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Will Corona virus cause a house price crash?


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i feel for you man. 

in life sometimes you have to make a decision, throw yourself upon the winds of fate, hold your breath and dive in.

whatever happens happens. i have done similar when i quit a job, moved to different parts of the country to start a new life etc. 

 guess good luck, whats the worst that can happen? house prices fall after you bought, or they rise when you held off.

one could see you in negative equity for maybe 15 years, the other could see you paying more when you do eventually buy, possibly adding 15 years to a mortgage. So either 'worst case' scenario of either decision will say cost you 15 years.

so it doesn't really matter what decision you take.  

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17 hours ago, Arpeggio said:

Cyprus. Anything above 100k EU had a 6.75% tax.

United Kingdom of Great Britain and Northern Ireland I think you'll find.

Interest rates dropped very low in the 30s (though not as much as now) and HMG had a lot of earlier higher coupon debt on which they reduced the interest by substituting it for new debt.

Courageously the then CEO of Midland Bank tried to stop it by refusing to advise his clients to accept.

In the end he had to give way. It was done with the acquiescence of the populace so that's alright then.

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1 minute ago, Bluestone59 said:

United Kingdom of Great Britain and Northern Ireland I think you'll find.

Interest rates dropped very low in the 30s (though not as much as now) and HMG had a lot of earlier higher coupon debt on which they reduced the interest by substituting it for new debt.

Courageously the then CEO of Midland Bank tried to stop it by refusing to advise his clients to accept.

In the end he had to give way. It was done with the acquiescence of the populace so that's alright then.

Thanks for informing me I didn’t know. Do you mean the 1930s though? I’m talking about Cyprus post 2008.

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1 hour ago, Arpeggio said:

Thanks for informing me I didn’t know. Do you mean the 1930s though? I’m talking about Cyprus post 2008.

Yes, 1930s and no, I wasn't around at the time. The Midland president was called Presley.

The reason I posted this was because I recalled the story which ended with the punters having to go round to the banks and swap their certs - NSI  at a guess. The crowds were so keen to get shafted that police were called to control them, so the report said.

I had a look round since but I couldn't find anything else on this. NSI have been known to issue bonds with a supposedly guaranteed rate so could have been something like those. 

 

 

 

 

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19 hours ago, longgone said:

Any money going in now will be investors that can't believe how low things can go if you have never seen the bottom you dont know how far it is.

There is the potential of a real bounce and ‘opportunity of a lifetime’ at these prices.....however, your statement whilst frightening could also be absolutely spot on. 

I guess if the Virus and it’s impact is worst case scenario and the bottom is VERY VERY LOW eg 1000 points (or lower) for the FTSE 1000.. then the least of our worries will be money lost. 

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12 minutes ago, Pop321 said:

 

I guess if the Virus and it’s impact is worst case scenario and the bottom is VERY VERY LOW eg 1000 points (or lower) for the FTSE 1000.. then the least of our worries will be money lost. 

why though ? what do you expect to happen ? humans can live on very little food and a sip of water you need nothing else a few willing doctors around would not go amiss.  Never mind the relentless reporting of this virus by the media the herd mentality that your life depends on a few overpriced companies shares is ridiculous.  you would be surprised how little you actually need when it comes down to it. 

 

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now is a great time to buy. 

Its always incredible that people can talk themselves out of great buying opportunities in a panic, and also buy when the markets are very peaky.

humans are not logical creatures. 

must be a kind of follow the crowd = survival instinct or something? 
 

if everyone else is running, then run! Or you get eaten kind of thing

hard to break the cycle. but equally people do very well with momentum investing also. Mixed bag.

if the FTSE100 were to fall to some crazy crazy low, then I don’t think investments would be your biggest concern, I think at that point the value of our very currency would be a bigger deal to you.

sometimes you have to just use sense, if your stuffed either way, why not at least take a gamble? At that point it’s not even much of a gamble anyway, your either stuffed, or your stuffed anyway, or your not stuffed and actually making bank 

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2 hours ago, longgone said:

why though ? what do you expect to happen ? humans can live on very little food and a sip of water you need nothing else a few willing doctors around would not go amiss.  Never mind the relentless reporting of this virus by the media the herd mentality that your life depends on a few overpriced companies shares is ridiculous.  you would be surprised how little you actually need when it comes down to it. 

