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We May Be On The Verge Of A House Price Crash

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This story is prominently displayed in LARGE BLACK LETTERS on page 2 of today's edition of the second largest selling paper in Britain. The message is unmissable.

What effect might this have on sentiment and the legendary "spring bounce"?

I'd say the market is on the verge of a major correction and I doubt an interest rate cut like the one in Aug 2005 will save it this time.

Property market on verge of 'bust' warns report

by BECKY BARROW

12th April 2007

Britain's booming property market could be on the verge of a crash, a report will warn today.

The red alert is a blow for the country's 18.5 million homeowners, particularly if they have recently bought at today's record prices.

The report - from respected financial analysts Datamonitor - says there is "a threat" that a sharp fall in prices could be on its way..............

Karina Purang, a financial analyst at Datamonitor, said: "There is a threat that it (a crash) could happen."

.......the report warns that there are a number of serious threats which could spark such a disaster.

The biggest threat is the huge and rising levels of personal debt in Britain which now has a record £1.3 trillion debt mountain - meaning the average British adult has unsecured debts of £4,522.

She said this rise "spells trouble".

Unsecured debt, such as credit cards and personal loans, does not even include secured debt, typically a mortgage. But the average mortgage has now soared above £150,000 for the first time as people stretch themselves to buy at today's prices.

Miss Purang's fear is that these debts could have "a chain reaction" which will take its toll on the property market.

If homeowners cannot cope with their unsecured debts, the knock-on effect is that they will struggle to pay their mortgages.

The number of repossessions is already rising rapidly, up nearly 65 per cent to 17,000 in 2006, according to the Council of Mortgage Lenders.

The other threat, which has eerie echoes of the problems in America, is fears about the so-called 'sub-prime' market, according to the report.

A sub-prime mortgage is one which is lent to somebody who, typically, has a poor credit history and cannot get a conventional mortgage.

The report warns: "While UK lenders are required to practice a responsible lending policy, there are players which are willing to take a riskier approach to lending by relaxing their criteria to attract more customers."

The third worry is that the three interest rate rises since last summer are putting many homeowners under intense financial pressure.

The threat of another rate rise, possible in the next few weeks, could mean they will be even more stretched if mortgage costs rise again.

The warning from Datamonitor comes after several housing experts have raised fears about the future of Britain's extraordinary housing boom.

Last year, a former Government adviser, David Miles, chief UK economist at investment bank Morgan Stanley, said a sharp fall is possible.

He said: "A substantial fall in real house prices is likely at some point in the relatively near future, though it could yet be one or two years away." ...............

Debt charities have warned that homeowners are "on the rack" because their unsecured debts are pushing them to breaking point.

A typical homeowner who contacts the charity has unsecured debts of £36,192, which is about £14,200 higher than a non-homeowner.

Malcolm Hurlston, the CCCS chairman, said: "Homeowners are being stretched. They are on the rack. As the burdens on household finances mount, our research shows that homeowners in particular should take care."

Many homebuyers, who cannot afford to buy at today's prices, will be hoping that a crash finally happens.

But prices would need to fall very sharply for prices to fall far enough to levels that many people can afford.

Property market on verge of 'bust'

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This story is prominently displayed in LARGE BLACK LETTERS on page 2 of today's edition of the second largest selling paper in Britain. The message is unmissable.

What effect might this have on sentiment and the legendary "spring bounce"?

I'd say the market is on the verge of a major correction and I doubt an interest rate cut like the one in Aug 2005 will save it this time.

Property market on verge of 'bust'

The tabloid reading public are gonna be so confused with all the mixed messages they are getting at the moment. Poor things.

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The tabloid reading public are gonna be so confused with all the mixed messages they are getting at the moment. Poor things.

well, in a way, it might be that what they choose to believe is what ends up happening. if the public suddenly think theres going to be a crash, that could be the very thing that causes one, or at least precipitates and kicks one off

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The tabloid reading public are gonna be so confused with all the mixed messages they are getting at the moment. Poor things.

