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nickd

No Quick Crash And No Hope

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I believe people on this site are being very biased and deluding ourselves.

As a FTB I would like houses to crash quickly but I do not believe this will happen, especially in the kind of area one would actually want to live in. Landlords may exodus from Chav-ville where due to terrible neighbours, no-one in their right mind except a slum lord would buy anyway. This helps us not one iota if good areas are static.

Its apparently dangerous to say "Its different this time". Its equally dangerous to ignore facts and say things will always take the same path.

What is NOT different, is prices will one day return to fundamentals.

What IS different, is that by the equilibrium of deflationary pressure from cheap Chinese, Indian (etc) Labour versus higher debt and oil costs, this "crash" can be drawn out for an extremely long time.

As long this equilibrium remains, interest rates will remain low-ish, BTLs will have their mortgages paid by their tenants, and will not rush to sell up.

10 years from now we could be paying more for petrol, taxes and debt repayments, but less for all manufactured goods. We could have lost manufacturing jobs while gained other jobs especially in selling services back to, say, the Chinese.

Yes there are lower retail sales now, but, compared to record highs.

Yes there is higher unemployment than before, but, compared to record lows.

The majority of people bought before the increase in prices.

We are just a marooned few, unfortunately.

We are d*mned either way, to be in limbo paying someone else's mortgage trying to clutch at straws to find hope of a crash. Or to be mortgaged to the hilt ourselves and worried about the risk of a crash.

I have been trying to buy a place this summer, because being always transient and having no home, is not good, and also I feel if I owned a home I was settled in , my earning potential might be higher as result, therefore the debt is not such a bad thing. The bottom end is still selling like hot cakes. If anything it seems to have picked up since the rate cut (or maybe thats parents buying their student offspring houses).

All the debt problems people talk about are real, but will call decades of gradual pain. I only wish it would all bust short and sharply, but I don't see how it can.

OK everyone, try to shoot all this down in flames...........

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I dont think most people on this site believe it will happen quickly. You have some valid points but you have also outlined many reasons why the crash will be worse than pervious crashes. Yes it could be very long and drawn out, but the end result will be worse than before because of the economic reasons you pointed out.

Your mistake is expecting a quick correction and thats not going to happen. Just be patient and whatever you do, dont buy yet.

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I don't think anyone is saying the crash will be quick. If you're hoping for a short sharp crash, you are indeed deluding yourself. Last time it took 3-4 years don't forget.

We're currenty seeing the beginning of a nice gentle slide (on average), created by the odd 10K being knocked off here and there from mid-range houses and 50K+ from the half-million pound non sellers.

If we see a 1%/month fall, that'll be just fine for me

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Housing markets are not like stock markets, corrections tend to take and last years rather than months check the history of past housing market crashes in the UK 70,s early 90,s or check the Japanese housing market as a very interesting case of a long drawn out slump in property.

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We are d*mned either way, to be in limbo paying someone else's mortgage trying to clutch at straws to find hope of a crash. Or to be mortgaged to the hilt ourselves and worried about the risk of a crash.

Or move to a country where housing costs aren't so ridiculously extortionate (Germany, for example).

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I would argue you will do better in work if you rent.

The onerous tasks required as an owner occupier take time at weekends, and could sap you of energy. As renters we do as we want in the evenings and weekends. Additionally we are mobile if our jobs move.

I have owned and rented. There are serious advantages to renting. I would say if you want stability you should think about that when chosing to rent. Pick a place where the owners are abroad for a fixed time for example.

We avoided places owned by BTL landlords who wouldn't sign anything longer than 6 months.

Compare the costs of renting and buying now and that makes your decision for you. No need to worry how long it lasts.

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Guest Bart of Darkness
As a FTB I would like houses to crash quickly but I do not believe this will happen

When has housing ever crashed quickly.

It is you who is delusional, not us.

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So far the reductions seen in London and other key areas show signs of being every bit as "quick" as in the 1990 + meltdown. If anything this time around there is even more scope for a domino effect as the decline gathers momentum since it is being artificially held back somewhat by incredibly powerful (but untrue) spin by the property industry and media, and more so than in the 1990's.

