salamander Posted December 8, 2007 Share Posted December 8, 2007 (edited) I have looked back at the last crash which was at its height in 1992, and checked out the relevant statistics, it is not hard to do. Unemployment rose steeply from an already high base in 1990, reaching a peak in 1993, and then steadily falling after that until the present day. That puts the nineties house price crash right in the middle of the highest unemployment levels.Now, I was selling my house in 1992 to pay off the bank following the collapse of my business due to John Major's recession, and consequently, I was out of work. I bought the house three years earlier and paid £120,000 for it. I spent nearly £60,000 on renovations and improvements, but I could only sell it for what I paid, so effectively I lost over £60,000 right smack in the middle of the crash. I remained unemployed for another six months. QED, methinks Research might not be hard to do but it's clearly not that easy for some to do properly. According to the Nationwide HPI calculator, UK house prices fell between Q3 and Q4 of 1989, the year BEFORE you claim unemployment started to rise. Oh dear! http://www.nationwide.co.uk/hpi/Default.asp QED? Not quite Edit: One quarter out. Guess I should do my research a bit more thoroughly Edited December 8, 2007 by narrowescape Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted December 8, 2007 Share Posted December 8, 2007 Research might not be hard to do but it's clearly not that easy for some to do properly. According to the Nationwide HPI calculator, UK house prices fell between Q3 and Q4 of 1989, the year BEFORE you claim unemployment started to rise. Oh dear!http://www.nationwide.co.uk/hpi/Default.asp QED? Not quite Edit: One quarter out. Guess I should do my research a bit more thoroughly Touche! Explorer's wife is a VI - this may explain his deliberate misrepresentation of the facts! QED Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 8, 2007 Share Posted December 8, 2007 (edited) Touche! Explorer's wife is a VI - this may explain his deliberate misrepresentation of the facts! QED I get first hand info from my wife, what do you get, second hand stuff, no contest.! I do not misinterpret facts. The facts as I am able to get, have enabled me to make a bit of dosh on the new housing market. I was there in '92, what were you doing? Teething? There are those that observe and comment, and there are those that do! Which one are you my friend? Edited December 8, 2007 by Explorer Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted December 8, 2007 Share Posted December 8, 2007 (edited) I get first hand info from my wife, what do you get, second hand stuff, no contest.!I get good info from my wife thank you very much and she does not speculate in property. I do not misinterpret facts. The facts as I am able to get, have enabled me to make a bit of dosh on the new housing market. The house market began to go negative in Q3 and Q4 1989 - then the recession came. This time the housing market went negative in Q3 and Q4 2007 and then the recession will come. I fear your wife may be too late to sell her portfolio. I was there in '92, what were you doing? Teething? Aren't you brilliant you happened to be born at the right time. I was born too late and I guess if I was old enough I should have purchased a property at the tail end of the last crash (1996), however, I was too young. There are those that observe and comment, and there are those that do! Which one are you my friend? I do not wish to speculate on property. A home should be a place to live and not an ATM now go back to the Singing Pig website were you belong you VI! Edited December 8, 2007 by SlumpmonkeyII Quote Link to comment Share on other sites More sharing options...
