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right_freds_dead

5 Rock Solid Reasons Houses Will Crash Down

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1. prices have peaked beyond wages.

2. global warming worries/floods/record cold this winter.

3. iran, war and fuel.

4. bird flu.

5. IR has no room to drop much more.

i cant think of one reason that says they will rise - can you ?

and some less rock solid ones.

6. job worries.

7. maxed on MEW

8. rising taxes

9. turning sentiment.

10. rising inflation

Edited by right_freds_dead

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Just for fun:

1) Stock market crash - liquidity flees into bricks and mortar

2) Bird flu - decimates cheap labour pools in the far east

3) Iran annexed into 'Coalition of the Willing' empire - cheap fuel for the west

4) Globall warming - properties on hills skyrocket in value

5) IRs drop, currency collapses and improves our competitivty relative to far east.

(See Italian Lira for exapmle)

ABB

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4. bird flu.

Oh come on.

Some naughty chickens have an illicit fling with a blue tit, and regret it later.

Ergo, the price of a semi in Surbiton crashes by £20k.

Hmmmm

frugalista

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Devils Advocate here...

Dont forget the massive influx of immigrants. Last year 500k+.

All need to be housed somewhere - this implies that BTL's are a better bet than private homes.

I dont believe in a "crash" anymore.

I have become a "stag" - I see stagnation and a long, slow gradual decline.

A long slow decline in everything. Jobs, sterling, manufacturing...the lot over the next 10 years.

A long and protracted decline in "western" (and indeed global) economies is the way to go.

(A fall in sterling will increase inflation and mitigate any HPC anyway.)

But, again, a HPC is only a symptom its not the actual problem.

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1. prices have peaked beyond wages.

2. global warming worries/floods/record cold this winter.

3. iran, war and fuel.

4. bird flu.

5. IR has no room to drop much more.

i cant think of one reason that says they will rise - can you ?

and some less rock solid ones.

6. job worries.

7. maxed on MEW

8. rising taxes

9. turning sentiment.

10. rising inflation

there is no need to complicate this.

the reasons HPI took off is because, basically the time was ripe:

low unemployment

easy money (low IR)

we are entering the flip side of the business cycle:

higher unemployment

tighter lending (higher IR due to risk)

though nothing drastic, this climate alteration is sufficient to dispel the fantasy due to the compounding effects of the general feel good factor over the last few years (i.e compunded gearing, stupid l to v ratios and unrealistic borrowing)

it's that simple. this will be enough to correct the situation. it already is.

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Devils Advocate here...

Dont forget the massive influx of immigrants. Last year 500k+.

All need to be housed somewhere - this implies that BTL's are a better bet than private homes.

There is something everyone keeps forgeting about immigrants. Current immigrants IMO are not like Indians etc who came here in the 50s for life. They are next door Europeans who are just staying for a while for jobs-higher salaries. If infrastructure development slows down in UK plc, the polish construction worker will bugger off to Germany or his home with the first easy jet flight available. If UK currency gets over inflated, then its not anymore a big deal for him to get paid in pounds and convert his savings back to his home currency.

Could half of current immigrants abandon the ship with the first serious slowdown of the economy? Any thoughts?

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there is another reason and one that was posted in a thread recently.

People have moved up the housing ladder throughout the years due to inflation.

They take a loan against a small place.. inflation raises the cost of the home and also their wages which reduces the financial impact o the loan.

allowing them to borrow more with the equity to move up the ladder.

Now with low inflation (houses out of the equation) the impact of the loans will not diminish so the market can not rely on peoples increasing salaries and equity.

If inflation is to stay low then we will have to see house prices drop in relation to salaries against the long term average.

for example... you hare in your thirties, on average your salary has peeked.. you need to afford a home, but the mortgage against you current small property is only 5 years in and inflation has been low so the proportion of your salary the loan is taking is similar to what it was when you took it out.

So instead of a two bed starter being affordable against salary the market is going to have to allow for the fact that you will have no equity and still a large loan.

can you see where this is heading...?

As far as I can see low inflation means that the house price must drop..

Low inflation, leaves your loan lingering longer... :) kills the housing ladder...

if the average buyer has x amount avaliable.. and cannot rely on inflation.. then x has to relate to a long term property..

Low inflation should kill the housing ladder.

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Could half of current immigrants abandon the ship with the first serious slowdown of the economy? Any thoughts?

Did they all just ship last time / i.e. what were the immigration in/out of the UK in 1990 –1992?

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1. prices have peaked beyond wages.

2. global warming worries/floods/record cold this winter.

3. iran, war and fuel.

4. bird flu.

5. IR has no room to drop much more.

i cant think of one reason that says they will rise - can you ?

and some less rock solid ones.

6. job worries.

7. maxed on MEW

8. rising taxes

9. turning sentiment.

10. rising inflation

To me your less solid reasons look much more solid.

I am pretty sure there is not gonna be war with Iran, both sides have too much to lose.

Cold winter has no effect on house prices IMHO.

Bird flu is a joke. If not, several weeks of quarantine can stop it. After that everything rebounds.

IR has no room to drop more - maybe not in the UK, but capital markets are global, low euro and dollar yields can depress long pound yields, the BoE has only control over short rates. And the new FED chair is coming with a "helicopter" :o

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To me your less solid reasons look much more solid.

