Evil Laughs Ahoy!

[lets get it right]

i dont think anyone has ever really wanted a crash in History, why would they it destroys perceived wealth and at the worst destroys governments, countries and empires, unfortunately markets dont really care about peoples feelings which is why crashes have always happened throughout history despite every attempt to stop them (which generally results in maximising them). Pretty much always when they arent expected, in fact it needs the positivity to have the crash

Which 'market' WANTS house prices to crash?

When a currency crashes - it's because the half of the market that is betting down beats the half that is betting up. When the price of a commodity crashes it is usually because speculators are going to make money out of it - or frost has just wiped the coffee crop out in Brazil.

The only downward pressure on house prices is coming from those who stay out of the market. Their numbers are not only so small as to be utterly insignificant, they are effectively 'in the market' because they are renting from someone who really is 'in the market'. Unless you live in a tent, you're contributing.

Edited September 22, 2010 by Let's get it right

[lets get it right]

I see I have a sole mate.

I assume that was deliberate - there are just the two of us?

[Georgia O'Keeffe]

Which 'market' WANTS house prices to crash?

i didnt say the market wants them to crash, i said the market doesnt care about its participants not wanting a crash, if it or the economy is imbalanced enough it crashes, thats about it. Never been any different. Govts people whoever can try to fix the imbalances by adopting the same policies that caused the imbalance and cross there fingers close there eyes and hope, it doesnt really matter. They could even introduce price fixing if they want, which technically they have through SMI. The still always crash no matter whats done, its just natures solution to economic imbalance

[Tonkers]

I don't recall anyone wanting house prices to fall the last time. They did anyway.

[lets get it right]

I don't recall anyone wanting house prices to fall the last time. They did anyway.

I think it's fair to say they fell because 'the markets' decided to mess with our currency and interest rates were forced up - culminating in our exit from the ERM.

Which 'market' or vested interest is going to benefit from a house price fall?

[Godley]

I assume that was deliberate - there are just the two of us?

I feel we are a growing band.

[Godley]

I don't recall anyone wanting house prices to fall the last time. They did anyway.

I don't recall the banks and governments being so heavily leveraged and yet the last time it still took years and years to correct.

[tomandlu]

I think it's fair to say they fell because 'the markets' decided to mess with our currency and interest rates were forced up - culminating in our exit from the ERM.

Which 'market' or vested interest is going to benefit from a house price fall?

Question - if the powerful VIs are able/willing to prevent HPCs, why have Ireland and the US had 'em?

[_w_]

None of whom are aware of what you say and who, therefore, have no reason to be interested in either a house price crash or the benefits that would accrue if people had not paid high house prices and our economy was more productive.

As I said, the fact is, the banks, politicians and vast majority of people do not see the benefits of a house price crash. On the contrary, they are terrified of it and act accordingly.

I know, you're right. I should have made myself a cup of tea before I replied. It's just so frustrating.

[Si1]

I think it's fair to say they fell because 'the markets' decided to mess with our currency and interest rates were forced up - culminating in our exit from the ERM.

1989 - house price crash started

1992 - black wednesday

1995 house price crash ended

could you run that past me again??

[tomandlu]

To be fair, he's probably right.

Pensioners - No

Boomers - Hell No

Pre 2000 owner occupiers - No

FTBs and HPCers - Yes

In most cases, the above think they don't want a HPC, even though they might benefit. However, a mixture of growing awareness that the young can no longer afford to buy houses, plus a general and growing change in sentiment in the media seems to changing that.

The only people who really benefit from no HPC are the pensioners (i.e. anyone who might want to downsize and is probably not too worried about their kids anymore).

[lets get it right]

1989 - house price crash started

1992 - black wednesday

1995 house price crash ended

could you run that past me again??

Okay ... the housing market crashed - to the day - on August 1st 1988 (think that was the day the joint tax relief was removed). The idiot chancellor of the day, Lawson I think, flagged up his intention to remove joint tax relief on mortgages for unmarried couples months before it was implemented. An already overheated housing market, drunk on the earlier removal of credit controls, came to a halt overnight and then fell progressively over about 18 months The worst of the falls were over by 1990.

First time buyers could not afford to buy (following the joint mortgage tax relief removal) and the market moved down sharply. Once the market gained downward momentum, it was hard to get a floor under it. Whereas the government may have wanted to reduce interest rates to combat this, in the event the markets moved them up and down like a yo-yo.

At the same time recession started that, unlike this one, really seemed to affect people. Lots of people were worried about losing their job, spending and borrowing were reined in and it took a good 6 or 7 years for confidence to grow again.

