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Teddy Bear

After The False Dawn...

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OK so this mini boom that seemed to begin late last year with the cut in rates and big city bonuses seem to be coming to an end. Good! The question now is where next. Will this be the start of the big crash people have been hoping for or will it be another mini crash like mid 2001/2002 and 2004 to mid 2005 before the market's skin is saved yet again by something/someone nowone had thought about ?

If it proves to be another mini fall and there are good deals to be had (FTB might have something to say about that!) will you be tempted back in if only to ride the wave till the next mini fall?

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OK so this mini boom that seemed to begin late last year with the cut in rates and big city bonuses seem to be coming to an end. Good! The question now is where next. Will this be the start of the big crash people have been hoping for or will it be another mini crash like mid 2001/2002 and 2004 to mid 2005 before the market's skin is saved yet again by something/someone nowone had thought about ?

If it proves to be another mini fall and there are good deals to be had (FTB might have something to say about that!) will you be tempted back in if only to ride the wave till the next mini fall?

Once prices start falling substantially there will be nothing to stop it. Sentiment will have changed and we will be in HPC territory.

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Indeed. The only thing holding up this market is sentiment: when that goes, look out below!

And, of course, the longer prices stay high, the more the younger generation get used to not giving a crap about houses, and spending their money on themselves instead... so the deeper the crash will go.

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Indeed. The only thing holding up this market is sentiment: when that goes, look out below!

The only thing ever holding any market up is sentiment.

The question is, what will cause sentiment to change? For example, higher interest rates might do the trick. This would in fact be an external trigger - not just sentiment changing for no apparent reason.

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The only thing ever holding any market up is sentiment.

Only if you treat the term so pedantically as to make it meaningless.

Sure, you could argue that it's 'sentiment' that has pushed petrol up to a pound a liter, but to a more rational person it's the fact that people have a real hard time living without oil and there's far more need for it than ever before with declining production. Yes, we could all decide tomorrow to go live in caves, but the odds are pretty slim.

Similarly, house prices passed rational levels long ago, just as petrol would have done if it was selling for five pounds a liter right now.

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Although the price of a house is somewhat inflated, interest rates coupled with creative lending have enabled the market to Soldier on.

I dont buy the sentiment argument, it was being peddled around on this site some three years ago and it remains the case that people are still buying property.

It is not a rocket science, the disposable income of most individuals to spend on housing is around 800pcm, and this will get you a house or flat, for so long as this is the case the market will continue.

However when rates are very low, a microscopic rise of .25% is enough to teeter the balance and put the repayments out of reach of many.

There is nothing that will kill the market other than raising of interest rates, if people are waiting for sentiment to change then they will be waiting a long time. If they are waiting for rate rises, then the horizon is appearing, its really happening as predicted by the old hands, rates are on the up across the world.

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There is nothing that will kill the market other than raising of interest rates, if people are waiting for sentiment to change then they will be waiting a long time.

Disagree, all bubbles come to a swift end shortly after the last bull has bought because they are dependant only on continually rising prices.

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Although the price of a house is somewhat inflated, interest rates coupled with creative lending have enabled the market to Soldier on.

I dont buy the sentiment argument, it was being peddled around on this site some three years ago and it remains the case that people are still buying property.

It is not a rocket science, the disposable income of most individuals to spend on housing is around 800pcm, and this will get you a house or flat, for so long as this is the case the market will continue.

However when rates are very low, a microscopic rise of .25% is enough to teeter the balance and put the repayments out of reach of many.

There is nothing that will kill the market other than raising of interest rates, if people are waiting for sentiment to change then they will be waiting a long time. If they are waiting for rate rises, then the horizon is appearing, its really happening as predicted by the old hands, rates are on the up across the world.

I agree with that what will make most of the difference is those that are on very good rates on fixed mortgage rates that are coming to the end of the fixed period. They then find themselves on a standard variable rate on a high intrest rate.

Myself personaly will find this in July next year the best thing to do is remortgage for the remaining years with another lender on another special rate or try get a better deal with who your currant lender is. One of the best ones a lender will offer people is the one i was with before i remortgaged was with abbey they offered 1% above the boe rate. If the intrest rates keep rising fixed rate offers for remorgaging would rise anyway.

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Getting back to the original point. If this is another mini bust rather than the big one will you be tempted back in?

