Jump to content
House Price Crash Forum
Number79

House Prices Only Go Up Innit

Recommended Posts

We all hear it and mock the house prices only go up crowd, innit.

Over the longterm though, do any of us really expect this not to be the case?

There may be anything up to a massive correction coming and possibly spanning several years but over a decade or so or at least until the next cycle do many really believe that the old adage is not true?

Many have STR'd or have saved and are waiting, waiting for a bottom or a dip for the opportunity to buy. That being the reason for most being here, surely we are waiting for the opportunity because we mostly expect rising prices again in the future. Of course we would all hope for sensibly priced homes to live in and that they stay priced reasonably forever but we are largely poised expecting that not to be the case.

The bulls and rampers are insanely annoying but I believe that maybe this is why the bulls and bears, without a specific window of time, may both be right. Make no bones about it, the bulls are wrong right now but over a decade or so do any of us really believe prices won't rise?

The UK falling apart during the end of the world as we know it was not really catered for but if I missed any glaringly obvious choices for the poll then say so.

NB, Bruce I am not a bull in camouflage and do not expect to see my name in your signature lol

Share this post


Link to post
Share on other sites

Everything costs more longterm.

Continual above wage inflation rises? No.

So monetary inflation aside you do not expect prices to rise in relative terms anymore. What do you think can really put the masses off believing in bricks and mortar?

Share this post


Link to post
Share on other sites

Only voted rise due to inflation - remember when a bag of crisps cost 3d (approx 1p for the younger members) In real terms prces will fall from here.

Before my time but I do remember being able to buy a packet of 10 fags and a box of matches with £1 and still having change for penny sweets.

In real terms prices have pretty much risen constantly, I believe that modern life and women entering the workplace providing a double income gave this a massive boost. I dont, unfortunately, see how that trend will change short of a UK collapse that makes a roof merely shelter.

Share this post


Link to post
Share on other sites

So monetary inflation aside you do not expect prices to rise in relative terms anymore.

I'd say they would move roughly in line with inflation after the correction.

What do you think can really put the masses off believing in bricks and mortar?

A nice healthy house price crash :lol:

Share this post


Link to post
Share on other sites

We all hear it and mock the house prices only go up crowd, innit.

Over the longterm though, do any of us really expect this not to be the case?

In the long term we're all dead.

But for at least a generation we've got downwards pressure from older folks - pensioners and boomers - cashing in their investments. That should last right through the retirement years of at least today's over-50s.

Of course that's just one of many drivers, and so long as interest rates are zero many property owners will prefer income to capital. How long will that last?

Share this post


Link to post
Share on other sites

Or...the pound just keeps going down and down, wages don't rise to compensate and people overseas use their strong currencies to buy up all the houses and let them out to us.

So we've reached the limits of our purchasing power but others have increased theirs. In which currency should I be measuring those house prices?

By the way this is already happening with 1 in 3 flats in London sold to overseas investors since the currency collapse on Labour's watch. Since then, to us it looks like house prices have risen, but to others they are a bargain.

you need to price it in the one true currency, not paper, not gold but love and beauty and nature, the flowers in the garden, the birds in the skies, the waves of the sea, what are uk prices doing in terms of love?

Become as one with all the heavenly glory and thine eyes shall be forever opened.

Share this post


Link to post
Share on other sites

you need to price it in the one true currency, not paper, not gold but love and beauty and nature, the flowers in the garden, the birds in the skies, the waves of the sea, what are uk prices doing in terms of love?

Become as one with all the heavenly glory and thine eyes shall be forever opened.

First day on the new meds TDL?

Must be nice, can I try some :lol:

Share this post


Link to post
Share on other sites

A "nice" property (like my gran's) is about 250K or roughly 10 years wages for someone doing a (pre-retirement) job like hers. Houses have never been that expensive before and they will never be that expensive again. If you want to look at it another way think about opportunity cost. £250K at 5% is 12K a year - owning that house costs a grand a month. To rent it - 650 maybe 700 quid. Ergo even if you own it outright (like granny) you're losing money.

