The 70% club

IveSeenTheLight

dopester wrote: »

If you haven't noticed, house prices have risen near a spectacular 300% in 11 years in many areas. Near trebling in price, and wages haven't nearly kept up ................................................... because that reality isn't supported by the math.

100% increase doubles the price
200% increase trebles the price
A 300% increase would quadruple the price

MissMoneypenny

What a difference a year can make. December 2007 we had:-

"Does property still make sense?

Does it make sense to buy property? Halifax said this week that house prices are falling at the fastest rate since the crash of the early 1990s. Will today's buyers become trapped in negative equity? Patrick Collinson asks the pundits: are you mad to buy a property right now?"

Sarah Beeny
"She says that potential buyers are in the grip of irrational fears. "Interest rates really aren't at that high a level and it's quite a different economic climate to the early 1990s when rates were at 15%. People aren't in a position where they have to sell because they can't afford the mortgage."

Fergus Wilson
"I bought five houses from Wimpey last week and paid £153,000 each."

Gary McCausland, presenter of Channel 5's How To Be A Property Developer


"But next year you are going to see more rate cuts and that should stabilise the market. There's not going to be a crash and the British obsession with property is not about to go away."




"Jonathan Davis, Housepricecrash.co.uk

Davis was the gloomiest pundit we spoke to. "Don't touch property with a barge pole. Over the next year house prices will go down by 5-10%"

http://www.guardian.co.uk/money/2007/dec/08/buyingproperty

mewbie_2

IveSeenTheLight wrote: »

100% increase doubles the price
200% increase trebles the price
A 300% increase would quadruple the price

Yeah, OK, clever clogs, so what does a 50% drop work out as? I make it halving? But then I'm not in Mensa.

Actually the one I quite like is the 50% up and 50% down.
buy 100k.
plus 50% = 150k
less 50% = 75k

Of course these figures don't apply to Scotland, they work on a different number system.

IveSeenTheLight

mystic_trev wrote: »

But a year ago you said there wouldn't be a crash

http://forums.moneysavingexpert.com/showthread.html?t=572895

So perhaps you'd like to tell us, are we in a crash or a slight correction? Was I right and were you wrong?

To give the full post quote, a year ago I said

IveSeenTheLight wrote:

I personally believe there is an awful lot of hype around stating that house prices must crash, however the scenarios are not fully in place for this to happen. Over the course of the last year, the scenario has changed and will have probably.
Sure "SOME" areas may see house prices drop (not crash but maybe a little), however others (fortunately where I live) are still on the increase. This is still sort of true. While my VI area is now dropping, It has only just went into YoY drops (-2.23%).

I believe there may be a slight correction in some areas, maybe a house price stagnation in more, but definately not any significant price reduction such as people are stating as a crash is about to happen 50%, 60%, 70%, 80% :rotfl: :rotfl: :rotfl:

Right now, I would still term this as a correction.
Average UK house prices are still above the long term trend.
I did concede a year ago that some areas would fall.

I still don't believe in the 50+% average drops that some people on here believe / wish for.

Time will tell if it is a crash or a correction.

P.S. Define your interpretation of a house price crash please.

IveSeenTheLight

mewbie wrote: »

Yeah, OK, clever clogs, so what does a 50% drop work out as? I make it halving? But then I'm not in Mensa.

Actually the one I quite like is the 50% up and 50% down.
buy 100k.
plus 50% = 150k
less 50% = 75k

Of course these figures don't apply to Scotland, they work on a different number system.

Yes, 50% drop is halving
:T :T :T :T
well done


Are you in the 50% Average UK price drops camp or higher?

mewbie_2

IveSeenTheLight wrote: »

Are you in the 50% Average UK price drops camp or higher?

If you had asked me at any point during the dot com boom and bust if certain shares would lose 99% of their value I would have said you were bonkers.

I'll try to get my thinking clear on this one.

Obviously buy to let flats are going to crash big time, well over 50%. Rental property should be 100 x monthly rent to make the hassle and yield worth while. So thats a long way down.

Other places that have more than doubled over the rate of inflation in a few years - I see them reverting to mean, and of course a compensating dip before any recovery. So yes, hard to believe but 50% seems a reasonable possibility.

Million plus properties in London (oh yeah -that's all of them!!) - I see 50% as easily achieveable.

So yes - although it still seems crazy to say it - I would go for 50%. Average. I don't mean the average that's skewed downwards by the total collapse of BTL flats in city centres. I mean an average property, in an average street, will halve in price from the peak.

And no I don't have a crystal ball, financial training or any knowledge that makes me any more speshul than the next person. But that's my gut feeling.

dopester

Originally Posted by IveSeenTheLight
I personally believe there is an awful lot of hype around stating that house prices must crash, however the scenarios are not fully in place for this to happen. Over the course of the last year, the scenario has changed and will have probably.
Sure "SOME" areas may see house prices drop (not crash but maybe a little), however others (fortunately where I live) are still on the increase. This is still sort of true. While my VI area is now dropping, It has only just went into YoY drops (-2.23%).

The scenario changed for many of the clear reasons many people projected it would. You were wrong in my opinion... "however the scenarios are not fully in place for this to happen.", as there was and remains to be many negative and pressing pressures forcing down on house prices.

Some further logical projections have been made in this thread for why a -50% to -70% crash in property prices in the UK is very possible, affecting most areas.

When this scenario happens, you might again wish to cast it off as "scenario changed", without examining the reasons given here for why exactly why it changed.

macaque_2

wintersunshine wrote: »

You can't criticise home owners for HPI unless you're are prepared not to own one yourself. Just wanting a home makes you part of the problem -" If you walk across the farm yard you get !!!!!! on your shoes".
Just wanting to own a house makes you part of the problem - same as the home owner. You are, therefore, not in a position to criticise anyone else and you and your buddies should get down of your high horses and have a look for "the planks in your own eyes"

A person buying a home to live in is not part of the problem. The problem is witless people buying multiple homes to when they have no idea how much to pay or how to manage them. How often to we hear the phrase 'I'm in for the long term'. This is the default response from clueless people trying to rationalise stupid decisions. These idiots are responsible for 1/2 million empty homes. Fortunately, the cleansing fires of the bear market will force these properties back into use. As Warren Buffett put it "when the tide goes out, you find out who is not wearing smimming trunks".

Really2

mewbie wrote: »

If you had asked me at any point during the dot com boom and bust if certain shares would lose 99% of their value I would have said you were bonkers.

I take it you never saw any of the trading figures of a dotcom. I worked in a "bicks and mortar" off shoot of a dotcom and when you see £12m spent on marketing and less than £2m turnover in a year you could tell they were all going down the pan.

mewbie_2

Really2 wrote: »

when you see £12m spent on marketing and less than £2m turnover in a year you could tell they were all going down the pan.

sadly.. I couldn't.