 

Bit confused, you ask why then reenforced the same point I made. The reason I said money would be the least if your worries...was because food, water, doctor, knowing how little you really need (just like you say), would be the concerns. Whether your shares had gone up or down would he way down the list. 

ps...context back to my first point was that IF this were worst case scenario, not that I thought it would be. Like jilted johns comment, if it’s not worse case scenario then it could be a great buying opportunity. It’s tricky catching a falling knife...but if the opportunity to buy close to the bottom comes in the next few weeks at even lower levels then it will be difficult to resist. Particularly if the outlook is either big profit v’s something else where profit or loss doesn’t even matter. 

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16 minutes ago, Pop321 said:

Bit confused, you ask why then reenforced the same point I made. The reason I said money would be the least if your worries...was because food, water, doctor, knowing how little you really need (just like you say), would be the concerns. Whether your shares had gone up or down would he way down the list. 

ps...context back to my first point was that IF this were worst case scenario, not that I thought it would be. Like jilted johns comment, if it’s not worse case scenario then it could be a great buying opportunity. It’s tricky catching a falling knife...but if the opportunity to buy close to the bottom comes in the next few weeks at even lower levels then it will be difficult to resist. Particularly if the outlook is either big profit v’s something else where profit or loss doesn’t even matter. 

I am in the process of opening a shares isa To take advantage of 2019s allowance so will be keeping an eye on what's Going on I have a 1 year bond maturing next couple weeks so could Go 20k in.

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8 hours ago, longgone said:

I am in the process of opening a shares isa To take advantage of 2019s allowance so will be keeping an eye on what's Going on I have a 1 year bond maturing next couple weeks so could Go 20k in.

Funny that, me too. 

Mentioned on another thread...I missed Lloyd’s (not a recommendation) at 36.8p and they were up to 38p when I looked again. But it never felt I had ‘Missed out’ rather that traders were just consolidating...and even at these prices there is further to go. There is a definite sinking feeling at the moment  

I think like you I am ‘keeping an eye on what’s going on‘ rather than rushing in to buy. 

I don’t like pooled investments much (reduced risk but also reduces upside) but I am even starting to look at a simple tracker. FTSE at 5000 and yielding 5%.....

But just to re-iterate, possibly like you at the moment I am just window shopping. 

Re house prices. That’s a whole different kettle of fish. Who knows what the government will do. The reason I historically made money in property was because I never paid retail price (unlike the daft 118’ers) and often would get 50% off comparable properties. You can’t do that with shares because the price is the price.

So if sentiment falls (even temporarily) then house prices may fall....but it is possible a HTB FTB’er and even the average ‘Joe Public’ may never even know. They may think £10k off a £400k new build (including grass on lawns and carpets...who hop) is a bargain.

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1 hour ago, Pop321 said:

.

So if sentiment falls (even temporarily) then house prices may fall....but it is possible a HTB FTB’er and even the average ‘Joe Public’ may never even know. They may think £10k off a £400k new build (including grass on lawns and carpets...who hop) is a bargain.

It's not about sentiment, it's about a global debt bubble popping, IMHO

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I think it will crash, but it just occurred to me we can now borrow at emergency rates which is effectively a discount.  So will probably buy a reasonably priced house we just saw for about £240k with £130k down, £110k borrowed at sub 2% fixed for 5 years. This will leave £100k war chest.  I realise we might miss out on getting it for sub 200, but the house is about half what we could afford if we released tied up capital, & sellers are unbelievably stubborn where we are looking.

The discount is that we'll save about £5000 interest vs 3%.

This is fag packet.  Going to do the sums properly today & will report back.

Non financially we will gain security of tenure,  but wouldn't over emphasise that as landlord very keen to keep us as tenants (even more so in the light of Covid-19 presumably)

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1 hour ago, Pop321 said:

Funny that, me too. 

