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House Price Crash 3

lypsey
Posts: 201 Forumite
This is my 3rd post with this title . I was wondering wether the Americans were listening to Martin on the BBC a few weeks ago
But don't worry this can't happen here
http://news.bbc.co.uk/1/hi/business/6088630.stm
Before someone says interest rates have had a big effect in the US , well I would say they haven't had 150% increase in house prices in 5 years which is what we have had in the UK . So yes it can happen here
FTB'ers and BTL'ers beware ... it is just a matter of time . Our interest rates will definetley be up in November (it is a done deal) . The pressure in the UK is too great for prices to not to fall.
But don't worry this can't happen here
http://news.bbc.co.uk/1/hi/business/6088630.stm
Before someone says interest rates have had a big effect in the US , well I would say they haven't had 150% increase in house prices in 5 years which is what we have had in the UK . So yes it can happen here
FTB'ers and BTL'ers beware ... it is just a matter of time . Our interest rates will definetley be up in November (it is a done deal) . The pressure in the UK is too great for prices to not to fall.
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Comments
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Sorry Lypsey but I still can't see it happening. Yes, there has been a large increase in prices and that is not sustainable, but unless something upsets the balance between supply and demand then nothing will change. People will still want a place of their own, and the lack of suitable housing will keep the price up.
Demand for housing is not going to subside to any great extent. Yes, a number of potential buyers will be unable to afford to buy and this number may increase, but to cause a reversal in prices would need a large increase in people not buying houses.
The other factor that could affect the market is the supply of new houses - particularly Social Housing - and that is simply noy going to happen.
I think we will see a slowdown in house prices as more & more people find they are unable to buy (can't raise the deposit, can't make the payments) but thai will in turn put pressure on rented accommodation, and as too many Council houses were sold off without being replaced (thank Margaret Thatcher for that) the buy to let market will still remain buoyant.
But I could be wrong.0 -
Whilst I agree with your sentiments Lypsey, while we are in the minority house prices will rise.
I've been saying they can't rise any more for two years now and obviously been wrong every time. I knew my Economics degree was worthless!0 -
IR's are going up next month to 5% and even the VI's agree they might go up a lot further - It'll be "interesting" (sorry for the pun) to see what happens when they "kick in"
"Drew Wotherspoon, of mortgage brokers John Charcol, said: 'Lenders have already factored in a base rate rise in a couple of weeks, but there has been a general consensus that 5% may not be the peak.
'A lot of people have suggested that may go to 5.25% and may reach that point or higher before they go down again."
http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=414075&in_page_id=58&ct=50 -
I dont think we should bother with the concepts of if...
Mearly with when and how much. If property goes much higher it will have no value as no-one can afford it. You cant sell something no-one can buy.
This should send the shivers up anyone with an investment. The value of irrelevent if you cant sell, property would need to drop in value to actually have value! Strange but true.0 -
Sadly, the market is a lot freer and open in the States.
Also, though, the ave house price is HALF ours. How scary is that - being saddled with the highest prices in the world at a time when other countries are starting to undercut our labour force?
Something's gotta give.0 -
I blame it all on our permissive society. If people did not have sex then there would be no babies to grow up into house buyers. It's either that or Boy George's fault.0
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sumostar the supply increases when interest rate increases, adds to repossessions and people selling up when they realise they cant afford to keep their mortgage.0
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Reading their article.
Prices fell almost 10% in a year but its not a crash as sales have increased.
So...
What is the definition of a crash?0 -
Chrysalis wrote:sumostar the supply increases when interest rate increases, adds to repossessions and people selling up when they realise they cant afford to keep their mortgage.
And people will be able to afford less, hence demand decreases.
Increase in supply and decrease in demand leads to price cuts.0 -
but the increase in supply is not just generated by reposessions-the crash in the mid 80s was as bad as it was because people who could afford where they were, panicked and tried to sell to cut their (on paper) losses.
Those people who stayed put and sat it out were back to where they had been in a few years.
Are we assuming that this lesson has not been learnt?0
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