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Bruce Banner

Are We Heading For A House Price Crash? - A O L Money.

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A Halifax study revealed we are now more positive about the future of house prices than any time since their records began in 2011

Who writes this shite.

What possible meaning can be read in to a survey that started 3 years ago when these things have 10+ year cycles.

More people than ever before believe the housing market has reached a top and will stay like that for years according to the slacker survey started 2 minutes ago.

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The important thing is sentiment and that is influenced every time the question is asked.......

Only the headline gets remembered by the majority.

Edited by Bruce Banner

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The important thing is sentiment and that is influenced every time the question is asked.......

Only the headline that gets remembered by the majority.

Sorry wasn't knocking the story - just rubs me wrong way when journalists use "since records began" only to see that they actually began very recently and data is utterly meaningless.

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Only the headline gets remembered by the majority.

Good job too when the article says,

However, Zangana doesn't necessarily think this fall is an immediate risk, because mortgages are currently so affordable. He says that the current average mortgage repayment is 27.6% of average household disposable incomes. This is significantly lower than the long-run average of 35.9%, and the peak of 47.7% in 2007.

The overall consensus is that a crash is not around the corner. Robert Gardner, Nationwide's Chief Economist predicts that: "underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook." The National Institute of Economic and Social Research predicts that house prices will rise 7.8% this year and 4.2% next year.

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Drivel.

House prices are set by how much banks 'allow' people to borrow, no what they can afford to borrow.

Remember, we are in the new - normal of 0% interest rates.

Q) If mortgage rates were 0.5%, but the bank would only allow a max mortgage size of £100k, then how much would average property prices be?

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Good job too when the article says,

What else can he say?!

I mean "Robert Gardner, Nationwide's Chief Economist predicts " FFS

Nationwide has gone headlong into being a big player in the mortgage market over the last 3 years, increasing their exposure massively. Cant really say much else.

Does the idiot reporter who wrote this bile actually think they're going to get an honest, unbiased viewpoint from such a person. Frankly they should be fired for writing such rubbish.

Edited by Executive Sadman

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Drivel.

House prices are set by how much banks 'allow' people to "borrow" - i.e. LIE to borrow -- via PREDATORY LIAR LOANS, not what they can afford to borrow.

Remember, we are in the new - normal of 0% interest rates.

Q) If mortgage rates were 0.5%, but the bank would only allow a max mortgage size of £100k, then how much would average property prices be?

Corrected. :rolleyes:

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Drivel.

House prices are set by how much banks 'allow' people to borrow, no what they can afford to borrow.

Remember, we are in the new - normal of 0% interest rates.

Q) If mortgage rates were 0.5%, but the bank would only allow a max mortgage size of £100k, then how much would average property prices be?

It's all about this, and variances from it.

Including cost-of-debt, credit-qualification-criteria tightening, and importantly, assuming always a demand for big mortgages to pay high prices.

The banks will definitely lend to me for the sort of house I'm after, but I have no demand for such a mortgage, as terraces and semi-Ds are mostly £100,000 to £200,000+ overvalued from my point of view, so there is no real demand from me for their mortgages.

Perhaps there is forever demand to pay such sums, and a constant flow of willing borrowers. Some people see demand everywhere and thus HPI for-ev-ah, 'look at the population growth' where I only see more tapped out non-owners remaining.

“Population keeps rising. That means more demand.”
This is a totally wrong statement. If the supply is one house, if you have a billion penniless people who desire that house greatly, the price is zero, not a million. A high number of penniless people do not constitute demand. It is better to have 2 millionaire competing on a house than 30 million people with no money.
I hope that the explanation is clear enough for you to realize that a large number of people would not constitute DEMAND. Otherwise, India with over 1 billion people would be very rich indeed. Also, Switzerland, with a fraction of India population would be very poor because of low demand.

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It's all about this, and variances from it.

Including cost-of-debt, credit-qualification-criteria tightening, and importantly, assuming always a demand for big mortgages to pay high prices.

The banks will definitely lend to me for the sort of house I'm after, but I have no demand for such a mortgage, as terraces and semi-Ds are mostly £100,000 to £200,000+ overvalued from my point of view, so there is no real demand from me for their mortgages.

Perhaps there is forever demand to pay such sums, and a constant flow of willing borrowers. Some people see demand everywhere and thus HPI for-ev-ah, 'look at the population growth' where I only see more tapped out non-owners remaining.

Increasing people does mean more demand. India is poor because of demand, not in spite of it. 1 billion people and not many houses. They are penniless because there are so many of them.

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The important thing is sentiment and that is influenced every time the question is asked.......

Only the headline gets remembered by the majority.

Sentiment is not taken into account in the MMR.

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Increasing people does mean more demand. India is poor because of demand, not in spite of it. 1 billion people and not many houses. They are penniless because there are so many of them.

Well we'll see whether the flow of borrowers willing (not me at current prices) and able (MMR) to pay high prices holds up, and whether FLS withdrawal begins to have an impact on mortgage rates.

Whether enough buyers truly feel and believe in this 'economic recovery' (Silver Surfer's quote from the article re demand for mortgages to meet seller's asking prices).

A tilt in supply onto market would also be interesting, from such lows. Prices move at the margin. Jumbo-mortgage house-owner's elderly neighbour agrees to sell/transact with a buyer at a lower prices than comparable houses had been selling for in the past, then that impacts on all the other houses on the road and in the area.

However, Zangana doesn't necessarily think this fall is an immediate risk, because mortgages are currently so affordable. He says that the current average mortgage repayment is 27.6% of average household disposable incomes. This is significantly lower than the long-run average of 35.9%, and the peak of 47.7% in 2007.

The overall consensus is that a crash is not around the corner. Robert Gardner, Nationwide's Chief Economist predicts that: "underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook." The National Institute of Economic and Social Research predicts that house prices will rise 7.8% this year and 4.2% next year.

Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else. In a bear market, the vast, vast majority does nothing and gets stuck holding assets with low or non-existent valuations. The 'million dollars' that a wealthy investor might have thought he had at a peak value can quite rapidly become $500,000 or $250,000 etc. The rest of it just disappears.

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