The Great House Price Crash 2005?

[Derek]

Glad to be back, and possibly to make some usefull input to this forum.

I have already posted my portfolio on this form, and on Housemouse

Am I the only BTL investor to be losing money ? ... well i can't be can I ? - I am pretty noused up on business matters. What makes my loss bigger is that I am still investing in refurbishments for the properties and repairs. The refurbishments and prompt repairs keep the tenants happy, and as a consequence I have very few void periods. I don't charge top whack rent either.

If interest rates went up to 5% or even 5.25%, I would still be here. After that I would be forced to re-consider my BTL strategy. I would sell of properties as they become empty. This way I could hang on for a very long time.

I have an alternative income stream in a computer rentals company, that currently subsidises my tenants.

The market may be a bit iffy at the moment, but there is no way on earth property prices will not have risen significant in 15-20 years time. .. and the supply of HB tenants is never ending.

I think there is the possibility that the government will introduce so much red-tape and regulations for rented properties that it might not be worth carrying on.

[Crazy88s]

For 13 properties in the LTD company, I have loans of £886,000 and the value of the portfolio is £1,420,000 (this is not top dollar valuation, but valued so the properties would sell within 6 weeks)

property 1 bought in 1993 for £38k, now valued at £110k

property 2 bought in 1996 for £37k, now valued at £110k

property 3 bought in 1997 for £38k, now valued at £95k

property 4 bought in 1998 for £39k, now valued at £110k

property 5 bought in 2001 for £68k, now valued at £130k

property 6 bought in 2001 for £57k, now valued at £115k

property 7 bought in 2002 for £59k, now valued at £95k

property 8 bought in 2002 for £60k, now valued at £95k

property 9 bought in 2002 for £84k, now valued at £120k

property 10 bought in 2002 for £81k, now valued at £105k

property 11 bought in 2003 for £83k, now valued at £120k

property 12 bought in 2003 for £84k, now valued at £105k

property 13 bought in 2003 for £78k, now valued at £95k

I also have 3 properties bought outside the LTD company

outstanding loans of £234,000, value of properties is £350,000

property 1 bought in 2003 for £100k, now valued at £130k

property 2 bought in 2003 for £104, now valued at £125k

property 3 bought in 2004 for £85k, now valued at £95k

so total outstanding loans for both portfolios is £1,120,000 against a portfolio value of £1,770,000

that means my loan is 63.2%

This is Dereks portfolio. Like he says if rates went higher he could sell one prop at time and stay in the game for a considerable time, however for those that have only one or two properties with large mortgages to value ratios then I guess they will bail as soon as the going gets tough.

[brainclamp]

brainclamp, we are building MORE houses than ever before, and at a GREATER rate than immigration can take slack up. Persimmons, Barrett, Bovis and the 20 or so other builders are building tens of thousands of new houses a year. Residential property has never experienced such a boom in newbuilds.

I look forward to the inevitable period in 4-5 years time when all the McJobs in Britains have run out and there is net emmigration, you will be say "what is there to stop house prices from falling now that everyone is leaving Britain"!! LOL.

<{POST_SNAPBACK}>

What total and utter rubbish. Totally wrong on both counts.

This is the kind of self delusional nonsense that many here reassure themselves with.

Never let facts and figures get in the way - ever!

yes - Everyone is leaving the UK, sure, there there thats better... oh yeah - mass building is going on, of course it is... Oh god that makes me feel better.

Oh wait a moment - oh dear ... where the heck is your evidence?

THE FACTS AND FIGURES SAY THE OPPOSITE ON BOTH COUNTS.

TRUTH IS THERE IS LITTLE NEW CAPACITY in relation to immigration inflows dispite all the signs of redevelopment according to the ODPM's offical figures and home office figures...

Most BTLers are merely waiting for a slight drop (like derek) and the fundemental law of supply and demand to reassert itself (with a vengence) as rents rise and your taxes go up.

This is the 'SECRET' basis of David Smiths economic forecast in the times that HPI will continue to accelerate.

The BOE chief economist points to a 'wealth transfer' effect, from the young unpropertied workers to older property owners, and there may be a permenant political dominance through demographics towards even more of these landlord frendly policies. This is why this election is so crucial.

