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Smash It Up

What If It Just Doesn't Happen?

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I'm hoping for a crash - mostly for selfish reasons, I just want to be able to buy a nice place to live at an affordable price, and I'd love to see the smug smirks wiped off a few people's faces when they suddenly realise they're not financial geniuses after all. But, I'm only 50% convinced that the crash will happen and I'm kind of interested to see how society will develop in an era when property ownership is simply an impossible dream for most people without high salaries or wealthy parents. Any thoughts on what it will mean for Britain if the prices simply don't drop?

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I'm hoping for a crash - mostly for selfish reasons, I just want to be able to buy a nice place to live at an affordable price, and I'd love to see the smug smirks wiped off a few people's faces when they suddenly realise they're not financial geniuses after all. But, I'm only 50% convinced that the crash will happen and I'm kind of interested to see how society will develop in an era when property ownership is simply an impossible dream for most people without high salaries or wealthy parents. Any thoughts on what it will mean for Britain if the prices simply don't drop?

Go abroad. It's happening there.

If Britain does revert to a Victorian society, it will be the only one in the world and the labour force and investors will desert it in droves. We are only worth something as a consumer economy, without it we are a second world country that not even the rich would want to live in.

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We are only worth something as a consumer economy

that is true. It is the UK's only remaining asset of any perceived value to supranational investors - i.e. the fruits of the future labours of its populace, aka the "consumer".

The transfer of aforementioned fruits is carried out through the medium of debt.

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I'm hoping for a crash - mostly for selfish reasons, I just want to be able to buy a nice place to live at an affordable price, and I'd love to see the smug smirks wiped off a few people's faces when they suddenly realise they're not financial geniuses after all. But, I'm only 50% convinced that the crash will happen and I'm kind of interested to see how society will develop in an era when property ownership is simply an impossible dream for most people without high salaries or wealthy parents. Any thoughts on what it will mean for Britain if the prices simply don't drop?

A Wishful Bear not a Certain Bear then - fair enough.

Answer: People will continue to pay rents that are half the cost of the mortgage.

I'd also suggest owning will become less of a social desire as legislation is improved when the larger number of tenants become a significant voting proportion with more clout than the landlords.

In Germany I gather when you rent you can use the space as if you effectively own it, e.g. can decorate however you want and the landlord can't object. Much more power to the tenant - but maybe a tenant in Germany can explain this a bit better?

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I'm hoping for a crash - mostly for selfish reasons, I just want to be able to buy a nice place to live at an affordable price, and I'd love to see the smug smirks wiped off a few people's faces when they suddenly realise they're not financial geniuses after all. But, I'm only 50% convinced that the crash will happen and I'm kind of interested to see how society will develop in an era when property ownership is simply an impossible dream for most people without high salaries or wealthy parents. Any thoughts on what it will mean for Britain if the prices simply don't drop?

Mates sister just bought a place in cardif,

executive flat.

£160,000

from a guy who paid £250,000 three years ago...

It is happening.

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this isn't a uk problem - it's global

the central banks have a global agenda - part of which is inflating money supply - which naturally inflates asset prices

you won't escape this by moving abroad

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and I'd love to see the smug smirks wiped off a few people's faces when they suddenly realise they're not financial geniuses after all.

This is the exact reason it WILL happen, because of the morons who thought they are smart investors ploughing money into the bubble. History has taught us one thing, when ordinary inexperienced people throw money at an overheated market chaos ensues. At least when the inevitable occurs we are pretty much guaranteeed a good ten years of people being negative about property and treating it as somewhere to live, not as an investment which pays out £30/day.

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Mates sister just bought a place in cardif,

executive flat.

£160,000

from a guy who paid £250,000 three years ago...

It is happening.

And thats still 50% too much!!!

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My best friend's sister's mate's dad's brother just bought a place for 10p, and the smug git that owned it before has lost £100 million on the price.

Also, I read in the Mail that property prices are going to go negative, so you will have to pay people to take them from you. There was another article from a leading economist in the FT, saying the opposite, but he's obviously being paid off by a vested interest, and is obviously not a very nice person anyway.

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My best friend's sister's mate's dad's brother just bought a place for 10p, and the smug git that owned it before has lost £100 million on the price.

Also, I read in the Mail that property prices are going to go negative, so you will have to pay people to take them from you. There was another article from a leading economist in the FT, saying the opposite, but he's obviously being paid off by a vested interest, and is obviously not a very nice person anyway.

Hot Dog! Do you have any links? How did we miss that!

What effect do you think this will have on the prices of bananas? I like Bananas...

