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Possible Outcome Of A House Price Crash

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From another thread

It seems to me the housing bubble is merely a conduit to transfer massive amounts

of wealth away from the general population, effectively destroying the middle-class.

And enabling the elites to further consolidate economic and political power.

Conspiracy or no conspiracy, I agree that this will be one of the consequences of a house price crash.

When the little BTL empires of 1, 2, 5, 10, 100 properties which have been built up by the middle-classes collapse. Who will pick them up at a song? It won't the average punter who posts on HPC.co.uk. Maybe cash-rich STRs will pick up one or two. But banks will have been badly burnt and repramanded and will not lend much against depreciating assets. Those who are rich now - and I mean high net-worth rich and not just leveraged 'rich' - will be in a fantastic position to hoover up the choicest bits that will be out there.

They will be the big winners, not Mr Mechanic (who probably won't be better or worse off) and most definitely not Mr White-Collar Baby Boomer (who'll probably be worse off than when the bubble began).

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From another thread

Conspiracy or no conspiracy, I agree that this will be one of the consequences of a house price crash.

When the little BTL empires of 1, 2, 5, 10, 100 properties which have been built up by the middle-classes collapse. Who will pick them up at a song? It won't the average punter who posts on HPC.co.uk. Maybe cash-rich STRs will pick up one or two. But banks will have been badly burnt and repramanded and will not lend much against depreciating assets. Those who are rich now - and I mean high net-worth rich and not just leveraged 'rich' - will be in a fantastic position to hoover up the choicest bits that will be out there.

They will be the big winners, not Mr Mechanic (who probably won't be better or worse off) and most definitely not Mr White-Collar Baby Boomer (who'll probably be worse off than when the bubble began).

I read an article that claimed that the dotcom boom achieved exactly the same thing. Basically money moved from the middle classes, in particular retired people, to the super rich. The super rich saw the boom coming and sold their shares near the peak, leaving the middle classes to lose out when it crashed.

Edit: That should be "The super rich saw the bust coming".

Billy Shears

Edited by BillyShears

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I read an article that claimed that the dotcom boom achieved exactly the same thing. Basically money moved from the middle classes, in particular retired people, to the super rich. The super rich saw the boom coming and sold their shares near the peak, leaving the middle classes to lose out when it crashed.

Billy Shears

I read that in the US market the last professional real estate investors stopped buying in late 2004. It would be interesting to see if any professional investors have bought into the UK market in the last 12 months. By "professional" I mean people who have been in the business for a substantial number of years and whose sole source of income has been from property investing with large sums involved--i.e. in excess of 1 million pounds per annum.

My guess is that the pros got out at about the same time their US counterparts did leaving the gullible holding the babies.

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I read that in the US market the last professional real estate investors stopped buying in late 2004. It would be interesting to see if any professional investors have bought into the UK market in the last 12 months. By "professional" I mean people who have been in the business for a substantial number of years and whose sole source of income has been from property investing with large sums involved--i.e. in excess of 1 million pounds per annum.

I doubt it. It's what my father does - and has done for a long time. He has sold a couple of things and bought nothing over the last 2 years. He istn't really in it for capital gains so hastn't gone and sold loads of things off when the rents are coming in, but hastn't bought either.

Should housing crash, I imagine he will buy quite a bit.

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I also read somewhere that the out of the top 100 richest people in the world 70 will drop out every 10 years to be replaced by new people. The likes of Abromvich, Gates have basically come from nowhere. Admittedly the UK has a problem with people who made millions in slavery, sugar or some random thing 500 years ago and their families still remain rich but that is more to do with our land laws than anything else.

Basically like in 'The Wire' (HBO TV Programme) there is always someone new or some new group that is hungrier and will take the power.

N.B Statistics in this post are from memory and probably completely wrong :)

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I doubt it. It's what my father does - and has done for a long time. He has sold a couple of things and bought nothing over the last 2 years. He istn't really in it for capital gains so hastn't gone and sold loads of things off when the rents are coming in, but hastn't bought either.

Should housing crash, I imagine he will buy quite a bit.

Yeah, buy low and sell high. Simple, innit?

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Yeah, buy low and sell high. Simple, innit?

Well he hastn't sold much, I think he should but he istn't as pessemistic about the market as me - and anyway is in it for the rental income. He certainly hastn't bought anything new at least.

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Well he hastn't sold much, I think he should but he istn't as pessemistic about the market as me - and anyway is in it for the rental income. He certainly hastn't bought anything new at least.

In that case, I think I need to revise my "Get Rich Through Property Theory". Here it goes.....

Buy low. Simple innit?

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Heloo, Nice thread. I'm glad others can see the structural wealth syphons in the SYSTEM.

