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BillyShears

The Great House Price Crash Coverup

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There's nothing new in this post, but I think some things have come out in the last few weeks on this forum which need emphasis.

Basically, house prices have been going down in some parts of the UK. A good example is house prices in Brighton which it has been claimed went down 10% last year.

Time and time again on places such as this forum, in the papers, on television, in conversations at our local workplace, everywhere, people keep telling us that prices won't go down because of high employment, prices won't go down because interest rates won't rise, house prices wont' go down because of this, because of that.

But if these arguments were true, then house prices would go down absolutely nowhere in the UK, because they, pretty well, apply equally across the UK. If prices drop significantly in some places in the UK, then all these arguments about house prices not crashing because of blah blah blah are blown right out of the water.

I was shocked to hear that Brighton prices went down 10%. I still wonder if it is true. Why wasn't it on the front pages of all the newspapers. Why isn't it discussed on the radio, on the TV?

Is it true that massive HPI in Northern Ireland and a few other places are keeping the average for the whole country up? Rather than the Nationwide graph on the front page, we need a table in big red flashing letters showing that prices have fallen considerably in some areas, and how this is being hidden by the average.

As far as I can see, if the "HPC community" wanted to do something, then collecting and refining these statistics, and publicising them is by far away the far most important thing that can be done, because people will make sympathetic noises about FTBs but be counting their money even while they are making them. But tell people that the price of their investment property went down by 10% last year, and nobody told them, then they'll start thinking of doing something. Like unloading the property, and you know where that will lead...

Yes, I know that there's nothing original in this post, but I really think these facts need to be verified, and properly researched. To expose all the BS for the BS that it ... is?

Billy Shears

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Is it true that massive HPI in Northern Ireland and a few other places are keeping the average for the whole country up?

If you look at the regional breakdowns then it does appear so. I would say that the NI bubble continues because of the unbelievable Irish Republic bubble.

Basically I think that the trick which has been pulled off, is that the "ripple effect" which has kept the national average house price looking relatively stable, has taken so much time to work through Scotland and NI, that it has effectively fooled people in to thinking that a crash has been avoided.

This has therefore brought some more buyers back out in England etc who have kept the market going on the back of the IR cut last summer.

But if you dig deeper into all the statistics (and how many do that before they buy a house) then you realise that England is definitely in more negative territory.

This is one of the key reasons for the cover up.

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Basically I think that the trick which has been pulled off, is that the "ripple effect" which has kept the national average house price looking relatively stable, has taken so much time to work through Scotland and NI, that it has effectively fooled people in to thinking that a crash has been avoided.

Aberdeen, Dundee and Inverness were quite resilient initially, though all have slowed dramatically and even fallen over the last six months. Glasgow and Edinburgh flats have been falling considerably. Scotland lagged England a fair bit, but the crash is catching up here too.

Why is this not being reported?

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Guest Charlie The Tramp
BillyShears Posted Today, 12:32 AM

I was shocked to hear that Brighton prices went down 10%. I still wonder if it is true. Why wasn't it on the front pages of all the newspapers. Why isn't it discussed on the radio, on the TV?

Well this information was published in the Brighton local paper.

Sussex finished tenth-highest on a list of 53 counties for mortgage repossessions in 2005. Brighton is by far the highest on a list of homes repossessed during the last quarter.

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I reckon we're due a 40% correction. I've seen several properties in my area have 10% slashed from the asking price so that's 25% of the crash taken care of already.

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I reckon we're due a 40% correction. I've seen several properties in my area have 10% slashed from the asking price so that's 25% of the crash taken care of already.

What everyone on this site MUST be careful of is recognising that asking prices are being slashed to below the ceiling price in your street/area - as opposed to reductions in asking prices from a highly inflated initial asking price.

I think that EAs are highly inflating prices all over the place, in an attempt to engineer market stagnation / slight price rises when the few people mug enough to pay these prices come along and buy.

If EAs priced houses to actually get a normal level of transactions for a healthy market then we would be seeing falls and not rises in the official stats.

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Aberdeen, Dundee and Inverness were quite resilient initially, though all have slowed dramatically and even fallen over the last six months. Glasgow and Edinburgh flats have been falling considerably. Scotland lagged England a fair bit, but the crash is catching up here too.

Why is this not being reported?

