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Flat Bear

Speed Of This Housing Crash

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I realized by the middle of last year we were about to see a house price downturn. The fact we are having a severe credit crunch is obviously having an affect on the market but the speed of these falls has still astounded me.

We are seeing an annulized fall rate of over 20%!

Remember these falls are at a time when;

#Many are still in denial and asking prices are still high

#Very few "forced" sales have been seen

#Employment is at near record levels

#The economy is still in growth (officially anyway)

#Interest rates are still low by any historical measure

#The central governments are pumping billions and billions into the markets to help liquidity

#Disposable incomes, although shrinking, is still high for most

It is now obvious we will be entering a severe economic downturn at the same time as increasing inflation so how will the rate of these falls change when;

#Capitulation of sellers/remaining EAs takes place?

#Forced sales are widespread with firesale auctions the order of the day?

#Unemployment skyrockets?

#The economy shrinks rapidly?

#Mortgage rates are forced upward to rates beyond any expectations?

#The central governments can no longer finance the global money markets?

#Disposable income evaporates?

All these things are likely to happen very quickly, within 12 months in my view. The downward pressure on asset prices will be high, I can not think of any time in history it was worse. 1930? I would suggest people had more tangible assets at that time and were more capable of being self sufficient.

Could we see monthly price falls hit 5% or even one giant 10%? Is this conceivable/possible?

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Could we see monthly price falls hit 5% or even one giant 10%? Is this conceivable/possible?

Conceivable only on very low trading volumes e.g.

If there are forced sellers and no mortgages, we get to whatever the cash buyers and those with large deposits and good incomes will pay.

If the EA market is dead, we are left with only auction prices and private deals in the indices. That would cause some large -ve numbers.

VMR.

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I realized by the middle of last year we were about to see a house price downturn. The fact we are having a severe credit crunch is obviously having an affect on the market but the speed of these falls has still astounded me.

We are seeing an annulized fall rate of over 20%!

Remember these falls are at a time when;

#Many are still in denial and asking prices are still high - Yes but nobody pays asking price

#Very few "forced" sales have been seen - You will be suprised, go and have a look at the local auction house, CAB

#Employment is at near record levels - Officially, but still it doesn't matter. The amount people are earning (To get / pay off finance) is the indicator not the fact they are working.

#The economy is still in growth (officially anyway) - What do you think?

#Interest rates are still low by any historical measure - Been said before, IR do not matter the banks are setting their own rates. Your worse off on your savings if anything

#The central governments are pumping billions and billions into the markets to help liquidity - Not being passed on to the borrower

#Disposable incomes, although shrinking, is still high for most - with food, energy,mortgage repayments,fuel all up do you really think

It is now obvious we will be entering a severe economic downturn

Maybe, but for property markets levels will be set where buyers who can get mortgages can buy.......The biggest falls will be over the next 18months until this level is reached and then further smaller falls are to be expected until the bottom is reached.

It was never down to employment etc it was purely down to the availability of cheap easy credit.

If the banks started offering 1% mortgages fixed for 40 years do you still think we would see falls in the market continuing?

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Everything you say is right. I think this autumn will see some jaw dropping falls as the market capitulates, 3-5% perhaps for one or two months. The papers will use words like collapse, and at one time point in the next year or two I expect to see one index go 20-25% YOY as I'm expecting to see 40-50% in 2.5 years.

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jonny

My point is nothing is likely to get any better over the coming 12 months, all aspects are likely to get worse. Credit is more likely to get even harder to find and at a higher cost. I can not see any factors that will be positive for the market.

I understand what you mean, I think, when you say much of the high falls are happening now because prices were so out of touch with reality and the recent severe clamp down on lending has had a massive affect but this can only get worse as prices are still so out of touch and it takes a number of months for defaults on mortgages to become a forced sale statistic.

Up to date there has been very little forced selling in the new phenomina the BTLer. This alone should see forced sales on a unprecidented level.

Peak purchase BTLer will become a derogitory term with a meaning of being totally financially stupid, gullible retard is the closest name I can think of. Very few will admit to have once being one.

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  • 395 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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