I am pretty sure there is not gonna be war with Iran, both sides have too much to lose.

Cold winter has no effect on house prices IMHO.

Bird flu is a joke. If not, several weeks of quarantine can stop it. After that everything rebounds.

IR has no room to drop more - maybe not in the UK, but capital markets are global, low euro and dollar yields can depress long pound yields, the BoE has only control over short rates. And the new FED chair is coming with a "helicopter" :o

I agree plus no1 of the first list. In practice interest rates unable to fall/inflation rising are the same thing...

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Okay, Fred. Given what you have posted, and if you truly believe this, then why in the heck are you buying a house?

the house was asking 140k in april 05.

i got an offer of 110k accepted.

is that a crash or what ?

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the house was asking 140k in april 05.

i got an offer of 110k accepted.

is that a crash or what ?

I've no idea. Get it revalued in 18 months time and I'll give you an answer. ;)

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There is something everyone keeps forgeting about immigrants. Current immigrants IMO are not like Indians etc who came here in the 50s for life. They are next door Europeans who are just staying for a while for jobs-higher salaries. If infrastructure development slows down in UK plc, the polish construction worker will bugger off to Germany or his home with the first easy jet flight available. If UK currency gets over inflated, then its not anymore a big deal for him to get paid in pounds and convert his savings back to his home currency.

Could half of current immigrants abandon the ship with the first serious slowdown of the economy? Any thoughts?

I think that's right. The "there will be loads of immigrants - they have to be housed" argument is just a load of rubbish in my view. There will only be a load of immigrants who can afford to push house prices up if the economy continues to do well. It doesn't look like it will. Immigrants aren't going to come over here just to join a dole queue.

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Guest Riser

You need to DEFINE crash... if you are going to talk about it

I though we had defined a crash as at least 1% falls per month, don't know why you would want to change 'revise' that.

Looking at previous crashes we saw a couple of 18 month long periods where inflation adjusted prices were falling at over 12% per year so I will stick with using that measure for this crash.

Nationwide HPI goes negative

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There is something everyone keeps forgeting about immigrants. Current immigrants IMO are not like Indians etc who came here in the 50s for life. They are next door Europeans who are just staying for a while for jobs-higher salaries. If infrastructure development slows down in UK plc, the polish construction worker will bugger off to Germany or his home with the first easy jet flight available. If UK currency gets over inflated, then its not anymore a big deal for him to get paid in pounds and convert his savings back to his home currency.

Could half of current immigrants abandon the ship with the first serious slowdown of the economy? Any thoughts?

IMO the German economy will pick up as ours tanks and we'll be back to the "Aufwiedersen Pet" days

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I think that's right. The "there will be loads of immigrants - they have to be housed" argument is just a load of rubbish in my view. There will only be a load of immigrants who can afford to push house prices up if the economy continues to do well. It doesn't look like it will. Immigrants aren't going to come over here just to join a dole queue.

Of course they will come if UK benefits are more than they can earn in the home country. Once in they're rarely sent home, even if their asylum application fails. They'll leave only if they can see an even more stupid country willing to bend over backwards to let them in.

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Low inflation should kill the housing ladder.

Totally agree. The UK 'housing ladder' is dead.

IMO the German economy will pick up as ours tanks and we'll be back to the "Aufwiedersen Pet" days

I'm not so sure, as the worlds greatest exporter I think the Germans are too heavily reliant on American consumer spending.

America will lead us all into a global recession when the consumer slowdown bites there as it has done here. Within 6- 12 months IMO or even as soon as Christmas.

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Of course they will come if UK benefits are more than they can earn in the home country. Once in they're rarely sent home, even if their asylum application fails. They'll leave only if they can see an even more stupid country willing to bend over backwards to let them in.

they can always stay and get the doll, although somehow I doubt the BTL yields be very secure with tenants on the doll. :lol:

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Oh come on.

Some naughty chickens have an illicit fling with a blue tit, and regret it later.

Ergo, the price of a semi in Surbiton crashes by £20k.

Hmmmm

frugalista

No in Surbiton we are looking at 50K. and I predict that if the pathogen mutates there will be a glut of fine squats with no traceable ownership. Whole gene pools will hit the dust, since strength of resistance to disease has a singificant hereditary element. And the current version is taking out (officially) 50% of victims. Likely closer to 15% since the stats don't include the poor untested masses. Die in a village you will probably just get buried. But it is still frightening. That is 9Million people in Britain. Of course we all think that modern medicine will work its wonders, but unfortunately (and why should we care? we never have before) the Chinese peasant are on strike!

(EDIT: and good on em too)

Edited by Elizabeth

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Guest pioneer31

To me your less solid reasons look much more solid.

I agree. 6 - 10 are the main things that will bring the house of cards down.

I think sentiment alone could finish it. It's as though the whole nation has been high on drugs, not noticing that HPI has been a big game aided and abetted by the media (and banks, EA's etc)

Now the game is up and bearish articles are swamping the headlines, nobody is bothered anymore to rush into a purchase. People know they can dither and stall and even 12 months later the price won't have risen.

Pity the rules of this evil game weren't made clear as it was happening. This whole sorry episode could have been avoided

Edited by pioneer31

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  • 301 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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