It is not being reported because it is not happening! "slowed dramatically" "fallen over" "falling considerably" "the crash is catching up here too" This is absolute gross exaggeration and is the sort of loose talk that makes me despair of this site and switching off from it.

I have been trying unsuccessfully to buy in Aberdeen for months now, at O/O approacing 20%. Oh how I wish it were so!

I have another considerable O/O going in today but once again do not expect to be successful.

I really know the market here from bitter and direct experience. Just because you would wish it crashing does not make it so.

I have also been tracking a number of flats in Edinburgh and they have all sold quite rapidly.

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There is one aspect of the crash that did not happen last time and it is this.... I have just rented another house. Another case of the seller not being able to sell so rents out the house.

What I don't understand however is how they do it. When I moved I needed the money from my sale to put down on a new house so that my mortgage payments were cheaper.

This guy could not sell his house at £335,000 (mainly because it is not worth it - Neighbours thought it was a joke) so he rents it out at £900.00 a month. I know from net house prices this probably just covers his mortgage repayments. He then buys another house for £400,000.

If he does not sell his house he needs to be pretty wealthy to have a 100% mortgage on £400k or have a healthy bank balance for a sizeable deposit.

Lets assume he is quite wealthy and can do so, what about all the other people who are doing the same. It does not make financial sense. The mortgage on £400,000 must be horrendous or he could borrow on his btl but either way it puts massive strains on your finances. But if he could afford to mortgage that amount why did he not do so when he bought this house 4 years ago.

Four years ago a previous neighbour of mine moved out of her terrace of £80,000 and bought a house for £135,000. Everyone was saying how can she afford a mortgage that high. The same neighbours now are buying houses valued at £200,000. Whats changed. Have they all of a sudden got richer. Its only 4 years ago.

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I don't think a house price crash can be covered up, when it actually comes.

The cover up suggestion is like saying there's been a stock market crash but the prices don't yet reflect it (because some stocks are keeping the average up while other stocks are plummeting).

When the HPC is here, you'll want to block out the whinging, whining and finger pointing. It won't be pretty.

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I was shocked to hear that Brighton prices went down 10%. I still wonder if it is true. Why wasn't it on the front pages of all the newspapers. Why isn't it discussed on the radio, on the TV?

It was mater-of-factly mentioned in a article on Brighton in last weekends Sunday Telepraph in their Home & Living property section.

I have to say I was surprise to see such honesty in a property section of a newspaper.

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"With prices doubling in Brighton over the past seven years, they suddenly fell by 10 per cent last year. Now that they have started to level off, it is a good time to buy, argues Lawrence Felton from Strutt & Parker (01273 779649)."

10% down is a great deal more serious than 10% up. If you take a Brighton home value 100k in 1999 and the same home at 200k seven years later there is HPI of 100k or double. 10% off is 20k or one fifth of the profit, not one tenth. Most of us know this but it is surprising how many do not.

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I think that EAs are highly inflating prices all over the place, in an attempt to engineer market stagnation / slight price rises when the few people mug enough to pay these prices come along and buy.

If EAs priced houses to actually get a normal level of transactions for a healthy market then we would be seeing falls and not rises in the official stats.

You make it sound like a big conspiracy! In reality the seller sets the price not EA's

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It is not being reported because it is not happening! "slowed dramatically" "fallen over" "falling considerably" "the crash is catching up here too" This is absolute gross exaggeration and is the sort of loose talk that makes me despair of this site and switching off from it.

I have been trying unsuccessfully to buy in Aberdeen for months now, at O/O approacing 20%. Oh how I wish it were so!

I have another considerable O/O going in today but once again do not expect to be successful.

I really know the market here from bitter and direct experience. Just because you would wish it crashing does not make it so.

I have also been tracking a number of flats in Edinburgh and they have all sold quite rapidly.

Sorry Alba, you must be meaning a different Aberdeen to the one I know? Far from an exageration.

From your tone, you wouldn't per chance be an amateur BTL'r trying to prop up the fading value of your portfolio by any chance?

Aberdeen is definately on the way down (even the stats can't hide this) , desirable out of town country properties remain resilient for the time being though. Aberdeen is yet another city awash with new build rental properties that simply are not required and not renting.

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I don't think a house price crash can be covered up, when it actually comes.

The cover up suggestion is like saying there's been a stock market crash but the prices don't yet reflect it (because some stocks are keeping the average up while other stocks are plummeting).

