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House Price Crash Forum


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About adwzie

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  1. There's so much group think on here. Anyone who thinks they just need to hang on a little bit longer before prices collapse is in complete denial about what's currently going on out there.
  2. Interesting that The Economist thinks UK house prices are only 14% - 20% overvalued. Not really consistent with the reams of vitriol and hyperbole that appear on this site every day.
  3. People on this website have been arguing for 10 years that prices are on the verge of a crash and that anyone who disagreed was an ignorant member of the sheeple. The arguments seem to make a lot of sense but the only problem is they've been consistently wrong year after year. It seems extremely unlikely to me that London prices are going to fall anytime soon. Interest rates aren't going anywhere (government will do whatever's necessary to avoid them going up), help to buy is about to kick off, the economy is showing signs of life after years in the doldrums, rents are shooting up, population is growing and we're still not building. The window for a crash has passed. Look at the graph on the front page of the website. It's a good time to buy. Admit you got it wrong and get on with your life.
  4. I currently commute in zone 4 SE London and I'm pretty sick of having to stand on a cramped train every morning. I get the impression that if we lived just a bit further out we'd be pretty much guaranteed a seat every morning. Does anyone have any experience of commuting from Welling, Abbey Wood or Sidcup? Are you more or less guaranteed a seat on the train from these places?
  5. I work in accountancy. It's true that it's been fairly recession proof. I haven't heard of any redundancies (except where it's been used as an excuse to get rid of weaker players). Longer term though I'm nervous. There's been a trend for years now to outsource low level jobs to India but this is gradually creeping up the ranks. I've been told in the last few months that I have to recruit future members of my team in India rather than the UK. We're now at the point where most of the entry level jobs where current senior people started are nearly all in India. The management have effectively pulled up the ladder behind them. This means that the transfer of jobs to India has taken on a momentum of it's own. When the time comes to replace more senior people, the only people with any relevant experience will be in India. It's hard to see how this wouldn't eventually creep up all the way to very top of the organisation thus ending accountancy as a profession in the UK. The only thing I can see stopping this is the rapid wage inflation in India. India's no longer super cheap (about 50% of UK costs now). However if we reach a point where all the experience is in India then higher Indian wages won't be enough to bring all the jobs back to the UK. Emigrating to India might be one option in that scenario... but can't say that really appeals.
  6. I've lived on this square and would second the above except that the problem is not that it's in the wrong part of Camberwell but that it is in Camberwell. The square itself is an oasis but I wouldn't step into the park after dark unless you think you can outrun the gangs.
  7. Everything they can? Really? Like raising capital gains tax? Like reducing LHA? Like subsidising builders to build more homes (via homebuy/mortgage indemnity scheme)? Like reducing real incomes via inflation and tax increases/benefit cuts? Like increasing unemployment? Yes, they're really pushing the boat out to keep this sucker up aren't they? This stuff is really just fiddling while Rome burns. The money supply and to a lesser extent interest rates are much greater drivers of house price moves. The stuff above is good politics but not much more.
  8. Back in the 70's and 80's interest rates were much higher than now but inflation was also colossal. It's not that unusual for real interest rates to be negative as they are now in which means property plus big mortgage looks like a smart move. The graph on the front of the site shows real house prices. Crashes in nominal prices either don't happen or are relatively small. Although that seems counterintuitive, it's the nominal prices you should worry about, assuming you are buying with a mortgage. Very important point though: the above is particularly true if you live in prime parts of the country ie the southeast. Otherwise, you live in apart of the country that is locked into the sterling zone and prices may well fall in nominal terms as the have in non prime parts of the eurozone.
  9. Is there really anyone who still hasn't spotted the government won't allow a nominal crash? They'll print as much money as is needed to prevent it. I would therefore suggest that cash is a terrible place to keep your £'s. if you pile into property with a huge mortgage then inflation will gradually erode your debt and the worst that will happen to the value of your property is that it'll stay the same in nominal terms. So there's no point in even waiting for a crash in real terms. Fill yer boots.
  10. It raises an interesting question though: Is it really possible to put aside serious amounts of money simply by working hard and living frugally ie without inheriting money, creating a business empire, becoming an unusually successful banker/footballer/celebrity, making it the board of a large plc (which takes most people till their 50's anyway) or anything else that applies only to the lucky / exceptional few. If the OP has saved £200k by the time he is 31, what does he expect to have put aside by the time he is 40? Even if it's possible, is it really worth the effort? How much is enough? At what point do you say that's enough saving, it's now time to start spending? Is this based on age or an amount of money? Answers on a postcard....
