From 5 years ago

Pobby · 27 July 2008 at 1:08PM

http://video.google.co.uk/videoplay?docid=-8482518243122067675&hl=en-GB

This is a program regarding the lie to buy market. When i asked an American friend who is a broker how many people lied out in the States she said they all did!!!!

dad-of-4 · 27 July 2008 at 4:26PM

you combine the income lies with the lies of the sale prices for property and you can quite easily see how the house prices got so out of controll,

m00m00 · 27 July 2008 at 4:27PM

as the oft stated phrase said

Greed and Fear

Greed, and fear of missing out on the greed.

dad-of-4 · 27 July 2008 at 4:34PM

exactly even the poor chap on 30k at the start seemed quite happy to get in on it, as long as he gets to own a place.

Pobby · 27 July 2008 at 5:24PM

So at last I have a bit of a handle on why properties defied gravity!

brit1234 · 27 July 2008 at 9:41PM

Strange how the big clamp down on this sort of thing has started after the market crashes.

All those people who lied are going to be in trouble when they try to remortgage. It means tens / hundreds of thousands will be put onto the standard variable rate. This means many more repossesions than first thought.

neverdespairgirl · 28 July 2008 at 1:23AM

brit1234 wrote: »

Strange how the big clamp down on this sort of thing has started after the market crashes.

Re-arrange these words into a well-known phrase or saying...

stable horse bolting door...

dudleyboy · 28 July 2008 at 7:10AM

Thanks for posting this, Pobby.

I wonder: If house prices were already over-inflated in 2003 because of self-certification mortgages, and continued to spiral upwards for a further 5 years thanks to BTL, then just how far will they fall?

30% estimates seem quite conservative IMHO. The withdrawal of cheap credit and relaxed lending alone could bring prices down by this amount but factor in the fact that almost the entire British economy and GDP is (was) based upon consumer spending, that we're heading towards the mother of all recessions and mass job losses, and that the vast majority of Britons are up to their eyeballs in massive amounts of secured and unsecured debt, I think it's very plausible that we could see falls of 60% if not more.

In 2003 the BBC reported that house prices had gone up by 300% over 20 years (although, of course, one must factor in wage inflation):

http://news.bbc.co.uk/1/hi/business/2693411.stm

5 years on, how much more?

And with the days of hedonistic lending and spending behind us, I think the falls in house prices, not to mention the British economy, are going to be massive.

Pobby · 28 July 2008 at 10:40AM

This is a graph of the price to earnings ratio,

http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php

Looking at the peak in about 1989 this reprented just short of 4 times earnings. This corrected some 5 or 6 years later to 2.8. 2007 is the last part of the graph show that ratio to be rather scarily near to 6 times.

To a degree it is different this time as interest rates are still lower than the long term average but there has been little change in wage increases. Having said that the lower rates are being off set by rising fuel and food costs and non house purchase debt.

In real terms at the slump in the 90`s a terraced property where I live would have been around the 30 something thousand. Today around the 140 something. I was talking to a buddy who lives just outside of London in a tiny terraced house (and I do mean tiny). In the mid 90`s they were selling at just below £45k. Last year they were changing hands @ £200k.

Debate House Prices

From 5 years ago

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