You have to accept that non-liquid assets take very much longer to react to changes. ....ye of little faith.

Stick to your guns and it will happen.

VP

Edited by VacantPossession

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Does anyone have any theories about how even the crash will be? I mean, will it level out the North/South divide or accentuate it?

I'm currently stuck in the M4 corridor in an area where the average price is around 8 or 9 times my income...I was pondering a move back up to Scotland. Looks like I time just for Scotland to reach its' peak!

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I have been trying to buy a place this summer, because being always transient and having no home, is not good, and also I feel if I owned a home I was settled in

Oh dear! :o

my earning potential might be higher as result,

How do you figure that?

The bottom end is still selling like hot cakes.

Really? Don't think so.

The next 6 - 12 months will be the time that things will really shift, all we've seen over the last year is HPI fall dramatically from over 20% to around 0% now. It's going to go negative and then there will be no denying what is happening and the crash will be self fullfilling as the change in sentiment drives the market down. Unfortunately at the moment the majority of people believe that the housing market has stagnated when in fact all the evidence out there, particularly from houses further up the property ladder is that they aren't fetching what they did last year, in many cases they aren't fetching 20% of what they were last year.

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The buoyancy, to put it mildly, of the housing market has been built on a stable and growing economy. But first, nothing in the economy (growing at 3% or so p.a.) has justified the housing market's extraordinary inflation, and secondly, if you look at the performance of the economy you can see that its progress is nothing like as serene as it looks.

Our prosperity has been built on credit - government and consumer - and therefore on sand. Consumers have borrowed and spent vast amounts, but have now cut back their spending. Government forecasts for growth for this year look set to be overoptimistic by at least 30 or 40%. Tax revenues are likely to be down. HMG will either have to spend less, borrow more or tax more to make up the shortfall.

Where is future growth in the economy going to come from? Unlikely to come from consumer or government, particularly since rising oil prices stoking inflation mean that scope for interest rate cuts is limited. It doesn't seem fanciful to suggest that in the next few years we are likely to see rising unemployment, bankruptcies and repossessions. In other words the foundations which were the precondition of the runaway housing market are being eroded.

This isn't fanciful stuff. It's happening around us now. You can read about it in the papers. Have a look at the Larry Elliot thread currently on this board and come back and tell us that we're just a few cranks making it up.

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I remember the same in 1990. We were told then the market had bottomed out and that rises will remain stagnant and start to rise. They dropped about 30 per cent and then stagnated even when interest rates had dropped from 14 per cent to 6 per cent. They didn't reach 1989 price rates again until 1999.

People emigrate, People die, People break up and separate. People move. People have the tax man after them. These houses turn over regardless of circumstatnces.

To get a bargain in this environment and the next couple of years you will find the above categories. Dont worry the estate agant will let you know the circumstances. If selling never reveal why.

Rule of thumb buying look at a 100 put an offer in for 3 and buy 1 . If you find a place you like and they don't accept your offer leave your number. They will call you in 3 months. AS long as ther are more sellers than buyers and with unemployment creeping up if you are prepared to do the leg work you will get a bargain.

In a rising market people panick to buy offer within 5 minutes yes we will pay more you get gazumped.

Dropping market the sellers panick. Its fun put a few ridiculous offers and see what happens. the ball is in the buyers court. The great thing you can walk out of the deal at any time before it becomes conditional if you see something cheaper.

The low end of the market moves slowly. The fun starts at the top end first as seen in London. You are saving over a 100K on some properties now that were 600K.

Do the groundwork. PS If you are window shopping you will see high prices. Inspect the place and offer what you thinks its worth. A good tip is go to the markets and learn to barter.

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nickd:

Please define what you would consider to be a "quick crash" so that we can have a poll on whether HPC members think a crash will be "quick" by your definition.

I am bored of people implying that this site believes property will fall like the ftse in 87. To suggest such a thing is frankly a slur on the intelligence of HPC bears. It implies we don't realise ho wlong conveyancing takes. It implies we think house price indices are constructed like stock indices, where only ten houses in london need fall by 20% to cause a prop index decline of 20%.