Just look at the Land registry figures for % of total property stock that is mortgaged, it reaches maximum at HPI peaks and bottoms in crashes.... repeatedley rich people sell thier houses to people who need mortgages at peaks but then come back and buy them in the crashes.

The best and most empowering axioms to my surprise sofar are all obvious! But absent from mainstream use. For eg in markets where pure advantage is sought through exchange via possesion of profitable knowledge and experience. Each party needs to find a couter party. And the two need to agree 100% on the price but -100% on FUTURE EXPECTATION. If members of the super rich group (like the side that buys properties with cash) command similair expertise within thier group then who do they transact against? While thier small numbers may seem to make the problem a fringe issue. This is a red herring cos thier asset sizes are soo large that they need lots and lots of people to exchange with in smaller chuncks. So a pervasive lack of awarness is good for bussiness. Remember they have the inherited and earned privilage to earn though "ideas, powerfull information, the best advise money can buy ie inside advise". Wouldn't you seek to protect your ability as a group (or rather a class of people) to live in luxury and have people work for you effectivley taxing them through overt and covert "crowd control" to facilitate thier "late comming" to the band wagon repetitivley?

They understand inflation and money supply and othe details of the system that are absent from "main stream awarness".

To thier credit finding out is really easy the facts and historical precedents are really easy to find. But it takes a certain charachter of person to lead one self to draw individual conclusions for self advantage. In this market economy at least individuals can, if they desire and have the conduct and ability to employ the advantages ounce the intial work is done. There is no easy money it takes effort.

THere are many aspects i dont agree with in the system. But the markets would not exist if the production and "service" base of people actually made net gains. (Look at the roots of the terms of economy; production, service, is it not all obvious?)

The early chapters are quite dry but by the 5th it gets juicy...

QUOTE(FreeTrader @ Mar 31 2006, 08:28 PM)

Murray Rothbard's 'The Mystery of Banking' is one of the classics. Don't be put off by the date when it was written. It starts off giving the absolute basics of what money is, and moves on to discuss the mechanics and development of fractional reserve banking. Well worth reading, with the big plus that it's available on the Web as a PDF:

http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

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Thomas Jefferson: "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

Boom bust cycles are precisely engineered to move wealth from the middle class and poor to the rich. It has always been that way.

Edited by sean taylor

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It strikes me that this money system is a complicated version of the bookie/gambler relationship.

If you buy and sell enough times you will lose to the landed gentry just like if you bet enough times you WILL lose to the bookie.

I don't want to gamble at all, but to me STRing was the only option when I saw the price of houses leap to IMO fundamental unsound levels.

I agree that I only have a limited number of chances in my life to get the biggest asset at the right price.

I also except I am gambling that the price will fall. Believe me I know from friends and family what a risk I have taken.

I would never have even considered it if I didnt believe it was so massively out of whack.

I also understand that I have no control over the system, like I have no control over the oceans, in a sense I surf or drown depending on my ability to judge the crest and trough of the wave.

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Gavin I agree with you. Your self direction and taking resposilbility for your choice to stay in or judge it a ripe time to get out with a view to get back in a a net gain is the right way In my view. But like casinos, stock markets life insurance brokers, buckets shops and the property market infact the busssiness cycle, they all work on averages. it is the avaerage participant who gets fleeced. Your stance was the right one in my view.

sp1

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It strikes me that this money system is a complicated version of the bookie/gambler relationship.

If you buy and sell enough times you will lose to the landed gentry just like if you bet enough times you WILL lose to the bookie.

I don't want to gamble at all, but to me STRing was the only option when I saw the price of houses leap to IMO fundamental unsound levels.

I agree that I only have a limited number of chances in my life to get the biggest asset at the right price.

I also except I am gambling that the price will fall. Believe me I know from friends and family what a risk I have taken.

I would never have even considered it if I didnt believe it was so massively out of whack.

I also understand that I have no control over the system, like I have no control over the oceans, in a sense I surf or drown depending on my ability to judge the crest and trough of the wave.

The only difference between Economics and Gambling is that no-one forces you to go to a Casino...

Try to explain you don't have a bank account and you might not get paid

Try to explain you don't like credit cards and you might not get a mortgage

Try to pay all your bills in cash and you'll spend hours waiting in queues

The system implies that only the system is acceptable - you cannot remove yourself from it.

Reminds me of an 80's sci-fi book called 'StepFather Bank' by David Poyer about the last man (a street poet) with no bank account. BTW in this book anyone who was in debt and couldn't pay had their organs reclaimed as collatoral... beware of this in your loan agreement small print!

- Pye (Property Speculation Ninja :ph34r: )

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was in debt and couldn't pay had their organs reclaimed as collatoral... beware of this in your loan agreement small print!

This might in fact be a good idea. One would hope that if government's where in debt then the claim would be on the MP's organs ;)

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  • 338 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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