Its Been Another Year

[CABMAN UK]

Hi everyone its been a while since i last posted on this site, my last post was about a friend who was selling his 3 bed terr in waltham abbey for 200 grand,and i was saying you wont sell it mate guess what 4 months ago it sold for the asking price. So i have just mugged myself again another mate of mine had his 2 bed flat(ex council)in central london on the market for 270 grand,oh dear guess what it sold for the asking price,now my friends i know jack shit about all of this except what i read on this site and i visit the site every day for a read,so i am begining to believe we might have got this wrong in a way that the bloody crash isn't happening and dudes like Minted if you can remember him did have it right,i am still waiting and waiting and waiting its not going down my friends and to be quite honest have put my trust in alot of peoples views on this site,PEOPLE ARE STILL BUYING so maybe it is different this time.Thats it my rant is over its time to jump from a high building and curse and swear about this f....king site all the way down.

[ETOPS773]

Please please please read this thread:

http://www.housepricecrash.co.uk/forum/ind...opic=24836&st=0

Many many people on here said the trigger of the crash would be overlooked by most. Seems they were right....its the Japanese raising interest rates which will cause a credit crunch!

I was geniunely quite choked when I read it, if they raise the rates in Japan (which is 99% certain next month) then we were right all along and we get our crash.

Seriously, in 6 months we could be further down the line than many of us even dreamed of.

Keep the faith, we are about to be rewarded for our patience!

[Realistbear]

1982-1988 saw the 2nd highest property spike in history. The Great Crash (1989-96) followed and saw a down-turn spanning 7 years. 1997-2005 saw a recovery and expansion to the highest property spike in history. The "plateau" began in 2005 as appreciation slowed to almost nothing compared with 2004. The next stage in the economic cycle is a repeat of 1983 and 1990 (the 2nd years of the down cycle where momentum to the downside picks up).

Some do not believe in the economic cycle however and think speculative asset bubbles only expand. They are mistaken, as history shows.

Edited February 25, 2006 by Realistbear

[Guest Winners and Losers]

What you have been witnessing is the slow downward spiral of the last couple of years. The crash won't happen overnight, but considering it has been brewing for a while it could well be just around the corner.

[CABMAN UK]

DrBubb my friend i dont wish to earn money from property, thats the whole issue here i just want to be able to buy a property to live in with my family.I am not intrested in materialistic ******** like money and status mate when you die mate you cant take any of that with you and what you leave the goverment take back anyway.I dont wish to sound to divergent im sorry if i do im just abit pissed with it all.

Thanks for the replies people.

[Ferret]

You have already posted this anecdotal. Why are you repeating it?

http://www.housepricecrash.co.uk/forum/ind...topic=22913&hl=

CABMAN UK Jan 25 2006, 03:14 PM Post #1

Hi everyone, i haven't posted for a while but always visit the site,the last post i done was about my friends house in Waltham abbey about six months ago, he had it up for sale for 200 hundred grand and within six weeks it sold for the asking price,another friend has put his two bed ex council flat up for sale in the clerkenwell area in London for 270 grand, he had loads of intrest and has just sold for the asking price,so it seems as people are still buying property no matter what, maybe it is different this time and we are wrong about the crash. I like most people have been waiting for this to happen but the media plays a big part in this and all the news is positive with the reports they give, and also the FTSE doing so well, plus most get intrest only mortgages which can work out affordable,and i know from talking to people that they look at it like if they buy for 160 grand lets say on intrest only in 10-15 years what they earn in wages to now the mortgage always gets smaller or something like that i think you get what i mean lol,anyway from sitting back and waiting for 3 years it dont look good for us,This time it must be different from before otherwise it would be happening and its not, and last year they said there was a dip, well if so property didn't drop much did it, i do hope people can reply to this post but it dont look good.

[BillyShears]

What you have been witnessing is the slow downward spiral of the last couple of years. The crash won't happen overnight, but considering it has been brewing for a while it could well be just around the corner.

