Property crash soon???

sheffield_lad

NSR2 wrote:

Sorry this makes no sense to me:
1) Politicians will typically avoid crashes like the plague.

You do not have to go back very far to see how politics affect interest rates. Politicians keep rates low when they need raising and put rates up to protect sterling. Think tory's exit of the ERM.


In a crash this would happen:
a) Buy cheap crappy property
b) Do it up
c) Try and sell it, find no one wants to buy...

So property developers wouldn't buy in the first place.

Why would the hoards of FTB be put off buying cheap then? Wouldn’t this be the best time to buy? Will nobody move because there has been a crash? Do divorces deaths and births suddenly stop happening!

Come on guys like an earlier post suggested quote impending doom when you have sold up and gone renting.
Nope thought not
.

tomstickland

Common misconception No 1: “Rent is money down the drain.” What then is; mortgage interest, stamp duty, solicitors fees, mortgage fees, estate agents fees, and house maintenance –new roof, kitchen or windows anyone? Not forgetting the inflexibility of not being able to walk away if you want to move/separate/hate your neighbours/lose your job etc etc.

It's no more dead money than paying to stay in a hotel room.
However, relative to paying off a loan so that you own a property, it is dead money. When you rent you're paying off someone elses mortgage for them, or giving them straight profit.

Say the fixed costs come to £1600, that's £44 pcm over a 3 years period. Not a great deal.


Re owing a house that rapidly increases in value, the owners can make money from this by moving to a smaller property, one that may well have grown by the same proportion, but the difference will also have grown by that proportion. Unless they do that or move to an area where prices haven't risen so high, then it is just theoretical profit, I agree.

Tassiotti let me quote you from your posts

I don't know whether he's bragging or not really. Sure, he claims to have made a lot of money, but then again he's taken the risk and got on with it. It's fine by me, I don't want to take the risk.

NSR2

howee wrote:

Why would the hoards of FTB be put off buying cheap then? Wouldn’t this be the best time to buy? Will nobody move because there has been a crash? Do divorces deaths and births suddenly stop happening!

FTBs might want to buy now, but thats because HP have been going up / staying the same (at least thats the perception).
If prices are seen to fall, FTBs will turn round and think. Do I want to borrow £100K for a property, which in a few months time will be worth £80K?
The answer is no.
Also with falling HP, a recession kicks in, people lose their jobs, lost jobs means people can't buy.
You have far greater flexability in being able to move around renting, so if you need to relocate after losing your job, you don't buy.

howee wrote:

Come on guys like an earlier post suggested quote impending doom when you have sold up and gone renting.
Nope thought not
.

In my case I'm a potential FTB. I'm willing (in fact wanting to be proved wrong), but I want to see a reasonable coherent argument to suggest now is a good time to buy.....

lynzpower

Hey. fascinating debate here.

My parents live in Stockport of all places, the most "average" place i nthe uk according to a survey not so long ago.

Im not saying its right AT ALL that prices are pushed up so ridiculously ( who is reposnsible?) , but if someone is willing to buy houses that are at best average for 350k, then they want thier head read in my book. But they are not in the minority are they? 1 bed flats are being thrown up here where I live ( olympic villiage for what thats worth) at a rate of knots and are "all sold" boards up everywhere.I havent seen a 1 bed flat round here for less than 250k. I couldnt afford that, and even if I could I wouldnt pay it, its obscene in my books, I could never want to buy that bad.

Doozergirl

manhattan wrote:

i think people who own more than one house should be taxed right upto their A$$ !

without these house wh0res,young ftb'ers may have a chance to own their own home!

pmsl @ house wh0re. :T

"My name is Doozergirl and I am a house wh0re" My husband will be pleased!

(You'll find it's called Capital Gains Tax and it's charged at 40%)

meanmachine_2

Just a few quick points: The fact that someone can be given 58 mortgages in 6 years - does that not tell you we're in a speculative bubble? If that doesn't, naff all else will.

Secondly: re "dead money", I did the sums on this today. If I take out a £130K mortgage, in five years' time - that's 60MONTHS - I'll have paid off exactly...wait for it, £15K. A tiny amount. The rest is dead mo...sorry, it's interest to my landlord (aka the bank).

At this current point in the housing cycle, I'd rather sit it out and let the loonies sell each other their overinflated properties, thx.

manhattan

Doozergirl wrote:

pmsl @ house wh0re. :T

"My name is Doozergirl and I am a house wh0re" My husband will be pleased!

(You'll find it's called Capital Gains Tax and it's charged at 40%)

thanks for the tax info!

by the way i am considering becoming a house pimp,any advice ?

robwend

live-on-less after reading your comments,GOD I FANCY YOU !!!!:kisses2:

Deemy

Somewhere above there, theres a question asking wheres all the credit come form ?

Basically its due to the cheap money pumped into the worlds financial system by Japan and the USA, where Japan at one point had negative short-term rates and the USA had rates at just 1% ! People / organisations / businesses / banks/ goverments, would borrow at these rates and invest in all kinds of assets including property and providing cheap credit to third parties.

These were called carry trades. NOW since the Fed started raising rates, the US carry trades have been unravellign and hence credit has been steadily been becoming tighter.

The more recently Japan has also signalled higher rates, but have yet to rise, and thus signal an unwinding of the japanese carry trades as well.

The days of cheap credit are disappearing fast and soemthign that the housing market will have to adjust to, namely in price to market interest rates.

Interest rates at some point this year WILL have to follow US and European rates higher otherwise the BOE will start missing its inflation target due to a declining £.

njwd

Deemy - My sentiments exactly.