GOLDMAN 555

I've been expecting a house price crash for about four years now. And I have to say for the first time in four years I'm starting to believe that there will be no correction.

The economy is too strong.

I think I will just have to sit here in misery wishing I could afford a bigger house.

Smug property investors.....you were only bloody right

stilover

They were right the last time too. Just before the last house crsh. D'oh

What goes up, must come down.

Ben v7

Going to need high interest rates such that the buy-to-let bubble bursts before you see any real movement.

I am renting and have been for years just waiting for it to crash, but no, just keeps on rising!

Petem95

America's housing market is currently crashing rather heavily, and every time this has happened before, the UK market has followed 18-24 months later. (Unfortunately their economy is very likely to go into a recession next year, and that will have implications for the World economy, and thats not good - houses could fall in price 60%, but you cant buy if you dont have a job...)

Also recently theres been a massive increase in the number of properties available on the Irish and Spanish markets, so looks like they could be heading for a softening in prices.

As soon as it looks certain prices will heading downwards, investors will pull out and invest in other areas, and this will create a downwards spiral.

If they dont crash however, any young professionals should simply rent, save then move abroad and buy. Otherwise you in-effect have a low standard of living depsite high earnings, and you can only afford an ex-council flat with a very big mortgage!

stilover

The rental market might be closer to popping than people think. Was talking to an estate agent a couple months ago now, and he was saying that people who bought to rent are starting to sell, as there are far to many properties for rent, than there are people renting.
Some Apartments that were bought for renting purpose have been sold at a loss just to get the debt off their back.
OK, bigger towns and Cities are not going to be affected by this, just yet, but if smaller towns are starting to get the same trend, then it will have an overall affect. It has too.
The price of properties mean large mortgages repayments, so rent prices are high to pay Mortgage. No one rents as the price it too high, market should start to fall.

AudiLover

What about emerging economies like china. Good or bad place to invest?

The german luxury car manufacturers are investing heavily over there just to note.

Petem95

Returns from investments in China and India's stock markets have given extremely high yeilds over the last couple of years (15-40%), but its still seen as risky.

Difficult to know what area's will be big for investment in the future, but I have read a few times that fine art has a good chance of being a strong investment as the new-rich in countries like China, Russia, India etc compete with existing buyers from Europe/US due to their new-found wealth (hence driving up prices).

apples24

iTrader: (1)

id like to see this post brought back to the top in 2 years time


am i **** buying a house at this moment in time

King RA

Look at how many people there are waiting to buy houses when they crash, this alone will limit an unlikely crash.

Petem95

Point is banks wont be lending out money like it was Monopoly money in the future.

I doubt many people who are waiting to buy when prices fall have enough to buy out-right, or even buy more than 50% of the property. They'll still need a mortgage, and if few can borrow more than 3.5 x salary then prices will have to fall to a level where people can afford to buy. Its gone silly recently with banks falling over to lend, but as bad-debts continue to rocket they wont lend the money out if they arent getting it back.

davyboy

Bloody hell, same threads, same "person" replies without fail!

Petem95

Thought you'd get here sooner or later

davyboy

Yeah, you must have been looking at the last 10 or so thinking where is he....I've posted and he hasn't!

borat52

I'm willing to bet that this group of people is miniscule compared to the number of people that have bought over the last 2 years.

I think I'm correct in saying that our prices have gone up way more than they did in the USA before their 'crash' too.

I really don't understand why the government encourage these house price increases, and on top of that I don't understand how we have got away with massive increases in house prices and yet relatively low inflation in the economy. Unless its yet to work through, and if it does show up as inflation thats the time to watch out.

Petem95

Rocketing house prices makes people 'feel' rich, and consumer spending booms as a result which is good for the economy, so maintaining high house prices is in the interest of the government..

However do you really think inflation is only 2.4%? Obviously not with gas, electric, council tax, petrol, mortgage payments, wage increases etc etc rising significantly - but just look at how the government calculate the inflation figure.. anything which is included and keeps rising is removed from the calculation (Labour removed wage increases some years back to make the figure look lower)

Dracoro

I'm on a street where all are 3/4 bed townhouses. Next door one one side has been repossessed. The other side was sold 4 months ago and still no-one has moved in (great as I can have tv on louder ). Prices haven't risen in 2/3 years and there's 2 other houses on our street that haven't sold in 4/5 months.

This is in reasonably affluent London/surrey suburbs (Purley). Guess the flat owners aren't selling thus can't afford the hike up to the houses. We rent as buying would be 1.5/2 times what we'd pay in rent!! When prices recede, we'll buy or if not buy flats and rent them out. There's no law that states you have to live in the property you own

jonc

Makes for interesting read with theories of the market correcting its self back in 2002!!..just did a quick search for old house prices topics...

https://www.scoobynet.com/non-scooby...ht=house+price

https://www.scoobynet.com/non-scooby...ht=house+price

Olly

A disastrous house price crash have been predicted on Scoobynet for, ooh, around 4 years now. Edit: As proved by Jonc's little search. ^^

Usually started by those "waiting for prices to come down". Roughly translated as "I don't want to sell my chavvy Impreza or leave my Mum".

