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Max Power

What Is To Be Gained From A Crash

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I'm a hearty bear. I'm making decent returns on shares, cranking out my maxi-ISAs each year, doing my best to ignore colleagues who got on the property ladder at an absurdly young age and live in huge amazing houses and drive fancy cars as soon as they come to market.

I understand many of the arguments for a crash: housing purchase demand/prices are based greatly on speculative investment, one of the biggest signs of a bubble. House purchases have been funded by households vastly decreasing the amount they save and by cheap borrowing. Emerging markets can pin down interest rates only so long, and once their cheap imports have been factored in, interest rates may well return to higher levels for the longer term. If we hit a recession or there is some other external shock then the whole edifice is likely to go down like a house of cards.

The problem is I am locked out as an FTB by present prices, but things aren't going to get better for me if there's a recession. My job insecurity will go up, I still won't be able to able to afford a house until there's been quite some correction. My share gains are likely to be wiped out, unless the pound goes down and my foreign holdings compensate my UK share losses.

The housing boom's transfer of wealth to the older generation won't reverse, so I'll remain both worse off and in the midst of a recession - as house prices can't correct without our economy going down the pan.

As I understand it the house price boom, which is crazy and irrational, is just a ratchet. Whatever happens I lose out unless I really keep my wits about me and am extremely fleet footed.

So what is there to hope for? :unsure:

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Most people wont lose their jobs in a recession. So for those who keep them, lets say on the average wage, housing will become much more affordable.

Im hoping all the BTL crew will get screwed over big time. What people seem to forget is that once your in a house its very hard to be kicked out. Lets say your tenants decide not to pay you, its going to take 6 months to a year to kick them out, in which time your BTL guru will have made a big loss. As the recession comes this is going to be a more common scenario.

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So what is there to hope for? :unsure:

Don't hope for anything !

Unfortunately, life has taught me that for most people who 'live in hope' they will be sorely disappointed.

You have to work hard at life in order to get the rewards later on. Some get lucky, the vast majority don't.

'It pays to be a winner' an old motto but very true. Try a be a winner, thats all I can say.

If you are prepared to wait and you keep saving and investing, you'll get your reward at somepoint - thats exactly what most of the older generation have done over the years, who everyone on here seems to want to slag off. They haven't caused house prices to be high, they are just reaping the benefits as many 'younger people' are more than happy to pay high prices.

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The problem is I am locked out as an FTB by present prices, but things aren't going to get better for me if there's a recession. My job insecurity will go up, I still won't be able to able to afford a house until there's been quite some correction. My share gains are likely to be wiped out, unless the pound goes down and my foreign holdings compensate my UK share losses.

As I understand it the house price boom, which is crazy and irrational, is just a ratchet. Whatever happens I lose out unless I really keep my wits about me and am extremely fleet footed.

So what is there to hope for? :unsure:

After the last crash prices bottomed out when, '94?, '96? If you look back to see what things were like then, employment wasn't too bad, and lots of people were able to buy houses. And it's wasn't a matter of spotting the sole five minutes when it was a good idea to buy a house, it went on for years. Why shouldn't this happen again?

Billy Shears

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Bubbles are fairly predictable.

The resultant fall out, and consequences for ALL - not so.

Be careful what you wish for.

I fear deflation, hyperinflation or a mix of both. Certainly some sort of DEPRESSION, not recession.

Get liquid ASAP - it won't just be the BTL brigade getting slaughtered.

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Guest Winners and Losers

After the last crash prices bottomed out when, '94?, '96? If you look back to see what things were like then, employment wasn't too bad, and lots of people were able to buy houses. And it's wasn't a matter of spotting the sole five minutes when it was a good idea to buy a house, it went on for years. Why shouldn't this happen again?

Billy Shears

I bought in London in 1996 for 2 x joint salary with 5% deposit!!! I had no problem finding work from 1992 - 1996.

I have just read (on the Wiki) the headlines from the last crash. Not many headlines saying 'The CRASH is here'. I think the biggest give away was the lack of stories in 1993. When it all goes quiet, you know its here! If it doesnt happen again I will be very, very surprised. In fact, looking at the past headlines, and from my personal experience I would hedge a bet that it already has started. :unsure:

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Bubbles are fairly predictable.

The resultant fall out, and consequences for ALL - not so.

Be careful what you wish for.

I fear deflation, hyperinflation or a mix of both. Certainly some sort of DEPRESSION, not recession.

Get liquid ASAP - it won't just be the BTL brigade getting slaughtered.

If there is a risk of hyperinflation what would you suggest as a safe place for your assets?

