Is It Building Up

[worzel]

I have been reading this forum for quite some time, a lot longer than I have been a member. I am aware that this topic has been discussed before so make no apolgies for re-stating it now as I believe it to be more relevant today than ever.

I have been banging on about the ridiculous cost of housing to my friends and family for some time. It is only recently that a decent portion of them (say about half) actually think that I may have a point. I have noticed the same on here (unless its just my interpretation of how people are thinking). I know I have been wrong before, as most on here have been, but lets be honest, if anyone could consistently beat thee market they would be extremely wealthy and would be too busy sunning it up on some island than hanging around on here.

Prices have now reached such a level, fuelled by the relaxed lending criteria and hysteria surrounding rising prices, that I just cant see that there is room for significant further rises. If we assume for arguments sake that this is a reasonable prediction, and that we will see relative stagnation in prices, I think that this alone may be enough to trigger the crash. The greater fool decides not to be the fool and buy an asset that is not going up in price when he can rent that same asset with none of the associated hassles for a much lower price than it would cost to buy. Buy to let dries up once and for all as a levergaed investment must increase in value to make it viable. Demand all but dissapears, and the prices which are set at the margin, reduce, after all you can have a forced seller, but I have never heard of a forced buyer (although there have been a few foolish ones).

I personally, am going to stick to my guns and not be the greater fool. I have a good job, and could buy, but when I feel as strongly as I do, and am enjoying a nice standard of living in cheap rented accomodation, I just dont feel the need. I just hope everyone else will see the light soon and house prices can return to reality.

Getting hassle to play cards with the missus now, so better dash.

Night all

Worzel

[Kebab]

I have been reading this forum for quite some time, a lot longer than I have been a member. I am aware that this topic has been discussed before so make no apolgies for re-stating it now as I believe it to be more relevant today than ever.

I have been banging on about the ridiculous cost of housing to my friends and family for some time. It is only recently that a decent portion of them (say about half) actually think that I may have a point. I have noticed the same on here (unless its just my interpretation of how people are thinking). I know I have been wrong before, as most on here have been, but lets be honest, if anyone could consistently beat thee market they would be extremely wealthy and would be too busy sunning it up on some island than hanging around on here.

Prices have now reached such a level, fuelled by the relaxed lending criteria and hysteria surrounding rising prices, that I just cant see that there is room for significant further rises. If we assume for arguments sake that this is a reasonable prediction, and that we will see relative stagnation in prices, I think that this alone may be enough to trigger the crash. The greater fool decides not to be the fool and buy an asset that is not going up in price when he can rent that same asset with none of the associated hassles for a much lower price than it would cost to buy. Buy to let dries up once and for all as a levergaed investment must increase in value to make it viable. Demand all but dissapears, and the prices which are set at the margin, reduce, after all you can have a forced seller, but I have never heard of a forced buyer (although there have been a few foolish ones).

I personally, am going to stick to my guns and not be the greater fool. I have a good job, and could buy, but when I feel as strongly as I do, and am enjoying a nice standard of living in cheap rented accomodation, I just dont feel the need. I just hope everyone else will see the light soon and house prices can return to reality.

Getting hassle to play cards with the missus now, so better dash.

Night all

Worzel

In 1997 my wife and i bought our first property. It was a nice 2 bed flat in south London. We paid £98,500 with a mortgage of £93,500 and our joint income was £42,000. As both of us are still with the same employers we know that today our equivalent youngsters earn together £48,000. I saw from Houseprice.co.uk a couple of months ago that my old flat was sold for £228,000. This really puts in perspective how things have moved.

I was discussing this with some of my young colleagues and they seemed relaxed on the point, which surprised me. They mentioned that its "OK" to now buy at 30 not 25 which was my age when i bought. Several had received inheritances from grandparents that would finance large deposits, and they pointed to the never ending supply (apparently) of youngsters flocking to London each year who would all feed the boom. They also said that they dont buy to make money, they buy because they want to "settle down" and home purchase seems to be part of that process.

It left me feeling that the London market has plenty of miles left in it before it crashes. The guys i spoke to buying today are neither panicking, resentful at what they pay or going in with greed driving them - they seem to buy homes when they want to and they can afford it because interest rates are low and parent and inheritance are financing it all.

[Diddad]

In 1997 my wife and i bought our first property. It was a nice 2 bed flat in south London. We paid £98,500 with a mortgage of £93,500 and our joint income was £42,000. As both of us are still with the same employers we know that today our equivalent youngsters earn together £48,000. I saw from Houseprice.co.uk a couple of months ago that my old flat was sold for £228,000. This really puts in perspective how things have moved.

I was discussing this with some of my young colleagues and they seemed relaxed on the point, which surprised me. They mentioned that its "OK" to now buy at 30 not 25 which was my age when i bought. Several had received inheritances from grandparents that would finance large deposits, and they pointed to the never ending supply (apparently) of youngsters flocking to London each year who would all feed the boom. They also said that they dont buy to make money, they buy because they want to "settle down" and home purchase seems to be part of that process.

It left me feeling that the London market has plenty of miles left in it before it crashes. The guys i spoke to buying today are neither panicking, resentful at what they pay or going in with greed driving them - they seem to buy homes when they want to and they can afford it because interest rates are low and parent and inheritance are financing it all.

All of those factors were in place prior to the last crash and the crash still happened. Sentiment is a big factor. The process will play out the same as last time too, the cracks start to appear, the scales tip and instead of the phrase on everyone's lips being 'you'd be a mug not to buy property now', it becomes 'you'd be a mug to buy property now'.