The Beginning of the End?
#1
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The Beginning of the End?
Or the Start of the Beginning??
The Inflation Rate may top 3% very soon ..... Interest Rates have GOT to go up significantly to arrest the situation.
The housing boom has ended, we know that, but is the forecast fall about to materialise?
I have been saying there will be a correction for a few years but the market has defied logic .......... this tells me that, when it happens, it is going to be a very big correction.
Any guesses for how big the drop in property values will be?
Any guesses at where the Interest Rate will top out?
Seeing as there is no Election looming I would guess the Government would rather get the worst out of the way quickly and get a recovery underway by the time of the next election?
It would be disastrous for the Government to try and steady a sinking ship and have it all sink come Election time - better to sink it now and then re-surface it later in time to be seen as the saviour of the economy.
So, I am thinking that 2007 will see a 10% fall in property values - 2008 will see 20% fall - before 2009 sees the falls stop and 2010 sees a small rise of 5%.
Interest rates will increase rapidly over the next 9 months to 8% and hold at that rate for 24 months - before dropping down to 6% in time for the Election.
The Inflation Rate may top 3% very soon ..... Interest Rates have GOT to go up significantly to arrest the situation.
The housing boom has ended, we know that, but is the forecast fall about to materialise?
I have been saying there will be a correction for a few years but the market has defied logic .......... this tells me that, when it happens, it is going to be a very big correction.
Any guesses for how big the drop in property values will be?
Any guesses at where the Interest Rate will top out?
Seeing as there is no Election looming I would guess the Government would rather get the worst out of the way quickly and get a recovery underway by the time of the next election?
It would be disastrous for the Government to try and steady a sinking ship and have it all sink come Election time - better to sink it now and then re-surface it later in time to be seen as the saviour of the economy.
So, I am thinking that 2007 will see a 10% fall in property values - 2008 will see 20% fall - before 2009 sees the falls stop and 2010 sees a small rise of 5%.
Interest rates will increase rapidly over the next 9 months to 8% and hold at that rate for 24 months - before dropping down to 6% in time for the Election.
#3
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This is the point at which prices need to be reduced ... this is also the point at which panic sets in to those selling - I saw it and lived it in 1990!!
#4
Personally, I think up until the last decade or so houses were almost always bought on the main bread winners salary. In the last decade, they have been bought with a joint income, which is why the ration of average house price to average wage has increased.
As we aren't about to stop buying houses with joint incomes on the whole, then I see no reason why there will suddenly be a massive drop in prices. They may well drop slightly, or level out for a while, but I don't think there will be a massive drop - IMHO.
As we aren't about to stop buying houses with joint incomes on the whole, then I see no reason why there will suddenly be a massive drop in prices. They may well drop slightly, or level out for a while, but I don't think there will be a massive drop - IMHO.
#5
IMHO prices are way overpriced in the UK and most people are so insular that they have no concept of how rich they have become.
£200k in virtually any other country would be enough for people to have a significantly luxurious property (excluding really exclusive areas) yet it is not enough to buy a dump in the UK.
I think the UK in in line for some massive corrections and will not be a nice place the next time a recession occurs.
People also keep going on about demand. Where is this coming from? I personally think a foreigner would be mad to buy in the UK, I'm also pretty sure the majority of new immigrants send their money back home too.
£200k in virtually any other country would be enough for people to have a significantly luxurious property (excluding really exclusive areas) yet it is not enough to buy a dump in the UK.
I think the UK in in line for some massive corrections and will not be a nice place the next time a recession occurs.
People also keep going on about demand. Where is this coming from? I personally think a foreigner would be mad to buy in the UK, I'm also pretty sure the majority of new immigrants send their money back home too.
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House prices in the North east of scotland are still rising sharply and in my area the shortfall of housing is scary.
Still unless the rate reaches 10% or above, I can't see any real problems in the short term
Still unless the rate reaches 10% or above, I can't see any real problems in the short term
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#9
It's hard work this
Every analyst agrees there is a shortage of housing in the UK. This is driven in part by the purchasers wish to buy earlier, but also the change in society where there are more single occupants due to a higher divorce rate, or societys acceptance of spinsters and bachelors. Supply of property is therefore limited and hence prices are high. There will be no crash unless that changes.
Significant numbers of houses will need to come onto the market, and that doesn't mean downgrading as smaller properties will be at a premium and this will reflect in the prices higher up. This will mean rental properties or people having to move into rental or local authority housing(of which there is no spare capacity).
Level out, maybe a small drop reflecting a stagnant market but I'd be very surprised to see a 20% fall.
