house price crash? (poll included)

[presto]

thaught i would get a discussion going on this.
it's hit the US bad, N Ireland now has caught the cold are we next?

Theres been plenty of talk on the subject for a while now, so whats everyones thaughts. i personally just cant see how prices can stay this high, with (bank of england) interest rates going up currently 5.75% - expected to reach 6% soon even 6.25% by the end of the year.
other factors like repossessions increase, priced out first time buyers, lenders - lending too much, house prices many times more than wages etc....

saw an interesting article on how builders shares peaked 1 year before the crash in the US, and how the UK is now mirroring the effect from over there with building shares now on a decline after a peak.

theres a good set of graphs on http://www.housepricecrash.co.uk/graphs-average-house-price.php

[Street cry]

all the repossessions are not helping things my mortgage rate has gone from 4.3 to 6.5% in last year and a half that must impact heavily on those who have no room to manouver

[presto]

was going to show what £100k can get you in the US now - but it looks like rightmove is down. (will post later)

[Win2Win]

Half built estates all over Northern Nevada when I went, building work just stopped as they can't sell them.........great to pick up a bargain on a new build though, as these crashes do not last forever.

...and for folk who can't afford to pay due to interest rate rises here, then hard luck, should have learnt basic maths at school.

[presto]

not bad for £110k http://www.rightmove.co.uk/viewdetails-8854551.rsp?pa_n=1&tr_t=buy&chnl=overseas

what sort of house would you get for £110k over here?

[tophatter]

Interest rates are just returning to near normal levels now although still on the low side. When you think they used to go up and down by a point then the staggered rises mean a more gentle ride.

I cant see there been a big house crash anytime soon becasuse the housing boom has been caused more by a supply and demand issue rather than a revolutionary big bang issue which was the case in the 80's. Long term you would hope prices stabalise if the housing supply increases as the governement have pledged.

[Onlyforfun]

TH is spot on in terms of supply vs demand being the main driver.

Unlike the US we have a shortage of land to build on and the population is more concentrated in the major cities. Even building hundreds of thousands of extra houses won't make a difference. Where would they be built, no doubt places where nobody wants to live. Prices in cities are so expensive because people don't want to live far away, and if you work a 10 hour day you don't want an extra 3 hours commute on top.

And are high house prices a problem anyway? Sure, lots of people struggle to "get on the ladder", but there is no divine right to own your own house and as prices rise, renting becomes cheaper and offers advantages, especially to the young, mobile proportion of the population. Some are blinded by the capital gains, but maintenance is a constant drain especially on older houses and if you need to buy somewhere else any capital gain is eaten up by the increased cost of your new purchase (unless you take out equity, increase your mortgage and SPEND, SPEND, SPEND like the Worlds central bankers want you to), stamp duty and legal fees.

The problem may be when the economy turns down and the overseas workers move on to the next pot of gold which may cause problems for the buy-to-let market and that could have a knock on effect.

On the other hand, I am staggered by the rise in house prices in some of the provincial cities where average salaries haven't increased markedly. How can someone on £20k afford a £150k mortgage? Those places (Belfast, Glasgow, Newcastle etc) may struggle to sustain any increases.

[Onlyforfun]

As for inflation and base rates. Last time inflation was this high as measured by the RPI rather than the CPI (the difference being the RPI includes all the things you HAVE to spend on whereas the CPI is whatever hasn't gone up or can be "hedonically adjusted") rates were closer to 10%. AND, the BoE (and by extension the Govt - and if anyone says the BoE is indepenent you go straight to "Monuments of Stupidity") weren't increasing the money supply at 13% p.a. to prop up consumer spending.

If anyone remembers the Flash game Glos once posted with the drunk walking down the road and you had to adjust your mouse to keep him standing but his wobbles got worse and worse before he inevitably crashed to the gound. Thats the game central bankers and Governments play with interest rates. The main difference being the longer you keep him upright by cheating (yes, by rigging the inflation numbers and increasing the money supply after stopping reporting it, or heaven forbid, extending the so-called "economic cycle" to allow you to borrow even more money which increases the money supply still further) the harder the crash will be when it finally comes.

[sparkyminer]

Because the Tories would never ever do anything like that would they OFF?:D

[vegyjones]

If there was a house price crash, who would benefit and who would lose out?

[Onlyforfun]

They all do it Sparky, they just use different tricks.

Labour have been "lucky" in that the Global supply of money has increased at the same time that deflation in consumer goods has been imported from China and India creating a period of high liquidity and cheap borrowing, but as rates rise where in the past people had savings, they now have debt. And as standards of living rise in China and India etc rise, the cost of labour increases and there aren't really any more cheap labour sources to mine, maybe Africa, but that would require colonisation.

