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The Undertaker

House Prices Can Never Go Down

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I was in kebab shop in South Kensington today, and overheard a twit explaining to his friends how "property is a miracle in this area" because "it always goes up". Apparently no matter what you pay it will continue to rise by at least 20% according to this guy. I felt sick.

Unfortunately most of my friends, who are all quite well educated, seem to believe prices will never go down, and most of them are looking to buy. I have tried to save them but none of my arguements seem to work on them. Im sure this has been discussed before, but any suggestions for convincing si

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I was in kebab shop in South Kensington today, and overheard a twit explaining to his friends how "property is a miracle in this area" because "it always goes up". Apparently no matter what you pay it will continue to rise by at least 20% according to this guy. I felt sick.

Unfortunately most of my friends, who are all quite well educated, seem to believe prices will never go down, and most of them are looking to buy. I have tried to save them but none of my arguements seem to work on them. Im sure this has been discussed before, but any suggestions for convincing si

Prices may go down in the short term, but over the long term, your friends are absolutely right. Of course, there will be short-term dips, but as long as you think of property as a long term purchase, you'll be fine.

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Unfortunately most of my friends, who are all quite well educated, seem to believe prices will never go down, and most of them are looking to buy. I have tried to save them but none of my arguements seem to work on them. Im sure this has been discussed before, but any suggestions for convincing si

Can be frustrating can't it! Trouble is a very emotive thing, it's not like politics where you can agree to disagree....peoples financial decisions and futures can depend on the outlook......and nearly everyone believes they are an expert.

Basicly I rarely bother to try and counter argue with people on this subject unless my "care for them" exceeds my need to "get on with them".

For example friends whose best interests I have in heart I will speak up and attempt to highlight something typically on a factual level - for example show them a newspaper editorial/report or something. Work colleagues whom I need to "get on with" I will tend to just go along with their line of conversation.....I don't need any further opportunity for confrontation than an office existance already presents.

A work colleague of mine recently showed me pictures and asked me what I thought of his off-plan properties that he had secured with deposit which are due for completion in the next 12 mths. I could have told him that I thought he had just made a very expensive financial error or commented with a very benign "how nice they looked".......You can guess which path I took to maintain working harmony. :(

Remember property has pretty much maintained an upward trend for the last 10 years.....TV, media & "experts" (albeit VI) say it will continue, who the **** are you to tell people it will do differently. :unsure:

but as long as you think of property as a long term purchase, you'll be fine.

Well seeing as I don't "need to get on with you" I would disagree here.....buying property at a huge peak can screw you in the long term....friends of mine who bought in '88 era took over 10 years to recover.....that was pretty long term for someone in their young 20's!

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Can be frustrating can't it! Trouble is a very emotive thing, it's not like politics where you can agree to disagree....peoples financial decisions and futures can depend on the outlook......and nearly everyone believes they are an expert.

Basicly I rarely bother to try and counter argue with people on this subject unless my "care for them" exceeds my need to "get on with them".

For example friends whose best interests I have in heart I will speak up and attempt to highlight something typically on a factual level - for example show them a newspaper editorial/report or something. Work colleagues whom I need to "get on with" I will tend to just go along with their line of conversation.....I don't need any further opportunity for confrontation than an office existance already presents.

A work colleague of mine recently showed me pictures and asked me what I thought of his off-plan properties that he had secured with deposit which are due for completion in the next 12 mths. I could have told him that I thought he had just made a very expensive financial error or commented with a very benign "how nice they looked".......You can guess which path I took to maintain working harmony. :(

Remember property has pretty much maintained an upward trend for the last 10 years.....TV, media & "experts" (albeit VI) say it will continue, who the **** are you to tell people it will do differently. :unsure:

Well seeing as I don't "need to get on with you" I would disagree here.....buying property at a huge peak can screw you in the long term....friends of mine who bought in '88 era took over 10 years to recover.....that was pretty long term for someone in their young 20's!

10 years is medium term.

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10 years is medium term.

Being stuck in negative equity in a one bed flat on the wrong part of town for the best part of a decade is a life sentence.

If you bought 20 years ago and your property had both risen and sunk £100k you don't really care, however if you've bought at the top of that peak it will be a world of pain. You may see nicer, larger properties in better parts of town selling for less than your bubble priced property, that's just not nice.

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Being stuck in negative equity in a one bed flat on the wrong part of town for the best part of a decade is a life sentence.

If you bought 20 years ago and your property had both risen and sunk £100k you don't really care, however if you've bought at the top of that peak it will be a world of pain. You may see nicer, larger properties in better parts of town selling for less than your bubble priced property, that's just not nice.

No it's not nice, but nor is it "a life sentence".

You people are such drama queens. If you have a problem, then decide on your options and make a decision.

Anyone would think that you've lost control of your own lives the way you go on.

If the responsibility of owning property is too much for you, the answer is simple.

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Guest muttley

You people are such drama queens. If you have a problem, then decide on your options and make a decision.

