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Dr Renter

Boom Mentality Returning

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So, I was getting a little hacked off with the current state of the housing market as it seems the government has managed to prop up the pyramid.

A house came up for sale in my village (outside Bath) last week which was a bit of a wreck and needed a complete refurb with scope to extend from three to four bedrooms. As a possible hedge against both HPI and HPC with this property, I decided to have a look around it last week. It was indeed a wreck but reasonably priced so I decided to go and have a think for a week whilst on holiday in Cornwall.

I returned today to book a second viewing to find that there had been 3 cash offers, one of which was around 20% above the asking price, and that they were taking no more viewings or offers.

So, it seems the mentality that led to the boom is returning, and there are plenty of parasitic BTLs/"developers" around to take up the affordable properties and keep prices inflated, and even inflate them up and beyond 2007 prices.

Anything coming onto the market that is reasonably priced is selling fast and I just cant see things changing anytime soon. Low interest rates are here to stay, allowing people to remain in their houses even if they are in financial difficulties.

I'm now bullish on British property and looking to leave as I cant see FTBers ever getting anything reasonable, even with a Tory government and its slightly more realistic policies.

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3 reasons for this:

Full employment

Easy credit

Rising wages.

Hang on......................... :blink:

...or lack of confidence in sterling, money sat sitting in the bank?

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I think this will be the trend in most des res areas now.

Are there likely to be that many cash buyers? It's strange how big the mortgage market was, given how they seem so irrelevent to house sales. :unsure:

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This is good news.

I think this will be the trend in most des res areas now.

It's good for both sides at the moment. If you are happy to live in a cheaper area prices have come down a bit and those who are happy to pay more get to live in a nicer area.

Win win really. I did say house prices in good areas didn't drop. Looks like I was right.

Sibley, you gave me a fright popping up like that.....Sorry, personally I will give maidstone a miss, yes you are absolutely right, you are wrong. ;)

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So, I was getting a little hacked off with the current state of the housing market as it seems the government has managed to prop up the pyramid.

A house came up for sale in my village (outside Bath) last week which was a bit of a wreck and needed a complete refurb with scope to extend from three to four bedrooms. As a possible hedge against both HPI and HPC with this property, I decided to have a look around it last week. It was indeed a wreck but reasonably priced so I decided to go and have a think for a week whilst on holiday in Cornwall.

I returned today to book a second viewing to find that there had been 3 cash offers, one of which was around 20% above the asking price, and that they were taking no more viewings or offers.

So, it seems the mentality that led to the boom is returning, and there are plenty of parasitic BTLs/"developers" around to take up the affordable properties and keep prices inflated, and even inflate them up and beyond 2007 prices.

Anything coming onto the market that is reasonably priced is selling fast and I just cant see things changing anytime soon. Low interest rates are here to stay, allowing people to remain in their houses even if they are in financial difficulties.

I'm now bullish on British property and looking to leave as I cant see FTBers ever getting anything reasonable, even with a Tory government and its slightly more realistic policies.

This is a slow burner. True, things are going up now and it wasn't like this in 1990. It is different. Rates are low and will remain so for the forseeable future...at least until the bond markets get twitchy about UK debts...but things are really f03ked this time and, whilst the streets are not littered with for sale signs, the artificial props are just that...artificial. Don't know how old you are Dr R, but I wouldn't be hoping for much from Spotty and Dave. Thatch started all this a long long time ago in a fairly pleasant land...

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This is good news.

I think this will be the trend in most des res areas now.

It's good for both sides at the moment. If you are happy to live in a cheaper area prices have come down a bit and those who are happy to pay more get to live in a nicer area.

Win win really. I did say house prices in good areas didn't drop. Looks like I was right.

