Friday, January 4, 2008

Good article by Edmund Conway

Property market: Brace yourselves for the crash

"A housing slump - severe enough to tip the entire economy into recession - looks likely. Edmund Conway wonders who will take the hardest hit... Hardest hit are the buy-to-let investor in the North and the young couple who have just taken out a big mortgage to buy their first place; best-placed are those who have yet to buy, and families with small mortgages." Yeah!!!

Posted by confused76 @ 06:32 PM (1326 views)
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11 thoughts on “Good article by Edmund Conway

  • More like essential reading for anyone with any doubts. He has in there all the points we’ve been making. I know it’s maybe a bit of Schadenfreude, but it will be pleasant to read the next 3-4 months worth of indicators on here. Speaking of which, when will the graph be updated to show the Q3 and Q4 dips?

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  • 10%… We saw -3% in Dec from Rightmove, prior to mass sentiment changing. Take an average from Halifax and Rightmove and assume sentiment/conditions stay the same, that’s -20% this year. If property doesn’t shift most decent EAs would suggest dropping 2-3% per month, so this fits the picture. Problem is fighting the +ve hype of “Bargains galore!” after a 5% fall.

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  • “The days of being able to stroll into a high street bank and walk out minutes later with a five-times-salary mortgage are over”. No wonder EAs are panicking in Essex and contacting their MPs.

    My MP was in the local paper discussing house prices this week, telling folk our area is a great place to buy into and hoping the Interest Rates go down soon. Our Neighbouring MP (Eric Pickles) managed to get into the national press suggesting a 0.5% cut next week.

    One thing I would bet on is that the EAs and conveyancing solicitors are doing the rounds of MPs – Remember to tuck your thumbs in as you shake hands, lads!

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  • Mr Conway has finally offloaded his rental property.

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  • yeah ,is that the new muhahahahahaah

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  • voiceofreason says:

    Hurrah and balley-hoo !

    The time for reasoned discussion is over. The time to celebrate is just starting.

    “best-placed are those who have yet to buy, and families with small mortgages.” BRING IT ON !!!!!!!!!!!!

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  • crash bandicoot says:

    I think he’s wrong about the negative equity. I don’t remember 125%LTV or 6x salary being available last time round. Then there is all the MEW’ing, taking folks who should never be there close to negative equity.

    I do think he is right with the “houses only ever go up in price” thing being shot to pieces. I haven’t seen that cornerstone of reckless borrowing/lending pedalled for a while. I think that prices are now at that Wile E Coyote point where he has run over the edge of the cliff and is only not falling because he has not looked down yet. Once folks realise nothing is supporting their house price they will fall in the same way – straight down, with a little puff of dust when they hit the floor.

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  • Crash
    not forgetting the people who asked their boss to write a false document stating they earned an extra 15K a year more than they actually do. to buy that 2 bed terrace for 160K on an interest only. Although i’m not sure weather they did that also in the 80’s. I’ve never felt more confident than i do now that a crash is coming in the next year or two. I still feel for those poor souls who are going to get hurt. (the ill advised ones).

    However our time is coming.

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  • Where’s Crusty and Phil?

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  • “I suspect, too, that there won’t be quite as much in the way of negative equity as in the last crash. Back then we were, on average, borrowing a greater amount compared to house values, leaving us more exposed if prices fell.”

    On the other hand, back then we had inflation over 10%, so the 30% real price falls were much less in nominal terms. Now we have 2% inflation, so the nominal falls are going to be much more painful, with millions of people in deep negative equity for several years.

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  • justwatching says:

    monty, 2% tee hee, do you really believe that one?

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