UK prices to plunge like the US

baby_boomer

We're just earlier in the cycle.

So says Robert Schiller, author of "Irrational Exuberance" which foretold the US crash.

Observer

".....In London to promote his new book, The Subprime Solution, Shiller told The Observer that consumers should be wary of the comforting excuses many analysts find for explaining why Britain's housing market will be hit less hard than America's, where prices have already fallen by more than a quarter, and repossessions are rife.'A lot of people say that in the UK we haven't seen so many defaults on mortgages - but we're just earlier in the cycle,' he said.

'These housing cycles go for a long time. Real estate markets are very different from liquid financial markets, in that they have a lot of momentum, and they continue in the same direction for a long time.' He pointed out that during the last housing boom and bust, in the 1980s and early 1990s, prices in London more than doubled, in inflation-adjusted terms, 'and then they came almost all the way back down again. That's certainly a possibility now, and that would be huge. Think of all the balance-sheet problems that would cause, for banks and for households...."

lostinrates

If this were to happen - the houses for dollars- what would happen to things like housing benefit? Rather pointless paying people monthly rent if that rent over a few months could buy either thm a home, or more benficially, social housing? Is the that extensive (comapritively) system of housing benefit and social housing something thng up, I that would in fact prevent this echoing th proportions of the US crash in many states?

baby_boomer

Why wouldn't the rents fall?

The yields on new purchases would still be way above bank interest rates.

lostinrates

baby_boomer wrote: »

Why wouldn't the rents fall?

The yields on new purchases would still be way above bank interest rates.

Rents would fall, but if it were possible to buy for the budget previiously set aside for rent assistance/provision then government/LAs would surely take that option, and I imagine that itself would stop property dropping to th $1 dollar/couple of hundred dollar headline grabbing amounts in US of A.

purch

"Irrational Exuberance"

and Irrational Bear Syndrome.....

The two most common afflictions suffered by those closely involved in all markets, especially Real Estate and Stocks.

sympatex

From the recent graphs i've seen from case shiller comparing the uk market to the US it looks as though the UK market has almost caught up with the US falls already even though the house falls started after the americans by some margin.

So either we're very very screwed or the rate of fall in the uk will slow from it's current "falling off cliff" position to lead baloon.

setmefree2

I have read Schiller's book "The sub-prime solution" (I didn't know it was new, I read it awhile ago) and it highlights a massive difference between the US and the UK housing market. In the US they massively over built so they have an over supply of houses. This is not the case in the UK.

Furthermore, and thankfully, our government has learned from the US and has every intention of supporting the housing market. It's in no-one's interest for us to end up like the US.

You shouldn't believe hype.

hearts

Also the US is massive. A lot of these houses are built far from the cities and are in areas that cannot be compared to the UK in general. Prices here for houses in areas without employers to sustain the communites have always been lower and will be the worst hit.

sympatex

setmefree2, you're getting dangerously close to the under supply over demand for housing argument there. You'll get slapped down!

Point is valid but i think current indications of loads of houses standing empty as the owners can't sell or rent it lowers that arguments validity.

There's also debate over whether the government can do anything to stop the economic cycle, it would be a first. They can ease it as best they can but it will come at a cost for someone else.

brit1234

setmefree2 wrote: »

In the US they massively over built so they have an over supply of houses. This is not the case in the UK.

I think it will be with the massively rising defaults in the buy to let sector. Remember in the UK we never had a shortage of property we had a shortage of affordable property caused by the credit bubble. During this socalled shortage papers were full of 100,000s of properties for sale. Investors were buying up first time buyer properties pushing the prices up beyound the reach of ftb. Now we have 15 sellers for everyone buyer and buy to let fraud is being clamped down on.

We have also a far bigger housing bubble than the US so have farther and faster to fall.

ad9898_3

setmefree2 wrote: »

In the US they massively over built so they have an over supply of houses. This is not the case in the UK.

I still have no idea where this myth of 'not enough houses comes from', we have plenty of housing stock, even now there are thousands and thousands of houses for sale and when the amatuer BTL'rs start squeaking (a few already are), there will be an over supply here too.

For instant when the Wilsons go belly up, do you think Barretts and Taylor Wimpey will be bulldozing their way through Ashford, I think the answer is no. Thousands of flats all round the country are empty, never mind sell them, they can't even rent them out.

Another load of crap pedaled by Clown.