Looking back - and I really 'lived through' that downturn - both in terms of selling up and downsizing to reduce my mortgage and being made redundant in 1991 - there aren't many comparisons between then and now.

Now we have base rates at 0.5%, banks heavily lent into the market who cannot afford to see house prices fall (in the late 80s/90s they couldn't odds things - IRs were much higher and the government set interest rates to their own agenda - usually to try to maintain balance of payments by virtue of currency manipulation) etc. etc. The list goes on and on. If you think this crash must happen as a carbon copy of the last one - surely it's obvious already that it won't pan out that way.

[Si1]

Okay ... the housing market crashed - to the day - on August 1st 1988 (think that was the day the joint tax relief was removed). The idiot chancellor of the day, Lawson I think, flagged up his intention to remove joint tax relief on mortgages for unmarried couples months before it was implemented. An already overheated housing market, drunk on the earlier removal of credit controls, came to a halt overnight and then fell progressively over about 18 months The worst of the falls were over by 1990.

First time buyers could not afford to buy (following the joint mortgage tax relief removal) and the market moved down sharply. Once the market gained downward momentum, it was hard to get a floor under it. Whereas the government may have wanted to reduce interest rates to combat this, in the event the markets moved them up and down like a yo-yo.

At the same time recession started that, unlike this one, really seemed to affect people. Lots of people were worried about losing their job, spending and borrowing were reined in and it took a good 6 or 7 years for confidence to grow again.

Looking back - and I really 'lived through' that downturn - both in terms of selling up and downsizing to reduce my mortgage and being made redundant in 1991 - there aren't many comparisons between then and now.

Now we have base rates at 0.5%, banks heavily lent into the market who cannot afford to see house prices fall (in the late 80s/90s they couldn't odds things - IRs were much higher and the government set interest rates to their own agenda - usually to try to maintain balance of payments by virtue of currency manipulation) etc. etc. The list goes on and on. If you think this crash must happen as a carbon copy of the last one - surely it's obvious already that it won't pan out that way.

history may not repeat but it does tend to rhyme old boy

[lets get it right]

history may not repeat but it does tend to rhyme old boy

History rhyming? Doesn't sound like much of an argument to me.

The last boom took place over 2 to 3 years and was very much concentrated in London and the South East. Didn't have BTL sharks stalking the rest of the country in those days.

So, the banks' exposure was a hell of a lot lower than it is now. The number of people with mega-mortgages held against property in negative equity was relatively few and the banks could handle it.

They couldn't now. They have already needed government bail outs to prevent systemic banking collapse. Which is why, it seems to me, there is nothing that won't be done/tried to keep the boat afloat.

Edited September 23, 2010 by Let's get it right

[Si1]

History rhyming? Doesn't sound like much of an argument to me.

it's just a superficial exposition of the case for macro-trends

time will tell

[Si1]

They couldn't now. They have already needed government bail outs to prevent systemic banking collapse. Which is why, it seems to me, there is nothing that won't be done/tried to keep the boat afloat.

nonsense. they have run out of money to do this. the banks' liquidity crisis has been solved and they have restructured to survive the future, including rising mortgage delinquency which is already accounted for. The banks will be fine. The foolish people with BTLs and big mortages will not. end of.

[SMAC67]

Seriously, renting via a succession of Assured Shorthold Tenancies is no way to live your life. When you have a wife and a couple of kids in tow - and the accumulated detritus of years spent accumulating crap to lug around - and trying to stay in the right catchments for schools etc. etc. - it's no fun. Okay if you have a plan, sit out of the market for a while and watch it fall. In a couple of months I'll celebrate my 7th anniversary of doing that.

And of course I'm not saying that if she doesn't get on the ladder now she never will - but what I am saying is you can't wait forever to get on with things. If you can't afford property, okay, what can you do? Wait for it to become cheaper? I'm beginning to think you'll have a long wait.

I'm not trying to defend the indefensible - just getting a bit tired of it all to be honest.

You are kidding aren't you? I'm afraid the days of buying a house and living in it are long gone. Most people who "own" property within my peergroup move house once a year, I even know one couple who have moved 12 times in ten years. I usually rent a place for a period of 4-5 years, the last place I "owned" I stayed in for 3 years.

Homeownerism is now a virulent disease and is no way related to putting a "roof over your head". It is simply extreme consumerism tied in with what seems to be a guaranteed win in the casino of life. Property is a lifestyle statement and status symbol now.

As for cars, I know someone who bought thirteen in one year.................................

[lets get it right]

You are kidding aren't you? I'm afraid the days of buying a house and living in it are long gone. Most people who "own" property within my peergroup move house once a year, I even know one couple who have moved 12 times in ten years. I usually rent a place for a period of 4-5 years, the last place I "owned" I stayed in for 3 years.

