House Price Crash 4

lypsey

I have noticed in the last couple of weeks that there seem to be some much more bearish reports in the press . This one from the Times makes interesting reading

http://www.timesonline.co.uk/article/0,,1052-2473231,00.html

I notice the front page of the FT and London Evening Standard had front pages with House price crash headlines last Friday.
This is on top of Morgan Stanley and Pricewaterhousecooper who are probably 2 of the most respect companies in the country. I also was reading a huge two page spread in the Sunday Telegraph by a leading BTL specialist and he was saying how good BTL was at the moment and hidden deep in the text was a small reference saying "it was very possible that your asset could lose money next year"

Its happening.......

sheraz2

lypsey wrote:

I have noticed in the last couple of weeks that there seem to be some much more bearish reports in the press . This one from the Times makes interesting reading

http://www.timesonline.co.uk/article/0,,1052-2473231,00.html

I notice the front page of the FT and London Evening Standard had front pages with House price crash headlines last Friday.
This is on top of Morgan Stanley and Pricewaterhousecooper who are probably 2 of the most respect companies in the country. I also was reading a huge two page spread in the Sunday Telegraph by a leading BTL specialist and he was saying how good BTL was at the moment and hidden deep in the text was a small reference saying "it was very possible that your asset could lose money next year"

Its happening.......

it's also very possible, that your asset could keep making money and keep screwing poor sods out of money to pay the mortgage off.

Depends on what you want to hear really!

Alan_M_2

I believe there will be a crash the writing is on the wall, but alot of these articles take sound bites from all over the place and take them out of context.

1/ BTL is a prime example, BTL is a business, if you bought at the right time (ie. two years ago or longer), you're still making money, will probably have made enough equity to ride out a drop and can carry on with paper losses only but an asset that long term will appreciate.

If you bought within the last two years or are infact buying now and the crash occurs, It's unlikely you'll make any capital gain in value and highly likely you'll lose money, the ability to service the debt long term is the governing factor on whether you can hold onto the property and realise the long term increase in value of your asset.

2/ If you own a house that you bought over two years ago FTB or not, then any crash is really irrelevant as long as you have the continued ability to service the debt, it might be a nuisance, it might put you in a small amount of negative equity, it might effect your credit rating in doing so, which means you can't move. But the capital gain you've made on paper will likely cover most of these events However if you're happy and the house is just a home it's a matter of time until this is redressed and the whole cycle starts again.

3/ If you bought within the last two years or are considering buying now as an FTB you could be on thin ice and as with the BTL scenario, your ability to service the debt will govern if you can hold onto to your asset long term. It's very likely that any capital gain you've made on paper will be wiped out and some.

4/Editted, due to poor research and information being duff:)

5/ It is inevitable that a correction in prices will occur, it is after all an economic cycle, predicting it is the trick, and how is effects you depends on what your current circumstances are. I see a lot of bitterness on this forum from those that have and those that don't which is really all uneccessary and quite irrelevant actually. Unless you are a serious property investor (multi millions - multiple properties, no requirement for a day job etc) Then it's likely your house is your home and any swings in value are largely irrelvant but pleasant if they work in your favour. For the serious investor, its a calculated risk much like trading the markets, and most of the serious investors I know have dumped as much property as they can already.

The people that are most likely to get their fingers burnt are the amatuers, people overstretching themsleves to buy a second or third property and strapped up to the eyeballs in debt with very little equity. Buy at the wrong time and this equates to playing roulette, you'll either win big, or go completely broke.

For the FTB wondering if you'll ever get on the ladder? Stop worrying about something that is totally beyond your control, it's highly likely you will be able to buy as and when a correction occurs and so what if you can't? Plenty of people go through life never owning a property at all.

You'd be surprised how many affluent people simply don't bother with property and how many million pound plus houses are actually rented and not owned.

aderbyshirelad

Congratulations Alan M.

At last, a reasonably balanced, informed and sensible conclusion to this pretty pointless "debate" - and it only took two posts to get there. I'm over the moon. Can that be the end of it now - PLEASE??

Hereward

A very reasoned argument Alan M, but I believe you are incorrect on point 4:

Alan_M wrote:

4/ PriceWaterhouseCoopers were Auditors for Enron, and delcared everything hunkey dorey only a few months before the poo hit the fan and took the fan out the 80th storey window along with all the stock......I kind of lost respect of PWC at that point.

I believe that Arthur Anderson were Enron's Auditors and their involvement in that fiasco was the final nail in their coffin.

Alan_M_2

Ahh indeed you're correct, In which case I apologise wholeheartedly to PWC.

Doozergirl

lypsey wrote:

Its happening.......

And where exactly in all the information you've provided does it say that?

There's always plenty of commentary and specualtion on house prices. It goesn't mean 'it's happening' right now.

I'm not saying it won't, but there's no evidence here.

...Nothing to look at here ladies and gentlemen, move on......

PoorDave

Doozergirl wrote:

And where exactly in all the information you've provided does it say that?

There's always plenty of commentary and specualtion on house prices. It goesn't mean 'it's happening' right now.

I'm not saying it won't, but there's no evidence here.

...Nothing to look at here ladies and gentlemen, move on......

Agreed. No actual facts supporting the argument, just 2nd hand references to sound bites really.

"Someone from outside HPC website in admitting there might be a crash shocker!"

lypsey

Sentiments makes every market and if the sheeple keep seeing these kind of headlines then the FTB (the few there is now) and the BTL'ers who are driving this markets will stop buying . The BTL'ers may also start to sell. I live in North Kent in a town a approx 50,000 people and I can tell you without a shadow of a doubt there are far far far too many places to let. What do you think will happen when they see figures of house prices down 1% every month. This WILL happen . As I explained before my house went up 100% in under 3 years . No market can sustain that . Our wages probably only rose 2-3% every year . Where is all the money coming from .... I have STR and I think this will be one of my best financial "investments"

A colleague in the office who I tried to persuade not to buy 9 months ago already has missed his 1st mortgage repayment and is in the s££t . He is only 23 years old and I can promise you will be a casulty of this crash. At some stage he will default and he will be 1 of many many thousands.

This is a bubble market and we all know what happens to bubbles.......

lypsey

You say you want facts here is one

http://www.in2perspective.com/nr/2006/11/landlords-buying-cheap-theory-wishful-thinking-.jsp;jsessionid=808541B4BC77C195B3399EB436EE6BAC

It states "25% of landlords have refinanced over the last year to create ‘war chests’ " . It looks like fear to me???

aderbyshirelad

lypsey wrote:

This is a bubble market and we all know what happens to bubbles.......

Yes, they appear to inhabit your head!

As an STR you clearly hope for a crash. But unlike Alan M in his first post, you fail to cite any actual facts or show any balance.

As an STR I genuinely wish you all the best and hope it works out for you. One point with STRs that has always puzzled me though - what about those who at least two years ago thought that house prices back then couldn't possibly continue to rise. However, they are still waiting for the crash. They will of course see form of correction or slowdown, but, since the market has risen considerably since they left it, they'll need a fairly impressive crash to get prices back to where they were.

Hope you sold up yesterday...