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Am I a dreamer? Will house prices come down?


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Welcome @Rachel88, strap yourself in!

The Covid pandemic perhaps should've been the pin to ***** the uk housing bubble. Unfortunately for those wanting/needing a house price correction the government and central bank interventions have conspired to pump an illogical bubble even further. The SDLT holiday, furlough scheme, $50k bounce back loans, further QE have all flooded the country with a stash of free money which was only ever going to go one place - assets.

If you add in continued record low interest rates and the ongoing conversation around negative interest rates, you can see that TPTB are not quite done yet in their efforts to support asset (house) prices - it's all we have in terms of an economy.

Personally I don't see how the govt can defend continued tax payer subsidies to allow people to purchase overpriced housing stock given the parlous fiscal position this country currently finds itself. If anything, the govt has the perfect fall guy in Coronavirus to allow for a large correction in prices - but they're sh*t scared of upsetting boomers and the bankrupting the country.

So to answer your questions:

1. Are you a dreamer? Maybe, but you're not the only one.

2. Will house prices come down? Yes - but don't ask me when; a crash could start in 6 months or 6 years or 60 years.

It's the hope I can't stand.

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The housing market is rigged like the bond market, controlled by the central bankers. People's living standards are falling and central bankers know this hence using houses as ATM cash machines (low mortgage rates and high prices to maintain the wealth effect of the older generation and sacrificing the younger generation). I don't think house prices will fall, central bankers would just modify the system for a few years yet to keep it going.

House prices = household income + rates + supply/demand

Household income (nil change over the years)

Rates (ZIRP policy and central bankers BUYING mortgage backed bonds to reduce the risk for mortgage lenders, resulting in reduced risk premium) 

Supply/demand (low supply under Government targets and demand is very high) 

Interest rates will never increase and if they do Bank of England will simply join the HM treasury so the government will not have to borrow and can just 'print' money. Inflation will be controlled by tax and not by interest rates. 

By 2030, most people will be renting as part of the global reset project any ways. 

 

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Just now, mrlegend123 said:

The housing market is rigged like the bond market, controlled by the central bankers. People's living standards are falling and central bankers know this hence using houses as ATM cash machines (low mortgage rates and high prices to maintain the wealth effect of the older generation and sacrificing the younger generation). I don't think house prices will fall, central bankers would just modify the system for a few years yet to keep it going.

House prices = household income + rates + supply/demand

Household income (nil change over the years)

Rates (ZIRP policy and central bankers BUYING mortgage backed bonds to reduce the risk for mortgage lenders, resulting in reduced risk premium) 

Supply/demand (low supply under Government targets and demand is very high) 

Interest rates will never increase and if they do Bank of England will simply join the HM treasury so the government will not have to borrow and can just 'print' money. Inflation will be controlled by tax and not by interest rates. 

By 2030, most people will be renting as part of the global reset project any ways. 

 

 

What about the amount of deaths from Covid, will that bring in more supply?

They cant go up much more, my salary is not increasing.

I have looked into the great rest thing.... people not owning anything but being happy. This would mean the government owning everything, so they would be buying houses but they're not. So I think it's an idea from klaus Schwab but not actually going to happen. 

I do think taxes will go up. Maybe council tax. I know quite a few older people, with saving but they only have about £20k which wont go far when taxes rise. Maybe this will make some down size. 

I have to agree about supply and demand. I have quite a few friends looking to buy. The new builds are £300k plus near me. But none of us can afford them. 

 

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50 minutes ago, Smiley George said:

Welcome @Rachel88, strap yourself in!

The Covid pandemic perhaps should've been the pin to ***** the uk housing bubble. Unfortunately for those wanting/needing a house price correction the government and central bank interventions have conspired to pump an illogical bubble even further. The SDLT holiday, furlough scheme, $50k bounce back loans, further QE have all flooded the country with a stash of free money which was only ever going to go one place - assets.

If you add in continued record low interest rates and the ongoing conversation around negative interest rates, you can see that TPTB are not quite done yet in their efforts to support asset (house) prices - it's all we have in terms of an economy.

Personally I don't see how the govt can defend continued tax payer subsidies to allow people to purchase overpriced housing stock given the parlous fiscal position this country currently finds itself. If anything, the govt has the perfect fall guy in Coronavirus to allow for a large correction in prices - but they're sh*t scared of upsetting boomers and the bankrupting the country.

So to answer your questions:

1. Are you a dreamer? Maybe, but you're not the only one.

2. Will house prices come down? Yes - but don't ask me when; a crash could start in 6 months or 6 years or 60 years.

It's the hope I can't stand.

Yes. Covid could definitely be the perfect fall guy. The economy was bad just before Covid took off. September 2019 the economy started to go down, then Covid came and propped everyone up. 

