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Game: find some old "there won't be a crash" posts.
Comments
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IveSeenTheLight wrote: »Whats the definition of crash?
A 5%, 10% or even 20% correction, is not a crash in my opinion, just a correction.
Personally, before it would affect me (i.e. negtive equity) prices would have to drop over 60%, then I would agree there was a crash. I just dont see this happening.
I guess if we are looking at a UK terminology for crash regarding house prices, you would have to know how much of a drop would realise the levels to the amount of outstanding mortgage debt. Up to that point is a correction, beyond would be a crash.
I'm no expert on the terminology, but as far as I can gather from the armchair experts
on here, a crash isn't defined by the amount of % drop, it's defined by how many months in a row the prices have continued to drop, although I can't remember what that amount is.
I'm sure dopester will be along soon with another of his home-made graph "specials" to enlighten us all!
Rob0 -
I'm no expert on the terminology, but as far as I can gather from the armchair experts on here, a crash isn't defined by the amount of % drop, it's defined by how many months in a row the prices have continued to drop, although I can't remember what that amount is.
I'm sure dopester will be along soon with another of his home-made graph "specials" to enlighten us all!
Rob
If that is the termonology it does not make sense to me.
What would you define as a crash (and I'm notsaying this is what is happeneing today): -
3 months of 20% drops
or
24 months of 0.1% drops
A total percentage drop has to be involved in the terminology of a crash:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
I'm sure dopester will be along soon with another of his home-made graph "specials" to enlighten us all!
Those graphs actually took quite a while in Photoshop to do, but were satisfying - nothing wrong with a little forward imagination on how things could play out.
:beer:IveSeenTheLight wrote: »What would you define as a crash (and I'm not saying this is what is happening today): -
3 months of 20% drops
or
24 months of 0.1% drops
A total percentage drop has to be involved in the terminology of a crash
It's a fair question and I don't fully know how to define it.
To me, "crash" does imply something which happens quickly and suddenly and violently, but a property a "crash" surely still would be considered a crash even if it took 2 to 4 years to play out - given the difficult illiquid nature of the property market. Sort of like a slow motion crash where you get to see most of the gory elements of it frame-by-frame.
Also I don't know the percentages to be considered a "crash" - other than I would expect it to be a considerable percentage.
Anyway here is some perspective which go towards answering a couple of your questions IveSeenTheLight (but without percentages) - and I've highlighted relevant sections:PDF Document (The UK HOUSE PRICE BUBBLE)THE UK HOUSE PRICE BUBBLE
Andrew Farlow
Oriel College, Oxford
27 November 2002
INTRODUCTION
Following a reported 25-30% annual rise in UK house prices, there has been much debate about the possibility of a housing market crash. The issue boils down to one thing alone: Have housing assets experienced a price bubble? Absent a bubble, the current price level will be sustainable and future adjustment smooth. Only a bubble is capable of generating a crash. New developments in the theory of bubbles, and recent experiences of other asset market bubbles, help us to answer this.THE ANATOMY OF THE BURST
So, how will the bursting of the current UK house price bubble look? To the fundamentalists this is a silly question. But, if we concede that there is a bubble, then at some point it will either deflate gently or burst dramatically. And evidence overwhelmingly supports the latter. The notion of slow house-price deflates is defied by 40 years of UK house price behaviour (the collapse of the bubbles of 71-3, 78-9, and 86-9 in particular), by the collapse of other recent property bubbles (e.g. Scandinavia, Japan, Hong Kong, New Zealand), and by recent equity market collapses following major bubbles (e.g. the US and UK). None of
these collapses were, or could have been, smooth.0 -
The notion of slow house-price deflates is defied by 40 years of UK house price behaviour (the collapse of the bubbles of 71-3, 78-9, and 86-9 in particular), by the collapse of other recent property bubbles (e.g. Scandinavia, Japan, Hong Kong, New Zealand),
While I am aware of these, I do not know the full facts.