It could be particularly nasty in the USA where they have effectively sent all their money to China in return for consumer goods with low intrinsic value and then borrowed some more to continue the process, and now China has them by the short and curlies and are openly talking about selling their US Dollars if the Americans don't give them some respect.

[Onlyforfun]

If there was a house price crash, who would benefit and who would lose out?

People who rent and had savings would benefit - maybe.

People who own 1 house that they live in and have savings and a decent chunk of equity would be neither one side or the other.

People who ended up with negative equity after ramping up their mortgages through the boom and spending would be in trouble, but as long as teh general economy holds up and they still have a job they just tighten their belt.

Buy-to-let investors, or should that be speculators, would have the financial equivalent of a red hot poker shoved up their :butthead:.

But iif it is bad enough we all lose out as people stop spending on non-essentials the economy slows and people start losing ther jobs, and those who keep their jobs have to pay mor eto support those who are unemployed.

[vegyjones]

Cheers OFF,
I had assumed that those with mortgages would be okay, just wouldn't be able to move!

[Jonny2621]

not bad for £110k http://www.rightmove.co.uk/viewdetails-8854551.rsp?pa_n=1&tr_t=buy&chnl=overseas

what sort of house would you get for £110k over here?

Round here, probably a garage, possibly a manky studio flat, a small manky one.

Im off to the Southern Hemisphere when I have made my millions :wink

[mathare]

Yeah, down in the south £110k is unlikely to even get you a poky studio flat above a shop in a scummy area of town these days.

[Vic]

Have had egg on my face for several years now saying the prices are not sustainable. It has to be people of my generation that are the cause, a house could be bought for £10k when I was 23 (I bought one), and that was thought to be a stupid move as it was 3.5x my salary!

Lots of people my age have humungeous equity values in their homes, and try to replicate that huge capital growth by releasing some of it to buy another 1 or 6. I for one would welcome a BIG crash to enable the current crop of 20 somethings to have a chance of ownership.

[Onlyforfun]

It may be sooner rather than later, given the shenanigans in todays markets. The ECB had to lend $125 billion today to banks to ease liquidity, thats 50% more than after 911.

[piggy]

it all depends where you live, house prices around scarborough havent gone up as much as elsewhere you can still get a 3 bed terrace for under 100k and a 2 bed for as little as 70k , plus there are loads of flats from 50k so getting on the ladder isn't that bad, the downside being you can't move to many places as houses are much dearer.

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[mathare]

The ECB had to lend $125 billion today to banks to ease liquidity, thats 50% more than after 911.Would that money have not been better spent improving county facilities, subsidising cricket events and helping those clubs affected by the floods? After all that's what the England (and Wales) Cricket Board was set up for

[Onlyforfun]

Who knows, if they had $125 billion they could afford to buy some skill and courage...

[Win2Win]

$125 Billion is probably not even 1% of the money Europe wastes.

[Onlyforfun]

But it won't just be $125 bn. They have pledged to lend "unlimited sums" at below market rate. It is usually a sign of bad times to come when the "lender of last resort" starts lending...

George Bush went on the telly to tell everyon ethe US economy was absolutely fine and the sub-prme problem was contained. So it's official, we're doomed...

[Win2Win]

I seen his broadcast......Irag is fine, the politics are going the right way, the surge is working........Parallel universe must exist as he's in another one!!! :splapme

[Littlegaz]

Voted "don't know" because I don't. OFF's points all make economic sense, but if economic sense always prevailed I could have retired by now having made my fortune from speculation.

The stock market has its ups and downs in approximately 10 year cycles. The housing market data history is more sketchy but suggests that the cycles are more in the region of 30 - 50 years. It's been pretty good since the seventies (the late 80s/early 90s drop was a forced blip caused by Fat Nigel rather than a natural cyclical dip) so are we 30 years into a 50 year rise, or are we at the end of a 30 year high point. I don't bloody know, but I wish I did :wink

[John]

I've just graduated and have found my first place to rent.

Will probably be at least 10 years before I get a mortgage on a house... fear I will struggle.

[Onlyforfun]

An "interesting" day ahead for me to say the least! :yikes:

[mathare]

An "interesting" day ahead for me to say the least! :yikes:Why's that?

[sparkyminer]

C'mon Mat. Check the Financial news. In fact it's on all the main news bulletins.
Trouble is, we've been here before when the banks started doling my money out like sweets and then it's 'prudent' people like myself and others who get stung because banks and thier customers don't know the first thing about money. In a couple of months / years we'll probably have a raft of d!ckheads, profitseeker et al, trying to sue because they couldn't afford the mortgages they took out.