According to the LR the better areas did not go down by much--some truth in your statement therefore:

*

Higher priced areas

Annual change in house price

-9.2%

Total number of sales: 32,605

Comparison of counties/unitary authorities in South East

ALL PROPERTIES: Click headings to re-order table AREA AV PRICE QUARTER ANNUAL SALES

Windsor And Maidenhead £379,728 -12.5% -15.9% 367

Surrey £337,413 2.5% -9.1% 3240

Buckinghamshire £310,566 5.6% -14.0% 1341

Hertfordshire £277,633 -2.1% -9.4% 2868

Oxfordshire £271,780 1.7% -6.0% 1738

Brighton And Hove £243,168 4.4% -12.9% 803

West Sussex £238,837 7.6% -10.7% 2554

Bracknell Forest £235,285 0.4% -8.1% 298

Hampshire £230,920 -2.2% -10.4% 3923

East Sussex £215,227 0.1% -10.8% 1678

Kent £209,830 4.3% -11.7% 3844

My area--very high end for the most part, only dropped 10.8% last year. With jobs being lost arond here very rapidly I suspect things may pick up in the year ahead. To the downside that is.

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While the free money is flowing people will spend it on unsupported property, the only trouble is the foundations are not in place to hold it steady. ;)

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So, I was getting a little hacked off with the current state of the housing market as it seems the government has managed to prop up the pyramid.

A house came up for sale in my village (outside Bath) last week which was a bit of a wreck and needed a complete refurb with scope to extend from three to four bedrooms. As a possible hedge against both HPI and HPC with this property, I decided to have a look around it last week. It was indeed a wreck but reasonably priced so I decided to go and have a think for a week whilst on holiday in Cornwall.

I returned today to book a second viewing to find that there had been 3 cash offers, one of which was around 20% above the asking price, and that they were taking no more viewings or offers.

Do you have a link to the property so we can track it's progress ?

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I've said this before but I think that this 'dead cat' needs a more satisfactory explanation than simply calling it a dead cat. It just seems more 'crack fuelled' than a normal bounce in a downward trend, as this anecdotal illustrates.

What the f*** is going on? A resurgence of this magnitude did not happen in the last crash (correct me if I'm wrong), so precedent doesn't account for it.

If it's a rush to assets then we may well be in the early stages of a 'blow off top' crack up boom, in which case prices could go to Mars (they're already at the moon)................but, but....I can't get my head away from the fact of low approvals and transaction levels, high unemployment, record personal debt, the LTV problems for FTBs and all the other sound fundamental indicators. I just can't imagine a return to mental HPI, but then the evidence before me seems to be telling a different story.

I'm possibly even more concerned about holding sterling now than I was at the height of the banking crisis - at least then asset prices were deflating. The resilience and resurgence of the housing market seems to me to be a real 'black swan'.

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.....

Annual change in house price

-9.2%

.....

There are a lot of people on this forum that need to tighten up on definitions. Houses have not fallen anywhere as much as people wanting to BUY would like. Property has fallen 20 odd percent, but this includes the hideous 2 bed flats that were built to sucker the johnny come lately amateur BTL morons out of their money. Down from a quarter mill to 50 grand in many places. This is affecting the property indices which the media like to wrongly call "house" price indices.

The good area - bad area debate reflects the circumstances of the people that live there and their need (or not) to sell up.

I think we all must wait a while to see how it pans out TBH. I remain undecided but think that prices will atrophy over a decade or so.

The "boom mentality" will take a while to go away. Many people have enjoyed a lifestyle well above their real earnings for a decade or more. This is hard to give up. Reality is unpleasant and accepting you're bust is not easy. Rising property values will bail them out so this is the "good" news they want to hear - so its the "good" news the newspapers will print (to sell more copies and bolster their advertising revenues)

If everyone believes it prices will rise and all will be well in the world. Re-finance deals will be forthcoming and bankruptcy avoided. This is what the people want and is what the government want, come to that its what the banks want and its what the manufacturing industry (reliant on consumer spending) want. Its what Obama wants to finance the healthcare project. Its what Brown want to bolster his election chances. Its what Cameron wants to give tax cuts to his rich mates, its what the builders want to get them building again.

The only people that don't want it are the people that want to buy a house at 3.5 times average income......

Which of these groups is larger?

