88Crash

I agree with most of what you are saying, but remember the majority don't move the housing market it is the MINORITY Getting an EA round for a valuation purely for dinner party conversation does NOT count You are either buying or selling property The rest are just observers

I totally agree. We now have a new generation that don't know the meaning of the word HOME House, yes - property - yes - profit - yes but what the hell does a home mean? Then the older generation wonder why they get mugged "I fought for YOU during the war" justification isn't working anymore for the young, especially when they hear that another one of their parents neighbours has just cashed out with 500K and buggered off from the UK to a place in the sun (with swimming pool!)

In the UK your friend is in the majority at the moment Many people on this forum refer to this as the 'denial stage' Certainly happened a lot in the last crash

Sure - less profits will mean a reduction in share prices, but housebuilder shares haven't really performed that well relative to the massive increase in profits, so they won't go crashing down if the profits drop - its not a very dynamic sector, so I would presume that shareholders take a long term view I reckon the big effect of cutting profit margins will actually be felt by homeowners in denial Cut profit margins is the 'business term' It means DROPPING house prices in your area If a 300K new home has already dropped to 270K today What is the older 300k house worth in the next street If there is no 'spring bounce' what if the new home is reduced to 240K in 2 months time?

Shareholders won't desert - Housebuilders have been making record profits every year for some time. They have plenty of 'reserves' plus forward land banks to build on for several years The profit margins are very good, but they have to sell volume They cannot sit on their hands for another 6 months in denial

I think a problem we have in the UK with regards to all social problems and crime to be more specific is "I'M ALRIGHT JACK" Although crime is high in certain towns and cities across the UK, for most poeple crime isn't too much of a problem I used to live in London, moved to Surrey - much less crime At dinner parties I am very careful what I say with regard to street crime My opinion (and experience) wouldn't be welcomed Most are all very liberal and PC (but then none of them have been mugged, stabbed etc,) There is no real problem becasue they are not directly affected, like I said "I'M OK JACK"

IF an HPC starts the dynamics will be quicker than the last crash I use the word 'IF' because although I am convinced it will happen, in a sentiment driven market nothing is guaranteed. There are lots of factors that will be different in 2005, one that springs to my mind is the influence of housebuilders During the last crash the big players were run more like a family business. They sold maybe 3000 homes per year. They also didn't have the same geographic influence i.e. Barratts didn't build homes in the South East In 2005 the big 4 now sell closer to 15,000 homes per year and they sell all over the UK Although the prices may not be crashing, prices are down in the last few months (often hidden via 'incentives') If you think discounting 10% off a 300K semi is bad, cos you've got to shift it, try the same on 300 million pound worth of unsold stock The big guys are all plc's and their shareholders will be putting pressure on for SALES This is one factor that is different in 2005 - I am sure you guys can think of a few more?

Good point, I never thought of it that way! Plus if your're married their can be a hidden benefit especially on Sunday afternoons "Honey, can you fix the leaky roof and by the way the boilers stopped working" "Sorry luv - not my place, I'll have to call the landlord"

If you rented a home for approx the last 5-7 years compared to buying the same home, then it would fair to call that 'dead money' But that is with the benefit of hindsight, because the housing market has boomed so much over that period That would also assume that you sold that home last year and 'cashed out' At the moment it is cheaper to rent than to buy, so currently renting is NOT dead money Plus the majority of forward indicators suggest a HPC

This crash MAY happen a bit quicker than the last one because Lenders learnt a thing or two from the last crash In the last HPC the big lenders were quite slow to repo and when they did, many would market them first with an EA - auction was a last resort. During this time the value of the repo'd home went down even further Maybe there was a bit of denial with the lenders, maybe it was political pressure? I advised a friend a few months not to worry too much about his arrears and mess up his Xmas. I said - "as long as you settle them in the next couple of months, the bank is UNLIKELY to go for repo, this side of Xmas" I am glad I used the word 'unlikely' - the lender went straight for a repo order (quickest I have ever known) This was one of the major lenders and although this is ONLY one example, if this is the 2005 trend, it will have a BIG influence on the speed of the HPC

the economists will aslo say "there was a similarity between 1988 and 2005" the historians will say "History has a habit of repeating itself" Gordon Brown will forget everythig he said n 1997 I will say "Same Sh*t - different day (decade)" will we ever learn?

