House Price Crash 3

Pobby

Seems to me that the whole issue of house prices is just following any market trend.Boom and bust.The amout of repo`s is on the rise.Personal bankruptcies are soaring.If there is a rise next month the situation will worsen.People are taking huge risks with properties and some are becoming very unstuck.I feel that a market correction will happen.A number of circumstances could trigger it.

F_T_Buyer

I have a few american friends who I often talk to, and their attitude was very much the same as here. It won't happen, It can't, It's different...

Now sentiment there is very very different, but the falls are mainly in the large city locations, whereas in the UK everywhere is overvalued. You could say the US is like 52 different property markets.

I don't think the US housing market is experiencing the worst, when the dollar falls due to it's high deficits (a few years - maybe), then all that hope on the next move in IRs going down will be lost. That's when the US HPC will happen.

realwildone

well the tide is certainly changing

This article on the bbc today with many economists saying IR will hit 6% next year. That will put the cat amongst the pigeons. Combine that with HIPS next year.

UK interest rates 'to hit 5.25%' http://news.bbc.co.uk/1/hi/business/6090754.stm

Some economic forecasters believe rates could rise as high as 6% in the medium term if world oil prices remain at their current levels.

lypsey

Sumostar , it looks like you maybe the only poster today who thinks prices are going to keep rising

You say that something in supply and demand will have to change. I have attached the following graph that shows beween 90 - 96 there were falls

http://www.in2perspective.com/nr/stats/uk-annual-house-price-inflation-halifax-.jsp
Now I know you will say hang on a minute interest rates were different maybe 2.5 times higher. Think about this , would you rather have
1) A 300 k mortgage/house with 5% interest rates
or
2) A 100k mortgage/house with 15% interest rates

Example 1 is a simplistic picture of today
Example 2 is what that same house was say in 1996
Now obviously if you had a mortgage with examples 1 and 2 you would be paying EXACTLY the same . Having said that I would prefer example 2 because surley interest rates could only come down

Now please explain to me why house prices went down between 1990-96 and you say nothing is different now

BobProperty

Anyone else notice all the good news in the sidebar on the original post?

LATEST ECONOMIC NEWS
US prices ease on cheaper fuel
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US jobs figures reveal slowdown
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meanmachine_2

6% would be crippling for many of my recently-bought mates, all of whom are on 2 year variable deals.

But still very low by historical standards.

We'll see. I think oil has to spike, though, for that to happen.

lush_walrus

Sorry to say but this is the same thread that I have seen over and over since I joined. As with all statistics you can present them in whichever way you want the bias to fall.

Lypsey, are you waiting to be a FTBer by chance?

Unfortunately, out there in the EAs (at least in London, Essex, Herts and Berks) all I can see still is a shortage of property and a rise in prices, same as has been for the past 5 plus years.

With regards to the increase in repossessions, again not in my areas. It is a totally different playing field out there till was present in the 80s, interest rates are manageable (even with a rise of 0.25%, which is the predicted and expected rise to be announced in Nov), the market is still there and in a situation of demand outstriping supply, and the real fly in the ointment for a downturn is that the banks have found a nice little way around affordabilily through introducing bigger loans for longer terms.

Sorry, but as with all of the years of speculation there is still no sign of a downturn.

WesternExpress

lypsey wrote:

Sumostar , it looks like you maybe the only poster today who thinks prices are going to keep rising

You say that something in supply and demand will have to change. I have attached the following graph that shows beween 90 - 96 there were falls

http://www.in2perspective.com/nr/stats/uk-annual-house-price-inflation-halifax-.jsp
Now I know you will say hang on a minute interest rates were different maybe 2.5 times higher. Think about this , would you rather have
1) A 300 k mortgage/house with 5% interest rates
or
2) A 100k mortgage/house with 15% interest rates

Example 1 is a simplistic picture of today
Example 2 is what that same house was say in 1996
Now obviously if you had a mortgage with examples 1 and 2 you would be paying EXACTLY the same . Having said that I would prefer example 2 because surley interest rates could only come down

Now please explain to me why house prices went down between 1990-96 and you say nothing is different now

And in example 2 wages were rising, in exmple 1 they aren't really.

Chrysalis

mrsS wrote:

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?

I remember vaguiely the ones who stayed put were all over the news losing their homes when they got stuck in negative equity.

mrsS_2

but negative equity only crystalizes when you sell the house.

As long as you can afford the mortgage repayments the fact that the house now may be worth less than you paid for it only affects you if you sell. If you stay put for 3 years and it goes back to what it cost how does this make you lose your home?

being unable to afford the repayments on your mortgage (and being repossessed) is a result of rising interest rates-not falling house prices.