Prices will oscillate I am sure but I honestly don't believe they will ever go beyond what we have seen in the current madness. Tulip bulbs are still only a few quid a kilo ;)

Share this post


Link to post
Share on other sites

A "nice" property (like my gran's) is about 250K or roughly 10 years wages for someone doing a (pre-retirement) job like hers. Houses have never been that expensive before and they will never be that expensive again. If you want to look at it another way think about opportunity cost. £250K at 5% is 12K a year - owning that house costs a grand a month. To rent it - 650 maybe 700 quid. Ergo even if you own it outright (like granny) you're losing money.

Prices will oscillate I am sure but I honestly don't believe they will ever go beyond what we have seen in the current madness. Tulip bulbs are still only a few quid a kilo ;)

What are the prices like in France, by way of comparison?

Share this post


Link to post
Share on other sites

I would like to live in a country where people only bought homes to live in not as part of their investment portfolio. I don't want my children or my grandchildren to either 1) have to emigrate or 2) be life-long debt slaves. At present I feel all I can do is write letters to MPs and make as many young people as possible aware of the harsh facts of life. I hope that HousePriceCrash forum continues and develops to be a long lasting voice of protest/mobilisation.

Edited by Reluctant Heretic

Share this post


Link to post
Share on other sites

I'm one of those who voted for 'Prices will keep falling and become irrelevant'.

Here's why, please bear in mind that the numbers can be easily viewed as being fanciful but they give me what I think is an adequate view of the scale of falls to be expect. The timescale: I'm looking at things over the next 20-30 years.

- Globalisation - Wages

From what I read our wages are ten or more times greater than people in India or China. EM wages should go up towards our levels but not by that much since there is such a large surplus of labour today. Meeting halfway means our purchasing power is divided by 5 -> lodging costs need to go down by 80%. We don't need kitchen tops made of volcanic rock from Mt Vesuvius or 3 bedroom houses for married couples or a separate house for granny when a spare bedroom will do: some of lowering should come from reduced housing standards.

My guesstimate for this factor: 50% house price reduction (I'm being conservative, I really think it will be much more)

- Globalisation: commodity costs

As wealth is sucked relentlessly towards EM markets (there will be more ups and downs but the trend is there and unstoppable now), we will find ourselves competing with many more people for stuff that we buy. Food and energy, the two groups I focus on, should go up in price in real terms. My very rough estimate is a doubling of costs in real terms (in truth I haven't got a clue but we've got to pick a number). If we take 30% essentials (food, heating, transport, etc.), 30% housing and 30% taxes and others as the 'standard' distribution of spending in a household, then a doubling of essentials costs leaves the other two (taxes and housing) with only half the spending power. I don't expect taxes to go down for a long time so the brunt of the loss of purchasing power should be born by the housing component: I am making the assumption that discretionary spending has been mainly financed by unsustainable debt and so should be considerably reduced anyway.

My guesstimate for this factor: another 50% house price reduction

- Price to income / lending normalisation

The historic average I know of that is considered sound lending in my experience is based on 3 times price to income. Affordability rules that have dominated over the last 15 year have meant that people could easily borrow 10 times to income with no sweat. The key factor here is that the current affordability critieria is seriously flawed: it fails to take account interest rate risk. Interest rates are at a historical low and sound lending would require that affordability criteria take into account not only historical average interest rates (around 6%?) but also include an element of safety by factoring in higher rates than that. So factoring in repayments (no IO, that is just ponzi behaviour and should be banned) of 30% of income and assuming interest rates that are higher than now takes you back to 3 times income.

My guesstimate for this factor: another 70% house price reduction

Those are the trends that I see as being key factors. So 50%X50%X70% = irrelevant. We'll have more important things to worry about.