When the HPC is here, you'll want to block out the whinging, whining and finger pointing. It won't be pretty.

Disagreed. We don't have one big property market over the whole country, we have a whole lot of property markets. There's the UK property market, the East Midlands property market, the Leicestershire property market, the Leicester property market, and the LE4 1AT property market. What is, if not exactly being covered up as the title of this thread was deliberate hyperbole, but at least not given the prominance it deserves is that quite large chunks of the country have experienced HPD for "house price deflation".

What is more important when you're selling a house in LE4 1AT? The state of the property market over the whole country, or the state of the market in LE4 1AT?

I believe that most homeowners and potential buyers are unaware of local price drops, because of the emphasis put on the country as a whole, and hence are missing out on the chance of either realising their profit before the prices fall further, or to realise that not only do house prices not always go up, but that they are going down right now.

Certainly I think there are a lot of people around the country who see the headlines in the papers or on the news, and are tickled pink that house prices have gone up yet again, and feel richer, when in fact it's likely that the "value" of their home has gone down.

Billy Shears

You make it sound like a big conspiracy! In reality the seller sets the price not EA's

Don't many house owners market their property at the price suggested by the EA?

Billy Shears

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There is one aspect of the crash that did not happen last time and it is this.... I have just rented another house. Another case of the seller not being able to sell so rents out the house.

What I don't understand however is how they do it. When I moved I needed the money from my sale to put down on a new house so that my mortgage payments were cheaper.

This guy could not sell his house at £335,000 (mainly because it is not worth it - Neighbours thought it was a joke) so he rents it out at £900.00 a month. I know from net house prices this probably just covers his mortgage repayments. He then buys another house for £400,000.

If he does not sell his house he needs to be pretty wealthy to have a 100% mortgage on £400k or have a healthy bank balance for a sizeable deposit.

Lets assume he is quite wealthy and can do so, what about all the other people who are doing the same. It does not make financial sense. The mortgage on £400,000 must be horrendous or he could borrow on his btl but either way it puts massive strains on your finances. But if he could afford to mortgage that amount why did he not do so when he bought this house 4 years ago.

Four years ago a previous neighbour of mine moved out of her terrace of £80,000 and bought a house for £135,000. Everyone was saying how can she afford a mortgage that high. The same neighbours now are buying houses valued at £200,000. Whats changed. Have they all of a sudden got richer. Its only 4 years ago.

Lets assume 900ukp a month more than covers the IO morgage, on the equity on the original property, 900ukp a mounth is IO on 180k. If he had equity before, his orginal morgage may be alot smaller (90k?) this would leave him 450ukp a mounth on the rent to 'play' with on his new property..

IO on the new property for 400k is 2000ukp a month, taking away the 450 leaves him an IO morgage of 1550 a month, i guess that could be just about covered by his wifes salary? He only needs coucil tax on one property, and if he has teenage kids he can charge them a rent to live there. Anyway its only for a whort while, property prices always go up, he can sell the first house in a couple of years time and he is quids in and that will pay off the balance on the old house, especially if interest rates continue to fall.....

Crazy logic, but with IO its just about possible.

If we all wanted we could lie about our incomes, buy a large house (or two) with 600k on a 30k salary rent out all the rooms including the dining room and use that to live on. When prices go up we can all sell up (or sell one of the properties/downsize). Logic is being stretched to the limits....

As for your other neighbour, say she had a normal morgage to start with, she sold an 80k house, if she bought in 96 that would have cost her no more than 25k. so she has 'made' about 55k. She wants a bigger place to make a bigger slice of pie. she moves to an IO morgage on the 135k property...

Lets imagine she MEWed on her initial morgage and had a 35k repayment morgage at a higher Ir (1997 rates) : 400 a month

using equity from old place she has a 90k IO morgage at a lower IR (6%) : 450ukp a month

Your previous neighbour is only paying 450 a mounth, so she feels better off, has a nicer house and its cheaper than renting the equivelent property....

Ive dscovered a few people in the office are now IO, its cheaper and there planning on downsizing in future, people have stopped paying off the equity, many are releasing equity for the next property, or a place in spain. Changing to IO morgages makes the outgoings almost the same, but with a second property they can sell at a later date....

Edited by moosetea

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Don't many house owners market their property at the price suggested by the EA?

Billy Shears

Many do, but an awful lot are quite happy to make their own decisions, irrespective of how realistic it may be!

M

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  • 302 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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