Has Anyone Else Noticed?

[Flat Bear]

This will bring down house prices in the UK soon as well as causing a lot of pain and a recession.

The question is when will this effect the UK housing market?

I believe it will effect the city first and quickly (by the end of the year) I expect to see small MoM falls as soon as September! and expect all indexes to be YoY negative by next April.

This is a very bearish outlook given the extreme demand especially in the SE but I can not see any way current prices can be financed. Mortgages are likely to rise, availability of funds is likely to dry up over the coming months together with cut backs in public spending, rising import costs, lower disposable incomes, the loss of many positions within the financial sector within the next 6 months and accelerating defaults on secured as well as unsecured loans to almost certain record levels.

And remember this credit crunch is only a very gentle squeeze up until now for the UK consumer and householder, with most people not being effected at all. Over the coming months this squeeze will get tighter and tighter, people can last out a few months being extra frugal but after redundancies and even higher taxes and general costs start to hit a bigger house will be the last thing on peoples mind. This could will be a very bleak Christmas for many people.

Is there a possible alternative senario? and how?

[tinecu]

This will bring down house prices in the UK soon as well as causing a lot of pain and a recession.

The question is when will this effect the UK housing market?

I believe it will effect the city first and quickly (by the end of the year) I expect to see small MoM falls as soon as September! and expect all indexes to be YoY negative by next April.

This is a very bearish outlook given the extreme demand especially in the SE but I can not see any way current prices can be financed. Mortgages are likely to rise, availability of funds is likely to dry up over the coming months together with cut backs in public spending, rising import costs, lower disposable incomes, the loss of many positions within the financial sector within the next 6 months and accelerating defaults on secured as well as unsecured loans to almost certain record levels.

And remember this credit crunch is only a very gentle squeeze up until now for the UK consumer and householder, with most people not being effected at all. Over the coming months this squeeze will get tighter and tighter, people can last out a few months being extra frugal but after redundancies and even higher taxes and general costs start to hit a bigger house will be the last thing on peoples mind. This could will be a very bleak Christmas for many people.

Is there a possible alternative senario? and how?

You are right as right can be but remember 'effect' is different from 'affect'.

[Flat Bear]

You are right as right can be but remember 'effect' is different from 'affect'.

Yep

Thank you

[piece of paper]

Yes RB, but perhaps it would be better to say "The question is 'When will this have an effect on the UK housing market?'" I don't think that any useful purpose is served by waiting for the market to don a top-hat and tails and start to whistle "The continental".

p-o-p

[29929BlackTuesday]

Good aggressive counter-post! Well done and I agree with everything you say.

Come on! Let's affect the effect!

[HOwner]

Very good post.

A few slight problems though. Nothing major.

1) Unemployment is not rising (so that perhaps rules out the mass redundancies you seem to be banking on)

2) Wages are still rising faster than inflation

3) IR's may have peaked (so with 2&3, perhaps there goes the argument about not enough money for xmas).

4) Some people have been saying that the only way is down for what, eight years now? Guess what, people still keep affording to buy houses.

So, I wouldn't be counting your chickens just yet.

[Jimmy2Times]

Very good post.

A few slight problems though. Nothing major.

1) Unemployment is not rising (so that perhaps rules out the mass redundancies you seem to be banking on)

2) Wages are still rising faster than inflation

3) IR's may have peaked (so with 2&3, perhaps there goes the argument about not enough money for xmas).

4) Some people have been saying that the only way is down for what, eight years now? Guess what, people still keep affording to buy houses.

So, I wouldn't be counting your chickens just yet.

I have an issue with 3), do you mean they have peaked for the current cycle or indefinitely, if the latter then thats quite some insight you have there me old china.

[Flat Bear]

Very good post.

A few slight problems though. Nothing major.

1) Unemployment is not rising (so that perhaps rules out the mass redundancies you seem to be banking on)

2) Wages are still rising faster than inflation

3) IR's may have peaked (so with 2&3, perhaps there goes the argument about not enough money for xmas).

