Jump to content
House Price Crash Forum
Sign in to follow this  
benjamin

House Prices Hit A Standstill

Recommended Posts

.

No not seen that one yet.

.

And of course house prices don't have to actually fall becuase of IRS, or Credit Crunch in order to start the HPC cascade.

A stagnation should do it too, and this is why I think so.

.

It was an analyst from (I think) ABN Amro who said about a month back that becuase the housing market was now mostly based on a speculative model (ie. less influence of OOs and long term "investors" and more from flippers and short term BTLs) that something like up to 40% of the current prices of houses is based on continued increase at the current or faster rate.

.

I.e. The only way you can justify/afford buying a house at present levels is if you expect that it will increase in value at +10% per year. This is why BTLs are prepared to subsidise rent and why so many people are prepared to take IO mortgages. (experience tends to bear this out)

.

When the market slows that value attached to the house attributed becuase of its ability to increase in value is lost or reduced. This lowers its price which lowers further the expected future return.

.

And so the cascade begins.

.

Can anyone find any holes in my logic.

.

ST

Share this post


Link to post
Share on other sites
.

No not seen that one yet.

.

And of course house prices don't have to actually fall becuase of IRS, or Credit Crunch in order to start the HPC cascade.

A stagnation should do it too, and this is why I think so.

.

It was an analyst from (I think) ABN Amro who said about a month back that becuase the housing market was now mostly based on a speculative model (ie. less influence of OOs and long term "investors" and more from flippers and short term BTLs) that something like up to 40% of the current prices of houses is based on continued increase at the current or faster rate.

.

I.e. The only way you can justify/afford buying a house at present levels is if you expect that it will increase in value at +10% per year. This is why BTLs are prepared to subsidise rent and why so many people are prepared to take IO mortgages. (experience tends to bear this out)

.

When the market slows that value attached to the house attributed becuase of its ability to increase in value is lost or reduced. This lowers its price which lowers further the expected future return.

.

And so the cascade begins.

.

Can anyone find any holes in my logic.

.

ST

this is essentially a summary of one of the major points of the Miles report back in Jan....

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...
Sign in to follow this  

  • 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.