Jump to content
House Price Crash Forum
Sign in to follow this  
apom

My Opinion..

Recommended Posts

First of all, do not forget that the housing market is the most clearly cyclical market ever seen, and has always been this way.

House prices have swung between affordable and unaffordable about five times since WW2.

Do not be fooled that the housing market has swung upwards due to a lack of housing.

A decade ago there were 2.76 people for every home, two years ago that was down to 2.6 and today a home is built for every 2.1 person that the population grows by.

So why did prices go up?

The previous boom had caused a price drop in housing, with inflation being strictly managed this didn't allow wage push inflation to make homes affordable as had happened after ever previous boom. House prices are a very powerful component if the economy and every previous boom has led to massive inflation (wages) followed by a recession period. So a downward price correction was seen for the first time. The economy was protected but people saw the horror of huge debt and negative equity, The prices swung below a sustainable level (average house about 4 times the average salary) So House price inflation is inevitable. But what happens then is people see large financial gains in a relative short period of time and interest is again peeked, investments are made and speculation begins, This time borrowing has been made cheaper then before and easier to secure. Speculation needs only other speculators to boom.

With shares performing badly, low interest rates and failing pension schemes people became desperate for a solid investment.

We had a boom, a speculative boom.

There is only one trick in a speculative market and that is not to be the last speculator.

There would be another trick and that would be to find a speculative market that has not failed, but as they all have there is just the one trick.

House Prices are a matter of opinion, debt is real. Mervin King announced in late 2004.

There will be no wage inflation to allow current massive debt levels to become easier to manage, We have been promised that by the MPC and in 2003 Mervin King warned that when people realised this, property prices would crash.

It is your home, but it is also an asset that is speculated upon as an investment, and it is a market that has always been cyclical. With first time buyers at an all time low the market fails when the investors leave.

Are house prices sustainable? Not without inflation. That has been proven countless times before.. There is no shortage of housing. BTL Mortgage providers have stopped lending against new builds as they fear and oversupply and dropping prices.

The signs are there. Trust them as you will not have inflation to save you as your parents generation did. The loan is not going to get easier.

And currently we are the only major economy not rapidly raising its interest rates.

Share this post


Link to post
Share on other sites

The signs are there. Trust them as you will not have inflation to save you as your parents generation did. The loan is not going to get easier.

And currently we are the only major economy not rapidly raising its interest rates.

Good post – we have not admitted to inflation in the country – I could buy a house and watch the value be eroded by invisible inflation or I can keep my money in the bank and see the same happen to that – great choice.

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...
Sign in to follow this  

  • 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.