I have seen facts relevant to the last UK house price crash (put in bold from your post
Between 1989 and 1996, the graphs show that there was an approxiamate 40% house price average drops, many areas outside London showed a House Price Increase
You can verify this at http://www.hbosplc.com/economy/inclu...TownsData3.xls
Some snipet random examples of percentage increases (green) / decreases (red) between 1989 and 1996: -
Aberdeen - 57%
Airdrie - 19%
Ashford (Kent) - -2%
Bangor (N-Ireland) - 77%
Barking Gr London - -17%
Barnet (Gr London) - 17%
Barry (Wales) - 25%
Basildon (Essex) - -5%
Beckinham (Gr London) - 2%
Belfast - 75%
Blackburn - 26%
Blackpool - -16%
Cardiff - 15%
Dagenham (Gr London) - -25%
Dundee - 51%
Dunfermline - 34%
Feltham - -18%
Gateshead - 32%
Glasgow - 36%
Harrow (Gr London) - -5%
Hayes (Gr London) - -17%
Hounslow (Gr London) - -14%
Ilford (Gr London) - -12%
Inverness - 32%
Kilmarnock - 40%
Leeds - 17%
Liverpool - 37%
Manchester - 21%
Mitchem (Gr London) - -16%
Newcastle - 22%
Sheffield - 14%
I think this goes a long way to show that while the UK average dropped around 40%, most of these drops were seen in and around London and the South East.
It shows that price drops for properties around London vastly affect the UK average.
It shows that while there was a reported crash with 7 years of house price declines, many areas only dropped for a short period and over the term increased on average for that area
Now I know these figures above are not inflation adjusted, but neither is the graph which shows the average house price, so it is a good comparison
:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
The effect on you via the wider economy and bank/building society collapses would be serious long before 60%. Other people's negative equity can affect everyone else.IveSeenTheLight wrote: »Personally, before it would affect me (i.e. negtive equity) prices would have to drop over 60%, then I would agree there was a crash.0 -
Hi
For me this is a property crash. When builders stop building and people start losing their jobs- estate agents, removal men, etc and the property market generally starts to have a negative effect on the economy, then that is a crash. If the market moved only 4% then I agree in rerospect that would probably be seen as a correction. But nobody can seriously believe we aren't going to see big falls of at the very least 20%. Might only be short lived though
A year?
I suppose it depends on the wider economy and how long all the FTBs and STRs can resist jumpin back on the ladder.:D0 -
Want to know what a crash looks like? This is a crash:
0 -
baby_boomer wrote: »The effect on you via the wider economy and bank/building society collapses would be serious long before 60%. Other people's negative equity can affect everyone else.
I can understand that which is why I saidIveSeenTheLight wrote:I guess if we are looking at a UK terminology for crash regarding house prices, you would have to know how much of a drop would realise the levels to the amount of outstanding mortgage debt. Up to that point is a correction, beyond would be a crash.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Here's a breakdown of the last crash by area:
http://www.fool.co.uk/news/property-home/2008/01/25/how-bad-was-the-last-housing-crash.aspx
http://www.fool.co.uk/news/property-home/2008/01/25/the-last-housing-crash.aspx
These clearly show that property prices fell in ALL regions, contrary to IveSeenTheLight's claims; although he is correct in that Scotland saw the least of the falls (although one suspects that that is because they saw few of the rises preceding the falls either, unlike this time...).
The reason for the difference in figures from IveSeenTheLight's is clear; he randomly picks the dates 1989 and 1996 as his frame of reference, when as the above articles make clear, different regions peaked and bottomed out at different times.
Many areas fell by c. 30% - I personally expect greater nominal falls this time, as wage inflation is lower and so prices will have to fall further to hit long term averages of affordability.0 -
I'm not sure which kind of light IveSeenTheLight is seeing, but it would appear to be an artificial one judging by his recent posts on here! In fact, probably the same one that Mr. B and Pickles are seeing...
:rotfl:
Rob0
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