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Vagabond

Another Turncoat

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As per the thread title really. I was updating my story in t'other thread here. but although I was viewing a fair few properties, there was nothing that seemed to tick enough boxes to even bother updating with, let alone offering on!

It was a fairly sobering experience actually viewing properties. I had rather naively thought that as a cash buyer being ready to move the house-buying world would have been my oyster and I would have been beating desperate sellers off with a sh*tty stick. Whilst that may have been the case for the previous few years it turns out that timing really is everything. Living in the SW means prices hadn't fallen as much as elsewhere in the country and you didn't get as much for your money either.

Still. After moderating my expectations somewhat and filtering out the dross (of which there was a great deal), I managed to find another place I was happy to offer on. I had to compromise. There is no parking which is a chore, although there are a couple of car parks within 5 mins walk and the house is on a fairly busy road, but that then means I get to tick other boxes which I find more important. There are 3 double bedrooms (and I mean real double, not new build double), the bathroom is huge and the back garden is a decent size. Overall, its got about 1.5 times the size of other properties the same size and as I'm looking for a home for the long haul, I'd prefer something I wont grow out of.

The price was just below the price paid in 2006 and it had had a fair bit of work done to it since then. Not great but not terrible either. I'm also at the bottom of a chain so there is still a fair amount of scope for things to fall through. Hopefully not.

Do I think house prices will go up or down from here? Even though I've bought, I'd still like to see them drop through the floor and I assume this will be the case the very day after I exchange contracts (you're all welcome :) ). I'd like to see housing cheap for all and given the fact that if I do move, it will be to a bigger house I'm well aware that any drops in my house price will be reciprocated with houses further up the chain.

Sadly, I don't believe this will happen. I'm currently of the mind that the government have, and will continue to, throw so much at keeping houses from falling if they do crash it will be because the financial system has also gone and the last thing you'll worry about is house prices.

Shall answer and update as and when..

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Do I think house prices will go up or down from here? Even though I've bought, I'd still like to see them drop through the floor and I assume this will be the case the very day after I exchange contracts (you're all welcome :) ). I'd like to see housing cheap for all and given the fact that if I do move, it will be to a bigger house I'm well aware that any drops in my house price will be reciprocated with houses further up the chain.

Sadly, I don't believe this will happen. I'm currently of the mind that the government have, and will continue to, throw so much at keeping houses from falling if they do crash it will be because the financial system has also gone and the last thing you'll worry about is house prices.

Can I just ask. Have you ever looked at other historical financial crashes around the world? No asset has ever exceeded fair-value over the long term. You think house/land prices didn't bubble in the roman empire? or in the 1800s? or even the 1980s? And they always crashed. The government cannot manipulate an asset price forever. They can try all they like. And they are trying very hard at the moment.

Help to Buy. Government guaranteed mortgages. You must realize that when the government steps in as it is doing now it is a move of desperation and suggests that their power to manipulate the market is crumbling.

Historically low interest rates. A massive UK budget deficit that they have have been completely unable to reduce. EU in a mess. America on the verge of bankruptcy. And you are buying now?

If you are buying a home, and don't plan on selling for the next 20 years then great. Price in that circumstance is not as important. And I wish you the best of luck. :)

But if you can hold off for as long as possible I feel you will be in a far better position. Even 6 months at the moment could make all the difference.

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Can I just ask. Have you ever looked at other historical financial crashes around the world? No asset has ever exceeded fair-value over the long term. You think house/land prices didn't bubble in the roman empire? or in the 1800s? or even the 1980s? And they always crashed.

Would be interested to know how fair value is defined.... also have you any graphs demonstrating this for previous bubbles (whether it be south seas, tulips, or houses!)

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Would be interested to know how fair value is defined.... also have you any graphs demonstrating this for previous bubbles (whether it be south seas, tulips, or houses!)

Ok. I will stick with housing.

Japan at the beginning of the 1990s. One of the worst I have ever read about.

Same thing happened in the UK in the early 1990s. I won't post a chart for the UK.

japan-house-prices--nov08.gif

USA, Spain and Ireland mid 2000s

House-prices-2012-0528.jpg

The South Sea share price wasn't really propped up by the government. More speculation and the flow of investment from land into the financial city of London at the time.

the-south-sea-bubble.jpg

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Can I just ask. Have you ever looked at other historical financial crashes around the world? No asset has ever exceeded fair-value over the long term. You think house/land prices didn't bubble in the roman empire? or in the 1800s? or even the 1980s? And they always crashed. The government cannot manipulate an asset price forever. They can try all they like. And they are trying very hard at the moment.

Help to Buy. Government guaranteed mortgages. You must realize that when the government steps in as it is doing now it is a move of desperation and suggests that their power to manipulate the market is crumbling.

Historically low interest rates. A massive UK budget deficit that they have have been completely unable to reduce. EU in a mess. America on the verge of bankruptcy. And you are buying now?

If you are buying a home, and don't plan on selling for the next 20 years then great. Price in that circumstance is not as important. And I wish you the best of luck. :)

But if you can hold off for as long as possible I feel you will be in a far better position. Even 6 months at the moment could make all the difference.

I don't think prices will sky rocket from here. I just think they will flatten and bounce along for the next 10-20 years whilst inflation nibbles away at them until they get to fair value. I'm also looking at it from the PoV that house prices already crashed by anywhere up to 50% for anyone not in GBP which I would consider to be a fair crash already.

However, I was never really looking at a house as an investment or a pension. Having been working abroad, my time to buy was always likely to be when I came back regardless of where we were in the cycle and who ends up being right or wrong. As you say, is not that important anymore as I have a home I can grow into.

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