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Well as the Irish would say good things come to those who wait. You have no property no debts and no ties. you have assets not liabilities. look forward to life, you can go anywhere do anything. give notice on your flat and go and live in cambodia for a year tracking rare monkeys or something. no mortgage to pay. no bills no taxes, no debt.

lets see the rest of you debtslave freinds do that with you?

asset price deflation will make the UK a fairer and more competitive economy. chill the market will take care of it.

in hyperinflation gold/commodities but to a lesser extent equities are the obvious choices. in deflation cash is king.

if we see a worst case price scenario in which good/good assets/prices (inflation in assets)/(deflation in prices) is replaced with bad/bad (deflation in assets)/(inflation in prices) then bets are essentially off. bonds might be good after all the rate hikes if rates go high enough and yeilds go to the moon (and they might to quell the inflation) . commodities could still perform well if they try to cut rates and reflate but poor in deflation. cash is safe and might be a real star in a full on deflation. and what else is there. equities would have to fall a long way to look good value in a "bad" price scenario. diversify your way into some esoteric backwarter in the global economy maybe and wait it out... maybe? Jury is deffinetly still out. we won't know untill it happens. I guess.

Edited by jonpo

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If there is a risk of hyperinflation what would you suggest as a safe place for your assets?

Hint : There are plenty of gold and oil threads in the investment and financial sections on here. Some advice? -Start forming your own opinions from this content, follow it up by looking elsewhere for opinion - try not to follow without your own research.

FWIW: I have split my portfolio in two. Hyperinflation plays, and, deflationary plays. I expect to shift the weightings as I see things develop. I have NO DEBT.

My hyperinflationary portfolio includes gold bullion and oil stocks.

I'll say it again (As they always say here) - "do your own research"

Well as the Irish would say good things come to those who wait. You have no property no debts and no ties. you have assets not liabilities. look forward to life, you can go anywhere do anything. give notice on your flat and go and live in cambodia for a year tracking rare monkeys or something. no mortgage to pay. no bills no taxes, no debt.

lets see the rest of you debtslave freinds do that with you?

asset price deflation will make the UK a fairer and more competitive economy. chill the market will take care of it.

in hyperinflation gold/commodities but to a lesser extent equities are the obvious choices. in deflation cash is king.

if we see a worst case price scenario in which good/good assets/prices (inflation in assets)/(deflation in prices) is replaced with bad/bad (deflation in assets)/(inflation in prices) then bets are essentially off. bonds might be good after all the rate hikes if rates go high enough and yeilds go to the moon (and they might to quell the inflation) . commodities could still perform well if they try to cut rates and reflate but poor in deflation. cash is safe and might be a real star in a full on deflation. and what else is there. equities would have to fall a long way to look good value in a "bad" price scenario. diversify your way into some esoteric backwarter in the global economy maybe and wait it out... maybe? Jury is deffinetly still out. we won't know untill it happens. I guess.

Good post J.

Deflationary plays require much thought, and guess work.

Fixed price government bonds and cash (not anywhere near a bank) are my chosen havens.

Looking back at US 1929 - commodities tanked with everthing else, gold included. This may not happen this time, anything is possible, but history is usually a good guide.

But who knows?

Edited by vinny

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Guest muttley

If there is a risk of hyperinflation what would you suggest as a safe place for your assets?

Buy a house.

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Buy a house.

Didn't work in hyperinflationary Germany: as far as I'm aware house prices crashed -- at least in real terms -- during their hyperinflationary period.

After all, when a loaf of bread costs a million pounds in the morning and four million in the evening, who's going to have time for buying and selling houses?

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Bubbles are fairly predictable.

The resultant fall out, and consequences for ALL - not so.

Be careful what you wish for.

I fear deflation, hyperinflation or a mix of both. Certainly some sort of DEPRESSION, not recession.

Get liquid ASAP - it won't just be the BTL brigade getting slaughtered.

yes

Edited by Flat Bear

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And what is the other option? To continue with positive HPI? Listen HPI is not a problem when in-line with wage inflation, but the last 5 years have seen madness that NEEDS Correction. If House Prices dropped to on trend (Based on inflation), which I believe is about £130,000 for the average property, tyhen HPI of 5% per annum is not a big problem.

We cannot, however, say its now in-line with inflation when the starting point is way off trend.

If the whole market and UK PLC goes TITS UP then point the finger at Gordon Brown. Its like a cancer, gets ugly but there is f'all you can do about it.

The only way we can avoid this is to control the correction in both housing and the economy. To stay in denial, as we seem to be with government, means when it does falter its a bigger shock.

I dont want a recession but I'm afraid thats what we are gonna get :(

TB

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And what is the other option? To continue with positive HPI? Listen HPI is not a problem when in-line with wage inflation, but the last 5 years have seen madness that NEEDS Correction. If House Prices dropped to on trend (Based on inflation), which I believe is about £130,000 for the average property, tyhen HPI of 5% per annum is not a big problem.

We cannot, however, say its now in-line with inflation when the starting point is way off trend.

If the whole market and UK PLC goes TITS UP then point the finger at Gordon Brown. Its like a cancer, gets ugly but there is f'all you can do about it.