I have a couple of friends who haven't received any money because they are part of the 3 million excluded. Obviously I think they should have been helped financially, they are my friends. But if the government doesn't help them, then I know that my friends will be in a very bad way financially. I don't think they expected this lockdown to go on so long.

There are around 50000 properties for sale in London that is a lot of properties. It looks like everyone is trying to leave. 

I'm not looking to buy in London but my mum always said that once property prices go down in London they fall everywhere else. Not sure if this will be true this time round, especially with supply and demand.

I just want 2016 house prices again. I'm looking around Manchester area. Fingers crossed as they are just getting stupid now. I'll be living under a bridge if it doesn't happen soon.

 

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3 hours ago, Dweller said:

Do you think if the government does close down the whole market (which they talking about doing to include stopping anyone moving even if they are in the process of completing) 

Where have you read this nonsense?  Do you have a source?  

The government have said nothing of the sort.

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3 hours ago, zugzwang said:

 

TROLL-THUMB-920x920.jpg&f=1&nofb=1

Lol...exactly!


A bit of a wiff of mumsnutter in the OP, no? I'm sure there are many that hate that this site even exists, so resort to troll tactics instead.


Mods - for the sake of the OP please rename the website to: "WeDontWantAHousePriceCrashCusWereStupidOverInvestedMoronSheep.Com"
(...or .org if .com is already taken)

Edited by highcontrast
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1 hour ago, TheCountOfNowhere said:

Why ?

1998: Buy a house

2007: Sell house, buy gold

2010: Sell gold, buy shares/bonds

2014: Buy £1000 of bitcoin

2020: Sell bitcoin buy a private jet/island a 100 yacht. ( miss this one out )

2020: Sell share in Jan, buy them all back in May

2021/2022: Cash everything in buy house

You need to be desperate to buy the right stuff at the right time, not the wrong stuff at the wrong time.

It's pretty simple.

Bitcoin is a load of rubbish. Dont trust it. 

It's not an investment, it's a gamble.

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8 minutes ago, Martin_JD said:

Where have you read this nonsense?  Do you have a source?  

The government have said nothing of the sort.

Gosh I had forgotten what it can feel like sometimes on this website when I end

up feeling like I have been called up in front of the headmaster! I struggle with this stuff 

so I have no idea if this will happen but this is what I read: 

https://www.mirror.co.uk/news/politics/uk-lockdown-tighten-days-curbs-23308820

The Government is reportedly considering closing outdoor markets, estate agents, click-and-collect services and temporarily banning home moves in a bid to bring coronavirus rates under control

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1 minute ago, Dweller said:

Gosh I had forgotten what it can feel like sometimes on this website when I end

up feeling like I have been called up in front of the headmaster! I struggle with this stuff 

so I have no idea if this will happen but this is what I read: 

https://www.mirror.co.uk/news/politics/uk-lockdown-tighten-days-curbs-23308820

The Government is reportedly considering closing outdoor markets, estate agents, click-and-collect services and temporarily banning home moves in a bid to bring coronavirus rates under control

Appoloiges, i didnt mean to sound like a headmaster :)

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4 hours ago, markyh said:

The Miras withdrawal deadline in Sept 1988 basically crashed the market within months and it didnt recover for 10 years. But then back then there were no bailouts

It was not just the withdrawal of double Miras that sparked the Crash. During the spring and summer of 88 Interest rates dropped quite a lot the FTB's rushed in , back then there were very few fixed rate mortgages so they were on variable rates. When Miras ended Interest rates shot up at the same time. I remember Dear John Major putting them up 2% in Just 1 day when the balance of payment figures were released for the month of August. Strange that back then the setting of Interest rates was almost linked to the figures for the balance of payments and were a big part of Interest rate policy. Today the balance of payments has no bearing on interest rates.

Debt being one big driver for people selling houses those FTB's of 87 and 88 crashed and burnt. Anyone like myself who had bought pre 87 was unaffected by negative equity as the market did not crash more than it had gone up in the previous 3 years. I had also had 3 good pay rises so even at 15% my Mortgage was less of my take home pay than it had been in 1986 when I paid 12% interest. 

Today Interest rate shocks are not going to be as big as they were in 88 . The late 80's early 90's crash was bought about by those who had massive mortgages and bought in the last few years of the boom. Today people who have bought many years back are still carrying massive debts as wage inflation has not reduced their debt in real terms as it did for people in the 80's. I see on one hand the Interest rates not being the massive problem at this time but the size of debt being the overriding problem that could crash the market. The ending of SD holiday is not a shock to monthly payments but an incentive while moving that has been withdrawn. It will not affect those who have already bought and their ability to service the debt. 