4) Some people have been saying that the only way is down for what, eight years now? Guess what, people still keep affording to buy houses.

So, I wouldn't be counting your chickens just yet.

Do you believe there is a chance unemployment might not rise over the next 6 months?

Do you believe the government figure on inflation? Real inflation is around 9%

Wage inflation is around 3%

Why do you think IRs could have peaked? They have been going up this week. Is it because you think we are entering a recessionary period?

Most people can no longer afford to buy a house or have access to the funds to do so.

I would be more worried about counting my chickens if I was over leveraged on BTL property or had an uncomfortably high mortgage around my neck.

[HOwner]

I have an issue with 3), do you mean they have peaked for the current cycle or indefinitely, if the latter then thats quite some insight you have there me old china.

No, of course it is the current cycle. But the original email was talking about going neg YOY in just over six months, I think the current cycle is the one that is relevent.

[HOwner]

Do you believe there is a chance unemployment might not rise over the next 6 months?

I am sure it will, but I don't envisage massive rises.

Do you believe the government figure on inflation? Real inflation is around 9%

Wage inflation is around 3%

Wage inflation is 3.4% or something. Do I believe the RPI figure? Yes, I believe that the RPI figure is correct for the items in the RPI basket. If you have a better measure for inflation, please share it. Do I think it is 9%? No, I would laugh at that suggestion.

Why do you think IRs could have peaked? They have been going up this week. Is it because you think we are entering a recessionary period?

Very small rises. I believe the BOE IR's have probably peaked in the current cycle. I would be surprised if there is more than one rise before next April. I would expect none.

Most people can no longer afford to buy a house or have access to the funds to do so.

People have been saying that for years.

I would be more worried about counting my chickens if I was over leveraged on BTL property or had an uncomfortably high mortgage around my neck.

Sure, but those are not the people making claims for a YOY falls in just over six months.

Maybe you are right. Maybe I am just being negative, but this site is often like the childrens joke about it raining tomorrow. Tomorrow never comes. Except in this case, it seems to be the crash "within 12 months" that never actually comes but is only ever a year away at most.

[oracle]

Very good post.

A few slight problems though. Nothing major.

1) Unemployment is not rising (so that perhaps rules out the mass redundancies you seem to be banking on)

2) Wages are still rising faster than inflation

3) IR's may have peaked (so with 2&3, perhaps there goes the argument about not enough money for xmas).

4) Some people have been saying that the only way is down for what, eight years now? Guess what, people still keep affording to buy houses.

So, I wouldn't be counting your chickens just yet.

now hold on just a minute.

1)Unemployment is not falling because the number of immigrants is far in excess of the number of jobs being filled.

..if you have 100000 immigrants and the jobless total falls by 20000,what happens to the other 80k??

the majority of people getting laid off now are indigenous brits,in favour of cheaper immigrant labour.

...for indigenous brits who have families and mortgages this is not good news.

2)wages rising faster than inflation.Again skewed.

...you have a small number of high-earners getting mega-rises,while the shop floor get below inflation in much larger numbers.

..ps CPI is fraudulent.

3)the base rate might stay put,but as people default in larger numbers,the banks have to re-assess risk and up thier margins accordingly.For some lenders,they simply can't stay afloat,and their outstanding loans have to get sold out to tother competitors at knockdown prices.

....and less competition for punters means higher margins(higher mark-ups in IR's by the lender,not the BoE)

4)people have been affording to buy houses by lying,borrowing,grabbing from their parents pension pot...selling their grannies to medical science,the whole lot,all pumped up by the media.It's not the same as an honest 10% down and the broker trawling though EVERY possible expense you MIGHT occur.....the pendulum will swing until only the VERY highest quality borrower with bullet-proof job and 25% deposit will gain access to funds.

[HOwner]

In terms of unemployment, I am talking about claimant count. Something would certainly reflect your second point about Brit's being laid off. Except that currently, it doesn't.

