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It Won't Crash Until I Buy A Property.

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Hello all,

I can just see me resigning myself to the bulls' arguments, not that I can understand them, but it looks like any real price retracement downwards could take years, like a slow agonising relationship breakdown (and I know all about those, eh luv).

Will it take years? Will inflation catch up with it?

Will property prices not fall until moi, Le Jinx, buys one? In which case, a whip round would be in order, please. I'll give you my PayPal account - ta.

TLB

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I think the next 12-18 months will tell. There's no doubt that prices will continue to fall, and fall hard once this current bounce is out of steam, but whether that will be nominal or real is far from clear in my mind.

Current plan is to stay in cash, stay alert, and possibly buy an acre or two of land (albeit overpriced) as the ultimate inflation hedge.

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You can get a caravan and live on your land , literally surrounded by a hedge.

Do you own a house outright? If not why not buy one and live in it as the ultimate hedge.

Thats what Im going to do. If the prices are going to fester downwards for years then Ill buy soon and live mortgage and rent free. Of course ill be choosy and bargain hard...

At the moment Im paying 700 a month to live in a house which is crap. Rent isnt going to fall by much sadly. If I buy outright ill save 25 k in rent in 3 years. I can take my family on holidays abroad etc.

That will allow me to save considerably more in high interest regular saver accounts and not have to worry what the prices are doing as I would have enough money to either extend the house or move to a bigger one.

I personally dont think prices will drop as fast as im paying rent, so if you can afford to buy maybe in 6 months, when everyone has recovered from the spring madness then you should get a reasonable deal.

Edited by str mofo

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You can get a caravan and live on your land , literally surrounded by a hedge.

Do you own a house outright? If not why not buy one and live in it as the ultimate hedge.

Thats what Im going to do. If the prices are going to fester downwards for years then Ill buy soon and live mortgage and rent free. Of course ill be choosy and bargain hard...

At the moment Im paying 700 a month to live in a house which is crap. If I buy outright ill save 25 k in rent in 3 years.

That will allow me to save considerably more in high interest regular saver accounts and not have to worry what the prices are doing as I would have enough money to either extend the house or move to a bigger one.

The land is more related to growing veg and putting some animals on if I feel like it. I have no intention of living in a caravan ;)

Re the bolded comment, I wouldn't dream of buying now when there is no clear answer to inflation / deflation / biflation / stagflation / ad nauseam argument. Sure, I'm losing thousands per year in interest at the moment, but if nominal falls began to occur again, I'd be seeing that back in no time.

The circa 2% drops we were seeing on a near monthly basis equated to about 5k per month to me, tax free. I can afford to take a few months of zero interest if that is likely to resume.

Whereas if inflation kicks in big time, then I'll just buy what I can outright - but it's too early to tell yet.

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I laughed when I saw this, and I thought it was a clever way of looking at the issue.

But ... and I dont want to be cruel about this...

If rising prices now are making you MORE LIKELY TO BUY, then you havent thought this situation through properly.

Havent you learned anything from 2007-2008?

Here's my take:

+ Bubbles occur when: easy money hits unthinking speculation

+ "When people are buying without thinking and analysis of what they can afford, prices can go to any height", and that is the most dangerous time to buy, because prices detach from reality

+ As property prices rise (but rents don't), renting becomes even more obviously the smart choice, since the economic benefit of renting rather than buying becomes stronger

Some say, "but a just want a home!" (Let me say this in an unvarnished way: They are fools, and the worst sort of liars - since they are lying to themselves! If they were willing to rent before, why should the argument in favor buying get stronger when prices rise? They economics against buying are stronger, not weaker. They are lying to themselves, since what they really mean is: "I dont want to miss out on the easy money that I see others making, and what i really want is the psychic pleasure of owning while I'm also making tonnes of easy money, in a passive way. " If they were truly honest about what is motivating them, then they could deal with it better. )

Let me hit these types with another brick. A lawyer once said: "I dont want to use myself as a lawyer, since I would then have fool for a client." You dont want to just "go with the emotional flow, and BUY!", since you would then be buying without a good reason.

This is a very good argument that I haven't seen put as starkly as this before. I agree completely.

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Snip ...

Some say, "but a just want a home!" (Let me say this in an unvarnished way: They are fools, and the worst sort of liars - since they are lying to themselves! If they were willing to rent before, why should the argument in favor buying get stronger when prices rise? They economics against buying are stronger, not weaker. They are lying to themselves, since what they really mean is: "I dont want to miss out on the easy money that I see others making, and what i really want is the psychic pleasure of owning while I'm also making tonnes of easy money, in a passive way. " If they were truly honest about what is motivating them, then they could deal with it better. )

...Snip

I'm one of these people - I do just want a home. It's got nothing to do with prices, it's do to with the fact that I want to be free of the restrictions of renting.

