House Price Crash 3

Woby_Tide

so in summary, prices will go up, prices will go down, house prices will boom, house prices will crash, it'll all happen at some point between 1970 and 2137, we're all doomed, renting is dead money, renting is great, pity the BTL, laugh at the BTL, my house in Lerwick is worth 3x what it was last year the market is booming, my house in lands End is worth half what it was last year the market has crashed. Look at the US, look at the Japanese. Look at the tea leaves. Debate over. Thread locked.

dougk_2

W_T , you forgot flipping the coin!

meanmachine_2

dougk wrote:

and the one the year before and the one the year before that!

And why compare us to the US? We are not the same and don't have the vast acres of untouched land with little concern for the environment and lack of planning laws and and they don't have an open door immigration policy!

You go onto a US forum and the arguments are IDENTICAL.

If you don't think the US has a massive immigration issue, thanks to the Mexicans, you need to read up more.

But yes, the US market is a lot more dynamic. If the demand for housing goes up, they build more, if it goes down, they build less.

Except they've been gripped by speculation like everywhere else and are starting to pay the price.

Rick62

House price rises have been fuelled by a combination of increasing population, increased lending multiples from lenders, the new BTL finance market and the strong economy (partly due to increasing levels of equity drawdown).

Lenders are now reaching the limits on sustainable multiples and often now tightening lending criterior, BTL funding is now fully developed, with BTL mortgages going to 90% value and the brakes have got to be on the economy, with the levels of personal debt, fiscal tightening on credit cards, and high levels of public expenditure.

Prices are now looking like an investment bubble, although there is support from immigration and the piles of money being created in the city.

Two year swap rates are now over 5.4%, meaning the market expects rates to peak at over 5.5% next year. Also there is still a large number of overpriced flats being built for the BTL market in non prime locations. If the price of these start to ease, from a combination of oversupply, rental voids and yields not meeting loan payments that could be the trigger for a change of sentiment and a collapse in the property bubble.

PoorDave

Woby_Tide wrote:

the House Price crash thread is a bit like a school reunion, it comes around every year, the same old faces appear, some disappear, some new ones arrive, then we all wonder why we bothered as it wasn't very good, just like last years thread

Last week, more like. Same threads, different OPs question (can anyone remember what it was???) same tedious argument that we all get drawn into!

Just different titles to the threads to draw you in!

PoorDave

F_T_Buyer wrote:

The problem is quite the reverse has happened. The BoE has allowed commercial banks to hold less and less in reserves. This means they can lend out higher and higher multiples based on what deposits they had.

Recently, China has took actioned to slow the credit market (how sensible), they made commercial banks increase reserves from 16% to 16.5% (meaning they need more deposits to lend more). In the UK, the average reserve is 3.3%, a stupidly low amount.

This is why interest rates on deposit account have been so pitiful over the years. One step in the tightening cycle is offering higher interest rates to savers, which we are slowly seeing now with regular savers; although in this case I suspect it's more to do with attracting and keeping new customers.

This is why lots of critics say the goverment and BoE could have done alot to stop a credit bubble forming. But, who's gonna stand in the way of the banks massive profits when it's the banks that are funding the political parties... don't bite the hand that feeds you, comes to mind!

Exactly! Agreed

Gorgeous_George

Would a host of repossessions increase the demand for rented accommodation? Houses empty and waiting to be sold to BTL investors at knock-down prices.

Maybe a crash would benefit BTLers.



GG

mystic_trev

Gorgeous_George wrote:

Would a host of repossessions increase the demand for rented accommodation? Houses empty and waiting to be sold to BTL investors at knock-down prices.

Maybe a crash would benefit BTLers.



GG

The problem most recent BTL's will have (as being so highly geared) is no (or negative) equity - so unable to buy. A few of the professional investors might snap some up, but not many.

Gorgeous_George

My BTL cost me £15,500 in 2001. Rent so far has recovered more than this initial outlay. In a few months time, all costs associated with making the home habitable will have been recovered through the rent.

If the house price crashed by 100%, I'd break even.



GG

mr.broderick

If the house prices crash by 100% I hereby offer you £15500 for your btl.