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IMupNorth

Crash 2006

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If your riding a bicycle, do the wheels ever turn? Of course, but it depends on how fast you are peddling before a complete revolution has occured. The government have been trying to ride slowly, but everyone knows if you slow too much, the bike will stop and you fall over!!

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A few years ago, when my brother was in the Army, the officer in charge of the barracks decided he'd save money by increasing the time between maintenance, repainting, etc. So he saved lots of lovely dosh which made the men at the MoD terribly happy and they gave him a nice carriage clock or whatever when he retired.

Two or three years later they realised the whole place was rotten and it cost a fortune to rebuild - far more than the savings on maintenance in earlier years.

You'll notice, if you look around, a bit of rising damp, a bit of peeling paint and a few rotten bits round the windows - and no money going round to fix it all up as lots and lots of people are up to their neck in debt. But don't worry, it'll all be fine.

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If it didn't crash in 2005, why should it crash in 2006 ?

I've yet to see any convincing arguments - come on bears, you must be able to come up with something ?

I`m mystified by this cyclical arguement, in the last correction prices did not crash, "stock market style", prices corrected over a 7 year period. If it is different this time it will maybe take longer to correct, which would neatly fit in with theories on: stagflation, relatively low interest rates, moribund economy, deflation etc..There is no crash on the horizon, the market has begun to correct. I`m up North can still make money, as can many cute investors, prices will eventually fall..

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If it didn't crash in 2005, why should it crash in 2006 ?

I've yet to see any convincing arguments - come on bears, you must be able to come up with something ?

Well it won't.

Just like it didn't crash in 1990, or 1991, or 1992...

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I read in the times newspapers, property expected to be average of 200k...

thats 8 times average earnings, how do you expect it not to crash, the only thing keeping people investing was tax relief of 40% from sipps!... do people not understand, people were buying to

1) either sell to this "SIPPS" investor

2) to put it in a SIPPS investment!

wheres ya SIPPS now?

there it was

GONE!

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Seen Gold recently?

Calculate property prices in Gold, and you will see; the Crash HAS started

Good point.. but its too complicated economically a concept for someone who has made what seems like a fortune in the last few years..

and Dr bubb..

If I can buy a flat now for less then £130,000 when an identical new build in the same development on an earlier phase was sold for £170,000 a year and a chunk ago.. does that make a crash...?

Or a more realistic sale price.?

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Thought so, no definitive arguments here. Just strange analogies about bicycles, Enron and army barracks.

Dr Bubb, you're pulling my plonker :lol:

I admire you're creative thinking though, as its about the only way we'll be able to justify a price crash by comparing house prices with the next big asset price bubble. It ain't the house prices crashing its the gold appreciating.

Suspect, most people don't have gold, only pounds to buy their house with. Good luck to all you gold enthusiasts by the way.

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Western consumers are maxed out on credit - there ain't no more money to buy things with.

Taxes are rising and will hit home next year.

Lenders are now tightening everything from credit cards to mortgages. The era of easy credit is coming to an end. Banks always do this. They created the bubble and now they want their pound of flesh.

The base of the pyramid is being eroded re the above and once that happens - once there are no more people able to buy - then it will, like all bubbles in history going right back to ancient Rome, will collapse. When people were warning that the dot.con bubble would burst there were plenty - so called economists, journalists and VIs, saying that it would not and that prices would keep on rising.

Tell that to friends of mine who had thousands of Cisco shares at 100 bucks per share and those shares ended up at 10 bucks per share within a couple of years. Houses, IMPO, are about to go the same way.

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Thought so, no definitive arguments here. Just strange analogies about bicycles, Enron and army barracks.

Dr Bubb, you're pulling my plonker :lol:

I admire you're creative thinking though, as its about the only way we'll be able to justify a price crash by comparing house prices with the next big asset price bubble. It ain't the house prices crashing its the gold appreciating.

Suspect, most people don't have gold, only pounds to buy their house with. Good luck to all you gold enthusiasts by the way.

Read mine mate.. I am talking about £130,000 that was £170,000

and that was before sipps and BTL oversupplys..

and two more phased are not completed.

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If it didn't crash in 2005, why should it crash in 2006 ?

I've yet to see any convincing arguments - come on bears, you must be able to come up with something ?

When it comes to arguments sorry, but if something is not seen, it is rather arguments to support HP. The trend just show something is happening at present.

