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Question For The Bulls.


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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?

but I only need one house to become affordable..

I don't understand.. (lol I do.. only joking..)

Mate, your looking at a market where ftb's are about 7%..

not enough agree with you..

If they did it would be the everage 30%..

argue that..?

New builds are forced sellers..

the others follow..

speculators waiting for the sipps flip are at the moment still loosing money.. If they bought at peak

and economics are not simple.. but study them and you will understand one thing, there are distinct and unavoidable patterns.

To that end it would appear simple.

But I can talk about this market for over three hours, recounting facts and opinion.

I do understand the finer details.

and it is on those that I have based my opinion.

If something it too expensive it will become cheaper.

and very few bought at peak.

Edited by apom
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but I only need one house to become affordable..

I don't understand.. (lol I do.. only joking..)

Mate, your looking at a market where ftb's are about 7%..

not enough agree with you..

If they did it would be the everage 30%..

argue that..?

New builds are forced sellers..

the others follow..

speculators waiting for the sipps flip are at the moment still loosing money.. If they bought at peak

I agree with your strategy of waiting if you're a young FTB. My first purchase was a very heavily discounted new build built by a quality builder who needed to sell very quickly. 1991 - depth of London house price crash.

The market has polarised into desirable property (good quality in good locations) and marginal (the rest). Same as it always does when it's evidently over-priced.

Marginal property is not selling. But would you ever buy marginal property? Cheap won't mean good value.

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Guest Winners and Losers

I bought a flat in London in 1997 for 65k, the vendor was in 'negative equity'. I had a friend who worked for an EA (was not an EA though), who had sold the flat in the first place and got the details for me. She had paid about 50k in 1993 and spent about 20k refurbing. The vendor was in Australia and I remember that her parents were not happy that she was selling.

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%

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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.

You're getting your crashes mixed up here. In the 89-94 crash actual prices fell by about 30%. It was the 70's crash, when inflation was rampant, that actual prices hardly fell.

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Guest Charlie The Tramp

You're getting your crashes mixed up here. In the 89-94 crash actual prices fell by about 30%. It was the 70's crash, when inflation was rampant, that actual prices hardly fell.

During Heath`s term during 1973 HPI hit 33%. Wilson`s term in 1976 saw HPI go 13% negative followed by Callaghan`s term of plus 4%.

Average inflation rate from 1970 to 1979 was 12.63%

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During Heath`s term during 1973 HPI hit 33%. Wilson`s term in 1976 saw HPI go 13% negative followed by Callaghan`s term of plus 4%.

Average inflation rate from 1970 to 1979 was 12.63%

But throw into that the average inflation outside of house prices.

Remember, a house can accelerate in value as fast as it likes, it will require inflation of wages for people to actually buy them. That is an obvious fact.

If you break itno idividuals then yes, a FTB earning enough will be able to afford to pay £170,000 for a flat.

But if the average wage for a FTB in the area is less then £20,000 then the prices will eventually have to relfect this.

Or new buyers need to be found.

Or invent a method of living forever and don't build any new properties.

That way no one needs to enter the market and everyone can say that their house is worth a billion trillion gazillion.. which it could be, providing you can find people to buy. ie.. don't have to sell.

My parents estate can show 120 houses (tasteful) and they are worth £250,000

Why is that? well one sold for that in 2004.

Since then i have seen 8 go onto the market, none have sold, five have given up. three are trying.

The oldest one that has not sold, backs onto rolling countryside, has been extended.. looks lovely.

So is it worth £250,000.?

If it can find a buyer then yes.

They are only worth what people pay..

and there is no reason to pay more..

There was a shortage of property..

Now there is a shortage of buyers.

Edited by apom
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Guest Fiddlesticks

Looking at the figures from the ODPM there was a peak in July 1989 of £75,132 and a trough in October 1992 of £65,864, ie a nominal drop of 12.3%.

I'm afraid ImUpNorth is pretty much right when he says:

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.

There are some selective memories of the most dramatic falls. For each of those disaster stories there were plenty of people who barely would have noticed any difference.

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Guest Charlie The Tramp

There are some selective memories of the most dramatic falls. For each of those disaster stories there were plenty of people who barely would have noticed any difference.

In the areas which did not really see a boom that is correct, the North of England I believe was one area. It was then the so called rich South East which saw the big boom and bust in property. This time around the boom has spread across the whole country.

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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.

I've posted this a few times now but you bull type people just don't ever take anything on board that does not suit your world view (I know, I know, we're all guilty of that).

I look at my local market and ...

A former next door neighbour's house went on the market just after I STRed in Dec 2003 for an eyewatering £385k - it was, in my opinion 50k over priced but symptomatic of the market then when EAs would put stuff on for anything. So it went on the market in early 2004. I saw it advertised back in the Autumn (2005) in an EAs window in the town (must be the 5th agent it was with by then). It was up for Auction. It sold in October for £260k.

Big brick and flint detached place came on the market in Jan 04 - 565k. Sat there for a year and, eventually, sold board went up. It sold in Jan 05 for £469k.

A couple of years ago a typical 4 bed 25 year old estate box was selling for £325k. There are lots on the market now for £275k. They are 10 a penny round here so it is easy to compare like with like.