How many times do people here have to say they believe the crash will work its way through over 3 to 5 years?

Perhaps your assumption is based on the site name?

Would you rather the site be called "HousePriceGentleDecline"

Yeah, like really catchy!

Edited by Sledgehead

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I believe people on this site are being very biased and deluding ourselves.

As a FTB I would like houses to crash quickly but I do not believe this will happen, especially in the kind of area one would actually want to live in. Landlords may exodus from Chav-ville where due to terrible neighbours, no-one in their right mind except a slum lord would buy anyway. This helps us not one iota if good areas are static.

Its apparently dangerous to say "Its different this time". Its equally dangerous to ignore facts and say things will always take the same path.

What is NOT different, is prices will one day return to fundamentals.

What IS different, is that by the equilibrium of deflationary pressure from cheap Chinese, Indian (etc) Labour versus higher debt and oil costs, this "crash" can be drawn out for an extremely long time.

As long this equilibrium remains, interest rates will remain low-ish, BTLs will have their mortgages paid by their tenants, and will not rush to sell up.

10 years from now we could be paying more for petrol, taxes and debt repayments, but less for all manufactured goods.  We could have lost manufacturing jobs while gained other jobs especially in selling services back to, say, the Chinese.

Yes there are lower retail sales now, but, compared to record highs.

Yes there is higher unemployment than before, but, compared to record lows.

The majority of people bought before the increase in prices.

We are just a marooned few, unfortunately.

We are d*mned either way, to be in limbo paying someone else's mortgage trying to clutch at straws to find hope of a crash. Or to be mortgaged to the hilt ourselves and worried about the risk of a crash.

I have been trying to buy a place this summer, because being always transient and having no home, is not good, and also I feel if I owned a home I was settled in , my earning potential might be higher as result, therefore the debt is not such a bad thing. The bottom end is still selling like hot cakes. If anything it seems to have picked up since the rate cut (or maybe thats parents buying their student offspring houses).

All the debt problems people talk about are real, but will call decades of gradual pain. I only wish it would all bust short and sharply, but I don't see how it can.

OK everyone, try to shoot all this down in flames...........

Nickd,

I think you make some fair points, stating the best bull's scenario better than bulls can. And yes, there is an anorac tendency here and some truly @rse clenchingly embarrassing straw clutching. Where I depart from you is on the market. The 'better' areas are starting to get hit. I spoke to the leading estate agent in a rather nice leafy village in Surrey adjoining private golf course and rural areas. He told me that in his 18 years in his practice, he's only known the market this bad about 10 years ago. That'd be towards the end of the last slump/crash.

And whilst the lower end of the market is ticking over, notwithstanding it's August, much of the market is stalled and price drops are now becoming the norm. Repos are up, bankruptcy valuations are up. My colleague today was asked by some kids in their home if he'd come to take more stuff away. And most of the bankruptcy valuations I'm doing are on houses about £500,000 and up. It's not a pretty picture.

I also think you over emphasise the BTL impact. They're certainly selling up, no doubt, but as Charlie regularly points out, this is all about debt. You think the country can manage this, I'm not so sure.

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Guest Charlie The Tramp
Repos are up, bankruptcy valuations are up. My colleague today was asked by some kids in their home if he'd come to take more stuff away. And most of the bankruptcy valuations I'm doing are on houses about £500,000 and up. It's not a pretty picture.I also think you over emphasise the BTL impact. They're certainly selling up, no doubt, but as Charlie regularly points out, this is all about debt. You think the country can manage this, I'm not so sure.

At the beginning of 2004 in my area there was a sudden increase of properties in the 500k plus region come on to the market from a very select part which was very unusual. I put this down to OOs grabbing their profits knowing the market was about to reverse. One property I know ( ex customer ) was purchased in 1964 for 6k and sold 2004 for 600k.

In the past few weeks the same is happening again but with many more properties than last time, all between 500k and 900k.

