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How Far Can Prices Go Down?

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If you look in the US cities where prices have dropped 50%, they still cannot find buyers for these houses. Most young people still cannot afford to buy.

A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

Another aspect is something I had not appreciated until recently. A bank manager was telling me, what a large percentage of adults under 35 already have wrecked credit. Student loans, credit card debt, car loans that they defaulted on at some point. A growing percentage of the under 35 population simply is locked out of the mortgage market. They would not even be able to go and get a loan for £20k to pay for some serious house repairs.

This is why we see in the US cities and now in some European states house prices just keep falling with no bottom in sight. Even when down 40-50% and looking to be gaining some strength, the market crests over and pushes towards new lows again. On a simple level you cannot totally trash the ability of the young generation to earn money, AND expect them to take out large mortgages AND pay extremely high cost of living expenses. We already see the collapse in auto sales in some nations.

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Isnip

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

snip

if houses cost nothing, then a burst pipe. a broken roof...who cares...get another house.

insurance? thats for people who value their property.

Ive never met a squatter who insures their dwelling...or a tenant for that matter.

You are right though, the Bernanke plan to devalue the dollar to boost exports hits the poor right where it shouldnt.

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IMO i think from peak houses will fall 50%

which means average house at its peak was something like 200k, will be 100k

so if you look at your area and see what they were going for in 2007 , i would say about half of that they will fall.

if we start getting anymore monthly falls like yesterday. it might not be that long to wait,

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if houses cost nothing, then a burst pipe. a broken roof...who cares...get another house.

insurance? thats for people who value their property.

Ive never met a squatter who insures their dwelling...or a tenant for that matter.

You are right though, the Bernanke plan to devalue the dollar to boost exports hits the poor right where it shouldnt.

Its honestly a good point. I've talked to some young people who are doing that with cars already. They buy an older but still working good car for say £1500 and drive it until it no longer works. Then just abandon it and buy another older car. Because the cost of serious maintenance is so extreme.

I guess if houses got down to like £10,000 people could just not bother doing repairs and not bother insuring.

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If you look in the US cities where prices have dropped 50%, they still cannot find buyers for these houses. Most young people still cannot afford to buy.

A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

Another aspect is something I had not appreciated until recently. A bank manager was telling me, what a large percentage of adults under 35 already have wrecked credit. Student loans, credit card debt, car loans that they defaulted on at some point. A growing percentage of the under 35 population simply is locked out of the mortgage market. They would not even be able to go and get a loan for £20k to pay for some serious house repairs.

This is why we see in the US cities and now in some European states house prices just keep falling with no bottom in sight. Even when down 40-50% and looking to be gaining some strength, the market crests over and pushes towards new lows again. On a simple level you cannot totally trash the ability of the young generation to earn money, AND expect them to take out large mortgages AND pay extremely high cost of living expenses. We already see the collapse in auto sales in some nations.

It's the inevitable consequence of the free market. The flaw in the system that forces down labour costs is that it needs money from the labour whose costs and therefore spending power it reduces to buy the stuff that it needs the same people to spend more on. The 'solution' was to make up the difference with almost unlimited cheap credit to keep them spending , now thats run out, theres nowhere to go.

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It's the inevitable consequence of the free market. The flaw in the system that forces down labour costs is that it needs money from the labour whose costs and therefore spending power it reduces to buy the stuff that it needs the same people to spend more on. The 'solution' was to make up the difference with almost unlimited cheap credit to keep them spending , now thats run out, theres nowhere to go.

IC..Bernanke QEing is free market. I stand corrected.

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If you look in the US cities where prices have dropped 50%, they still cannot find buyers for these houses. Most young people still cannot afford to buy.

A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

Another aspect is something I had not appreciated until recently. A bank manager was telling me, what a large percentage of adults under 35 already have wrecked credit. Student loans, credit card debt, car loans that they defaulted on at some point. A growing percentage of the under 35 population simply is locked out of the mortgage market. They would not even be able to go and get a loan for £20k to pay for some serious house repairs.

