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Bubble Pop Electric

Short Term Memory Loss?

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Forgive me if this topic is repeating itself.

I was too interested in trying to get served underage at my local pub at the time of the late eighties housing crash - however when i ask my "elders!" to recall this event - no-one seems to know what on earth i'm on about. Or they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"

What is going on?

If you ask most people what they think of house prices today they say things like:

"Ooo - they're astronomical at the moment" or "it's terrible how high they are"

So if this is the case - why do they only think they'll stagnate, and why do they only remember a stagnation last round.

As a STR - it's driving me up the wall - someone give some faith please!! I'm new round here - but have been following this silly price hike for a few years now (but happy i haven't bought - and i'm sticking to mi guns!)

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they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"..........................

As a STR - it's driving me up the wall - someone give some faith please!!

Welcome. I can assure you that house prices fell significantly from 1989 onwards and by as much as 50% or more in some areas. They didn't start to pick up again until 1996 and then only slowly for several years until the current bubble took off.

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The people you need to ask are those that lost their houses, they'll remember. If a person lived in the same house throughout the crash they probably wouldn't realise how much prices dropped it's only people who were directly effected that'll remember (repo'd, negative equity, moving house during crash).

Think back to summers when you were a kid, I'm sure you remember them always being sunny - similar thing with the 80's crash if you weren't effected.

Edited by mustrum_ridcully

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Property values fell a long long way during the last crash and don't be fooled by those who pretend otherwise.

I know of people who's properties halved in value and it took 10 years for those values to regain former highs.

Timing in markets prone to volatile speculation is very important.

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Forgive me if this topic is repeating itself.

I was too interested in trying to get served underage at my local pub at the time of the late eighties housing crash - however when i ask my "elders!" to recall this event - no-one seems to know what on earth i'm on about. Or they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"

What is going on?

If you ask most people what they think of house prices today they say things like:

"Ooo - they're astronomical at the moment" or "it's terrible how high they are"

So if this is the case - why do they only think they'll stagnate, and why do they only remember a stagnation last round.

As a STR - it's driving me up the wall - someone give some faith please!! I'm new round here - but have been following this silly price hike for a few years now (but happy i haven't bought - and i'm sticking to mi guns!)

minus 27% in the London area....but only about minus 10% in the North ,Scotland and Wales........

In the North many people were in denial through the whole crash .....as 10% falls are often not transparent........(people moan like hell about not being able to sell rather than cut their price in such a market....like the ex-pats now)

Edited by Michael

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My own house..... 3 bed end terrace in Bucks

1983 bought for £33K

1990...valued at about £95 (maximum)

1994 sold for £60K

Lost at least 33% in 3-4 years.

I fully expect the same, or worse, to happen now.

Edited by justanewbie

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Forgive me if this topic is repeating itself.

I was too interested in trying to get served underage at my local pub at the time of the late eighties housing crash - however when i ask my "elders!" to recall this event - no-one seems to know what on earth i'm on about. Or they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"

What is going on?

If you ask most people what they think of house prices today they say things like:

"Ooo - they're astronomical at the moment" or "it's terrible how high they are"

So if this is the case - why do they only think they'll stagnate, and why do they only remember a stagnation last round.

As a STR - it's driving me up the wall - someone give some faith please!! I'm new round here - but have been following this silly price hike for a few years now (but happy i haven't bought - and i'm sticking to mi guns!)

I bought in late 1988 (due to job move) for £69,500. Sold that same house in

1997 for £72,000. In the intervening 9 years, prices in the street had plunged to

around £50,000, which meant we were stuck in negative equity and couldn't move.

Hence why I am so keen not to repeat earlier mistake, and am sitting tight in rented whilst this pantomime plays out.

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...when i ask my "elders!" to recall this event - no-one seems to know what on earth i'm on about. Or they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"

You have my complete and utter sympathy BPE. Here @ HPC we are constantly criticised for suggesting property will crash, as if we had fallen victim to some hysteria. In fact as you point out, the wider population have been so brainwashed by 10 years of price rises and a constant barage of property friendly "advice" from press and TV they are incapable of even accepting history. This is pure BUBBLE THINKING, PERIOD.

As already pointed out, talk to people who losttheir homes last time.

