Jump to content
House Price Crash Forum
Sign in to follow this  
Grommit

The Economics On The Normal People On The Street

Recommended Posts

From reading this forum for several months, it is clear that many of the posters are young and have never gone through the pain of a housing crash. It is not clever for any of the victims, so at this point in time, it is essential not to become one. At nearly 50, I have experienced the crash myself (fortunately positively for me, a £240k flat in spring 1989 for £185k, exchanged in a week which then went down to £160k) but another friend with a BTL took 10 years to turn it around. This I fear is about to happen again, there will be winners and victims.

On my holidays, I like to read business books for you always pick up ideas to use in your own business. I recall a bit about Warren Buffet, the world's best trader ever, who occasionally goes to the shops with his wife to "see what is really going on". This is the best advice ever, to get out of the office and go take a look for yourself. This is where the real truth and opportunity lies.

What do I see round here?

* Property not even getting close to asking prices

* Property on the market for ages

* Friends with BTL flats being empty

* High street dead

* Great reduction in new car sales

* All the staff tell me they are not spending anything

* Next doors late 20's kids still at home but both have good jobs

* Our mate, the local EA fearing it will get nasty

* A builder friend going to give up after Christmas

* Family members with debt issues

I could probably go on, I am sure you can add to this list. I can't see too many "street" positives at the moment however. My point is that the truth is on the street, not on the latest house price survey. With these street "facts", how can it be possible for people to commit more to investment in housing? For several years now I try my best to make "my own guesses" at what will happen to the economy and market and structure accordingly. It is amazing that if you do this and act accordingly how far you will be ahead in terms of your thinking. Actions have to be taken before the trends become evident.

I would have liked to come to the pub event this evening in London, I'm sure it will be interesting. Would like to hear from you all your "street information" tomorrow.

(Finally for now, clearing some papers in my office over the weekend and found a file of press cuttings from January 1989. It is remarkable how similar the VI language is to today. We are in grave danger of history repeating itself. Depending on how you see it, for you FTB out there this is either a great opportunity or a great threat. I've seen both sides.)

Share this post


Link to post
Share on other sites

I recall a bit about Warren Buffet, the world's best trader ever, who occasionally goes to the shops with his wife to "see what is really going on". This is the best advice ever, to get out of the office and go take a look for yourself. This is where the real truth and opportunity lies.

I'd call Warren Buffett an investor, and we all know Dr Bubb is the best trader ever.

Anyway, if you look at recent UK economic history, you will see that recessions follow the peak in the housing market, the lag is usually about 2 years.

So from a peak in mid 2004, we should be in recession (2 negative quarters) by the middle of next year. Evidence on the ground would currently support this view.

The recessions are usually followed by a Sterling crisis, as the goverment tries to borrow it's way out of trouble and investor's lose faith in the country.

I'm expecting this within a couple of years, along with the sudden doubling of interest rates needed to protect the currency.

You don't want to be owning houses...

Edited by BandWagon

Share this post


Link to post
Share on other sites

My point is that the truth is on the street, not on the latest house price survey.

Eventually the truth hits home and no amount of chrome can cover the rust eating at the engine of the vehicle that is the economy.

But that is classic herd mentality. Eventually people wake up to the truth that all is not well and they take steps to protect themselves.

House prices could crash 80% and interest rates could skyrocket to 18% whilst the stockmarket plummets to 50% of what is today. Scary? Not to anyone who is not in debt.

Share this post


Link to post
Share on other sites

House prices could crash 80% and interest rates could skyrocket to 18% whilst the stockmarket plummets to 50% of what is today. Scary? Not to anyone who is not in debt.

Sounds very nice.

Share this post


Link to post
Share on other sites

House prices could crash 80% and interest rates could skyrocket to 18% whilst the stockmarket plummets to 50% of what is today. Scary? Not to anyone who is not in debt.

It is only those who have borried over the last few years in excess that will be hurt significantly. The government needs to think about this when it constantly tries to please home owners. Most homeowners have been in the market for decades and have small mortgages...unless they've MEWed, alot of people are sensible.

One of my close friends is a carpenter. He bought an ex-council house for 86k in 2000, now supposedly worth 200k. I disputed that, he said "I don't really care, I've only got twenty grand left on the mortgage). Rather than go on holiday, or buy flash cars, he's put as much as possible into paying off his debts. It is these kinds of people the Government should be thinking about, not the morons who borrow up to their eyeballs . People just need to wake up and realise that a crash of 50% would benefit all but those who are looking to trade down or who FTB'd in the last three years.