OK so this mini boom that seemed to begin late last year with the cut in rates and big city bonuses seem to be coming to an end. Good! The question now is where next. Will this be the start of the big crash people have been hoping for or will it be another mini crash like mid 2001/2002 and 2004 to mid 2005 before the market's skin is saved yet again by something/someone nowone had thought about ?

If it proves to be another mini fall and there are good deals to be had (FTB might have something to say about that!) will you be tempted back in if only to ride the wave till the next mini fall?

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Getting back to the original point. If this is another mini bust rather than the big one will you be tempted back in?

I remain confident unless we see intrest rates rising towards 7% as some have mentioned. I think any more than 1% increas the housing market could be in trouble with the recklass borowers.

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Getting back to the original point. If this is another mini bust rather than the big one will you be tempted back in?

Of course you wouldn't if you knew it was only a mini-bust, with the big one to follow. So the question is: how low do prices have to go before you'll buy? Alternatively: how will you know when to call the bottom?

Edited by Immigrant

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Getting back to the original point. If this is another mini bust rather than the big one will you be tempted back in?

I'm not interested in mini-crash or mini-boom. I'm waiting for the BIG ONE! There wont be any question whether it's mini or temporary because unfortunately the big one will be obvious and sentiment will have changed substantially to the point where people will be asking "why are you buying now or rather than why haven't you bought yet?". Probably a bigger question will be "so, do you still have job?" because the next true HPC wont just affect houses.

Have a look at most countries around the world at the moment - what's happening in the UK with low interest rates and property prices over the last 10 years is representative of what has happened in Aus, USA, Canada, France, Germany, Eastern Europe, even China. Discounting regional fluctuations everyone is in the same boat so when it crashes here I bet it will be in conjunction with a world wide HPC (most likely started in the USA) and probably an associated world wide recession. A lot of people understandably focus on what's happening locally and in the UK but the with the global economy and global debt/savings so inter-related now the real HPC wont be just a UK phenomenum. Until this scenario occurs (hopefully in the next couple of years) I'm not getting in. I just hope I'm in a position "job wise" to make the most of it to buy a house when it occurs.

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I'm not interested in mini-crash or mini-boom. I'm waiting for the BIG ONE! There wont be any question whether it's mini or temporary because unfortunately the big one will be obvious and sentiment will have changed substantially to the point where people will be asking "why are you buying now or rather than why haven't you bought yet?". Probably a bigger question will be "so, do you still have job?" because the next true HPC wont just affect houses.

Have a look at most countries around the world at the moment - what's happening in the UK with low interest rates and property prices over the last 10 years is representative of what has happened in Aus, USA, Canada, France, Germany, Eastern Europe, even China. Discounting regional fluctuations everyone is in the same boat so when it crashes here I bet it will be in conjunction with a world wide HPC (most likely started in the USA) and probably an associated world wide recession. A lot of people understandably focus on what's happening locally and in the UK but the with the global economy and global debt/savings so inter-related now the real HPC wont be just a UK phenomenum. Until this scenario occurs (hopefully in the next couple of years) I'm not getting in. I just hope I'm in a position "job wise" to make the most of it to buy a house when it occurs.

Dont think its a matter of when but iff.

Edited by PogoLocky

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Globalisation/World economy/easy credit is nothing new. Of course everyone's here is waiting for the big one but there have been two false ones this decade so far. So the queston is what is so different this time around? People were mortgaged up to their eyeballs in 2001-2002 and 2004-2005 yet the big crash didn't happen - the market/politicians simply found new ways of getting people to borrow more and/or getting new groups to borrow through shared ownership schemes etc... etc...or in Gordon Browns case move the goalposts over his borrowing. Who is to say that history won't repeat itself again?

I'm not interested in mini-crash or mini-boom. I'm waiting for the BIG ONE! There wont be any question whether it's mini or temporary because unfortunately the big one will be obvious and sentiment will have changed substantially to the point where people will be asking "why are you buying now or rather than why haven't you bought yet?". Probably a bigger question will be "so, do you still have job?" because the next true HPC wont just affect houses.

Have a look at most countries around the world at the moment - what's happening in the UK with low interest rates and property prices over the last 10 years is representative of what has happened in Aus, USA, Canada, France, Germany, Eastern Europe, even China. Discounting regional fluctuations everyone is in the same boat so when it crashes here I bet it will be in conjunction with a world wide HPC (most likely started in the USA) and probably an associated world wide recession. A lot of people understandably focus on what's happening locally and in the UK but the with the global economy and global debt/savings so inter-related now the real HPC wont be just a UK phenomenum. Until this scenario occurs (hopefully in the next couple of years) I'm not getting in. I just hope I'm in a position "job wise" to make the most of it to buy a house when it occurs.