Confused? Yes, quite!

Lets not forget the 'greatest news paper in the world' a few days ago….

http://www.express.co.uk/posts/view/3862

or this from a month before…

http://www.express.co.uk/posts/view/781

Overall, among all the screaming headlines, I think that sentiment is starting to change. Anyone else think this?

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Guest Cletus VanDamme
Overall, among all the screaming headlines, I think that sentiment is starting to change. Anyone else think this?

Nah, we had headlines like that back in 2005, 2004, 2003

Makes absolutely no difference until people start seeing their neighbours getting repossessed and the MEW'd car being towed away.

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Nah, we had headlines like that back in 2005, 2004, 2003

I admire your bullish stoicism in the face of defeat but we didn't have headlines anywhere near as bearish as this back in 03, 04 and 05, apart perhaps from one I recall on the front of the Express in 05.

Makes absolutely no difference until people start seeing their neighbours getting repossessed and the MEW'd car being towed away

I've already had 4 people (usually bullish on house prices) come up to me this morning to tell me "there's gonna be a house price crash".

Apparently they read it in the Mail ;)

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I admire your bullish stoicism in the face of defeat but we didn't have headlines anywhere near as bearish as this back in 03, 04 and 05, apart perhaps from one I recall on the front of the Express in 05.

I've already had 4 people (usually bullish on house prices) come up to me this morning to tell me "there's gonna be a house price crash".

Apparently they read it in the Mail ;)

We did, i remember a very big headlines 'House Price Crash' in 03/04

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Guest Yeahbutnocrash

As sometimes happens this is the same original story already posted on here but being freshly reported as it 'does the rounds' in the morning tabloids, evening papers, local papers, sunday papers...

Fair enough, I guess it's likely to have more impact if it appears in more papers and those with more exposure but the story itself is not new on HPC

The original author was not predicting a crash but was pointing out that the market is now more vulnerable (you know - perhaps to a major final straw or combination of straws....)

Edited by Yeahbutnocrash

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I've already had 4 people (usually bullish on house prices) come up to me this morning to tell me "there's gonna be a house price crash".

In the same vein, six months ago my mum was telling me (much to my amusement) about an old friend of hers who was trading up to the biggest house they could afford on an IO mortgage, with the intention of reaping the HPI rewards. This woman and her husband previously had a VERY nice 4 bedroom detached place in Shepherds Bush, so God knows what they've paid for this new one, probably the best part of a million.

Anyway, we had a family gathering a couple of weeks ago and I bumped into this woman and she started telling me that she thought they'd made the biggest mistake of their lives because they keep reading in the papers that house prices are going to crash.

So yes, I would say that sentiment is definitely changing.

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We did, i remember a very big headlines 'House Price Crash' in 03/04

Really? Then perhaps you could post the links, if they exist because I can't recall headlines of the type we are seeing regularly these days from the Mail to the Mirror, Telegraph, and even the Express.

BTW. You've changed your tune since buying a house Moosie, are you having second thoughts yet or have you slipped into bravado mode?

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As sometimes happens this is the same original story already posted on here but being freshly reported as it 'does the rounds' in the morning tabloids, evening papers, local papers, sunday papers...

Fair enough, I guess it's likely to have more impact if it appears in more papers and those with more exposure but the story itself is not new on HPC

The original author was not predicting a crash but was pointing out that the market is now more vulnerable (you know - perhaps to a major final straw or combination of straws....)

Yeah, whatever :lol:

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Just a few more bearish headlines should reprogramme those greedy little BTL *****!!!!! hahaha looks at the filth panic mwahahhahahahahahhahahahhh

little do they know its a conspiracy

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Nah, we had headlines like that back in 2005, 2004, 2003

Makes absolutely no difference until people start seeing their neighbours getting repossessed and the MEW'd car being towed away.