Share this post


Link to post
Share on other sites

From reading this forum for several months, it is clear that many of the posters are young and have never gone through the pain of a housing crash. It is not clever for any of the victims, so at this point in time, it is essential not to become one. At nearly 50, I have experienced the crash myself (fortunately positively for me, a £240k flat in spring 1989 for £185k, exchanged in a week which then went down to £160k) but another friend with a BTL took 10 years to turn it around. This I fear is about to happen again, there will be winners and victims.

On my holidays, I like to read business books for you always pick up ideas to use in your own business. I recall a bit about Warren Buffet, the world's best trader ever, who occasionally goes to the shops with his wife to "see what is really going on". This is the best advice ever, to get out of the office and go take a look for yourself. This is where the real truth and opportunity lies.

What do I see round here?

* Property not even getting close to asking prices

* Property on the market for ages

* Friends with BTL flats being empty

* High street dead

* Great reduction in new car sales

* All the staff tell me they are not spending anything

* Next doors late 20's kids still at home but both have good jobs

* Our mate, the local EA fearing it will get nasty

* A builder friend going to give up after Christmas

* Family members with debt issues

I could probably go on, I am sure you can add to this list. I can't see too many "street" positives at the moment however. My point is that the truth is on the street, not on the latest house price survey. With these street "facts", how can it be possible for people to commit more to investment in housing? For several years now I try my best to make "my own guesses" at what will happen to the economy and market and structure accordingly. It is amazing that if you do this and act accordingly how far you will be ahead in terms of your thinking. Actions have to be taken before the trends become evident.

I would have liked to come to the pub event this evening in London, I'm sure it will be interesting. Would like to hear from you all your "street information" tomorrow.

(Finally for now, clearing some papers in my office over the weekend and found a file of press cuttings from January 1989. It is remarkable how similar the VI language is to today. We are in grave danger of history repeating itself. Depending on how you see it, for you FTB out there this is either a great opportunity or a great threat. I've seen both sides.)

Grommit, what a huge coincidence you were clearing your office and found some 1989 press clippings (as you do...). Perhaps you would like to to scan them and post them to the site. Otherwise you come across as a b+@llsh*7ter and no one will read your posts

:)

Share this post


Link to post
Share on other sites

Grommit

As an oldie 54 years old retired lecturer working as a consultant for a large region

regeneration body I have lived through two governments who have messed up the

country. Labour did it in the 70s with the growth of the public sector and devaluing the

pound. Next came all the tories they gave away cheap money again a credit boom and

then came the bust. Now the problem is we have a synthetic boom all created by cheap

credit which has allowed GB to expand the public sector at a dangerous rate. Do forgot

the theft of the pensions tax credit which has helped fund this.

Most folks are blind all that comes to their pathetic minds is my house is worth XXXX.

Remember this time its different - yes it is with 1.2 trillion of household debt.

The bigger the boom the bigger the bust - Wait and see.

Share this post


Link to post
Share on other sites

Unfortunately, you're both right. I've been a Labour supporter all my life, but the I can't agree with the current government policies. Looks like we're going to have a Tory government next.

Share this post


Link to post
Share on other sites

Sounds very nice.

As long as you havent got any money in the bank either.... look what happened in Argentina.

What people fail to realize is that the econom is an interelationship betwwen the whole of this society we are all inextricably linked into it via our jobs and are need for warmth and shelter and food

Edited by homeowner

Share this post


Link to post
Share on other sites

Unfortunately, you're both right. I've been a Labour supporter all my life, but the I can't agree with the current government policies. Looks like we're going to have a Tory government next.

Yep, Labour will pass the buck!

Share this post


Link to post
Share on other sites

From reading this forum for several months, it is clear that many of the posters are young and have never gone through the pain of a housing crash. It is not clever for any of the victims, so at this point in time, it is essential not to become one. At nearly 50, I have experienced the crash myself (fortunately positively for me, a £240k flat in spring 1989 for £185k, exchanged in a week which then went down to £160k) but another friend with a BTL took 10 years to turn it around. This I fear is about to happen again, there will be winners and victims.

