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House Price Crash Forum

Rightmove New Report (GOOD NEWS)


Wiseman
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Being dead for over a century has perhaps afforded me the unique opportunity to survey market trends from my vantagepoint here in the afterlife, although I confess that more often than not I remain none the wiser. I'm mindful of the recent downturn in UK housing and feel that this must be encouraging news for any FTB and STR's out there. However, my suspicion is that soon we may also witness an uplift in prices and housing could indeed enjoy a measure of recovery; quite possibly in the second quarter of 2005.

In capital markets in the 1990s, traders began speaking of the 'dead cat bounce', a phenomenon where declining markets experience sudden temporary revivals before continuing their decline again. (The idea being that even a dead cat will bounce if you drop it from a great height.) Investors have burned their fingers badly, mistaking this temporary bounce for a real recovery. My limited understanding is that the core problem is that nervous traders often mistake movement for signs of life.

It will be interested to see what happens over the next few months. By the way the afterlife is so dreadfully managed, one hardly knows to whom to complain. Thank goodness for this forum!

Otto

<_<

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Being dead for over a century must have made it difficult to find a nice avatar as I don't suppose they had the Internet in those days.

Here's one, and there's a few more on that site:

Otto_von_Bismarck_r.jpg

Couldn't find any dead cats though, or even dead "property experts".

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Being dead for over a century has perhaps afforded me the unique opportunity to survey market trends from my vantagepoint here in the afterlife, although I confess that more often than not I remain none the wiser. I'm mindful of the recent downturn in UK housing and feel that this must be encouraging news for any FTB and STR's out there. However, my suspicion is that soon we may also witness an uplift in prices and housing could indeed enjoy a measure of recovery; quite possibly in the first quarter of 2005.

In capital markets in the 1990s, traders began speaking of the 'dead cat bounce', a phenomenon where declining markets experience sudden temporary revivals before continuing their decline again. (The idea being that even a dead cat will bounce if you drop it from a great height.) Investors have burned their fingers badly, mistaking this temporary bounce for a real recovery. My limited understanding is that the core problem is that nervous traders often mistake movement for signs of life.

It will be interested to see what happens over the next few months. By the way the afterlife is so dreadfully managed, one hardly knows to whom to complain. Thank goodness for this forum!

Otto

:huh:

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While interest rates (and liberal lending) were the biggest factor in creating the house price boom, this does not mean that once the property becomes overvalued then holding or lowing the interest rates can either keep it rising or overvalued.

For example, if the BOE suddenly decided to slash the base rate to 3.0% overnight, then at this base rate a typical Capital Repayment mortgage on a typical average property (£170,000) would cost the buyer around £1005 a month in repayments. This represent over 70% of the takehome income of someone on an average income, and is effectivly still unaffordable.

Low interest rates help to overvalue the market, but once it is overvalued the movement in interest rates can only have the effect of either expediating the crash or prolonging the boom (and also affects extactly how many people will face financial hardship/ruin). It is no-longer a control as to whether the overpricing of property is indefinately sustainable at this stage of the market. Current price levels are now utterly unsustainable whatever happens to the base rate.

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'Fools' (Uriah Heep)

<Dedicated to Kirstie and her BTL friends>

I know this feeling inside

Has just made up my mind

I’m gonna take this chance

And do what’s in my heart

You always said that

You’d stand by me

And help me get along

So understand

I must do what’s in my heart

So I’ve read your words and

I’ve signed my name

But I can’t make up my mind

If you really care or you’re

Playing your games

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Regarding the impact of Rightmove's lastest figures, the general public are very fickle.

All it will take is for Nationwide to announce house prices are up 1.3% (or something) in August and eveyone will be running back to the estate agents to buy, buy, buy in September.

It's not over yet. There's still a way to go before the public fully accept that;

a)Prices are REALLY coming dow.

b)This isn't just STAGNATION but the start of a long term downward trend.

I wasn't in the country this time last year but didn't London have price falls during the 2nd half of 2003 ?

And didn't Rightmove also release their last set of figures early (start of August?) to coincide with the BoE rates decision ?

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At last some quantifiable figures for what a lot of people on this site have thought and discussed for some time - myself included as I have just done the STR thing I can start to feel it was the right move and stop feeling like a pariah around family, friends + work colleagues.

Anyway my concern now is that with various experts speculating that the MPC will not raise interest rates again (or max one last time in November) will the prices not just dip to an affordable level in terms of what are still very low interest rates? Or do people think that it is all based on sentiment and that once people see ' House Prices Falling' headlines the market should start to fall proper ?

Interested in peoples opinions.

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I agree with Capt. Mainwaring and Otto. No one in their right mind will sell up their only home unless absolutely desperate. I also agree that at this stage minor fluctuations in interest rates are irrelevant. It is all about sentiment and a feeling that the party's over. No party lasts indefinately and this one has exceeded expectations of all the experts (bulls and bears) including the BOE who were worried about the boom 2 years ago.

In my neck of the woods all the agents who will be drawn are sounding at least pessimistic, at best hopeful, not optimistic. All agree the summer slowdown came early. About 70% or more purpose built 1/2 bed. flats are available 'with vacant possession' or 'no chain'. Family homes have been marketed for 6 months in many cases with price drops. As the captain says, fewer buyers are now playing silly buggers. The penny has dropped. The only question is, how much will prices fall?

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Wiseman does however make an interesting point. The value of our current property could fall well below what we paid for it in 1998 - if where we were moving to suffered an equivalent fall then we'd still be quids in (massively) as the hard cash (extra mortgage) required to execute the trade up would be so much smaller (less stamp duty too!).

The "conventional wisdom" (sic) that price rises "are good for homeowners" and price falls are "bad for homeowners" is utter rubbish for the majority. The nominal value is largely irrelevant - all the really matters is the amount of money you owe and the relative value (price ratios between areas).

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