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DonnieDarker

Did You Experience The Last Crash?

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I would love to know from those who have experienced a housing market in weak or declining health this:

does property in desirable areas stop appearing on the market?

At the moment I am assuming that when the market turns very sour that the property in preimum locations becomes even harder to find as those folk dig their feet in the ground.

Am I right? Am I wrong?

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You are right.

I can remember back to the mid 70s housing recession. Basically, very little sells for a while. So, it's the wrong time to change jobs and relocate, get divorced or start a family. Those wanting a bigger house will look at building an extension rather than not being able to sell their house.

If you are an owner-occupier the change in values doesn't really matter if you can sit it out - in 3 years time your house will be worth less but the house you want to buy will be cheaper too.

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You are right.

I can remember back to the mid 70s housing recession. Basically, very little sells for a while. So, it's the wrong time to change jobs and relocate, get divorced or start a family. Those wanting a bigger house will look at building an extension rather than not being able to sell their house.

If you are an owner-occupier the change in values doesn't really matter if you can sit it out - in 3 years time your house will be worth less but the house you want to buy will be cheaper too.

Prblem is under these circumstances if you lose your job you are knackered.

As far as I remeber crap housing doesn't sell, the good stuff might.

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I bought my first flat during the last crash. A one bed in London. It was on for 80k and I got it for 52k

My cousin worked for the Halifax (in Halifax itself!). Her job was booting people out of their houses.

My work colleague and her boyfriend bought a two bedder for 85k in London and were in a lot of negative equity for a while. They had maxed out the mortgage and the house value fell to around 50k.

It was all good fun - we were young. Even they didnt seem to mind as they were not planning on moving. My cousin had a rough time of it and was very unhappy in her job.

Good houses in good areas still sold - sometimes people had to move, or they were repossessed, or they had bought ages ago, owned outright and were not looking to make massive capital gains anyway. Many still made big gains because even at the bottom of the crash prices were still higher in than they had been 10+ years earlier.

I rented out my flat and went abroad, I came back to visit in 1995 to find that it had dropped in value from 52k to 38k!

Next time I came home in 2002, all hell had broken loose !!! The wheel had turned full circle!

Happy days! - the crash was great fun - lets hope the next one is too :)

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An EA once told me that the best stuff is only sold at the top of the market (EDIT: or just before and after the top) because it is so pleasant to live in you can happily ride out the downturns by staying in it, and the people who have them tend to have other resources to reduce forced sales. (EDIT: They also tend to be canny enough to recognise the top, which is maybe why they are rich.)

Of course, that's a generalisation and can't be entirely true. There will be forced and estate sales always, even for the best places in the world.

I think this time will be different because of MEW - the middle classes haved MEWed en masse as far as I can make out judging by all the beige houses I now visit with brand new kitchens, bathrooms, redecorated bedrooms and a 4x4 parked outside. In fact, I think the middle classes will be most badly hit in all of this as they have swallowed hook, line and sinker this nonsense.

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That's definitely true in terms of housing quality. I was thinking more in terms of location. (All my favourites are always estate sales. People only leave the best houses "when they carry me out in a box".)

But if they've been buying BTLs and places for the kids at the peak, then yes.

EDIT: I also want to add that this time it might be different, because this market could well be the historic housing peak in real terms which will never be attained again, for lots of reasons demographic, technological and fiat money based.

I agree with the last point, a boom in asset prices, depending on the collateral damage we may all have to deal with, may be prevented from happening for a very long time. <_<

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When the dot.con market crashed there were numerous articles looking at the bellweather tech stocks - Cisco, Oracle, Yahoo, etc - and figures given of about 15 years before any of them had a chance of reaching their peak again - I can't remember if that was real or nominal and my brain is not working too good at the moment but you get my point. Houses may well be the same.

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I know a very hardworking couple (a builder and a nursery teacher) who lost 10 houses in the 1990's.