It's only the start of 2006. 2004 was a boom year, and 2005 was mostly flat. While I'm not one of those who predicts a crash with claims of 100% certainty, if this was the start of a crash, it still wouldn't be slow. If 2006 ends slightly down, with 2007 accellerating in pace, and 2008 when prices really start coming down, then I'd say that this was a fairly sudden and fast crash. Expecting a real difference from a month ago is a bit unrealistic IMHO.

The problem with a site like this one is the classic "the watched pot never boils" situation.

Billy Shears

[FernandoMorientes]

Please please please read this thread:

http://www.housepricecrash.co.uk/forum/ind...opic=24836&st=0

Many many people on here said the trigger of the crash would be overlooked by most. Seems they were right....its the Japanese raising interest rates which will cause a credit crunch!

I was geniunely quite choked when I read it, if they raise the rates in Japan (which is 99% certain next month) then we were right all along and we get our crash.

Seriously, in 6 months we could be further down the line than many of us even dreamed of.

Keep the faith, we are about to be rewarded for our patience!

Good thread.....please note similar threads on the existing forum page and note the journals from the US and Australia and tell me what makes you think the UK is immune? Our debt is higher than our annual GDP think about that in respect to your own finances if that doesn,t chill your bones then I don,t know what will?

[beenhearingthisforyears]

Two Comments;

1/

Property at best has provided boring returns since mid-2004. It is cheaper to rent, and my money is elsewhere, earning much better returns. I am happy to stand aside since the return on property is poor, and the risk is high

2/

We are only two turns of the credit screw away from a Crash:

The first will put HP inflation into reverse, and the second will be a more severe credit tightening, which will be a reaction to all the problems thrown up by the first. When the tightening is done, BTL loans will be back down to a maximum of 60-70%, and a price slide will be well underway.

IT AMAZES ME how eager people are to throw their money into an asset class with such a poor risk/reward

But how long do you think this cycle is going to take to play out? With respect IMO the majority of the british public could not/would not "play" / risk the markets with their STR funds. Many got burnt in the past. And friends who made £100k on the markets last year, have lost in the past. IMO it is not perceived to be as easy as sinking your funds into property. And of course we have to seperate the investors from the home owners. Many OO do not even read the business pages of the tabloids let alone study the markets or read a broadsheet. UK's most popular newspaper is the Sun! (actually IMO some very talented journalists work on the Sun, believe dept Political editor of the Times is moving over to Sun)

Many people buy a property to make a home, and do not look at it as JUST an investment vehicle.

And if anything the banks are relaxing regulations on BTL, if the news from Guardian today can be relied upon:

Saturday February 25, 2006

The Guardian

please see quote below:

"Yesterday Nationwide building society, through its UCB Home Loans buy-to-let subsidiary, didn't just loosen its lending criteria, it unlocked the gates and threw away the keys. Whereas previously Nationwide allowed a landlord just two buy-to-let mortgages, now it will give them up to 10 each. And don't worry about the size of the loan - they're quite happy to lend a landlord up to £3m. Nationwide is joining an extraordinary rush by other banks to grab a share of the new lending boom. A few weeks ago HBoS raised the lending ceiling on buy-to-let landlords from £2m to £5m. West Bromwich building society is about to dump its £3m limit, Derbyshire building society has lifted its to £5m - and brokers say it can be pushed as far as £10m. Paragon, the biggest buy-to-let specialist, already has a £10m limit."

So a credit crunch looks like it could be a way off yet?

[CABMAN UK]

Ok Dr bubb, sorry if have upset you in any way didn't mean to, got out of the wrong side of the bed today and just abit fed up waiting, it seems like its never going to happen sorry mate.