Another word for home owners being SILLY is DENIAL Many people will be sensible and logical inm many aspects of their life until it comes to House prices House prices going up there are sensible House prices going down they are silly

What is interesting is that if you add up all the comments, it gives you a constant impression a BEAR market out there HPC forum is BEARISH by nature, so we could be accused of being a bit bias But these expats are having trouble selling their houses and for several months by the looks of it

The mentality goes something like this On the way UP- no denial - total acceptance of the dynamics of the housng market "My house was 200k last year, prices have gone up 20%, its now worth 240K" Realistic acceptance of market conditions On the way DOWN the house that was worth 240K drops by 20% and is now worth 192K DENIAL "My house is worth 240K BECAUSE I had 4 offers last year at the full asking price" (All fell through cos' the chains collapsed) "My house is worth 240K BECAUSE the EA told that there will be a spring bounce" (EA's always tell vendors what they want to hear) "My house is worth 240K BECAUSE interest rates are going to go down" (His EA was an expert economist before switching careers!)

In fairness to these people, if they are living abroad, they get most of their info via the VI propaganda machine This might explain the fact why ALL of them seem to complain about the same thing yet it occurs to NONE of them, things may not be 100% in the UK housing market ignorance is bliss!

They all seem to naively miss the point Their asking prices are too high Not to mention the fact that if they are expats, its highly likely thay bought a least a few years ago These are the sort of people that can take a big price reduction and still walk away with a decent profit Won't do much for their neighbours house values!!

This is one of the big differences between the last crash and 2005 This is a generalisation, but in the last crash it was mostly younger people - FTB's etc, that got burnt and developers/landlords (not the BTL sort) Most people 40+ hadn't MEW'd, didn't owe 50K on credit cards and were largely untouched by the actual HPC Even those who lost their jobs during the economic downturn didn't get repo'd in large numbers because a) They had fairly small mortgages If they couldn't repay their mortgage the DSS via housing benefit paid the mortgage for them NO LIMIT Some high profile businessmen that got into trouble were getting ONE MILLION POUND mortgages paid on housing benefit In 2005 the difference is a) thanks to MEW a lot of the above I refer to have bigger mortgages Housing benefit has been capped (Whoops!)

The couple trying to sell their place for £645,000 complain "They are at the mercy of the market" They forget to mention they bought the place 20 years ago, probably paid 145k and are hoping to walk away with half a million for a nice retirement This will only happen if FTB buys the sh**thole at the bottom of the chain

'Lie-to-Buy' mortgage - thats a good one I'm giving away my age a bit, but we used to call them 'dodgy mortgages' and they were quite hard to get (relatively speaking) Obviously there are no official figures, but I wouldn't be surprised if a significant amount of money, that cannot be repaid long term by income can only be repaid by anticipated HPI Unless HPI picks up in the next couple of years these people are a going to have difficulties If prices fall, there are in deep trouble!

And this is the bit that looks all too familiar at the moment It stopped dead in August in the real world but the boom carried on for many for months in the statistical world In London 1 beds that sold like hot cakes in August 88 were on the market in August 89 for 75k Wasn't someone on this forum talking about the 'Denial Phase'

Nicely put - sleep well

KOTC I'm not saying that the market will crash as I've stated earlier, the UK housing market is mostly driven by sentiment and that highly unpredicatable and I don't for one minute presume I can predict the market Plus I am no longer with property investments so from a personal point of view I don't care What I am am saying that I have experienced a similar market before first hand and drawing from that experience in 2005 it looks all too familar If history repeats itself (and it has a habit of doing that), any FTB buying today could be in negative equity very soon Negative equity doesn't sound that bad, but 10 years of stress, debt etc, all for the crime of buying your first home to live in is not very nice

KOTC I see the figures, but they are statistics for the UK One mans statistic, another mans lie etc, I only dealt with property in London Booms start in London - normally Chelsea, Belgravia etc, They then spread to the other parts of London, then to the suburbs, then to the Home counties and then to the rest of the UK The eighties boom started in London The eighties HPC started in London (nineties HPC by the time it hit the north and the statistical charts) This current boom started in London in 1995 Not a lot of people know this because most people are not property dealers In London in 1995 properties that sold for 25-30k were SELLING last year for 200k+ You will not see this in any statistic

Good point A very good friend of mine who has been using self certs for the last 4 years was just declined last month - he was a bit miffed at why he was suddenly declined Mortgage advisor told him - new regulations he has 40k out on credit cards and is on 20k basic salary He was counting on a bit of extra MEW'ing to help him throgh The worse thing is he is a very nice person, just got a bit carried away with seeing all his friends living the good life because they had all made 'SO MUCH MONEY OUT OF PROPERTY'

Going back to my point of the best thing about the HPC website is - If it helped a few FTB's not buying now and getting messed up for the next 10 years - thats a good thing If investors win or lose - it goes with the territory likewise with BTL's and even 'King of the Castle' The market may not crash bigtime - none of the major banks/lenders have ever got it right, so I don't profess to But one thing is clear - the market is going down - how far who knows - it will be driven by sentiment which is unpredictable