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Who Knows If The Crash Will Ever Happen?


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Hi

I have been a frequent visitor of this board over the last few years and due to what I read on this board I had become convinced that there would be a crash or at least a correction in this country. Their seems to be a lot of people who talk sense on this forum, I could not see how the prices could keep on going up and up as the only thing that I could see pushing these prices up were low interest rates and cheap credit. I have seen people laughing over the statement “Its different this time” but………

There are a lot of differences this time the main 3 being

1. Bank Of England Govern Interest Rates

2. Buy to let

3. Immigration set to go to the next level

The Bank of England must realise if the house market in this country does crash now millions upon millions of families and people are going to be in serious trouble and the country would be in absolute chaos, the only people a crash would benefit would be FTB’s, i.e. the people on this board.

People now see property as their pension and believe me I have friends who sell off plan apartments for buy to let investors and it is going crazy at the moment, Everyone wants to get involved because they love the idea of someone paying for their pension even if they do have to top it up each month to meet the payments. In particular the Asian community here in Birmingham LOVE property and continue to buy buy buy with no fear.

In January the floodgates open once more and mass migration will follow, Millions of new people will be coming into this county boosting the economy and therefore fuelling HPI further. This is not a good thing for me and you, people at the bottom of the ladder but for families that already own property and are well up the ladder this is good news. Lets face it our county’s government are obsessed with money, they do not care about society, they only care about our countries wealth.

I am 23 years old, I do not pretend to know everything about economics but I enjoy reading this forum and I have learnt a lot from it. I just say it how I see it. I understand that if Inflation does take over and Interest Rates are forced up it will be catastrophic but I just cannot see it being allowed to happen. I honestly hope that it does happen so maybe one day I can afford my own property. I live in a nice house with my mom at the moment which is rented, I would like to see these smug buy to let investors who have helped push these prices out of my reach with egg of their faces but I just don’t know!!!

Feel Free to pick my view apart. I see it from both sides of the coin. I will not buy yet but at the same time I just don’t know what will happen in the next few years….

Duncan

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Guest Yeahbutnocrash

Hi

I have been a frequent visitor of this board over the last few years and due to what I read on this board I had become convinced that there would be a crash or at least a correction in this country. Their seems to be a lot of people who talk sense on this forum, I could not see how the prices could keep on going up and up as the only thing that I could see pushing these prices up were low interest rates and cheap credit. I have seen people laughing over the statement “Its different this time” but………

There are a lot of differences this time the main 3 being

1. Bank Of England Govern Interest Rates

2. Buy to let

3. Immigration set to go to the next level

The Bank of England must realise if the house market in this country does crash now millions upon millions of families and people are going to be in serious trouble and the country would be in absolute chaos, the only people a crash would benefit would be FTB’s, i.e. the people on this board.

People now see property as their pension and believe me I have friends who sell off plan apartments for buy to let investors and it is going crazy at the moment, Everyone wants to get involved because they love the idea of someone paying for their pension even if they do have to top it up each month to meet the payments. In particular the Asian community here in Birmingham LOVE property and continue to buy buy buy with no fear.

In January the floodgates open once more and mass migration will follow, Millions of new people will be coming into this county boosting the economy and therefore fuelling HPI further. This is not a good thing for me and you, people at the bottom of the ladder but for families that already own property and are well up the ladder this is good news. Lets face it our county’s government are obsessed with money, they do not care about society, they only care about our countries wealth.

I am 23 years old, I do not pretend to know everything about economics but I enjoy reading this forum and I have learnt a lot from it. I just say it how I see it. I understand that if Inflation does take over and Interest Rates are forced up it will be catastrophic but I just cannot see it being allowed to happen. I honestly hope that it does happen so maybe one day I can afford my own property. I live in a nice house with my mom at the moment which is rented, I would like to see these smug buy to let investors who have helped push these prices out of my reach with egg of their faces but I just don’t know!!!

Feel Free to pick my view apart. I see it from both sides of the coin. I will not buy yet but at the same time I just don’t know what will happen in the next few years….

Duncan

Sensible post - As opposed to grabbing hold of one particular piece of news or data and posting a 'here comes the crash' for the nnnnth time message or prices only rise message

I reckon it's better to take a step back and attempt to get a feel for the overall picture and sentiment taking into account whats really going on (obviously the reality varies depending on what area and what part of the market is involved in your assessment)

Edited by Yeahbutnocrash
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All I would offer are 6 simple observations of where we are now:

1. There are other well known property bubbles - US, Spain, Ireland, Australia

2. US market is in decline

3. Spanish market is in decline

4. Irish market in decline

5. Australian market is in decline

6. Why on earth does anyone think the UK market is somehow different? :)

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All I would offer are 6 simple observations of where we are now:

1. There are other well known property bubbles - US, Spain, Ireland, Australia

2. US market is in decline

3. Spanish market is in decline

4. Irish market in decline

5. Australian market is in decline

6. Why on earth does anyone think the UK market is somehow different? :)

The Irish market continues to show spectacular growth (up 0.7pc in September alone) - what the hell made you think it was in decline?