[Guest Winners and Losers]

2008 is only 2 years away. I can stay in my current rented house for the next 2 years (says my landlord). How perfect! This time I will time it right. I have let go of the desire to own a house again in the UK, be warned though that this process takes some time and could involve the taking of mind altering substances. I was not a forced seller when I tried to sell my house in Oz in 2004, but I did want to sell it. 12mths later of chasing the market down and I rented it out instead as prices had dropped to 2003 levels. The only reason I can do this is because I have half the value of the house in equity - I did not MEW, luckily! I used to think rent was dead money too. It's a funny thing, once you give in to it you feel so much happier that you are prepared to wait. I know things are a little different for FTB's, but essentially that is what I am if I want to buy in the UK again. BUT, having experienced what I did in Oz I would rather wait, even if the market goes up, then watch my property depreciate in value by the day. If you are not bothered if your house is still only worth what you paid for it in 5 years time, then buy. I would warn people against buying on the premise that they are going to make as much in the next 10 years as has been made in the last 10.

Does this long post mean I am unloved?

[Nijo]

Different people, all of us.

Personally I like renting. My 1-bed rental flat is up for sale at £300k; a friend that came round last week said he would buy it for asking in a shot (if it weren't for my tenancy contract). He wants to buy a place, doesn't care about the direction of prices just so long as the location is right.

That's fine and good luck to him. He has his strong opinions, I have mine.

TO ME,

Renting and waiting is so obviously the right choice, I do not understand the stress that some here feel.

That's me exactly. My friend can't understand why I would "throw away money on rent" but admits that he doesn't know the first thing about money or numbers (despite having a £100k income). He feels I think too much....

I dont wish to earn money from property, thats the whole issue here i just want to be able to buy a property to live in with my family.I am not intrested in materialistic ******** like money and status mate when you die mate you cant take any of that with you and what you leave the goverment take back anyway.I dont wish to sound to divergent im sorry if i do im just abit pissed with it all.

So to the OP, if you feel like this then why didn't you stick to your convictions? Stop thinking so much and buy some place to make yourself happy. Many here are also not materialistic but simply do not want to pay over the odds; still others can't afford to buy full-stop. Everybody is different. Just do what you have to and get on with your life.

My 1-bed rental flat is up for sale at £300k

In fact the EA is in my flat as I type this, showing around my prospective new landlord.

Interesting situation. :-)

[laurejon]

How much is your Rent ?.

[beenhearingthisforyears]

"But how long do you think this cycle is going to take to play out?"

Does it matter?

It is easy to sit this out, if you simply let loose of that irrational desire to own property.

I thought we should see a final low in 2008-2010, but the longer this plateau goes on, the more

likely that the time to the cyclical low will get stretched too.

- -

"it seems like its never going to happen"

WHAT is not going to happen? Do you mean property will not fall?

These things take years to play out, why should you expect it to happen in months?

If you look at Australia, or at the USA, you will see the downturns have already started.

The downturn has been slow to start here because the banks have continued with their ultra-loose

lending, while they are tightening in those other countries.

The UK cannot remain the "odd man out" forever. Eventually, international investors will start to

pull their assets out of the UK, and that would require and adjustment in rates here.

Take your time, learn aboutr other markets, make money in other markets, rent well,

and the time will pass more quickly

But IMO it does matter how long all of this will take to play out to SOME. Families want to settle; 40 + years olds are wondering how their age will impact on getting a mortgage; friends are sick of sharing or being served a section 21 for no reason, and being asked to leave a great flat, etc, etc. There is immense pressure on some people to buy at this time. And these are the people who are buying.

And all research is showing that the majority of the UK public have no idea about even how much debt they owe. Surely it will only hit home, when they loose their jobs or IR's start going up?

And if times do get tough, how many will actually be forced to sell? Not everyone purchased at peak of market, many have a level of equity and i hear from some who sat out the crash last time. I lost my job so i know how bad it got.

[Nijo]

How much is your Rent ?.

£1150. Like the yield on that?

[Guest boredwaiting]

IT AMAZES ME how eager people are to throw their money into an asset class with such a poor risk/reward

Most people don't know any other way. I don't know anyone who trades shares. I myself have a few but i really don't know how to research the markets and I have no buddies as such to offer tips. Most of what I know i get from this forum.

I would love to learn more but it can be expensive.

