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Somebody Explain What Is Happening


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according to LR, all of england & wales is just over 10% down from peak. london is just over 5% down from peak.

what is happening is basically as follows:

(1) prices have been pushed down by lower employment & lower mortgage availability [drying up of the 100%+, celf cert, etc, mortgage deals];

but

(2) they've not been pushed down very much due to interest rates having fallen so much and lending, still, being extremely high by historical standards [3-4 times joint income mortages etc]... and also a few smaller effects at the margins like government support for interest payments.

that's more or less it?

I think you are right.

I think most British buyers still base their buying decision based on short term comparison between rents and mortgage payments. Most don't consider the high risk of higher interest rates soon. And for the longer term, most still believe that "properties will always go up".

As long as interest rates are this low, most British buyers will keep trying to buy. If they have access to a deposit, they will buy. Looks like the bank of Mum & Dad (many M&D probably MEWing their own homes) is supplying these deposits.

.

Edited by Tired of Waiting
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I think most British buyers still base their buying decision based on short term comparison between rents and mortgage payments. Most don't consider the high risk of higher interest rates soon. And for the longer term, most still believe that "properties will always go up".

Rental is much cheaper than purchase even on IO where I live, and yet houses are still selling for far more than they should.

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I am seeing this as a London (and associated counties) lead bounce. Every month Rics highlights this.

Had a very long and slightly spirited debate with a friend about this – London market is being pulled up by the fact that there is far more foreign demand coupled with Sterling being debased it means there is a steady stream of foreign purchasers keeping property ticking over in this area.

If anyone had got any links or data on the number/precentage of foreign purchasers in the London market that would be great!!!

Outside of London and there is the same low levels of transactions it seems, I have not seen a house marked up in asking price on RM for months – the only action on asking prices is downwards.

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1. Too much free money from the Bank of England.

2. Base rate too low.

3. 60 million people with blinkers on not realising the implications of a £70bn structural budget deficit.

I could go on, but I've run out of Prozac :(

I think you got it in no.2

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Those approaching retirement or who are already retired are giving some of their kids inheritance to them early, is my guess. I believe 'gifting' is advantageous from an inheritance tax point of view. They see their offspring in their 30s and 40s struggling, being made redundant or with pay cuts, inflation is starting up with fuel etc, and if their offspring haven't bought yet they can see they have no chance. Maybe the kids are asking for help now.

Inheritance tax + poor return of savings + their kids struggling = early gifting of inheritance

If the kids are spending it on overpriced housing they can only just afford at a time of very low interest rates just before a change of government, I suspect they will all be feeling a bit silly in a couple of years.

It's sad.

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People borrow yet more to compete on this price spiral and so on. It is a simultaneous process rather than the stepwise one suggested by your point (which I largely agree with apart from this tiny tiny point that I want to ram down your throat :)).

yes I've swallowed that point. however I'd like to embellish it with demographics - the only reason the spiral has been perpetuated in this way is because of the underlying boomer demographic bubble.

the absolute numbers of living breathing human beings that can be used to manufacture credit is a very very very important variable. houses can be built and knocked down, rates can be raised and lowered, even land can be freed up or removed by changing zoning laws.

but ultimately all this is driven by meat, because its meat of the human variety which is the only thing from which money can be manufactured.

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You live here? I'm impressed. Are you a Clanger?

Many significant moments are gone in a flash.

For those not priviledged to have seen/heard Oliver Postgate at his best, google 'Vote for Froglet'.

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whats going on is out and out lying and corruption from government and media to the british people.

Is it though? Are they that clever or devious?

Is the average property journalist plotting to ruin the country or is it, as I tend to favour, the fact that they are as thick as sh!t.

Two worlds - us in here, seems dark and claustrophobic to me, thinking the inverted debt pyramid is going to collapse - those out there, in the bright and warm sunlight, taking on as much debt as possible on the basis that (to coin a political phrase) it's 'the right thing to do'. As long as house prices go up, their debt decisions are justified and, as long as everyone (except we few in this prison of despair) does what they do, their decisions are vindicated.

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Is it though? Are they that clever or devious?

Is the average property journalist plotting to ruin the country or is it, as I tend to favour, the fact that they are as thick as sh!t.

Two worlds - us in here, seems dark and claustrophobic to me, thinking the inverted debt pyramid is going to collapse - those out there, in the bright and warm sunlight, taking on as much debt as possible on the basis that (to coin a political phrase) it's 'the right thing to do'. As long as house prices go up, their debt decisions are justified and, as long as everyone (except we few in this prison of despair) does what they do, their decisions are vindicated.

they know that if the levels of insane priced housing are not maintained - the economy will collapse to such an extent, the country wouldnt function.

sorry guys, but you've been sold up the river. sacrificial bait. banker snacks. and no one will listen to anything other than sheer made up figures, corruption and lies. thats how deep the banks have shafted both the government and british people.

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Where are you exactly? I've been looking around Sussex / Kent and I would say the opposite is true here. Things are just not selling - unless they are keenly priced and in the right place. We are not that far from London here.

I wonder whether there will be a 'ripple inwards' towards these last few places where people are buying things still. Here there are loads of sellers now and far too few buyers. I think this is true in many other places looking at the press articles (which are conveniently dressing it up as 'more choice' for the minute, not 'chronic over-supply').

I'm near Wokingham in East Berkshire.

I have a friend who lives in Tunbridge Wells - he moved about 3 and a half years ago - I tried to subtly warn him that the market was heading for a fall but I didn't say too much - at the time he was working as Finance Director for a firm that is involved in investment and pension fund management.

