Wake up Bears its feeding time

the_ash_and_the_oak

GDB2222 wrote: »

Good point, nicely encapsulated - ie is 5% going to be the norm for the medium term?

On point 3, you need to bear in mind that the conservatives let rates get up to nearly 15% in the early 90's so as to get inflation under control. That was pretty hard-line, though.

True but as rates hadnt spent much time below 10% in the preceding 8 or so years a rise to 15% wasn't as huge as it sounds (a rise of around 50-60% on ave from prior lows - a 7.5% base rate would have a similar effect on rates that were around 5% for much of the time in the preceding years imo)

nembot

All the last six months of enforced rises, governmental help, incredibly low interest rates have done, is pushed the country even further into the realm of unsustainability in terms of the housing market.

You have to be mad to think otherwise....

I was there at the last crash - so very nearly bought, after listening to exactly the same reasoning that we hear everyday from the bulls on here, but back then it was just the estate agent and the media.

How lucky was I, when a few years later I bought exactly the same house for 30% less.

That's why I take the "supply and demand" and the other classic "buy now before its too late" with a pinch of salt, it's the same old rubbish, just different people.

Quite happy to stand by my opinion, whether I'm right or wrong - we'll see the result in 12/24 months won't we?

chucky

nembot wrote: »

All the last six months of enforced rises, governmental help, incredibly low interest rates have done, is pushed the country even further into the realm of unsustainability in terms of the housing market.

You have to be mad to think otherwise....

I was there at the last crash - so very nearly bought, after listening to exactly the same reasoning that we hear everyday from the bulls on here, but back then it was just the estate agent and the media.

How lucky was I, when a few years later I bought exactly the same house for 30% less.

That's why I take the "supply and demand" and the other classic "buy now before its too late" with a pinch of salt, it's the same rubbish, different people.

Quite happy to stand by my opinion, whether I'm right or wrong - we'll see the result in 12/24 months won't we?

ooohh the HPC bot has arrived...

nembot

chucky wrote: »

ooohh the HPC bot has arrived...

Denial...

lemonjelly

Have only skim read the thread, so apologies if I start repeating what has already been discussed.

I'm kinda with Graham here. I don't put myself in the bull or bear category, as I don't feel I fit in either. I'm more interested in looking at what is going on, where it might go, etc etc.

I thought (years ago) that prices were going to slow/fall much sooner than they did. My assumption for this is mainly due to percieving that the economic boom we were experiencing was based on credit, little else. I felt it to be unsustainable. It lasted longer than I thought.

I anticipated a correction, rather than a crash. I think in some ways it has been percieved to be worse than it really is, because HPI has lead to much higher prices (& therefore a small percentage fall equates to thousands+ off the value), plus many have not experienced a significant economic downturn.

I don't feel we've really had an accurate correction, where homes are now closer to their "real" value. (Please, don't tell me the market sets the value). I anticipated that there would be continual falls, not neccessarily a crash, but stagnation/falls.

I am really purplexed by the rising prices. I can only surmise it is due to the severly restricted amount of property on the market, & prices being maintained by "forced purchases" (ie where a person has to buy, due to seperation/being kicked out/job etc).

What is keeping the bouyancy escapes me at the moment. Realistically I expect there has to be a further correction. When that will occur, I don't know...

the_ash_and_the_oak

Don't really take any issue with any of that but...."forced purchases" - ok so you put it in quotes too but...I can't see that! (sentiment is high enough anyway that people want bad enough anyway that I don't think there's a pool of people that would have waited but are somehow forced into buying thru circumstance!)

lemonjelly

Perhaps forced is too strong a word? I dunno. I'm talking about people who have to buy. Usually in a downturn we talk of those who have to sell. Why has there been none of that this time?

I know I'm not the only one with this view.

No-one appears able to explain why prices are being propped up IMO

the_ash_and_the_oak

lemonjelly wrote: »

Perhaps forced is too strong a word? I dunno. I'm talking about people who have to buy. Usually in a downturn we talk of those who have to sell. Why has there been none of that this time?

I know I'm not the only one with this view.

No-one appears able to explain why prices are being propped up IMO

Because people on trackers are paying v little interest...SVRs are fairly low...rates in general for existing owners are low comparative to when taken out...banks aren't reposessing. Any problems the housing market may encounter in the shortish term don't look to be coming from the problems of sellers

Its pretty clear what a forced sellers is - someone with no choice but to sell or have it done for them via reposession - its just that there aren't many in that situation

But what on earth is a forced buyer? People may have to move (sellers as much as buyers as much as renters) - but nobody HAS to buy?

julieq

Multiples are an interesting question.

In the 1980s you could buy a house at 2.5 joint salary when mortgagerates were pushing 10%

We're now at a position where the likely rate "norm" is somewhere around 5%, so by that measure, a more reasonable lending level would be 5x joint salary. In fact salary to loan multiples are somewhere around 3.5x, perfectly reasonably, and dragged up probably by the London and South East.

The big difference between this and previous contractions is also that there is now a well developed route towards letting houses. Anyone "stuck" in a house now has the option of offering their own house on a short term let, and renting another where they need to be. So there's less pressure on forced sales due to relocation.

And we've had the falls hpc predicted anyway. We had a big contraction here, and on top of that we devalued our currency. That's why there's an influx of foreign cash, prices here look 40-50% down.

the_ash_and_the_oak

its an interesting point. if rates over the next 10-15 years are going to average 5% instead of the 10% they averaged for a good decade in the 1980s then it does double the amount that could be borrowed or doubles the multiple w no real problem. (if we think they are going to average 5% or so or the next decade)

the only question i would have about this would be - this takes interest out of the equation (10% on 2.5x wage vs 5% on 5x wage) but still leaves the question of the capital imo. To me this leaves us back at the question of puchase price vs salary

Agree about being able to let it out though (esp in places like London!)