tigsrenting Posted December 8, 2007 Share Posted December 8, 2007 Slumpmonkey read some of Explorer's posts properly and stop all this sh!te about being born at the wrong time. The guy experienced the last bust as did I but didn't winge about it. Explorer can you give us some idea as to the location you are now. County will do. Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted December 8, 2007 Share Posted December 8, 2007 Slumpmonkey read some of Explorer's posts properly and stop all this sh!te about being born at the wrong time. The guy experienced the last bust as did I but didn't winge about it.Explorer can you give us some idea as to the location you are now. County will do. I have read Explorer's posts and he is arguing that it is different this time. Well it is NOT different this time. As in 1989, Property prices will go down first and will be followed by recession. To argue against this fact so vehemently would suggest to me that he has a VI in talking the market up. Go figure Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 9, 2007 Share Posted December 9, 2007 (edited) Firstly, Slumpmonkey, my wife does not have a portfolio of property, she only sells property to others. However, through her contacts we were able to buy, on one occasion, low and sell high, hence my comment above. If you had read the post properly, you will see that it was the NHS nurse that had the portfolio. My point about 1992, that led to your comment about the date of your birth, was to emphasis the fact that I was there at the time and trying to sell a house in the middle of a recession. There is no substitute for first-hand experience, and you must understand that it is irritating when someone else, too young to have been through it, tries to re-write history and say it wasn't like that then. I live in the county of Devon by the way. As for a VI. My wife has sold houses through good times and bad. She gets paid regardless, because house builders always need to build and always need to sell, albeit the commission takes a knock in the bad times. Those already with their own house, fully owned or mortgaged up to the hilt, like me, of course do have a VI. I am relying on my house retaining sufficient equity to trade down when I retire to pay off my £122,000 interest only mortgage. We have a nice old thatched country cottage in a pretty Devon village, that will be hard to leave, but leave we must. The house is essentially part of our pension fund, as it is with thousands of other couples who could lose out big time if there is another crash late in life. This is the problem of getting old, you just simply run out of earning time. If you are a FTB, then you have my sympathy, but as I said above, the only way things are going to be eased for this category of buyer is for a massive programme of house building the like of which this country has never seen before. Do I care about FTBs? Of course I do, my son and daughter are such a case, unfortunately I do not have the means, approaching retirement to help them financially. However, I have a patch of land at the back of our garden which I submitted to the council as land for affordable homes. I would have borrowed the money to build four two-bed dwellings, selling at around £135k to local young couples, one would have been allocated to my daughter and grandson. The council rejected it, despite our village being a high needs area. The government, both local and national, have it within their means to solve the problem, the only thing lacking is the will! Edited December 9, 2007 by Explorer Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted December 9, 2007 Share Posted December 9, 2007 I guess we will have to agree to disagree on this one. My point is that there does not have to be a recession or high unemployment to cause HPC and history tells us this. Furthermore, it is NOT different this time (see examples of US and ROI which both had "strong" economies before HPC started.) Quote Link to comment Share on other sites More sharing options...
salamander Posted December 9, 2007 Share Posted December 9, 2007 Explorer. While I agree that there is no substitute for experience I happen to think that you are fundamentally wrong on the need for a massive building program. There is a shortage of cheap housing to buy because BTL "magnates" have been busy filling their pension portfolio at the expense of first time buyers. The fact that rent increases over the last ten years have come nowhere near matching the rise in the cost of property for sale makes it absolutely, undeniably clear that there is no shortage of housing in this country. We are simply at the point in the cycle where house prices go down. We have seen it before (I was 22 in 1992 so I remember) and we will undoubtedly see it again. Property prices are driven by fear and greed both on the way up and on the way down. These are human emotions which are unlikely to disappear anytime soon. Building vast quantities of additional housing will only make the inveitable price falls in the current downswing much steeper and with that in mind you should be calling for a reduction in the number of new builds. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted December 9, 2007 Share Posted December 9, 2007 I was there in '92, what were you doing? Teething? Great. You're a property winner. But what about rhe shmucks who bought/invested/traded up or remortgaged up during the the last 3 years? Are you telling us they'll be OK? fp Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 9, 2007 Share Posted December 9, 2007 Great. You're a property winner. But what about rhe shmucks who bought/invested/traded up or remortgaged up during the the last 3 years?Are you telling us they'll be OK? fp If they hang on in, yes of course. As sure as eggs is eggs, house prices will rise again, even if there is a blip next year, they always do, just like the stock market. Those who have invested since 1993 and have hung on, still have an excellent an valuable asset on their hands. As long as you are young enough to wait a few more years, next year's potential blip will be just a small hiccup in the scheme of property values. Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going. You know it makes sense! Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted December 9, 2007 Share Posted December 9, 2007 If they hang on in, yes of course. - wrong. There is no such thing as of course in finance. As sure as eggs is eggs, house prices will rise again - wrong. It is based on zero economic rationale -purely hope and past experience. The past is no guide to the future... ...housing...is still the best risk going. - sorry. Obvioulsy you've not heard of agriculture, gold or general commodities. But you've lived in a house. Wow. You're so knowledgeable. Quote Link to comment Share on other sites More sharing options...
tigsrenting Posted December 9, 2007 Share Posted December 9, 2007 Great. You're a property winner. But what about rhe shmucks who bought/invested/traded up or remortgaged up during the the last 3 years?Are you telling us they'll be OK? fp FP if you read some of Explorer's other posts you would realise he wasn't a property winner. Some of us jump on people the minute they say something that doesn't go along with the mainstream thought on this forum. I am guilty of this also. Explorer your posts have certainly given me something to think about and I look forward to hearing more. Quote Link to comment Share on other sites More sharing options...