Even if I'm renting from the bank rather than the Lettings Agent, a man from the bank doesn't turn up to check you're looking after what is essentially their property.

If I rent from the bank, they don't ask for paint swatches to give their permission on if you want to paint - which means you don't tend to decorate, as it's just not worth the hassle, and the wait of people not getting back to you.

If I rent from the bank I'm free so long as I keep up payments - and it should be the same with renting - then people will be happy to stay renting as a very long term option.

Edit: I completely agree with the rest of the comment though!

Edited by waitingandsaving

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I'm one of these people - I do just want a home. It's got nothing to do with prices, it's do to with the fact that I want to be free of the restrictions of renting.

Even if I'm renting from the bank rather than the Lettings Agent, a man from the bank doesn't turn up to check you're looking after what is essentially their property.

If I rent from the bank, they don't ask for paint swatches to give their permission on if you want to paint - which means you don't tend to decorate, as it's just not worth the hassle, and the wait of people not getting back to you.

If I rent from the bank I'm free so long as I keep up payments - and it should be the same with renting - then people will be happy to stay renting as a very long term option.

Edit: I completely agree with the rest of the comment though!

How much for the privilege of painting your walls?

Well I think the value of the flat I rent will drop 250k->200k from now to the bottom, say over 4 years.

That is approx £1000pcm. There is also £1000 interest per month if I purchased. I pay £750pcm rent.

So should I pay £1250 a month extra, over 4 years, just to have the privilege of painting walls?

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How much for the privilege of painting your walls?

Well I think the value of the flat I rent will drop 250k->200k from now to the bottom, say over 4 years.

That is approx £1000pcm. There is also £1000 interest per month if I purchased. I pay £750pcm rent.

So should I pay £1250 a month extra, over 4 years, just to have the privilege of painting walls?

It's like watching paint dry waiting for the HPC to fully take hold! But I think you are doing the right thing - try to invest the money you are saving by renting. In that way you will accrue a bigger deposit. One thing to watch out for is that although prices will fall the size of the deposit needed may not. There is too much uncertainty to buy unless you need to.

Edited by crashologist

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Let me say this in an unvarnished way: They are fools, and the worst sort of liars - since they are lying to themselves! If they were willing to rent before, why should the argument in favor buying get stronger when prices rise? They economics in favor of buying are weaker, not stronger. They are lying to themselves, since what they really mean is: "I dont want to miss out on the easy money that I see others making, and what I really want is the psychic pleasure of owning while I'm also making tonnes of easy money, in a passive way. " If they were truly honest about what is motivating them, then they would be easier for them to slap down the silly emotion, and deal with the thoughtless emotional response better.

A very interesting point of view.

However I think it is a bit unfair. There is a more obvious reason than profiteering that rising prices would make fence-sitters decide to buy:

Suppose they want to own a house for non-financial reasons (eg security of tenure)... rising prices may well make them fear higher future rises making it harder to own one in the future.

I bet that goes through more people's heads than the desire to profit.

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The argument for not buying is much weaker when you do not require a mortgage. At the moment my rent is swallowing all my cash. I can afford to buy a 3 bed semi with garage and garden which needs a bit of tidying for cash.

I wont be paying anyone anything and I can do what I like with the property.

Dont get me wrong, Im no bull, but ive been looking for a decent house to rent (moving area for schools) for under 850 a month and I just cant find one. I have adverts up in shop windows, checking the weekly classifieds, asking everyone I meet, checking rightmove, homes24, zoopla, gumtree etc etc every day.

If the 2% per month falls start up again it will be great and I think they well do over winter. BUT I cannot find a decent house to live in in the mean time!

If the wife loses her job we have too much in savings to get any help from government. All in all, at the moment I would be better buying.

I will examine the position in 6 months and perhaps buy, perhaps carry on renting. Depends on what property, what price, what auctions/firesales/repos I can find...

If I can find a decent priced house then the crash will have already happened for ME. Just because the average asking price hasnt dropped doesnt mean you cant buy a house for 40% off.

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I laughed when I saw this, and I thought it was a clever way of looking at the issue.

But ... and I dont want to be cruel about this...

If rising prices now are making you MORE LIKELY TO BUY, then you havent thought this situation through properly.

Havent you learned anything from 2007-2008?

Here's my take:

+ Bubbles occur when: easy money hits unthinking speculation

+ "When people are buying without thinking and analysis of what they can afford, prices can go to any height", and that is the most dangerous time to buy, because prices detach from reality

+ As property prices rise (but rents don't), renting becomes even more obviously the smart choice, since the economic benefit of renting rather than buying becomes stronger

Some say, "but I just want a home!"

