Jump to content
House Price Crash Forum
Jonnybegood

Dont Think We Will See A Housing Crash For At Least 5 More Years

Recommended Posts

For me inflation is now a real risk to world economies and with the US continuing to flood the markets it just seems they will all do anything just to prop up the markets, be it housing or stocks.

The DOW and FTSE have continued to rally since the summer when I thought it was going to fall and all indicators and normal logic would have agreed, but QE2 has lifted the market and recently so are the commodities, precious metals and energy stocks all on the rise (I am not moaning I have made significant profits from this sector) but I am now a believer without listing all articles , speeches and forum talk I have read and research I have undertaken that inflation is going to be much higher over the next 5 years.

What it means for property? I feel the most likely outcome a stagnant market in nominal terms but heavy falls in real terms, its whether incomes increase around the globe as we accept this higher cost of living as a way of wiping out existing debts.

Not forgetting we have a VAT increase in January, predicted to add an extra £500 to an average households bill annually and that is without taking into account those one off big ticket purchases and above inflation rises from the energy companies, an average family car will add an extra £350 alone.

I was in the deflation camp 2 years ago, but for now and at least the next 3 years I see inflation as the dominant force, housing will become cheaper in real terms, its just that with all the other rises in the cost of living will they become any more affordable? My guess, only slightly.

Its no longer acceptable to say that last time this and that happened and what is now happening is against logic, that may be the case but the markets are rigged and those at the top really are masters of the universe, and I believe now they may actually pull this one off, just check out the stock markets and commodity prices after the so called biggest recession of all time.

Edited by Jonnybegood

Share this post


Link to post
Share on other sites

I half-agree - only as the other half of me is still hoping for a crash.

I also believe strongly in inflation. Fuel, housing, commodities - balanced by cheap tat from China but at the expense of jobs here in order to iron out the figures. Deflation my backside. Maybe I AM glad to have got some index-linked certs when I did.

Share this post


Link to post
Share on other sites

I've read here many times on this forum that you don't actually see a crash in property, as in "my word the price of property has fallen a lot this month/quarter", it's some 5 years later people observe prices have crashed, the actual change is gradual.

I believe we are having a crash in prices now but the change is glacial in speed

Any old timers/guru's care to confirm

Edited by madpenguin

Share this post


Link to post
Share on other sites

I've read here many times on this forum that you don't actually see a crash in property, as in "my word the price of property has fallen a lot this month/quarter", it's some 5 years later people observe prices have crashed, the actual change is gradual.

I believe we are having a crash in prices now but the change is glacial in speed

Any old timers/guru's care to confirm

i doubt old timers can help, theyve never potentially witnessed a credit expansion cycle peaking, theyve only ever known credit expansion unless we have a few centurions on here

Edited by Tamara De Lempicka

Share this post


Link to post
Share on other sites

i doubt old timers can help, theyve never potentially witnessed a credit expansion cycle peaking, theyve only ever known credit expansion unless we have a few centurions on here

Sorry I meant old timer in the sense of "seen a lot of these kind of posts before", not chronological age :rolleyes:

Share this post


Link to post
Share on other sites

I've read here many times on this forum that you don't actually see a crash in property, as in "my word the price of property has fallen a lot this month/quarter", it's some 5 years later people observe prices have crashed, the actual change is gradual.

I believe we are having a crash in prices now but the change is glacial in speed

Any old timers/guru's care to confirm

I'm an old timer and I don't quite agree. This time is different because of the huge VI interference. And the last bubble bursting was clear when it was happening. The banks had no hesitation in repossessing and the government had no hesitation in putting up interest rates. This time is very different.

I would like to be able to agree with you.

But I think we will have a slow motion crash eventually, or go the Japanese way.

Share this post


Link to post
Share on other sites

They left.

ztsvg8.jpg

(centenarian?)

you are the sort of guy that turns up at a job interview, and when asked "have you filled in the Questionaire?", you reply proudly "yeah, der doorman was a bit cheeky so I laid him out".

