Concern From The Bbc

[Tummybanana]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

[Normal]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

Possible, and right now it would look like a "spring bounce". Next month it would look like a bull trap. In 6 months you will barely notice the blip in the plummeting graph of houseprices!

[geed]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

Some may buy after moderate falls but most who can wait will wait. Everyone's situation different.

Many will now look to other "crash" areas such as Ireland, Spain and of course the States for further evidence as to what will happen here in Blightly. They will see approx 10% falls in less than a year in these places and think why would I buy something that will definietley fall by 10% in value? There is too much evidence out there now. The media/experts? have revised their projections from flat to a moderate fall this year, once folk put 2 & 2 together they will realise that the UK is going the same direcetion as the aforementioned nations.

This coupled with the fact that only buyers with serious deposits can now find a loan, and at a price, will ensure that the more brainless amongst us (those that do little research before buying a property - young couples, Daily Express readers etc...) will not be able to buy even if they want to.

Edited April 11, 2008 by geed

[talksalot81]

All things are possible. Ultimately though, for this one to be right it would point to a paradigm shift as far as UK housing is concerned. It seems much more likely that prices will correct to allow the practices of recent history to remain.

Really all one car say is that the bulls mocked and mused the bears for a long time. For a good part of it, they were right to do so because there was plenty of scope for price rises without things being ridiculous, all the evidence pointed to rises and the bears were rightly ridiculed. Now the table has turned. Everything points to a fall and there will always be someone deluded and bullish enough to say that the change is around the corner. Give it time and there will be a site called HPB which will be filled with bulls predicting the market to turn. Swings and roundabouts.

[Leonard Hatred]

How likely do people think this is to happen?

Extremely unlikely, and as always requires "it's different this time" to hold true. If they're cash rich, there's few better ways to burn through their money.

[Paddles]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

It's more likely that I'd receive a phone call in the next ten minutes from the Sugababes inviting me to their penthouse suite for an evening of viagra, Krug and charlie-fuelled fun.

(If I don't post anything this afternoon, you'll know where I'll be....)

Edited April 11, 2008 by Paddles

[Kuma]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

The vast majority of people out there who are cash rich, who are looking to buy into property, and haven't jumped on the bandwagon yet are Bears. I really don't think they are ready to jump into property just yet!

If you really are a bull and have a shed load of cash why would you have waited until now to invest? This would therefore only apply to those who have recently come into a large some of money i.e. inheritance, a small drop in the ocean compared to the overall market I would hazard a guess.

[yaakov]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

i'd say this has a probability of zero.

[OldGreg]

No chance. Even if there are a few out there ready to buy, there isn't enough of them to be out bidding each other. There's no way they will be looking to pay above asking price. As soon as there's a sniff of other interest they will just move on to other properties where they can pay so called 'BMV', which will in turn feed through into the negative indicies.

[Guest pioneer31]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

If you want a house to live in then you may consider buying in a falling market - subject to availability of funds

If you are cash rich and want a house to generate income (either via BTL or capital gains) then there is no way you will buy anytime soon - unless you're a Maths dunce......and a Maths dunce won't be cash-rich!

Edited April 11, 2008 by pioneer31

[Guest mSparks]

How many cash rich investors will dive into a plummeting asset?

If they have a death wish, then yes, it will happen.

I agree, cash rich investors usually become cash rich by not being completely stupid, Half the point of the conversations on here have been showing that housing is a pretty poor investment at the best of times (unless your lucky and find the odd one or two that are), and that right now, it isn't exactly the best of times.

[Wlad]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

If you were a cash rich investor you would only look to pick up bargains when the market started to turn back up as otherwise you'd be risking capital losses and a lower return on investment from renting than you could achieve by buying at a lower price.

So cash rich investors won't stop the slump, but they -might- provide a sharp rebound after it hits bottom, but that will depend on how many are cash rich, and how many distressed sellers there are at the bottom.

[nixy]

How likely do people think this is to happen?

Highly unlikely...... very soon, annual house price changes will drop to negative.

Up till now, those with vested interests have been able to argue (lie?) that prices are still rising.

Lies, damned lies, and house prices

[Rick62]

No way. Even if there were the idiots who wanted to, the funds from the bank are just not there. Money raised on capital markets is less than a fifth what it has been previously and the banks are just not recklessly funding BTL as they were the last few years.

[qska]

Possible, and right now it would look like a "spring bounce". Next month it would look like a bull trap. In 6 months you will barely notice the blip in the plummeting graph of houseprices!