Sorry, I don't buy the "skewed" argument. Whenever stat's go against what people want to believe, it always because they are "skewed" or "corrupt". If you have any evidence that proves your claim, please present it, otherwise, please don't be offended it if I dismiss it.

CPI/RPI, again, you claim it is fraudulent. Still, it is the perhaps the best measure that we have if you want to show consistency over time. If you have a better way of measuring inflation, I would be more than happy to see it.

Banks did up their margins. By, what, 0.1%? I don't see how another few 0.1% rises are going to do when something like five successive 0.25% rises haven't worked. Again though, I wouldn't be counting your chickens. How many major UK banks do you actually think are going to go under in the next few months?

With regards to how people afford the mortgage, I have no argument there, but where is the reason for it not to continue? So far, it is looking like the current crisis is certainly not it.

Edited September 12, 2007 by HOwner

[Flat Bear]

Maybe you are right. Maybe I am just being negative, but this site is often like the childrens joke about it raining tomorrow. Tomorrow never comes. Except in this case, it seems to be the crash "within 12 months" that never actually comes but is only ever a year away at most.

I take your point and I agree especially when things are exagerated to ridiculous levels or ignoring facts that do not fit. Because houses are extremely expensive by historical measures it does not follow there will be a "crash". Factors such as shortage of supply and access to cheap and plentiful finance must be taken into consideration and those that try and suggest there is over supply and low demand have been blinkered.

I am fairly certain we are entering a global recessionary period. I do not want this as my business connected to the construction industry will be badly affected. It seems clear there has been a global giant credit bubble which is not only a problem in a sub prime housing market in the states but within every country on the planet with certain countries and asset class products being artificially inflated in price as a result. The UK housing market being one of those asset classes most affected. If it was not the US sub prime market this year then it could have been several other areas to burst next year.

Forget about all this smoke and mirror stuff about cdus, financial vehicles, inter bank trading, libor rates, etc etc etc The truth is there has been defaults on loans and as a result the credability of the western world as good debtors has been changed in the perception of the carry trade originators and they want their money back, which will take around 6 months to unwind most of the positions. There will be less available finance for any purpose with housing way down on the list.

Why do you think the banking industry has been so very very aggressive in pushing loans especially when backed with real? security ie houses. This excess of cheap money has found its way throughout the retail world with interest free deals that seem impossible to understand.

The banks and other financial institutions have made fortunes and the braver and more aggressive they were the more they made. When they could obtain money on the commercial market for such low rates (around 2.2% a few years ago) it was very good business selling it on at even 3.99%. In retrospect it is difficult to see how the UK housing market could not have been effected, even if the BoE had kept rates high the banks could have set their rates lower making the BoE rate redundant.

All of this is currently being pushed into reverse the gears can be heard mashing (all this hulabaloo about liquidity) and the fact is it has not even started in the UK yet.

I can not see how UK house prices can remain at the price levels they are at the moment with the main prop (cheap and plentiful credit) being taken away.

[notthereyet]

This will bring down house prices in the UK soon as well as causing a lot of pain and a recession.

The question is when will this effect the UK housing market?

I believe it will effect the city first and quickly (by the end of the year) I expect to see small MoM falls as soon as September! and expect all indexes to be YoY negative by next April.

This is a very bearish outlook given the extreme demand especially in the SE but I can not see any way current prices can be financed. Mortgages are likely to rise, availability of funds is likely to dry up over the coming months together with cut backs in public spending, rising import costs, lower disposable incomes, the loss of many positions within the financial sector within the next 6 months and accelerating defaults on secured as well as unsecured loans to almost certain record levels.

And remember this credit crunch is only a very gentle squeeze up until now for the UK consumer and householder, with most people not being effected at all. Over the coming months this squeeze will get tighter and tighter, people can last out a few months being extra frugal but after redundancies and even higher taxes and general costs start to hit a bigger house will be the last thing on peoples mind. This could will be a very bleak Christmas for many people.

Is there a possible alternative senario? and how?