Share this post


Link to post
Share on other sites

I'm an old timer and I don't quite agree. This time is different because of the huge VI interference. And the last bubble bursting was clear when it was happening. The banks had no hesitation in repossessing and the government had no hesitation in putting up interest rates. This time is very different.

I would like to be able to agree with you.

But I think we will have a slow motion crash eventually, or go the Japanese way.

I agree with you about the re-possessions, in the late 80's I had a house on a new build estate in the South East.

I can remember coming home to my wife and remarking how a lot of people had moved out because every other house was empty, she replied "no, they have been repossessed" pointing one by one to every empty house in our street, and relating each tale of woe relayed through the stay at home mum's telegraph

In relation to slow crashes, I've seen numerous graphs on these forums showing previous crashes took about 5 years to hit bottom, from what you've pointed out how long do you think this time 6-10?

Edited by madpenguin

Share this post


Link to post
Share on other sites

I agree with you about the re-possessions, in the late 80's I had a house on a new build estate in the South East.

I can remember coming home to my wife and remarking how a lot of people had moved out because every other house was empty, she replied "no, they have been repossessed" pointing one by one to every empty house in our street, and relating each tale of woe relayed through the stay at home mum's telegraph

In relation to slow crashes, I've seen numerous graphs on these forums showing previous crashes took about 5 years to hit bottom, from what you've pointed out how long do you think this time 6-10?

Yes. I reckon about 10 at least. Partly also because this bubble is much bigger than the last one. I read somewhere that bubbles often take as long to deflate as to inflate. For property I think that is true. This time, we had liar loans and property porn and VI all helping to make property prices defy gravity. Edited by Giordano Bruno

Share this post


Link to post
Share on other sites

I agree with you about the re-possessions, in the late 80's I had a house on a new build estate in the South East.

I can remember coming home to my wife and remarking how a lot of people had moved out because every other house was empty, she replied "no, they have been repossessed" pointing one by one to every empty house in our street, and relating each tale of woe relayed through the stay at home mum's telegraph

In relation to slow crashes, I've seen numerous graphs on these forums showing previous crashes took about 5 years to hit bottom, from what you've pointed out how long do you think this time 6-10?

If you look at 5-10 years then from peak of 2007 could be anywhere between 2012 - 2017.

Take the average price of an house before the real boom took off in 2000 (£80,000) you will see that following the long term inflation average of 2.5% + 1% an average house price today should be in the region of £125,000, a 20-25% correction from current prices would be needed to bring us back in line.

Inflation I believe over the next 3 - 5 years is going to be far higher than long term average, however I don't feel house prices will go up any higher in nominal terms over the same period so in real terms they will be depreciating and by the end of the inflationary period circa 2014 house prices will have come back almost in line with long term average:

2010 Actual average house price £168k - Long term average £125k

2011 £125k + 2.5% + 1% Long term average £129,375

2012 £129,375 + 2.5% + 1% Long term average £133,903

2013 £133,903 + 2.5% + 1% Long term average £138,589

2014 £138,589 + 2.5% + 1% Long term average £143,440

2015 £143,440 + 2.5% + 1% Long term average £148,460

These are only averages and each property area will have other reasons for growth and falls e.g those that have risen the most should fall the greatest if there was no fundermental reason for the rise, so as you can see there is still room for a 10% nominal correction on house prices, but if inflation does really kick in and wages follow that could quite easily be wiped out.

I also see IRs below 5% over the same period, rising sharply end of next year, then 1% annually up to 2014 - 2015

Share this post


Link to post
Share on other sites

I agree with you about the re-possessions, in the late 80's I had a house on a new build estate in the South East.

I can remember coming home to my wife and remarking how a lot of people had moved out because every other house was empty, she replied "no, they have been repossessed" pointing one by one to every empty house in our street, and relating each tale of woe relayed through the stay at home mum's telegraph

In relation to slow crashes, I've seen numerous graphs on these forums showing previous crashes took about 5 years to hit bottom, from what you've pointed out how long do you think this time 6-10?

I lived on a new build estate at the start of the 90's there were 4 repossessions I could see from my window.