It was an immensely difficult time for them.

(They are good, honest, hardworking people, so I dont want to hear any "serves them right" comments.)

Funny thing is they are at it again. Exposed this time in both the UK and Ireland.

Makes you wonder.

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To most people it was no big deal. People delayed moving until things turned around. Plenty people took bank loans (I know, I worked for a bank at the time) to cover their negative equity, usually 5-10 grand.

The real problems were of course caused by the interest rates and the effects on mortgages. People who could barely afford their mortgages were in trouble.

If the 'crash' ever arrives before 2016, do the grimmest predictions speak of 1989 interest rates?

----

Is there any homeowner who did not convert to a fixed rate mortgage in the last couple of years?

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Guest muttley

I've told this story before,but it bears repeating as it's relevant to the thread:

Back in 1992 we viewed a house on the market at 125k (reduced from 135k).We offered 115k and were deemed piss-takers.We upped our offer to 118K (we were prepared to go to 120k) and were told to get lost as we were time wasters.

Fast forward to 1995 and the house was still on the market ......for 115k.

Interestingly,I don't remember thinking that prices were "crashing" and neither do I remember other people saying this was happening.

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Property law no 1 : The Market values the property at any given point.

All property good or bad will always sell even in a terrible market. Its in the hands of the vendor, all they have to do if they want or need to sell is keep lowering the price until it reaches a level that someone is willing to buy it at. Its called market forces.

Good property is difficult to sell in a bad market. Bad property is virtually impossible to sell. In the last property down turn. 1989 to 1994. there were long periods when you couldnt give property away. If you could sit tight you were ok. If you needed to sell you were in trouble.

Pablo Silver or Lead?

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I would love to know from those who have experienced a housing market in weak or declining health this:

does property in desirable areas stop appearing on the market?

At the moment I am assuming that when the market turns very sour that the property in preimum locations becomes even harder to find as those folk dig their feet in the ground.

Am I right? Am I wrong?

in the last crash prices fell about 27% in the London area and about 10% in the north.............

but contrary to what most people in here will tell you the North had previously risen as much as the south ..only later like in the recent boom.............................

Premium locations do tend keep selling though and places on busy roads and flats above kebab shops become unsellable and especially if you can get them at auction go for knock down prices.....

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The last crash, particularly in 1992/3, paralysed the market because chains couldn't be constructed, let alone be maintained. Homeowners at the lower end were locked in because of negative equity and thus the first link simply wasn't there. I moved after 18months of fruitless advertising when an overseas buyer arrived on the scene. Overall I lost 20% on the sale but my vendor took a hit of 30%.Mind you the overall situation was exacerbated by the prevailing recession which decimated confidence and hit small businesses particularly hard. The froth of the economy, advertising consultants, personnel recruitment , telephone sanitizers and the like went to the wall in droves.

The pubs continued to do well.....

Edited by deus ex machina

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I recall the last crash very well.

My ex Inlaws owned a big pile in a very upmarket area called 'Hadley Wood' on the edge of N London. They had the place valued at £800000, but when a few years later they needed to sell (1993) they got £450 ish.

One of my Brothers bought a studio for £60000. Got repossesed (his choice) as he couldnt sell it in c1991 for £19000!!! 10 years later lender caught up with him (Bristol & West) presenting bill for £52000. He ended up paying £2500 even though he had lots of equity, reasonable income.

INDIAN RESTAURANTS: My bellweather. In early nineties I recall them empty, and I often used to chat to the waiters about the recession. Now in the small town near me the number of restaurants has trebled. Once they start shutting I will know the recession has finally arrived.

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I bought my place for 25k in 1994 - a few years earlier it had been 'worth' 80k. Roll on repeat scenarios. Although seeing grown men sobbing at work over negative equity wasn't pleasant :(

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I bought my first house in 1991 for 40k. It was valued then at 50k but myself and boyfriend of the time bought it from his parents and they offered it to us with the 10k discount.