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I agree that if it doesn't happen, there will hopefully be a groundswell of opinion in changing tenancy laws to allow longer tenancies. I personally am enjoying the cheaper option of renting at the moment, and investing the differential. If I have to do this for the rest of my working life, I will hopefully have saved up enough to pay for a small retirement flat.

Well you've got to dream haven't you! :angry: :lol:

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Any thoughts on what it will mean for Britain if the prices simply don't drop?

I think prices will drop off a little, Im not convinced on a crash.

We are only worth something as a consumer economy

No, the point is that there is plenty of money moving around both in and out. It doesnt matter if it comes in because I sold a car or because I sold a concept. Britain actually makes more stuff than it ever did before, but the sector makes up a smaller % thanks to faster growth in other areas.

I'd also suggest owning will become less of a social desire as legislation is improved when the larger number of tenants become a significant voting proportion with more clout than the landlords.

Yeah, good ol' democracy - that will save us. So its the Tories go next, then back to labour in 10 years, and in the meantime decisions will be made by politicians totally unqualified in their area - is anyone else increasingly troubled by that education decisions are lead by someone who has never worled in a school, health decisions by someone whos never worked in a hospital, etc...

In Germany I gather when you rent you can use the space as if you effectively own it, e.g. can decorate however you want and the landlord can't object. Much more power to the tenant - but maybe a tenant in Germany can explain this a bit better?

Im no legal whizz, but was lead to believe under British law you also temporareily owned the place. You can decorate a rented property, what you cant do is damage it. Painting satanic symbols over the house would probably be easy to claim against, but the LL is going to have trouble in court if you spruced up his pad. The problem is actually that why would you want to improve someone elses property!

The real detractor for most renters is stability. Renting would be good to me if you could had a right to stay there for years but had the chance to leave in months. Rent rises would be capped at a level pre-arranged in the contract. If you knew you'd be there for 10years you'd have no probs doing the place up and would be happy your kids arent going to go through the trauma of losing their family home, etc...

My best friend's sister's mate's dad's brother just bought a place for 10p, and the smug git that owned it before has lost £100 million on the price.

Also, I read in the Mail that property prices are going to go negative, so you will have to pay people to take them from you. There was another article from a leading economist in the FT, saying the opposite, but he's obviously being paid off by a vested interest, and is obviously not a very nice person anyway.

hehe, nice 1

Edited by Orbital

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In Germany I gather when you rent you can use the space as if you effectively own it, e.g. can decorate however you want and the landlord can't object. Much more power to the tenant - but maybe a tenant in Germany can explain this a bit better?

90% of people in Berlin rent. Most of the Appartments are owned by the State or orginisations similar to House Associations. They own hundreds or tens of thousands of appartments. There are however private firms or individuals owning a block or a few blocks who also rent out. Obviously there are also people who have a buy to let and rent it out, but it is not common. Increasingly state owned housing is being sold off big style to funds or private equity. Dresden recently sold the lot. Howerver because of the very to the left politics of Berlin, selling off of such state assets is frowned upon. Most people I know who bought property at arouind 1995 say they have lost 50% in value. Property in Berlin is either flat or still falling.

The rule of thumb for a rental in Berlin is Unbegrenzt- ie. unlimited time period. Most people rent 10, 20, 30yrs or stay forever. The younger ones may

move around every three or four years. Every year statisticaly every 7th Berliner moves. Most flats come unfurnished, some with no kitchen units.

Some flats come with needing refurbishment which means putting your own kitchen and bathroom in, as well as fully decorating the place. Often for this

you get 3 months rent free. For a professional person/couple seeking an Appartment the following will apply;

Most Appartments are advertised in various newspapers. (There are agencies as well where a finders fee of perhaps 2 months rent is paid).

Also the many state/housing associations have web sites and offices with visiting times etc.

Appartments are advertised as with or without - heating, cable, finders fee, deposit viewing time etc.

You turn up at an appointed time alone or possibly viewing with 10 or 20 others.

After applying and getting your appartment you can more or less treat it as your own. (contract is for life or as long as the building exists). If a firm goes bust the new one has to take the tennant over. There are state rent laws dictating what can be charged in rent depending on location, age, type of

heating etc. If more is charged or wanted it goes to court. There are regulations and associations with offices who enforce this.

If your heating, water supply etc. goes you are leagally entitled to withhold a portion of your rent. ie. no heating in winter 30%.

As long as when you leave the property it is of an equivolent or better state you can;

1. Decorate how you want.

2. Put in new kitchen and bathroom.

3. Replace carpets, laminate, doors etc.

There are no inspections of your Appartment. Deposit is usually 3months rent which is returned with intrest. I allways get mine back.

There is no council tax as it is included in the rent as is usually the heating.

If you fail to pay 2 months rent you can be evicted. This will take 6 months or so.

