Jump to content
House Price Crash Forum
Guest Cletus VanDamme

Are We Nearly There Yet

Recommended Posts

Guest Cletus VanDamme

On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

Share this post


Link to post
Share on other sites
On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

I think the key is rental income. How much could you rent out your N8 - 600k conversion for? Where there is the most disparity between rentals incomes and mortgage interest, will see the biggest falls.

Share this post


Link to post
Share on other sites

It will be a 40% drop in prices and a higher wages earning, so yes you be able to afford it after a while,inflation related pay is low so prices seem high, so debt is growing and it will come to a point were it will demolish the rate growth in properties. What you need to think is of balance this economy is running on debt once people can't afford to borrow and the others dont spend the economy starts to cave in people lose their jobs, wages rise fast and then once people are happy with the level of wage earnings they will start to spend again.

Edited by crash2006

Share this post


Link to post
Share on other sites
Guest Cletus VanDamme
It will be a 40% drop in prices and a higher wages earning, so yes you be able to afford it after a while,inflation related pay is low so prices seem high, so debt is growing and it will come to a point were it will demolish the rate growth in properties. What you need to think is of balance this economy is running on debt once people can't afford to borrow and the others dont spend the economy starts to cave in people lose their jobs, wages rise fast and then once people are happy with the level of wage earnings they will start to spend again.

I just wonder whether everything is pointing towards hyperinflation at the moment. As a hobby, I trade in sci-fi collectibles, and prices are just mad right now. I recently sold an item that I'd paid $45 (USD) 6 months ago for £130 (Sterling). It's the same across the whole art and collectibles market.

Edited by Cletus VanDamme

Share this post


Link to post
Share on other sites

Surely hyperinflation would put the UK out of business, what foreign company would invest in a country with high wage demands when they could offshore elsewhere for a tiny % of the price?

This IMO would increase outsourcing creating a swathe of unemployment and thus a HPC meltdown anyway.

I cannot see how hyperinflation would benefit the country in any way and do not see the goverment wanting this scenario at any cost.

I just wonder whether everything is pointing towards hyperinflation at the moment. As a hobby, I trade in sci-fi collectibles, and prices are just mad right now. I recently sold an item that I'd paid $45 (USD) 6 months ago for £130 (Sterling). It's the same across the whole art and collectibles market.

Share this post


Link to post
Share on other sites
On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

Why will they be too expensive at 400k? Crouch End is quite nice, it can be too expensive for normal people without being too expensive to fill all the property there.

I wouldn't have thought the rich would stop buying unless London's economy tanked completely and all of a sudden people weren't rich any more.

And 6 miles in London terms is a long way . . . crouch end may not be hugely central but it's nothing compared to enfield.

Share this post


Link to post
Share on other sites
Guest Cletus VanDamme
Why will they be too expensive at 400k? Crouch End is quite nice, it can be too expensive for normal people without being too expensive to fill all the property there.

Because similar flats could be had for about 120K in 1997?

Share this post


Link to post
Share on other sites
Are We Nearly There Yet?

Not quite but getting there slowly, it is a bit like you buy something if the price is reduced to £99 but probably wouldn't buy if it was £109. We have not seen 6% + rates for nearly a decade the last time we had a rate of 6.75% was November 1998. I really believe we are 1% rate rise away from house price 'carnage'

6% + rates will change the sentiment & affordability big time. Many heavily indebted borrowers & property speculators won't be able to absorb it and the housing bubble will pop.

Share this post


Link to post
Share on other sites
Not quite but getting there slowly, it is a bit like you buy something if the price is reduced to £99 but probably wouldn't buy if it was £109. We have not seen 6% + rates for nearly a decade the last time we had a rate of 6.75% was November 1998. I really believe we are 1% rate rise away from house price 'carnage'

6% + rates will change the sentiment & affordability big time. Many heavily indebted borrowers & property speculators won't be able to absorb it and the housing bubble will pop.

Put it another way. We're just two hikes away from 6.25% which is the highest rate for nearly a decade.

30% won't correct the boom, but don't focus on headline figures. London fell 27% last time round according to the figures. But actually, there were plenty of places that fell 60-70% in that time.

Be watchful. Look out for distressed sellers and repossessed properties. Comb obsessively estate agents and websites and in a crash you'll bag a bargain that no one is looking for.

