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There Wont Be A Crash

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"Interest rates went up to 15% last time thats why there was a crash, it wont happen this time rates may go up but only to 5.5%"

I'm sure we've all had a variant on this conversation a thousand times with the sheeple, my question is this, how do all the ignorant masses explain the current situation in Aus and US with rates at 6.0% and 5.25%?

I cant wait for the next mug to raise the afore mentioned argument to me. :lol:

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IMO unemployment and the collapse of the BTL market will be the major triggers.

Curent IR are probably higher in real terms than the 15% of yesteryear. Further, house prices are in much higher multiples which means that lower IR are ofset by much larger levels of debt and repayment obligations.

The market is crashing in OZ and the US despite low IR. :o

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It's that there boiling frog scenario again though non? ;) Household energy bills, council tax, petrol, insurances, no interest worth having on savings, real levels of inflation....saw a report yeasterday suggesting average mortgage payment was 19% of salary, when factoring in other 'bills to live' the figures probably exceed 50%. Rates at 6% would make the frog boil, still wouldn't jump out his BTL investments though, he'd probably pass them on to his spawn :lol:

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IMO unemployment and the collapse of the BTL market will be the major triggers.

couldn't agree more, RB.

The silly billies I offloaded MY btls onto had about as much idea of 'business' as a large sack of king edwards.

Still, SEP!

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"Interest rates went up to 15% last time thats why there was a crash, it wont happen this time rates may go up but only to 5.5%"

I'm sure we've all had a variant on this conversation a thousand times with the sheeple, my question is this, how do all the ignorant masses explain the current situation in Aus and US with rates at 6.0% and 5.25%?

I cant wait for the next mug to raise the afore mentioned argument to me. :lol:

"Ignorant masses?" - this site gets more and more like a cult <_<

That aside, you must be aware that interest rates in the US increased from one per cent to 5.25 per cent. That is why the market has faltered (to say they are in a crash is wide of the mark, although on this site anything below 20 per cent growth is viewed as a crash)

More importantly, the "ignorant sheeple" may ask - despite the bears' unassailable logic - HPI continues.

e pur si muove :P

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"Ignorant masses?" - this site gets more and more like a cult <_<

That aside, you must be aware that interest rates in the US increased from one per cent to 5.25 per cent. That is why the market has faltered (to say they are in a crash is wide of the mark, although on this site anything below 20 per cent growth is viewed as a crash)

More importantly, the "ignorant sheeple" may ask - despite the bears' unassailable logic - HPI continues.

e pur si muove :P

House prices in the US are no where near as comparatively expensive as they are here.

Hold on to your hat Europa, your in for a shock.

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"Interest rates went up to 15% last time thats why there was a crash, it wont happen this time rates may go up but only to 5.5%"

I'm sure we've all had a variant on this conversation a thousand times with the sheeple, my question is this, how do all the ignorant masses explain the current situation in Aus and US with rates at 6.0% and 5.25%?

I cant wait for the next mug to raise the afore mentioned argument to me. :lol:

Of course the answer is that it's all relative - Our rates are still historically low!

However I agree that a good time for a reappraisal of where our economy is heading will be in the spring when all the increased bill payments are starting to kick in

Will the brakes be on firmer or maybe an actual slight fall in house prices

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That aside, you must be aware that interest rates in the US increased from one per cent to 5.25 per cent.

Sigh. And typical mortgage rates for people with good credit are up from about 4% to about 6-7%.

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IMO unemployment and the collapse of the BTL market will be the major triggers.

Curent IR are probably higher in real terms than the 15% of yesteryear. Further, house prices are in much higher multiples which means that lower IR are ofset by much larger levels of debt and repayment obligations.

The market is crashing in OZ and the US despite low IR. :o

The market is not crashing in Australia.

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"Interest rates went up to 15% last time thats why there was a crash, it wont happen this time rates may go up but only to 5.5%"

I'm sure we've all had a variant on this conversation a thousand times with the sheeple, my question is this, how do all the ignorant masses explain the current situation in Aus and US with rates at 6.0% and 5.25%?

