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House Price Crash Forum


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Everything posted by abharrisson

  1. Just a thought, not that I'm into betting/investing on the markets... but 99% of people on here seem to think property prices are on a downward bet, and of those about 50% seem to think something worse than 25% is on the cards. There are pages and pages of data to support.... why don't you ( and all of the others with a mind to) find a way of accessing the property price futures (I believe these are based on the halifax index) and as the index is currently factoring in I think only about 15% (10% this year , 5% next) and go lower in a massively leveraged way..... two years time when house prices have fallen by 25% or so you'll be sitting on a massive profit..... people always said with the financing available that property has been a one way bet for ten years... upwards...... now however with the financing not available it looks like its a one way bet downwards..... you really can't lose can you... and anyone on here is bound to know more about than the other VI's betting only 15% over two years ( after all its mainly the investment bank gus and what do they know)..... go on have a punt on something you know about rather than FX or stocks....... I would argue for most who post on here saying they agree with 25% or 50% or some I read recently said 60%....... the right thing to do if you are so very sure is gather together what deposit you were saving and back prices to fall way way way below the index currently, start at 25% (surely they will go lower than this if everything I have read on here is right), and stage your bets all the way down to 50%...... you can't lose... surely.
  2. I don't disagree with the point you make about house prices yo-yoing around, however I do disagree strongly with the premise of the thread that " house prices don't rise by a single penny . ever." whilst before you sell gains are projected and therefore not real, where properties are sold for a figure beyond which they were bought then they will have risen, or one could argue where inflation adjusted they have sold for more than they were bought then again they will have risen. There are literally millions examples of this. I am not saying the house as pedantically "made" money as it is inert, but one cannot argue that the price has not risen. One certainly cannot argue that houses don't rise by a single penny. ever. as this thread attempts.
  3. I wonder just how many people on here who (rightly in my view) are clearly not in love with Brown voted for labour since 1997..... I have always argued that their running of the economy has been wrong and now finally everyones begining to agree... they have taxed us until we squeak, they have widened the gap between rich and poor, they have wasted HUGE sums of money on the NHS and in education jst by chucking money at an issue that needed more than that, they have allowed personal debt to get out of control, they have covered us all in acres of red tape... let alone the wars, the over cuddly relationship with the states etc..... I would almost though bet you that many of those now railing against brown essentially for the issues of house prices and debt.... actually voted for these idiots, not once but throughout their period in office since 1997.... its those that voted for them that I blame, it was quite clearly the worng thing to do, and you are at fault, you fell for the silver tongued spin and failed to see beyond that. Its quite clear Labour voters are to blame... those who did ought to feel ashamed of themselves. However even though the evidence of their imcompetence is now clear ( as is the evidence of house prices that are too high) I suspect we will see the usual millions voting for them in the local elections and in the general election whenever that may be.
  4. I'd go along with that sentiment... although personally I see the shape being more like a 15% fall over two years with perhaps a longer period bobbing along the bottom with real prices being erroded by inflation but no real cash price falls or very marginal anyway. I would absolutely agree on the joint income issue, and I would also agree that FTB's returning to the market will signal the end of pricing slides... whenever that may be. I just simply don't buy the 50% fall thought, despite the data being put forward.
  5. I'm afraid whichever stats you use peoples experience or perceptions will differ from those stats... the national house price stats while interessting don't really add up to a hill of beans even if you break them down regionally.... a house I know of which has sold recently ( a week ago having been on the market for ten days) should have had a vlaue of £1.1m according to nationwide stats (backdated), it wnet on the market at £1.3M and sold for £1.65m.... granted its an extreme example, but I use it to illustrate my point. I have no doubt that the 13% figure last time was pretty much right on a National basis but within that some areas got hit massively (london), others hardly at all..... I suspect it will be the same this time around with some spectacular falls in te overbuilt city centre flats area, new builds generally and in the poorer neighbourhoods with heavy poenetrations of adverse........ you could also see some skewing of the figures where the stats rely on for sale data ... for instance if house builders are not building and selling as many of their over priced houses this will effect those stats, but it won't necessarilly effect the price of the 3-bed victorian semi down the road from you.