I guess you could say that 2005-2007 was a bull-trap, if you zoom-out a bit you'll see that the proper crash should happen in 2005 and was only artificially prolonged to last this long.

Month to month changes don't really matter in the grand scheme of things, just as when you're looking at data from 1988-1992 you don't focus on particular months at all.

It's similar to stock market changes 1% either way every day, there's not much happening each day, but when you zoom out the chart you'll see some clear trend there.

Get back to work ;-)

Edited April 11, 2008 by qska

[Authoritarian]

It depends on the rental yield of said property. If an investor was to offer at or below what the property was worth, not some notional crazy figure dreampt up by an over-zealous EA then land would become a decent asset class for a cash rich investor. If you got it for a song the lender would recoup some of their loses without having to resort to the additional expenses of respossession and auction. Only one wee snag though, we become a nation of feudal serfs answering to our overlords.

Edited April 11, 2008 by chefdave

[I want a house!]

How likely do people think this is to happen?

Some people still believe the lies... Pathetic really.

[joey]

There's still a hardcore out there who look at falling houseprices as a dip before another boom; the idea being that as house prices drop, they will be snapped up by cash-rich investors, who will then compete with each other, boosting house prices even MORE out of range of the owner occupier.

How likely do people think this is to happen?

I recall the USA thinking the same when they started cutting interest rates but with each rate property is tanking over there. Remember during the last CRASH interest rates fell from 15% down to 6% (the LOWEST for decades), rememeber they were 8%-10% during the boom in the late 90s (commentators fail to mention how high they were then 8% was super low) and even at 6% property fell for a further 2 years even when buying was cheaper than renting. Once public sentiment sways its hard to turn around like a tanker. We are seeing drops now in 6 months that took 5 years to get during the last CRASH. Our own SUB-PRIME BTL (Buy To Loose) New Builds are just coming out in the open with people finding their Portfolios are worth upto 100K per property less than they paid for them. The CREDIT CRUNCH is just starting to bite, and people are struggling to pay off their personal debt and their 10 CREDIT CARDS, never mind their over stretched mortgages. JOb Security is decreasing day by day.

INTERESTING TIMES AHEAD, not one to be sitting on huge DEBT for a few years with the USAheading for RECESSION and DEPRESSION

Edited April 11, 2008 by joey

[Iotrez]

I would have thought that investors would be too worried that prices would continue to fall after they buy and that this will stop them buying. You'd expect them to think about such things because they're in it just for the money.

[Selling up]

Agree with all that has been said.

If investors are cash rich then that means that they have CHOSEN not to join the property buying frenzy. Presumably they think property is poor value.

Consider that many cash-rich investors were cash-rich in 2006, some in 2005.... and by not using their cash to buy houses in these years, each of them therefore demonstrated that they thought value was poor even at the lower prices in those years.

Why would a 4% fall from peak now suddenly change their mind?

They will be waiting a long time yet.

Edited April 11, 2008 by Selling up

[eric pebble]

No chance. Even if there are a few out there ready to buy, there isn't enough of them to be out bidding each other. There's no way they will be looking to pay above asking price. As soon as there's a sniff of other interest they will just move on to other properties where they can pay so called 'BMV', which will in turn feed through into the negative indicies.

What will people like Fatty Kirstie do with their lives!!! Nothing to do --- Just eat more pies!!!

[Flat Bear]

Catching falling knives is very dangerous, but a few will try it (or have recently tried it)

[Austin Allegro]

Just a theory, but I wonder if this common idea that people will snap up cheap property if prices fall is due to a misunderstanding of leverage. I don't think a lot of people quite understand that most BTL 'fortunes' are theoretical only, based on overinflated prices (because they don't understand that prices ARE overinflated) and that most BTLers can only add to their 'powwtsfowwios' through high gearing. I suspect many sheeple think the BTLers have huge piles of cash lying around the place just waiting to be blown on things. Those that are cash rich are, I would suspect, too savvy to buy into a falling market and will have long since invested their money elsewhere.

[AC2]

If you've ever traded shares, and held on as the price has dropped, promising yourself that they'll bounce back soon, you'll know exactly the emotions that these bulls are going through. Psychologically they simply can't afford to be wrong.

[Fed Up]

The denial phase is not yet over and will continue until there are significant falls in asking prices. A year from now when significant falls have happened the denialists will then be calling the bottom of the market, and a year from then and another year from then. By the time prices have bottomed out, sometime 2013 - 2016, they'll have given up!