I cant wait for the next mug to raise the afore mentioned argument to me. :lol:

Pressed the wrong button. But I have to agree with I told you shite there is no way the rconomy will implode until rates get to 15%. Its just so strong and everyone is so rich. Even if it gets this high everyone in the UK will have sold and made millio

ns

Edited by TokyoJoe

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Once again the focus is on interest rates and not inflation. In a low inflation environment it takes longer to erode the capital of the debt and the overall cost of servicing the debt is therefore much higher over the complete term of the mortgage. So much so that if you overborrow, to pay it back is totally unfeasible. If you overstretch yourself to buy your first house then you will never be able to trade up because inflation will not erode the capital of your debt as it did for previous generations. When this finally hits home the value of housing will plummet. Regardless of this, the market needs FTBs and without them chains collapse, the market stalls and prices fall (it is currently at 7% according to the NAEA). The argument that BTL is taking their place doesn’t wash:

a. Because BTLs will not look to trade up

b. The percentage of investors in the market hasn’t actually altered as all that has happened has been a transfer from professional landlords to amateur investors.

Whatever angle you come at it, the present prices are not sustainable in the long term. It’s not all about interest rates.

Edited by SCUMBAG

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"Interest rates went up to 15% last time thats why there was a crash, it wont happen this time rates may go up but only to 5.5%"

I'm sure we've all had a variant on this conversation a thousand times with the sheeple, my question is this, how do all the ignorant masses explain the current situation in Aus and US with rates at 6.0% and 5.25%?

I cant wait for the next mug to raise the afore mentioned argument to me. :lol:

Probably worth pointing out that the US is behind Oz and UK in terms of the cycle.

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House prices in the US are no where near as comparatively expensive as they are here.

Hold on to your hat Europa, your in for a shock.

Which USA are you talking about here, because it's not the one I live in? Places like most of California, Seattle, Las Vegas, Phoenix, most of Florida, the northeast, Atlanta, and Denver are insanely priced, with median home prices passing 10x median salaries in many places. LAs 'Affordability Index' was about to move into the single digit % but has now been 'revamped and updated' so that magically 25% of people can buy, overnight.

It's as bad in the US as the UK in the bubble markets, which cover the majority of the US population.

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Just been to OZ, not crashing there yet, in fact have just started to go up again, one or two stories re Sydney slowing down but everyone in Melbourne and other cities full of long term confidence, and remember they are paying typical interest rates of 7% and stamp duty when buying of about 5%, oh yeah, BTL is still booming and they are getting returns after all costs of about 2.5% so weve got a long, long way to go before confidence falters. Another issue over there is that there is concern that there aint enough housing being built which is also adding fuel to the HP confidence trick.

Edited by steve99

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Just been to OZ, not crashing there yet, in fact have just started to go up again, one or two stories re Sydney slowing down but everyone in Melbourne and other cities full of long term confidence, and remember they are paying typical interest rates of 7% and stamp duty when buying of about 5%, oh yeah, BTL is still booming and they are getting returns after all costs of about 2.5% so weve got a long, long way to go before confidence falters. Another issue over there is that there is concern that there aint enough housing being built which is also adding fuel to the HP confidence trick.

Property in Oz is much more tax friendly though.

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Just been to OZ, not crashing there yet, in fact have just started to go up again,

"Slide to negative equity

Anthony Klan

September 06, 2006

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire.

According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said.

AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices.

"That's your first classic sign that things are slowing right off and people are becoming far more cautious," Mr Watkins said.

Prices were also coming under pressure in parts of Melbourne with valuations of properties "in many cases showing no growth or declining values during the past 12 to 24 months".

However, it is Sydney where prices have fallen the most, with the highest proportion of families facing the prospect of negative equity. "Many owner-occupiers, seeking to refinance their homes, are being disappointed by the lower-than-expected valuations being achieved," Mr Watkins said.

"If larger numbers of owners are forced to sell, this will trigger even greater declines, affecting more property values."

Unit developments at Green Square in Sydney's inner southwest, and outer northern suburbs such as Waitara and Hornsby, had been hardest hit by the downturn.