Out of curiousity I drove around the area looking at the houses and in some cases saw the owners with their expensive cars on the driveways, some returning with young children. Those I saw I would say were around mid thirties to mid forties. Three of the houses belonged to ex customers who were still living there when I retired just over two years ago.

I believe this is what surveyor is dealing with in his quoted post above as my post below shows.

To their friends and neighbours. they probably seem like high fliers who are sitting pretty. They earn at least £50,000 a year, have high powered jobs, big houses, and expensive cars.

But looks are notoriously deceptive and debt experts warn that impoverished professionals are on the increase.

There has been a sharp rise in the number of people or families who take home £3,000 a month net but are seeking help from the Consumer Credit Counselling Service.

Large numbers of middle class families seem to have gone deep into hock through credit cards, loans and remortgages to keep up appearances.

But rises in interest rates and higher household bills have driven many to the edge of financial meltdown.

It looks like it will start from the top this time in a very big way.

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Guest Charlie The Tramp

Saw an amazing thing today.

Two Rollers in the local Tesco car park, wondering if they were buying up all the tesco value lines. Lose your house, buy cheap food, but no way let the Roller go.

A little touch of To The Manor Born?

:D

Edited by Charlie The Tramp

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Guest horace

With the current price of road fuel it may have been less expensive of the said Roller drivers to have used Tesco`s home delivery service? ;)

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Guest Charlie The Tramp
With the current price of road fuel it may have been less expensive of the said Roller drivers to have used Tesco`s home delivery service? ;)

Ah, but Tescos won`t put Harrods stickers on their vans when delivering, what would the neighbours think. <_<

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Ah, but Tescos won`t put Harrods stickers on their vans when delivering, what would the neighbours think.  <_<

No problem, just head over to www.harrods.com.

Order online, and presto, save the fuel, keep the roller in the garage, and the neighbours are still impressed.

This keeping up with the Jones'es has fantastic business potential.

(In about 15 years, when this crash has been forgotten)

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Guest growl
"I would like houses to crash quickly..."

BE REALISTIC.

I expect we will see a rate of fall of 1%+ per month by December,

and maybe 10-15% down in 2006, and another 10-15% in 2007, but individual

years may be faster and slower than this.

TELL ME, why would you expect anything different from this?

If you feel it is not realistic, pleaselet me know why.

Dont get stucked into the "HPC-Anxious-FTBers" who hope for a faster rate of

decline, but have few arguments in favor of one

So going of your other posts where you have said this property cycle( correct me if it was someone else)will last 15 years. then am I right in thinking it will take another five to bottom out. As that is what I am hoping. I want to carry on building up my nest egg so that in five years time I have at least half of the house bought and not just a deposit, to put down.

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Guest growl
Ah, but Tescos won`t put Harrods stickers on their vans when delivering, what would the neighbours think.  <_<

That reminds me years ago of a town I used to live in. When they built Sainsburys(this is when Sainsburys was going better than Tesco) people used to brag about shopping there.

Then they built an Aldi. Which is lke a Lidle but up north. I used to go there at first to get cheap staples like milk and butter. Both stores where built on the same retail area. A large hedge seperated their carparks.

People were going into Aldi bringing their own Sainsburys plastic bags. Then filling them with Aldi goods. It used to really crease me up :lol:

That was during the last property slowdown. Around the middle, about two years in. People will do anything to keep up appearances. :blink:

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Guest rigsby II
Then they built an Aldi. Which is lke a Lidle but up north. I used to go there at first to get cheap staples like milk and butter. Both stores where built on the same retail area. A large hedge seperated their carparks.

People were going into Aldi bringing their own Sainsburys plastic bags. Then filling them with Aldi goods. It used to really crease me up :lol:

Hang on young chap.

Lidl has 50% off all fruit and veg at the moment...

You go to Morrisons to buy the 2 for 1's and get free carrier bags.

Then go to Lidl and use the free carrier bags.

Nowt to do with keeping up appearances...

:)

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Guest horace

That`s all very well BUT the crunch is that Lidl will only accept cash or debit cards.

It will not be long before those keeping up appearances will be shopping at any supermarket accepting credit cards.

horace :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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