The 70% club

StevieJ

purch wrote: »

"So if Professor Kelly's 70% figure is accurate, where would that leave UK house prices? The last downturn in the housing market ended in July 1995, when average prices according to the Halifax were £61,000. That gain, trough to peak over 12 years, is £139,000. So if this is a typical bubble, the fall would be 70% of that, £97,000, taking the price of the average house at the low to just £103,000"

Is the attention span of most members of this forum so short, that they find it impossible to actually read the story referred to.

Where is £ 64,000 coming from ????

I have not read the article (nor come up with the 64k) however I can see where it has come from, try reducing 219k by 70% (not a million miles away)
Extracted from some article or other
The mix-adjusted average house price in the UK in August 2007 stood at £219,528

dopester

StevieJ wrote: »

So what you are saying (I think) is that mainly the pro buy-to-letters are going to snap up all these properties because no-one else can borrow any money.

Good. I'm happy to read your financial-home-debt position is quite comfortable, as you are one of the more reasonable bulls on the forum.

There aren't enough professional buy-to-letters in the market to support prices imo. Only the very smartest got out near the top... including that guy who was being chauffeured around in a Bentley in one of the TV documentaries a few months back. Even his rich get-out can't support prices but a fraction in a multi-trillion market.

Even if there are so many professionals, most are already bricks and mortar heavy, not liquid. Do your professionals own outright or are they leveraged? Regardless, they suffer the same asset-price-falls, and can't MEW at the same levels to buy heavily back in at the bottom.

Banks are unlikely to lend someone a stack more money simply because they have a portfolio of properties - unless they are already mostly paid off, with healthy income stream... from tenants who might very well be on much lower incomes.

StevieJ

macaque wrote: »

http://money.uk.msn.com/investing/articles/nicklouth/article.aspx?cp-documentid=10924988

A year ago I suggested that a house price correction in the region of 70% might be on the cards. People's reaction to this was ridicule and contempt. With each passing month however, more and more people have been joining the 70% club.

Whilst this is not particularly welcome for home owners, (and a catastrophy for heavily leveraged BTLs) it is good news for the country. High house prices have been socially divisive and damaged the long term stability of our economy.

Naughty, naughty, Mr Purch says read the article, you have lead us down the garden path. It is only 70% of the difference from 1995 to 2007. Typical bear exaggerating again.

I think Jonny whatshisname may be along soon to have a word with you about your spelling of that long word beginning with C

StevieJ

dopester wrote: »

Good. I'm happy to read your financial-home-debt position is quite comfortable, as you are one of the more reasonable bulls on the forum.

There aren't enough professional buy-to-letters in the market to support prices imo. Only the very smartest got out near the top... including that guy who was being chauffeured around in a Bentley in one of the TV documentaries a few months back. Even his rich get-out can't support prices but a fraction in a multi-trillion market.

Even if there are so many professionals, most are already bricks and mortar heavy, not liquid. Do your professionals own outright or are they leveraged? Regardless, they suffer the same asset-price-falls, and can't MEW at the same levels to buy heavily back in at the bottom.

Banks are unlikely to lend someone a stack more money simply because they have a portfolio of properties - unless they are already mostly paid off, with healthy income stream... from tenants who might very well be on much lower incomes.

Payday please note, also did you also see the women had a go at me for being a bear.

macaque_2

Dan: wrote: »

Houses are now almost affordable to the average FTB, couple that with low interest rates, buyers will soon be flocking into the market to pick up a bargain.

25% from peak - a possibility (but I still wouldn't bet on it)
70% from peak - not a chance

Flocking? Yes, flocking like a flight of pigeons into the engines of a 747.

As an unreconstructed bull, your heart is ruling your head. In 2007, the average house price reached around 8 times the average income. If this wasn't crazy enought it gets worse. Property sizes have been shrinking. In the 60s first time buyers would get 1000 square feet for their money. By 2005, many FTB homes were in the 300-400 square foot range. It was all smoke and mirrors. The definition of a home had changed.

There is underlying excess of property in the UK because the native population is shrinking. Although immigration created a transient bulge, this flow has gone into reverse.