On that subject, there is no way, now that new labour, have reduced in 1997 and then scapped mortgage interest relief for ordinary working people, while landlords can claim it in spades, that you will ever get a situation where a FTBer can ordinary out bid a BTLer for a property.

[andrew_uk]

I missed it as well.

Well Derek seems like a card, but his situation give a lot of insight into how the BTLers mind works. It also shows a lot of hidden details.

Tie in penalties + selling costs = Much harder to off load properties at a vast profit.

If prices drop and he sold up he'll have made vast profits from the early properties but gain nothing/lose from the latter ones. This means anyone BTLing in the last 2 years is a bit stuffed whilst the older Landlords have a great safety cushion. Through from talking to some local Landlords quite a few have already sold up/downsized.

My personal view of why a lot of BTLers will lose out is nothing to do with interest rates or house prices. A simple fact i'll realised overtime is this "The loses of Amateur Investors are the grease on the cogs of investment". Overal 1-2% of the profits from the big boys (pension funds, etc.) come from amateur investors whether from shares or houses.

[Guest muttley]

Hope there is a repeat - I missed it (drat and double drat!) Having said that, I thank everyone here for highlighting the most salient parts of the programme for me.  The BBC needs a pat on the back too - there is a part of me, y'know, that thinks this is some kind of 'softening up' process, for all of us made in collusion with Government.  They know what's going to happen. They're just preparing us for it. Personally, I just can't wait 'til we get this general election over and done with...I think we'll see some real fireworks then. Enjoy the show!

<{POST_SNAPBACK}>

If there is a modicum of truth in the bear stance,then there will be other programmes about this subject before long.Newsnight?Panorama?

I have e-mailed the BBC saying how much I liked their programme,and suggested that the debate would make a good topic for Radio 2 listeners.

[FTB]

If there is a modicum of truth in the beat stance,then there will be other programmes about this subject before long.Newsnight?Panorama?

I have e-mailed the BBC saying how much I liked their programme,and suggested that the debate would make a good topic for Radio 2 listeners.

<{POST_SNAPBACK}>

I recorded it, if it's not done by someone else in the interim I'll digitise it and make it available for download within the next couple of days.

[urban_hymn]

 

Ordinary people will fight it out for resources that become rarer and rarer every year due to fixed supply.

<{POST_SNAPBACK}>

A message from the real world. The only fighting going on round these parts is the over supply of landlords fighting over the handful of potential tenants.

Wolverhampton is a big city full of students, immigrants and guess what?void properties! Typical of many other places

[Grin and Bear it]

Brainclamp,

I have read all your theories before and am unimpressed. If house prices are rising due to immigration or overcrowding, please explain why rental prices are not also rising to the same extent?

It is a much better explanation that the lure of capital gains led to a short-term advantage of buying over renting which will now correct...... by a crash in house prices.

[Guest muttley]

Brainclamp,

I have read all your theories before and am unimpressed. If house prices are rising due to immigration or overcrowding, please explain why rental prices are not also rising to the same extent?

It is a much better explanation that the lure of capital gains led to a short-term advantage of buying over renting which will now correct...... by a crash in house prices.

<{POST_SNAPBACK}>

And are there any graphs you could post that don't illustrate your point?

[odaat]

Damn and drat

I am working overseas and would love to see the programme.

PPLeeeaaassseeee, could anybody send a copy to my Uk address in the Norwich area

Will send lots of good karma your way.

odaat

odaataa@hotmail.com

[Cassandra]

Finally got to see the prog (thanks to this site I was able to download the programme). Fascinating.

However, am I the only person who found the whole tone in today's climate unbearably BULLISH!!!

Roger Bootle: maybe 20% drop in prices over 4-5 years!!! Come on!!! No mention of the worldwide situation: USA economy completely unstuck, credit boom in many countries etc.

The impression that I got from the programme was that we will all have a slight slap on the wrist. We will be told that we are naughty boys and girls for letting things get a little over-exuberant and then everything will be OK.

I don't believe this. The current boom is the longest and biggest in UK history. When it crashes it won't be a soft landing (and the 20% fall Mr. Roger B**tle is predicting looks very, very soft). Extrapolating from previous crashes we can expect a much bigger dip up to maybe 50% or more.