Every analyst agrees there is a shortage of housing in the UK. This is driven in part by the purchasers wish to buy earlier, but also the change in society where there are more single occupants due to a higher divorce rate, or societys acceptance of spinsters and bachelors. Supply of property is therefore limited and hence prices are high. There will be no crash unless that changes.
Significant numbers of houses will need to come onto the market, and that doesn't mean downgrading as smaller properties will be at a premium and this will reflect in the prices higher up. This will mean rental properties or people having to move into rental or local authority housing(of which there is no spare capacity).
Level out, maybe a small drop reflecting a stagnant market but I'd be very surprised to see a 20% fall.
#11
This has been the land of the great rip off for a long time now and it is getting worse exponentially.
The house of cards is beginning to look a bit less steady now.
PSL,
Are you able to tell us just why inflation and consequentially interest rates are now rising in what you have told us is such a buoyant economy under your heros?
Les
The house of cards is beginning to look a bit less steady now.
PSL,
Are you able to tell us just why inflation and consequentially interest rates are now rising in what you have told us is such a buoyant economy under your heros?
Les
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There could be a massive shortage of housing (which IMO there isnt) and prices could still crash hugely!
If you CANT obtain the money to buy the house, you CANT buy it!! Why do people find that so hard to understand?!
Banks wont continue lending money like theres no tomorrow if they arent getting it back (which is whats happening), so when interest rates have risen people who would have been able to borrow £150k find the banks only willing to lend them £90k. This causes house prices to fall because the perspective buyers CAN NOT borrow the money to pay the high price! Result? Prices fall to a level where buyers are ABLE to buy.
Look at Japan? Virtually all the land is built on - massively more dense population than the UK and prices fell up to 80% in an almighty crash because things went the same way they've gone here. I did previously think the house price crash would be fairly minor, ie 10-20%, but I now feel this could be very big.
Yes I think its the beginning of the end as PSL says - the reset button will be hit and its likely to take over a decade for the effects of this buy-now pay-never (by both government and consumer) crazy borrowing binge are ironed out.
If you CANT obtain the money to buy the house, you CANT buy it!! Why do people find that so hard to understand?!
Banks wont continue lending money like theres no tomorrow if they arent getting it back (which is whats happening), so when interest rates have risen people who would have been able to borrow £150k find the banks only willing to lend them £90k. This causes house prices to fall because the perspective buyers CAN NOT borrow the money to pay the high price! Result? Prices fall to a level where buyers are ABLE to buy.
Look at Japan? Virtually all the land is built on - massively more dense population than the UK and prices fell up to 80% in an almighty crash because things went the same way they've gone here. I did previously think the house price crash would be fairly minor, ie 10-20%, but I now feel this could be very big.
Yes I think its the beginning of the end as PSL says - the reset button will be hit and its likely to take over a decade for the effects of this buy-now pay-never (by both government and consumer) crazy borrowing binge are ironed out.
Last edited by Petem95; 16 January 2007 at 11:20 AM.
#13
The rate is confirmed at 3 % now.
Why oh why oh why oh why do people keep talking about a housing shortage?I have never seen so many properties up for sale.
We are looking to buy in a nice part of Sutton Coldfield.Ours is stuck on the market at the moment but over months of looking we see lots of the same properties still for sale and price reductions and numerous numerous 'no chain' headlines.Possibly already repo'd?
Is it just some special part of the country where there are 2 people chasing 10 houses??
And the local county courts are swamped with repossessions.
People are blind to the obvious
Why oh why oh why oh why do people keep talking about a housing shortage?I have never seen so many properties up for sale.
We are looking to buy in a nice part of Sutton Coldfield.Ours is stuck on the market at the moment but over months of looking we see lots of the same properties still for sale and price reductions and numerous numerous 'no chain' headlines.Possibly already repo'd?
Is it just some special part of the country where there are 2 people chasing 10 houses??
And the local county courts are swamped with repossessions.
People are blind to the obvious
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how can there be a shortage of house`s when there are ****-loads for sale???
edit ^^^ doh you beat me, honestly i see far to many houses for sale in and nobody ever buys them
edit ^^^ doh you beat me, honestly i see far to many houses for sale in and nobody ever buys them
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#17
This whole housing mess is because banks and building societies started lending more than 3 times salary for mortgages, if this unwritten rule had been stuck to, we wouldn't be in this mess today.
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House prices may fall but it will be dependent upon the value of the property and the area it is in.
The proportional rise in property prices in the South has been much higher (as usual) but the rest of the country has been slow to catch up.