I have friends that are buying or wanting to buy right now. I think they're mad....... But I am outnumbered very considerably.

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I've said this before but I think that this 'dead cat' needs a more satisfactory explanation than simply calling it a dead cat. It just seems more 'crack fuelled' than a normal bounce in a downward trend, as this anecdotal illustrates.

What the f*** is going on? A resurgence of this magnitude did not happen in the last crash (correct me if I'm wrong), so precedent doesn't account for it.

If it's a rush to assets then we may well be in the early stages of a 'blow off top' crack up boom, in which case prices could go to Mars (they're already at the moon)................but, but....I can't get my head away from the fact of low approvals and transaction levels, high unemployment, record personal debt, the LTV problems for FTBs and all the other sound fundamental indicators. I just can't imagine a return to mental HPI, but then the evidence before me seems to be telling a different story.

I'm possibly even more concerned about holding sterling now than I was at the height of the banking crisis - at least then asset prices were deflating. The resilience and resurgence of the housing market seems to me to be a real 'black swan'.

I really do think last days of rome...

they simply cannot afford another debt boom, I think a lot has to do with the type of property. If you were expecting that little chocolate box thatched cottage in the cotswolds at 50% off, think again, was never going to happen. These properties have always been unreachable by the masses. I can see lots of price reductions still in my area for properties that actually are quite nice, just not jawdroppingly nice.

Me, I am buying some farmland next year, pre-election. I have concluded the only way the tories can start to go and sort out this sorry mess is approval of building on areas that were previously considered no-go to development. If the allah wont go to the mountain, the mountain shall come to allah!

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Guest joeschmo
So, I was getting a little hacked off with the current state of the housing market as it seems the government has managed to prop up the pyramid.

A house came up for sale in my village (outside Bath) last week which was a bit of a wreck and needed a complete refurb with scope to extend from three to four bedrooms. As a possible hedge against both HPI and HPC with this property, I decided to have a look around it last week. It was indeed a wreck but reasonably priced so I decided to go and have a think for a week whilst on holiday in Cornwall.

I returned today to book a second viewing to find that there had been 3 cash offers, one of which was around 20% above the asking price, and that they were taking no more viewings or offers.

So, it seems the mentality that led to the boom is returning, and there are plenty of parasitic BTLs/"developers" around to take up the affordable properties and keep prices inflated, and even inflate them up and beyond 2007 prices.

Anything coming onto the market that is reasonably priced is selling fast and I just cant see things changing anytime soon. Low interest rates are here to stay, allowing people to remain in their houses even if they are in financial difficulties.

I'm now bullish on British property and looking to leave as I cant see FTBers ever getting anything reasonable, even with a Tory government and its slightly more realistic policies.

Very similar situation in Brighton

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Agree about Brighton.The street I live in peaked in spring 07 at 305k.Last winter you could get one for 225-240.Now back on at 300-335 and selling!NIGHTMARE

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I really do think last days of rome...

they simply cannot afford another debt boom, I think a lot has to do with the type of property. If you were expecting that little chocolate box thatched cottage in the cotswolds at 50% off, think again, was never going to happen. These properties have always been unreachable by the masses. I can see lots of price reductions still in my area for properties that actually are quite nice, just not jawdroppingly nice.

On the contrary, 'twas a headline a few months back. Prime cottages in Devon & Cornwall amongst the biggest fallers at 29% down - thought to be a holiday-home effect. Dorset just a little less.

Not sure about cotswolds: they're within commuting distance of well-paid jobs, so the holiday-home market may be proportionally less important. But I expect it's had some effect.

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I've said this before but I think that this 'dead cat' needs a more satisfactory explanation than simply calling it a dead cat. It just seems more 'crack fuelled' than a normal bounce in a downward trend, as this anecdotal illustrates.

What the f*** is going on? A resurgence of this magnitude did not happen in the last crash (correct me if I'm wrong), so precedent doesn't account for it.

I tried to post a thread about a dead cat bounce, questioning how long could it be before becoming a trend reversal and if there was any precedent for dead cat bounce in the housing market. My thread never made the board...