Also, what the programme failed to point out is that maybe this could have a teensy-weensy effect on other things such as unemployment and inflation so that when it all goes pear shaped (or mango or pineapple shaped) we might all have to worry about a bit more than just house prices.

[King of the castle]

What total and utter rubbish. Totally wrong on both counts.

This is the kind of self delusional nonsense that many here reassure themselves with.

Never let facts and figures get in the way - ever!

yes - Everyone is leaving the UK, sure, there there thats better... oh yeah - mass building is going on, of course it is...  Oh god that makes me feel better.

Oh wait a moment - oh dear ... where the heck is your evidence?

THE FACTS AND FIGURES SAY THE OPPOSITE ON BOTH COUNTS.

TRUTH IS THERE IS LITTLE NEW CAPACITY in relation to immigration inflows dispite all the signs of redevelopment according to the ODPM's offical figures and home office figures...

Most BTLers are merely waiting for a slight drop (like derek) and the fundemental law of supply and demand to reassert itself (with a vengence) as rents rise and your taxes go up.

This is the 'SECRET' basis of David Smiths economic forecast in the times that HPI will continue to accelerate.

The BOE chief economist points to a 'wealth transfer' effect, from the young unpropertied workers to  older property owners, and there may be a permenant political dominance  through demographics towards even more of these landlord frendly policies. This is why this election is so crucial.

On that subject, there is no way, now that new labour, have reduced in 1997 and then scapped mortgage interest relief for ordinary working people, while landlords can claim it in spades, that you will ever get a situation where a FTBer can ordinary out bid a BTLer for a property.

<{POST_SNAPBACK}>

Excellent post BC.

[Veritas]

Finally got to see the prog (thanks to this site I was able to download the programme). Fascinating.

<{POST_SNAPBACK}>

Where can you download the programme?

[Starcrossed]

Veritas,

go to this thread - the download is on there:

http://www.housepricecrash.co.uk/forum/ind...t=0entry79210

[Van]

Brainclamp, YOUR OWN old sig graphs sho wing the number of immigrants and the number of newbuilds are conclusive enough. They clearly showed the number of new builds was GREATER than the rate immigration divided by the average household size. Immigrants (and others) do not live one person to a house.

This point has been covered in previous threads before.

[Van]

"TRUTH IS THERE IS LITTLE NEW CAPACITY in relation to immigration inflows dispite all the signs of redevelopment according to the ODPM's offical figures and home office figures... "

You're so wrong brainclamp that it's not even funny.

Had to dig around for it a bit, but check out Sledgehead's deconstruction of this MYTH:

From: http://www.housepricecrash.co.uk/forum/ind...topic=1073&hl=#

According to National Statistics Office, Population Estimates, Mid 2003

"The UK has a growing population. It grew by 232,100 people in the year to mid-2003.......The UK has an ageing population. This is the result of declines both in fertility rates and in the mortality rate. This has led to a declining proportion of the population aged under 16 and an increasing proportion aged 65 and over. "

From the red above, if we take last year in isolation, the UK built 125,000 homes for 232,100 people:

Implied occupancy = 232,100 / 125,000

_______________ = 1.86 persons / household

According again to the government Social Trends Survey (see Chapter2, Households and Families, table 2.1) household occupancy Great Britain Percentages for the past forty year sor so have been thus:

Occupancy________1971___ 1981___1991_____2001_____2003

One person__________18______22______27_______29________29

Two people__________32______32______34_______35________35

Three people________ 19______17______16_______16________15

Four people_________ 17______18______ 16______ 14________14

Five people__________8_______7_______ 5_______ 5_________5

Six or more people____ 6_______4_______ 2_______ 2_________2

Average _________ 2.9_____2.7_____2.5______2.4______ 2.4 persons / household

So taking last year in isolation, in the UK:

Houses built as % of those needed = 2.4 / 1.86  * 100 = 129%

Put another way, we built 29% more houses than were needed.

Couple this with the 718,720 empty homes across the country (Empty Homes agency) an dthe very real prospect that owners of such homes will be forced into compulsory letting by the government (House of Commons Hansard debates, 11 May 2004 ) and one wonders just how pressing the supply issue really is! Remember the stress is always on shortage of affordable homes. For FTBers, affordability can be solved just as easily by a house price crash as by building more homes.