john84 Posted December 9, 2007 Share Posted December 9, 2007 If they hang on in, yes of course.As sure as eggs is eggs, house prices will rise again, even if there is a blip next year, they always do, just like the stock market. Those who have invested since 1993 and have hung on, still have an excellent an valuable asset on their hands. As long as you are young enough to wait a few more years, next year's potential blip will be just a small hiccup in the scheme of property values. Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going. You know it makes sense! There will be more than a blip next year. People are already starting to fall behind on their mortgage payments and the BOE cannot keep interest rates at a low level for much longer. The property market has to revert to what it was before 1989 when the norm was that people borrowed roughly no more than three times their income. Today buyers are borrowing in some instances 8 times their salary. http://www.hiday.net/news.html?newsid=176 Quote Link to comment Share on other sites More sharing options...
A Fool & His Borrowed Money Posted December 9, 2007 Share Posted December 9, 2007 (edited) If they hang on in, yes of course.As sure as eggs is eggs, house prices will rise again, even if there is a blip next year, they always do Also just like in Mugabe's Zimbabwe. See, prices rise, but then the value drops pound-for-pound. (Weimer Republic, what happens when price rises get too silly) Houses are only good as a hedge against infaltion, not really as a get-rich-quick scheme. Hope this Helps. Edited December 9, 2007 by A Fool & His Borrowed Money Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted December 9, 2007 Share Posted December 9, 2007 If they hang on in, yes of course.As sure as eggs is eggs, house prices will rise again, even if there is a blip next year, they always do, just like the stock market. Those who have invested since 1993 and have hung on, still have an excellent an valuable asset on their hands. As long as you are young enough to wait a few more years, next year's potential blip will be just a small hiccup in the scheme of property values. Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going. You know it makes sense! Er...when house prices cycles go into reverse the downturn normally lasts longer than a year. You're just hoping that it is different this time (like all people with a vested interest in high house prices). You have been told by FP and I will tell you again - IT IS NOT DIFFERENT THIS TIME! Now I'm bored with you Mr Property Speculator (soon to be Mr Negative Equity) - go back to Singing Pig and talk to your loser buddies! Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 10, 2007 Share Posted December 10, 2007 If they hang on in, yes of course. - wrong. There is no such thing as of course in finance.As sure as eggs is eggs, house prices will rise again - wrong. It is based on zero economic rationale -purely hope and past experience. The past is no guide to the future... ...housing...is still the best risk going. - sorry. Obvioulsy you've not heard of agriculture, gold or general commodities. But you've lived in a house. Wow. You're so knowledgeable. I also said the following: "Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going." It is nothing to do with whether or not I actually live in a house, it is the experience and feel of the market that is important. We all have to live somewhere, I assume you too live in a house or flat, whether you "own it" with a mortgage or not, or pay rent, or live with your parents etc. Contrary to what has been said above, the BTL purchases have actually kept the market going. The FTBs have been priced out of the market long before the BTLs started buying in earnest. Again, I can call on the feedback my wife gave me direct from the new build market. Affordable homes is the short term answer, but planning red tape and a ridiculous imbalance on where you can and can't build, is holding up progress in this area. Any commodity where supply exceeds demand will increase in value, or should I say price, as there are some on this board who think houses are poor value. By the way, gold is not a commodity, it is a refuge currency alternative for investors in times of war and crisis, and does not follow the same rules. Quote Link to comment Share on other sites More sharing options...