On my holidays, I like to read business books for you always pick up ideas to use in your own business. I recall a bit about Warren Buffet, the world's best trader ever, who occasionally goes to the shops with his wife to "see what is really going on". This is the best advice ever, to get out of the office and go take a look for yourself. This is where the real truth and opportunity lies.

What do I see round here?

* Property not even getting close to asking prices

* Property on the market for ages

* Friends with BTL flats being empty

* High street dead

* Great reduction in new car sales

* All the staff tell me they are not spending anything

* Next doors late 20's kids still at home but both have good jobs

* Our mate, the local EA fearing it will get nasty

* A builder friend going to give up after Christmas

* Family members with debt issues

I could probably go on, I am sure you can add to this list. I can't see too many "street" positives at the moment however. My point is that the truth is on the street, not on the latest house price survey. With these street "facts", how can it be possible for people to commit more to investment in housing? For several years now I try my best to make "my own guesses" at what will happen to the economy and market and structure accordingly. It is amazing that if you do this and act accordingly how far you will be ahead in terms of your thinking. Actions have to be taken before the trends become evident.

I would have liked to come to the pub event this evening in London, I'm sure it will be interesting. Would like to hear from you all your "street information" tomorrow.

(Finally for now, clearing some papers in my office over the weekend and found a file of press cuttings from January 1989. It is remarkable how similar the VI language is to today. We are in grave danger of history repeating itself. Depending on how you see it, for you FTB out there this is either a great opportunity or a great threat. I've seen both sides.)

£240k for a flat in 1989? Are you sure? Where was it, Kensington?

Share this post


Link to post
Share on other sites

Driving into work, on a traffic sign at a roundabout, a professionaly made sign advertising a sale in a large well know department store, never seen this before, desperate times!

Share this post


Link to post
Share on other sites

£240k for a flat in 1989? Are you sure? Where was it, Kensington?

See, this is what this poster means. You youngsters think property prices have never been high before???

Smart riverside flats in Marlow were in the 200k to 300k range then.

Share this post


Link to post
Share on other sites

Sounds very nice.

If you think this wont affect everyone you must be on drugs. I was a casulaty of the last crash/recession through no fault of my own. Its not pleasant being made redundant because the **** has dropped out of the economy.

Be careful what you wish for.

Share this post


Link to post
Share on other sites

Hi Grommit - not too sure about the 1989 newspaper stuff :D But nevertheless IMO you are absolutely spot on with your other observations. It really is out there folks. Have a good look around you, listen to what people you know are experiencing, and use your common sense - it's all there. Why on earth anybody would listen to anyone in any walk of life who clearly has a vested interest, in an outcome, is one of life's mysteries. Naiveity knows no bounds.

Ps - anyone pick up from Bloomberg yesterday that RBS have just sold on £3billion worth of CC debts. Whatever does Fred the Shred know ?

Share this post


Link to post
Share on other sites

£240k for a flat in 1989? Are you sure? Where was it, Kensington?

Yes, it was in Kensington. When we bought this flat, £240k was way out of our budget, so we offered a silly amount less, i.e. 25% which was accepted as long as we exchanged in a week. Bit of stress involved, I did not go to work for a week while we bombed around London getting the paperwork in place, but it was a great deal. This was my FTB. At the moment, I don't think people will accept this type of low offer yet, but I don't think it will be long. A developer close to here (Thames Valley) is accepting big discounts on new property, when you do the sums they can not be doing much better than breaking even on these projects. (The other paper I found was the amount we were paying at the time, the interest rate was something like 17% or so and the monthly payment was £1,767!!!. Ouch!!)

(Just a quick note to the abuse throwers on the site, it really is not necessary. There are many young people reading this site who if they are not careful with their first purchase will suffer the consequences. I suggest posters declare their ages, this will give us a much better idea if they experienced the effects the last time this happened. Anyone under the age of 35, you don't really realise the dangers approaching FTBs. If and when this happens again, you won't forget it in a hurry. Some friends and acquaintances took many years to sort themselves out, this with some inflation to help. Next time we won't get this help)

To the poster who suggested I put the 1989 article on the thread, have a look at the FAQ pages on this site where you will find many of these articles. I've temporarily parked my copy in a box as we are currently moving. We are selling here to go into a rental for a while. To give you an idea, our monthly rental is 1/340 of the price of the property. What does this say about the market??