My Appartment;

70qm/720sq ft. west Berlin.

rent inc. council tax, heating, cable €500-350pound. per month

contract - for life

deposit - zero

finders fee- zero

building 7 storey / 1975

balcony 6 m²

nice neibourhood etc.

So its nice and cheap and very secure. But it is cheap for a reason, 20% unemployment. However I believe the tenancy laws are German wide.

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It's a good question. Social trends are clearly pointing towards a different future, inequality is rising and real wages for the working and middle classes are flat or falling. If these trends continue then reduced home ownership is a possibility, after all millions of Britons who now expect to be home owners would have expected to be tenants in previous generations.

However, I still expect a house price crash is in imminent prospect, even if the long term trend over several generations moves back towards lower owner occupancy rates.

The reason is that the current surge in BTL carries the unmistakeable signature of a bubble. There's been a fevered rush into BTL, fuelled by exceptionally easy credit, and many BTL landlords just don't have the financial reserves, experience, or patience to weather the impending perfect storm of increasing interest rates, low rental yields, and bearish media.

The property landlord of previous generations had low expectations of capital gains, today the opposite is true. The only possible reason for becoming a landlord today is the anticipation of rising prices. Consequently landlords have changed from the Mr Rigsby of Rising Damp, a sad and risk-averse loser, to ambitious hot-shots who expect to gamble and win big.

Except they won't. They'll lose.

The more prescient of them will see the writing on the wall and get out now without sustaining too much pain. But it really is a case of only the first into the lifeboats will survive, the laggard BTL landlords will carry a crushing burden of debt for the next decade or longer. And "buyer beware" will become "borrower beware", as the new maxim that will endure from this coming rout and guide the next generation.

Edited by silver surfer

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A lot of areas are currently experiencing price falls now, yet along when the interest rate rises kick in.

How do the lack of supply prophets explain that?

All the indicators are curently pointing towards house prices declining rather then rising.

Houses at 10 x income?

I think they're around about that now.

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I'm hoping for a crash - mostly for selfish reasons, I just want to be able to buy a nice place to live at an affordable price

Why is it selfish to hope for a crash to be able to buy at an affordable price? Greedness & selfishness of others is the reason why the market is detached from reality. Do they feel selfish or guilty for the fact that you are priced out?

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Why is it selfish to hope for a crash to be able to buy at an affordable price? Greedness & selfishness of others is the reason why the market is detached from reality. Do they feel selfish or guilty for the fact that you are priced out?

Indeed.

Our whole society is based on peoples desire to be selfish and have more money/better things etc.

The worrying things about high house prices is that they're engineered by the powers that be.

Builders restricting land and not building enough houses (yes I'll admit supply plays a small part, but not that much), interest rates, banks lending 5 times salary etc.

What will they think of next to sustain the madness. Personally I think this is the end.

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Unless you have a hefty deposit, it will actually be harder to purchase a house (or more specifically, borrow money) in the event of price drops during a crash! Why can people not get their heads round this!? So many fools waiting as if house prices will suddenly drop overnight so they can buy at a knock down price - sorry, but it doesn't work like that. Many of those without a deposit would actually be better off buying now on a 2yr fixed rate and swapping mortgages after that period.

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Indeed.

Our whole society is based on peoples desire to be selfish and have more money/better things etc.

The worrying things about high house prices is that they're engineered by the powers that be.

Builders restricting land and not building enough houses (yes I'll admit supply plays a small part, but not that much), interest rates, banks lending 5 times salary etc.

What will they think of next to sustain the madness. Personally I think this is the end.

I would have no issue with renting, if you could rent as you could in Germany.

For instance I don't "own" my car. Its leased but I still consider it my "own" and the lease

company looks after the repairs / servicing.

But there needs to be legislation to secure longer term renting arrangements other than "assured shorthold tenancies."

However as one commentator said this week, we do not really want a "rational" housing market in the UK.

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this isn't a uk problem - it's global

the central banks have a global agenda - part of which is inflating money supply - which naturally inflates asset prices

you won't escape this by moving abroad

Yes but for those of us who have paid our mortgage of and want to move up the ladder it looks like a real winner. I can get a nice house in California for what I get for my small place here, there are more jobs, the weather is better. The same is true of New Zealand, Canada and Australia. I checked on line and we have enough points to get into either. Got to be a good option in my book.

Edited by gordonbrown

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Unless you have a hefty deposit, it will actually be harder to purchase a house (or more specifically, borrow money) in the event of price drops during a crash! Why can people not get their heads round this!?

In short, because there isn't any point in getting your head around it. It's utter sh1te.