[beenhearingthisforyears]

Most people don't know any other way. I don't know anyone who trades shares. I myself have a few but i really don't know how to research the markets and I have no buddies as such to offer tips. Most of what I know i get from this forum.

I would love to learn more but it can be expensive.

I so agree with this post. my best mate made £100k last year on markets, but even though he explains the system, i know he spends hours and hours doing research and often has intense periods of anxiety when it is all looks like it could crash and burn. It is NOT a walk in the park...and if many members ON THIS FORUM admit they have STR funds in regular bank accounts i think we can see that there is no hope for general Joe Public. Mention markets down the pub/work and many have a horror story of mate who lost in dot.com crash....

Imagine Joe telling Mrs Joe he is flogging the house and "investing" the funds in the market.....yeah she just ran by my window with the rolling pin............Look at the demographics % of the UK population. Little Britain was popular because MANY people could relate to it......

[lowrentyieldmakessense(honest!)]

Two Comments;

1/

Property at best has provided boring returns since mid-2004. It is cheaper to rent, and my money is elsewhere, earning much better returns. I am happy to stand aside since the return on property is poor, and the risk is high

2/

We are only two turns of the credit screw away from a Crash:

The first will put HP inflation into reverse, and the second will be a more severe credit tightening, which will be a reaction to all the problems thrown up by the first. When the tightening is done, BTL loans will be back down to a maximum of 60-70% , and a price slide will be well underway.

IT AMAZES ME how eager people are to throw their money into an asset class with such a poor risk/reward

I think credit tightening has started (credit cards) but the BTL lenders appear to be even more lax (increasing lending limit for individuals, lower interest rates, and allowing only 100% interest cover).

[Magpie]

TO ME,

Renting and waiting is so obviously the right choice, I do not understand the stress that some here feel.

Dr Bubb,

Isn't that partly because you have a clear choice - you have the money to buy if you want, so that takes a lot of pressure off your decision. It is easier to wait knowing that you could buy if you chose to. I have a lot of respect for your advice here, but sometimes I think you forget that the pressures and stresses for wannabe FTBs are quite different to your situation.

I'm buying now, even though I think that prices are likely to fall. For me this is the first time I have been in a position to buy something I would enjoy living in at all, and I have to take into account the possibility that because of my age (approaching 40) and other factors, I might not be able to buy at all if I don't act now. I have family pressures (need a room for my child) and we aren't happy with the instability of renting, etc etc.

So I'm trying to buy a property that I judge will do less badly than some others, but I'm accepting that my deposit may end up getting destroyed by price falls, maybe worse. I try not to get stressed about it all, because the crucial thing for me is to have a family home. But I do think all these pressures mean that my situation is significantly different to yours. For me it's not a simple logical choice between asset classes - it's "will I ever own a home or not?" - it's a choice between different risks which may adversely affect my life rather than a choice between positive investments, and I'm therefore having to try to choose the least bad risk.

Edited February 25, 2006 by Magpie

[vicster]

I have family pressures (need a room for my child) and we aren't happy with the instability of renting, etc etc.

I've posted similar dozens of times myself (sorry - I'm boring myself now!).

If the government were to tighten housing regulations, make tenancies more secure, not only would you and I be less likely to buy but all those hobbyist BTLs would bale out too, flooding the market. Then we'd see HPC...

Mind it's not going to happen

[BillyShears]

I've posted similar dozens of times myself (sorry - I'm boring myself now!).

If the government were to tighten housing regulations, make tenancies more secure, not only would you and I be less likely to buy but all those hobbyist BTLs would bale out too, flooding the market. Then we'd see HPC...

Mind it's not going to happen

Correct me if I'm wrong, but the changes to the way that deposits are treated and also the more stringent conditions concerning electrical safety are two small steps making things harder for landlords.

Not a major change, but every little helps.

Billy Shears

[beenhearingthisforyears]

I've posted similar dozens of times myself (sorry - I'm boring myself now!).

If the government were to tighten housing regulations, make tenancies more secure, not only would you and I be less likely to buy but all those hobbyist BTLs would bale out too, flooding the market. Then we'd see HPC...