EXACTLY THAT HAPPENED TO MY NEIGHBOUR OVER THE ROAD A FORTNIGHT AGO - TWO CARS!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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EXACTLY THAT HAPPENED TO MY NEIGHBOUR OVER THE ROAD A FORTNIGHT AGO - TWO CARS!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Good stuff!!! I bet they were only bought to make you and the other neighbours feel insecure. Don't tell me, they were 4x4's and Convertibles.

They must feel like fools now :lol:

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BBC News online still spouting bullish propaganda I see. Ignore the Datamonitor report but report RICS survey - market still boomng!

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there is a comment piece in today's mirror condemning those banks who are offering 6x lending multiples to first time buyers. i read it as the paper setting up their 'villains of the piece' when the shit finally hits the fan...

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BBC News online still spouting bullish propaganda I see. Ignore the Datamonitor report but report RICS survey - market still boomng!

I don't think we get real news anymore, just spin and propaganda and bulls**t surveys and data to support whatever trollop we're served up, thats why we're all on here trying to figure out what the dickens is going on.

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Friends of mother-in-law (wealthy boomers of course) recently bought a house (Half a million) with a BRIDGING LOAN without selling their current house (over-valued at £400,000).

They've 'sold' it TWICE AND TWICE IT FELL THROUGH.

It's still on the market. Been for sale for A YEAR now...

Oh dear.

Not all rosy for the boomers after all.

Edit - Leek in Staffordshire.

Edited by 29929BlackTuesday

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Friends of mother-in-law (wealthy boomers of course) recently bought a house (Half a million) with a BRIDGING LOAN without selling their current house (over-valued at £400,000).

They've 'sold' it TWICE AND TWICE IT FELL THROUGH.

It's still on the market. Been for sale for A YEAR now...

Oh dear.

Not all rosy for the boomers after all.

Edit - Leek in Staffordshire.

I haven't heard of bridging loans for years, didn't know they still did them. Used to be very expensive, a quick road to povery if you did'nt sell quickly enough.

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Guest Yeahbutnocrash
Yeah, whatever :lol:
BEARing in mind the bears track record I'd rather not just assume we are heading for an imminent massive crash

I'm not saying there can't be a crash but at the same time find it hard to believe there is about to be a huge crash that will mean we will soon all be able to buy good sized property in good locations at 30-50% discount!

Edited by Yeahbutnocrash

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BEARing in mind the bears track record I'd rather not just assume we are heading for an imminent massive crash

I'm not saying there can't be a crash but at the same time find it hard to believe there is about to be a huge crash that will mean we will soon all be able to buy good sized property in good locations at 30-50% discount!

Why ? The FSA told the banks to model a 40% correction because thats what they believed to be realistic, and that was some months ago now. In order for prices to revert to the long term mean they need to fall by 50-60%. Granted it wont happen overnight but it will happen.

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Guest Yeahbutnocrash
Why ? The FSA told the banks to model a 40% correction because thats what they believed to be realistic, and that was some months ago now. In order for prices to revert to the long term mean they need to fall by 50-60%. Granted it wont happen overnight but it will happen.
That was what is known as 'disaster planning' ie. Planning for a worst-case scenario

That is in fact a completely different matter from expecting anything like it will actually happen

Similarly the government had plans about what to do in the event of a nuclear war and companies have disaster plans of how to keep their business functioning in case their main building is destroyed in an accident or by terrorism etc

Also even though IR's are rising and I think that could be quite significant - It's happening at a slower pace than in the 80's crash so people have more time to plan and arrange how to deal with it

Edited by Yeahbutnocrash

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BEARing in mind the bears track record I'd rather not just assume we are heading for an imminent massive crash

I'm not saying there can't be a crash but at the same time find it hard to believe there is about to be a huge crash that will mean we will soon all be able to buy good sized property in good locations at 30-50% discount!

It won't happen overnight. 5 years of stagnation and wage inflation will do the trick. Its underway now.

Edited by NoIdea

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  • 337 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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