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The_Equalizer

Last Bear To Bull.

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As a HPC regular (although far more reading than writing) I have to admit that I’m starting to have my doubts. Not that there will be some kind of levelling out, a crash as seen before won’t happen. I’m just as fierce a bear as any on here, but against all logic the house market appears bullet proof. I’m beginning to believe only when sentiment changes after the public witness continued market problems will there be any change. Unfortunately for me I currently live in Northern Ireland where HPI is still running at 10%+. Two days ago I saw queues to buy flats in sub-zero temperatures:

Buyers queue for new flats

At least 30 people were braving the cold today to queue outside a Belfast estate agent for apartments that don't go on sale until tomorrow.

The flats, to be built in the Great Victoria Street area behind CastleCourt, won't be built until May 2007, but will be sold on a first-come, first-served basis from 9am tomorrow.

Desperate would-be buyers have been queuing outside the Halifax Estate Agents on the Ormeau Road since yesterday.

Barrister John Connolly (28) from West Belfast said he didn't mind having to queue. "Three days in the freezing cold will be worth it because this is the first phase, so the price can only go up between now and the last phase - it could mean I make £20,000 on my apartment and that is definitely worth waiting out for," he said. "I've been here since 2.30pm yesterday and I am feeling the cold but it has to be done."

And James Dougan (18) , a computer science student from Lisburn said: "It has been cold but I'm well wrapped up and the staff here have been great to us. They have been bringing us tea and toast in the morning and soup at night which has been lovely. I don't mind having to queue - it adds to the excitement."

The simple conclusion is that people will pay what it takes up to their absolute limit of affordability. Given more money (i.e. lent by the bank) they will continue to use this credit. Most of the FTB market has only lived in an era of easy credit, acceptance of high levels of debt and no understanding of basic economics. It’s well know that prices are sticky downwards and only when sales are forced then we see downward movement. In the current environment people will be able to stick it out probably at the cost of not saving/spending in other areas such as pensions, holidays etc. The overall effect is, as predicted, stagnation.

Comedy of it all was highlighted by the house next door to our rented place coming on the market at £235K. This is £930/month IO and we are renting for £600/month. Where’s the logic in that? Basically - logic plays little part.

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Ever thought those people queuing could be builders/EA employees?

Call me a cynic but some of the b0ll0x that is getting reported lately shows what lies and deception VI's will go to to convince people everything is 'OK'.

It's been a difficult few weeks, but at least Nationwide have said they expect falls untill mid-next year and then stagnation. (see thread about 5 days ago)

TB

Edited by teddyboy

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Guest Homer

I'm another one currently bemused by the Northern Ireland situation. People just don't earn enough here for the lifestyles they lead and the mortgages they are servicing. It has to end in tears. Banks don't help- my girlfriend is paying off a substantial debt, earns £18 K and was offered a mortgage of up to £130 K. Ridiculous.

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The_Equalizer

If you are blind to what will happen I suggest you remove yourself from

this site. As a 54 year oldie I have lived a bit. I have watched two recession

and subsequent house price crashes.

A government will create a boom so the population will feel rich and vote them

back in power. There is no propsperity in the UK what has been created is a large

public sector.

Remember the bigger the boom the bigger the bust.

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Guest Homer

When will people on this forum learn that comments concerning the Republic of Ireland have no relevance to the subject of Northern Ireland. They are 2 different countries. The UK. And the Republic of Ireland.

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Just speculation on my part but ....

It'll be all the IRA money looking for a safe home - (forgive the pun) - thats driving the market over there.

On the other hand it could be the massive amount of public sector jobs that there are in NI. Isn't it 1 in 3 are public employee's. Public sector jobs are as safe as houses - (sorry, another pun)

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Guest Charlie The Tramp

Just speculation on my part but ....

It'll be all the IRA money looking for a safe home - (forgive the pun) - thats driving the market over there.

Reminds me of an ex customer living in Highgate in 2000. Claimed all the big houses around her were being bought by the Russians, and commented, I hope they are not the Russian Mafia, as all I see is one concrete lorry after the other driving in, are they trying to build protective enclaves.

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Guest Charlie The Tramp

These last two posts show an embarrasingly high level of ignorance.

Yes, I thought her comments were humorous rather than ignorant. ;)

In its simplest form, money laundering is the process of disguising the source of money or other valuable assets. The use of offshore shell companies and complex transactions with difficult to follow audit trails are what most people would consider to be money laundering. However, in a small practice it more often is going to involve using your (or a solicitor’s) client account to introduce illegal cash and later reintegrate it into a legitimate business. It can include the purchase of property for cash and the later sale of the property, “loans” from abroad, and taking out single premium insurance policies, which are later surrendered.
<_<

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Homer, are investors from the Republic of Ireland / the 26 counties continuing to invest heavily in residential property in Ulster / Northern Ireland / the 6 counties?