Better still, ask these "elders" these simple questions:

1 . what is negative equity? (a screen to see if they could read in early 90s)

2 . why was the term ever coined, given that it can only occur when property prices not only fall, but wipe out your deposit?

or look atthis from HM Treasury: PERSONAL SECTOR AND THE HOUSING MARKET, Summer Economic Forecast 1996

Here's a chart linked from this archive:

1-8.gif

I make that a 13% fall even on the North biased Halifax index. Then look at the 3 years it went nowhere. All that time wage inflation was high, so further eroding prices in real terms: ie it would have felt like property was getting cheaper by the percentag ewages went up.

Edited by Sledgehead

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Forgive me if this topic is repeating itself.

I was too interested in trying to get served underage at my local pub at the time of the late eighties housing crash - however when i ask my "elders!" to recall this event - no-one seems to know what on earth i'm on about. Or they say things like:

"house prices didn't fall - well not by much anyway" or "they just stagnated a bit and then went up"

What is going on?

If you ask most people what they think of house prices today they say things like:

"Ooo - they're astronomical at the moment" or "it's terrible how high they are"

So if this is the case - why do they only think they'll stagnate, and why do they only remember a stagnation last round.

As a STR - it's driving me up the wall - someone give some faith please!! I'm new round here - but have been following this silly price hike for a few years now (but happy i haven't bought - and i'm sticking to mi guns!)

I was a bit young at the time myself, but was the crash last time not more localised to, say, the south east and other selected hotspots rather than the blanket one we're about to see?

Additionally, inflation (at least official inflation ;) ) was a lot higher then, so some areas would not have had so much in the way of actual numerical falls, but more a stagnation, which would need to be inflation adjusted in order to see the falls.

Edited by aclwalker

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Guest Charlie The Tramp
My own house..... 3 bed end terrace in Bucks

1983 bought for £33K

1990...valued at about £95 (maximum)

1994  sold for £60K

Lost at least 33% in 3-4 years.

I fully expect the same, or worse, to happen now.

Likewise

Bought 1984 43k

Peaked 1988 120k

Dropped to 83k 1992

Valued 110k 2000

Valued 120k 2002

Valued 249k 2003

Dropped to 239k 2004

Currently selling 228k 2005

Took ten years to return to its peak price. <_<

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I remember that a lot of people were in denial at the time.. thought that the value of THEIR house hadn't really fallen because they'd done so much work to it etc etc. It was only people who had to sell for some reason who acknowledged what was happening.

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I am amazed at peoples short term memorys. I know of people who were happy to just get their name taken of a joint mortgate - transfering all the debt to their ex joint mortgague.

Rates for site work went down. Electicians, Brickies, Plumbers etc., cant really have such bad memories as to forget how bad things were.

It only got easier to sell about 96-97 onwards.

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I watched the 90's HPC from the sidelines as I didn't own a house at the time. But memories of that time include for sle boards everywhere, constant talk on the news of how many people had lost their jobs that week, constantly hearing about reposessions and how menay people had negative equtiy and couldn't move. I rememberthinking at the time how I hoped I'd see it coming next time use it to move up a rung. Like last time I currently don't own a house (STR).

Another memory I have is people comparing that crash to the previous one (70's) and how they had thought it would be different that time around. All the signs over the last few months are scarily sililar to the 80/90's.

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First of all, Loadsamoney was a plasterer!

We bought in 1989 for £63000. I think we actually managed to pick the peak of the market in London, down to the day, as within a month all talk was of a crash.

Similar properties (flat in Chingford) were selling for just £35000 in 1992 - how depressing. Would love to have moved but huge negative equity meant we were stuck in our little flat. At least interest rates were only 14%, so it wasn't all bad <_<

Moved in 1998, but the property was still only worth £50k, so rented it out and sold in 2002 for £85k - finally making a profit.

So my memory is very much intact, as is anyones who was actually affected by the crash.

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You have my complete and utter sympathy BPE. Here @ HPC we are constantly criticised for suggesting property will crash, as if we had fallen victim to some hysteria. In fact as you point out, the wider population have been so brainwashed by 10 years of price rises and a constant barage of property friendly "advice" from press and TV they are incapable of even accepting history. This is pure BUBBLE THINKING, PERIOD.

As already pointed out, talk to people who losttheir homes last time.