The Australian market is stagnant; it is not crashing as such.

The Spanish market is widely expected to decline, but again, nothing much yet.

I'm amazed how many bears make important decisions based on mental spasms, rather than rational analysis based on sound facts :huh:

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The Irish market continues to show spectacular growth (up 0.7pc in September alone) - what the hell made you think it was in decline?

The Australian market is stagnant; it is not crashing as such.

The Spanish market is widely expected to decline, but again, nothing much yet.

I'm amazed how many bears make important decisions based on mental spasms, rather than rational analysis based on sound facts :huh:

Eurinal is correct in parts - the Irish market has slowed to a standstill officially, anecdotally, however, the panic is beginning.

Aus market? Crashing. If you have any evidence otherwise, Eurinal, feel free to post it.

The Spanish market is on its knees. You can't give away second hand property on the costas, and as for finding a tenant huh.

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Who Knows If The Crash Will Ever Happen?

No one knows.

Here's my 2p.

A house is only worth what someone is prepared to pay for it. As long as there are buyers willing to pay higher prices year on year then HPI will continue to go up.

When buyers cannot afford to pay OR won't pay the prices being asked then something will have to give. Either people will not move or prices will have to come down.

Which one do you think is more likely? :unsure:

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No one knows.

Here's my 2p.

A house is only worth what someone is prepared to pay for it. As long as there are buyers willing to pay higher prices year on year then HPI will continue to go up.

When buyers cannot afford to pay OR won't pay the prices being asked then something will have to give. Either people will not move or prices will have to come down.

Which one do you think is more likely? :unsure:

Well a house is only worth what a lender will allow somone to pay for it, The lenders are one of the main reasons for the mess we are in, If they stop giving cheap credit then the prices will have to come down surely? But what will it take for the lenders to stop doing this whilst they are making so much money?

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a house is only worth what a lender will allow somone to pay for it

Fantastic slogan subverting the somewhat trite platitude "something is only worth what someone is prepared to pay for it".

I would change it slightly to :

a house is only worth what someone is able to borrow for it

or maybe even

a house is only worth what some mug is able to borrow for it

frugalista

Edited by frugalista
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Eurinal is correct in parts - the Irish market has slowed to a standstill officially, anecdotally, however, the panic is beginning.

Aus market? Crashing. If you have any evidence otherwise, Eurinal, feel free to post it.

The Spanish market is on its knees. You can't give away second hand property on the costas, and as for finding a tenant huh.

Today you have a pet name for me; yesterday you posted a little picture. What next? Flowers? :D

Regarding your rather shaky claims. Allow me to debunk...

Spain saw HPI of 10.8 per cent in the year to August (source Spanish National Institute of Statistics) Slightly down on 04-05 which was, according to The Economist, in the region of 15pc.

As for Australia, see chart below. Sydney has experienced a down turn (which is ending) Other areas show growth.

Composition-adjusted house prices

City Median House Price Percentage change

Sydney $523,000 $517,000 $528,000 1.2% -0.9%

Melbourne $352,000 $355,000 $344,000 -0.8% 2.5%

Brisbane $339,000 $334,000 $325,000 1.4% 4.4%

Adelaide $321,000 $313,000 $303,000 2.7% 5.9%

Canberra $424,000 $419,000 $410,000 1.3% 3.4%

Perth $455,000 $413,000 $333,000 10.1% 36.6%

Darwin $332,000 $311,000 $276,000 6.9% 20.5%

Hobart $243,000 $241,000 $225,000 1.0% 8.0%

Source: www.homepriceguide.com.au

Anything else you need help with, just ask <_<

Edited by Europa
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Well a house is only worth what a lender will allow somone to pay for it, The lenders are one of the main reasons for the mess we are in, If they stop giving cheap credit then the prices will have to come down surely? But what will it take for the lenders to stop doing this whilst they are making so much money?

They will stop when the debt mountain hits the buffers and their bad debts rise to such a level that their lending capacity is restricted. Remember bank employees are incentivised by loan targets not whether the lending is prudent and responsible.

Banks have short memories. Several banks have been nearly wiped out by bad debt. (The old Midland lost a bundle lending to Latin America.) If their is a global re-alignment of property asset values this will put a hugh strain on the international banking system.