(Let me say this in an unvarnished way: They are fools, and the worst sort of liars - since they are lying to themselves! If they were willing to rent before, why should the argument in favor buying get stronger when prices rise? They economics in favor of buying are weaker, not stronger. They are lying to themselves, since what they really mean is: "I dont want to miss out on the easy money that I see others making, and what I really want is the psychic pleasure of owning while I'm also making tonnes of easy money, in a passive way. " If they were truly honest about what is motivating them, then they would be easier for them to slap down the silly emotion, and deal with the thoughtless emotional response better. )

Let me hit these types with another brick. A lawyer once said: "I dont want to use myself as a lawyer, since I would then have fool for a client." You dont want to just "go with the emotional flow, and BUY!", since you would then be buying without a good reason.

Hi Dr Bubb,

i am glad to say you are wrong on this 1, because for some people it's NOT about MONEY.

<rant>

Unfortunately Bubb, it's people like you who have been partly to blame for the insanity of the past decade. IIRC you were buying 'investment properdee' in HK in the not too distant past. These residential property investments IMO have been one of the root causes of the huge price rises. You talk about speculation above, you are treating houses/appartments as an investment - but for some people they are somewhere to live - somewhere to call home. In the next few years (if it hasn't happened already) there will be a crash in HK - and it's people like you that have caused it - along with pricing out 'average Joe' into buying a place for himself.

The (a!) solution of course it to heavily tax capital gain on property. ~90% should do it - with no taper relief.

Lets cut these 'investors' out and give houses back to the people that will live in them.

I used to laugh at some of the posts on this forum - blaming the BTL brigade the banks etc for all the problems - and in the next breath the same posters would be saying that they will buy a holiday home or some other investment when prices got more realistic.

They couldn't see that THEY were the problem.

</rant>

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The argument for not buying is much weaker when you do not require a mortgage. At the moment my rent is swallowing all my cash. I can afford to buy a 3 bed semi with garage and garden which needs a bit of tidying for cash.

I wont be paying anyone anything and I can do what I like with the property.

Dont get me wrong, Im no bull, but ive been looking for a decent house to rent (moving area for schools) for under 850 a month and I just cant find one. I have adverts up in shop windows, checking the weekly classifieds, asking everyone I meet, checking rightmove, homes24, zoopla, gumtree etc etc every day.

If the 2% per month falls start up again it will be great and I think they well do over winter. BUT I cannot find a decent house to live in in the mean time!

If the wife loses her job we have too much in savings to get any help from government. All in all, at the moment I would be better buying.

I will examine the position in 6 months and perhaps buy, perhaps carry on renting. Depends on what property, what price, what auctions/firesales/repos I can find...

If I can find a decent priced house then the crash will have already happened for ME. Just because the average asking price hasnt dropped doesnt mean you cant buy a house for 40% off.

In terms of your savings try to think of ways you can move it out of reach in case your wife loses her job - perhaps a parent could hold it for you? I know you want a home and it's better to own than rent. All I would say is the economy is looking too volatile to me. I think further falls are inevitable. That means if you buy you need to drive a hard bargain because you will be left with eroded equity or at the worst negative equity. It's horrible to feel that your life is on hold - this is not of your making though. I think it is symptomatic of this country and the current government. I wish you and your wife well and hope you get the house you want soon.

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Hello all,

I can just see me resigning myself to the bulls' arguments, not that I can understand them, but it looks like any real price retracement downwards could take years, like a slow agonising relationship breakdown (and I know all about those, eh luv).

Will it take years? Will inflation catch up with it?

Will property prices not fall until moi, Le Jinx, buys one? In which case, a whip round would be in order, please. I'll give you my PayPal account - ta.

TLB

Sorry LastBear, but it is I who is the true HPCjinx. If I decide to buy, the crash will commence at warp speed.

My track record proves this: Bought Nov 07 (Mrs HTBB expecting a cub)

For various reasons we decided to sell in Dec 08. Sold Stc in MArch 09.

Since then Nationwide index has shown continual HPI!!!!

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Sorry LastBear, but it is I who is the true HPCjinx. If I decide to buy, the crash will commence at warp speed.

My track record proves this: Bought Nov 07 (Mrs HTBB expecting a cub)

For various reasons we decided to sell in Dec 08. Sold Stc in MArch 09.

Since then Nationwide index has shown continual HPI!!!!

Buy a house, you idiot! NOW!!! Buy buy buy! :o:PB):unsure:

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Sorry LastBear, but it is I who is the true HPCjinx. If I decide to buy, the crash will commence at warp speed.

My track record proves this: Bought Nov 07 (Mrs HTBB expecting a cub)

For various reasons we decided to sell in Dec 08. Sold Stc in MArch 09.

Since then Nationwide index has shown continual HPI!!!!

