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spinoser

Question For Realistbesr

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RB,

I've read some of your posts with interest and broadly agree with your views and hopes. However I am concerned that whilst the UK housing market is a very risky place atm, there are some demographic and economic factors that might mean that previous downswings might not be a model for the next one.

The main reason might be the growing maldistribution of wealth could mean the richer part of the population slowly accumulates more property (from distressed sellers or whatever). The sellers become renters and thereafter continue paying money to the landlords. There is a vicious circle here that accelerates the division of society. Governments have fostered this in many ways by switching rates (a wealth tax) to council tax (an occupancy tax). This meant landlords suddenly found some maintenance costs bourne by tenants. BTL for your own pension at the expense of your tenant(s) who won't even own their own house (unless they pay the inflated prices) let alone be able to organise their own retirement funding.... many other factors like this will be ongoing unless there is a return to post-war democratic socialism!

BTW I live in Germany where prices are sane (you can buy a good large detached family house for price of a small terraced house in a comparable location, and there's no rush to buy because real prices are level for many years and rents are reasonable, accommodation is high quality (and landlords are too... good regulation of rental sector suits both parties). We rent but keep an eye out for a special house. Character cottages/farmhouses which are the stuff of dreams in the UK can be had for as little as a few thousand € if they need renovating! http://www.alteshaus.com/

Cheers

S

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I can answer.

People are not as rich as you may think you are.

Look at your local area, look at what is reported to be the average wage.. and look around you.

there is not enough money in the country to support current house prices.

its okay if 5% of the property is bought at near peak.

but it really isn't okay if it all is .. that would be 100%

at some point the economy collapses.. some point before 100% after 5%

anyone care to through a dice to say when that happened..? (sorry bulls, when it will happen?)

No bull would say that there was not that point, it would be silly

and as the market has been made up of captain self Cert borrowing 7 times their salary against an IO mortgage the market cannot be said to be made up of carefull investors likely to see the crunch.

So, the only question can be when this will happen, if it hasn't already..

garrgh..

and to the besrs..

we didn't break the country.

Morons with unlimited access to levels of debt that would make your balls shrink at the thought of it.. debt they can't afford..

They broke the country.

Edited by apom

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I'm not RB, but the main problem with your paradigm shift scenario is the fact that yields are becoming too low for rental incomes to justify the investment required. If people actually sat down and did the sums, they'd realise their money would be better off in the stock market or elsewhere. The only reason BTL has been a good option since yields fell is capital appreciation due to HPI, now that HPI is over, there is very little to attract the smart investor into this sector. It wasn't so long ago that property in Germany was too expensive, like here now...I think it's a good time to buy out there now, once people really start to see what a bargain it is, they'll start piling in.

In terms of demographics, I think immigration is more of an issue that could stop an HPC, but if unemployment continues to rise, then even hoards of Bulgarians won't save house prices.

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I agree with spinoser that the demographics are very different this time. During the current boom, many young people have delayed buying/and or starting a family, which didn't seem to happen to the same extent during the previous boom. Their ticking biological clocks would mean that confidence (or should I say desperation to own a home) would return to the market faster cf the last crash.

Plus the shortage of accommodation and more singleton households will be a strong limiting factor when the bust comes. That's why I think slow real falls over a few years seem a likely scenario (average real fall in HPs of around 25%).

Also, won't the mortgage lenders bend over backwards to prevent a full on crash? - as soon as signs of significant falls in prices become clearer and when interest rates are rising to hold down hyperinflation, I bet they'll start offering their existing mortgage customers the option to fix for up to 3-10 years at 0.25 to 0.75% above base rate for a very small fee, waiving redemption penalties. Why? because there'll be f*** all equity to be had in most repos, and they'll want to keep their cash flow in mortgage payments as predictable as possible. Am I talking economic nonsense?

But... some more differences between then and now:

In a crash scenario coupled with a recession, I predict that an outflux of productive workers from the South East will be huge. The Web will be a powerful tool allowing people to sniff out their best options for relocating to reduce living costs and improve their quality of life. During the last HPC, stats and detailed info about house prices and job markets outside one's own region, let alone outside the UK, were much harder to come by for most people.

And so, if significant numbers of productive young workers foresake the UK, in addition to homeowners cashing in their equity for a better life abroad (mostly rich baby boomers, retirees), say around 2 million a year emmigrate in total for a few years, then I think the economic recession would hit much harder (high spenders leave) and real house price falls would eventually be much greater than 25% (demand for housing gradually falls). Not a particularly unlikely scenario either, me thinks.

Actually, my money's on this latter scenario. I'm planning to follow some of the rich boomers abroad and flog overpriced services to them. Living in the UK's pretty naff anyway, regardless of the tyranny of house prices.

Edited by bugged bunny

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Nope..

Its not some big plot to make loads of money..

Its a bunch of goons that havent realised that it can't be done.

No one knows what they are doing...

BTL's... some make money.. recently most are subsidising massivly..

Shortage of houses? really.. that most frantic house building the country has seen since the war...? what did the alians come down steal a bunch of houses...?..

Affordability...? of course most the people can't afford their debt... what.. do you think that they do.. understand.. really...

Its a mess.. most people in the country are morons..

it is no plot.. there are no demographic changes..

there are a bunch of idiots who got carried away...

for gods sake..

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I'm planning to follow some of the rich boomers abroad and flog overpriced services to them. Living in the UK's pretty naff anyway, regardless of the tyranny of house prices.

Exactly, HPC or no, I'm heading out of here...the people drive me crazy, HPI is a symptom of our culture, political and social, and that won't ever change.

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We are now a very shallow race only concerned about greed and keeping up with material gains. Sad.

I Had 10 great years living in Dubai I have only been back 9 months and I am going back again to get out of this country before there are riots. I would not contribute extra council taxes for immigrants so I would probably end up in Jail so better leave now . Goodbye blighty.

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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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