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Come on LL. Support isn't new money, it's old money staying in. An STR is old money staying in.

What the old market needed to crash was a withdrawal of support in the form of people selling & moving to their relatives home - therefore withdrawing from the market.

In the last crash, that's all they could do if they wanted to stay out. In this market, we all know there's places available at reasonable rents.

So what this market really needs to crash, is a withdrawal on a large scale of support by investors.

Mark my words that it's been talked about for years now & hasn't happened. The only thing that can make it happen as you & I both know and have discussed before, is MUCH higher IR's.

In that case TTRTR everything's fine - there is trillions of pounds in support for the property market!

Perhaps it's my equity-related head going wrong here... support for BT shares at 200p to me means there are people willing and able to BUY the shares at 200p (so they shouldn't fall below 200p) rather than that there are loads of people who own BT shares who will not be sellers at 200p (in which case presumably there is "support" all the way down to 0p).

So STRs, by having already sold, are providing support right down to £0?

I would say an STR who sells for £200k thinking a property is 50% overvalued provides "support" at about £140k?

A BTLer who's willing to buy that place at £200k in the hope that they can rent it for £10k? Now he REALLY is providing support for current house prices. Or the FTB who leaves Mum and Dad's to buy the £200k property? Now THEY are providing support.

In my world someone selling their house because they think it absurdly highly valued to rent the place that was vacated by the greater fool who chose to buy their place is not supporting the market at current prices.

I'd say FTBs provide a support for the current housing market... just at much lower levels than the current ones.

Do you REALLY believe that the last crash was caused by masses of people selling their houses and moving in with their Mum and Dad again?

That said, I do agree the BTL investor is key to the current situation (along with their lenders etc). However, I'm not sure we need a withdrawal of BTL "support" by your definition - i.e. we NEED BTLs to become net sellers on a grand scale.

At present SOMEONE needs to buy at the bottom end of chains. It seems to me it is either BTLS or FTBs. But FTBs are essentially priced out. If BTLs simply stop buying MORE property (without removing your "support") then the property at the bottom of the chain still needs to sell... and if it is to an FTB it has to be at a price an FTB is willing and able to pay (the fact that the BTL next door is not selling is not hugely relevant).

So what I am saying is BTLs need to continue buying not just agree to sit on their hands to prevent prices from sliding back to a position where affordability to the average FTB is once again the key driving force of prices (unless the property market is going to dry up entirely - unlikely I'd say and somewhat inconsistent with the apparently increasing supply of properties for sale).

Edited by London-loser
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Only anecdotal evidence - but

I lived in London in 91-93. There was no shortage of decent rental property - I had two good flats, one in Vauxhaul, one in West Hampstead, finding both was quick, easy and rents were negotiable and reasonable

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Do you REALLY believe that the last crash was caused by masses of people selling their houses and moving in with their Mum and Dad again?

I believe that the last crash was caused by much higher IR's, don't you?

I also think you know the pack I speak of (you too RJG18), it's the one that lets you feel you have some control over your future. The one where you know you're top of the list (barring the bank of course, who is always tippy top of the list) when you lock the door at night (ie no chance of being asked to leave by your landlords).

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E.g. I now have enough cash to buy a few properties with only small mortgages.

Will I go for it, even though I would like to?

Of course not.

Why?

because the market is falling

I'll wait until prices look reasonable,

CrashIsUnderWay I'm just wondering why you would buy multiple properties if/when prices crash. Many pundits seem to suggest that low inflation will cause the property market to stagnate for many years to come (and "property investing" will be a dirty word for a whole generation if there is a severe HPC)

Do you think better yields will drive the attractiveness of property investment if there is very little or no capital appreciation? Have you crunched the numbers to see what yields are required if you get depreciation and also if IRs rise and your lending costs increase?

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Do you REALLY believe that the last crash was caused by masses of people selling their houses and moving in with their Mum and Dad again?

I believe that the last crash was caused by much higher IR's, don't you?

I also think you know the pack I speak of (you too RJG18), it's the one that lets you feel you have some control over your future. The one where you know you're top of the list (barring the bank of course, who is always tippy top of the list) when you lock the door at night (ie no chance of being asked to leave by your landlords).

TTRTR,

You'll be surprised to hear that I think house prices crashed last time because they were at unsustainably high (bubble, with hindsight) levels. Barring a new paradigm (where the UK public continued to put an ever higher proportion of the national wealth into property - at the expense of holidays, cars, etc) or a very loooooooong stagnation (yeah, right) it was inevitable.

I'm sorry to tell you this (again) but ultimately the value of our houses IS directly tied to our national wealth... even if idiots can drive them to ridiculous levels for a while.

The interest rate rises (which were not nearly as severe as property bulls like to make out - given double-digit interest rates were the norm rather than the exception for most of the 1980s) certainly made things worse and speeded up the situation... but no, I do not believe they CAUSED the crash.

What I mean is that had those interest rates come about when house prices were half the bubble level (and so people had manageable debt rather than ridiculously high levels of debt that left them hostages to fortune) then the crash that happened would not have happened.

As an example, my father deliberately bought a house for less than he could afford in 1985. His clever friends told him he was stupid for not re-gearing/re-mortgaging in the late 1980s and getting a bigger/better place. My dopey old Dad decided to stay put and enjoy the comfort of his equity. And while I wouldn't say the 1990s house price crash was comfortable for him, he rode it out. Had he taken the advice and doubled his debt in 1989 he would probably have been looking for a new home in the early 1990s (a cheaper one, I mean, not the one owned by his parents).

If only other people had been so cautious about the housing debt they were taking on then 15% interest rates (even if only for a short period of time) would have been a pain in the aris rather than the CAUSE of all their problems (as opposed to their own stupidity/lack of caution, of course).

Presumably your comment about "the pack" is to suggest that if I do not own my own home (or at least have a mortgage on it, even if it is in negative equity) then I have "no control over my future". You probably won't be surprised to hear that I feel I have a great deal of control over my future.

I'm actually thinking about chipping off (to South America) for a few months early next year. Now obviously if I'd bought in December (like you told me to) that might prove a bit trickier. As for my landlord, well, I'm sure he'll get a tenant easily at a significantly higher rent so I'm surely doing him a favour?

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