History is on your side

CO-JPP-F00.gif

japan-house-prices--nov08.gif

Or as from the Guardian Yesterday a 50% rise from here, I think you have made the right decsion and it may feel like the whole world is against you in your stratagy (because they are) but it is more likely we will get the Japanese scenario than the Gurdians. :rolleyes:

predictionq.jpg

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Guest UK Debt Slave
Hello all,

I can just see me resigning myself to the bulls' arguments, not that I can understand them, but it looks like any real price retracement downwards could take years, like a slow agonising relationship breakdown (and I know all about those, eh luv).

Will it take years? Will inflation catch up with it?

Will property prices not fall until moi, Le Jinx, buys one? In which case, a whip round would be in order, please. I'll give you my PayPal account - ta.

TLB

In case you hadn't noticed, our country is being turned into a totalitarian police state. The middle class is being wiped out.

My advice is simple

DON'T EVEN THINK OF BUYING A HOME

Private property rights will cease to exist in the UK in the new few years, so will your fundamental natural rights, habeas corpus, the whole concept of being innocent before being proven guilty.

Why anyone would consider buying a home right now is a measure of how asleep people are

If you have any sense, apply what resources you have to getting out of the UK before it's too late

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In terms of your savings try to think of ways you can move it out of reach in case your wife loses her job - perhaps a parent could hold it for you? I know you want a home and it's better to own than rent. All I would say is the economy is looking too volatile to me. I think further falls are inevitable. That means if you buy you need to drive a hard bargain because you will be left with eroded equity or at the worst negative equity. It's horrible to feel that your life is on hold - this is not of your making though. I think it is symptomatic of this country and the current government. I wish you and your wife well and hope you get the house you want soon.

Thanks for your kind words, but I wont be in negative equity because I will buy for cash- no mortgage.

Ill then be free to save 25k in 3 years thus negating possible falls.

The maths is very different for a cash buyer than a loan applicant.

Remember that theres always a right time to buy- if the price is right. Id be buying at 40% off peak or not at all.

When no one else is buying in jan/feb then I will be. Im in no rush but id be a fool not to keep my options open...

Parents have cash of their own to stash and inheritance tax is a bind too so there are no simple ways to stash cash and still beat inflation.

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In case you hadn't noticed, our country is being turned into a totalitarian police state. The middle class is being wiped out.

My advice is simple

DON'T EVEN THINK OF BUYING A HOME

Private property rights will cease to exist in the UK in the new few years, so will your fundamental natural rights, habeas corpus, the whole concept of being innocent before being proven guilty.

Why anyone would consider buying a home right now is a measure of how asleep people are

If you have any sense, apply what resources you have to getting out of the UK before it's too late

Spoken with such certaincy, when in reallity what you said will probably not happen. If the uk goes tits up itll take a good proportion of the world with it.

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japan-house-prices--nov08.gif

I do really like this graph that you have provided to us.

Multiply the one axis by £1,000 and shift the other by 16 years and you could have a correlation close to 1 of what the average house price in the UK might look like from 1996 to 2024.

If there is anyone who is more PC literate than me who could be bothered to try to take a crack at it, it might make an interesting thread in its own right ......

Edited by LuckyOne

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Guest UK Debt Slave
Spoken with such certaincy, when in reallity what you said will probably not happen. If the uk goes tits up itll take a good proportion of the world with it.

The UK has already gone tits up mate. The country is finished. So is America. The 2 nations that might have defended the world against tyranny have already been rotted from the inside out. The foundations are gone. The rotted stump will soon fall.

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The UK has already gone tits up mate. The country is finished. So is America. The 2 nations that might have defended the world against tyranny have already been rotted from the inside out. The foundations are gone. The rotted stump will soon fall.

One could argue that America and the UK have defended the world against one type of tyranny only to replace it with a different one.

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I do really like this graph that you have provided to us.

Multiply the one axis by �1,000 and shift the other by 16 years and you could have a correlation close to 1 of what the average house price in the UK might look like from 1996 to 2024.

If there is anyone who is more PC literate than me who could be bothered to try to take a crack at it, it might make an interesting thread in its own right ......

That is why I like it. However i have a feeling our will play out a little more quickly as once the GE is over the new party will want to get the bulk of the pain out of the way in the first 2 years and then try and stabilise thing. I still think you could buy in 3 years time after a 50% from peak fall and still loose 20-30% from that point.

Everyone says our government wont allow it and the Japanese were incompetent but so far we are following their path. They even offer government back loans in the hope of keeping people in their house which are only just blowing up now in this global recession and after a continued slide of the assets that were backed by the original government loan. The only difference I see with Japan is we do not have the luxury of the global economy booming while we sort out our problems.

In short still a great time to be on the sidelines.

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