This is why we see in the US cities and now in some European states house prices just keep falling with no bottom in sight. Even when down 40-50% and looking to be gaining some strength, the market crests over and pushes towards new lows again. On a simple level you cannot totally trash the ability of the young generation to earn money, AND expect them to take out large mortgages AND pay extremely high cost of living expenses. We already see the collapse in auto sales in some nations.

like all bubbles they definately have potential to fall the proverbial 90%, of course you wont see all that in nominal terms, maybe 50% in nominal but the potential is there in real, if you take them in most major currencies they are already down about 40% since 07, to an American UK and US prices have fallen a similar amount

Edited by Tamara De Lempicka

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A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

I think you are dead right, we could well see the return of £10k northern terraced houses. examples

That would price an awful lot of people back into the global labour market.

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If you look in the US cities where prices have dropped 50%, they still cannot find buyers for these houses. Most young people still cannot afford to buy.

A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

Another aspect is something I had not appreciated until recently. A bank manager was telling me, what a large percentage of adults under 35 already have wrecked credit. Student loans, credit card debt, car loans that they defaulted on at some point. A growing percentage of the under 35 population simply is locked out of the mortgage market. They would not even be able to go and get a loan for £20k to pay for some serious house repairs.

This is why we see in the US cities and now in some European states house prices just keep falling with no bottom in sight. Even when down 40-50% and looking to be gaining some strength, the market crests over and pushes towards new lows again. On a simple level you cannot totally trash the ability of the young generation to earn money, AND expect them to take out large mortgages AND pay extremely high cost of living expenses. We already see the collapse in auto sales in some nations.

In my simple-minded world, here's how I see it.

It all comes down to bank lending.

For example, if there were a total population of 10 people in the UK, and there was 20 houses, there would still be a housing shortage because 2 or 3 people would try to buy them all, and rent them out to the others, or just take them off the market.

Therefore it boils down to the amount that banks are prepared to lend. If not lending, prices will revert to available cash value, if willing to lend under 'bubble' dynamics, the price could be infinite.

So you have to then ask, what will happen to bank lending? That is ultimately the key fundamental. It is the supply of bank lending, not the supply of housing, that determines prices.

On the larger scale, where the market consists of millions of buyers, psychology also plays a role, and will introduce 'noise' intro the price path. For this reason HPI or HPC may overshoot the trend line.

That's my 2c anyway.

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If you look in the US cities where prices have dropped 50%, they still cannot find buyers for these houses. Most young people still cannot afford to buy.

A scary thing is even if prices dropped 100%, and the houses were simply given away, it would still be difficult for much of the younger generation to handle the expenses of ownership. First realize in many western cities now 30% of people between 18 and 25 are outright unemployed, with another 10-20% underemployed. But secondly realize the majority of jobs which have opened up over the last two decades are low end service sector jobs. The largest private employer is now Tescos. It sets the standard that other companies follow.

Someone on £8 an hour simply cannot afford the costs of insurance, property taxes and especially maintenance. Like if something serious goes, such as a water piping issue or the roof goes, how would someone making so little money come up with £20,000 to pay for it?

Another aspect is something I had not appreciated until recently. A bank manager was telling me, what a large percentage of adults under 35 already have wrecked credit. Student loans, credit card debt, car loans that they defaulted on at some point. A growing percentage of the under 35 population simply is locked out of the mortgage market. They would not even be able to go and get a loan for £20k to pay for some serious house repairs.

This is why we see in the US cities and now in some European states house prices just keep falling with no bottom in sight. Even when down 40-50% and looking to be gaining some strength, the market crests over and pushes towards new lows again. On a simple level you cannot totally trash the ability of the young generation to earn money, AND expect them to take out large mortgages AND pay extremely high cost of living expenses. We already see the collapse in auto sales in some nations.

The Elites & Vi's created a 'Perfect Storm' and it's all collapsing around them.

There is no one left to mug and chain up in further debt 'gratitude' in the host country!

They are completely fixated on saving their corrupt, thieving money making machine and protect their own spineless 'creative' wealth!

