Jump to content
House Price Crash Forum
jiltedjen

Bubble Is About To Go Pop!

Recommended Posts

This is all happening very quickly, only a few months I was dug and prepared for the long wait, I was waiting for "an event" rather than just burn out.

I am very reluctant these days to get over excited, but there really is a feeling in the air that something is about to kick off.

Im not convinced TBH. The government wont give up their rich man's bubble without a fight. I expect more madness soon. it's the old adage, believe what they do not what they say and so far they are still throwing everything at keeping prices up. Maybe they know the US will raise rates but no one on here beleives that is going to happen.

The #BrExit could be a game changer for us all tho.

Share this post


Link to post
Share on other sites

Doesn't this always happen? Rumours of property price crash, then they disappear and it's as you were. Though normally if the rumours persist, the government come out with a prop to completely eradicate any chance of price drops.

Share this post


Link to post
Share on other sites

Its good that the MSM is starting to publish bearish articles to the zombie masses. In reality however I still think we will be looking into next year for the start of the slide in earnest.

We still have the 'denial' stage of amateur BTL landlords and HPI crowds to go before they realise their 'IN' Brexit vote didn't keep bubble afloat.

It'll be when the BTL tax changes slap them hard in the face. That coupled with foreign investors starting to sell up in central London. Then landslide begins. Brexit will only make it happen mote rapidly.

Just the other day my sister-in-law (in Streatham funnily enough) took advantage of the RTB in the 90's. She likes to tell everyone at every opportunity that her terraced ex-council house is now worth well over £550k. When I explained about the BTL tax changes and things 'maybe on the turn' she argued that there isn't many BTL houses around her in her road so it won't effect her house price and that the good school nearby will keep her house going up in value.

Its 'those' kind of people that need to realise which way things are going before we see the big collapse.

Share this post


Link to post
Share on other sites

I thought the tax deadlines was the end of April, so these reported "fears" must have occured before the deadline, yet it seems its happening today.

so all those that "snapped up" those bargains in April, have lost most of the savings they thought they had made?

TBH, I read so much BS in the news, Its hard to know what is real, what is hype without looking at a longer trend in lending practices, which is the basis of excess inflation over wages.

Share this post


Link to post
Share on other sites

Its good that the MSM is starting to publish bearish articles to the zombie masses. In reality however I still think we will be looking into next year for the start of the slide in earnest.

We still have the 'denial' stage of amateur BTL landlords and HPI crowds to go before they realise their 'IN' Brexit vote didn't keep bubble afloat.

It'll be when the BTL tax changes slap them hard in the face. That coupled with foreign investors starting to sell up in central London. Then landslide begins. Brexit will only make it happen mote rapidly.

Just the other day my sister-in-law (in Streatham funnily enough) took advantage of the RTB in the 90's. She likes to tell everyone at every opportunity that her terraced ex-council house is now worth well over £550k. When I explained about the BTL tax changes and things 'maybe on the turn' she argued that there isn't many BTL houses around her in her road so it won't effect her house price and that the good school nearby will keep her house going up in value.

Its 'those' kind of people that need to realise which way things are going before we see the big collapse.

It's funny I was thinking the other day I have a sort of internal 'priceometer', what I 'feel' houses are worth which is hopelessly out of wack, perhaps forever so, with actual prices.

Very crudely, (bear in mind London\SE) non-family flats are under 100k, ordinary 3/4 bed terrace houses under 250k. Posher family houses - semis 4/5 beds etc 3-400k.

Not a rational thing mind - even though when I post-rationalise they don't seem to be far from some sort of logic in wage multiples. More like 'see that pile of old bricks ? what does it 'feel' like it's worth ?'.

Maybe ridiculous - but not much more so than current prices. Fear and momentum is what makes crashes unstoppable - but irrespective of the 'what someone will pay for it' logic ultimately it's people's sense of value, no doubt distorted by debt, that needs to change.

Share this post


Link to post
Share on other sites

It's funny I was thinking the other day I have a sort of internal 'priceometer', what I 'feel' houses are worth which is hopelessly out of wack, perhaps forever so, with actual prices.

Very crudely, (bear in mind London\SE) non-family flats are under 100k, ordinary 3/4 bed terrace houses under 250k. Posher family houses - semis 4/5 beds etc 3-400k.

Not a rational thing mind - even though when I post-rationalise they don't seem to be far from some sort of logic in wage multiples. More like 'see that pile of old bricks ? what does it 'feel' like it's worth ?'.

Maybe ridiculous - but not much more so than current prices. Fear and momentum is what makes crashes unstoppable - but irrespective of the 'what someone will pay for it' logic ultimately it's people's sense of value, no doubt distorted by debt, that needs to change.

Indeed. It feels like what a banker is willing to lend on it. and he will bend rules and criteria to make that loan a reality for a lucky purchaser.

Share this post


Link to post
Share on other sites

UK Gov, Basel & BOE is actively trying to cool the housing market......however, i am not sure they would tolerate price dive. Yet, i am have no idea what they can do.