Share this post


Link to post
Share on other sites

For me inflation is now a real risk to world economies

UK wages are only rising at 1.5%, and that's before 600,000 ex civil servants join the job hunt. Difficult to see inflation taking off while this remains the case.

Share this post


Link to post
Share on other sites

Sadly, I have to agree with the original post. It is difficult to see the government or the independent(?) BoE doing anything which might cause the pack of cards, which is the housing market, to collapse. Property has been the bedrock upon which Britain's illusory wealth has been created. The fact that the bedrock is actually sand, has to be denied at all costs.

I think there will only be a very slow decline, until inflation allows property prices to catch up (down?) with realistic prices.

P.S. I am not yet a centenarian but approaching that milestone too fast. In 1967 we bought our first house at £5,500, a new built end of terrace. At the same time, when furnishing our home, we really splashed out on a luxury oak dining table costing £100. That model table is still being made and now costs about £1,000 or a ten fold increase. We noticed last year, that our first home had just come on the market at £225,000 - a forty fold increase! Mad, or what?

Share this post


Link to post
Share on other sites

If house prices stay static for 10 years and we have on average 5% RPI for the next do years then it would be roughly 50% (can't be bothered working it our properly) drop in real terms?

Kind of makes holding out to buy pointless if you can afford it now.

The main thing putting me off is that there doesn't appear to be much quality housing on the market at the moment and the fact that I will be moving in a year and a half so at least want to see what happens in that time frame.

If next 1-2 years doesn't give us significant nominal drops then nothing will.

Share this post


Link to post
Share on other sites

What is a crash?...house prices will not be increasing any time soon....printing money causes inflation, we will be getting price rises in the necessities of living, fuel, food, commodities...wages will not increase enough to cover the extra cost of living. Interest rates will rise a little to counterbalance further inflation pressures.....smaller companies will use more of any profits to deleverage, new business will emerge....we will be entering an era of restraint and conservation, make do and mend....some of us are already familiar with this way of living so it won't come as too much of a shock. ;)

Share this post


Link to post
Share on other sites

Sadly, I have to agree with the original post. It is difficult to see the government or the independent(?) BoE doing anything which might cause the pack of cards, which is the housing market, to collapse. Property has been the bedrock upon which Britain's illusory wealth has been created. The fact that the bedrock is actually sand, has to be denied at all costs.

I think there will only be a very slow decline, until inflation allows property prices to catch up (down?) with realistic prices.

P.S. I am not yet a centenarian but approaching that milestone too fast. In 1967 we bought our first house at £5,500, a new built end of terrace. At the same time, when furnishing our home, we really splashed out on a luxury oak dining table costing £100. That model table is still being made and now costs about £1,000 or a ten fold increase. We noticed last year, that our first home had just come on the market at £225,000 - a forty fold increase! Mad, or what?

is it really mad though?

What were mortgage rates when you bought and what are they now?

Had woman thrown off the shackles of housewifery freedom and embraced full time working slavery until retirement in the 1967 yet thus enabling 2 salaries to buy their dream home?

How much money has been spent doing the house up in the last 45 years? A lot more than what it was originally purchased for and this has to be factored into the current price increase.

Share this post


Link to post
Share on other sites

is it really mad though?

What were mortgage rates when you bought and what are they now?

Had woman thrown off the shackles of housewifery freedom and embraced full time working slavery until retirement in the 1967 yet thus enabling 2 salaries to buy their dream home?

How much money has been spent doing the house up in the last 45 years? A lot more than what it was originally purchased for and this has to be factored into the current price increase.

diversion false arguments.

excessive lending to people who cant really afford it is at 21st Century problem, the headache for which is now.

Share this post


Link to post
Share on other sites

UK wages are only rising at 1.5%, and that's before 600,000 ex civil servants join the job hunt. Difficult to see inflation taking off while this remains the case.

There will be inflation, just not wage fuelled inflation. Houses costing 150 thousand loaves of bread in 2010 will probably only cost 75 thousand loaves of bread in 2015. Trouble is loaves of bread will be twice as expensive in real terms.