The likely scenario is that house prices in the south will take a hit and then as you move further North they will level out in the Midlands with still steady increases in the North due to a hift in companies to move their larger staff bases out of London and the south as they are just to expensive to develop and staff.
Also I suspect that it will be mid range houses that will take the hardest hit as this is the toughest bracket to break into. It is by no means easy for first time buyers but it is with some creative accounting on the building societies part possible for most couples to qulaify for a mortgage in the lower sector of the market but to take the next step up means generally that they have to have made money on that first property and in a stagnant/slow moving market that just won't happen. No profit means no larger deposit and therefore no move up!!
There has recently been a trend toward propoerties being bought cheap and 'done up' for a quick sale but this market is also staturated and the savvy sellers are now putting propoerties in some areas on the market at near the value of a good property. These do still sell but only in high population areas (Cities)where there is still a shortage of suitably priced property.
I would have thought the next logoical move is that people will extend their current properties (loft conversion,extension) in order to maximise the space available to them. This will now become the more viable option than the move up which is not possible.
The proportional rise in property prices in the South has been much higher (as usual) but the rest of the country has been slow to catch up.
The likely scenario is that house prices in the south will take a hit and then as you move further North they will level out in the Midlands with still steady increases in the North due to a hift in companies to move their larger staff bases out of London and the south as they are just to expensive to develop and staff.
Also I suspect that it will be mid range houses that will take the hardest hit as this is the toughest bracket to break into. It is by no means easy for first time buyers but it is with some creative accounting on the building societies part possible for most couples to qulaify for a mortgage in the lower sector of the market but to take the next step up means generally that they have to have made money on that first property and in a stagnant/slow moving market that just won't happen. No profit means no larger deposit and therefore no move up!!
There has recently been a trend toward propoerties being bought cheap and 'done up' for a quick sale but this market is also staturated and the savvy sellers are now putting propoerties in some areas on the market at near the value of a good property. These do still sell but only in high population areas (Cities)where there is still a shortage of suitably priced property.
I would have thought the next logoical move is that people will extend their current properties (loft conversion,extension) in order to maximise the space available to them. This will now become the more viable option than the move up which is not possible.
#19
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Thats right:- "External WorldWide Forces, nothing we can do, nothing anyone can do!"
Happy?
#20
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Those who say prices will not fall in the UK Housing Stock because of demand are forgetting one VERY IMPORTANT fact in the Price rises of the past 10 years.
The Buy-To-Let buyers!!
These are now not buying (or would be very stupid to be) .... demand has eased hugely.
Supply and Demand has changed - there is now more supply hence prices are coming under pressure.
The Buy-To-Let buyers!!
These are now not buying (or would be very stupid to be) .... demand has eased hugely.
Supply and Demand has changed - there is now more supply hence prices are coming under pressure.
#21
Not really PSL, I am not certain however that is is world wide forces this time, more like excessive government borrowing, wasting the cash from that and also the extreme taxation, and encouraging the vast buying boom on credit.
There was a world recession before as you say, time will tell if that is the present cause anyway.
The increase in house prices means nothing in real terms, sell your own house and how much will it cost to get another comparable one? Looks like a good many will go into negative equity again anyway!
Les
There was a world recession before as you say, time will tell if that is the present cause anyway.
The increase in house prices means nothing in real terms, sell your own house and how much will it cost to get another comparable one? Looks like a good many will go into negative equity again anyway!
Les
Last edited by Leslie; 16 January 2007 at 12:56 PM.
#22
Not so sure Pete. Rentals have long been subsidised by the landlord on the basis that return was capital growth, it's only when a risk (long term) that returns diminsh will we see panic sells, and even then I doubt the professional landlords will get that upset.
#23
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#24
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Remember this!!
Inflation was 21.9% under the Tories!!
Labour are a LOT BETTER than the Tories at looking after the Economy, so thats not about to happen .... but external forces are driving it higher.
Inflation was 21.9% under the Tories!!
Labour are a LOT BETTER than the Tories at looking after the Economy, so thats not about to happen .... but external forces are driving it higher.
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#29
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The last time that Inflation was higher than this was when the TORIES were in power .......... 11 years ago!!
Speaks volumes .......
Remember that when a few misguided halfwits on here blame Labour .....
Speaks volumes .......
Remember that when a few misguided halfwits on here blame Labour .....
#30
this might be interesting
http://www.ukinvest.gov.uk/10235/en_GB/0.pdf
59% income tax anyone?!
The Danes are taxed very highly, and decent cars are limited the privelaged few. I have family there, and when they come over they're amazed to see flashy cars like knackered old Scoobies.
they don't seem to mind the income tax though - they have a much better education and social care system.