  6. I don't know if anyone caught it but there was an interessting article in yesterdays FT on the average LTV situation we are in now compared to the last crash. Apparently, and this surprised me, the level of high LTV loans 90%+ is a LOT lower currently than it was last time... apparently the 100% and 125% loans are not nearly as prevalent as the papers make out, the situation was worse before. If true it is very important, last time around prices feel quickly creating a lot of repossessions which further depressed the market. This time around I think prices appear to falling much more slowly and have much further to go (than last time) before the repossessions volume gets to a critical level where that in of itself will start to have a downward drag on house prices. Have a read of the article I think its quite interessting... don't have a link I'm afraid as I read it on old fashioned paper.
  7. Of course the other way to look at this is that the within reason the price is kind of irrelevant, if you have planned your financing and can afford it, want the house and they are rarely available and plan to live there for ten years or so... whether you get it for £200k, £230k or whatever is kind of irrelevant in the grand scheme of things. Its a home amd in the longer term will be worth at least what you paid for it. I bought quite recently, we got a good deal (though nothing like 40% down ... more like the 2005 price level), but as I plan to stay there for quite a while I am really not at all bothered if house prices dip, crash or whatever... in the same way that what goes up must go down then what goes down must come up....
  8. Probably the same guy who when he put forward the budget for the olympics forgot to add VAT, and got the numbers badly wrong anyway... £3.4bn vs £9Bn
  9. Granted. I suppose crudely when they raise rates they expect both the cost of the debt to rise, limiting disposable income levels and therefore reducing inflation and they also see the pound increasing therefore reducing the sterling price of imported goods which in turn further reduces inflation. Whilst the de-coupling of mortgage rates from BOE rates causes other difficulties it does in part do the task of helping put a brake on expenditure which in of itself has a deflationary effect... equally the redcuing price of sterling has a boosting effect on exports such as they are...... BUT the issue remains that mortgage rates are no longer within BOE control via the repo rate and to some degree nor is sterling (not that it really ever is beyind the margins)..... so effectively BOE has few levers to push and we know with Govt finances in such a mess there is going to be little they can do from that side either.
  10. Well if you are right and the job market weakens that would indicate I suppose a recession and in that instance I feel crash would be writ large regardless of any steadying in the mortgage market... simply becasue I feel rising unemployment stats would trump any return to competitiveness in the mortgage market.
  11. Do you know I actually don't think the price of mortgages (within reason ) is the defining factor... theres just no choice out there currently, some sectors have closed completely etc.... from a personal perspective I think some return of choice may have a supporting effect even if the actual cost of the mortgage remians as high (comparitively to last year) as it is today. You do also raise a very interessting and very fair point about "the drive to own a home" perhaps irrationally supporting a price level....... if it does steady up you are of course right that prices will still be above trend an I suppose the answer to that is that we might perceivably see inflation and time take care of that rather than cuts in actual prices... but fall to trend at some stage they must I suppose, however it happens.
  12. Now theres a nice thought to cheer up my weekend..... tot up all the aspect of the "perfect storm" that this thread set out, add in todays nice little gun boat incident off Iran.... and now you add in the spectre of an influenza outbreak... bird flu anyone (we'll certainly see more cases this winter)and locally they will have an impact, Government labs leaking deadly viruses (it couldn't happen surely !), ..... all we need now si a terrorist blowing up an important fuel site, or another fuel storage fire or god forbid someone decides to fly a plane into a nuclear site (always wondered why they hadn't tried that yet) and we'd have the full set of cards in the armaggeddon deck.... from house prices to the extinguishing of life on earth as we know all in one cheery thread. Now that has made my weekend... makes a 20% drop in house prices look like minor problem... actually makes a house price bubble also look like a minor problem.
  13. Agreed, I suppose the question I was getting at is that IF, and I'd grant its a big IF at the moment the financing situation eases and there is more choice of mortgage products within say the next 12 months... could that have an effect on whether the bubble deflates quickly or slowly or not as far. I know many are in the camp that says a crash surely follows every boom, but I just wonder if a return to some semblance of normality in the mortgage market (choice not price) will curtail the level of fall.