The swearfilter took d!ckhead out.:doh

[silax]

hmmm i was about to buy a few properties to let think i'll hold back for a bit.
hopefully there will be a crash and i'll be able to pick them up a bit cheaper.
how exactly will this affect the spanish market as i've got a very nice place about to go up for sale.
anybody fancy a spanish villa 3 bedroom 2 bathroom swimming pool with mountain views close to a really nice town in the beverly hills of valencia.
also can do long term rent as well.
if you've got a half descent place in the uk you could rent that out and i'm sure that would cover the rent for this baby.
is this spam ...............

[mathare]

C'mon Mat. Check the Financial news. In fact it's on all the main news bulletins.I don't watch the news, missed the radio news bulletins and had to switch off my BBC news ticker for some testing I am doing so unless the W2WRSS has put up a headline or it's on Sporting Life I haven't seen it this morning. But after a quick shufty at the Beeb website I assume you mean the stock markets dropping.

[Onlyforfun]

Spanish property is the worst of the lot Silax.

They run pyramid schemes to artifiacially boost occupancy where you'll go along to buy an off-plan property and be told, we've already sold most of the apartments, property in Sapin is taking off, if you buy 3, by the time they are complate and you have to pay for them you can sell 2 and pay some or all of the 1 you want to keep.

So average punter has been told for years that speculating in property is a 1-way bet so signs up. So the developer can now say he has sold all his properties, but when they are built and 2/3 rds of them come straight back on the market you can guess what happens to the price. And I'm sure you don't need me to tell you what chance of success a Brit has of suing a Spanish mortgage company for bad advice.

[Win2Win]

Land & property values in the Philippines will go through the rood when they pass the laws over the next few years to make foreign investing easier, as at the moment you need to be married to a Filipina, and put it all in there name, with hubby as a co-owner.

In the US some companies are now giving you your first year mortgage for free......desperate or what?

[presto]

dow jones down over 1% ,in the opening 10mins of trading. FTSE down nearly 3%.
a contributer to the downturn being the US sub prime lending, one lender already gone under, the other lenders have ofset many of there policies by selling them to other national lenders.
so there will be a big impact over here, lenders simply wont continue lending massive sums that borrowers can't really afford to pay back.

i won't speculate anymore on a recession :rolleyes:

[Win2Win]

Well these folk in the US have been lending money out to illegal immigrants without even having any proof of who they are!! I could see this coming months ago.....pity the people who get paid millions a year, can't seem to figure it out :doh

[Onlyforfun]

It's not the bad mortgages that are the problem, it is the complex derivatives structured on the back of them that are causing havoc as they have been used as colateral to borrow money, so now that most of them have gone "no-bid" in terms of collateral they are worthless (though they still have considerable intrinsic value) so banks, hedge funds etec are having to sell liquid assets (Gold and equities) to cover the margin calls.

[silax]

Spanish property is the worst of the lot Silax.

They run pyramid schemes to artifiacially boost occupancy where you'll go along to buy an off-plan property and be told, we've already sold most of the apartments, property in Sapin is taking off, if you buy 3, by the time they are complate and you have to pay for them you can sell 2 and pay some or all of the 1 you want to keep.

So average punter has been told for years that speculating in property is a 1-way bet so signs up. So the developer can now say he has sold all his properties, but when they are built and 2/3 rds of them come straight back on the market you can guess what happens to the price. And I'm sure you don't need me to tell you what chance of success a Brit has of suing a Spanish mortgage company for bad advice.
you are very right off but if you get out of the developers grip and find spanish places it can be so different i made quite a bit on my first property and hopefully a killing on this one.
got any takers yet ..................

[sparkyminer]

d hopefully a killing on this one.


Is that a wise choice of words Eddie?:)

[Win2Win]

Sparky......gets those mines open.....we may be needing caves soon :)

[Merlin]

Probably all on account of greed........:yikes:....Which triggers panic...which fuels fear.......and on and on and on.....:laugh..

On a positive note this is great for me....coz where I was only getting 1.6 ish Brazilian Reais for the US Dollar....I am now getting over 2.00...........:laugh...........long may it stay that way....

[bigmazey]

Hey Its only money! I have a house that is now supposedly worth over 250,000 pounds. In London it would be worth over £1,000,000.

I am not going to benefit from it but hopefully my kids will.

When it comes down to it the majority of the country are just mortgage slaves.

There needs t be more affordable rented housing available for poorer people who cant afford to buy. Social housing was a great thing that is jus tnow a thing of the past.

i think the government should stop council house sales and move to a new social housing building programme.

This would mean that people would not be entrenched in the boom or bust capitalist mentality.

[Win2Win]

I am not going to benefit from it but hopefully my kids will.



...and the government with all that lovely death tax they'll rob from your grave :ermmm

[mathare]

I'm utterly bored of seeing this poll crop up again and again so I have closed it