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grizzly bear

Period Of Austerity

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There are lots of threads at the moment about the deficit, the cuts needed, along with tax rises, and that unemployment will no doubt rise as the impact of cuts works it way through the system. Additionally banks moving away from interest only mortgages.

But interest rates may stay low if unemployment is up and spending down, perhaps meaning less forced sellers?

So what happens to house prices?

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But interest rates may stay low if unemployment is up and spending down, perhaps meaning less forced sellers?

So what happens to house prices?

If they can keep mortgage rates down permanently and print money to pay the mortgages of those without jobs then the market can be stable at low volumes.

Otherwise, it goes our way.

VMR.

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There are lots of threads at the moment about the deficit, the cuts needed, along with tax rises, and that unemployment will no doubt rise as the impact of cuts works it way through the system. Additionally banks moving away from interest only mortgages.

But interest rates may stay low if unemployment is up and spending down, perhaps meaning less forced sellers?

So what happens to house prices?

House prices only ever go up regardless of whats going on in the real world.

if you buy a house next Monday and the following happens;

  • Tuesday - interest rates triple making your mortgage repayments impossible to afford

  • Wednesday - you lose your public sector job in the cuts

  • Thursday - your wife divorces you and wins a 50/50 settlement

  • Friday - you die of scroffula and the bank reposess

by saturday morning you can sell your house and still be rich beyond your wildest imagination thanks to ever rising houseprices!, (albeit rich & dead.)

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House prices only ever go up regardless of whats going on in the real world.

if you buy a house next Monday and the following happens;

  • Tuesday - interest rates triple making your mortgage repayments impossible to afford

  • Wednesday - you lose your public sector job in the cuts

  • Thursday - your wife divorces you and wins a 50/50 settlement

  • Friday - you die of scroffula and the bank reposess

I've had worse weeks

I really hope they go down for the good of everyone, FTBs or people just moving up.

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There are lots of threads at the moment about the deficit, the cuts needed, along with tax rises, and that unemployment will no doubt rise as the impact of cuts works it way through the system. Additionally banks moving away from interest only mortgages.

But interest rates may stay low if unemployment is up and spending down, perhaps meaning less forced sellers?

So what happens to house prices?

Just wondering as thinking of trade off between low interest rates (which may be here to stay if enough cuts/tax rises) vs impact of afforemmentioned tax rises and cuts!

I am an avid reader of moneyweek and MSW (usually uber bear) today thinks interest rates are going to stay low.

Also many family members seem to be trying to move ATM - BIL/SIL making offers even though they haven't sold yet (!!!)

I told my MIL that they hadn't sold as they were asking too much (2 bed conversation flat in London suburb, asking £280k) and she said, well if they reduce the price too much it will be less than they bought it for (£240k in 2004). I'm sure they have a lot of equity in it as they have saved since they have been there but it was more her shock that they might end up owning for 6 years and not making any money. My MIL is in her 60s and like most baby boomers has made a lot of money from property.

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If they can keep mortgage rates down permanently and print money to pay the mortgages of those without jobs then the market can be stable at low volumes.

Otherwise, it goes our way.

VMR.

It kind of goes our way no matter what happens.

economy down the crapper so interest rates stay low - people lose their jobs = HPC

economy recovers and with it inflation pushing / allowing the BOE to increase interest rates - many won't be able to afford their IO 100% mortgages = HPC.

Either way we win.

The only other option is we muddle along with no real economic solution but no drastic economic pain which would allow prices to stay level at low volumes but over time (10 years) inflation eats into the real value of properties = HPC (albeit delayed and in real terms)

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We can get stagflation and very likely will. Some prices can still deflate in this too. So far, the BOE keep on believing inflation will soon reduce. But in fact it continues to rise. If they have to put up VAT that will feed in too. A lower pound means higher import prices and more inflation. So, likely scenario is higher interest rates gradually.

Then, as the cuts and tax rises join in, it will bear down on house prices. Also, the banks ability to borrow on the markets is going to be severely tested when the BoE $300bn of liquidity comes to an end shortly. We also know that a large proportion of people cannot afford much of an interest rate hike.

The sheer volume of houses suddenly coming on the market recently must tell us something. Just take an area and look on right move for the number of new on the market for the last 7 days. You'll be amazed. It's far more than ever get sold!

