A postcard from the 70% club

Max_Headroom_3

macaque wrote: »

Max headroom

I have made no references to 'perfectly average family house' and I have not used the word 'soon'.
.

So you're backtracking?

I agree that in extreme cases (vastly oversold inner city flats) you could see 70% drops. But most people are concerened with the bigger picture, what will happen typically or averagely, across the whole marketplace.

So are you saying that a typical £150K (at peak) property will (soon, eventually, whatever) be £45K or not?

macaque_2

Max_Headroom wrote: »

So you're backtracking?

No.






StevieJ

The banks are not lending normally because property prices are too high. They are repairing their balance sheets by getting ownership transferred from distressed borrowers to people with large deposits. It is a ruthless process of stripping home buyers of their savings in order to repair credit ratings.

Interest rates go in cycles. The lower than expected reposession levels are almost entirely due to exceptionally low interest rates. The market is now like a grenade with the pin removed. As soon as interest rates start moving houses will flood onto the market.

ray123

Also, take into account the FTB's who have recently left university, having run up large student loans, student bank accounts/credit cards - saving if not something that features within their vocabulary.
Then add into the mix the government schemes for FTB, such as the home buy scheme, etc, it is simply a recipe for disaster in my opinion.
Who can forget the pension disaster that seems to be unfolding and the cuts in Public Spending required.
Bankrupt Britain, more like Over-staffed Britain.

thriftybabe

StevieJ wrote: »

Yep, you got that right, don't forget though wages are going to be falling back to 1990 levels.

We are at 1999 at the moment!

Max_Headroom_3

Originally Posted by Max Headroom
So you're backtracking?

macaque wrote: »

No.

So which is it then?

ad9898_3

70% falls would be a dream come true, all that wealth being transfered from the old to the young, it would make a nice change and be better for society and the economy in the medium to long term, however I don't see it happening on a large scale. Some cheap and nasty crap new builds may well fall by these levels but most houses wont, more is the the pity.

It will be interesting over the next few years to say the least though. The government/BoE know that 100's of thousands of people are on the edge at the moment, if the IMF have to be called or inflation takes hold (QE the big unknown) and rates are pushed up, there could be absolute carnage in the housing market, it would be interesting to see what the forecast would be for repo's if IR's went to a very modest 7%, with SVR's at about 8%, I would imagine it would many hundreds of thousands, that could indeed send prices plummeting 70%, I guess time will tell.

I'm pretty happy with the falls so far and forsee most of the RMBS HPI from 2001-2007 disappearing over the next three years or so.

blahbob

ad9898 wrote: »

70% falls would be a dream come true, all that wealth being transfered from the old to the young, it would make a nice change and be better for society and the economy in the medium to long term, however I don't see it happening on a large scale..

.

I am the 'young'. I bought a house at 24, around 6 years ago, then 'moved up' to a bigger house in 2007. Today, assuming a loss of 20% equity and negative equity of about 6K. If prices do hit -70% then I'm screwed, along with about 1/2 mortgage holders.

Though, it could reach a 'critical mass' or 'perfect storm' where interest rates go up, forcing up repossessions, in turn pushing down house prices further, pushing more people in to negative equity, thus creating a negative feedback loop.

Then again, if 70% was reached, then it would be total carnage on a scale never seen since the 1600ds. I'm pretty sure I'd leave the UK along with my mortgage in that case.

IMHO, since LENDERS and the GOVERNMENT caused this mess, they should be responsible for paying for it. Some 'young' people borrowed responsibly and it really vexes me when you see headlines about how this has been caused by youngsters living beyond their means, who usually have 5 credit cards and 2 over drafts and 3 personal loans.

People who try to blame 'irresponsible' youth for this mess are living in denial, this is hitting everybody and could end up being total carnage for about 1/2 mortgage holders in the UK.

Harry_Powell

I was listening to a discussion on TalkSport with Mike Parry today where they stated that 7 out of 10 tenants thought that they would never be able to buy a house because even though prices were falling, they were still out of reach and mortgages were impossible to get hold of. A really depressing statistic. I just couldnt understand how it works though. If only 30% of first time buyers can afford to buy, then how will their high price levels be sustained? Surely in the absence of cheap credit, house prices will continue to fall until they reach an affordable level? Isn't it inevitable, or am I missing something?

torontoboy45

Harry_Powell wrote: »

I was listening to a discussion on TalkSport with Mike Parry today where they stated that 7 out of 10 tenants thought that they would never be able to buy a house because even though prices were falling, they were still out of reach and mortgages were impossible to get hold of. A really depressing statistic. I just couldnt understand how it works though. If only 30% of first time buyers can afford to buy, then how will their high price levels be sustained? Surely in the absence of cheap credit, house prices will continue to fall until they reach an affordable level? Isn't it inevitable, or am I missing something?

you're missing nothing.

we can go around the houses re why HP's will fall/not with graphs-press releases -et al, but the bottom line is so clear that we can do without the 'emperor's clothes' stuff from the bears and the 'heeey. relax mr. ftbe'r' rubbish from the bulls.

HP's are gonna fall further: you know it, I know it. let's concentrate on the %ages and wait for sustainable lending re the banks and their new-found sense of reality.

chucky

thriftybabe wrote: »

We are at 1999 at the moment!

are we - they're still at 2006/2007 where i am