Apartment values had fallen by as much as 20 per cent in Green Square, where developers were opting to rent out apartments rather than sell them for fear of further price falls.

Properties at the lower end of the market were worst affected during the year, with values at the top end of market continuing to surge.

AFG said the average Australian mortgage had grown to $306,783.

http://www.theaustralian.news.com.au/story...9-25658,00.html

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"Slide to negative equity

Anthony Klan

September 06, 2006

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire.

According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said.

AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices.

"That's your first classic sign that things are slowing right off and people are becoming far more cautious," Mr Watkins said.

Prices were also coming under pressure in parts of Melbourne with valuations of properties "in many cases showing no growth or declining values during the past 12 to 24 months".

However, it is Sydney where prices have fallen the most, with the highest proportion of families facing the prospect of negative equity. "Many owner-occupiers, seeking to refinance their homes, are being disappointed by the lower-than-expected valuations being achieved," Mr Watkins said.

"If larger numbers of owners are forced to sell, this will trigger even greater declines, affecting more property values."

Unit developments at Green Square in Sydney's inner southwest, and outer northern suburbs such as Waitara and Hornsby, had been hardest hit by the downturn.

Apartment values had fallen by as much as 20 per cent in Green Square, where developers were opting to rent out apartments rather than sell them for fear of further price falls.

Properties at the lower end of the market were worst affected during the year, with values at the top end of market continuing to surge.

AFG said the average Australian mortgage had grown to $306,783.

http://www.theaustralian.news.com.au/story...9-25658,00.html

Any chance of some more unsubstantiated, over-extrapolated tautological yet self contradictory and qualitative hearsay from The Australian? Prices are dropping but the average mortgage has grown? MEW notwithstanding shome mishtake shurely.

The market is not crashing in Australia: negative equity is easy to get into due to there being a large intake of FTBs and BTLs who were offered debt packages from both lenders and builders that equated to 105% mortgages. A 5% drop will cause negative equity very quickly.

Overall, Sydney has been flat or 5-10% off over the last 2.5 years and it's very area dependent. Looks like a soft landing to me... which is a shame, because I would love to head over there. BTW, the pundit who is worth keeping an eye on is Rob Cornish from Maccas... the only forecaster who ever get anything right are those who can actually move markets (c.f. Mervyn, etc).

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Prices are dropping but the average mortgage has grown? MEW notwithstanding shome mishtake shurely.

Think about it - this statement on its own seems ok to me - even if prices are coming off their peaks the average mortgage associated with each property will rise assuming the property was held by the previous owner for several years (quite likely).

This is the hidden agenda - the banks want as many properties as possible to turnover at these prices, its good mortgage business.

JY

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There won't be a crash? - Not immediatly.

The big difference between the UK housing economy and those of the US and Australia is the Uk's policy on immigration. Whilst I agree that a crash would be triggered by the BTL falure, this will not happen.

The fundamental in all this is the fact that there are hundreds of thousands of former eastern bloc citizens wishing to live in the UK and Ireland. They all require accomodation and, even if they do live six to a house, this will satisfy the market. It will only be when UK industry disappears altogether, that those migrant workers may return to their countries. They may even decide to stay.

So, in my opinion, I would advise the BTL's to buy property close to industrial area's and sit tight. The frightening words come from those who have no property of their own and feel inadequate about their situation.

By the way, I am a renter and I do not like the idea of my domestic situation being at the mercy of someone else but hey......that's life I suppose!

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There will be a monumental crash in my op

This said I have purchased a shared ownership propery recently, when you have a family security is paramount to making money.

So, when the crash comes and people cry that their finances are ruined remember that they were warned by non VI's and of course that life goes on

People really need to stop being slaves to the money in the UK

I dont think immigration has much impact on UK housing at all. That has been a tactic to paper of the cracks of a fundamental problem within government, the fact that it has NO strategy in helping people have a decent place place to live. We may live in a prosperous nation but we live in morally corrupt country with no pride

Bye Bye Labour, bye bye Blair. Time for the Conservatives!

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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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