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cashinmattress

This Website Is Doom Laden And Gets It Wrong

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Hardly any financial subject excites as much furious debate as property prices. Last Sunday we reported the startling results of a reader survey in which two-thirds of more than 1,000 respondents said they were using buy-to-let property to fund their pension.

Immediately, many of you turned to the internet to voice your opinions. By Friday, more than 700 comments had been posted on our online pages on the subject of buying-to-let and the wider property market.

A minority of comments agreed with the landlords we featured. They spoke of profits they had made through property and cited growing tenant demand and low interest rates as reasons for the boom to continue.

But most were critical. At best, landlords and those who aspired to become one were ‘delusional’, ‘playing with fire’, ‘far too optimistic’ and ‘indulging in pure speculation’. They were also accused of ‘hype’ and of ‘property ramping’.

Buying-to-let was a ‘con’ and people were urged ‘not to take the bait’.

Landlords were also ‘greedy’, ‘parasites’ and blamed for pushing prices beyond the reach of ordinary buyers. They were ‘sponging off a whole younger generation’, someone posted.

In terms of the wider market, the majority took a negative view. Many said property was a ‘house of cards’ and there were repeated warnings of bubbles, imminent crashes, corrections and ‘disasters waiting to happen’.

Doom-laden forecasts have been a persistent feature of all commentary on housing for as long as I can remember.

Someone has predicted a huge housing crash at every step of the market’s primarily upward journey.

Websites such as Housepricecrash exist to discuss little else than when the fall will come and how big it will be.

So far they have been wrong. Prices have stagnated, and fallen even quite sharply in some parts, but they have not crashed. For whatever reason or reasons, the property apocalypse that pessimists predicted (or hoped for) hasn’t materialised.

And right now, of all periods since the banking crisis began to unfold in August 2007, there seems less solid ground than ever on which to argue that prices will fall. Virtually all data has turned positive – in some cases dramatically.

Elsewhere today, we report on the ‘wall’ of foreign money that keeps London’s prime property prices in the stratosphere. But the property market is strengthening at grassroots level, too.

On Monday Hometrack said prices nationally had risen by 0.4 per cent in May, the highest single month’s growth since May 2007. The average time a property took to sell dropped to under nine weeks, the lowest since July 2010.

The percentage of initial asking prices achieved – at 94 per cent – is the highest in three years.

On Thursday, Nationwide – Britain’s biggest building society –reported its figures for May, which based on its own lending and valuations showed a 0.4 per cent increase, making the average home 1.1 per cent more valuable than a year ago.

That may seem modest, but it reflects the fastest pace of growth since November 2011, Nationwide said. Rival Halifax, in its latest report, said there was average national price growth of 1.1 per cent for April, again part of a climbing trend.

Figures from the Land Registry, also published on Thursday, added to the list of authoritative data highlighting a trend of recovery and growth.

As many readers point out, rising house prices are not necessarily a cause for cheer. They make it difficult for future generations to participate in a form of wealth from which their elders have benefited handsomely – perhaps unfairly.

Nor are rising prices such good news for the economy as they require buyers to save more towards hefty deposits and huge mortgages, rather than to spend.

But welcome news or not, it is difficult to conclude that house prices will do anything in the near future but continue to rise.

Shot over the bow to the mods.

Anyway, this dude has a bias judging by his body of published work...

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wrong?

and yet he writes this in the article:

"So far they have been wrong. Prices have stagnated, and fallen even quite sharply in some parts, "

He then immediately moves on to the "wall of money" (I first heard that phrase in 2002) in London.

Take a look on Google earth...London is a very small part of the UK.

yet if you read further into the article, he talks of future generations and their coming problems, and then for the economy in general.

A pretty neutral piece easily read to satisfy whichever view you wish to take.

Edited by Bloo Loo

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The problem is this. Pretty much everyone who has invested in property in the last 50 years has filled their boots. I've never "got into BTL", but I've bought houses, lived in them, then not sold them when I moved - and these have been spectacular investments, outstripping anything else I have invested in. Even if the property market dropped 50%, they would still be spectacular investments. So the track record is good.

Set against that, you have the problem that an asset (whatever it is) cannot levitate indefinitely. Eventually it will reach a ceiling. However, our political parties (pretty much all of them) are determined to continue the levitation in UK currency terms - property has already dropped considerably against global currencies. Once the asset does reach a ceiling, then if it is truly speculative, it will reverse quickly (tulip bulbs....). Houses aren't that speculative - there is an established model for getting an income from them, and a decent house in a decent area will always have value.

At the high end, I see foreign money driving prices, and continuing to drive prices. I know someone who has paid 10x the going rate for 7 acres of pasture in the last 6 months - foreign money, really doesn't care.

In the middle ground, decent houses will continue to be desirable in local currency terms. There are a bucket load of people who really, really will put everything on the line to live in a better house. This is a powerful support.

At the low end, I see a reversal, as people realise that paying £300K for a grotty flat is bonkers and refuse to do so. This is where the BTL mob are going to burn.

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So far they have been wrong. Prices have stagnated, and fallen even quite sharply in some parts, but they have not crashed. For whatever reason or reasons, the property apocalypse that pessimists predicted (or hoped for) hasn’t materialised.

He may be right...so far.

We're told that all bubbles burst. Will London prove to be the exception? :huh:

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If two thirds of their respondents are into BTL, then either their sample was seriously flawed or the dam is going to burst very soon. Nice to think you've just read an article written by the modern day Shoeshine Boy.

