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Alright everybody,

What are your thoughts on suggestions that

1) house prices will stay buoyant until average earnings catch up? Hence no crash. The minimum wage did go up?

2) The flood of immigrants will continue to fuel the buy to let market especially in London.

3) Also the common belief among people I have spoken to is that a crash in an election year is unlikely. The governments not that stupid and interest rates will probably stay on hold.

These are common beliefs amongst my friends and professional relations such as estate agents, accountants and solicitors (who still continue to buy agressivly (mostly bank funded ofcourse) but incorporate a 8% drop and reduce their offers, just to stay safe).

I anticipate a small decrease (over many years) before the market gets stable and earnings catch up. maybe waiting around for a slump isn't the best thing to do. why not offer say 8%less on the asking price? this will help to cover a small decrease in prices if it does indeed happen.

hitman.

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1) house prices will stay buoyant until average earnings catch up? Hence no crash. The minimum wage did go up?

Average wages going up implies an increase in inflation. Even if house prices stay constant (I think unlikely) this is still a crash in real terms. Also, an increase in inflation will of course tend to push up interest rates ==> leading to a HPC!!

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3) Also the common belief among people I have spoken to is that a crash in an election year is unlikely.  The governments not that stupid and interest rates will probably stay on hold.

The stupidity of the Government has little to do with this:

(1). An HPC is not necessarily due to an increase in interest rates. Even with rates as they are (or lower) the HPC will happen. However it might take a little longer.

(2). It is the BOE, not the government that decides interest rates. As far as I can tell they are fairly independent.

(3). House prices are not the only factor determining interest rates. Inflation, industrial output, exchange rates etc etc all play a part. In many cases the government has little control over these factors (e.g. economic policy in the US).

My feeling is that the election will turn out to be a real "poisoned chalice". Like the one John Major won in ...when was it...1992?? If the Tories are sensible (which I'm afraid I doubt) they should put on a good showing but let Tony and his mob win (with a reduced majority). I can already see the infighting when things go pear shaped.

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What are your thoughts on suggestions that

1) house prices will stay buoyant until average earnings catch up?

People said this before the last crash as well. They were wrong then, and they're wrong now. At the current rate of wage growth it would take 20 years for average earnings to increase enough to bring the price/earnings ratio back into line.

2) The flood of immigrants will continue to fuel the buy to let market especially in London

This is already priced-in.

my friends and professional relations such as estate agents

Estate agents are not professionals. Professionals are solicitors, accountants (as you say), doctors, dentists, actuaries, vets, barristers etc.

why not offer say 8%less on the asking price? this will help to cover a small decrease in prices if it does indeed happen.

This discount would not "cover" you for the falls that have ALREADY happened in London:

http://www.in2perspective.com/nr/20052/8/l...-price-fall.jsp

Land Registry statistics point to house price fall

8th Feb 2005, a Tuesday

House prices are down an average 2.7% by the end of 2004. The biggest losers were London Boroughs (six showing falls of 6-12%).

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If they are so independant why have they not increased interest rates to curtail credit? I grant that they are integgigent peole, or at least have access to decent analysis, and if people on here (better people than I) can predict the problems caused by debt and HPI any rational body would have raised rates long ago.

Unless they are being lent on.....

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If they are so independant why have they not increased interest rates to curtail credit? I grant that they are integgigent peole, or at least have access to decent analysis, and if people on here (better people than I) can predict the problems caused by debt and HPI any rational body would have raised rates long ago.

Unless they are being lent on.....

They have. 5 times since November 2003, and probably again next month or month after. If they're not independant, as you seem to think, why didn't they leave rates at 3.5%?

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  • 441 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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