Im not convinced TBH. The government wont give up their rich man's bubble without a fight. I expect more madness soon. it's the old adage, believe what they do not what they say and so far they are still throwing everything at keeping prices up. Maybe they know the US will raise rates but no one on here beleives that is going to happen.

The #BrExit could be a game changer for us all tho.

Share this post


Link to post
Share on other sites

My friends think I'm bonkers for suggsting negative growth, I don't talk about it anymore.

But, its clear like the article says that prices can't go up anymore. I live close to streatham and the prices are insane.

Share this post


Link to post
Share on other sites

Only mainstream article I've see that suggests even with a 20% drop, prices would still be top high.

That's the problem - prices went super-crazy between 2001 to 2004. Honestly, for me I'd consider housing affordable if it was mid-90s prices + inflation. Never going to happen. We'll have a crash, but it will be a crap crash. It'll be 20% or 30% and housing is still unaffordable.

Share this post


Link to post
Share on other sites

That's the problem - prices went super-crazy between 2001 to 2004. Honestly, for me I'd consider housing affordable if it was mid-90s prices + inflation. Never going to happen. We'll have a crash, but it will be a crap crash. It'll be 20% or 30% and housing is still unaffordable.

In my area there has never been more than 20% drop in the last 50 years so I am not getting carried away. Having said that anything is better than nowt.

Share this post


Link to post
Share on other sites

I found this site in about January 2008 when as a fresh graduate I was keen to take the next logical step* in life and buy myself a home. But read this site and decided against it. There have been times I've been angry and many more times I've been glad I didn't buy (so many life changes, lost jobs, moving 100 miles for work etc) that owning a home would have been a PITA so even when financially I've at times felt I suffered I have been able to look at it and realise I've had flexibility.

Anyway, the point of the post is much of that last 10 years I've predicted to friends and family that prices would drop and buy now was mad. A few have ignored me and bought and I've smiled and congratulated them on their purchase. The only person to agree with me almost from the start is my dad and he often tells the story of a work college buying a house and living in negative equity that saw him working 60 hours a week and not seeing his wife or kids and it drove him to attempt suicide (I'm guessing this was early 90s and the good news is this man has now done well for himself. years of spending as little as possible on tat has meant he's continued to do the same which now means loads of holidays and a nice car).

I've been mocked by some friends (some who think I'm "too poor" to buy a house - totally oblivious to the fact I have more in savings, shares and bitcoin than they have in housing!) for a while now but you know what? They seem to be agreeing with me more and more these days. The general opinion is changing. OK I'm only citing the case of my friends and family here but I'm seeing and hearing change now and that can only be a good thing. It come up the other day about how BrExit would cause prices to drop and one of my mates turned to me and said, "you'd finally be right" so I pointed out as long as he actually "owned" his home and it wasn't a smoke and mirrors huge mortgage he could afford to move to a bigger house if it happened and he finally admitted that yes, he'd love it to happen!

I'm also finally starting to think things WILL change now. It happening. I'm not going to celebrate just yet because we all know the government make the rules and could do anything.

The good thing for me is that if they "only" crash 20% around here as they've not gone mad, that would be a real crash. Not a slight re-alignment as it'll be in some areas of the country.

*So I thought at the time

Share this post


Link to post
Share on other sites

In the last crash in the nineties (the one that never happened?) the MSM were full of it once it was obvious, then quite quickly (and for many years!) there were endless 'green shoots of recovery' stories.

I think we'll still have some sort of 'interest free mortgage' prop, or similar whacky nonsense before a real slide happens.

Agreed - seems quite obvious that they'll try to pre-empt any serious slide with some sort of prop for prices - could be more QE, some form of MIRAS, more 'help to buy' or whatever.

Mortgage borrowing is a massive credit creation engine and it won't be allowed to seriously slow down.

Share this post


Link to post
Share on other sites

Can you imagine buying a house now (height of market) at today's interest rates ( lowest ever) and only just being able to make the repayments? If that's you please don't do it - you are being lured to your doom.

Unlimited credit, printing money - this is going one collapse.jpgway - belly up!

post-40326-0-00925400-1462973786_thumb.jpg

Share this post


Link to post
Share on other sites

I'm sure we would all love to see prices lower for a sustainable outcome. I know its heresy but I agree HPC isn't going to happen they way we think - losing control of prices, inflation and currency would not be beneficial for anyone.

If banks are leveraged 26 to 1 (which in this crazy world is conservative!) then a 4% drop starts eating their capital. They'll be bust at a 5%-6% drop. Help to Buy houses gives them a 20% cushion from the government, but this is a tiny proportion of current mortgages. Think of it like turning a tanker around, it takes a long time and a wide circle - same with the housing market. Banks are the only business in the world where they just don't have to declare losses or fail because of them. Just look at the sh*t show at Italian banks - they have 20%+ non performing mortgages - loans past 6 months non payment. All they have to do is publish this information to the market for ECB free printed money and a merger to mix good debt with bad debt to lower losses. That is how all banking failures are dealt with. It exposes the fact that banks and money are not real, they are simply an instrument of confidence in a system. If your friends actually stop believing what their bank says, then there would be an almighty loss of confidence and an HPC.

