Jump to content
House Price Crash Forum
judas

So What's The Future For House Prices Then?

Recommended Posts

We thought the world would change forever.

A global financial crisis to define a generation.

Bookies taking bets of the first city to riot.

HPC members talking seriously (some of them yes) about stocking up on food.

Deflation, hyperinflation, lives ruined forever.

And house prices to fall by at least 50% and up to 90%.

Here we are 15% peak to present in over a year ??!!! A bit dissapointing no? Certainly unexpected.

So what happens now. How much further will real house prices fall. I feel that even the HPC official prediction of 40 - 50% may be silly.

Share this post


Link to post
Share on other sites

Like many, I had expected the last year to provide a "reboot" in terms of house prices, the measurement of the relative value to society of different professions, share prices etc etc.

This "reboot" looked very likely until about mid-March 2009. Since then, fiscal and monetary authorities have been able to avoid the day of reckoning with very effective short term policies that are ultimately very damaging in the long run.

My view of the world as well as my approach towards protecting the few aspects of my family's long term future that are under my control are based on a very long run outlook.

The actions that I expected to be able to take in 2010 / 2011 are now delayed until 2015 or so. Depending on future interference, these actions may be delayed much longer : perhaps even beyond my lifetime.

Share this post


Link to post
Share on other sites

Answer? Nobody knows.

I must admit I am beginning to wonder where all this is heading. So far those in power have crushed the crash, so to speak. And to boot, they've punished savers in favour of the debt ridden. The majority want house prices protected, and so it is.

Often we've seen posts declaring the next leg down, citing this and that as the catalyst. But it's come to nothing. The truth is houses are still ridiculously overpriced, and they ain't budging. It's as if everyone has learnt from history this time, and taken steps to smother a crash no matter what the long term cost. It's a pity they didn't learn from history, and keep house prices under control in the first place.

Personally I think there is perhaps one glimmer of hope left. Labour have held the dam in place with a view to reaching the next election. Their claim will be "we steered the UK out of recession and crash". But once the election has passed that dam may finally break.

I'm not convinced anything spectacular will happen though. It been slow motion all the way. Who knows, maybe we're heading the Japan route. But regardless, it's been disappointing so far. Anyone with an escape route to better climes should probably take it IMO.

Housing is becoming a subject I prefer not to discuss. Passion has been replaced by weariness. We all have lives to live, and that can't be put on hold waiting for "the bargain buy".

Just my 2 cents.

Share this post


Link to post
Share on other sites

I dunno the fundamental problems exist ie owe too much and no real industry to support it.

TBH I think the UK government are just doing everything possible to keep the status quo (and mugging people by printing) until the election.

Share this post


Link to post
Share on other sites
Guest Daddy Bear
Answer? Nobody knows.

wrong

Daddy Bear knows

50% REAL TERM fall over next 10 years for AVERAGE PRICE INDICES as house prices and wages reach the correct equilibrium.

MASSIVE RISE IN NOMINAL TERMS started Spring 2009 as we undergo massive inflation due to global printing of money, dash to assets and hyperinflation.

DB

Share this post


Link to post
Share on other sites

war cannot be avoided it can only be delayed to the advantage of your enemy.

the same can be said for this crash, it,s inevitable and the more they spend and the longer they pretend toxic assets have a value well above reality to delay it , the worse it will be, less pain now for alot more pain later or a slow lingering decay over 20 years or so not sure yet but history shows the latter to be more likeley. :rolleyes:

Share this post


Link to post
Share on other sites

The 'printing of money' as many keep claiming has not actually occurred. The BoE has increased its balance sheet with new money and swapped that for banks assets (gilts and bonds). So the size of the economy that we see has not increased, just the liquidity. So no hyper-inflation.

We are going down the Japan route. Wages and house prices will decline in real terms until a more traditional equilibrium is restored.

What it will mean though is there will be far fewer owner-occupiers of residential property for decades to come.

BTW, have you seen this - http://news.bbc.co.uk/1/hi/england/kent/8282368.stm

Great stuff from a subsidiary of the UK's largest estate agency group, Countrywide!