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As I said in the other thread on the same subject...

http://www.housepricecrash.co.uk/forum/index.php?showtopic=190822&view=findpost&p=909333253

I've never expected a crash, rather a steady decline of house prices until they are down to 50% of their peak bubble price and I am optimistic that this much needed correction will be complete by the end of this decade.

As for a property apocalypse, it will only be such for those who sought to feather their nests by ploughing more and more borrowed money into the biggest bubble in living memory.

Edit, to say that the level of ramping appears to be inversely proportional to the confidence of the indebted that their decision to invest in buy to let was sound.

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In the middle ground, decent houses will continue to be desirable in local currency terms. There are a bucket load of people who really, really will put everything on the line to live in a better house. This is a powerful support.

This is very true and this group are the most dangerous in an environment of loose money. They will ignore any rational criteria and just max out on debt.

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Someone in Belfast will be choking on their cornflakes.

It's true that prices have not crashed Nationwide, but while they remain significantly overvalued in relation to wages it would be foolish to think there is no danger of further decline.

The question for the bulls is always: "If the market is so fundamentally sound, why are so few people buying?"

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The author of this article seems to forget we have had a crash of between 25%-33% real depending on which survey you choose. He is a typical crash denier.

When I joined HPC the consensus was for for a real 30%-40% correction, so pretty damn close. No doubt he would have been predicting 50% gains by now at that time.

edit. It just beggars belief when the bulls who got it so wrong can still pretend that they called it right. Being in the minority will never earn you any credit, even if you call it spot on.

Edited by crashmonitor

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Guest eight

At the high end, I see foreign money driving prices, and continuing to drive prices. I know someone who has paid 10x the going rate for 7 acres of pasture in the last 6 months - foreign money, really doesn't care.

Is the problem then that we really don't have much else to export except the family silver? So in return for (mostly) energy we give foreign nations our rapidly devaluing toilet paper which is then burning a hole in their pocket to be turned into something - anything - tangible?

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The question for the bulls is always: "If the market is so fundamentally sound, why are so few people buying?"

Add to that: "If the market is fundamentally sound, why does it need so many props?"

Which of course begs the question: "What do you think will happen when those props are removed?"

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In Edinburgh FTB flats have generally fallen about 35% NOMINAL from peak and over 50% real from peak.

And Edinburgh is not exactly a backwater location with no money or jobs around. Its one of the most affluent areas in the whole country.

This bloke is looking at a very small sample and extrapolating that to cover an entire country.

For that simple reason - i think this man is not very bright.

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I was staying at a hotel in Wiltshire recently where an "investment seminar" was taking place.

I won't describe the people attending as to categorize them might be unfair. However, they had all paid to be there to learn more about "No Money Down Property Investment".

Some believe the market will always rise, or are being sold that promise, easily.

A fool and his money

Edited by LiveinHope

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At the high end, I see foreign money driving prices, and continuing to drive prices. I know someone who has paid 10x the going rate for 7 acres of pasture in the last 6 months - foreign money, really doesn't care.

In the middle ground, decent houses will continue to be desirable in local currency terms. There are a bucket load of people who really, really will put everything on the line to live in a better house. This is a powerful support.

At the low end, I see a reversal, as people realise that paying £300K for a grotty flat is bonkers and refuse to do so. This is where the BTL mob are going to burn.

I agree with you on the high end, unfortunately, it is the middle ground that will get burn. The lower end (those sub £100k BTL) will get the state money and to cater for the luck runs out middle-class. As with everywhere in the UK society - the middle is the one that will get burned.

So, the £1m plus probably will be ok, the under £100k might be ok, it is the somewhere in between that will get burned.

Again, nothing last forever and policy changes eventually. It is now not so much about economic but about politics.

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Trouble is there isn't consensus about what will happen on here.

Some expect a big crash others a slow decline.

The problem is no one knows what will happen, my feeling is that it will be stagnation / slow decline as this makes managing the banking crisis easier although there is no guarantee they will manage that. The UK economy clearly has been built around the property market and any large correction is going to make the country "poorer" no politician is going to want to allow that to happen.

If anyone on here knew what was going to happen they'd be very rich indeed.

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Guest eight

If anyone on here knew what was going to happen they'd be very rich indeed.

Only if they had the capital to, ahem, capitalise.

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This website is Doom Laden with good cause and gets it right:

homepage.png

+1

Meanwhile Dyson and his ilk have spent the last five years promising their readers that prices will be 25% higher by 2015 etc.

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Trouble is there isn't consensus about what will happen on here.

Some expect a big crash others a slow decline.

The problem is no one knows what will happen, my feeling is that it will be stagnation / slow decline as this makes managing the banking crisis easier although there is no guarantee they will manage that. The UK economy clearly has been built around the property market and any large correction is going to make the country "poorer" no politician is going to want to allow that to happen.

If anyone on here knew what was going to happen they'd be very rich indeed.

The only way the economy is going to flourish in property is if they start building more...much more.

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Ermm... loose lending caused the asset bubble, housing crisis and financial crisis. What part of that did this site get wrong?

He mentions the financial crisis yet seems incapable of associating that with over valued property.

This site predicted fall out from an unsustainable bubble caused by loose lending & irresponsible borrowing so predicted a financial crisis of some form if not precisely the form we have seen. Did he see the financial crisis coming? He still doesn't seem to associate unaffordable housing with the financial crisis. I suggest he reads more on this site, he might learn something.

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There is no such thing as bad publicity, as they say.

Hopefully some of his readers might visit here and broaden their horizons a little, maybe understand that the UK housing market is massively over valued and that there will be a correction.

Edited by 98% Chimp

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  • 242 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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