The only way we can avoid this is to control the correction in both housing and the economy. To stay in denial, as we seem to be with government, means when it does falter its a bigger shock.

I dont want a recession but I'm afraid thats what we are gonna get :(

TB

I can see what you are saying TB. But I see a lot of "cheerleading" for a crash. I don't think that all here have considered the extent and possible duration of a resultant turndown. I may be wrong but when economists look back, and apply any useful measure to this turndown, then they will all talk of a depression rather than a recession.

BTW Inflation of any sort is always a problem IMO. I wish we had real "money".

I do not wish for you, or others, to take this amiss, but...........

I have taken advantage of the liquidity (credit expansion) in the system. There have been more profitable places to be than real estate. I have tried to turn a bad situation to my advantage. I now seek a save haven from the debt bubble fallout. If my tactics are correct then I will prosper. I would urge others, if they are in any position to try - to do the same. This is different to lamenting their troubles without acting to help themselves. I do worry though, if I will even be in gainful employment once we are in a downturn.

Vinny.

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I can see what you are saying TB. But I see a lot of "cheerleading" for a crash. I don't think that all here have considered the extent and possible duration of a resultant turndown. I may be wrong but when economists look back, and apply any useful measure to this turndown, then they will all talk of a depression rather than a recession.

BTW Inflation of any sort is always a problem IMO. I wish we had real "money".

I do not wish for you, or others, to take this amiss, but...........

I have taken advantage of the liquidity (credit expansion) in the system. There have been more profitable places to be than real estate. I have tried to turn a bad situation to my advantage. I now seek a save haven from the debt bubble fallout. If my tactics are correct then I will prosper. I would urge others, if they are in any position to try - to do the same. This is different to lamenting their troubles without acting to help themselves. I do worry though, if I will even be in gainful employment once we are in a downturn.

Vinny.

I fear you are right :(

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For you to win, does not require others to lose.

I take it you're a BTL?

If we're ever to live in a decent society, then the greedy scumbags who created this bubble need to be punished, from Gordon Brown down to the idiot BTLs. That will at least prevent another bubble for another generation.

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I take it you're a BTL?

No, I just have an abundance mentality. And my house is a home first, and an investment second.

If we're ever to live in a decent society, then the greedy scumbags who created this bubble need to be punished, from Gordon Brown down to the idiot BTLs. That will at least prevent another bubble for another generation.

The politics of envy.

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And my house is a home first, and an investment second.

Good for you. I suspect most people who are priced out of the housing market would say the same... if they could afford to buy a house.

And, since your house is a home first, you won't object to a 60% drop in house prices, will you?

The politics of envy.

No, the politics of not destroying the British economy through pushing vast amounts of borrowed money into the house price casino and pricing the majority of youngsters out of housing altogether.

How can any sane person justify leaving most of a generation unable to buy a decent house, and then claiming they're 'envious'?

Edited by MarkG

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Since your house is a home first, you won't object to a 60% drop in house prices, will you?

No, not at all. Unless completely unforeseen circumstances forced me to move before prices recovered, it would only be an on-paper loss. Wouldn't affect me in the slightest.

Edited by Seamaster

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No, not at all. Unless completely unforeseen circumstances forced me to move before prices recovered, it would only be an on-paper loss. Wouldn't affect me in the slightest.

Excellent reply :)

Alot of people forget houses are not supposed to be an investment :) If prices crashed tommorow buy 90% would it really make any difference to most of the home owning population?

Personally Im not hoping for a crash at all, just a slowdown so I can save money at a quicker rate than house prices increase.

Edited by zag2me

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No, not at all. Unless completely unforeseen circumstances forced me to move before prices recovered, it would only be an on-paper loss. Wouldn't affect me in the slightest.

Some points?

+ Circumstances can change. The shift in the credit cycle WILL affect everyone IMO. In different ways and to different extents I'd grant you. GENUINE question - Why are YOU so confident to make the quoted statements? They appear over confident to my mind.

+On Paper gains can be erased - Yes or no?

Then paper losses can be reaslised as well?

+ Another genuine question - Do you think that my posts on this thread are "far fetched"?

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Please do not be offended these questions, I'd like to know what folk out there are thinking.

Does anyone else think they will be better off - on all fronts - from a HPC?

Where are the real gains?

Edited by vinny

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No offence taken. I accept that economic circumstances can, do and will change. If you re-read my post, I referred specifically to personal circumstances that would force me into a house move coincident with depressed prices. I'm confident that such circumstances will not present themselves in my case.

Edited by Seamaster

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No offence taken. I accept that economic circumstances can, do and will change. If you re-read my post, I referred specifically to personal circumstances that would force me into a house move coincident with depressed prices. I'm confident that such circumstances will not present themselves in my case.

Thank you for the reply.

It may be a prying question, but let me ask it again - in a different manner.

Why are YOU different to the many I see getting slaughtered? / Am I generally wrong - Should I be more confident?

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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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