Whilst politically it is true that the government cannot afford a house price crash before and election, it is equally true that they cannot financially  afford the cost of extra housing after the election. What does that suggest to you? (Cue Bruno)

<{POST_SNAPBACK}>

[THE MONKEY]

On Friday 4th March, 2005, BBC2 broadcast a programme about the current state of the UK housing market entitled "The Great House Price Crash 2005".

You can view it by clicking on either of these links:

Broadband users (fast internet connection) use this link:

http://www.martinrea.co.uk/hpc/TheGreatHou...ceCrash2005.avi

Dial-up users (slow internet connection) use this link:

http://www.martinrea.co.uk/hpc/hpc.wmv

You can also save the file to your PC by right clicking the link and selecting "save as".

Some people have had trouble playing the larger file using Windows Media Player. The Monkey has found that it plays fine on Real Player.

The Monkey thinks that it would be a good idea to post the link to this thread on forums around the internet. That way, thousands of people will be saved from making the mistake of buying a house now and spending years in the misery of negative equity. Also, they will be introduced to this website and will find out that it too is an excellent source of information re. the housing market.

The Monkey would also like to point out that these videos have been made available by the hard work of other members of this site such as Baby Simon, FTB and Mooseboy 2 and not the Monkey. The Monkey is merely a celebrity face advertising the show.

[FTB]

On Friday 4th March, 2005, BBC2 broadcast a programme about the current state of the UK housing market entitled "The Great House Price Crash 2005".

You can view it by clicking on either of these links:

http://66.220.1.240/public/TheGreatHousePriceCrash2005.avi

http://66.220.1.240/public/hpc.wmv

<{POST_SNAPBACK}>

Good work Monkey

Remember that the hpc.wmv link is heavily compressed at only 8mb, for dialup users, broadband users should go for the full TheGreatHousePriceCrash2005.avi which is 67mb and of a much better resolution.

Bit Torrent users should also go to the link below, spreads the bandwidth load among us :

HPC_2005.avi BitTorrent link (also keep it seeding after you've finished please!)

Mirrors also here in case above links are dead:

TheGreatHousePriceCrash2005.avi (67mb)

hpc.wmv - 8mb version

[brainclamp]

Brainclamp,

I have read all your theories before and am unimpressed. If house prices are rising due to immigration or overcrowding, please explain why rental prices are not also rising to the same extent?

It is a much better explanation that the lure of capital gains led to a short-term advantage of buying over renting which will now correct...... by a crash in house prices.

<{POST_SNAPBACK}>

Thats is because there is now a lot of BTL capacity out there - yet inside of 2 years - about 18 months I expect the capacity to be well used up. With immigration flows that have no limits, ever cheapening Labour, cheaper services and non-food costs and rising capital values.

There is now a secret army of 'new' homeless - millions strong - currently living with parents...

I can say with certaintly on the current numbers that capacity should fill completely within just 2-3 years- rents will gently rise upwards within this period, this year, reflecting the demand issues, and then rental returns will rise with a vengence. Neighbourhoods will intensify with multiple occupancy.

I cannot forcast the economy, but a likely scenario is that there will be a period of rising interest rates, also rising retail inflation. However, the central bank will not use IR's to force a recession, instead Capital values will carry on rising and Labour carry on cheapening through immigration flows.

Rising interest rates will be a cost passed on easily by landlords, because of the market constraints, and people will find a much greater taxation burden affecting them.

The working UK population is growing by the equivalent of one whole city every year. (source: http://www.optimumpopulation.org/opt.more.ukpoptable.html) Landlords will find increased rental returns, through the taxpayer, and multiple occupancy, dispite a possiblity of increased unemployment.

Workers will find thier taxes shooting up. ID cards will become a central part of thier lives, with massive fines for being without one, and massive penailties for forgetting them.

All the above are factual and highly likely outcomes based on real numbers and government policy.

You think you run the country? Most people on here don't even vote!!!!

For all this talk about BTL sheep - who the hell really are the sheep here. Keep reassuring yourselves of a 'crash'.