Keep throwing in what you are hearing on the street. This is where the real steer will come from.

Grommit (Wallace sends his regards, too busy to write as he is just completing his patented house price prediction algorithm).

Share this post


Link to post
Share on other sites

It is only those who have borried over the last few years in excess that will be hurt significantly. The government needs to think about this when it constantly tries to please home owners. Most homeowners have been in the market for decades and have small mortgages...unless they've MEWed, alot of people are sensible.

One of my close friends is a carpenter. He bought an ex-council house for 86k in 2000, now supposedly worth 200k. I disputed that, he said "I don't really care, I've only got twenty grand left on the mortgage). Rather than go on holiday, or buy flash cars, he's put as much as possible into paying off his debts. It is these kinds of people the Government should be thinking about, not the morons who borrow up to their eyeballs . People just need to wake up and realise that a crash of 50% would benefit all but those who are looking to trade down or who FTB'd in the last three years.

Totally agree. This is why the notion that the BoE or the government will do "anything" to keep houses going up is just wrong IMO. Only a small fraction of people, the suckers that bought recently would suffer if there was a drop. It's just not true that the "nation" couldn't tolerate a fall in house prices. And a lot of people would benefit. Everything comes full cycle. Money has flowed from the young to the old property owners, and one day it will flow back again. It's not a law of physics that house prices are high compared to wages.

Share this post


Link to post
Share on other sites

"From reading this forum for several months, it is clear that many of the posters are young and have never gone through the pain of a housing crash. It is not clever for any of the victims, so at this point in time, it is essential not to become one. At nearly 50, I have experienced the crash myself (fortunately positively for me, a £240k flat in spring 1989 for £185k, exchanged in a week which then went down to £160k) but another friend with a BTL took 10 years to turn it around. This I fear is about to happen again, there will be winners and victims.

On my holidays, I like to read business books for you always pick up ideas to use in your own business. I recall a bit about Warren Buffet, the world's best trader ever, who occasionally goes to the shops with his wife to "see what is really going on". This is the best advice ever, to get out of the office and go take a look for yourself. This is where the real truth and opportunity lies.

What do I see round here?

* Property not even getting close to asking prices

* Property on the market for ages

* Friends with BTL flats being empty

* High street dead

* Great reduction in new car sales

* All the staff tell me they are not spending anything

* Next doors late 20's kids still at home but both have good jobs

* Our mate, the local EA fearing it will get nasty

* A builder friend going to give up after Christmas

* Family members with debt issues

I could probably go on...."

NO Need!!!! Things are getting scary out there - I know of many many many many people who have not been able to sell their properties for 12 months + unless they have HEAVILY discounted!!!!!! IT IS happening!!!

Share this post


Link to post
Share on other sites

Only a small fraction of people, the suckers that bought recently would suffer if there was a drop. It's just not true that the "nation" couldn't tolerate a fall in house prices.

Nearly!

550,000 people die every year in the UK.

Far, far more during a cold winter.

If winter is v. cold (as expected) approx 400,000 EMPTY houses, bungalows, flats - will come on the market in 2006 alone!

All in a declining?? market.

Inheritors lose bigtime!

Share this post


Link to post
Share on other sites

i was at north weald market saturday overheard one stall owner saying to another IF YOU CANT MAKE MONEY AT THIS TIME OF YEAR WHEN CAN YOU !!!!! i work in the building industry on new builds ,the devolopers managed to sell there show house for just under one million about 6 weeks ago GUESS WHAT IT FELL THROUGH THIS WEEK now they are stopping any forward work on the rest of the devolopment until they get a sale . ANOTHER DEVELOPER I WORK FOR SOLD HIS SHOW HOUSE ABOUT A MONTH BUT WAIT FOR IT E HAD TO DISOUNT BY £100,000 big discount .the last 2 weeks 2 of the local estate agents have been putting flyers through the letter boxes of all the local HOUSES in my area THIS SPELLS A SIGN OF DESPERATION TO ME . ALSO I KNOW OF QUITE A LOT OF PEOPLE GETTING LAID OF IN THE BUILDING GAME .and speaking to chippy at work hes spoke with his mortgage adviser about extending hes mortgage over 50 years to lower his payments £145,000 mortgage ,adviser thinks its a great idea sad c nt

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 338 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.