HPC is on the way. Buy Silver or Gold!

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We can get stagflation and very likely will. Some prices can still deflate in this too. So far, the BOE keep on believing inflation will soon reduce. But in fact it continues to rise. If they have to put up VAT that will feed in too. A lower pound means higher import prices and more inflation. So, likely scenario is higher interest rates gradually.

Then, as the cuts and tax rises join in, it will bear down on house prices. Also, the banks ability to borrow on the markets is going to be severely tested when the BoE $300bn of liquidity comes to an end shortly. We also know that a large proportion of people cannot afford much of an interest rate hike.

The sheer volume of houses suddenly coming on the market recently must tell us something. Just take an area and look on right move for the number of new on the market for the last 7 days. You'll be amazed. It's far more than ever get sold!

HPC is on the way. Buy Silver or Gold!

I am thinking of leaving this site for good. Anybody with half a brain knows the end is nigh, that the HPC will very shortly be in full swing and then what? I know we talk about other stuff but HPC.co.uk will be a pretty silly website. What new name will it emerge as? Housepricerise.co.uk?

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I am thinking of leaving this site for good. Anybody with half a brain knows the end is nigh, that the HPC will very shortly be in full swing and then what? I know we talk about other stuff but HPC.co.uk will be a pretty silly website. What new name will it emerge as? Housepricerise.co.uk?

By then we'll all be too busy helping out at the soup kitchen making sure former BTL landlords get a hot meal.

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I am thinking of leaving this site for good. Anybody with half a brain knows the end is nigh, that the HPC will very shortly be in full swing and then what? I know we talk about other stuff but HPC.co.uk will be a pretty silly website. What new name will it emerge as? Housepricerise.co.uk?

really? houses near me going at near 2007 prices, agents telling me no point in offering unless at 2007 prices. we have STR (in 2008 though) and am getting itchy.... just saw a house thats been on the market since early 2008 sell for its 2007 price that I never thought they'd get... i am an uber bear but am getting depressed!

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....

I told my MIL that they hadn't sold as they were asking too much (2 bed conversation flat in London suburb, asking £280k) and she said, well if they reduce the price too much it will be less than they bought it for (£240k in 2004). I'm sure they have a lot of equity in it as they have saved since they have been there but it was more her shock that they might end up owning for 6 years and not making any money. My MIL is in her 60s and like most baby boomers has made a lot of money from property.

The magic money tree of property "ownership" is ingrained in the belief system of western democracy. Let's be honest it has not been hard to make a stack load of wedge over the last 20 years has it? Just like the '29 share crash the belief has become religious and to challenge it is to put oneself outside the "normal".

2004 was the top of the "normal market" - I sold up my London house then and thought (rather too smugly as it turns out) that I had called the top. Everyone I knew said it couldn't go on like that and prices would drop. A quick look at any graph will tell you that prices should and may well drop to about 2002 levels from where they are now. The people that said (in 2004) prices were too high now say that I am mad to think they will drop. Most of them have MEW'ed since then. My money is still in the bank. A lot of people think they have made money - but have they? Maybe they will have the last laugh as my cash gets burnt in the bank collapse. Time will tell......

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There are lots of threads at the moment about the deficit, the cuts needed, along with tax rises, and that unemployment will no doubt rise as the impact of cuts works it way through the system. Additionally banks moving away from interest only mortgages.

But interest rates may stay low if unemployment is up and spending down, perhaps meaning less forced sellers?

So what happens to house prices?

I've always believed in the main HPC graphs which have always shown the prospects which the boom-bust cycle inevitably fulfill. I've not yet seen a credible argument to persuade me to consider otherwise, and I trust that most on this website think the same. We lived through the boom times; witnessed the masses as, intoxicated by the mantra of HPC mania, one by one, they caved in to the craze. Now we are left with the hardcore. And the newcomers, all welcome too. To see the cycle through is not just a vindication, it is an unbroken law of economics. Bears suffered doubt, let's not forget how the bulls ripped into us during the boom times with their boat missing, ladder missing, you poor, poor so and sos.. etc. All still resonates for me, making the sweetness of buying at the bottom when it comes again so much nicer. The bottom is set to last for a good while too. We missed the boat in 2003-7, but it comes back, larger, roomier and less full of shyt to pick guys like us up :P And I'm certain of it, always have been B)

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  • 261 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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