Anyone would think that you've lost control of your own lives the way you go on.

Good advice.

Now remind us why you post here again.

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If you have a problem, then decide on your options and make a decision.

The problem is high house prices >> The decision is not to buy.

Indeed simple really, so why this bizarre conclusion?

If the responsibility of owning property is too much for you, the answer is simple.

I don't equate paying over the odds for a house with anything approaching responsibilty. Are you inferring there's some sort of social duty involved? <_<

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You can't counter it because it's true. Even if there was a crash (and that is looking pretty unlikely now) prices would still reach even higher levels than they are today, eventually.

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Prices may go down in the short term, but over the long term, your friends are absolutely right. Of course, there will be short-term dips, but as long as you think of property as a long term purchase, you'll be fine.

Try telling that to someone who bought property in Japan in 1990.

frugalista

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Or Shanghai pre WW2, or Cuba pre 1956, or Zimbabwe pre 2000. Quite a few others as well.

On a number of occasions, politics trumps economics, and value of property falls as someone with a gun comes along and gives you an offer you can't refuse.

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No it's not nice, but nor is it "a life sentence".

You people are such drama queens. If you have a problem, then decide on your options and make a decision.

Anyone would think that you've lost control of your own lives the way you go on.

If the responsibility of owning property is too much for you, the answer is simple.

Perhaps affordability is taking the decision to buy away from some people. The responsibility of owning a property would be easy if the cost wasn't so high.

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Property has long been a major investment sector in the UK and people have always appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation. This is hardly surprising when you consider that the property market has consistently generated good returns for UK investors over the past 40 years and residential property has on average doubled in value every seven years.

Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner. There are a number of very good reasons to doubt these predictions. Firstly, interest rates remain low by historic standards and mortgages are at their cheapest for more than 25 years. The predicted property crash is also more unlikely to materialise when you consider the fact that the UK has high GDP growth and employment levels and a shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 behind current demand levels and the gap is expected to widen, with house building in the UK at its lowest since the Second World War.

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Property has long been a major investment sector in the UK and people have often appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation, as short term, it can, and does, fall. This is hardly surprising when you consider that the property market has underperformed most other kinds of investment over the past 40 years and residential property has on average doubled in value every seven years, which is worse than wage inflation, and doesn't come near investing in the stockmarket.

Despite its historically average performance, property continues to be the first choice of vested interests and naive investors in the UK. There are a number of very good reasons to doubt the investment accumen of these people. Firstly, interest rates are low by historic standards and can therefore only go UP, and mortgages are at their cheapest for more than 25 years because of this, leaving highly leveraged numpties VERY exposed to even tiny rate increases. The coming property crash is also very likely to materialise when you consider the fact that the UK had high GDP growth and employment levels funded purely by personal borrowing and that there is no shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 above current demand levels and the gap is expected to widen, with house building in the UK at its highest since the Second World War, and enormous numbers of 'newbuilds' standing empty for years.

Edited by CrashIsUnderWay

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Property has long been a major investment sector in the UK and people have always appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation. This is hardly surprising when you consider that the property market has consistently generated good returns for UK investors over the past 40 years and residential property has on average doubled in value every seven years.

Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner. There are a number of very good reasons to doubt these predictions. Firstly, interest rates remain low by historic standards and mortgages are at their cheapest for more than 25 years. The predicted property crash is also more unlikely to materialise when you consider the fact that the UK has high GDP growth and employment levels and a shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 behind current demand levels and the gap is expected to widen, with house building in the UK at its lowest since the Second World War.

Morning Bruno - managed to find your umbrella handle yet? :lol:

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No it's not nice, but nor is it "a life sentence".

Why don't you try and pay over 50% of your income for something that is worth 100k less than you paid for it

If your are "responsible" enough to cope with that - why are your posting on this forum? - why are you not off "self actualising" some where

CS

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You can't counter it because it's true. Even if there was a crash (and that is looking pretty unlikely now) prices would still reach even higher levels than they are today, eventually.

try telling that to the japanese and argentinians.

maybe they will be higher in todays terms due to inflation, but in real terms they'll be the same price. its all relative. if it goes up to 300K for an average house then a gallon of petrol will be £10 and a packet of cigarettes will be £12. when you sell your house in 25 years for more than what you paid, you still have to buy somewhere to retire and your living costs will be higher. so you don't win, you just pay double back in interest over the 25 years and make banks loads of money. your a financial slave and that is the truth of it.

Edited by debtfree

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Property has long been a major investment sector in the UK and people have always appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation. This is hardly surprising when you consider that the property market has consistently generated good returns for UK investors over the past 40 years and residential property has on average doubled in value every seven years.

Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner. There are a number of very good reasons to doubt these predictions. Firstly, interest rates remain low by historic standards and mortgages are at their cheapest for more than 25 years. The predicted property crash is also more unlikely to materialise when you consider the fact that the UK has high GDP growth and employment levels and a shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 behind current demand levels and the gap is expected to widen, with house building in the UK at its lowest since the Second World War.

