House prices to crash

[Uncle C]

To be honest Uncle C you are going to be right at some point. There will be a housing crash, unfortunately this could be short, medium or long term, you seem to be hoping for it now rather than predicting it.

As always, I have a little theory.

The current Government knows that they cannot stop a house price correction. They could introduce measures such as abolition of stamp duty etc etc, but they are only postponing the inevitable.

I suspect they would rather that prices fell right now. That way they can:
a. Blame the Labour Party
b. Be in a recovering housing market when the next election comes.

 

[sten_super]

The problem is that there have been people predicting a house price crash for years. Even a stopped watch is right twice a day, and while people (and particularly investors) were guilty of thinking that the good times were going to carry on forever, the naysayers have been equally guilty of always predicting that bad times are always 'just around the corner'. Take, for example, the housepricecrash.co.uk website, which likes to spout lots of evidence that a house price crash is apparently imminent. That website has been running since 2003, and has constantly been pushing the same agenda, only it took 4 years for anything to actually come to pass.

 

[Uncle C]

The problem is that there have been people predicting a house price crash for years. Even a stopped watch is right twice a day, and while people (and particularly investors) were guilty of thinking that the good times were going to carry on forever, the naysayers have been equally guilty of always predicting that bad times are always 'just around the corner'. Take, for example, the housepricecrash.co.uk website, which likes to spout lots of evidence that a house price crash is apparently imminent. That website has been running since 2003, and has constantly been pushing the same agenda, only it took 4 years for anything to actually come to pass.

I agree there has been a lot of wishful thinking over the last 7 years but not by me.

The sub prime issues were the writing on the wall for property prices - written ten foot tall.

Unlike many other countries, our Government were able to postpone the sting, with a combination of tricks such as the abolition of stamp duty and quantitative easing. These efforts are now played out and the correction is here.

 

[larus]

The problem is that there have been people predicting a house price crash for years. Even a stopped watch is right twice a day, and while people (and particularly investors) were guilty of thinking that the good times were going to carry on forever, the naysayers have been equally guilty of always predicting that bad times are always 'just around the corner'. Take, for example, the housepricecrash.co.uk website, which likes to spout lots of evidence that a house price crash is apparently imminent. That website has been running since 2003, and has constantly been pushing the same agenda, only it took 4 years for anything to actually come to pass.

I think that some of this argument has become polarised by language (crash/correction etc).

The issue, as far as I can see, is do we think it is sensible for house prices to continually go up by more than the rate of inflation? Logically, it must be no.

Therefore, the issue is then; what is a sensible valuation? Based on the fact that house prices are still, for many, unaffordable, then current valuations wouldn't appear to be justifiable. The problem is that current house owners think they have a certain amount of wealth, purely because their house has increased over the last 10-15 years (say), by more than inflation.

What exactly is this 'wealth'? It's an illusion; it's a con/myth. People are then taking this 'wealth' by re-mortgaging and having holidays, buying cars etc and spending this 'wealth'.

For example; 3 people all have a house worth £100k. After 3 years, a sells to B, B sells to C and C sells to A, all for £120k. In this imaginary world, there is no inflation. Suddenly they are all worth £20k more, so they go and spend this money on 'stuff'. Where's the true wealth come from to pay for this 'stuff'?

This is the stupidity of constantly rising house prices (in excess of inflation).

 

[Tim Over Whelmed]

As always, I have a little theory.

The current Government knows that they cannot stop a house price correction. They could introduce measures such as abolition of stamp duty etc etc, but they are only postponing the inevitable.

I suspect they would rather that prices fell right now. That way they can:
a. Blame the Labour Party
b. Be in a recovering housing market when the next election comes.

Like the theory but even Cameron knows he only gets away with "That was Labour" for about 6 - 9 months max. Therefore he needs it to happen this month or prior to Christmas. We all know nothing happens in the housing market between now and Mar.

Another issue is people are starting to strecth their "investment" options again and property looks a "reasonable" bet. My theory is the market won't crash but won't surge either. The serious investors and second home buyers will support a 5-7% increasde in 2011 and the market will gather pace in Q4 of that year.

So knowing my luck and prediction ability that'll be a crash around about 5 p.m. today then!

 

[Drumstick]

Has it crashed yet Anybody



helllooooo!?!

 

[BLOCK F]

Like the theory but even Cameron knows he only gets away with "That was Labour" for about 6 - 9 months max. Therefore he needs it to happen this month or prior to Christmas. We all know nothing happens in the housing market between now and Mar.

Another issue is people are starting to strecth their "investment" options again and property looks a "reasonable" bet. My theory is the market won't crash but won't surge either. The serious investors and second home buyers will support a 5-7% increasde in 2011 and the market will gather pace in Q4 of that year.

So knowing my luck and prediction ability that'll be a crash around about 5 p.m. today then!

Can't agree there.House prices are due a correction and rightly so.
5-7% increase in 2011?Not in my humble opinion.More like the other way,I reckon.

 

[severnside gull]

I do appreciate alternative views, but not from Vested Interests or Estate Agents, who make their living by talking up the market.

and one way to AVOID a crash is.............................