Better still, ask these "elders" these simple questions:

1 . what is negative equity? (a screen to see if they could read in early 90s)

2 . why was the term ever coined, given that it can only occur when property prices not only fall, but wipe out your deposit?

or look atthis from HM Treasury: PERSONAL SECTOR AND THE HOUSING MARKET, Summer Economic Forecast 1996

Here's a chart linked from this archive:

1-8.gif

I make that a 13% fall even on the North biased Halifax index. Then look at the 3 years it went nowhere. All that time wage inflation was high, so further eroding prices in real terms: ie it would have felt like property was getting cheaper by the percentag ewages went up.

V. good post. I agree totally.

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Yeah, I've encountred this too, there certainly is a "they never go down" attitude.

As a kid I can certainly remember the negative equity and repossession stuff on the TV during the last crash... aside from being told we owned our home and not to worry it didn't register much, I suppose it has to really affect you personally to leave an indelible mark.

Unless you were directly involved buying/selling it's hard to remember back to 15/30 years with any great significance, people seem to take a very long term view like "I paid £5000 for my first house in the early 70's!, look at 'em now", in one sense they're right, even if you bought now at the height of the bubble you probably will be cash positive in 2020 by the time the next bubble comes along :lol: Though they had demographics on their side back then.

When I ask about the 70's crash there doesn't seem to be much awareness at all, this is either because it was a "long time ago" and just gets merged into the greater industrial and economic problems of the time and/or we can thank inflation for that.

If houses stayed stagnant in nonimal terms but inflation roared away at 10%+ for two-three years technically your house hadn't fallen in value... it's just that the currency was now worthless thanks to the nice bout of inflation combined with the devaluing of pound (think Wilson with the "pound in your pocket").

Again, the rate of inflation or rigging the forex markets probably doesn't register with most peoples memories. It has to be connected with something tangible, people seem to connect with decimalisation as inflationary, however aside from price rises being x2.4 greater (i.e. a 1p rise was actually a 2.4d rise) it paled compared to the the real problem, which was the govt printing money like crazy thus leading to IMF bailouts. If you ask an older person about their memories of threepence hapney or the laxities of the money supply in the 70's... which are they gonna connect with?

Which leads me to believe there will be a temptation to let inflation eat into that debt pile (govt and personal) this time around, the BoE inflation figures are so obviously rigged becuase they exclude so much (unless you live nowhere and on thin air and buy nothing but DVD players). Problem is, they can't have their cake and eat it, letting inflation rip would involve runaway wage growth, and Gordon cannot afford that in the public sector, rasing taxes in a slowdown isn't helpful and borrowing more isn't good either since you're trying to kill the value of existing debt no create new one's. Anyway, public sector wage growth seems to nicely outpace private settlements (which are negative this year).

Point being, people don't remember shit, politics wouldn't work if we did, and in the longterm we're all dead!

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Likewise

Bought 1984 43k

Peaked 1988 120k

Dropped to 83k 1992

Valued 110k 2000

Valued 120k 2002

Valued 249k 2003

Dropped to 239k 2004

Currently selling 228k 2005

Took ten years to return to its peak price.  <_<

Tramp.

At the time, i.e in 1988, did you know what was happening, and what was going to follow ?

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First of all, Loadsamoney was a plasterer!

Snooty! Love it. Too much politeness on here. If someone is wrong, let 'em 'av it!

Except for me of course you cheeky tw@t!

A plasterer eh? I can't remember, a bit hazy. Why would a plasterer with a virtually empty order book be so smug ?

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First of all, Loadsamoney was a plasterer!

We bought in 1989 for £63000. I think we actually managed to pick the peak of the market in London, down to the day, as within a month all talk was of a crash.

Similar properties (flat in Chingford) were selling for just £35000 in 1992 - how depressing. Would love to have moved but huge negative equity meant we were stuck in our little flat. At least interest rates were only 14%, so it wasn't all bad  <_<

Moved in 1998, but the property was still only worth £50k, so rented it out and sold in 2002 for £85k - finally making a profit.

So my memory is very much intact, as is anyones who was actually affected by the crash.

By the way, as for the rest of your post, thankyou very much, very insightful!

Few people come on here and give honest accounts of a bad personal situation in the past.

We tend to get a lot of people coming on, using any pathetic excuse they can to brag about how much money they have in the bank. Total w@ankers, and probably lying anyway.

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Guest Charlie The Tramp
Tramp.

At the time, i.e in 1988, did you know what was happening, and what was going to follow ?

As Churchill`s dog would reply nodding his head , Oh yes. :D

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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