Jump to content
House Price Crash Forum
apom

Question For The Bulls.

Recommended Posts

Simply put, when measured against average salary (removing inflation, which is removed now as far as possible by the MPC) House prices have always followed a cyclical path moving around the average cost of average 4 times salary.

Now in the last correction inflation was not allowed to carry salaries up to meet the house prices so house prices came down.

This time wage inflation will certainly not be allowed to catch up and prices are coming down.

(This is based on a like for like basis, I would expect to see "average house prices" climb as we have never seen this low a level of FTB's, and with BTL pull outs against new builds and sipps gone the bottom end of the market has lost a critical amount of buyers)

So, why are prices not going to correct this time as they always have?

What engine is in place to keep prices so high.

We seem to be seeing the same recession tendancies in the high street, the same debt problems as all of the other times (only this time multiplied by a lot) and First time buyers are prices out (less then 7%)

The lack of bottom end activity takes several years to hit as forces sales build, but this has been hitting now for several years.

and granted, some BTL landlords are able to take the hit each month.

But I know too many who were not expecting to hold onto their properties this long who are struggling.

So, how is it going to work?

Share this post


Link to post
Share on other sites

I'm more neutral than bullish, here's what I think;

Not many forced sellers. Only people you seem to be able to haggle with are builders/developers, most private sellers aren't interested in reducing their prices much (certainly where I live).

What happens if IRs are cut? May well happen, remember hawks are out numbered by the doves on the MPC.

Share this post


Link to post
Share on other sites

So, how is it going to work?

Probably quite a few arguments for this one –but

1: if it was going to go down because of FTB’er it would have started by now (but it looks like we are going to have a spring bounce)

2: Interest rates will be lowered to start the economy – after inflation worries maybe we will see 2% IR

Note – I’m a Bear

Share this post


Link to post
Share on other sites

We have to forget the ratio of houseprices to Salary.

We have a new metric at play, its low interest rates.

So look at the Ratio of interest rates, houseprices,average salary, and the introduction of interest only mortgages, and part buy mortgages, and you can see that there is some mileage left yet.

Share this post


Link to post
Share on other sites

Question for the bears:

Why do you keep saying prices are falling when they're not?

They are around my area--"new prices" everywhere and builders offering 10k off prices set just before Christmas! They might be going up in some postcodes but not all. The latest report from the ODPM refers.

Share this post


Link to post
Share on other sites

They are around my area--"new prices" everywhere and builders offering 10k off prices set just before Christmas! They might be going up in some postcodes but not all. The latest report from the ODPM refers.

Yeah but that's asking prices. Is this another example of bears manipulating their arguments as and when it suits them? On one hand they slate Rightmove by stating, "They're only asking prices", and then use asking prices to back their arguments up!

:blink:

Share this post


Link to post
Share on other sites

House prices are clearly not going down!!!!.

They went up last year, the year before, and they will go up this year.

But next year...............well that is truly a different matter 2006 and early 2007 will be the straw that broke the camels back, however it wont be houseprices that break it. It will be a failed economic policy coupled with very high interest rates as years of fiscal mismanagement become more obvious to even the most plank like layman.

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
If it is accepted that it is a disproportionate amount of the higher value properties that are still selling, then these figures are most likely to remain skewed in favour of the figures providing minute rises, or continued stagnation of prices for some time to come.

It is worth comparing the average UK house prices (according to the ODPM) over the past five months, in order to gain a more informed perspective on the recent increases.

July 2005 £186,207

August 2005 £186,208

September 2005 £186,638

October 2005 £185,398

November 2005 £186,431

From July-November 2005 the price of the average property increased in value by £224. An irrelevance in relation to the volume of hot air frantically exhaled by organisations and individuals that wish to see prices maintained at unaffordable levels for first time buyers.

Link

Share this post


Link to post
Share on other sites

most private sellers aren't interested in reducing their prices much (certainly where I live).

Whilst this may be true in a lot of cases, it still amazes me that people want to keep their price high and pay a higher price the next step up. Shows the stupidity of the population. :blink:

1: if it was going to go down because of FTB’er it would have started by now (but it looks like we are going to have a spring bounce)

Cant say I agree with this - BTL has propped up wherer the FTB's left a gap. Now SIPPS is dead there has only been 2-3 months for this to have an affect. Judge it in 6 months time.

TB

Share this post


Link to post
Share on other sites

Question for the bears:

Why do you keep saying prices are falling when they're not?

New builds.. are plumiting here in devon..

Massive developments.. not selling phases more to go..

I would be in the region of £35,000 better of buying a few months ago then I would have at peak..

and these are sipps fodder..

there is no sipps..

Exeter BTL is dead..

massive oversupply.. rents not approaching costs at peak or for a couple of years before peak..

we saw 300% inflation in an area where the local economy or wages cannot even begin to afford..