  14. That is my view as well... I had always thought the laws of physics meant that free infinite energy just doesn't happen. For my part, not because I am naturally green etc, but because I also like the economics I am getting a wind generator installed... with oil looking like it may well power on to $200 a barrell ... alternative energy will get real shot in the arm... but the VI's in the industry will resist all the way... hopefully the latest nonsense of stipulating an amount of organic fuel in diesel etc will blow over when folks realise that the rising price of all farm production makes this option pointless.
  15. Now here's an interessting question.... house prices have got too high ... agreed all the data seems to point that way... how far they will fall remains to be seen and there are as many predictions for that as there are economists. The interessting thing about house prices is I don't think they fell or are falling simply because they are too high... the market didn't decide enough is enough based purely on the price. So what did cause the change... I think the answer from my point of view is simply the change in financing, and the knock on change in confidence levels... many fewer mortgage options, many sectors now currently unfunded etc . So I suppose if thats the primamry trigger then one potential answer on how far they might fall will be that any fall might be linked to how quickly a normalised mortgage market returns (by that I don't necessarilly mean return to previous pricing but return to previous choice). Whilst confidence may take time to build there surely is an argument to say that when (if) a more normalised mortgage market returns then that may have a steadying effect on prices almost regardless of where they have fallen to... they may well still have a way to fall to get to trend for instance. Personally I think the financing change did trigger the fall, and it has not been triggered by the simple fact that prices are way too high against historical measures, I do think a return of some choice and some competition in the mortgage market will steady things, and there is a chance this could be above trend. However the longer the mortgage market is uncompetitive the higher the chance of a full crash because the market will have developed some momemtum and there will be so much bad news stored up amongst the credit challeneged that the ensuing repossession and forced sales data will effectively force the price down. In terms of time I would say if the mortgage market choice and competitiveness has not returned to a large degree by end 2008/ spring 2009 then we may well get the full blown crash rather than the softer version. I know there is a view that bubbles always burst and go below trend and there are those who will feel that the numbers are just so strong that a major correction has to happen..... but I wonder how many out there feel as I do that the timing of the return to a greater degree of competitiveness in the mortgage market might well have a large say in what the final shape of the house price correction will be. I wonder if anyone else feels that a speedy resolution (say 8-12 months) has a chance of seeing prices steadying for a longer period rather than crashing below trend and then recovering.
  16. In my view the "new build premium" has often been a lot higher.... even in relatively stable small housing (not flats) around average size towns you could be paying a 20% plus premium... ANY buyer of a new build who did not knock around 20% off the price ( the offers of carpets, 5% deposit, part exchange, mortgage subsidy , free toaster ... whatever... never amounted to more than say 7% so you'd need to be taking that plus a further say 13%).... were buying a house that was bound to degrade in price vs its established neighbours... to put this in perspective everyone here seems to say anyone buying say summer 2007 bought at the peak.... well if you bought new build in say summer 2005 you effectively were buying in the same situation as even with price increases in 05,06,07.... the "premium degrade" would have amounted to the same or more in some cases than the gain... so even two years down the track at peak the "price" of those houses would only be the same as what was paid. One of the bigger sins in the market over the last few years was buyer ignorance of the "over" price they were paying for their new build property.... many first time buyers and people who traded up etc have shot themselves in the foot by not realising just how hard they needed to bargain to lessen the effect of the "new build premium".... the developers by the way used the residential buyers incapacity to negotiate to deliver greater discounts to those investors who did know how to negoitiate....the result many residential buyers overpaid dramatically... many investors got bigger "discounts"... they'll all lose in the end of course, its just that the residetial buyers will in all likelihood lose more.
  17. I absolutely agree... I know whats in my account and manage my money and expenditure accordingly... those who can't are living beyond their means, or are inept. If bank charges go then the banks will look to re-coup the money somehow... charges being one route... and those charges are likely to be focussed at those without much money... eg banking will be free if you maintain a balance of £2,000 otherwise its £50 per month and overdraft interest rates will rise alongside credit card interest rates.... everyone pays one way or another... those with hefty balances through low interest rates ... those who have overdrafts through overdraft interest... those who can't manage their money through fees..... and in this environment you can bet your rapidly depreciating house that ALL banks will reach the same conclusion at the same time and all their charges will be strangely similar.
