Housing Faces prolonged bear market.

HAMISH_MCTAVISH

I actually find this topic quite refreshing.

To see so many bears being excited about the prospect of "real" prices being "flat" for a few years, whilst actual prices rise.

Fascinating. Whatever happened to the crash?

Of course, saying "real" prices may be flat masks what must be a pretty uncomfortable reality for them.

Actual house prices will be rising, AND so will the costs of everything else. Noting that the ratio between more expensive houses, and more expensive consumer goods, has decreased, makes not the slightest bit of difference unless wages also rise.

And given our economic situation, the thing least likely to rise enough to improve the ratio significantly, over the medium term, is wages.

Like I said, absolutely fascinating, that a bunch of crashaholics can find such comfort in the concept.;)

Emy1501

HAMISH_MCTAVISH wrote: »

I actually find this topic quite refreshing.

To see so many bears being excited about the prospect of "real" prices being "flat" for a few years, whilst actual prices rise.

Fascinating. Whatever happened to the crash?

Of course, saying "real" prices may be flat masks what must be a pretty uncomfortable reality for them.

Actual house prices will be rising, AND so will the costs of everything else. Noting that the ratio between more expensive houses, and more expensive consumer goods, has decreased, makes not the slightest bit of difference unless wages also rise.

And given our economic situation, the thing least likely to rise enough to improve the ratio significantly, over the medium term, is wages.

Like I said, absolutely fascinating, that a bunch of crashaholics can find such comfort in the concept.;)

Nightmare senario for those using property as an investment tool or pension. If the article is right then banks will offer a better return for cash in a few years once IR get back to normal. Especially when you take into account wage inflation likely to be low for years to come.

Once investors start realise this. money could be moved out of property and then a crash.

CLAPTON

Emy1501 wrote: »

Nightmare senario for those using property as an investment tool or pension. If the article is right then banks will offer a better return for cash in a few years once IR get back to normal. Especially when you take into account wage inflation likely to be low for years to come.

Once investors start realise this money could poor out of property and then crash.

why will IR get back to normal?
why will wage inflation be low for years?

StevieJ

Emy1501 wrote: »

Nightmare senario for those using property as an investment tool or pension. If the article is right then banks will offer a better return for cash in a few years once IR get back to normal. Especially when you take into account wage inflation likely to be low for years to come.

Once investors start realise this. money could be moved out of property and then a crash.

Hope springs eternal.

Emy1501

StevieJ wrote: »

Hope springs eternal.

Do you think investors will still get into property with no real term gain? Also where is all this real term growth going to come from?

carolt

Ohhhh, I wanted to be the first to post this story.

Such a pretty headline.

Great news for buyers - don't worry about getting into the market before 'the boat sails' and all the other nauseous cliches - the boat has returned to dock and is rapidly sinking.


Loving it.

Generali

Emy1501 wrote: »

Do you think investors will still get into property with no real term gain? Also where is all this real term growth going to come from?

It's not that simple from an investment viewpoint. Let's take a scenario where RPI = 3%, mortgage rates = 5%, rents are 3% of house prices (after voids and repairs) and nominal house prices are increasing at 2%pa.

You buy a house with a downpayment of 10% for £100,000 so you put down £10,000 and borrow £90,000 on an interest only basis (to make the sums easier I confess).

At the end of the year where are you?

You have paid £4,500 in interest and received £3,000 in rent and your house is now worth £102,000 so you have made a nominal £500, eg a return of 5% (500/10,000 x 100) or a real return of £200 in what looks like a nightmare scenario for an investor.

Now ok, I haven't included selling costs here so it's an unrealised profit but a paper gain is still a gain. If you hold for 20 years, the net present value of the selling costs is negligible anyway.

marklv

I don't believe there will be a house price collapse or any such nonsense. House prices will still rise, but less steeply than before. Personally, I think that's a good thing.

StevieJ

carolt wrote: »

Ohhhh, I wanted to be the first to post this story.

Such a pretty headline.

.

Some joker doing his Nostradamus impression doesn't make it so

Percy1983

For me locally I do think houses have dropped back to afforable levels and I may be in a position to buy early next year.

So as much as I would prefer a further drop, things staying level is fine by me.

Still hope there is more falls to come, but that is purely to get my potential mortgage payments lower.