Plumiting is a word I never thought I would use this early on..

drops are more then my wild dreams..

Share this post


Link to post
Share on other sites

I just don't understand why you guys don't get it - its soooo simple !

No mass of forced sellers, no price crash - a few forced sellers doesn't work because their properties get snapped up by the massive pent up demand.

You need to see more forced sellers than the pent up demand and then you'll get a price crash.

If people couldn't afford their mortgages, it would have gone tits up 18 months ago - but it didn't becuase people as a rule are just not that daft.

so what will cause forced sellers ? - two things or a combination of these two. major rise in IRs (i.e 1+%) or rapidly rising unemployment i.e. at least an extra 500,000 in the next 12 months.

Are either of these going to happen ? - NO, hence no price crash. QED

Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Suspect the same might happen again 10% reduction max, with 10 years of stagnation thrown in - its called a soft landing - and that hasn't even started yet, as prices are still rising, as are the volume of house sales.

Crash ?? - not a snowballs chance in hell of a crash. Go get yourselves another hobby, my desperate little straw clutchers :D:D:D

P.S. I don't mind you taking the p1ss out of me if this crash ever starts ! :D

Share this post


Link to post
Share on other sites

I just don't understand why you guys don't get it - its soooo simple !

P.S. I don't mind you taking the p1ss out of me if this crash ever starts ! :D

You`ve got balls IMupNorth :lol: Prepare for the barrage

Share this post


Link to post
Share on other sites

or rapidly rising unemployment i.e. at least an extra 500,000 in the next 12 months.

Will 111,000 in three months do?

Share this post


Link to post
Share on other sites

Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Speaking to two older colleagues at work in the last month. One lost 30k on a flat in Notting Hill, bought for 90 sold for 60. Another lost 40k on a house in Suffolk - 160 to 120k both bought 1989, sold 1993.

Sounds like you didn't see the sharp end.

This time it will be worse - not only is this the end of a housing cycle but the start of a new lean era.

Energy prices and outsourcing will fan the flames.

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Well I would not call this a Jolly Boy`s outing. Houses in my area as the EAs say a popular and desirable area were selling at 120k in 1989, by 1992 they were struggling to sell at 83k not returning to their 1989 level until late 2001. In 2003 they were selling for 249k and by the middle of 2005 were struggling at 230k. :)

The average inflation rate from 1993 to 2001 was 2.52%

Share this post


Link to post
Share on other sites

I just don't understand why you guys don't get it - its soooo simple !

No mass of forced sellers, no price crash - a few forced sellers doesn't work because their properties get snapped up by the massive pent up demand.

You need to see more forced sellers than the pent up demand and then you'll get a price crash.

If people couldn't afford their mortgages, it would have gone tits up 18 months ago - but it didn't becuase people as a rule are just not that daft.

so what will cause forced sellers ? - two things or a combination of these two. major rise in IRs (i.e 1+%) or rapidly rising unemployment i.e. at least an extra 500,000 in the next 12 months.

Are either of these going to happen ? - NO, hence no price crash. QED

Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Suspect the same might happen again 10% reduction max, with 10 years of stagnation thrown in - its called a soft landing - and that hasn't even started yet, as prices are still rising, as are the volume of house sales.

Crash ?? - not a snowballs chance in hell of a crash. Go get yourselves another hobby, my desperate little straw clutchers :D:D:D

P.S. I don't mind you taking the p1ss out of me if this crash ever starts ! :D

I'm not convinced by this argument.

Those who are not forced sellers are the next door types for e.g. who bought before hpi took off. What have they got to lose? Not very much. If they are not selling they are content where they are and have no impact on the market. They may have watched stupified as their house went up without their input and I don't see why prices can't go back down again.

My view is that new build = forced sellers, copious amounts of flats throughout the UK overpriced for sale, lack of speculation, serious affordability issues for ftb's and that there is property out there for sale which isn't moving (checking my area and reading anecdotes here) can possibly set a new market value.

Edited by BearLite

Share this post


Link to post
Share on other sites

I just don't understand why you guys don't get it - its soooo simple !

No mass of forced sellers, no price crash - a few forced sellers doesn't work because their properties get snapped up by the massive pent up demand.

You need to see more forced sellers than the pent up demand and then you'll get a price crash.

If people couldn't afford their mortgages, it would have gone tits up 18 months ago - but it didn't becuase people as a rule are just not that daft.

so what will cause forced sellers ? - two things or a combination of these two. major rise in IRs (i.e 1+%) or rapidly rising unemployment i.e. at least an extra 500,000 in the next 12 months.

Are either of these going to happen ? - NO, hence no price crash. QED

Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Suspect the same might happen again 10% reduction max, with 10 years of stagnation thrown in - its called a soft landing - and that hasn't even started yet, as prices are still rising, as are the volume of house sales.