  18. Interessting.. you should post this more widely as I fear the story will have invigorated builders to start "action" against non-payers.... wouldn't surprise me if we see one emerge in the next few weeks who does the same himself thinking he won't get into trouble and then gets forced to re-build the whole thing even though he still has not been paid... now that would be an amusing story.
  19. If he's right about the correlation I suspect we'll find the explanation is a simple one.... cancer rates are greater in poorer neighbourhoods (poor diet, higher smoking rates etc) and equally finances tend to be weaker in those areas.... whats so sad about this whole thing is that apart form those who bought into the big city centre flat developments you'll see I suspect the greatest falls and greatest repossession figures and the greatest misery in the less well to do areas... those areas where a dose of negative equity really will blight the rest of their days... many of these never should have bought their council home or indeed any home... their finances were not sufficinetly robust to cover it, and when prices rose the temptaion to remortgage and take "equity" out was just too great... sprinkle in some credit card debt... and voila .. disaster souffle... its always the little people who get hurt most in these things.... but hey ho, who cares ... at least house prices fall.
  20. All I can do is agree... the prospects of a recession looming and widescale job losses, public sector stikes etc are all potentially going to be part of it too.... a drop in house prices will be a relatively minor concern in amongst all that lot.
  21. Not quite , if the investor wants it , then often they have financing in place either by way of a commericial facility they can draw on or they take bridging finance and then take a mortgage later... without financing really very little would sell at auction although some investors do it with cash having pre-prepared a little pot prior to their latest buying phase. The point simply was its easier for the investor who is more experienced than it is for the average joe who knows little about it.... which why so few properties at auction go to actual end users (residents)
  22. Its happening NOW... there are loads and rising of people who need to sell (mostly to avoid repo etc) and there seem to be an ever growing group of companies offering sale and leaseback or sale and rent back deals to them. The guys in the property feel emotionally distraught at having to sell (don't want to have to move the kids etc) that I bet these companies are driving a very tough bargain on the price.... I think cash normally doesn't change hands ( although I could be worng) the buyer either makes them pay a very full rent if he can persuade them theres no equity in it or perhaps says well have it for three years rent free and rebuild your lives etc etc if there is some equity in it. of course down the line the buyer will NEVER let the tenant buy back into it at anything like a discounted price vs market and as they have bought it cheap with a view to selling in ten years or so... they won't sell for ages anyway. End result the original owner will have to move anyway at some stage... in my view in a lot of these cases the emotions get in the way and the original owner would have been better selling for what he could get and then renting somewhere else... but they make the mistake of being tied to the house emotionally. I bet it comes out as a huge "scandal" in a few years time.
  23. What planet are you on, or did you get out of the wrong side of bed. If you think recent prices are similar to 2004/2005 then say so, if not lets have a point of view.... of course some properties sell at auction some do not... muppet
  24. The best part of that of course is that it sounds pretty well positioned to ride out any storm becasue you don't have to re-mortgage it.
  25. Afraid to say with financing costs so high its going to be unlikely that you will be able to balance the budget like that.... othewise we wouldn't be where we are. I reckon your best bet is to see the agent who handles the sale or indeed the bank and offer to take a short term lease on a months notice, this will give you the best chance of not having to move. If they agree then you will have to play ball with viewings etc. I suspect the Agent will not sell so in a month or so it will get consigned to auction... I suspect if my reading of recent auction prices is anythign to go by then you could expect to get it for something like the 2005/2004 price. problem being you then need to organise finance.... and lenders are taking six weeks to eight weeks to produce and offer currently so theres going to be a prob between that and the purchase contract which says you will need to complete in 28 days..... there are ways round it, but this is why the investors and the finance savvy tend to get first look in at the auctions , for the others they can only buy at "agent" prices or choose not to...... but if the 2004/2005 price was to your likeing, and you could get through the financing issues then that would be my best est of what it might go for. be interssting to hear the final number.
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