microbe Posted December 10, 2007 Share Posted December 10, 2007 (edited) Since 1930, houses in the UK have increased in price in RPI adjusted terms from an average of £26,550 up to £204,813 (end 2006 - source Communities and Local Government/ONS data). That is 2% or so p.a. In that period there has been real growth in earnings relative to RPI and there has been growth in population. Bearing in mind that the indigenous population is not reproducing at a rate sufficient to generate population growth, growth only comes from immigration, which has surged during the recent credit based boom. An economic downturn will make the UK make less attractive as a destination to economic migrants. This short term growth factor could disappear overnight, through economic change or through recent legislation. In any event, the current population level is only sustainable if we continue to be able to exploit other people's resources. We produce only 60% of our own food which I think is a downright dangerous situation to be in. It should be obvious to anyone that infinite population growth cannot happen. At some point we have to stabilise our population, and we need to do it at a level which is environmentally sustainable, based on our own resources. It is just a question of when and how. The environmentally sustainable population level for the UK is about 30,000,000 people (Optimum Population Trust). In any event continued population growth should not be taken for granted. The productivity improvements of the last century have tailed off pretty much completely. In the absence of continued productivity improvements, we will not see real earnings growth in the future. I think the opposite may prove to be true, as we are obliged to adapt to environmental challenges. So, without real earnings growth, and without population growth, there is no reason to believe that real house prices will continue to grow. If we succeed in halving our population, house prices will almost certainly drop, unwinding all that long term growth. I really just wanted to make the point that you CAN lose on property, and in the very long term, (100 to 200 years) you probably will. As to the short term outlook - say the next twenty years - is housing a good investment right now? I think the answer is definitely not. The reason I believe this is because we are at the tail end of the biggest boom in house prices in the last century. In previous booms, had you bought at the peak, you might well have needed to wait as much as twenty years to recover your purchase price in real terms. Since this boom is bigger, it could take even longer. In each boom, the best course would have been to sell, rent somewhere to live, invest in other assets and then buy back into the market during the trough. The same will be true again and the wise thing to do is to wait a few years until prices restabilise. But if you ask me whether buying a home is a good thing to do right now, then that is a different matter. That is a personal decision and relies on much more important factors than just investment returns. Edited December 10, 2007 by microbe Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 11, 2007 Share Posted December 11, 2007 Slumpmonkey said: "You're just hoping that it is different this time (like all people with a vested interest in high house prices)" I have no VI in HIGH house prices, only a steady and sustainable upward trend. I admit for the reasons stated above, if a crash, like that in the nineties did happen, it would be hurtful to me and my family. However, I have always been interested in the housing market and studied it very closely. I have made assumptions like many on this board and the tabloids in the past, that prices were going to experience a sustained tumble on at least three occasions over the last ten years. For that reason, I avoided purchasing certain properties, caution ruling every time, and every time, I have lost out, and watched others do very well indeed. The government itself announced yesterday, that in October, house prices actually ROSE, admittedly by only a fraction of one percentage point, but this certainly contradicts the recent Halifax reported downward trend from September to end November. What does this mean? It means that would be buyers, under the current scenario, are being cautious, like I was, and are waiting for a definitive trend to emerge. This has not yet happened! This is the time of the year also when people do take stock, it is the season of the year and this will take precedent until the New Year breaks. I predict that there will be two more interest rate cuts by the end of March '08. Northern Rock will have been sold off and re-structured by then, and this will fade permanently from the headlines. The weather will be improving and buyer's minds will be returning to the market opportunities once again. Those coming off fixed rates, will be able to re-negotiate better deals with an eventual and expected bank rate of just 4% by the summer, so the forecasted adverse impact of this will be dampened, thanks to Mervyn King's timely strategy. There will be no negative equity like the nineties and repossessions will remain well below the levels then, that led to the scandal of cheap property auctions. Now I could be absolutely and totally wrong, but my guess is as good as the rest on this board. It is just another potentially realistic scenario for consideration, that perhaps addresses the balance of this debate. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted December 11, 2007 Share Posted December 11, 2007 The government itself announced yesterday, that in October, house prices actually ROSE, admittedly by only a fraction of one percentage point 1.3% annualised is a quarter of RPI. And much less than wage growth, also. Think about it, man. It also means that most of the country fell while one or 2 regions rose and distorted the national picture. This is the time of the year also when people do take stock, it is the season of the year and this will take precedent until the New Year breaks. Last year prices rose at this time. But you've researched housing carefully, so you say. NOT! I predict that there will be two more interest rate cuts by the end of March '08. Northern Rock will have been sold off and re-structured by then, and this will fade permanently from the headlines. The weather will be improving and buyer's minds will be returning to the market opportunities once again. There may well be Bank cuts but not mortgage cuts. 1.4Mns will reset in 2008 from c 4.5% to 6-6.5% - if they're lucky. N Rock is just little UKs version of the global credit crunch. Banks are tightening like billy-o - loans are simply not approved. Those coming off fixed rates, will be able to re-negotiate better deals with an eventual and expected bank rate of just 4% by the summer, so the forecasted adverse impact of this will be dampened, thanks to Mervyn King's timely strategy. Oh my god. Wake up. There will be no negative equity like the nineties and repossessions will remain well below the levels then, that led to the scandal of cheap property auctions. Tell that to the c 100k families repossessed in 2007 and 2008. B0llocks. Now I could be absolutely and totally wrong My god, he's got it. Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 11, 2007 Share Posted December 11, 2007 "QUOTE (Explorer @ Dec 11 2007, 07:51 AM) * Now I could be absolutely and totally wrong My god, he's got it." ...and so could you, and you seem to have missed that point entirely. Oh what does it feel like to think you are right all the time, but then I suspect that you haven't, as many before you haven't. See you in the New Year for a return, but don't let this thread die, I think it may be needed again. Happy house-hunting! Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 12, 2007 Share Posted December 12, 2007 (edited) I wasn't actually going to reply in detail to FP's reposte, but on reflection... 1.3% annualised is a quarter of RPI. And much less than wage growth, also. Think about it, man. It also means that most of the country fell while one or 2 regions rose and distorted the national picture. So what! This is a board about a house price crash isn't it. By a crash surely we mean at least a 20% DROP, as it was in the nineties. Last year prices rose at this time. But you've researched housing carefully, so you say. NOT! Perhaps, but I was talking historically and traditionally. There may well be Bank cuts but not mortgage cuts. 1.4Mns will reset in 2008 from c 4.5% to 6-6.5% - if they're lucky.N Rock is just little UKs version of the global credit crunch. Banks are tightening like billy-o - loans are simply not approved. You are simply predicting that effect will stick. Your guess is no better than mine! Oh my god. Wake up. I did, and managed to re-mortgage last year and avoid three rate hikes by taking out a six year fixed at 5.29%. Tell that to the c 100k families repossessed in 2007 and 2008. B0llocks. The poor will always be with us, FP. A drop in the ocean compared to the nineties! Hard luck though if you are one of the drips! My god, he's got it. See above post on that breathtaking patronising comment. Edited December 12, 2007 by Explorer Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 12, 2007 Share Posted December 12, 2007 Now read this FP: http://news.bbc.co.uk/1/hi/business/7140771.stm Hot off the BBC News Website tonight! Quote Link to comment Share on other sites More sharing options...
A Fool & His Borrowed Money Posted December 12, 2007 Share Posted December 12, 2007 Now read this FP:http://news.bbc.co.uk/1/hi/business/7140771.stm Hot off the BBC News Website tonight! They have each announced that they will provide billions in loans to banks in order to lower interest rates and ease the availability of credit. Banks trying to prevent the inevitable: | | V Quote Link to comment Share on other sites More sharing options...
Explorer Posted December 13, 2007 Share Posted December 13, 2007 Banks trying to prevent the inevitable:| | V I was brought up in a lower working class family where borrowing was totally taboo. Everything we wanted had to be saved up for, by necessity in those days(apart from the local Christmas loan club that gave us a few seasonal quid to buy our meagre presents). The thought of borrowing on the never never was alien to me. When I first got married a cheap home in London was around £5000 (in 1969) and there was no way I was ever going to buy a house outright, and mortgages were like hen's teeth. Eventually we managed to get a GLC (Greater London Council) mortgage specifically for newly weds only, and got on the rung, so what is my point? The point is that without a borrowing facility, the economy would not work. It drives the entire system and I learned that lesson very quickly. In our life to date, there have been periods where we have borrowed heavily, and periods when our borrowing has been low, without that flexible borrowing our ability to move jobs and housing along with it, would have been curtailed severely, and the standard of living that we now enjoy would not have been available to us. Borrowing can be both a joy and a curse, but the key is to plan and manage your borrowings sensibly and responsibly. Those that get in difficulties have not done that, but they should not be held up as reasons not to borrow, whether the borrower be the domestic buyer, or a bank or building society borrowing in the sub prime market. The central banks in the story above, know that without a ready supply of cash in the system it could severely damage the economies . Their action will be the lubricant that will keep the system moving and keep us all in jobs and in our houses, in the medium term. It seems that this site is dominated by those who want and seek the failure of the system, and seemingly have been hurt or disadvantaged by it, one way or another. Quote Link to comment Share on other sites More sharing options...
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