  11. I'm still not convinced. If he's earning £55k he'll be clearing around £3,300 a month. So to save £2k a month, he spends only £1,300 a month (fairly frugal for London). Assuming his spending has been constant since beginning work, to save £1k a month he'd need to be clearing £2,300 a month or approx £35k gross. It's unlikely that his starting salary after graduating was as much as £35k if he's in a career that pays only £55k at the age of 31 (unless his career progress has been pretty poor). More typical amongst people I know is to start on £20k - £25k and be on £60k - £80k by 31 (I'm 29). You would hit £35k+ after completing a graduate scheme of 2 - 3 years. Throw in some student debts as well and it's unlikely he made any real progress on savings until he was at least 25. So 5 - 6 years max to put together £200k in a period when his gross salary ranged from £35k to £55k. I should have better things to do than analyse it to this level but seems to be something not quite right with this story.... apologies to the opening poster if I've missed something. If the explanation is bonuses then it's a bit disingenuous to claim a salary of £55k and make everyone else wonder why they have so little savings.
  12. Can you fill us in a bit more on the maths of how you've managed to save £200k? I'm guessing the £55k is the best salary you've ever achieved and you've already said you only save £2k a month. I can't get my calculator to turn this into £200k by the age of 31, even considering a 20% return if you timed the fall of sterling perfectly. Are you also getting chunky bonuses on top of the £55k?
  13. +1 I went to hassle of buying (and reading) a whole book on the leasehold system after reading such scares stories. Freehold is preferable to leasehold but you do have the right to extend and at a price set by an independent value which should be line with the uplift in value you get from extending. The ones I would avoid are modern flats in large blocks which have outrageous service charges for lots of services such as porterage, communal gardening, lifts etc.
  14. The propensity of certain individuals to be spenders isn't what causes the boom. The boom is caused by the increase in the money supply due to the process outlined by some previous posters ie if the bank lends someone £100 then they will eventually deposit it somewhere else where it can then be relent ie there's not £1 of debt for every £1 of saving. The boom is simply inflation which can either be cost of living inflation or asset price inflation. Asset price inflation reinforces the boom ie if noone can get a mortgage for more than £100k then the maximum theoretical house price is £100k unless you have a house to sell which is valued at £100k in which case you can afford to pay £200k. This is how house prices have become so far out of step with incomes. House price inflation is self-perpetuating. The crash happens when the money supply goes into decline either because people are repaying their debts or because default by borrower A means that borrower B can't pay borrower C who then can't pay borrower D etc. The point of quantitive easing is to maintain the money supply at the pre bust levels but obviously it's impossible to print large amounts of money without it unfairly benefiting some parts of society at the expense of others and it provides a huge incentive to try and play the system rather than going to work for your bread and shelter.
  15. I've been following this site for at least 4 years and have been fully bought in to most of the ideas that have been bandied about on here. Nevertheless I'm now planning to buy as soon as I find a suitable property. For what it's worth my observations are as follows: 1. The property crash always appears to be just round the corner 2. Prices might fall in real terms but rarely significantly in nominal terms. If your mortgage is fixed or interests stay low then even if prices fall in real terms then you're still in the money. 3. Renting is shit. No security of tenure. You always have to worry about getting your deposit back. You have to pay through top whack for any repairs and don't see the benefit once you move out. You can't make improvements such as putting double glazing in. 4. Property in this country does seem overpriced to me but no more than in other parts of the world with similar job opportunities and transport possibilities. Commutable areas of New York, Sidney, Paris (have lived), Amsterdam (currently working) are all pretty much as expensive as London. Manchester property is cheaper than London but I'd struggle to earn half the salary I can achieve in London. So do I think my imminent house purchase will be a good investment? No not really but I also no longer think that the government will stand by and allow a major crash in nominal terms. Secondly I think the threat of rocketing interest rates has now subsided since GB got the boot. Thirdly I have to accept that if I'd bought back in 2006 rather than following this webiste I'd be better off today. It saddens to me to admit that the (naive) advice of my parents was correct. Get on with your life instead of trying to predict house prices.
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