Still he moved - much bigger house - and what he himself described as a mega-mortgage. Then he got made redundant and had a sticky 9 months getting another job. Got another job and is now happy as Larry, his new house is (he reckons) 100k up on what he paid - and he tells me the market around there is (as he puts it) 'great'. Anything going on the market (at anything other than truly daft prices) is, apparently, selling.

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they know that if the levels of insane priced housing are not maintained - the economy will collapse to such an extent, the country wouldnt function.

Do you think there is some mechanism in place that will mean that insanely priced houses will fall to the extent that the economy will collapse to the point the country wouldn't function?

Wouldn't some other mechanism come into play before that happened?

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People are now getting their 12 month interest statements popping through the door and, like me, have probably been horrified by the interest they have got on their savings in the past 12 months as opposed to the previous 12 months.

Then they open the Daily Mail or Express and read about rising HPs and figure out that they would be better off buying a house than saving.

Kind of makes sense to be honest.

And the crisis is over with the recovery locked in, Gordon said so...................... :blink:

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yes I've swallowed that point. however I'd like to embellish it with demographics - the only reason the spiral has been perpetuated in this way is because of the underlying boomer demographic bubble.

No it isn't - it's because we have a money supply that is riddled with fraud.

hard commodity standards - lending ends when you run out of stuff to physically hand over.

Fantasy *****land fiat paper standard - keep adding zeroes, who cares about any relationship to real world objects!

the absolute numbers of living breathing human beings that can be used to manufacture credit is a very very very important variable. houses can be built and knocked down, rates can be raised and lowered, even land can be freed up or removed by changing zoning laws.

but ultimately all this is driven by meat, because its meat of the human variety which is the only thing from which money can be manufactured.

Nope you are wrong. Have some new credit/money/whateverthe******youwanttopretend -

£1,000,000,000,000,000

No meat required. The monetary system is only vaguely attached to reality - and that's why it's such a ****** up.

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Do you think there is some mechanism in place that will mean that insanely priced houses will fall to the extent that the economy will collapse to the point the country wouldn't function?

Wouldn't some other mechanism come into play before that happened?

not really - it happened in the US and they're probably doing marginally better than us, it happened in irelend and, er, well, i'm sure there are other examples...

the usa didnt have the buy to let bubble. its one thing to have home owners in neg equity, but if you do that with buy to let - they go bankrupt and the banks take the punch. thats why the others allowed a natural crash. despite trying all they could to avoid it. IE prices are still insane. trapping thousands. but it wont collapse the system like here.

that bubble has sucked up so much money and debt that the entire uk banking system depends on those buy to let loans not collapsing. they have reached the desperation now that all they will do IS LIE, lie and more lie. its almost a state secret.

there is nothing else in the tin.

if you get those low house prices, it will take the buy to let loan books with it. and then the banking system and probably the currency. leading to the much fabled hyperinflation.

you have been sold up the river.

Edited by right_freds_dead
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How many times have I read a comment like this on HPC? If house prices don't start falling off a cliff by the end of this year, they never will.

PopGun, it sounds like you are in need of a data re-enforcement. If you want to see the future, look at my forum signature, below.

Is it sustainable? You know the answer. Trust yourself man (or woman). Trust your reason, logic, intelligence.

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Like I have said before, to a hostile audience, people don't really care about house prices, it is just about affordability and sentiment. Keep your money in the building society, earn nothing on it and pay someone else's mortgage, or borrow at low rates and one day own an "asset".

With high IRs it would be so, so different.

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Is it though? Are they that clever or devious?

Is the average property journalist plotting to ruin the country or is it, as I tend to favour, the fact that they are as thick as sh!t.

Two worlds - us in here, seems dark and claustrophobic to me, thinking the inverted debt pyramid is going to collapse - those out there, in the bright and warm sunlight, taking on as much debt as possible on the basis that (to coin a political phrase) it's 'the right thing to do'. As long as house prices go up, their debt decisions are justified and, as long as everyone (except we few in this prison of despair) does what they do, their decisions are vindicated.

Nothing clever or devious, I was buying and selling houses during the last crash from 1989 up to 2002

what I noticed was a slow increase in prices, noticeable be not panic inducing, however from 1998 things got

a little panic stricken, prices were rocketing up. I think this is what caught a few posters on here out.

take your eye off the ball for too long at your peril.

I believe it coincided with Btl.

the usa didnt have the buy to let bubble. its one thing to have home owners in neg equity, but if you do that with buy to let - they go bankrupt and the banks take the punch. thats why the others allowed a natural crash. despite trying all they could to avoid it. IE prices are still insane. trapping thousands. but it wont collapse the system like here.

that bubble has sucked up so much money and debt that the entire uk banking system depends on those buy to let loans not collapsing. they have reached the desperation now that all they will do IS LIE, lie and more lie. its almost a state secret.

there is nothing else in the tin.

if you get those low house prices, it will take the buy to let loan books with it. and then the banking system and probably the currency. leading to the much fabled hyperinflation.

you have been sold up the river.

The dice are loaded

How many times have I read a comment like this on HPC? If house prices don't start falling off a cliff by the end of this year, they never will.

I'm still waiting for forced sellers, estate agents folding... and it's not happening.

Edited by Plan B
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Like I have said before, to a hostile audience, people don't really care about house prices, it is just about affordability and sentiment. Keep your money in the building society, earn nothing on it and pay someone else's mortgage, or borrow at low rates and one day own an "asset".

With high IRs it would be so, so different.

Exactly.

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