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Newsnight Now - House Prices


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I noticed that. "house prices will go up 4%, great news" followed by "Rail fares up 4%, what a disaster".

I just translated that to "I want assets I own to be expensive, anything else should be cheap".

There is no understanding of the big picture, where high house prices simply generate interest income for the banks. We wont get our house price crash until interest rates go up and banks repossess or there is a mass building program (better).

I listened to that and wondered if I'd been transported into a world of the truly insane! The reports followed back to back FFS! "HPI awesome, oh no, rail fares up, terrible"! They even discussed rail fares squeezing disposable income being bad for wider economy etc, but simply ignored all this on the issue of rising house prices. The bias was so strong it was beyond parody.

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There was a double bubble here, caused by everyone thinking that they would become rich from buying property. This caused almost everyone to buy an investment property, so lots of (substandard) investment property was built.

Could have been stopped easily by the government of the banks restricting lending like they are now.

Same issue in London, the banks could restrict lending to 3.5x joint income max - that would stop unsustainable price rises but instead they choose to loan out more money based on the rising values.

For example: (London)

2005 = 1 bed flat costs £150,000 bank lends £120,000 80% LTV

2013 = 1 bed flat costs £300,000 bank lends £240,000 80% LTV

Loan to value remains the same, but they are lending more money based on the previous price rises. The banks can see this is unsustainable as they know how much wage inflation is.

The banks will not stop silly lending of 10x salary at 2% interest rates because the tax payer will bail them out.

The consumbers will not stop silly borrowing because the consequences have been taken away.

IMO that's why this sorry mess is repeating in the UK now - no consequences.

Sales volumes say no.

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In Northern Ireland we also had a bubble on a bubble. ROI investors were buying up everything in sight using the equity they thought they had in their residential properties.

In late 2006 I was offered a house at 200K from a distressed seller who wanted a cash sale. The house was worth nowhere near that but it was soon snapped up by someone else. It was flipped for 325K 6 months later just as the lights went out on the NI market. That unfortunate buyer will be eating negative equity for many years.

The more bubblicious your bubble becomes on the mainland the faster the pop. At present it is being led by greed and panic to buy just wait till its led by fear and panic to sell. It's not pretty.

Can`t wait :P it will be poetry in motion as far as I am concerned.

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I'm not usually up at that time, but saw it last night.......I usually start the day at 6 with the Today programme. Paxman is becoming more and more of a disinterested caricature. I doubt he would last 5 minutes starting out now, but he is an Institution.

Edited by crashmonitor
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So if we're going to get a bubble within a bubble, when the new H2B sponsored bubble bursts, we will be left with the original bubble peak prices of 2007.

Ive just seen an old dears flat near mine in a block of 6. Previous 2 sold in same block in 2007 for £160,000, hers is now up for £195,000 and thats before the unrestricted H2B comes in next jan.

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+1

Most of the reports that I've seen regarding HPI over the last few days have pointed out that the bubble is re-inflating.

There has also been talk of dropping H2B part two on existing properties. I want it to go ahead so that the HPC can be sooner rather than later.

I share your sentiment but as some have pointed out on here, all that may happen is that when prices do crash again they will only crash to the 2013 prices we have today, so no gain - not the 2003 levels that they should be and we all want.

Edited by Spoony
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Just a quick updtae on setiment im seeing amongst my friends who are approaching thier mid to late twenties....

Can see that realistically have little or no chance to buy so are either renting or staying at home and opting to spead their disposable income on holidays to Ibiza or Friday and Saturday nights on the lash. Not even too worried if they can never buy with one in particular inisiting that buying is very british and he's happy to take the continental approach

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Just a quick updtae on setiment im seeing amongst my friends who are approaching thier mid to late twenties....

Can see that realistically have little or no chance to buy so are either renting or staying at home and opting to spead their disposable income on holidays to Ibiza or Friday and Saturday nights on the lash. Not even too worried if they can never buy with one in particular inisiting that buying is very british and he's happy to take the continental approach

I concur with that 100%......the young I know in that age bracket are not in the slightest bit interest in buying...... more interested in going out meeting different people, doing new and different things than buying something that is not worth buying, they have better things to do and places to see lots of opportunities outthere for the taking....good luck to them....life is too short to tie yourself down for ~25 years. ;)

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If we are indeed in the "back to normal" phase, wont all these schemes (help2buy) and what have you delay the "crash"?

Of course they will influence the duration of the "back to normal" phase and they are. I still expect house prices to fall by 30% or 40% (nominal) by the end of the decade though. Exactly when depends on the level of tinkering, but fall they will.

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  • 441 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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