50% rise in house prices needed before crash

MickKnipfler

And once sentiment changes.......

nelly_2

THE_PROPHET wrote:

No, no, no Miss Naughty Kitten

HE is much more important than that.

Let me make things clearer to you by revealing the first of the Five Final Prophecies. I apologise that this should have been revealed to users of this forum yesterday but I ran out of time whilst attempting to preach to those heathens at the Singing Pig and Channel 4 Homes forums.

I hope that my Master does not beat me too badly for this break from protocol.

He will, however, appreciate the concept of jamming two in at the same time.

The First of the Final Five Prophecies is therefore as follows:

On the Day of Fools,
In the House of Fools
You will be Electrified!


The Second will follow swiftly.

Me thinks the prophet should stay off the glue

distilled

And people will still wake up one morning and decide to get married and say " Ey up pet we need somewhere to live!"

AndrewSmith

Precisely Distilled.

Way back in the late 80's did 14-17% interest put buyers off? no.
Did the following property crash put buyers off? for a short while but not really.

I think the media and public in general in some ways actually make these things happen for themselves by constantly 'predicting' it.

Try this. Stand on a busy street corner and look up. After a couple of minutes see how many other people are doing the same?

It is impossible to predict what will happen. Whether prices rise or fall there is little that the individual can do to change it except accept the situation for what it is.

Also there are so many of these reports and polls and predictions that if we believed them all we would all be facing a property boom and financial ruin whilst eating chickens laced with avian flu and drinking radioactive mineral water whilst our hair falls out due to global warming.

Andy

distilled

Nice one matey! I'll have a pint of whatever you're having

TypeR

THE_PROPHET wrote:

Oh no, Mrs. Welly.
It is not glue that I am smelling. It is the smell of HIS success.

The 2nd of the Five Final prophecies is thus:

On the Day of Fools,
In the House of Fools,
You will smell what HE is cooking.

Oh god, the head Jaberonee himself.

There is only one person I know who talks about himself in the 3rd person, and it's this clueless chump.

F_T_Buyer

meanmachine wrote:

OK, so I've looked at the whole affordability argument as a reason why the market hasn't crashed. I have to say, it's a pretty strong one.

Now if int rates stay at 4.5%, then houses would have to go up from around 160K to around 240K to hit the same unaffordability as in 1989. That's 50%.

If prices continue to rise @ 10% a year, we'll hit that point in 2010.

Of course, it's unlikely that buyers will voluntarily push prices up that far. In 1989, IRs spiked and homeowners had no choice in the matter.

Also, if IRs go up to, say, 5.5%, that will bring forward this tipping point by about 6-12 months.

Of course, this assumes all other things being equal (low unemployment), and doesn't factor in wage inflation, which will help affordability a little.

So there you go - if HPI is between 0-5% a year, that is sustainable beyond 2010. If it goes above that, then you're going to hit crisis point by 2010.

But of course, anything can happen, which is why predictions aren't worth a damn..

The problem with this is it is too short sighted to say the economic fundamentals will not change. If employment (or should I say unemployment), interest rates, wage inflation, living cost inflation and loose credit stays the same, I would happily agree the market would not crash.

But, unemployment has been rising. Companies are not making as much money and are having to cut back. Living costs are rising, which leads to less money to service a mortgage. Banks are (albeit slowly) tighening credit with higher stealth charges. Also net disposible income is less as a percentage compared to the past 5 years as we have more stealth tax (e.g. duty)...

Ultimately, what you are saying is the housing market is not a bubble. Which, many economists even some politicians (Gordon Brown said the housing market was a bubble) disagree with. (If you want to discuss if the housing market is a bubble or not, start another thread).

I think the market will crash/fall because of the economic fundermentals, and how these will be adverse for the house market. Although I expect this to happen in 2007/2008 more so than this year.

People need to stop jumping up when the monthly house price figures are released. They should open their eyes and looks what's happening in the economy to predict what's going to happen. To say it hasn't crashed yet, so it will never crash is very thoughtless - and shows that we are near the top of the bubble.

Remember, if something is unsustainable, it won't be sustained.

Doozergirl

F_T_Buyer, if you've read enough of meanmachine's posts historically, you'll be very clear on his stance. I cannot think of anyone else that has used the word 'bubble' to describe the propert market as much as meanmachine. It's not for me to describe his position, but it's quite sad to have watched someone so vehement in their stance become so disillusioned. If I could find him a decent property at a decent price I would, for all the painstaking research and debate that he's brought to the forum.

He'll be along to defend himself, quite articulately, no doubt.

He never talks to me, even though I'm his secret fan

F_T_Buyer

Doozergirl wrote:

F_T_Buyer, if you've read enough of meanmachine's posts historically, you'll be very clear on his stance. I cannot think of anyone else that has used the word 'bubble' to describe the propert market as much as meanmachine. It's not for me to describe his position, but it's quite sad to have watched someone so vehement in their stance become so disillusioned. If I could find him a decent property at a decent price I would, for all the painstaking research and debate that he's brought to the forum.

He'll be along to defend himself, quite articulately, no doubt.

He never talks to me, even though I'm his secret fan

Fair enough. I'm new on these forums!

Doozergirl

It wasn't a criticism of you; I hope you didn't take it that way