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This is good news.

I think this will be the trend in most des res areas now.

It's good for both sides at the moment. If you are happy to live in a cheaper area prices have come down a bit and those who are happy to pay more get to live in a nicer area.

Win win really. I did say house prices in good areas didn't drop. Looks like I was right.

Weirdo

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A few thoughts on "boom mentality returning" , I am not sure that "boom mentality" has ever left us but money for mortgage lending has left us and will continue to be in short supply for years to come.

As another poster said, the important point here is they were CASH OFFERS, people who need a mortgage cannot make offers on overvalued property because they simply will not get a valuation anywhere near 2007 values.

Rightmove's latest HPI said that EA's were advising sellers to accept a lower cash offer rather than wait for someone with a mortgage. Offers of 20% over asking however, does seem particularly odd, was it a WONDERFUL property?

I hope they like it enough to see it lose 50% , if that offer was 20% above peak?

You see it is these rare cash offers on overvalued property that are stopping the market from falling and leaving an awful lot of property unsold, however, there are plenty of indicators that the bull market will not last much longer, so PLEASE take heart.

UK House Prices Have Further to Fall

......Further, although there's been a big brouhaha about the latest HSBC 1.99% home loan offer, don't expect many other lenders to follow suit. A lot of lending power has now left the market for good. Almost £300bn of UK mortgage debt was securitised, i.e. packaged up and sold off from bank balance sheets onto the bond markets, between 2005 and 2007. "That represents more than 90% of the growth in mortgage debt over that period", says CreditSights. And "the world isn't exactly clamouring for British securitised mortgages anymore, and won't be for a long time", says Matthew Lynn on Bloomberg. "With less money coming into the market, there won't be the same kind of demand for houses".

Yet a Rightmove survey at the end of August gave the "encouraging" signal that 78% of respondents reckoned UK house prices won't fall any further this year. And also that "the UK property industry is now seeing a virtuous circle of confidence building upon confidence".

Why's this another worry? Well, as Fidelity's Anthony Bolton explained in the weekend's FT about the stock market, "if everyone is positioned for the market to rise, it means these bullish expectations are already discounted" – i.e. factored into the price. As a result, "the market often moves to make the majority wrong and does the unexpected… so at turning points especially, the correct is the minority view".

And while there are plenty of differences between shares and houses, the principles of crowd behaviour are the same for every asset class. When almost everyone is bullish, get ready for a price fall. The near-8.5% bounce in property prices within the last six months (using Nationwide's figures at least) now looks ripe for a reversal.

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Very similar situation in Brighton
Same in Berkshire/Oxfordshire - Where is all the money coming from though????

OX-fordshire - must be the bulls.

BERK-shire - obviously a bunch of berks.

And Brighton..? Well maybe they're just away with the fairies down there...

XYY

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I've said this before but I think that this 'dead cat' needs a more satisfactory explanation than simply calling it a dead cat. It just seems more 'crack fuelled' than a normal bounce in a downward trend, as this anecdotal illustrates.

What the f*** is going on? A resurgence of this magnitude did not happen in the last crash (correct me if I'm wrong), so precedent doesn't account for it.

If it's a rush to assets then we may well be in the early stages of a 'blow off top' crack up boom, in which case prices could go to Mars (they're already at the moon)................but, but....I can't get my head away from the fact of low approvals and transaction levels, high unemployment, record personal debt, the LTV problems for FTBs and all the other sound fundamental indicators. I just can't imagine a return to mental HPI, but then the evidence before me seems to be telling a different story.

I'm possibly even more concerned about holding sterling now than I was at the height of the banking crisis - at least then asset prices were deflating. The resilience and resurgence of the housing market seems to me to be a real 'black swan'.

A lot is at stake, the whole way of govt etc... is now at risk of being exposed for the fraud it is. The people running the show are not going to give up without a fight, too much power is at stake. It's fascinating to see how they are trying to prop everything up, I sure Goebbels would appreciate the propaganda effort going on at the minute.

Misdirection is everywhere.

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