I have been into local new build developments myself and been offered 15% off before I open my mouth. Blocks of local flats that have been finished over a year are still half empty. Anotherblock finished two years ago has only ever sold 4 out of the 8 flats. What happened to the others? The developer is renting them out because he could not sell them at a profit.

One thing I have noticed is that the market has become compressed - and the stuff at the lower end is remaining (relatively) stubbornly high. People round here are still asking £225k for crappy 2/3 bed terraces etc. But, as I say, 275k gets you a 4 bed detached. You see a few 'no onward chain ones' sneaking in under the 250k mark.

Where I live the market over the last 2 years has definitely fallen.

There is still lots of overpriced stuff on the market though but it just does not sell. Place opposite the last house I owned went on the market in Autumn 04. 1 year and 3 estate agents later they have taken it off the market.

If prices went up last year, the year before and will this year - why are there so many people on that ex-pats forum desperate to sell and regularly dropping their prices. Why are local developers offering such big discounts? Are they mad? Surely in a rising market they would just sit tight for a couple of months for the market to catch them up?

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.

Got the rose-tinted specs on?

In the last crash I put a house on the market at 210k, rejected an offer 6 months later of £183k and sold it after 18 months for £143k.

The house I bought a few years later for £100k - the time it changed hands before it sold for £154k.

In some areas prices halved in actual terms - forget inflation. In other areas prices hardly fell. London and the South East were the most badly hit. The lunacy had not spread to the regions last time - at least not like now.

Wonder why so many EAs went out of business last time?

Wonder why so many people gave the keys back to the building society?

Wonder why so many people languished in negative equity for year after year?

If prices only went down slightly ... pure fantasy.

Edited by Marina
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Guest Fiddlesticks

I've posted this a few times now but you bull type people just don't ever take anything on board that does not suit your world view (I know, I know, we're all guilty of that).

I look at my local market and ...

Interesting figures, and fairly disastrous for local housing market. However, to convince bulls you would need to show a fall in market value of the houses rather than a fall in asking prices - it's not clear from your post which of these two categories the examples you give fall into. They could just be 'aspirational' pricing. What is most conclusive is figures from one of the house price websites showing that the same house sold (for example) in 2006 for less than it went for in the reputed peak of 2004.

Got the rose-tinted specs on?

.

.

.

If prices only went down slightly ... pure fantasy.

No rose-tinted specs needed - he was actually right. See the ODPM figures above.

Edited by Fiddlesticks
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"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."

Bought for £68k in 1989, sold for £54k in 1996 (-20% and very, very nice unique flat)

Friend bought for £54k in 1989, sold for £28k in 1996 (-50% studio flat in reasonable area)

Both in London, and both very personal and uncomfortable experiences.

Add the inflation as well and see what you get in terms of real losses!

Please do not generalise, many went through hell!

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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:

Yeah but if asking prices are falling then prices paid are falling.

If asking prices are rising it does not imply that prices paid are rising.

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Guest Charlie The Tramp

Well put it this way my neighbour sold his house in 1989 for 120k. After the drop if I wanted to sell I would have to wait until 2001 if I wanted to get the same price. a period of 12 years.

If we go back to 1989, forget the correction and let`s say HPI carried on increasing by a steady 5% annually, by 2001 that 120k property would then have cost 215k.

Well my maths may be a little out but only a true 10% correction, well I`m lost.

Allowing for true monetary inflation using the 1.6 multiplier the price would still be 192k.

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I would guess that much of the reason for having a low number of new entrants entering into the world of work today is simply due to the last recession.

Many people I know did not have children as they were simply running to stand still working all hours in multiple jobs just to keep their heads above water, many failed and fell by the wayside out of house and home as a result. Many lost their marriages due to the strain also.

It is going to be truly interesting this time round how youngsters saddled with massive education debts will ever manage to get into the world of work and manage to put food on the table in a recession. To think they could ever buy a house is truly fantasy I just cannot see it ever being possible recession or not.

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Guest Charlie The Tramp

Many people I know did not have children as they were simply running to stand still working all hours in multiple jobs just to keep their heads above water, many failed and fell by the wayside out of house and home as a result. Many lost their marriages due to the strain also.

I`m seeing it now, people having just moved to my area taking a very young children to the day nursery at

7-00am in the morning, and one returning with their child at 7-00pm. When you take into consideration the cost of child care, they must be pretty desperate to have what`s left out of that salary. One of them I find every Saturday working in my local supermarket.

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This does not suprise me, as I see this pattern where I live. When I get up, I see neighbours with babes in buggies at the crack of dawn. Our neighbour's paid 250k for a 2 bedroom flat last year and have a 18 month old (approx). Their day starts very early in order to meet their work and mortgage commitments. They are not in a position to have another child and will probably find it very difficult to trade up. They pity us because we rent. What they seem to miss is that renting has 'allowed' us to have more than one child.

Our children also go to nursery, but we are in a position to be home at a resonable time, and although it is expensive, I need to work if we want to be self sufficient. Regardless of buying a home or not, putting a suitable roof over our heads is very expensive and is something we are unable to to at present. Over the longer term, we expect to be in a position to buy a house, hopefully with a mortgage term of 15 years. Well that is the plan.

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  • 441 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% +
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      • up 5%



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