Mentioned on another thread...I missed Lloyd’s (not a recommendation) at 36.8p and they were up to 38p when I looked again. But it never felt I had ‘Missed out’ rather that traders were just consolidating...and even at these prices there is further to go. There is a definite sinking feeling at the moment  

I think like you I am ‘keeping an eye on what’s going on‘ rather than rushing in to buy. 

I don’t like pooled investments much (reduced risk but also reduces upside) but I am even starting to look at a simple tracker. FTSE at 5000 and yielding 5%.....

But just to re-iterate, possibly like you at the moment I am just window shopping. 

Re house prices. That’s a whole different kettle of fish. Who knows what the government will do. The reason I historically made money in property was because I never paid retail price (unlike the daft 118’ers) and often would get 50% off comparable properties. You can’t do that with shares because the price is the price.

So if sentiment falls (even temporarily) then house prices may fall....but it is possible a HTB FTB’er and even the average ‘Joe Public’ may never even know. They may think £10k off a £400k new build (including grass on lawns and carpets...who hop) is a bargain.

The cycle of this virus has not even started yet we are in uncharted waters now.  i know your not in the SE but down here i have seen prices more than double in some areas after HTB 10k or even 100k is not even going to persuade me to buy anything, not that i can as i`m not working and now this lock down is going to occur,  it looks as if this year is another write off. 

saying that with the right investments a years salary or more could be made with the swings that are going on. 

4 month lock down on over 70`s i live with one so feck knows where that leaves me, will the state be picking up the tab for a rental for me for 4 months ?

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1 hour ago, Si1 said:

It's not about sentiment, it's about a global debt bubble popping, IMHO

In terms of fundamentals I agree. My experience has been follow sentiment (I mean in a contra fashion) and find a motivated seller. 

I am talking pure investment...reasonable location but that crappy house next to the ginnel, the one with the limited rear garden etc.  50% off...nothing else will do. Paint it grey, posh blinds, retire the bathroom then wait for sentiment to return and sell at 90% of comparables to allow for ginnel/garden.   

Buying a house to live in is a different proposition. Fundamentals and debt bubbles popping could lower ‘retail prices’ and it’s that which I am less sure about...not because it shouldn’t happen but because crazy intervention might stop it. Said it before though...governments are pushing against a tide but for those looking for a ‘home’ it’s really difficult to know when the madness will stop. It will happen but unsure when. Next week, next month, next year or next decade? 

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1 minute ago, Pop321 said:

In terms of fundamentals I agree. My experience has been follow sentiment (I mean in a contra fashion) and find a motivated seller. 

I am talking pure investment...reasonable location but that crappy house next to the ginnel, the one with the limited rear garden etc.  50% off...nothing else will do. Paint it grey, posh blinds, retire the bathroom then wait for sentiment to return and sell at 90% of comparables to allow for ginnel/garden.   

Buying a house to live in is a different proposition. Fundamentals and debt bubbles popping could lower ‘retail prices’ and it’s that which I am less sure about...not because it shouldn’t happen but because crazy intervention might stop it. Said it before though...governments are pushing against a tide but for those looking for a ‘home’ it’s really difficult to know when the madness will stop. It will happen but unsure when. Next week, next month, next year or next decade? 

Ok, agreed

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Interesting Law Society article listing some possible problems that conveyancers have raised due to COVD19. 

COVD-19 and residential conveyancing transactions

Quote
  • requests for properties being decontaminated
  • refusal to vacate on completion because seller in isolation
  • failure or disruption to parts of the banking system (such as CHAPS)
  • inability to obtain search results if people are not available to carry out the searches
  • reluctance on the part of removal company employees to enter properties
  • difficulties in obtaining witnesses
  • issues in mortgage lending surveys physical valuations

What everyone wants to understand (and ideally control) is who bears the risk in various situations.

 

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14 hours ago, jiltedjen said:

if the FTSE100 were to fall to some crazy crazy low, then I don’t think investments would be your biggest concern

Bulls always use the "if [asset] really were to fall significantly in price then buying would be the last thing on your mind" line. Seems like projection to me, 'it would be financially catastrophic for me so the same must be true for everybody else too'. Even at low prices there are trades happening so somebody must be buying, that's how we know the price is low.

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