The relationship didn't work out (praise the Lord) and I sold it in 1995 for 44k.

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Guest muttley

INDIAN RESTAURANTS: My bellweather. In early nineties I recall them empty, and I often used to chat to the waiters about the recession. Now in the small town near me the number of restaurants has trebled. Once they start shutting I will know the recession has finally arrived.

Maybe the immigrant population has trebled.I'd keep an eye on the Fish and Chips shops if I were you.

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The North will realy suffer this time arround, because the prices up there have risen higher and faster than the last time. scabby terraces in bad areas of Liverpool going for 50, 60, 70K. Penthouses in Manchester and Leeds 1 million + and wait for it a 2 bed ex-council semi on an estate just outside Newcastle 160k+.

Lets get a dose of reality here! You can buy a 3 bed ex-council semi in Poole, on the Dorset riviera. With the New Forest national park to the east, the Isle of Purbeck and Thomas Hardy's wessex to the north and west , and the second largest natural harbour in the world on your door step, for under 140k!

The traditional price differential between the northern black pudding belt and soft south has greatly narrowed. Have tens of thousands of highly paid jobs relocated north from the south east, or have the fundementals that drive the markets changed up north. Of course they haven't.

Prices have stagnated in the south for arround two to two and a half years, whilst they continued to increase in the north.

There no such thing as a free lunch. This party is over.

Pablo Silver or Lead?

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If you can just get your mind together, then come across to me.

We'll hold hands an' then we'll watch the sun rise from the bottom of the sea.

But first.

Are You Experienced?

Ah! Have you ever been experienced?

Well, I have

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Guest Charlie The Tramp

Maybe the immigrant population has trebled.I'd keep an eye on the Fish and Chips shops if I were you.

Well my local chippy was complaining this week he has been quite since before Christmas.

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Interestingly,I don't remember thinking that prices were "crashing" and neither do I remember other people saying this was happening.

There's the rub!

Had a discussion with the future Mrs about this this week.

Buying is not going to happen this year. Feels quite a relief to not have to think about it for at least 12 months.

Asking prices in this are are still absurd...

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I still no people whose lives have not returned to normal from buying at peak..

From loosing at much lower..

Negative equity can still be with you in the form of debt long after you have lost your home.

can't have families.. not until you have paid of debt.

Can't buy again, check out your credit rating.. and hell your still paying of debt..

My mum worked in a bank.. People handing in keys..

Suicides as good people saw everything lost.

There are peaks and troughs..

and the most deangerous place to be is peak

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Hmmm. I heed your warning.

I dont think buying now would put myself in a nightmare scenario but it could cost me a lot of my deposit/savings. That could be the difference between retiring 2 years early or could cost me the opportunity of buying a house in the area by the time I am 40 (a personal goal of mine).

I dont want to be one of these people waiting for an inheritance so they can afford a family home. I think a lot of my generation will be in this situation.

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Hmmm. I heed your warning.

I dont think buying now would put myself in a nightmare scenario but it could cost me a lot of my deposit/savings. That could be the difference between retiring 2 years early or could cost me the opportunity of buying a house in the area by the time I am 40 (a personal goal of mine).

I dont want to be one of these people waiting for an inheritance so they can afford a family home. I think a lot of my generation will be in this situation.

Don't forget if you buy now, your house purchase will probably only be worth the same value 10 years from now. It happened in 89-99. Sure there will be peaks and troughs between, but don't expect any real gains over the next decade.

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I remember lots of people dancing in fields to squiggly music, they were happy.

I remember lots of people losing their jobs, businesses, homes and families, they were not happy.

I remember my folks paying two thirds take home on the mortgage, they were well pissed off, actually.

I remember the BBC negative-equity'O'meter on the evening news, it was hilarious.

That time taught me two things, debt is a mugs game, home ownership can be a very stressful business.

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  • 302 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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