Edited by erranta

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Then impaired credit will become the new black. When everyone has a default or two against their name lenders will just overlook them. The herd always gets what it wants. It's only individuals who get stuffed.

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However if a monopoly or oligopoly develops that can exert pricing power on the market then that could raise the prices of marginal releases of supply to the market and the demand for credit for those units would rise in order that people who could not buy in cash can compete. (rather sounds like what we actually have in this country)

Yup. What he said. ;)

Unfortunately, property markets, like democratic systems, are ugly messy things.

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IMO i think from peak houses will fall 50%

which means average house at its peak was something like 200k, will be 100k

so if you look at your area and see what they were going for in 2007 , i would say about half of that they will fall.

if we start getting anymore monthly falls like yesterday. it might not be that long to wait,

Thanks for the calculation, I was having trouble with the 50% bit :)

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like i said a year or two back on this forum, house prices are ten times over valued. my twenty grand terrace house which would have gone for one hundred grand a year ago will now slowly go back down to twenty grand. nice to see other posters now saying we will see the return of ten grand terrace houses.

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I think prices will end up going lower than a limbo dancer. A perfect storm of boomers retiring, a public sector bloodbath, massive private debt (both secured and unsecured) and non-existent FTBs. The drought of FTBs will be long term, as students are currently exiting uni (40% participation of 18 year olds) with 20k of debts. This debt figure is going north fairly soon, with indications that fees will move from the current £3200 odd per year to at least £5500 a year. That gives a debt of £15k before living costs. Basically your standard FTB will enter adult life with a massive mortgage tied around the neck, before trying to get another one.

Game over.

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like i said a year or two back on this forum, house prices are ten times over valued. my twenty grand terrace house which would have gone for one hundred grand a year ago will now slowly go back down to twenty grand. nice to see other posters now saying we will see the return of ten grand terrace houses.

yes i think we will, i hope we do too, i know a few people that bought houses for 15 -20k, and they were good little houses for single people.

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Hi I am a newbie here, but I think this has become my new favorite Message Board.

The housing market in the UK is perplexing to say the least. I am an American (with a British husband). We moved back here (from Seattle) in June 2008. Despite my husband's salary of 135,000 GBP, we couldn't afford more than to let a small flat in a decent part of the city (I have a young child, so area is a bigger factor than space for us).

We have been renting in Maida Vale for over 2 years now, and the Mansion flats we live in are still being put on the market for 680,000 GBP for a small. 2 bedroom/ 1 bath flat. Its insane.

I don't see with all the cuts and increased unemployment in the next year, how housing will do anything else but fall. After all, even in London there are only so many millionaire/billionaire non-doms who are going to buy property, and they are more interested in the 2(+) million market.

I watched Faisal Islam (sp?) on Channel 4 last night. He called this fall of 3.6% last month, a MONSTER crash. It will be interesting to see if it continues. Here's to hoping owning a home in Britain is no longer just a privilege for the wealthy!

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I am an American (with a British husband). We moved back here (from Seattle) in June 2008.

Welcome to Britain! Personally I cannot for the life of me work out why someone would want to move to the UK from the US (work commitments?) at the best of times, let alone given how fecked this country is, but best of luck to you and yours.

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Welcome to Britain! Personally I cannot for the life of me work out why someone would want to move to the UK from the US (work commitments?) at the best of times, let alone given how fecked this country is, but best of luck to you and yours.

Well thank you. But for as messed up as you think this country is, its about 100% worse in America at the moment. We currently have a FAR right resurgence about to take over our government. Its frightening what is happening over there, and actually I prefer the UK (although not so sure about London itself).

We lived in Edinburgh for many years before we moved back to America (long story why we moved back to the States). I prefer it up there.

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Another big problem they have in the US now is whether hundreds of thousands of repossessions have been legal.

Who would now buy a repossessed house with the possibility that a court, at some future date, will hand the house back to the people who were booted out by the banks?

This can only put people off buying and hence drive down the prices even lower. You are going to want that repossessed house incredibly cheap now that the above risk exists.

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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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