House Price Crash 4

lynzpower

plus the fact that as weve previously discussed at length, a great number of the immigrant population ( by no means all, Im not overgeneralising :rolleyes:) of your Australian, saffas, kiwis plus the accesion country people, seldom stay that long. Many come here, fill thier boots financially and disappear off home where house prices are lower and quality of life higher.

I know a LOT of aussies/saffas/kiwis through my work, must have been freindly with at least 100 over the last few years, the only one I know who bought anything was my mate who rented a tiny room here in london and bought a house in brisbane for her return.

I dont know ANY that have bought an studwalled newbuild, despite every one of them being a) key worker b) sponsored visa, c) earning in excess of 35k Pa

meanmachine_2

Also the immigrant argument has been used for the past 40 years - during which time there has been two big crashes.

There was a BBC Four doc the other week which painted a very grim picture of late 70s Britain - protests in the streets about keeping "Britain for the British".

These same arguments were no doubt cropping up in the late 80s too to justify silly prices. They're as wrong headed now as they were then.

meanmachine_2

Anyway, the argument isn't that "house prices shouldn't be rising at all". They do rise over time, due to population, salary and lack of land.

That's a given. But as the Miles report pointed out, that only accountsfor around 50-60% of the recent increase. The rest is speculation, greed and fear.

And once those elements drop out (as the affordability ceiling is reached), then the market tanks.

Isn't that blindingly obvious?

WHat happened in 2005 is that the banks raised the ceiling level by switching to a bogus "affordability" calculation.

That'll keep the speculation going for a few more years, but it's really just delayed the inevitable.

cwcw

meanmachine wrote:

Anyway, the argument isn't that "house prices shouldn't be rising at all". They do rise over time, due to population, salary and lack of land.

That's a given. But as the Miles report pointed out, that only accountsfor around 50-60% of the recent increase. The rest is speculation, greed and fear.

And once those elements drop out (as the affordability ceiling is reached), then the market tanks.

Isn't that blindingly obvious?

WHat happened in 2005 is that the banks raised the ceiling level by switching to a bogus "affordability" calculation.

That'll keep the speculation going for a few more years, but it's really just delayed the inevitable.

"A few more years" of increases of around 8% per annum would mean a peak of 24% higher than now when we reach 2009/10. Realistically, do you really think a crash is going to be more than 24%? If you don't think it is then it would surely be wiser to buy now.

meanmachine_2

cwcw wrote:

"A few more years" of increases of around 8% per annum would mean a peak of 24% higher than now when we reach 2009/10. Realistically, do you really think a crash is going to be more than 24%? If you don't think it is then it would surely be wiser to buy now.

You need a new calculator.

A rise of 24% isn't the same as a fall of 24%.

If that's the level of thinking we're at, I give up.

tomstickland

It's close enough at this level of approximation though.

Previously, the typical one-person householder was the widow, often on a tight budget and thrifty. The rise in younger, wealthier one-person households is having an increasingly serious impact on the environment. But we have identified possible opportunities which arise out of the group’s expansion and diversification.

“For example, the rise in one-person households is expected to account for 72% of annual household growth between 2003 and 2026 according to government statistics*. This means that, as part of the planned housing programme for England and Wales, there is a real opportunity to house this group in ecological new builds that are prestigious, well-designed, state-of-the-art and environmentally sound.

That's me that is. Single, early 30s, decent income. Apparently 30 something single men with disposable income are the biggest environmental menace due to their consumption per person levels. Not quite me though; I'm frugal.
There are 9 1 bed flats in the space that might have been used by 3 small houses, so we're more efficient than 9 small houses.

cwcw

meanmachine wrote:

You need a new calculator.

A rise of 24% isn't the same as a fall of 24%.

If that's the level of thinking we're at, I give up.

Ok, the figures weren't an exact calculation they were off the top of my head, although I must say I don't like your tone at all.

£100k property now, at 8% annual increase, is worth almost £126k in 3 years time (and you seem to have conceded the status quo for "the next fear years").

It would then take a crash of over 20% in 2009/10 to bring the value of the property below the £100k it is worth now. I will ask again, albeit with a slightly lower figure, do you think that the future crash is realistically going to be greater than 20%? And if not, why are you not buying now?

Hereward

cwcw wrote:

Ok, the figures weren't an exact calculation they were off the top of my head, although I must say I don't like your tone at all.

£100k property now, at 8% annual increase, is worth almost £126k in 3 years time (and you seem to have conceded the status quo for "the next fear years").

It would then take a crash of over 20% in 2009/10 to bring the value of the property below the £100k it is worth now. I will ask again, albeit with a slightly lower figure, do you think that the future crash is realistically going to be greater than 20%? And if not, why are you not buying now?

I believe that most people here wanting/predicting a price crash expect the price drop to be aroung the 50% mark to reduce the prices back down to the 1998ish levels. (please note I have just made the fifures up, as I don't have time to work out the exact figures.)

meanmachine_2

It was a low blow, I concede that.

The figures look a bit more spectacular when you go from a 50% rise to a 50% fall.

Anyway, my personal circumstances are that it's cheaper for me to be out, unless HPI goes above c10% a year.

If it does, it just makes a bust more likely imo. But that's me having my cake and eating it.

My opinion is that prices today are some 20% above where they should be for me to find them "fair value". If they continue to go up - as they are doing - that makes a property even less attractive. It doesn't make me think "oh now I must buy". That's crazy.

As they say on Dragon's Den - I'm out.

nomadicwesti

mean machine
Scotland yes in teh highlands is sparcely populated, but again with the lack of house building and explosion of second /holiday homes there is a lack of housing. An island like Mull ...small population ...has a homeless number of 200 (this figure includes sleeping on friend's couches). check the Scot Exec for the figures ...Quite shocking and it has been caused by lack of new builds to a great extent, apparently caused because the feudal ownership of the land in Scotland has led to the estate owners preventing building ...more money in rich hunters apparently and teh first thing that community buy outs usuallymdo is to start builsing housing for locals when they get ownerships...See the isle of Eigg for an example.

In the central belt urban conurbation almost half of Scotland's population lives there. The two great cities of Edinburgh and Glasgow have been booming economically since the 1990s and there is a shortage of accomodation ...Glasgow for instance has had the highest level of private investment in it since the victorian era and unemployment is historically low. It trully is boom times and as one who remembers the true cost of Thatcherism to Scotland this is a very welcome situation

Prices are, granted, more affordable than England , the average house price in Glasgow is £135K opposed to a Scottish average of £128K, Edinburgh however has an average of £245K (it;s the seciond largest financial centre in Europe)

The talk of crashes is very South East centric. I lived in London during teh last bubble/burst. People having mortgages 8 times there salary is crazy and yes I agree will lead to bubbles. Scotland never saw a rise in prices for 10 years during teh 1980s ...we made that up in 5 years in teh 1990s and now prices are historically high. However for your average couple earninga verage salary ...affordability is still under 4 times salary (In the 1990s it was 2- 2.5 times salary). That combined with historically high employment ...a halt in the falling population (also see latest figures from the Scot exec) and a new business confidence...Scottish growth now exceeds the UK average ...for the first time in many years, things look far from doom and gloom as it may do to those of you trying to buy in SE England....

The bubble you speak of may occur in SE England, in Scotland prices may stop rising which is not a bad thing but a crash of 30% or more ...very unlikley in the short to medium term.