Share this post


Link to post
Share on other sites
Guest absolutezero
Daddy Bear knows nothing

Fixed that for you.

You know just as much as the rest of us.

Share this post


Link to post
Share on other sites

Careful what you wish for, there are still serious problems ahead. Have you forgotten that QE is still oiling the wheels of commerce? How do you think things will fly on their own when it runs dry?

http://www.foreignpolicy.com/articles/2009...partys_not_over

Surprisingly, the greatest contributor to Chinese growth since the 1990s is not net exports but domestically funded fixed investment used to buy machinery or construct buildings and infrastructure such as roads and bridges. For example, this constituted more than half of GDP in 2008 and more than 45 percent of GDP growth in that year. Due to this year's massive $586 billion stimulus, about 75 percent of growth this year -- now touching 8 percent -- has been achieved through state-led fixed investment.

And that´s the country our leaders have put their hopes in.

Share this post


Link to post
Share on other sites

In 1930 they thought that the worst was over, but then things got really, really nasty. we are heading into deflation, with M3 money supply falling steadily in the US and UK.

Be careful what you wish for.

Share this post


Link to post
Share on other sites

It has become the norm in the UK for people to equate personal wealth with the value of ones house.

This is a fact and shows what a basicially thick population we have.

High house prices mean equity and therefore the opportunity to borrow against it.

Think about it-F**k all Industry, thick population with no skills other than " Computer Skills",what they used to call" New Work"-----C****s.

All the connections to the Housing Market-from Carpets to Solicitors and beyond. No wonder the b******s are hung upon it! `Its all we have f*****g got. It keeps the rich rich and the poor happy! Its want everyone in the ruling classes wants, and that includes politicians.

So----------my feeling is that HP,s will stagnate,please don,t listen to the popular media, and in W.London, Bath and Poole,prices might rise,and in Newport,Belfast and Burnley they will fall. 4-5 years and the whole thing starts again.

Unless we become more European.Do you know Denmark has the cheapest house in the modern world, very little HP inflation, and virtually no one but the Danes can buy one. Offer low and hope for the best.

Take up a hobby. Chill.F**k it !

Share this post


Link to post
Share on other sites

No one knows at what will happen when economics is complete guesswork.

How this will all end is anyone's guess but it appears that we are seeing a direct challenge to Von Mises premise.

Ludwig von Mises describes the endgame brought on by reckless expansion of credit: "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

Share this post


Link to post
Share on other sites
It has become the norm in the UK for people to equate personal wealth with the value of ones house.

This is a fact and shows what a basicially thick population we have.

High house prices mean equity and therefore the opportunity to borrow against it.

Think about it-F**k all Industry, thick population with no skills other than " Computer Skills",what they used to call" New Work"-----C****s.

All the connections to the Housing Market-from Carpets to Solicitors and beyond. No wonder the b******s are hung upon it! `Its all we have f*****g got. It keeps the rich rich and the poor happy! Its want everyone in the ruling classes wants, and that includes politicians.

So----------my feeling is that HP,s will stagnate,please don,t listen to the popular media, and in W.London, Bath and Poole,prices might rise,and in Newport,Belfast and Burnley they will fall. 4-5 years and the whole thing starts again.

Unless we become more European.Do you know Denmark has the cheapest house in the modern world, very little HP inflation, and virtually no one but the Danes can buy one. Offer low and hope for the best.

Take up a hobby. Chill.F**k it !

I am clearly in the minority but I specifically subtract the portion of my net worth that I have to devote to shelter from my perception of my "real" wealth.

At the current level of house prices relative to rental yields, I can subtract less from my "real" net worth by renting than by buying.

Share this post


Link to post
Share on other sites

They've managed to slow down the real economy crash with zero interest rates, QE, and massive deficit spending. Unfortunately, unemployment is still rising, businesses are going bankrupt, and tax receipts are falling. It seems like the government won't stop its manic policies until it is forced to (and I doubt Cameron will be very different), which is when lenders refuse to buy our increasingly worthless debts/currency at low yields and interest rates have to rise to enable the sale of government bonds and to control inflation. At least there's a mechanism to stop them! When interest rates rise the crash proper can start again.

