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  1. 1. When do you expect a house price crash?

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Looking at the current economic situation, my expectation is that we should have a housing crash within 2 years perhaps as a result of Brexit induced recession or global slowdown. In my view it is the low interest rates that are keeping the debt affordable for now but day of reckoning should come.

What are your thoughts?

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Without being too silly about it, can you define what you mean by "a housing crash"?

Because if you mean "a 12-18 month period in which house prices decline by 10% or more" then I don't think there's likely to be one at all in the next 5 years.  Instead, I see the situation more like Japan where we they have 15-20 years of slow declines and prices going nowhere.

 

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I've been saying every year since 2009 (when i got married) .... just you wait till next year .... we'll be able to buy a house!

I started to get optimistic last year, but there now seems to be a lot of kite flying, pent up demand and people happy to pay stupid prices. Very low volumes though .... and sales could still fall through (fingers crossed).

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3 hours ago, scottbeard said:

Without being too silly about it, can you define what you mean by "a housing crash"?

Because if you mean "a 12-18 month period in which house prices decline by 10% or more" then I don't think there's likely to be one at all in the next 5 years.  Instead, I see the situation more like Japan where we they have 15-20 years of slow declines and prices going nowhere.

 

Yes I meant exactly that 10% decline in house prices over 12-18 months.


It is a possible we may be entering a long-term stagnation eta but my understanding is that in Japan there was a stock market and housing crash before the 2 decades of zero growth period began.

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6 hours ago, scottbeard said:

Without being too silly about it, can you define what you mean by "a housing crash"?

Because if you mean "a 12-18 month period in which house prices decline by 10% or more" then I don't think there's likely to be one at all in the next 5 years.  Instead, I see the situation more like Japan where we they have 15-20 years of slow declines and prices going nowhere.

 

My guess is our economy becomes a Japanese like zombie economy

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I think houses in southern England will be much (>50%) cheaper in both nominal and real terms by the end of this decade than they are now but hard to say whether that will happen through a sudden drop, a steady grind down or some combination of the two.

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When I first joined this site, I would give you an unambiguous answer that it would crash in X years.

 

But now I realise it is much more complicated.

 

I think we will get more inflation and continued very loose money. (Bank of England actually talking about a rate cut!!!)

 

So it is unlikely house prices will actually go down in terms of a £ value.

 

However measured against other things outside the system of the British economy such as gold, US dollars, Swiss Francs they may well go down (they have already been going down against these measures)

Edited by reddog
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However measured against other things outside the system of the British economy such as gold, US dollars, Swiss Francs they may well go down (they have already been going down against these measures)

That's pretty much my opinion.

Back in the crisis days of 2008-9 there was an academic study that showed that banking crises take, on average, to work their way through the system. It was effectively 10 years later that interest rates started to rise in any meaningful way. I expect the next 10 years to be gradual increases in interest rates - housing will veerrrryyyy slowly adjust. Most people won't see the difference. It's going to be a slow melt.

Similar to after the end of World War 2, interest rates hit the floor, but within 20 years they were back up to normal numbers - you don't want to be on the wrong side of that curve.

Diversified & balanced, stocks, bonds, & REITs will however continue to steadily rise and pump out dividends and coupon payments.

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3 minutes ago, VancouverGuy said:

That's pretty much my opinion.

Back in the crisis days of 2008-9 there was an academic study that showed that banking crises take, on average, 10 years to work their way through the system. It was effectively 10 years later that interest rates started to rise in any meaningful way. I expect the next 10 years to be gradual increases in interest rates - housing will veerrrryyyy slowly adjust. Most people won't see the difference. It's going to be a slow melt.

Similar to after the end of World War 2, interest rates hit the floor, but within 20 years they were back up to normal numbers - you don't want to be on the wrong side of that curve.

Diversified & balanced, stocks, bonds, & REITs will however continue to steadily rise and pump out dividends and coupon payments.

Updated my post from above - minor omission - why can't I edit my posts?

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When natural interest rates reassert themselves, they could rip a lot of people's faces off.

Ironically, the secular stagnation we are experiencing is due to the vast improvements in productivity humanity has achieved recently. This has enabled the Elite to thieve at an increasing rate via taxation and inflation, without provoking retaliation from the cattle (i.e. you) class.

Once they go too far, the system will collapse, interest rates will skyrocket and the payment for honest work will match its value again.

 

If you support low interest rates and government intervention, you are literally agitating for beating down poor people and feeding the rich.

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3 hours ago, Locke said:

When natural interest rates reassert themselves, they could rip a lot of people's faces off.

Ironically, the secular stagnation we are experiencing is due to the vast improvements in productivity humanity has achieved recently. This has enabled the Elite to thieve at an increasing rate via taxation and inflation, without provoking retaliation from the cattle (i.e. you) class.

Once they go too far, the system will collapse, interest rates will skyrocket and the payment for honest work will match its value again.

 

If you support low interest rates and government intervention, you are literally agitating for beating down poor people and feeding the rich.

Yes all good and fine but the point is when and how long? Deleveraging will happen for sure but when?

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On 1/25/2020 at 3:05 PM, Dorkins said:

I think houses in southern England will be much (>50%) cheaper in both nominal and real terms

I would be happy to take a £1,000 be that in 5 years time prices are not at 50% of today's prices. 

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On 1/25/2020 at 10:54 PM, Tiger131 said:

Hoping for a crash with the next 5 years is crazy, none of us know if we'll even be alive in 5 years time let alone 10.

Agree - live for today - tomorrow may never come.  

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UK banks approve highest number of mortgages since 2015.

https://www.theguardian.com/business/2020/jan/27/uk-banks-mortgages-interest-rates

Quote

The number of mortgages approved by Britain’s high street banks jumped to the highest level for almost five years in December, in the latest sign of a revival in the housing market.

Mortgage approvals for house purchases increased to 46,815 in December compared with 44,058 a month earlier, according to UK Finance – hitting the highest level since April 2015.

The trade body that represents major high street banks across the country said the value of mortgage lending increased the most since March 2016, rising by a net £3.8bn.

ian-duncan-smith-cheering.jpg?w=455&h=25

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1 hour ago, warrior88 said:

Yes all good and fine but the point is when and how long? Deleveraging will happen for sure but when?

Impossible to say. I think not too many years away, but that gets said every year.

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3 hours ago, mallish said:

I would be happy to take a £1,000 be that in 5 years time prices are not at 50% of today's prices. 

The time period of my prediction was 10 years, not 5.

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  • 417 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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