Property crash soon???

BobProperty

Ian_W wrote:

So how does that argument run, Bob? HIP will mean less properties going on sale because sellers won't spend 800 quid on them, so that will lower prices? :eek:

So if the oil companies produce less oil then petrol prices will be lower? :think:

Makes perfect sense to moi!! :doh:

...

Unfortunately Ian commodities are much more "supply and demand" price related than property. Property prices are related to availability of loans and availability of alternative property (plus tax breaks, use as security, etc.). I don't know what the proportion is but most house transactions involve the sale of one property and the purchase of another. Would you sell your house without finding another one to buy to move to? Most people will not.
I am predicting the middle of next year as it will be "seen" to be the introduction of HIPs that will be remembered. I think interest rates may have crept up by then and affordability and general debt will come into it. Remember "never let the truth get in the way of a good story" and you can guess how it will be reported. If you are old enough you will remember decimalisation was blamed for some of the inflation of the early 70's along with the "oil crisis". Problem is that rounding shillings and pennies up when going decimal hardly explains the price of a family saloon car going from £600 to £2000 in 5-7 years. Oil kept its price in real terms, or went up a bit, although the rises we had in the UK had were significant, but then oil isn't priced in £s.

jonclarke

Also relevant to this discussion - http://observer.guardian.co.uk/business/story/0,,1739418,00.html

Are Nationwide preparing the ground for drops in prices in some areas?

meanmachine_2

No, they're lobbying for an interest rate cut so that houses continue to "fly off the shelves".

Ace

if they did a poll, i wonder how many people will be in hope for house prices crash

freedebt

blimey, good debate.
but there's only one way its gonna go, look at the signs out there..
oil is going up in price, demand for oil is high
cost of living will go up due to manufacturing costs.
consumer debt is high too.
did I hear B&Q have laid off a load of people too? roll on the recession.
oh and btw im a would be FTB it's cheaper to rent at the moment the difference that im saving by renting im putting away for a deposit. I reckon it'll take 2 years to hit rock bottom, by that time i'll have a nice size deposit, but then of course I could be out of a job too!

F_T_Buyer

Originally Posted by F_T_Buyer
Remember: Wealth is never lost, it is merely transfered.

Pal wrote:

Alas this isn't true. The world is awash with free, brand new money, much in the form of mortgage credit.

How I laughed at this.

Money is not 'free' - money is a temporary storage of wealth. Those that create money (banks) issue it to the people in the form of 'debt'. Debt, is a promise to pay it back at a later date (usually with lots of interest).

Imagine this scenario:

If Tony Blair sent everyone in this country £100 what would happen? Ok, we would all be £100 richer, but are we more wealthy?

No. Because as there is more money in circulation, the value of money drops. We would all have more money to buy the same things. If the value of money drops, the cost of things go up. This is called inflation.

Inflation (in economics) is the decline in purchasing power of your money.

Note: Rising prices (such as DVDs going up) is a symptom of inflation, not the cause!

Therefore, when money is created (by the banks) wealth is shifted from the people to those that created the money.

In terms of what has been happening over the last 5 years: Banks have been creating money and lending this, the have been demand a smaller charge for this (lower interest rates), meaning people can borrow more money. More money means inflation - which as you suggest has gone into housing, therefore house prices rise.

Wealth has shifted from the people to the banks. The banks now own more housing stock than ever before because of this. So who is wealther? The banks? or the people?

This is why central banks inflate the economy with new money, while denying inflation exists. How can you possibly have house prices more than doubling, yet official inflation is only 2%? Now, that cheap money is moving into commodities, e.g. oil/gas. This is now inflating because of the new money, yet politicians and the central bank say it's all ok, official inflation is only 2%.

Note: The money supply increased by 12.6% in 2005 compared to 2004.

Quite simply, this cannot, I repeat, cannot go on forever. To compensate, the people must demand higher wages. But if this happens, the spiral of inflation rockets.

If everyone understood economics, their would be a riot in 60seconds.

The next 5 years will be pay back time, and it's barely started.

Pal

My post was tongue-in-cheek. You are preaching to the choir, my friend.

ManAtHome

Yes, good post though.

roswell

must say well done F T Buyer you have finaly put down what a lot of people have been trying to say.

sm9ai

meanmachine wrote:

No, they're lobbying for an interest rate cut so that houses continue to "fly off the shelves".

That will never happen. Speaking of which fed's stuck their rate up to 4.75% now with this likely to go up a bit more. Can't be long before we follow suit.