Add to that factors that I can't begin to quantify:

- The generational shifts ringleman mentions in another thread is very real IMO and should have an impact on housing as an investment/speculation market.

- My expectation of lower 'real' economic activity in the UK in the future. This should have an impact on governement revenues. I think the ridiculously generous £400 per week housing benefit limit will be a thing of the past. Same thing with the numerous 'stealth' props to the housing market and construction industry.

I won't pretend to know the future but this is the baseline scenario I have adopted, for what it's worth.

Share this post


Link to post
Share on other sites

I'm one of those who voted for 'Prices will keep falling and become irrelevant'.

Sadly, this is pretty much what I believe will be coming. I first started really thinking about it when reading about Jim Rogers moving to Singapore and the reasons why. I thought at first that emigration was probably the best course of action but now believe that maybe all that is left is acceptance. Wealth is transferring from east to west and living standards will be meeting in the middle so there are few places that will be better off as far as I can guess.

Share this post


Link to post
Share on other sites

- One more factor that needs mentioning: the pension timebomb. People have not been saving for their retirement: the pyramid scheme did benefit one generation but we have reached the limit even though the baby boomer crest hasn't reached retirement yet (our baby boomers are 10 year behind the US).

I view the bare minimum saving requirement as 20% of income, even factoring in the fact that many should live with their children to lower costs.

20% of income saved (not 'invested') will reduce that much from disposable income and should disproportionately affect the housing component:

Predicted impact on housing: another 30%

And the other side of the coin? TPTB will try to bamboozle and confuse us all with enormous inflation (at today's rate - 5% - prices will double every 13 years). From the lodging thread someone mentioned a cost of lodging of £13/month in the 60s, today it's more like £300? :)

This will make it much harder for everyone to see what is happening and pinpoint the origin of the falls in their living standards. I think the next few generations will be much smarter financially than we are however.

Share this post


Link to post
Share on other sites

Barring surprise inflation, UK home prices could easily be lower in 10 years time - In fact, i expect that.

Look at Japan, the US, and Berlin, and you will see how common that is.

And in HK, the average flat is still below the peaks of 1997.

Does this surprise you?

If so, you haven't read enough and looked at enough global property cycles IMHO.

It does not surprise me.

What does though is that you were once expecting prices not to bottom until 2013/14 which would imply that they would be worth atleast the same or more in subsequent years.

I admit that I have spent only a fraction of the time reading about global property cycles that I have about economic and currency collapses. Spending too much on a house could be the least of our concerns tbh.

Share this post


Link to post
Share on other sites

Your post sums up in a few words why I give up my free time to moderate this site. I believe that we can make a difference and open the eyes of people to the false promise of "You can't lose with bricks and mortar" "House prices only go up" etc.

Internet is the great information liberator. Whatever its commercial foundation, hpc is performing a public service IMO.

Thanks for doing this db.

Share this post


Link to post
Share on other sites

Everything costs more longterm.

Continual above wage inflation rises? No.

The poll does not allow for peeps like me who expect big falls but over long term expect house prices to return to a norm in real terms, in line with general inflation.

Share this post


Link to post
Share on other sites

I would expect that house prices will fall in real terms.

If you want to ignore inflation, I'm sure that Tulip Bulbs have or will pass their Peak Price at some point.

Share this post


Link to post
Share on other sites

Prices will drop and stay at affordable. We will have to wait for more than 16 years for the next rise again.

Problem this time is the 42% plus on interest only mortgages. When they come to retire, even with a rise in property prices they couldn't afford to downsize and use the rest of the money to spend until death. There is going to be a huge cash shortfall if pensioners don't have paid for homes and enough savings to retire on. The state won't be able to afford to bail them out !

We can't depend on inflation either, if inflation gets higher, bank standard variable rate will just increase (banks won't lend money at a loss) which will lead to more repossessions and lower prices.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 194 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.