Salaries over the past 10 years have lost all links with reality. City traders were collecting billions in bonuses by building liabilities of thousands of billions (the post iindustrial economy), armies of public sector employees were paying themselves extravagant salaries and private employees were subsidising their income with MEW to the tune of 50 billion per annum. The music stopped and we now have no MEW, rocketing unemployment and people taking pay cuts to stay in work.

Macaque! Are you are about to defect to the 80% club?

HankMcSpank

While personally, I think a 70% fall may be a bit of wishful thinking, the actual percentage itself does have some relevance when it comes to stock market peak to troughs (eg 1973 thru 1975, the UK FT30 fell 73%).... a house is just another asset class, just like equities - this housing bubble was bigger than we've seen at any point in history, so in practice a bust of 70% is reasonably possible.

I'll settle for 69% though (leave the final 1% for others to pickup!)

Dan:_4

macaque wrote: »

Flocking? Yes, flocking like a flight of pigeons into the engines of a 747.

As an unreconstructed bull, your heart is ruling your head. In 2007, the average house price reached around 8 times the average income. If this wasn't crazy enought it gets worse. Property sizes have been shrinking. In the 60s first time buyers would get 1000 square feet for their money. By 2005, many FTB homes were in the 300-400 square foot range. It was all smoke and mirrors. The definition of a home had changed.

There is underlying excess of property in the UK because the native population is shrinking. Although immigration created a transient bulge, this flow has gone into reverse.

Salaries over the past 10 years have lost all links with reality. City traders were collecting billions in bonuses by building liabilities of thousands of billions (the post iindustrial economy), armies of public sector employees were paying themselves extravagant salaries and private employees were subsidising their income with MEW to the tune of 50 billion per annum. The music stopped and we now have no MEW, rocketing unemployment and people taking pay cuts to stay in work.

Macaque! Are you are about to defect to the 80% club?

You will not get your 70% - end of.

StevieJ

HankMcSpank wrote: »

While I think 70% may be a bit wishful thinking, the actual percentage does have some relevance when it comes to stock market peak to troughs (eg 1973 thru 1975, the FT30 fell 73%).... a house is an assets class, just like equities - the bubble was bigger than we've seen at any point, so in practice it's quite possible.

I'll settle for 69% though (leave the final 1% for others to pickup!)

That wouldn't be the time when the oil price quadrupled and the country was on three day week, when the unions were running riot and inflation was going through the roof, was it?

Gorgeous_George

dopester wrote: »

Were you complaining on the way up?

Were you appreciating the difficulties of FTBS forever stretching themselves further and further for borrowing and debt from 1998 onwards to get their first property?

Honestly, considering you have at least one BTL, or a second home that you let out in your capacity as a landlord, that your sympathies are not that genuine or balanced.

I had no intention of selling* so price rises meant little to me. I'd like lower prices so that my kids can have a chance to buy or I could consider adding yet another BTL property to my empire of errm... one.

On the other hand, I would always vote for stability i.e., prices rising with inflation as this avoids the need for winners and losers. Hopefully when prices bottom out this will be followed by a long period of stability - brought about by lenders sticking to sensible lending multiples.

We cannot all be so well-balanced. Having a chip on both shoulders must help.



GG

* Except for a short period earlier this year when I considered STRing. My BTL was never for sale - it's my tenant's home.

mitchaa

Does anyone on here understand what the word average means? Really, it is not that hard

We even have a claimed barrister agreeing with 70% claims:rolleyes:

Property in Scotland is not even in the negatives yet or is everyone failing to ignore this FACT?? For everywhere to fall 70%, a hell of a lot of places will need to fall by substantially more than that.

Seriously it beggars belief that some people are so deluded.

Dopester..You harp on about unemployment, did you not analyse the stats on yesterdays release? 0.25% of the countries population are currently suffering with recent unemployment. Yes 0.25% of the 60m population:rotfl:

The link in the 1st post mentions nothing of a 70% fall like macaque is claiming. 70% drops and 70% drop from peak to trough. 2 totally different theories;) A lot of nonsense anyway in my books. The stats in my signature below let me sleep at night as does Scotlands strong resilience;)

70% nationwide, time to wake up i think:rotfl:If you are being serious, what areas will fall by 90% in order to combat those that fall by 50%?