How we'll know when house prices hit rock bottom

luvpump

I think one thing people should be aware of, is that with the future Economy so highly leveraged, thanks to a Government set to borrow & Spend huge amounts in order to give itself as good a chance as possible of winning the next Election..Once the Economy does begin to turn it will recover slowly..the debt that will have to be repaid will be a Major drag on any recovery .... So this Idea that property will suddenly shoot up again is a bit of myth IMO.. .. For what its worth ..late 2009 -2010 will be the bottom I think ..

Pobby

Running_Horse wrote: »

If my memory of the last crash is anything to go by, things will bump along at the lowest point for a few years, before the whole crazy business starts again.

That`s how I remember it. It bottomed out and stayed that way for around 3 years I think.

For me to guess at when the bottom will be hit this time is impossible.If you consider that where I am some one could have bought 10 years ago, at say, 3 times £15k a year income, that would have bought a decent 3 bed home. In 2007 £50k would have been needed. Has me perplexed.

WTF?_2

Running_Horse wrote: »

If my memory of the last crash is anything to go by, things will bump along at the lowest point for a few years, before the whole crazy business starts again.

I hate to say it, but it could be different this time.

We have a huge financial crisis which has lead to big deflationary pressures. The reponse of the Western governments is to throw caution out the window and implement an escalating series of panic measures (being as indebted as they are, they absolutely cannot afford deflation).

There's an awful lot of money out there currently sheltering in 'safe havens' - that's one of the reasons why people are buying US government bonds with no (or even negative) yeild against all seeming logic. They are scared to put it in a banking system that is tottering like a house of cards, they are scared of the stock market falling, they see commodities tumbling, hedge funds are imploding and FX is a total crapshoot.

Think of all that 'safe haven' cash like water sitting stagnant in a blocked-up reservoir behind a huge dam, instead of flowing through the turbines in the dam generating electricity.

In response, the governments are just flooding the markets with money - lifting the level of the reservoir and increasing the pressure in the hope that the blockage will clear and the money starts flowing again.

At some point I think it's quite likely that the dam will simply break and all that money - existing cash and new cash - comes flooding out in a huge wave down the valley where all the markets are sitting.

If that happens then frankly the FTB-saver would be nuts not to buy a property ASAP instead of keeping the cash in the bank with its value rapidly dwindling away to 'worthless'.

Probably won't happen for at least 12 months but you never know how desperate the govt will get.

pioneer

!!!!!!? wrote: »

I hate to say it, but it could be different this time.

We have a huge financial crisis which has lead to big deflationary pressures. The reponse of the Western governments is to throw caution out the window and implement an escalating series of panic measures (being as indebted as they are, they absolutely cannot afford deflation).

There's an awful lot of money out there currently sheltering in 'safe havens' - that's one of the reasons why people are buying US government bonds with no (or even negative) yeild against all seeming logic. They are scared to put it in a banking system that is tottering like a house of cards, they are scared of the stock market falling, they see commodities tumbling, hedge funds are imploding and FX is a total crapshoot.

Think of all that 'safe haven' cash like water sitting stagnant in a blocked-up reservoir behind a huge dam, instead of flowing through the turbines in the dam generating electricity.

In response, the governments are just flooding the markets with money - lifting the level of the reservoir and increasing the pressure in the hope that the blockage will clear and the money starts flowing again.

At some point I think it's quite likely that the dam will simply break and all that money - existing cash and new cash - comes flooding out in a huge wave down the valley where all the markets are sitting.

If that happens then frankly the FTB-saver would be nuts not to buy a property ASAP instead of keeping the cash in the bank with its value rapidly dwindling away to 'worthless'.

Probably won't happen for at least 12 months but you never know how desperate the govt will get.

I agree with alot of what you say; but I'd rather be in cash than watch it washed away into negative equity for the next few years

WTF?_2

pioneer wrote: »

I agree with alot of what you say; but I'd rather be in cash than watch it washed away into negative equity for the next few years

Just to clarify: I'm not advocating buying right now - just keeping a close eye on things so that you are ready for the inflationary backlash.

If you see commodities shooting up in price then start looking for houses pronto and sniffing out a good fixed rate mortgage ASAP.

pioneer

!!!!!!? wrote: »

Just to clarify: I'm not advocating buying right now - just keeping a close eye on things so that you are ready for the inflationary backlash.

If you see commodities shooting up in price then start looking for houses pronto and sniffing out a good fixed rate mortgage ASAP.

Why not load up with commodities now/soon then rather than houses. Property seems to be so last year and we are seriously at the wrong end of the curve. I think we need to set up a house to troy onz gld index.

Like your thinking and love your footer; ive been saying that for years but you might have to change the ratios.

£1 house price: 0% Interest: £5 Earned poor sheople

lincroft1710

In the last big crash, house prices started falling towards end of 1989 and didn't start to rise until 1996, so if this is repeated we'll be looking at 2015 before increase!!

paulsin

You can;t compare this house price crash with the last. Globalisation of our economy, the massive government investment in banks, the weaker pound to Euro, all present now, not present then. 1 potential is that when the economy does recover and banks share prices treble, which is not unlikely, then the government will have made massive gains of their investment. So the long term borrowing may not be as bad as first thought. This may not happend mind, but really, what does anyone know?Everyone is speculating. If you want to buy a house, buy one if you can afford it. If you don't then don't. It doesnt matter when you buy if your buying a home, becuase as a long term investment, property is a sound bet.

the_ash_and_the_oak

I believe any bottom (when it comes) will be u shaped rather than v shaped. A v shaped bottom - especially in an illiquid market - would make me very wary. Ditto any talk of 'missing the boat again' - such talk doesn't imply anything like stabilization.

Cannon_Fodder

paulsin wrote: »

You can;t compare this house price crash with the last. Globalisation of our economy, the massive government investment in banks, the weaker pound to Euro, all present now, not present then. 1 potential is that when the economy does recover and banks share prices treble, which is not unlikely, then the government will have made massive gains of their investment. So the long term borrowing may not be as bad as first thought. This may not happend mind, but really, what does anyone know?Everyone is speculating. If you want to buy a house, buy one if you can afford it. If you don't then don't. It doesnt matter when you buy if your buying a home, becuase as a long term investment, property is a sound bet.

I disagree - timing is very important - not to the extent of trying to squeeze the very last percentage point out of the crash - but as Barclays predict 10-15% more to come off during 2009, that would be (tens of) thousands of pounds.

In the words of !!!!!!?;

"Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage."