Thursday, March 12, 2009

Every Day Now We Hear About 50% + Fall In Property Prices

House prices 'could drop another 55%'

Is the UK finally waking up to the FACT that nobody could afford to support the UK's inflated property bubble? That property prices are going to fall 50% or more. That mortgage regulation on loan to income ratios at around 3.25 one wage will ensure that prices are not going to rise again for a long time, and then only in line with wages. That RECOVERY means returning to how things were prior to the madness, not a return to the kind of irresponsible lending that broke the banks. It can only be good news that we hear every day someone now confirming what was once considered a radical view! Now it just appears to be obvious, property prices are falling and falling fast.

Posted by sybil13 @ 08:56 AM (1464 views)
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9 thoughts on “Every Day Now We Hear About 50% + Fall In Property Prices

  • happy mondays says:

    But with low interest rates and quantitative easing and a solid government and financial system in place, how can this be?

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  • As I see it – all this money printing is inevitably going to lead to inflation and therefore high prices (including houses) and a loss in value of pensions and savings. But this will also necessitate higher interest rates – which should force house prices down lower. So I guess it’s all about timing – leave it too late and your savings are worth nothing and a loaf of bread costs 400 squid, buy too early and lose out anyway. The question that should be discussed more frequently on tis site is – how do we determine the right point to actually buy?

    Don’t you just love all this economic stability? No more boom and bust eh!

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  • I honestly do not think there will be anything like the sort of inflation the Sexpress imagines (or similar papers). If things get bad (10%) the Government will have long been selling bonds to take cash back. They will also have undertaken reserve asset ratio measures. For the Quasi-Bull Police: There is an argument that with worst case inflation, it is better to buy with a huge loan (that will inflation-erode) and lose money on the house than the other option to lose even more money having it in a bank account

    – What I see about house prices is directly related to the ease with which people can get credit.
    – I’d also track personal insolvencies and watch for a trend of this falling.
    – I expect that unemployment would need to start falling before the “feel good factor” comes in.
    – Sterling would need to start rising as Government sells bonds to reduce its supply

    So perhaps the best time to buy is on or before maximum unemployment with insolvency charts moderating and sterling starting to increase. Such an environment would probably also see inflation at about 4% and interest rates at about 6 per cent. Since I also believe the ECB is far more competent and the US will be more “out” than “in”, other countries’ indicators will already look “better”.

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  • little professor says:

    inbreda – the only way out of this debt binge for the government is money printing, to devalue the currency. Those of us with hefty deposits will be wiped out. It’s almost enough to make you want to buy gold….

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  • UK Bankrupt – Probably given what AD and GB are up too – you have to ask where is all the money coming from – is QE the next plan or actually the last rest as the piggies empty in truth?

    Next will be a IMF bailout who will insist IRs be set to lets say 5% to pay back the loan – you watch house prices ( and everything else thats an asset ) tank then.

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  • Agreed Imbreda

    I posted on the other 55% fall article that the figures are based on 3 times 1 salary and 25% deposit. Banks currently lend more than this.

    So do the writers of the article know something we don’t. Are banks going to reduce lending criteria with Gordon Brown in charge ?

    Yes we should be discussing our best options.

    I would say a general consensus seems to be to put at least half your sterling savings into a range of things such as other currencies, metals and commodoties.

    Perhaps Techieman, Flashman, 51ck etc. Can offer some advise on where and how to spread some risk from the possible fall in sterling (or is this already factored into the price) and yes Inbreda when we should be buying back into property.

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  • Priceless — it’s like listening to a bunch of BTL’s: you’ve already made your property profit out of someone else’s labour, and now you’re moaning about losing all your unearned wealth. The real people suffering from currency devaluation, interest rate falls and QE are those whose savings were earned by hard work, those who are losing out of their own pocket, not someone else’s

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  • str2007 – really no one can offer advice here, except to say what they have done or will do. All i can say is that for some time i have had a few bob in other currencies in cash AND that i have just taken out a Long Euro / short £ position as we discussed. Now i recognise that the cash values are there as a hedge if you like although 80% of my “cash” is in £.

    So really for the long term common sense says you whould hold some other currencies, precious metals etc but is now the right time to get in? Markets can often be perverse particularly at turning points.

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  • str2007 by the way talking about b/out systems you could just use a simple moving average. Basically you buy when the market closes above the average (on the close) and sell (liquidate) then sell another (go short) when it closes below the average. You can modify this with filters – eg there has to be a cross over of one period average line against another.

    Take a look at this chart http://www.forexhelp.com/charts-eurgbp/1440/ and you will see that there were periods where the market trended and you would have made alot and others where it was choppy around the average and you would have been going long/short/long etc with corresponding whipsaws. This is the problem with this kind of system – they may work but do you have the temprament to last through the chops – its emotionally draining believe me.

    As to when to get back into the property market – my thoughts are to wait for any DCB and then see what happens. I also take note of the guys here, so dont think i have expertise in this area above anybody else!

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