'Public sector jobs are as safe as houses - (sorry, another pun)' - unless you're in the 'security services'.

By the way, I recall that I recently heard that N Ireland boasts the highest % of people of working age who are economically inactive (in the UK).

Edited by gruffydd

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Rumour has it there's all sorts of mischief going on with regards bent money. It's all part of the 'peace process' keeping that natives quiet. The smart area in Belfast known as the Lisburn Road/Malone Road looks more like Kensington that Belfast what with mega expensive cars parked everywhere.

I’m not blind to the situation. I’m from the South-East and, although only 16 in 1989 I clearly remember the news of repossessions, job losses and the like during the last housing crash. This is what puts it all in perspective, but Northern Ireland as well as many other parts of the UK have never witnessed this kind of market before. The banks and government having a huge interest in trying to get this to play out smoothly.

The point I’m making is there’s no short, sharp shock to clip the wings of this market. People will hang on for grim death once committed. The effect therefore is delay over the longer period.

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Guest Homer

gruffydd

I'm afraid I'm nowhere near clued in enough to gauge that. The major driving force behind rising prices in my view has been more couples buying together; TV programmes and plenty of "area X is the next big thing because so-and-so has already made £000's". Pretty much the same as the rest of the UK. Investors from the South are most likely a minor contributor- they have been doing well enough down there.

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I've just noticed that NI is displaying all the warning signs too. For example, the Belfast Telegraph recently reported the repossessions are on massively on the up, although unfortunately the article is now achieved.

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The_Equalizer

If you are blind to what will happen I suggest you remove yourself from

this site. As a 54 year oldie I have lived a bit. I have watched two recession

and subsequent house price crashes.

A government will create a boom so the population will feel rich and vote them

back in power. There is no propsperity in the UK what has been created is a large

public sector.

Remember the bigger the boom the bigger the bust.

Im 38 and I went through the last recession. Even those repossesed found a way to buy back in, so recessions are'nt as fearsome to most Brits as some would have us believe. So people dont worry, they get on and buy and live for now. Think of the tumultous 1970s, in the end most of us got richer and prospered long - term so no worries despite bearish events (OPEC, high unemploymnet, Irish terrorism, unions, nuclear threat, 1976 drought, intense competition from Japan, UK firms collapsing, wars).

Renting as I always say is no where near as appealing as owning with a Bank so even where rent is less than mortgage this is irrelevant to all but the most an@l.

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gruffydd

Investors from the South are most likely a minor contributor- they have been doing well enough down there.

A lot of EAs in the North quote prices in euros, property prices are still a lot cheaper in the north compared with the south, and there are a lot of euros going north since the IRA decommisioning.

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Remember

Its different this time. I have heard that before.

There were individuals who said that in 1976 then 1989.

Boom & bust is part of capitalism - its like tom & jerry.

They cannot go without each other.

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Guest consa

The Irish Independent reports that house prices are overvalued by between 15pc and 20pc and risk a sharp fall, while interest rates could rise as soon as next month, a leading economist said yesterday.

Economist with Davy Stockbrokers Rossa White added that house price inflation had picked up in the past few months, which may be attributable to the fact that more banks are offering 100pc mortgages.

But Mr White stressed that as many as 77,000 houses could be built this year in a move that would lessen the chances of a major crash in house prices.

Mr White was responding to reports that officials from the OECD and the Central Bank recently accepted that the Irish property market is overvalued by 15pc.

Central Bank officials, however, were reluctant to disclose such a figure in case it might destabilise the Irish property market.

Mr White said he did not disagree with the assessment that house prices were 15pc too dear.

He added that interest rates could rise by a quarter of a percentage point next month and by the same amount again early in the new year.

"This won't be enough to push consumers over the edge, but investors could be put off and may decide to cash in," he said.

The OECD concluded that there was a speculative element to Irish house prices, which suggested prices were 15pc overvalued.

At a meeting of senior officials from the Organisation for Economic Co-operation and Development and the Central Bank on the subject of the property market, Irish officials were informed of OECD research which suggests that Irish prices were 15pc overvalued.

The memorandum records senior Central Bank officials attending the meeting as agreeing this was consistent with their own judgment.

Only last month, the International Monetary Fund concluded that house prices were 20pc overvalued.

The IMF warned that a sudden fall in the housing market was a key danger for the economy.

House prices have risen faster in Ireland than any other developed economy, doubling in the past six years, the IMF said.

In a statement last night, the Central Bank said that although the the risk of a sudden fall in house prices has receded, the risk cannot be dismissed.

"If house price rises were to re-accelerate, this would increase the risk of a sharp correction of house prices in the future," the bank said.

