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Bobbins

If The Crash Starts Tomorrow.....

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I've read many post on this site from the uber-bears, who proclaim that once the crash happens and you'll be able to buy a property for 30-50% less. As if on Monday house prices are top wack, and then when you wake up Tuesday morning, hey presto prices are 30-50% less. I challenge this with what happened in the last HPC, which was the largest and most severe HPC ever to happen.

Although in the 1989 HPC, properties in poor areas (especially studios and 1 bedders) did fall significantly in value, most properties in sought-after areas did not have significant price falls(<10%). In fact in the most sought-after areas (e.g. Putney, London), prices consistenly increased in value in the early 1990s.

What happened, is that over the next 7 (1989-1996) years, those properties, even in most of the sought-after areas didn't rise in value, but inflation did. By 1996, property, even in the best areas then became "cheap" again, because salaries were significanly higher in 1996 than 1989, and property prices had not risen.

Now, most purchasers want to buy in the sought-after areas, so if we are in for a repeat of 1989, don't expect 30-50% price falls, but sit tight as your savings and salary grows, while house prices stagnate. The problem with this for most, is the change in life circumstances, i.e. marriage, babies etc., means this is a difficult proposition.

If the housing market does go belly-up tomorrow, 12 months later you maybe able to get that studio in a rough part of town for 30% less than today, but it will not be the same for the desirable houses in a leafy areas.

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I've read many post on this site from the uber-bears, who proclaim that once the crash happens and you'll be able to buy a property for 30-50% less. As if on Monday house prices are top wack, and then when you wake up Tuesday morning, hey presto prices are 30-50% less. I challenge this with what happened in the last HPC, which was the largest and most severe HPC ever to happen.

snip....

Agreed. Late '80s I couldn't afford to buy and was renting, and watched the last crash in '89 without the benefit of an HPC support group but bought back in in '91 with substantial savings from that top...... and then watched my property steadily fall in value until '95/96 ish. Since then it's tripled in value and I've paid off the mortgage in 15 years.

That's not to dis the renters here, I've been in that boat of being the weirdo watching everyone jumping on a bandwagon. Before general access to the internet, though, you didn't have a forum to bounce your 'heretical' views off, I just tried to apply some common sense. I genuinely thought I'd never ever be able to afford to buy prior to '89. When the tide turns again, as it did before, the bears here will be laughing. Me too, again, though I might leave it a bit longer this time before buying back in/upgrading. Everything is cyclical - in another 20-25 years we'll watch it happen all over again.

TLM

Edited by trompe le monde

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I've read many post on this site from the uber-bears, who proclaim that once the crash happens and you'll be able to buy a property for 30-50% less. As if on Monday house prices are top wack, and then when you wake up Tuesday morning, hey presto prices are 30-50% less. I challenge this with what happened in the last HPC, which was the largest and most severe HPC ever to happen.

Although in the 1989 HPC, properties in poor areas (especially studios and 1 bedders) did fall significantly in value, most properties in sought-after areas did not have significant price falls(<10%). In fact in the most sought-after areas (e.g. Putney, London), prices consistenly increased in value in the early 1990s.

What happened, is that over the next 7 (1989-1996) years, those properties, even in most of the sought-after areas didn't rise in value, but inflation did. By 1996, property, even in the best areas then became "cheap" again, because salaries were significanly higher in 1996 than 1989, and property prices had not risen.

Now, most purchasers want to buy in the sought-after areas, so if we are in for a repeat of 1989, don't expect 30-50% price falls, but sit tight as your savings and salary grows, while house prices stagnate. The problem with this for most, is the change in life circumstances, i.e. marriage, babies etc., means this is a difficult proposition.

If the housing market does go belly-up tomorrow, 12 months later you maybe able to get that studio in a rough part of town for 30% less than today, but it will not be the same for the desirable houses in a leafy areas.

orly.jpg

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Yeah Birds are excellent animals - Years ago I looked after a baby magpie for a couple of days which had strayed onto a roadside and was so young it could only fly for a few feet.. highly intelligent & robust & well behaved little thing then handed it over to an animal centre

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Guest Bart of Darkness
I've read many post on this site from the uber-bears, who proclaim that once the crash happens and you'll be able to buy a property for 30-50% less. As if on Monday house prices are top wack, and then when you wake up Tuesday morning, hey presto prices are 30-50% less. I challenge this with what happened in the last HPC, which was the largest and most severe HPC ever to happen.

Could you post links to threads or posts claiming an overnight crash is likely. All the bearish posts I've read acknowledge that if a crash occurs, it will take years for prices to reach the bottom level before starting to increase again, just like last time.

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Could you post links to threads or posts claiming an overnight crash is likely. All the bearish posts I've read acknowledge that if a crash occurs, it will take years for prices to reach the bottom level before starting to increase again, just like last time.

the bottom won't be reached till 2016. Whether it involves real falls, or just inflation catching up with prices, it will take FOREVER. The johnny-come-to-late s(who bought my btl portfolio - thanks, suckers! :-) won't be able to stomach more than a couple of years of tenant subsidizing, unexpected voids and repairs, small claims cases for wonky bathroom tiles etc. That's what I hope, anyway. Or I could retire now.

Anyway, point is, the poster up above didn't understand that the erosion of value due to inflation is just as good a price falls for ftbs.

As they wait, they save money by renting, and can squirrel it away so that by the time the bottom is reached, that '250k palace' has become a 'cheap starter price - pay cash'.

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I've read many post on this site from the uber-bears, who proclaim that once the crash happens and you'll be able to buy a property for 30-50% less. As if on Monday house prices are top wack, and then when you wake up Tuesday morning, hey presto prices are 30-50% less. I challenge this with what happened in the last HPC, which was the largest and most severe HPC ever to happen.

Although in the 1989 HPC, properties in poor areas (especially studios and 1 bedders) did fall significantly in value, most properties in sought-after areas did not have significant price falls(<10%). In fact in the most sought-after areas (e.g. Putney, London), prices consistenly increased in value in the early 1990s.

What happened, is that over the next 7 (1989-1996) years, those properties, even in most of the sought-after areas didn't rise in value, but inflation did. By 1996, property, even in the best areas then became "cheap" again, because salaries were significanly higher in 1996 than 1989, and property prices had not risen.

Now, most purchasers want to buy in the sought-after areas, so if we are in for a repeat of 1989, don't expect 30-50% price falls, but sit tight as your savings and salary grows, while house prices stagnate. The problem with this for most, is the change in life circumstances, i.e. marriage, babies etc., means this is a difficult proposition.

If the housing market does go belly-up tomorrow, 12 months later you maybe able to get that studio in a rough part of town for 30% less than today, but it will not be the same for the desirable houses in a leafy areas.

You are missing one major point. Inflation then was pretty high and so house prices could remain stagnant while the high inflation caused wages to quickly caught up. Now, inflation is fairly low, and so, if prices remain stagnant, they would have to remain stagnant for almost a decade for wages to catch up. Or, things can take a short cut and prices can fall thereby accelerating the wages-catchup. Unfortunately, both scnearios don't bode well for FTBs. If prices become stagnant, you will need to rent for several years before you are able to save for a sizeable downpayment and then buy. If however, prices crash, we may have a recession where your job security will become your top priority rather than home buying. :(

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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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