We will wait and see.

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8 minutes ago, Dweller said:

That's very kind of you but it's quite OK it's my issues trying to keep up with stuff whilst being pretty 

clueless. 

It's very difficult to keep up with the governments messaging, i think most would agree.

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4 hours ago, TheCountOfNowhere said:

Why ?

1998: Buy a house

2007: Sell house, buy gold

2010: Sell gold, buy shares/bonds

2014: Buy £1000 of bitcoin

2020: Sell bitcoin buy a private jet/island a 100 yacht. ( miss this one out )

2020: Sell share in Jan, buy them all back in May

2021/2022: Cash everything in buy house

You need to be desperate to buy the right stuff at the right time, not the wrong stuff at the wrong time.

It's pretty simple.

pretty much the case of if you held the right mix of assets at the beginning of last year, houses have got much cheaper.

Its no wonder asking prices have increased massively when there are people with lottery winners all over the place with money to buy. Of course not everyone will sell, but you can't blame them for trying.

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4 hours ago, TheCountOfNowhere said:

Why ?

1998: Buy a house

2007: Sell house, buy gold

2010: Sell gold, buy shares/bonds

2014: Buy £1000 of bitcoin

2020: Sell bitcoin buy a private jet/island a 100 yacht. ( miss this one out )

2020: Sell share in Jan, buy them all back in May

2021/2022: Cash everything in buy house

You need to be desperate to buy the right stuff at the right time, not the wrong stuff at the wrong time.

It's pretty simple.

I wonder if anyone actually did this¬†ūü§£

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majority

8 hours ago, Rachel88 said:

Are the house prices going to come down?

I feel like I've been waiting forever and they just keep going up, up and up.

People have been putting an extra £30k/£40k on their houses, over the past few months. 

 

Hey there,

This is my first post (well, first visit) here for quite some time! Pretty much stopped visiting HPC because of all the Brexit moaning! 'its going to be the best thing' 'its going to be the worst thing' ect ect! (I was always of the Mervyn King school of thinking, that Brexit won't really make much of a difference, up or down, in the long term!).

Anyway not going to rant over that and thought it might be safe to come back now that Brexit is finally done!

So, your question...

House 'Prices' may never come down! OF course the real question is in relation to what do you want to them to come down too? Your salary? Your savings?

I still believe that house 'values' are too high but prices do not need to come down as such. Although it is certainly not impossible, the Government have shown that they will pretty much pull out all of the stops to stop house prices falling. For most people their home is still a majority of their wealth and I tend to think that the Government will destroy the currency before letting nominal house prices drop by anything over say 5%! LOL.

Of course the other question is what value do you want houses to drop too? How will you know they have dropped enough for you? Generally, if there was a large drop in prices, no-one would want to buy because they would think that prices would drop more, etc.

The main thing I learnt here was that worrying about what you can't control is a complete waste of time. If you have funds to buy somewhere you want to live and you are not getting yourself up to the eyeballs in debt, then do what you want to. Don't worry about something that may or may not happen. If you can't afford to buy, then stop lamenting and start making enough cash to buy that home you want or just live the best life that you can!

I still rent. Currently at a rental yield of 3.2%, so very reasonable. This is the main way I value property over the longer term. I invested the small deposit that I had saved into stocks and over the last 10 years have accumulated equity to a similar/if not a bit more than others have in buying a home. People mostly misunderstand compounding but the biggest cost to buying a home is the opportunity cost! Property investors use interest only mortgages for good reason. It is the only way to make above average returns from property in the longer term, you need the leverage!

I have gone over the average post word count now so will stop there and I may check in again sometime.

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7 hours ago, Sprrite said:

+1 - I have seen at times a good debate between people with opposing views on this forum but there is a level of disdain for people who believe prices will continue to rise. Its always good to get opposing views otherwise you just reinforce your own.

In regards to the OPs post, a lot will depend on what type of property your in and the local area. I think another major factor is when government support ends, this should be winding down once enough people are vaccinated and covid numbers are down. 

Its very hard to predict what will happen though, I was expecting us to be over covid by January and the correction in prices to happen by now which hasn't occurred. 

Having said that above I would love for a crash but I'm more realistic and think there may be a 10 to 15% correction which probably isn't going to be enough for most people on this forum to get on the property ladder.

I agreed. Understanding the prices in an area that you want to live is far more useful than hoping for a general decline. I was often puzzled by people who talk of a crash but didn't consider that when/if this happened they may not have a job to get this mortgaged home with? And of course the Remainders who thought that leaving the EU would be so bad that everyone would lose their jobs and the country would go into permanent decline, not looking on the bright side of this scenario that house prices would likely crash! Yeah, still ranting! But the site is called HCP! LOL

 

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