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Today you have a pet name for me; yesterday you posted a little picture. What next? Flowers? :D

Regarding your rather shaky claims. Allow me to debunk...

Spain saw HPI of 10.8 per cent in the year to August (source Spanish National Institute of Statistics) Slightly down on 04-05 which was, according to The Economist, in the region of 15pc.

As for Australia, see chart below. Sydney has experienced a down turn (which is ending) Other areas show growth.

Composition-adjusted house prices

City Median House Price Percentage change

Sydney $523,000 $517,000 $528,000 1.2% -0.9%

Melbourne $352,000 $355,000 $344,000 -0.8% 2.5%

Brisbane $339,000 $334,000 $325,000 1.4% 4.4%

Adelaide $321,000 $313,000 $303,000 2.7% 5.9%

Canberra $424,000 $419,000 $410,000 1.3% 3.4%

Perth $455,000 $413,000 $333,000 10.1% 36.6%

Darwin $332,000 $311,000 $276,000 6.9% 20.5%

Hobart $243,000 $241,000 $225,000 1.0% 8.0%

Source: www.homepriceguide.com.au

Anything else you need help with, just ask <_<

Nice.

Eurinal finally does 'the decent thing' and posts some stats.

Crash cancelled everyone.

did you REALLY take a=out a sub to www.homepriceguide.com.au? Or are you just making it all up?

If anybody can be bothered to examine his 'data' and contest it, feel free.

Me, bit busy. Cat's throwing a wobbly.

Edited by PropertyGuru
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Guest Yeahbutnocrash

All I would offer are 6 simple observations of where we are now:

1. There are other well known property bubbles - US, Spain, Ireland, Australia

2. US market is in decline

3. Spanish market is in decline

4. Irish market in decline

5. Australian market is in decline

6. Why on earth does anyone think the UK market is somehow different? :)

Most of that may be true - It seems likely we won't have further galloping HPI if IR's go up further

However, when prices eventually become more affordable in those countries there will probably be a recovery

Also after years of rampant HPI in this country it ought to be about time for a 'breather' and values may fall back a few % especially if IR's increase

However, just what does constitute a 'crash' following such massive increases?

A fall of 10% or even 20% still leaves values high compared to a few years ago

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Hi Duncan

Well you're wise to keep an open mind

I find your first reason for a crash not happening ('Bank Of England Govern Interest Rates') doubtful though.

Frankly, it was much more likely for the government to bend over backwards to take steps to avoid a crash in property prices than a central bank.

The Bank of England has a remit of targetting inflation and a gut reaction of price stability and calming the markets. There is no reason why this should consitently overlap with the need to 'stop a housing crash happening'.

Granted, wider economic stability is an important factor in the Bank's reasoning, but it is not the only one. And house prices are only one factor that make up wider economic stability.

There are also plenty of occaisions when the Bank could place greater emphasis on achieving things that could lead to rising interest rates. This would primarily be containing inflation, dealing with threats to the pound or pursuing 'sound monetory policy'.

You only have to look at the behaviour of Montagu Norman at the Bank of England during the 1930s or Paul Volker at the Federal Reserve during the 1980s to see that central banks can and will doggedly pursue policies that cause a great deal of economic suffering amoungst many people (including home owners and house prices) in the cause of sound finance (there are many more examples if you care to look).

I also have doubts about your second reason - but others will no doubt comment on that

Anyway you're still only 23 so have the luxury of being able to wait to find out who's right

JJ

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Stop posting? But I'm providing an essential service to the hard-of-thinking. Think how you benefit, PG :D

This site needs balance, we have loonie bulls, loonie bears and some general just plain loonies!

Everyone has to have their own view and be able to listen to others (!), this way we all will learn things we didnt know and move forward.

Information is everything.

Give it to me so I can make decisions based on as much information as possible.

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I think property prices will pretty much stay as they are. I don't see a big crash coming while demand is strong. In this country we are so obsessed with owning our own home we will take on massive mortgages, and lenders love to tie you to debt for a long long time so they will offer much longer term mortgages so payments remain affordable.

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I think property prices will pretty much stay as they are. I don't see a big crash coming while demand is strong. In this country we are so obsessed with owning our own home we will take on massive mortgages, and lenders love to tie you to debt for a long long time so they will offer much longer term mortgages so payments remain affordable.

I think it's the level of monthly repayment affordability that will drive the market, which is obviously driven by IRs and houses prices. I can't see IRs rising by to more than 5.25% in this cycle, and I really can't see further house price rises beyond now. .Mind you I said last November that prices would stop rising, and was proven wrong.

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