As far as a crash is concerned, i have noticed a large increase in the number of houses that are for sale in the last 6 weeks,the only ones that seem to be selling are the ones that are realistly price and are between 10 to 15% below simular property in the area.

Also noticed several properties which have had the sold sign on are back on the market some after several weeks.

I would not say it was a price crash at the moment but i do believe sentiment towards house purchases has changed in the last few weeks and would say at least a correction is in progress.

[Flat Bear]

I have now made a prediction on year on year negative on all indices by April 2008

Do you think this is probable, improbable or impossible?

[wotser]

I have now made a prediction on year on year negative on all indices by April 2008

Do you think this is probable, improbable or impossible?

6 months ago i would have said the risks would be more on the downside than upside as the subprime has been brewing for a while in THe US and I was aware of that. STill dont think the hurricane has fully landed yet. ANd i think tere is alot of 'subprime' in the UK as well, although its not an expression that's very common here !

Now I Would say its not a matter of if but when. I Would like expect negative impacts on the housing market as it starts to unravle over the next couple of months and I think these will be sustained into the medium term at least . Not a good time to enter the market! Not a pretty picture and its only beginning!

[notthereyet]

This will bring down house prices in the UK soon as well as causing a lot of pain and a recession.

The question is when will this effect the UK housing market?

I believe it will effect the city first and quickly (by the end of the year) I expect to see small MoM falls as soon as September! and expect all indexes to be YoY negative by next April.

This is a very bearish outlook given the extreme demand especially in the SE but I can not see any way current prices can be financed. Mortgages are likely to rise, availability of funds is likely to dry up over the coming months together with cut backs in public spending, rising import costs, lower disposable incomes, the loss of many positions within the financial sector within the next 6 months and accelerating defaults on secured as well as unsecured loans to almost certain record levels.

And remember this credit crunch is only a very gentle squeeze up until now for the UK consumer and householder, with most people not being effected at all. Over the coming months this squeeze will get tighter and tighter, people can last out a few months being extra frugal but after redundancies and even higher taxes and general costs start to hit a bigger house will be the last thing on peoples mind. This could will be a very bleak Christmas for many people.

Is there a possible alternative senario? and how?

http://www.ft.com/cms/s/0/05576104-620d-11...00779fd2ac.html

Looks like HPC is affecting the pound

[Flat Bear]

I have now made a prediction on year on year negative on all indices by April 2008

Do you think this is probable, improbable or impossible?

I reckon it is highly probable now.

I love it when a prediction comes together

[Layman]

I reckon it is highly probable now.

I love it when a prediction comes together

Congratulations!! You scraped into April by one day... but 100% correct (guaranteed) all the same.

Raise a glass to yourself this evening.

[Guest Skint Academic]

2) Wages are still rising faster than inflation

Really? I haven't seen any evidence of this myself. Even if you are using the fiddled official rate of inflation, I'm still not sure wages have actually increased faster.

[Dead Spider]

I have now made a prediction on year on year negative on all indices by April 2008

Do you think this is probable, improbable or impossible?

I doff willingly as I am very impressed , as I hadn't seen your original post before .

Well done .

[Guest Steve Cook]

Really? I haven't seen any evidence of this myself. Even if you are using the fiddled official rate of inflation, I'm still not sure wages have actually increased faster.

Neither have I. Which is why this is really going to hurt.....

[Stefan]

This will bring down house prices in the UK soon as well as causing a lot of pain and a recession.

[ .....]

I believe that the monetary bubble is already bringing the UK hose prices down. It just depends how you count. Looking from the perspective of global economy, it is already 13% down from peak and given the US predictions pararell looks even more gloomy at -25%:

for discussion of the foreign currency echange impact and monetary inflation see:

http://www.housepricecrash.co.uk/forum/ind...p;#entry1100537

[we the sheeple]

Brilliant analysis and forecast back in September, now reads back like a summary of what's happened.

Complete opposite of David Smith - he can barely predict the day of the week correctly.

[Leonard Hatred]

It's damn eerie how all these predictions are coming true. New visitors, take note!