Share this post


Link to post
Share on other sites

Sadly, I have to agree with the original post. It is difficult to see the government or the independent(?) BoE doing anything which might cause the pack of cards, which is the housing market, to collapse. Property has been the bedrock upon which Britain's illusory wealth has been created. The fact that the bedrock is actually sand, has to be denied at all costs.

I think there will only be a very slow decline, until inflation allows property prices to catch up (down?) with realistic prices.

P.S. I am not yet a centenarian but approaching that milestone too fast. In 1967 we bought our first house at £5,500, a new built end of terrace. At the same time, when furnishing our home, we really splashed out on a luxury oak dining table costing £100. That model table is still being made and now costs about £1,000 or a ten fold increase. We noticed last year, that our first home had just come on the market at £225,000 - a forty fold increase! Mad, or what?

Although I have to acknowledge that the government this time has pulled out all the stops to prevent a rapid re-adjustment, I think there is a danger of over-estimating its power to influence the downturn in sentiment once the reality settles into the majority of the population that there are no longer the gains from borrowing or spending savings to buy houses that there were five to six years ago. We delude ourselves that exposure of the population to the views expressed on websites such as this is particularly significant. It isn't and that accounts for the delay in the market response as we are awaiting the bearish views to percolate through to the general public and go mainstream.

I accept that I significantly underestimated the extent of VI influence on the government policies over the last couple of years, but the overall prediction of the bears on this site c2006-early 2007 that hpi would end has happened and the predicted fall in house prices has already happened on a small scale in spite of all the government's efforts (which only managed to pull back some of the falls in 2008). Since government cannot dictate individual decisions on house purchasing I cannot convince myself that there will be much government can do once a significant number of potential buyers of houses decide to sit on their hands, hoard cash or look at other types of investment.

Your post demonstrates the ludicrous level of present house prices. I don't see how they can be sustained at that level for anything longer than the short-term.

Share this post


Link to post
Share on other sites

is it really mad though?

What were mortgage rates when you bought and what are they now?

Had woman thrown off the shackles of housewifery freedom and embraced full time working slavery until retirement in the 1967 yet thus enabling 2 salaries to buy their dream home?

How much money has been spent doing the house up in the last 45 years? A lot more than what it was originally purchased for and this has to be factored into the current price increase.

selective and desperate

entertaining tho

Share this post


Link to post
Share on other sites

Although I have to acknowledge that the government this time has pulled out all the stops to prevent a rapid re-adjustment, I think there is a danger of over-estimating its power to influence the downturn in sentiment once the reality settles into the majority of the population that there are no longer the gains from borrowing or spending savings to buy houses that there were five to six years ago. We delude ourselves that exposure of the population to the views expressed on websites such as this is particularly significant. It isn't and that accounts for the delay in the market response as we are awaiting the bearish views to percolate through to the general public and go mainstream.

I accept that I significantly underestimated the extent of VI influence on the government policies over the last couple of years, but the overall prediction of the bears on this site c2006-early 2007 that hpi would end has happened and the predicted fall in house prices has already happened on a small scale in spite of all the government's efforts (which only managed to pull back some of the falls in 2008). Since government cannot dictate individual decisions on house purchasing I cannot convince myself that there will be much government can do once a significant number of potential buyers of houses decide to sit on their hands, hoard cash or look at other types of investment.

Your post demonstrates the ludicrous level of present house prices. I don't see how they can be sustained at that level for anything longer than the short-term.

I agree to an extent. But 'they' have nobbled other types of investment quite well. :(

Share this post


Link to post
Share on other sites

How soon we forget. From August 2007 and for 18 months, prices dropped 25% and twice as fast as the fastest speed before (prolly 1990s).

Then interest rates were cut and prices are supposed to have risen a bit. Now prices are showing a slide. There is nothing left for the corrupt governments to throw at this. Lets see what happens to prices over the next 6 months. I think there will be further drops.

If only interest rates would go back up, the job would get completed. We need to see a further 25% off, and we'd be there now if it wasn't for King stealing off the saver..

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.

  • 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%



×
×
  • 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.