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Elizabeth

Magnitude Of The Crash.

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Now I reckon we have a serious argument based on millions of pounds of government and banking industry research.

At least 30%

Why:

The new scheme to buy with the government and the banks identifies the absolute affordability gap as 30% (their share of the value)

BUT

Unlike the old Shared Ownership scheme (where the potential for loss was shared), under the new device govt. and bank share value is 100% indemnified against loss in conditions that force the FTB to act as the underwriter (see string below).

So my logic is - if the government is prepared to force the most vulnerable people in the market to act as underwriters for the failure of its latest device to hold house prices 30% above absolute affordability levels:

a. they are truly sure that the market is on the edge of the cliff, and

b. they really don't know if it will work this time

If these conditions were not true then they wouldn't be forcing FTBs to act as underwriters.

So much for a social democratic ethos.

There is only one choice. Just don't buy it.

http://www.housepricecrash.co.uk/forum/ind...20entry259513

Looks like our much maligned 30-40% pundits were right.

Edited by Elizabeth

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In the long run? - 50% at least

Don't forget that still doesn't cover the 3-fold increases we've seen.

50% oughta do it. (Not all in one year you understand - but I'm not in a hurry to be ripped off)

Why run down the hill and make love to a cow when we can walk down and make love to them all?

Any advance on 50?

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Max of 50% but to recover to 30% below today's values.

But, further to Liz's post, if you only own 70% of the property but 100% of the risk, thats a 71% drop.

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I'd love to know how they purpose to sell it while not being accused of mis-selling. No one even if they are insane is going to agree that their share is the first bit to go.

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Now I reckon we have a serious argument based on millions of pounds of government and banking industry research.

At least 30%

Why:

The new scheme to buy with the government and the banks identifies the absolute affordability gap as 30% (their share of the value)

BUT

Unlike the old Shared Ownership scheme (where the potential for loss was shared), under the new device govt. and bank share value is 100% indemnified against loss in conditions that force the FTB to act as the underwriter (see string below).

So my logic is - if the government is prepared to force the most vulnerable people in the market to act as underwriters for the failure of its latest device to hold house prices 30% above absolute affordability levels:

a. they are truly sure that the market is on the edge of the cliff, and

b. they really don't know if it will work this time

If these conditions were not true then they wouldn't be forcing FTBs to act as underwriters.

So much for a social democratic ethos.

There is only one choice. Just don't buy it.

http://www.housepricecrash.co.uk/forum/ind...20entry259513

Looks like our much maligned 30-40% pundits were right.

This explains why, from initially being against the proposal, at least some of the banks are now supporting the idea - brilliant wheeze that they are indemnified against a loss.

I was against this policy in the first place on financial grounds but this makes is immoral as well !

Can't wait to see how the pilot scheme goes.

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My tuppence, though just for most of Yorkshire and perhaps the rest of the North -

Bottom end (terraces, two bed semis etc.) to sell reasonably well with little or no reduction.

Mid - (three or four bed semis/small detached) - gently decline (maybe 5 to 10%).

Upper end (Five bed/three bath type stuff) - a less gentle decline.

Very Top End - No change.

However, I'd add a caveat in that only the best presented properties will be selling in 2006 - untidy and tatty houses will sit on the market and need fairly stiff reductions to move them but the owners of these type of properties often stubbornly refuse to either spend time and money to tidy them up or reduce the price and hence they fail to sell.

Edit - Apartments - 10 to 20% reduction.

Edited by ILikeBigBoobs

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Prediction:In some sectors of the UK market the Peak asking prices in year 04/05 to bottom exchange of contract prices year 06/07 ( ie. the differance between over optimistic vendor/EA hopes and the real price as defined by the market), will be close to -40%. A 300k flat becomes a £180k flat. keep saving your deposit.

Pablo Sliver or Lead?

PS. 100k property now worth 300k = 200% increase but only has to drop circa 66% to get back to 100k.

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Slow drops over the next 4-5 years resulting in nominal house prices dropping 20-23% by 2010. Factor in annual inflation and that will be a drop in real house prices of around 30%.

On that basis property is currently 40% over-priced.

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No one even if they are insane is going to agree that their share is the first bit to go.

Or they firmly believe that "house prices only go up".

As to magnitude of the crash - up to 50% on the lower end (but maybe no more than -5% over the next year). I think it will be a long drawn out affair - barring a nasty recession.

Edited by greencat

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The new build apartment market is collapsing already. Even the most ardent bull has problems denying that.

I believe it is the trigger we have all been waiting for.