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Globalisation/World economy/easy credit is nothing new. Of course everyone's here is waiting for the big one but there have been two false ones this decade so far. So the queston is what is so different this time around? People were mortgaged up to their eyeballs in 2001-2002 and 2004-2005 yet the big crash didn't happen - the market/politicians simply found new ways of getting people to borrow more and/or getting new groups to borrow through shared ownership schemes etc... etc...or in Gordon Browns case move the goalposts over his borrowing. Who is to say that history won't repeat itself again?

History will repeat itself again - only on a bigger global scale. 2004-2005 wasn't a crash (house prices subdued a little and consumers slowed spending for a bit but nothing like a crash). 2001-2002 was the closest we've had to a crash when the tech bubble burst and had the potential to turn into a crash if governments hadn't slashed interest rates to flood the market with liquidity and reassure investors. I'm not saying a crash is imminently around the corner. Governments and VIs will naturally do whatever they can to prevent a crash and it may take a while longer. Ultimately a crash will occur because events unfold to such an extent that they cannot be manipulated back into control. I don't know what will cause that to happen, but what I do know is that things have been unbalanced economically for a long time now and have only got worse. There are lots of different scenarios you could come up with that could result in a crash (eg. oil prices jumping above $100 a barrel, Asian countries who hold all the savings that have supported the debt binge in western countries lose confidence in the dollar and decide to sell all of their US Dollar savings, etc) but as yet I haven't seen any of these triggers. That doesn't mean that a trigger couldn't happen at any time. With global imbalances continuing to get worse it makes a trigger that may have been containable in the past more likely to become uncontainable in future. If we could predict the timing of the BIG CRASH then we would all be very rich. Unfortunately it's a waiting game (but it's kind of fun to watch if you've got sadistic tendencies or are just bitter about how things have worked out for you in relation to others that have done well out of the recent 10 year boom).

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It is not a rocket science, the disposable income of most individuals to spend on housing is around 800pcm, and this will get you a house or flat, for so long as this is the case the market will continue.

for an average person with average income(25k) the figure of £800pcm on housing costs is fairly accurate.(approx 60% of take home pay)

..that figure should include utility bills as well...these probably equate to £150pcm.

so £550 to spend on mortgage(+£100 for various necessary insurance)

that'll get about a 100k mortgage.

however,this figure is still cutting it fine,if you add in the nasty little incidentals like running a car(and it failing it's MOT) this figure looks a bit optimistic.Lets face it,if you commute to work and your means of getting there screw up then it's going to get expensive.

you still have choices.

1)get a new job

2)move closer to work

3)go self employed where possible(this is good if you can because transport if fully expensable to the taxman)

4)cohabit if not doing so already

....this is just a little kick in the knackers for anyone with a mortgage,they are only really raising IR's in line with inflation,0.25% is only sapping out about the same as the average workers pay rise this year,but when everything else goes up too it's time to cut costs!!!!!

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Guest grumpy-old-man

I remain confident unless we see intrest rates rising towards 7% as some have mentioned. I think any more than 1% increas the housing market could be in trouble with the recklass borowers.

my wife & I were looking for a mini today.......the girl who helped us is selling up on the back of the .25 % increase as she also thinks there is another one coming. 94k "apartment" bought 2 years ago , not sure exactly what for, but she said if she gets full price she makes 20k, so I assume 74k.

her & her boyfriend are struggling with extra utility bills, loans etc....they are moving in with her parents for a couple of years. They then plan to buy when the prices have dropped. You can't beat speaking with people for a true feeling on what is happening on the street.

This time I think internet/email & msn will make a massive difference......when this blows properly the word "crash" will spread so fast the headlines won't be able to keep up. all IMHO of course :rolleyes:;)

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... Have a look at most countries around the world at the moment - what's happening in the UK with low interest rates and property prices over the last 10 years is representative of what has happened in Aus, USA, Canada, France, Germany, Eastern Europe, even China. ...

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Watch the US- it is now ahead of the UK by 6-12 months

Last year's rate cut delayed things here, and made the bubble excesses worse,

and has created the potential for a harder landing

Glad i bought my other house a couple of months before that rate cut last year i bought it in July.

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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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