The game for government has always been the same, borrow money, never pay it back, borrow some more. Have a great lifestyle and give the people what they think they want. When interest payments get too high, inflate the debt away and pay with cheaper pounds in the future. UK invented this game (stealing it from the Roman empire) and the USA has perfected it in order to grow its military bases around the world. The $ has become cheap and most Americans don't care as the USA is very inward looking and surprisingly self sufficient except oil (shale has solved that problem too).

I think that housing as an investment will be seen as less of an amateur game once tax changes come in, this will lower the price of 1 and 2 bed flats. MIRAS tax breaks were removed in April 2000, and we saw the market respond by lowering rates and standards in order to sell mortgages. These tax changes will mean that the market will have to respond to keep transaction levels high - not sure now. Lying on LTV and mortgages has set a precedent for other stupid things happening. I also feel that the prices of larger houses and 3-4 bed flats will start to separate and stay higher as loose credit standards paid for these rather than BTL tax advantages. Look at NY or other highly metro areas, no one in NY can afford to buy the tiniest apartment. 90% rent - and thats just the way it is because a long time ago a few middle class wealthy people bought apartments for $500k and held on to them. As long as green belt persists I still see London like Manhattan - constrained on house+garden building with a huge transient population.

Another point. People especially in London will still see property as a pension - I did the figures a while a go but take a look how much it costs to buy an index linked annuity that guarantees you 24K a year - its probably about a £700K pension pot. A property - even if it loses value will still be seen as a safer bet in highly populated areas. Remember once you buy the annuity you have nothing except the guarantee to get 24K/year until you die, if you have a property you still can sell it for inheritance whilst still getting something close to 24k/year - even if its worth less you are making more for your family once you're gone.

Property has been a bit of a total mess, but I hope that capital will flow elsewhere, as this market will have a slow grinding price reduction due to inflation at 2% which will half the value of housing. You'd just better hope that your pay increases by more than 2% a year to make housing cheap for you. IF inflation doesn't happen, standards of living will fall as the mismanagement of all that government borrowing will be highlighted, and then customarily we'll start a war to stoke inflation and demand. Donald Trump will probably have a go -he's the master of debt inflation.

Share this post


Link to post
Share on other sites

Although this article is only 24 hours old and even though it has attracted 177 comments (far more than any other article in the DM Money section) I notice it has already been quietly relegated to about half down the page where any new readers are unlikely to notice it.

Share this post


Link to post
Share on other sites
Look at NY or other highly metro areas, no one in NY can afford to buy the tiniest apartment. 90% rent - and thats just the way it is because a long time ago a few middle class wealthy people bought apartments for $500k and held on to them.

From what I have read, both NY and London were, in the 80s, completely undesirable dumps. Then people started moving back to the inner cities, and since then there has been a boom in the population. I wonder if somehow London/NY could yet loose their desirable status.

Share this post


Link to post
Share on other sites

Certain vested interests attempting to manufacture consent for reductions. Wealth creation of the most obvious kind

Only the very top end to create the next winners

Share this post


Link to post
Share on other sites

I am really genuinely shocked at not only the bad press and data concerning house prices in just the last two months, but the economy as well, Last few hours there has been a warning from the BCC about the worsening economy, it was announced earlier today that UK industry was in recession, and yesterday the trade figures were the worst since 2008.

Oh come on, there really is something in the air.

Only months ago I thought that the house prices indicies would just keep trotting out HPI increases for a while yet.

To be honest, I've felt like there's been something in the air since 2008. However, the government always seem to find a prop. I can imagine a Remain vote on 23rd June, and that will be its own prop for property prices for another 6 months. Always there's an excuse to continue the malaise.

Edited by canbuywontbuy

Share this post


Link to post
Share on other sites

Given the headlines, I think it will happen this year of its going to happen.

Banks will foreclose on BTLers where they can, homeowners will be given forbearance. Let it ride for a couple of years then ease up on credit restrictions for home owners in 2018 so they can go into the next election with higher home ownership and a bullish property market.

Share this post


Link to post
Share on other sites

So many people will say "it is never going to happen", even though many people on here know the sheeple have a mentality of "it only ever goes up", I still think the same sub consciously , even though we know this house of cards is nuts and will collapse.. I remember coming out of the mid 1990's property crash where you thought prices would never go up, where whole streets and new estates that were partly mothballed in the late 1980's would have nobody touching them with barge polls, this even went on to the late 90's for some parts of the UK.

I even remember myself watching the new build flats in Cambridge go up in the 2000's thinking that they were identical in so many ways to the properties in the South East and London where so many got badly stung. Once sentiment kicks in you think things will never change, until they do.

Lets hope so, Cambridge = London with totally insane prices for micro flats but like London, low wages for lots of workers. I know people in Cambridge who are planning on their £130K semi they bought in 1998 or so, now 'worth' £550k and as I say, planning on it going up to £1Mill by the time their kids leave university at which time they will sell the house, buy another one for cash and 2 flats for their kids???? the logic? and they are educated people.. or so they believe. .. I really do hope their kids can buy their own places on the backs of real jobs this side of being bankster scum because their 'nice but dim' parents scheme just does not hold water, well not real water anyway.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   32 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

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.