Mind it's not going to happen

Getting 2 section 21's in 13 months finished me with renting..... found great places but could only get 6 mths lease. the LL was just looking for a buyer. we paid the rent whilst he found one, then got 2 months notice to quit. Not nice when you are trying to settle near jobs etc. And much, much worse for you guys with children........so no.... for me it was NOT always great to rent!!!

Edited February 25, 2006 by beenhearingthisforyears

[IMupNorth]

Hi everyone its been a while since i last posted on this site, my last post was about a friend who was selling his 3 bed terr in waltham abbey for 200 grand,and i was saying you wont sell it mate guess what 4 months ago it sold for the asking price. So i have just mugged myself again another mate of mine had his 2 bed flat(ex council)in central london on the market for 270 grand,oh dear guess what it sold for the asking price,now my friends i know jack shit about all of this except what i read on this site and i visit the site every day for a read,so i am begining to believe we might have got this wrong in a way that the bloody crash isn't happening and dudes like Minted if you can remember him did have it right,i am still waiting and waiting and waiting its not going down my friends and to be quite honest have put my trust in alot of peoples views on this site,PEOPLE ARE STILL BUYING so maybe it is different this time.Thats it my rant is over its time to jump from a high building and curse and swear about this f....king site all the way down.

Well, Cabman, I think you have reached the point where you realise there are a lot of false prophets on this site. There are also a lot of desperate people who are desperately clinging on to the hope that a crash is imminent.

The reality is that the vast majority of the people in the country are comfortably affording these house prices, thats why they are where they are and are staying there.

The only think that is going to change this situation is that IR would rise significantly and raise peoples mortgage repayments significantly. In my opinion that needs an absolute minimum of 1% rise in IRs to create a significant pressure to reduce prices.

Now 4.5% IRs are likely for the next 2 years based on a realistic assessment of the economic picture, taking all forecastable events into consideration.

This means the bears on hear, are desperate to talk up unlikely events into 'triggers'. The most likely outcome is that prices will stagnate for at least 2 more years - after that - well we'll just have to wait and see. But lets not forget that its been a soft landing now for 20 months by my reckoning. Now the bears would tell you 'this is not possible' - cobblers !, because it is possible as has now been proven for over a year and a half.

Now, they are saying the trigger is going to be Japan raising its IRs ! - again, highly unlikely, as the Japs will undoubtably raise it 0.25% at a time - two =years from now Japans IRs will probably be only 1%. Thats going to do nothing to create a crash in the UK.

The BoE has already calculated their forecasts taking into account a depreciation in sterling - becuase they don't expect to raise IRs.

The whole think points to continued stability for at least 2 more years.

You pays your money and takes your choice, as always in life.

[Magpie]

I've posted similar dozens of times myself (sorry - I'm boring myself now!).

If the government were to tighten housing regulations, make tenancies more secure, not only would you and I be less likely to buy but all those hobbyist BTLs would bale out too, flooding the market. Then we'd see HPC...

Mind it's not going to happen

Yes, I do agree that the deregulation of the renting market (I blame Thatcher, but obviously it's a more complicated story) set up the current situation by making it so much easier to be a (bad) landlord. I'm actually lucky in one respect because I have been in a housing association flat which would now be much harder to get. But it's only one-bed so to get more space we have to buy or rent on the open market.

[BillyShears]

Well, Cabman, I think you have reached the point where you realise there are a lot of false prophets on this site. There are also a lot of desperate people who are desperately clinging on to the hope that a crash is imminent.

The reality is that the vast majority of the people in the country are comfortably affording these house prices, thats why they are where they are and are staying there.

"Comfortably affording these house prices"? Some places may not be so bad, but are you denying that large numbers of the FTBs who do buy aren't taking on huge and potentially unsustainable amounts of debt? What about those parts of the country where average house prices are 10x average salary for the area? Are you suggesting that young singletons in London working in shops, as nurses, teachers, and the like can comfortably afford these £150,000 studio flats?

Well, are you?

Billy Shears