If property doubles in the next seven years, and disposable income goes up 4% a year, then in seven years the kinds of buyers who now spend 50% of their disposable income maintaining a mortgage, will then have to spend 76% of their disposable income maintaining their mortgages. Or in other words, assuming that disposable income in total remains a fixed percentage of total income, the proportion of their income that these new house owners will have to spend on things other than their mortgage will more than halve. If you want to claim that prices will go up considerably from where they are now, I'd like to see some arguments, including numbers, describing how these prices will be affordable.

Secondly, you say that mortgages are at their cheapest for more than 25 years. How does this work out since we've just seen mortgage rates going up? They were cheaper before these increases weren't they? In July 2003, the base rate was 3.5%. Are you saying that mortgages now are cheaper than then? If so, how can the banks afford such a cut in their margin, and is this sustainable for the banks?

Billy Shears

Edited by BillyShears

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Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner.

:lol::lol:

I think you overestimate the influence of this website.

It's not like we're a huge hedge fund manipulating the market. Property is a juggernaught, it'll turn when it's ready.

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Property has long been a major investment sector in the UK and people have always appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation. This is hardly surprising when you consider that the property market has consistently generated good returns for UK investors over the past 40 years and residential property has on average doubled in value every seven years.

Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner. There are a number of very good reasons to doubt these predictions. Firstly, interest rates remain low by historic standards and mortgages are at their cheapest for more than 25 years. The predicted property crash is also more unlikely to materialise when you consider the fact that the UK has high GDP growth and employment levels and a shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 behind current demand levels and the gap is expected to widen, with house building in the UK at its lowest since the Second World War.

You have justified why house prices have risen so high, yes it is because of low intrest rates, and cheap easily available credit. I think what everybody is saying on this site is.

1. interest rates aren't going to stay low forever! ( infact they are predicted at the moment to go up before the end of the year, read the news!)

2.Mortgages aren't always going to be easily available. (Nationwide has comented that it is restricting its lending, see the thread on credit tightening)

3. There isn't going to be a shortage in housing forever. (I think you will find there is alot of effort being made to get new houses built)

Lowest level since WW2? The number of new housing being built is increasing every year. A 20% increase in the last 5 years would be more correct

Here are the statistics:

Started

Registered

Financial Private Social Local All

Year Enterprise Landlords Authorities Dwellings

1990/91 138,716 20,449 8,079 167,244

1991/92 142,456 25,781 4,549 172,786

1992/93 129,567 37,826 3,246 170,639

1993/94 150,707 41,472 3,058 195,237

1994/95 163,226 39,627 2,589 205,442

1995/96 140,477 32,694 1,657 174,828

1996/97 162,556 30,040 1,799 194,395

1997/98 171,631 25,414 1,011 198,056

1998/99 161,380 23,757 362 185,499

1999/00 169,099 22,467 422 191,988

2000/01 R 164,823 20,366 439 185,628

2001/02 R 177,459 17,341 192 194,992

2002/03 R 178,649 16,455 185 195,289

2003/04 R 193,125 18,835 289 212,249

2004/05 R 205,247 20,623 239 226,109

4. High GDP and employment levels will not last forever. (This has been driven by several factors some of which are now turning in the wrong direction, generaly the increase in the level of borrowing has had a big positive pressure, this will not survive a house price crash)

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Property has long been a major investment sector in the UK and people have always appreciated the benefits of owning property over the long term, particularly in terms of capital appreciation. This is hardly surprising when you consider that the property market has consistently generated good returns for UK investors over the past 40 years and residential property has on average doubled in value every seven years.

Despite its historically positive performance, property continues to be the victim of an onslaught of the STR speculators who keep promising an imminent crash just around the corner. There are a number of very good reasons to doubt these predictions. Firstly, interest rates remain low by historic standards and mortgages are at their cheapest for more than 25 years. The predicted property crash is also more unlikely to materialise when you consider the fact that the UK has high GDP growth and employment levels and a shortage of housing supply. In fact, the quantity of newly developed units is more than 100,000 behind current demand levels and the gap is expected to widen, with house building in the UK at its lowest since the Second World War.

the only reason bulding volumes are low compared to post-WW2 is because they were replacing the slums then. We've funny planning laws that tend to slow things down a bit, but it's pretty clear to me that the problem arising from this is that when the boom first started properties couldn;t be built, due to planning laws, fast enough. Now the boom's over (yes, over) there's a huge glut of stuff still in the pipeline going to help hammer prices down, mainly in the "investment" (2 bed flat etc) property sector.

And as I understand it stock market investment over the same periods you are talking about has been superior. you appear to have ignored inflation and costs/physical depreciation too - how convenient.

Oh, and unemployment is increasing don't you know. In the regions, there's the smell of recession in the air...

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  • 301 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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