Interest rates and credit availability lead the curve of house prices. Interest rates have been rising for months, but house prices are only just starting to fall and not in all postcodes. This is because it takes time for these effects to manifest themselves in the actual prices of property at the point of sale.

Just as the rate and availability leads the curve going over the top of the curve, so they will also lead the curve going under the bottom.

It is true that you won't get a result next year, unless you are already sitting on mucho cash. This market will fall, like the last one, for three or four years.

Then, however, the economy will need stimulus and the taps will be opened again. Just like at the top of the market, this change will not have immediate effect and prices will continue to fall for some time. There will be a long window when credit availability coincides with relatively low prices.

A horizon of around four years from now is not unreasonable, IMO.

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If people bought property as a place to live and bring up their families, there would not be an issue. As an investment, property is high risk compared to many other investments, which means you can make a very good return or a very bad loss. As an investment, property is a gamble - as a home, it doesn't really matter.

TTID, to say that you can see a horizon 4 years from now is just as speculative as saying the share price of company x will be £1.39 in x years time. This is my point. HPI cannot continue at current levels unless wages rise in line, but this is not to say that we will enter a 5 year period of very low HPI instead of a crash. Nobody knows, and hedging your bets and waiting for the imminent crash to come along like the next bus is pure stupidity. People STR'd 5 years ago waiting for this to happen. Some people, 1 year ago and some 2 years from now - nobody knows who will have made a good decision but hindsight is a wonderful thing.

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In Germany I gather when you rent you can use the space as if you effectively own it, e.g. can decorate however you want and the landlord can't object. Much more power to the tenant - but maybe a tenant in Germany can explain this a bit better?

90% of people in Berlin rent. Most of the Appartments are owned by the State or orginisations similar to House Associations. They own hundreds or tens of thousands of appartments. There are however private firms or individuals owning a block or a few blocks who also rent out. Obviously there are also people who have a buy to let and rent it out, but it is not common. Increasingly state owned housing is being sold off big style to funds or private equity. Dresden recently sold the lot. Howerver because of the very to the left politics of Berlin, selling off of such state assets is frowned upon. Most people I know who bought property at arouind 1995 say they have lost 50% in value. Property in Berlin is either flat or still falling.

The rule of thumb for a rental in Berlin is Unbegrenzt- ie. unlimited time period. Most people rent 10, 20, 30yrs or stay forever. The younger ones may

move around every three or four years. Every year statisticaly every 7th Berliner moves. Most flats come unfurnished, some with no kitchen units.

Some flats come with needing refurbishment which means putting your own kitchen and bathroom in, as well as fully decorating the place. Often for this

you get 3 months rent free. For a professional person/couple seeking an Appartment the following will apply;

Most Appartments are advertised in various newspapers. (There are agencies as well where a finders fee of perhaps 2 months rent is paid).

Also the many state/housing associations have web sites and offices with visiting times etc.

Appartments are advertised as with or without - heating, cable, finders fee, deposit viewing time etc.

You turn up at an appointed time alone or possibly viewing with 10 or 20 others.

After applying and getting your appartment you can more or less treat it as your own. (contract is for life or as long as the building exists). If a firm goes bust the new one has to take the tennant over. There are state rent laws dictating what can be charged in rent depending on location, age, type of

heating etc. If more is charged or wanted it goes to court. There are regulations and associations with offices who enforce this.

If your heating, water supply etc. goes you are leagally entitled to withhold a portion of your rent. ie. no heating in winter 30%.

As long as when you leave the property it is of an equivolent or better state you can;

1. Decorate how you want.

2. Put in new kitchen and bathroom.

3. Replace carpets, laminate, doors etc.

There are no inspections of your Appartment. Deposit is usually 3months rent which is returned with intrest. I allways get mine back.

There is no council tax as it is included in the rent as is usually the heating.

If you fail to pay 2 months rent you can be evicted. This will take 6 months or so.

My Appartment;

70qm/720sq ft. west Berlin.

rent inc. council tax, heating, cable €500-350pound. per month

contract - for life

deposit - zero

finders fee- zero

building 7 storey / 1975

balcony 6 m²

nice neibourhood etc.

So its nice and cheap and very secure. But it is cheap for a reason, 20% unemployment. However I believe the tenancy laws are German wide.

Don't rely on this always being the case. A lot of these properties are being sold to private equity groups, who then gear them up through securitisation. This can only lead to a squeeze on tenants benefits and associated increases in rents over time.

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As an investment, property is a gamble - as a home, it doesn't really matter.

It will matter for many, when one takes 6x - 7x salary as a mortgage, on a relatively low interest rate environment for 25 years that is too long to be a debt slave in today's market. It may not matter now but it will bite some people in future whether the property is an investment or a home.

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