In fact I am a bit surprised at the question. IMupNorth, anything that has an fwd momentum needs to slow down and stop before going into reverse no? Do you do agree, I hope otherwise it is very serious ;)

Well if I look at the current picture.

1-Did it slow down? Yes (quite fast actually, no)

2-Did it stop, well, yes price are static (at least)

3-Now the 3rd seems to call for reverse, in addition to all the arguments which have been given here (level of debt, virtually impossible for 1st time buyer, HP/income ratio etc.... It is not stupid to see the reverse as just logic.

Now, yes I agree no certainty, but I think it is hard to deny that the chances of a fall are growing quite a lot. Saying crash is impossible in my opinion is by far more stupid than the crash will happen in 2006.

TWT

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it could crash in 3 years max.

at the end of the day, people are being paid poorly and the house costs dont reflect real earnings.

they are on the very edge of running along tied to a huge piece of elestic that stretched to the limit.

or there could be 10 years stagflation.

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Western consumers are maxed out on credit - there ain't no more money to buy things with.

Taxes are rising and will hit home next year.

How do you quantify your first point ? Whats your bench mark ? - if IRs fall, then what ?

Which taxes ? and precisely how much is this going to take out of Joe Publics purse ?

Give me the facts ?

:)

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If it didn't crash in 2005, why should it crash in 2006 ?

I've yet to see any convincing arguments - come on bears, you must be able to come up with something ?

Rising inflation expectations and consequently contracting credit. Simple as that.

Question for you. When equity (and housing) investors saw mostly flat prices from 1968 through 1982 and inflation raged through the 1970s both groups had real terms losses of 60-70%. Is that a crash? Or not?. Speaking only for myself I would be a little upset to see my net worth shaved by that amount.

In a fiat money, fractional banking world only REAL terms counts. Flat during a year equals a 5% loss.

BAB

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How do you quantify your first point ? Whats your bench mark ? - if IRs fall, then what ?

Which taxes ? and precisely how much is this going to take out of Joe Publics purse ?

Give me the facts ?

:)

Brilliant... I have to head to bed....

No bull ever answers when you lay out what prices are doing :(

One day...

no bull ever answers the eventual debt meltdown query.. as we have to double our debt in five years to sustain current prices...

yawn..

I am sure it won't fail.

Its just the fact that it has to that gets in the way..

and the facts that prices are dropping... gets in the way..

and the fact the BTL mortgage lenders say it will.. and have stopped lending...

yawn...

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Guest Charlie The Tramp

Which taxes ? and precisely how much is this going to take out of Joe Publics purse ?

You can never tell with a professional pickpocket. :unsure:

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I'm concerned about the pressures FTB are under financially to get on the market.

I would say their input is pretty crucial.

Affordability. Too many flats being built for an non existent buyer. Prices are being reduced - why is that?

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but I think it is hard to deny that the chances of a fall are growing quite a lot.

TWT

But why ? - what are these 'chances' ?

A crash is possible, but it depends on very painful circumstances starting to happen and they are not on the horizon. Thats why I say stagnation for another 12 months - when you look at the data objectively, then you realise the chances are that prices won't crash and that it is almost certainly another year of stagnation to follow the 18 months we have already had.

If it didn't crash in the last 18 months, then there is no logical reason for it to do so now.

Give me facts, give me a logical argument based on facts, thats all I ask ? - its pure wishful thinking by a load of frustrated bears at the moment.

You'd all be much happier, just putting this crash idea to one side for 12 months. I fear for some of the guys sanity on this forum if IRs get reduced by 2 x 0.25% over the next 12 months.

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It won't crash ... it will be a slow dribble of negative HPI fought tooth and nail by the VIs.

Dr Bubb: I'm not paid in gold, nor is anyone else, so why should the current commodities boom affect real house prices?

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If it didn't crash in 2005, why should it crash in 2006 ?

I've yet to see any convincing arguments - come on bears, you must be able to come up with something ?

OK I'll bite :)

But to be fair its a valid question so I will treat it with some sincerity. These are just my opinions based on nothing other than GUT FEELING.

I dont think it will crash! There feel better now :)

Prices will continue to fall imho so I will refer to it as a CORRECTION.

Since GB mentioned that SIPPS will not be used for residential properties, it got me thinking.

* I think that GB's plans now, are for affordable housing to come back to the people, and he wants the BTL investors OUT!