...........................oh yeah, to talk up the market




now where would we be if we did a bit more of that and a bit less talking it down?

 

[BLOCK F]

I think that some of this argument has become polarised by language (crash/correction etc).

The issue, as far as I can see, is do we think it is sensible for house prices to continually go up by more than the rate of inflation? Logically, it must be no.

Therefore, the issue is then; what is a sensible valuation? Based on the fact that house prices are still, for many, unaffordable, then current valuations wouldn't appear to be justifiable. The problem is that current house owners think they have a certain amount of wealth, purely because their house has increased over the last 10-15 years (say), by more than inflation.

What exactly is this 'wealth'? It's an illusion; it's a con/myth. People are then taking this 'wealth' by re-mortgaging and having holidays, buying cars etc and spending this 'wealth'.

For example; 3 people all have a house worth £100k. After 3 years, a sells to B, B sells to C and C sells to A, all for £120k. In this imaginary world, there is no inflation. Suddenly they are all worth £20k more, so they go and spend this money on 'stuff'. Where's the true wealth come from to pay for this 'stuff'?

This is the stupidity of constantly rising house prices (in excess of inflation).

Absolutely spot on.The rise in house prices and the false illusion of wealth that this created,especially amongst the wannabees and the less financially aware, has given rise to many of the debt problems seen today.
Prices will no doubt fall and personally,I look forward to a time when the hard pressed young people in this country have a chance of buying a home without crucifying themselves financially for ever and a day.It should primarily be looked upon as a home,not a cash cow.

 

[Tim Over Whelmed]

Can't agree there.House prices are due a correction and rightly so.
5-7% increase in 2011?Not in my humble opinion.More like the other way,I reckon.

Phew got past 5 p.m. then and no crash!

 

[The Modfather]

As always, I have a little theory.

The current Government knows that they cannot stop a house price correction.

So are we now talking about a 'correction' rather than a crash?

 

[Uncle C]

So are we now talking about a 'correction' rather than a crash?

There are a few sensitive souls on here that don't like to hear the word 'crash'. I picture them with fingers in their ears and making silly noises to blot it all out.

So from time to time I call it a 'correction' to humour them, but it amounts to the same thing.

 

[Tim Over Whelmed]

The "correction" was supposed to happen again in the stock market but doesn't look likely now ... he says!

Other than the frequent profit taking on the banks shares things appear to be picking up on the markets

 

[Uncle C]

The "correction" was supposed to happen again in the stock market but doesn't look likely now ... he says!

Other than the frequent profit taking on the banks shares things appear to be picking up on the markets

Thats a mystery to me as well. The markets seem to have got hardened to bad news and it may now take a bit of a crisis to reverse the current trend.

Remember though that stock markets are manipulated, not the least by QE which they are expecting to start again in the US.

 

[Easy 10]

There are some doom-mongering reports about what will happen once interest rates start going up again, and the people who have borrowed x5 their income on their mortgages and have had it easy with 0.5% interest rate, suddenly have to find wads of extra cash amid rising utility bills, fuel bills AND the impending hike in VAT to 20%, which is going to be a nasty shock to the system for everyone.

This country could be repo CENTRAL in the next few years.

 

[Uncle C]

There are some doom-mongering reports about what will happen once interest rates start going up again, and the people who have borrowed x5 their income on their mortgages and have had it easy with 0.5% interest rate, suddenly have to find wads of extra cash amid rising utility bills, fuel bills AND the impending hike in VAT to 20%, which is going to be a nasty shock to the system for everyone.

This country could be repo CENTRAL in the next few years.

In the US, I believe 25% of all mortgagees are in arrears, and their interest rate is the same as ours.

 

[beorhthelm]

Thats a mystery to me as well. The markets seem to have got hardened to bad news and it may now take a bit of a crisis to reverse the current trend.

the markets are also taking into account good news which some seemed determined to ignore: higher than expected growth, increased manufacturing output (in the UK and US, not just China), increased employment (320k new jobs), highest manufacturing recruitment for a decade, earnings across the UK FTSE350 increased 1/3...

remember, the stock market is based on sentiment of where the economy is going, not looking back to the past 2 years.

 

[Hurst'point Village Idiot]

I notice that Ashley Barnes has been silent about the link between his missing chances a ten year old could put away and the house price crash.

The link is too strong to be a coincidence surely?

 

[Dirk lovelace]

Hang on, somebody's not reading the script:

House prices show sharp increase -  MSN Local

 

[Uncle C]

Hang on, somebody's not reading the script:

House prices show sharp increase - Â*MSN Local

Yeah good innit.

This 'bounce' was anticipated following the dramatic 3.7% drop last month and reveals the volatility in the market due to very low volume sales.

In the sleepy hollow of Bishops Stortford friends of ours just sold for £1.55m and bought for £1.8m. Imagine what that did to the local figures.

Average UK house price in Oct 2009 was £164,990 and for Oct 2010 is £164,919, so any gains over the last year have been wiped.

Now if it goes up again next month I may have to re-think.