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As a HPC regular (although far more reading than writing) I have to admit that I’m starting to have my doubts. Not that there will be some kind of levelling out, a crash as seen before won’t happen. I’m just as fierce a bear as any on here, but against all logic the house market appears bullet proof. I’m beginning to believe only when sentiment changes after the public witness continued market problems will there be any change. Unfortunately for me I currently live in Northern Ireland where HPI is still running at 10%+. Two days ago I saw queues to buy flats in sub-zero temperatures:

Buyers queue for new flats

At least 30 people were braving the cold today to queue outside a Belfast estate agent for apartments that don't go on sale until tomorrow.

The flats, to be built in the Great Victoria Street area behind CastleCourt, won't be built until May 2007, but will be sold on a first-come, first-served basis from 9am tomorrow.

Desperate would-be buyers have been queuing outside the Halifax Estate Agents on the Ormeau Road since yesterday.

Barrister John Connolly (28) from West Belfast said he didn't mind having to queue. "Three days in the freezing cold will be worth it because this is the first phase, so the price can only go up between now and the last phase - it could mean I make £20,000 on my apartment and that is definitely worth waiting out for," he said. "I've been here since 2.30pm yesterday and I am feeling the cold but it has to be done."

And James Dougan (18) , a computer science student from Lisburn said: "It has been cold but I'm well wrapped up and the staff here have been great to us. They have been bringing us tea and toast in the morning and soup at night which has been lovely. I don't mind having to queue - it adds to the excitement."

The simple conclusion is that people will pay what it takes up to their absolute limit of affordability. Given more money (i.e. lent by the bank) they will continue to use this credit. Most of the FTB market has only lived in an era of easy credit, acceptance of high levels of debt and no understanding of basic economics. It’s well know that prices are sticky downwards and only when sales are forced then we see downward movement. In the current environment people will be able to stick it out probably at the cost of not saving/spending in other areas such as pensions, holidays etc. The overall effect is, as predicted, stagnation.

Comedy of it all was highlighted by the house next door to our rented place coming on the market at £235K. This is £930/month IO and we are renting for £600/month. Where’s the logic in that? Basically - logic plays little part.

What exactly do you mean by "but against all logic the house market appears bullet proof"? We are just at the start of the runway on this one. There are loads of potential troubles stored up in the economy right now. The fact that growth has fluctuated between positive and negative values recently before the real problems kick in is actually a surprise to me; I'd have thought it would have taken longer for things to start looking bad. Go and read some economic reviews. They are full of real lists of real problems which could well cause a crash. (It's not certain, nothing ever is). But I think the current economic outlook as presented by the serious economists and commentators is much, much gloomier than in recent years. None of them are claiming to be able to see into the future and saying that anything is definite, but a lot of them are warning that there could well be a crash, and if not, then at the very least the party is over.

The problem with the party being over is that in itself that could be enough to precipitate a crash, because people are so herd-like, and they might interpret a stagnant market as one which is not worth buying into, because it means their house is not an automatic cash machine.

I really don't get why the sort of posts like the one above have been appearing recently. It is almost as if people are expecting some sudden price plunge, and because it hasn't happened, then they buy into the equally stupid unspoken assumption of the bulls that because we've seen a little rise here or there, then we're back to the days of prices roaring up at 20% a year. I don't think any serious commentator is suggesting that. So why all the glee from the bulls? If we have really got a soft landing, then so what? That still means an end to people making money out of nothing. OK, so the people who managed that stunt already will get away with it, but so what?If prices creep up in line with wages, it means that prices are affordable (otherwise they'd fall), but at the same time it means that they are staying affordable.

My personal opinion is that they are in fact not affordable, and that they will fall, when the economic pain that has been stored up by public sector spending to smooth over the trouble now causes worse trouble later. But that's just my humble opinion. Never mind that. Focus on the fact that there are lots of real economists who know what they are talking about that are not predicting anything better than stagnation for a good many years.

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I’m still a complete bear, but witnessing people queue in the freezing cold to buy flats that haven’t even been built shows where we are presently at. I just wanted to stop the car and slap them all round the chops. Go home, stop building up this bubble and save yourself all thousands of pounds. You’re not the one making the money out of this, it’s the banks, estate agents and developers. There’s no shortage of land, housing, influx of people or any other of the ‘factors’ that are exercised as reasons for this – at least not in the majority of the UK.

It will unwind some how, but not instantly nor perhaps in the way we would all hope. We live in very strange times. On one hand Joe Public is rejoicing at unbelievably cheap consumer goods, clothes, food, holidays, but don’t apply this to housing. They believe that it’s a one-way ticket to magic wealth and for a lucky few it is. The rest just pay through the nose and the consequences will only be really seen at a much later date.

Without trying to sounding sycophantic, it’s poster on here that keep me sane. It would be nice to understand in greater depth posts from Dr. Bubb though. Perhaps a serious bit of reading is in order.

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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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