Share this post


Link to post
Share on other sites

Deflation is contraction of money supply - ongoing. Assets will lose value. DB with egg on face very very soon :D

Pound falling and general rise in cost of living - inflation. Consumables will go up, living standards down.

My forecast is that UK house prices will drop in 2010 by around 10%+ and that the mortgage market will dry up. However, its very hard to say right now. Maybe nominal prices will rise but if so the value of the pound will fall so in (for example) Euro or Yen terms house prices will fall by quite a bit more. Either way in the long run the earnings to value balance will return to about 3.5 - the long term level. Ergo the 6 years wages you spend to buy now will be worth 3.5 years wages in a decade.

However, if you can borrow the money and repay it with money worth a fraction of today's value (and get a fixed rate loan) you might win. Its a risky strategy and need you to have a fixed rate loan with a big borrowing. If you can achieve that then the banks will lose as you repay less than you owe (i.e. the savers and other suckers pay for your gain). Its a gamble that might pay off or it might bankrupt you.

Take your pick. Our friend above has put his money where his mouth is. I'm not sure I agree with his prediction but he has my respect for doing what he thinks is right - best of luck matey.

Share this post


Link to post
Share on other sites
Answer? Nobody knows.

I must admit I am beginning to wonder where all this is heading. So far those in power have crushed the crash, so to speak. And to boot, they've punished savers in favour of the debt ridden. The majority want house prices protected, and so it is.

They've crushed the crash more than once.

In 2005 there was a small correction, "corrected" by slashing interest rates and pouring more money in. Looked cheap at the time, unless you could spot that lenders were getting into serious trouble.

In 2007 the banks started going bust, leading to a bigger correction in house prices in 2008. Again "corrected". Only this time it didn't look cheap to anyone.

Now on this unstable trend, what will it cost to re-inflate the bubble next time? And what does that say about "next time"?

Share this post


Link to post
Share on other sites
The 'printing of money' as many keep claiming has not actually occurred. The BoE has increased its balance sheet with new money and swapped that for banks assets (gilts and bonds). So the size of the economy that we see has not increased, just the liquidity. So no hyper-inflation.

Yes but the actual value of the "bank assets" is almost certainly much less than the banks say they are worth (using the mark-to-model valuation approach) because they are mostly CDS subprime trash. So banks are actually net receiving money in return.

They are (sensibly) choosing not to lend it out, hence deflationary pressures will remain

But government can still spend spend spend if it chooses, and this will cause inflationary pressures.

Share this post


Link to post
Share on other sites
They've crushed the crash more than once.

In 2005 there was a small correction, "corrected" by slashing interest rates and pouring more money in. Looked cheap at the time, unless you could spot that lenders were getting into serious trouble.

In 2007 the banks started going bust, leading to a bigger correction in house prices in 2008. Again "corrected". Only this time it didn't look cheap to anyone.

Now on this unstable trend, what will it cost to re-inflate the bubble next time? And what does that say about "next time"?

A: Price controls and state failure.

Share this post


Link to post
Share on other sites
Guest Barebear
A: Price controls and state failure.

Or every owner imprisoned in their expensive properties paying everything they earn in taxes and interest payments.

A sort of suedo rich, sitting on houses that no one can afford to buy.

Edited by Barebear

Share this post


Link to post
Share on other sites
We thought the world would change forever.

A global financial crisis to define a generation.

Bookies taking bets of the first city to riot.

HPC members talking seriously (some of them yes) about stocking up on food.

Deflation, hyperinflation, lives ruined forever.

And house prices to fall by at least 50% and up to 90%.

Here we are 15% peak to present in over a year ??!!! A bit dissapointing no? Certainly unexpected.

So what happens now. How much further will real house prices fall. I feel that even the HPC official prediction of 40 - 50% may be silly.

We are in the stand-off phase where there are hardly any transactions. This is quite normal at the beginning of the beginning of a house price crash. It is going to be a few years yet before we hit bottom.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   291 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.