Homeownerism is now a virulent disease and is no way related to putting a "roof over your head". It is simply extreme consumerism tied in with what seems to be a guaranteed win in the casino of life. Property is a lifestyle statement and status symbol now.

As for cars, I know someone who bought thirteen in one year.................................

Well I know one serial mover but that's all. Lots of my peers have lived in the same house for 20 years or more while they've raised their families.

The person you know who moved 12 times in 10 years - if you add 12 stamp duties and 11 estate agent fees and 12 legal fees - you probably have the price of a half-decent house.

I know a few people who bought the biggest house they could either straight off - as FTBs with both partners working etc. - or maybe as their second purchase. An in-law went straight in for a 4 bed detached which (25 years later) they still live in. When they first bought I thought they were nuts - mega mortgage etc. But the years have proved them to be very wise - they've only ever paid stamp duty once and, so far, have never paid an estate agent a penny. Mortgage now paid off, they sit in a house worth half a million.

I've probably wasted 25k on moving costs over the years.

As for renting - I'd have to say 'can you be serious?' Each to their own. I'm on my third move now in 7 years and I can't be a r s e d with it any more.

[lets get it right]

nonsense. they have run out of money to do this. the banks' liquidity crisis has been solved and they have restructured to survive the future, including rising mortgage delinquency which is already accounted for.

So they are now quite happy to keep lending large amounts of money to people with the right risk profile to keep the market ticking along so the money already lent into the market is not at risk.

The foolish people with BTLs

The foolish people with BTLs will be fine if they are not over exposed and for as long as people pay the daft rents demanded.

... people with ... big mortages will not. end of.

As long as they stay in work and interest rates stay low (which seems to be in everyone's interest at the moment, apart from savers and they don't seem to count) - people with big mortgages will be fine too.

[dances with sheeple]

Which 'market' WANTS house prices to crash?

When a currency crashes - it's because the half of the market that is betting down beats the half that is betting up. When the price of a commodity crashes it is usually because speculators are going to make money out of it - or frost has just wiped the coffee crop out in Brazil.

The only downward pressure on house prices is coming from those who stay out of the market. Their numbers are not only so small as to be utterly insignificant, they are effectively 'in the market' because they are renting from someone who really is 'in the market'. Unless you live in a tent, you're contributing.

Total rubbish, the downward pressure on house prices is coming from lack of liar loans and other cheap credit. My landlord bought his flat for about 60k in a block where numpties recently paid 170k, I pay him 450 per month, no deposit, how is that being "in the market"? The numbers being refused mortgages are not insignificant, they are massive.

[dances with sheeple]

I think it's fair to say they fell because 'the markets' decided to mess with our currency and interest rates were forced up - culminating in our exit from the ERM.

Which 'market' or vested interest is going to benefit from a house price fall?

The young depressed and angry twenty somethings who can probably kick my ass and your ass in a street riot?

[dances with sheeple]

So they are now quite happy to keep lending large amounts of money to people with the right risk profile to keep the market ticking along so the money already lent into the market is not at risk.

The foolish people with BTLs will be fine if they are not over exposed and for as long as people pay the daft rents demanded.

As long as they stay in work and interest rates stay low (which seems to be in everyone's interest at the moment, apart from savers and they don't seem to count) - people with big mortgages will be fine too.

The market is not ticking along, it is on it`s knees? They are not lending large amounts of money any more, approvals are slipping by the month? Recent money lent into the market is at risk and accounted for on their balance sheets as "risky"? The banks can`t control someones work prospects, and they can`t control the bond markets either?

[neil324]

Anger stage by the looks

http://forums.moneysavingexpert.com/showthread.php?t=2747294

[lets get it right]

The market is not ticking along, it is on it`s knees? They are not lending large amounts of money any more, approvals are slipping by the month? Recent money lent into the market is at risk and accounted for on their balance sheets as "risky"? The banks can`t control someones work prospects, and they can`t control the bond markets either?

Well the market is not on its knees where I live. It's slow and sale prices are lower than asking - and some aren't selling - BUT - it is still ticking along.

The bond markets .... not so easy for the bond vigilantes to move the market when the BOE is poised to buy as much as it needs to.

I read everything you and others say about the market, the finance, the falls .... and then I go and view houses that are getting offers - below asking it is true, but some are accepted and, as I say, the market staggers on.

[lets get it right]

The young depressed and angry twenty somethings who can probably kick my ass and your ass in a street riot?

Yes but their non-participation in the market has had little effect other than to reduce transaction numbers. Around here, I am told, FTB stuff is just not selling - but prices are not falling much - not many people HAVE to sell. The banks and the government have seen to that.