'50% drops'

Conrad

DD if your'e ever bored here, I'd recommend popping here for a thrilling wind up;

http://www.creationtalk.com

If find debunking religious myths incredibly stimulating. What could be more interesting that debate on where we came from!!!!

stevetodd

brit1234 wrote: »

Hi, I'm one of the few on this board who think over 50% falls are very likely, my reason why:

1, The banks have been burnt and still getting burnt as they have lent to much money. They use to fund homes via deposits but recently they have turned to investment vehicles instead by selling off their mortgages to 3rd parties allowing more access to funds. This caused the credit crunch and sub prime incidnts and that area of funding is well dead. That leavesthem reliant on savings which they can lend £10 for every £1 of savings. This pretty much restricts mortgage lending to 3.5 times salary and a deposit. That in turns means about a 50% fall in prices on what the banks will sensibly lend.

2, House prices have gone up at an unsustainable high rate. Traditionally the only way an asset can go up above inflation is to add value to it. These properties were going well above inflation and the cause was irresponsible and unregulated lending. Some people were saying it was a shortage of property causing the huge price rises but I say it was over lending. To prove this look at the market today, there are over 15 sellers to very 1 buyer, the socalled demand hasn't died away but the lending criteria has. Quite simply we have a huge property bubble based on loose lending which has now ended and is taking banks down by the day.

3, At present average prices have fallen about 13-14% belowthis time last year. On present trends it will be a 20% fall by Christmas. There are no signs of recovery in the market and infact with us going into recession and widespread banking collapse it is highly likely the housing market will fall further. House price crashes normally ast about 4 years, we are in the first 6 months and we have the biggest falls on record. With unemployment and debt rising the trend is clearly down.

4, Buy to Let and self cert (British sub prime). Apart from the major increase in lending over the last decade the other big difference is buy to let and self cert mortgages. Pretty much all the buy to let lenders have stopped lending, gone bust, been taken over, or hiked up rates and lending restriction. Many of these people have large portfolios so as it get more expensive to fund especially around remortgaging time. Margins are being cut short, rents are falling (ARLA) voids increasing as unemployment rises. Many are highly geared investing capital gains from recent house price inflation as deposits for new properties. So as prices have already fallen 14% it makes it very exspensive to remortgage with the lower LTV required. It is my belief that all the properties flooding auctions from their reposesions will allow the big drops which other sellers can't bare. Just look t the Wilson family(see other thread), they are increasingly in trouble as prices fall and are now looking to sell some properties. If they go bust thats 800 odd properties extra up for sale in a depressed area. Then you have all the people who have lied about the saliries, there has been a big clamp down. How are they going to remortgage?

It is highly likely we will have 50% falls (which in reality brings it down to normal levels). 50% falls are increasingly happenening in the Northen Cities such as Manchester and this crash has barely got started.

60-70% are also possible due to a over correction. Remeber it takes time for sentiment to change so when we do reach bottom people make not recognise and the market will fall below purely on sentiment.

What you are not taking into account is people like me (and I am not alone) when prices have fallen by 30% I intend to buy 3 more houses. Demand will come back, anyone waiting for a 50% drop is IMO very likely to miss out as it will not happen. Just to establish what I mean by 50% I mean to an established market (victorian houses in my case) rather than new builds some of which had very dubious price tags IMO which is why I never touched them.

blisk

Are people taking this seriously ?

Chaos is about to set in, food shortages, job losses, power cuts.

Heyman_2

I'm certainly not taking you seriously.

stevetodd

blisk wrote: »

Are people taking this seriously ?

Chaos is about to set in, food shortages, job losses, power cuts.

LOL I am struggling to respond to this, are you high?

dopester

Heyman wrote: »

What are you saying then? Do you think rents will 'plummet'?

Rental values are under much downward pressure as I see it. People who've been repossessed, especially those who've lost their jobs in recent times, doesn't mean they can suddenly pay the rents you are asking.

And what savings or income they do have may need to be used cautiously. Like !!!!!! says... multiple house share, squatting, return to live with family, become lodgers... all kinds of options in the new-world, until rents are re-evaluated downwards sufficiently.

South-west is hit by wave of repossessions

The owner of one static caravan park in Devon said he was allowing families to live in caravans that officially should only be inhabited for limited periods. "I think the council knows about it but I think they are turning a blind eye," he said.

Cleaver

macaque wrote: »

You assess reality from where you stand. If someone had told you in 1990 that a 2 up 2 down in a dull midland town would fetch £200k in 2007, you would have called for an ambulance.

They'd probably be even more shocked if you told them that people spent their days debating this fact with strangers on something called the 'internet'.

Would you really be that shocked if that same terrace house in 2030 was 500k? I kind of see house prices a little bit like shares in that it's rather tricky to predict where they will go. Could easily be 100k too...

Actually, people may not be buying Earth houses in 2030 as they are all investing in flats on Mars. Or 'Integalactic Martian Urban Loft Developments' as they will probably be called.

Heyman_2

Rental values are under much downward pressure as I see it. People who've been repossessed, especially those who've lost their jobs in recent times, doesn't mean they can suddenly pay the rents you are asking.

And what savings or income they do have may need to be used cautiously. Like !!!!!! says... multiple house share, squatting, return to live with family, become lodgers... all kinds of options in the new-world, until rents are re-evaluated downwards sufficiently.

I don't think the scenario that you and !!!!!! are outlining will happen on a wide scale. What is far more likely is that it will be somewhere in between our viewpoints, i.e. families will move into smaller accomodation than they would have due to cost pressures.

So maybe we'll see a reduction in rents on the bigger properties.

But as of now, according to these articles the rental market is currently booming due to the housing market problems -

The booming rental market in Leeds - Link
Rental market booming in Wales - Link
Rental market booming - Link

Quote from that last link -
'Demand for rented accommodation rose 65% between August 2007 and August 2008'

Hard to see how there's going to be downward pressure on rents with that kind of demand, which I doubt is going to abate any time soon.

blisk

stevetodd wrote: »

LOL I am struggling to respond to this, are you high?

Youre drunk on the easy credit & false boom of past 10 years.

Look the World didn't know what was coming, governments & banking system.

They are still trying to play down the chaos that is to come.

Heyman_2