Crash ?? - not a snowballs chance in hell of a crash. Go get yourselves another hobby, my desperate little straw clutchers :D:D:D

P.S. I don't mind you taking the p1ss out of me if this crash ever starts ! :D

Hooey!

Our house in Yorkshire - good family home in York - was valued at £165,000 in early '89, and others in the street sold for that. We sold early '92, after being on the market for 18 months at £125,000, for £120,000.

10% in 4/5 years? I don't think so.

Share this post


Link to post
Share on other sites

I just don't understand why you guys don't get it - its soooo simple !

No mass of forced sellers, no price crash - a few forced sellers doesn't work because their properties get snapped up by the massive pent up demand.

You need to see more forced sellers than the pent up demand and then you'll get a price crash.

If people couldn't afford their mortgages, it would have gone tits up 18 months ago - but it didn't becuase people as a rule are just not that daft.

so what will cause forced sellers ? - two things or a combination of these two. major rise in IRs (i.e 1+%) or rapidly rising unemployment i.e. at least an extra 500,000 in the next 12 months.

Are either of these going to happen ? - NO, hence no price crash. QED

Oh, and by the way, can we get it straight that in the 89/90 'crash' house prices went down only slightly - the damage was done by inflation. 10% total reductions in price over 4/5 years was all I saw.

Suspect the same might happen again 10% reduction max, with 10 years of stagnation thrown in - its called a soft landing - and that hasn't even started yet, as prices are still rising, as are the volume of house sales.

Crash ?? - not a snowballs chance in hell of a crash. Go get yourselves another hobby, my desperate little straw clutchers :D:D:D

P.S. I don't mind you taking the p1ss out of me if this crash ever starts ! :D

Crikey.. no crash.. but an aquaintence spent £170,000 just over a year ago can buy the identical property now for £130,000.

(Now was Pre-sipps) Three more phases going there.. and not selling yet..

Pent up demand? maybe..? but pent up demand that can't afford...

The aquaintence, he has an interest only mortgage.. has not paid a penny of.. and struggles with his mortgage..

Not buying has bought me closer to owning then his "buying"

Ah, that will be why you didn't bother to learn how to spell it.

Quality...

Mate, I leave in spelling mistakes on purpose..

When the point I make about price drops cannot be argued.

It gives the bulls something to come back against.

Simply put, understand the market, understand global and social economic pressures, study every piece of evidence about the market and the market is easy to understand.

Clarify in your own head what the MPC's fight against inflation means to the market and trace that back against he market for 50 years.

See every trend, every time that HPI has kicked of, the inflationary pressures that followed and watch as that led the way to recession.

It is an emotive subject, but it is just simple economics.

Just because prices go up it does not mean that they can stay up or if there is any reason that they would.

Prices were high because people were willing and able to pay it. Now it appears that willing and able are living next to each other in new build flats, watching the same flats sell for less near them and waiting for the infaltion that bailed out their parents generation.. They may even get together and find arguments like yours convincing.. Even as their neighbours are paying less and actually able to pay of capital... Willing and Able are not in a good position

I have made a decission to trust that inflation will be managed and constrained and as un affordable prices are reported and by definition un afordable cannot be sustained I will wait.

If inflation was to happen, if my wages were to climb I would have bought and waited for that.

But wage inflation is not climbing fast enough.

Which is why I see houses not selling, some selling at percived values, but loads dropping.

It is a buyers market and you are kidding yourself if you believe that I could not pay vastly less now then I would have even a year ago.

I only want to pay less for a property. I can do that today.

Watching the market I know I can pay less tomorrow.

Some may get high prices for their homes still.

But those won't be the homes that I will buy.

It is happening, for I can see that I can pay less now.

All I want is to pay less.

p.s

Argue this point or pick up on some deliberate (and perhaps not so deliberate spelling mistakes)

Lysdexia rules KO!!!

Edited by apom

Share this post


Link to post
Share on other sites

Simply put, understand the market, understand global and social economic pressures, study every piece of evidence about the market and the market is easy to understand.

Clarify in your own head what the MPC's fight against inflation means to the market and trace that back against he market for 50 years.

See every trend, every time that HPI has kicked of, the inflationary pressures that followed and watch as that led the way to recession.

It is an emotive subject, but it is just simple economics.

Simple economics doesn't exist I'm afraid. People who think economics is simple are fools.

You also need to add a study of psychology to your "easy and simple" list of actions above. Pure analysis alone will only give you half of the picture. Why do you think it's only new build where you are seeing big drops in asking price?

I agree house prices are over valued by traditional methods but "traditional methods" went out of the window a decade ago. Where the long term average will end up in 20 years time is an interesting debate. Perhaps you should give that some thought?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

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.