Share this post


Link to post
Share on other sites
Because similar flats could be had for about 120K in 1997?

And if people were only willing to pay what they were in 1997 then 400k would be too expensive. If people were only willing to pay what they were in 1950 then 120k would be too expensive. If you shift your frame of reference to suit the view you want to express then anything can be too expensive or too cheap.

Share this post


Link to post
Share on other sites
On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

That rather nice 2-bed house - in a country with average wages of 25k - should be worth 100k max. We are so, so far out of line with sanity that it is impossible to remember a time when houses were reasonably priced.

When, finally, house prices nationally fall. When, finally, it becomes mainstream media fodder to talk about how far prices fell last month or quarter etc. Then, once sentiment changes, anything will be possible.

Investors will not buy in a falling market.

FTBs won't mortgage themselves to the hilt in a falling market.

The lunacy, particularly in London, during 2006 was based on the mistaken belief that IRs had peaked and were now on there way down. Now, few people are under any illusion that IRs will drop anytime soon.

Sentiment is already 75% changed.

Not far to go now and I would not be surprised to see freefall.

Edited by Lets' get it right

Share this post


Link to post
Share on other sites
On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

£600k? Are you sure?

This is only £300k:

http://www.rightmove.co.uk/viewdetails-832...=1&tr_t=buy

Share this post


Link to post
Share on other sites
Guest Cletus VanDamme
And if people were only willing to pay what they were in 1997 then 400k would be too expensive. If people were only willing to pay what they were in 1950 then 120k would be too expensive. If you shift your frame of reference to suit the view you want to express then anything can be too expensive or too cheap.

C'mon, you don't need me, of all people, to give the bear argument? Wages since 1997 haven't risen by anything like the amount required to match the % increase in prices in that time frame.

In 1997 I was earning 32K. Around 2000 it was easy to get an IT job paying 45K. Now, £35K is more the norm (if, as I do, you choose not to work for a city bank).

Share this post


Link to post
Share on other sites
Guest grumpy-old-man
This country is a lunatic asylum.

that's why it's called "Treasure Island" apparantly. ;)

they can make any type of sh1t elsewhere in the world & we will pay stoopid amounts of money to buy them.

Edited by grumpy-old-man

Share this post


Link to post
Share on other sites
C'mon, you don't need me, of all people, to give the bear argument? Wages since 1997 haven't risen by anything like the amount required to match the % increase in prices in that time frame.

In 1997 I was earning 32K. Around 2000 it was easy to get an IT job paying 45K. Now, £35K is more the norm (if, as I do, you choose not to work for a city bank).

And you of all people don't need anyone to point out alternative perspectives, why is 1997 purchasing power the "correct" level of purchasing power? It'd be fricking sweet if it was, but there's no reason why it should be.

Share this post


Link to post
Share on other sites
On another thread I posted about crazy prices in N8 - 600K for a 2-bed conversion, for instance.

How much longer can this continue, and how much will places in sought-after areas such is this actually fall by? Even at 30%, such flats will still be way too expensive at 400K or so.

Could it be that the prime areas end up falling by the most? If the rich stop buying, then no one else can afford the prices they were previously happy to pay, even with 50%+ falls. But then again, that's a very, very big if.

Perhaps the cheaper areas might not fall so much.

Here's a rather nice 2-bed house 6 miles up the road from the 600K conversions, at half the price (295k asking):

http://www.rightmove.co.uk/viewdetails-156...=1&tr_t=buy

gaaah! tell me about it!

my missus is desperate to go and look at similar types of properties in the N8 / N4 region.

:huh:

Share this post


Link to post
Share on other sites

house prices will drop to the point where buying on a repayment mortgage is equal to renting, right now buying on a IO is more expensive than renting!!

but you hit the nail on the head, saying that even after a crash we will have prices which are high, the reason for that is simple!

a lack of supply

Share this post


Link to post
Share on other sites
Sentiment is already 75% changed.

Sentiment has definitely turned and is eroding nice and steadily. But I don't think it's anywhere near 75% changed. Remember that HPCers are watching property news more closely than Joe & Joanna public, who still believe, and repeat to each other the well-worn platitudes.

I think it will take another year or so for the negative sentiment to work its magic on prices.

frug.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 354 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.