can't back this up with fact becasue the facts are not available becasue so much of it is in a 'grey area' but this HPC/correction has been underway for the last 7 months (FACT) it will happen quicker than the last one, for the above reasons and, I suspect quite a few more