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Bears - Why Do You Think The Housing Market (Esp London) Will Crash?

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Those members who think the market will crash, what are your reasons for thinking this? (obviously I would love a crash but don't see how it will happen at the mo).

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The houses in this country just aint worth what sellers are asking for them.

I know a house is worth whatever someone is prepared to (or sadly able to) pay BUT in the great world wide scheme of things, UK houses are just too expensive.

It takes too much of the world wealth to buy one.

The prices have been held up temporarily but it cannot and will not last.

Its either a drop in nominal terms or a drop in Sterling.

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1. M M R has started to bite. Market is stagnant from last September in the areas I am lookin at. Some have started dropping, others are either stubborn or kite flying.

2. Possibility of a black swan event - greece, stocks crash, war(China,Russia, some more allies eg. North Korea, some middle eastern countries)

3. Fed tightening, I R increases, B T L unviable.

4. Benefit cap further changes (WTC and DLA claimants included)

5. Recession, job losses.

6. Brexit.

Sorry about the spaces in the the abbreviations as my auto correct messes it up.

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They will start crashing when cheap finance becomes to expensive, the pound gets more expensive to buy......when the quality of life, the expense of living either renting/buying or simply unable to buy in today's market gets to the stage where moving away becomes a better prospect for families and far more profitable in more ways than one for more people.....the penny drops. ;)

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I asked the same question during my first years on this forum. I'm not a bear now for the short term but I gave up trying to buy in London (or Surrey) a couple of years ago.

None of the events we thought of then have made a proper dent on the central London market. Even the GFC which caused other areas of the country to crash or stagnate made a dent on any of the areas I was looking at.

Edited by Flopsy

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Those members who think the market will crash, what are your reasons for thinking this? (obviously I would love a crash but don't see how it will happen at the mo).

Like you, I can't see what could trigger a crash at the moment. FED are not going to raise rates to any significant level in the short term. Government won't remove props unless they are forced to and people will continue to borrow as much as they can to buy whatever they can! Currently I think the most likely outcome will be a sterling crisis. Could that lead to an additional real falling house prices due to foreign investors fleeing, I don't know. I'm pretty despondent when it comes to the UK housing market now and I bite people heads off whenever they ask why I'm renting and not buying!

I'm stubborn and won't be participating in the Ponzi (apart from helping my landlord out by paying rent). I'm looking at saving and investing and then escaping! Need to spend some time looking at the numbers and possible retirement locations (possible cheaper areas of the UK included) but even with my current savings and investments I can see the power of compounding at work.

Edit: spelling

Edited by renting til I die

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I spent 15 years living in London wondering why the market went and continued to be so crazy. I'm now firmly convinced it is simply a manifestation of the level of Housing Benefit, the way it is administered, and to whome it is given. The tax breaks and funding advantages for BTL in a low interest rate environment fan the flames. Everyone else is either directly or indirectly climbing on the bandwagon - even our Chinese "investors".

The situation is unsustainable because there is a limit to the tax base and to borrowing. Things are more promising than ever because there is a concensus around turning off the HB gravy train. If that happens, then the air will slowly hiss out of the London bubble over a few years.

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I asked the same question during my first years on this forum. I'm not a bear and I gave up trying to buy in London (or Surrey) a couple of years ago.

None of the events we thought of then have made a proper dent on the central London market. Even the GFC which caused other areas of the country to crash or stagnate made a dent on any of the areas I was looking at.

....greater numbers of people looking to live in a finite area of space.....there are bigger and better spaces out there but naturally the customer base will be smaller...technology has overcome many problems and offers many answers, best of both worlds means many no longer have to squeeze into one deteriorating restricted crowded space......nowhere in the UK is that far away. ;)

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the issue delaying any correction is that the only way out of the levels of debt that the UK and many other economies has is inflation

given that the combination of the various QE programmes and near ZIRP to date is deflation, then we could be in line for a future QE programme that will make the others look like someone dropped some change

that is what is necessary to cause the inflation needed to inflate away the debt burden being carried just now

and that will tend to push up real asset prices

Also, when many government bonds are guaranteed to run to negative yield if left to mature, where else can the money go?

Edited by pipllman

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Foreign investors are in London because even with today prices the chance of capital loss is lower than elsewhere. When I say capital loss, I mean everything from falling prices to insurrection that renders prices irrelevant. Would I rather have £1m in a bank in China or £1m in a property in London - probably the latter. Compared to places like New York, London is not expensive. That's the prime property taken care of, so the UKs high earners are pushed into places like Clapham and Islington if they want a house. Everyone else fights over the crumbs.

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Properties like this one at these prices .... eg 25k deposit and 5x salary of 80k ... or indeed why would anyone who could spend 425k buy this? OK may be kite-flying but seriously at even 225k would be 25k deposit plus 5x a 40k salary to live in a dump and a dump where you would not even feel happy to walk home in the dark.

http://www.rightmove.co.uk/property-for-sale/property-49856800.html

Not to be too rude about the possessions of the person living in that £425k flat, but the entire contents aren't - from what I can see in those photos - worth a blow on a rag man's pipe.

No money left, after paying for the bricks & mortar, for consumer durables to give the sort of lifestyle that someone living in a home of that value might rightly expect??

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but with a 6% yield the rent will be £24,000 per year so the tenant must be earning £40,000 just to cover the rent so will need to be on £70,000 to actually exist and £100,000 to have a life.

Although it's a 2 bedroom flat, the pictures actually show 3 beds in the property - which I assume means the standard practice of converting the living room into a bedroom. So your figures are probably off in terms of what each person is earning given that there are at least 3, and possibly 4 people in there.

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Those members who think the market will crash, what are your reasons for thinking this? (obviously I would love a crash but don't see how it will happen at the mo).

#turningjapanese

Next Recession can't slash rates so Depression.

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I asked the same question during my first years on this forum. I'm not a bear now for the short term but I gave up trying to buy in London (or Surrey) a couple of years ago.

None of the events we thought of then have made a proper dent on the central London market. Even the GFC which caused other areas of the country to crash or stagnate made a dent on any of the areas I was looking at.

Don't know when you're referring to but if 2004-2008 - RUBBISH! There was a crash as we all said there would be. What we did not predict was Base Rate slashed from 5 to 0.5 and QE.

Next time they can't do slashing.

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Although it's a 2 bedroom flat, the pictures actually show 3 beds in the property - which I assume means the standard practice of converting the living room into a bedroom. So your figures are probably off in terms of what each person is earning given that there are at least 3, and possibly 4 people in there.

Will it be classified as HMO then?

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