My guess is that the rest of the market will fall (in percentage terms) by around half what apartments will fall by. Why? Because that is what I observed from '90 to '94.

So to put figures on it. A 50% fall in apartment values and general fall of 20-30%. It will take around five years though.

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No more than 10-15% nominal, I'm afraid (I'd prefer it to be more)

I think if there was going to be a larger crash we'd have had it by now, and that the sentiment has NOT changed for prices to fall. I think we'll get a slow drift, 10-15, as I say, and that slow catch up on wages will effect a correction.

Only way I'd reconsider is if I thought IRs would rise and, unfortunately, I don't think they will in the medium term

Edited by Casual Observer

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My tuppence, though just for most of Yorkshire and perhaps the rest of the North -

Bottom end (terraces, two bed semis etc.) to sell reasonably well with little or no reduction.

Mid - (three or four bed semis/small detached) - gently decline (maybe 5 to 10%).

Upper end (Five bed/three bath type stuff) - a less gentle decline.

Very Top End - No change.

However, I'd add a caveat in that only the best presented properties will be selling in 2006 - untidy and tatty houses will sit on the market and need fairly stiff reductions to move them but the owners of these type of properties often stubbornly refuse to either spend time and money to tidy them up or reduce the price and hence they fail to sell.

Edit - Apartments - 10 to 20% reduction.

ILBB,

Which areas of Yorkshire are you referring to? My belief (based on the Huddersfield market) is almost the opposite of yours:

Bottom end 30 - 50% overvalued (based on rental yields and income of buyers)

Mid range - I really dont know. The prices seem astronomical compared to a few years ago, but Huddersfield was cheap and the current prices dont seem overly excessive for a middle class family, certainly compared with the rest of the country.

Top end - could be a big fall but depends as much on the prevailing fashion as the national market. There is a market for £1/2 million houses in West Yorkshire, but not as big a market as there are properties for sale at the moment.

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UK: anything is possible, but definitely a -ive year, guess -5%

ROI: no less than +7%

One can't underestimate the domino effect, once so-called "sentiment" (ghastly word) turns against the current tide. Remember the current market is entirely being held up by denial, misplaced confidence and enormously powerful VI's whose influence was nothing like as powerful in the 1990's. Additionally, on balance the internet has increased the power of VI's to publish unsubstantiated spin more than the power of bears to counter it.

It is almost impossible to exaggerate the rigid mindset of all those with a lot to lose if the market goes belly up. They are almost willing it to avoid crashing. Everyone is trying to convince themselves that nothing serious is about to happen......it is Hitler appeasement multiplied by millions.

I believe therefore that there is potential for a catastrophic crash when it starts to roll under its own steam. For that reason I think 40-50% is more likely than a gentle 10-20%. Even after a 40% drop many who bought in the early to mid 1990's would still have made a whacking great profit.

BTL flats are going to lead the crash. It is a complete myth that there is a shortage of housing if you include apartments. There is a huge over-supply...most sold at the top of the market. There's only one way left and that is down, down and again down.

VP

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While the banks have total control over new money flowing into the economy AND the money stays cheap, there will be no crash.

As long as the money stays at a bargain price there will be customers for it.

Trade will only be hampered if there is a lack of money in the market. Sentiment, confidence blah, blah.

We may see 5-10% falls at most, IMO stagnation, no crash.

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NO crash.

At least not 30 - 50% and most importantly not accross the whole market.

5 - 15% max.

And are these figures taking in the current 7% average discount from asking price?

High value and high increase areas will fall first and furthest.

Normal areas will fall little if at all.

Just as the 'Average House Price' doesn't apply to all properties in all areas, the 'Crash' will not affect all properties equally.

So, for a large percentage of the market, it appears that a soft landing will be a reality.

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Guest Bart of Darkness

Looking at the housing market as part of the whole economy, if a genuine recession comes, 30-40% may not seem that far fetched in the end.

Of course it will al seem so obvious to the bulls -- after it''s happened.

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NO crash.

So, for a large percentage of the market, it appears that a soft landing will be a reality.

Shouldn't that be "NO crash, please, please please" :lol:

I can't believe this "soft landing" rubbish is still being trotted out. Dear oh dear oh dear....

But how deep will it go? If the findamentals keep deteriorating at their current pace I would say falls of 30%. If everything unravels and the govt try to interefere and mess it up even further (quelle surprise) I would say 50% falls would be quite common in many areas.

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my view is that prices will drop over 3 years by about 35% from the levels seen in 2003 ( southeast) and (2004 midlands and north.)

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  • 337 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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