Rather glad I didn't listen

Where is the fear or risk in buying a property?? Can someone please explain??

Why does no-one bat an eyelid when they buy a new car, absolutely knowing it will lose thousands? Yet a house purchase puts the fear of God into people?

Olly's tip: Buy houses. You've got to be in it to win it.

Ben v7

I won't be buying a house anytime soon, unless the crash comes sooner than expected for several reasons.

My view is that the government is doing it's best to drive up house prices with immigration and refusal to build enough new homes. They need house prices to stay high because it makes people keep spending. If people stop spending, and we have well over a trillion of person debt in the country, then the economy weakens.

The governments economy is also built on high public spending which in turn keeps unemployment low. The governments own finances are not exactly in good shape and they will have to cut back eventually. This is the reason we are seeing so many 'climate change' and 'congestion taxation' and talk or road charging - it's all so they can keep up the high public spending and hence unemployment low with public sector jobs.

The private sector workers are already under pressure from high taxation and high fuel bills etc etc and this high rate of tax is contributing to rising inflation. This will weaken spending on retail sectors etc and combined with a possible global downturn following the US combined with likely reduction in public sector work we will see both high inflation and rapidly rising unemployment.

Once unemployment rises immigrant works will become less welcome and more property will be available at the lower end. High inflation will make big mortages unattractive and kill the buy-to-let boom - again hitting the lower end. Once the low-end drops out the rest has to follow. Its the city financers enjoy current boom times in that sector that have driven up high-end house prices to silly levels recently - that boom won't last for ever.

I just can't see how their isn't going to be a correction. The government will tell you all is well for obvious reasons and the banks and other financial 'advisers' won't want to scare you away from home buying again because it is in their interests that you buy. The fact of the matter is though that the current situation is largely unsustainable because one of many factors could trigger the rapid downward spiral.

Also the money in your home isn't real money. You sell the house and still have to buy something else at an equivalently high price. You really can't count on it I don't think and hence why the value can drop just as quick as it rose.

From a personal persepective I do earn above average wages, but with a 4x mortage I can only afford to live in the very unappealing parts of London. I would rather rent in a nicer area than live their just so I can say I am on the ladder. Additionally the interest alone payments to the bank on say a mortage of over £200,000 is actually about what I pay in rent anyway - so it just doesn't make sense to me.

C_B_B

Property purchases shouldn't be viewed as a short term investment. Over the longer term the housing market has always faired very well despite the blips.

A friend of mine is a letting agent. He was telling me about a client of his who has recently had 20 flats repo'd. All built within the last year to 18 months, all in a development the people in the know within the local town won't invest any money. I saw another 6 flats in the same development go to auction on behalf of the morgagees in possesion a few months ago, i think they were around 70% of the price paid when sold by the developers a year before.

Property is still a sound place to invest your money IF you know what you're doing and understand the areas and prices fully where you intend to invest.

Brendan Hughes

Ben v7

Not the only reason, but it's probably a beneficial side effect regarding house prices don't you think?

I wasn't having a pop at immigration - just making the point that it is helping keep demand for property high!

Terminator X

iTrader: (7)

Ignore the peaks, look at the trend ... you can't lose if you've bought a house!!

House Prices - Thirty Years on the Terraces

TX.

Dracoro

Do you really think it can carry on.

BBC NEWS | In Depth

Long term, the prices always go up, however the trend has been reasonably constant with house prices mostly around the 3.5x salary, unlike the last 5 years. There will always be corrections, the earlier each correction, the more people keep track of it all and so forth. We haven't had a correction for a while, without the corrections a bust happens.

Petem95

Im surprised you dont see this Brendan. Why do you think the government are allowing immigration on such a massive scale?

a) increases demand on housing.
b) reduces wage inflation which in turn means interest rates stay lower.

Doesnt mean it wont crash tho does it, just means the predictions of the timing were wrong

IMO it could carry on for another 1-2 years, but if the market hasnt seen/started a fairly significant correction in 2 years from now, I'll buy Davyboy a pint when he digs up this thread in 2008

Tripple'O G

I'm prediciting rates will drop withing the next 4 years, but will jump straight back up almost immediatley.....

No light at the end of the tunnel for a while i'm affraid....

COME ON THE CABLE!!

TopBanana

How is it beneficial?

Do you like the fact that moving to a bigger house would cost you more money, or if you have them, that your kids might not be able to afford their own place when they live home? Beneficial at certain sorts of dinner party I should imagine, but not much else...

Tripple'O G

I was always under the idea of never renting as it's "dead" money......however with all this, i'm in no position to rush into buying a property.......
I'll play the waiting game

TopBanana

It certainly is, in the same way that interest on a mortgage is 'dead money'

Tripple'O G

So what would your advice be.....

Get on the ladder now and rent it out straight away?
or wait for the slight burst.....or just rent until you get the house thats coming to you and move into that...