[newaccount99]

Nice work Monkey - Cheers.

Loved the program.

[Sonny]

Thats is because there is now a lot of BTL capacity out there - yet inside of 2 years - about 18 months I expect the capacity to be well used up. With immigration flows that have no limits, ever cheapening Labour, cheaper services and non-food costs and rising capital values. 

There is now a secret army of 'new' homeless - millions strong - currently living with parents...

I can say with certaintly on the current numbers that capacity should fill completely within just 2-3 years- rents will gently rise upwards within this period, this year, reflecting the demand issues, and then rental returns will rise with a vengence. Neighbourhoods will intensify with multiple occupancy.

I cannot forcast the economy, but a likely scenario is that there will be a period of rising interest rates, also rising retail inflation. However, the central bank will not use IR's to force a recession, instead Capital values will carry on rising and Labour carry on cheapening through immigration flows.

Rising interest rates will be a cost passed on easily by landlords, because of the market constraints, and people will find a much greater taxation burden affecting them.

The working UK population is growing by the equivalent of one whole city every year. (source: http://www.optimumpopulation.org/opt.more.ukpoptable.html) Landlords  will find increased rental returns, through the taxpayer, and multiple occupancy, dispite a possiblity of increased unemployment.

Workers will find thier taxes shooting up. ID cards will become a central part of thier lives, with massive fines for being without one, and massive penailties for forgetting them.

All the above are factual and highly likely outcomes based on real numbers and government policy.

You think you run the country? Most people on here don't even vote!!!!

For all this talk about BTL sheep - who the hell really are the sheep here. Keep reassuring yourselves of a 'crash'.

<{POST_SNAPBACK}>

BrainClamp,

I think you need to take a chill pill, Getting bored with you rants especially when you keep mentioning immigrants.

[brainclamp]

BrainClamp,

I think you need to take a chill pill, Getting bored with you rants especially when you keep mentioning immigrants.

<{POST_SNAPBACK}>

Oh dear - I mentioned immigrants did I?

Tell you what - it all doesn't matter. Immigration and population numbers - "Forget about it!" The scrapping of mortgage interest rate relief for ordinary buyers while investors can claim it. "Forget about it!" - Don't want to mention it at all.

The large discount for self invested pensions and REIT like structures for investors in 2006 - Well they have been 'explained away'.

Yes, of course - to soothing music - "there will be a crash there will be a crash".

This forum should only ever be used to voice the same mantra over and over again.

Sorry for mucking it up with a few relivent facts - ESPECIALLY MENTIONING THE WORD IMMIGRATION - Anything discussing immigration should not be raised - EVER.

[brainchump]

Ja,dumbkopff Sonny

FOR YOU ZE HOUSE PRICE CRASH IS OVER!!!

[JonoP]

Oh dear - I mentioned immigrants did I?

Tell you what - it all doesn't matter. Immigration and population numbers - "Forget about it!" The scrapping of mortgage interest rate relief for ordinary buyers while investors can claim it. "Forget about it!" - Don't want to mention it at all.

The large discount for self invested pensions and REIT like structures for investors in 2006 - Well they have been 'explained away'.

Yes,  of course - to soothing music - "there will be a crash there will be a crash".

This forum should only ever be used to voice the same mantra over and over again.

Sorry for mucking it up with a few relivent facts - ESPECIALLY MENTIONING THE WORD IMMIGRATION - Anything discussing immigration should not be raised - EVER.

<{POST_SNAPBACK}>

Brainclamp you are a deluded fascist fool. You argumants have the intelligence of the avaerage BMP voter. Just a couple of points. If "massive immigration" drives house prices - why have prices not risen in Germany or Austria or Holland?????? These countries have also experienced "massive immigration". Get your pathetic daily mail reading backside out of the forums

[magictorch]

I too missed the programme. But hey no worries due to the kind people at HPC.co.uk I got the .avi file and watched it with the missus last night.

Yeay about blooming time. Complete faith restored in the BBC. It was nice to see the propaganda machine off its hinges now and again.

Oh by the way psssst there are now 200 terrorists on the streets of London! *Cough* can we now please push through this terrorist Bill?

Nuff said/