Why? Well for a start, from LR figures we see that they are down on sales by 15.41% from last year.

This roughly equates to sales of 2004 - £51,073,840,000 2005 - £44,740,160,000

Thats a shortfall of approx. £6,333,680,000 (average figure for illustration).

NOW THATS GOTTA HURT!!!! because the majority of sales are over £120,000. Lot of stamp duty missing

* He has made it a difficult proposition to do BTL unless you know what your doing and have the portfolio to carry you through the next few years. New HMO laws, SIPPS (dont mention the SIPPS :)), Paying rent direct to the claimant and not the landlord (like giving a gun to a terrorist imho).

* He knows that WAGE INFLATION will NOT, i repeat NOT be enough to bring back affordability. He is capping wages to 2-3% all over. This means it will take another 4 years (with no rises for houses) to come back to affordability levels. 4 Years of stagnation? All that stamp duty lost?

* If he brings houses back to affordable levels and the market picks up, oil prices are sustainable and generally we all feel good then there is every chance of him becoming PRIME MINISTER. The way he is going now, he has NO CREDABILITY and would not get any votes at all. He will spend these nex 2-3 years kissing ass. He needs a GOOD public image as a leader.

This all points to a MARKET CORRECTION that may be pushed along by the Government!

The finances are in a state. They need to protect the country financially and the best way to do that is to get people to spend REAL money. When everything is SO expensive the whole country will come to a standstill. We need expendible INCOME not more CREDIT.

Weird theory I know but it makes sense.

GB if your reading this and you rob these ideas - I at least want a mention in the 6 O clock news!

SO her goes:

MY PREDICTION FOR 2006.

Prices will drop and will be reported as dropping in mainstream media. This mean that when a house is valued it will be competitive. The sellers will see that others they want are dropping and will play ball. EA's will be important in the communication of this.

We will get a bumpy ride down. FALLS - small pickup - Smaller fall - Smaller pickup yade dade yaa!!

How this pattern derives is entirely up to the EA'sand the sellers. If they play ball it will be smooth and transitional and the bottom of the market will be reached quicker. If they continue to be greedy then I am sorry everything I said above is complete B0ll0x and it will crash 'like a renagade master!'

EA's - SELLERS - YOU DECIDE!!!!!!!!

I predict BASED ON HOMETRACK DATA

£0-100,000 DROP OF 6-10%

£0-£200,000 DROP OF 8%

£200,000 - £500,000 DROP OF 12%

others 7%

I think the sub £100K market is criticall for FTB's. I expect biggest drops coz certainly in Liverpool the ones in this price range are the shyte areas of Liverpool. Locals would not pay the prices for these CRAP areas.

£100,000-£200,000 is the FTB's (Who can afford it) and the Second time Buyers who will then upgrade another bedroom. I believe now they are all saying "Extra bedroom for £70,000 extra! ****** to it - Ill extend me house for £30K).

£200,000 plus houses - I strongly believe a lot more will drop below the stamp duty threshold.

All these predictions will be helped along with valuers talking the market down and undervaluing properties for the banks who I believe will tighten the purse string a bit next year - especially if there is a rate rise. Will they RISE or FALL? I honestly DONT KNOW!!! Common sense says they should rise to deter more debt, but common sense said housing should be more affordable - and look where we are now!!!

COMMENTS PLEASE

TB

Edited by teddyboy

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I forgot to add. The lending criteria for 2006 will probably be tighter than previous years. I expect the Christmas sales figures to be poor and as we see today - unemployment IS rising. We are giving all our jobs to India!

A lot of the market direction will be steered by these outside factors. The simple truth is - we need more 'expendible' income in our pockets to boost our economy and we aint gonna get it through a wage increase.

TB

Edited by teddyboy

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Thought so, no definitive arguments here. Just strange analogies about bicycles, Enron and army barracks.

Dr Bubb, you're pulling my plonker :lol:

I admire you're creative thinking though, as its about the only way we'll be able to justify a price crash by comparing house prices with the next big asset price bubble. It ain't the house prices crashing its the gold appreciating.

Suspect, most people don't have gold, only pounds to buy their house with. Good luck to all you gold enthusiasts by the way.

Werent you previously a bear Imupnorth?

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Werent you previously a bear Imupnorth?

He's like an ex-smoker. He used to be a bear, but now he has turned to the 'dark side', he's become a consummate wind-up merchant, posting 'nothing' posts like the first one in this thread.

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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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