anyone else want a CRASH...?

Generali

Asset prices are set at the margin - small increases or decreases in supply and demand of illiquid assets (like houses) compared to the total stock can lead to large price movements. 8% of the housing stock changing hands in a few years can have a large effect on prices.

BobProperty

GW65 wrote:

It certainly can be.... Here's a (crude) example...

If there are 96 houses for sale, and 92 buyers...it's a buyers' market so prices go down.

If there are 96 houses for sale and 100 buyers...it's a sellers' market so prices go up.

It only takes a small shift to change the nature of the market, so 8% can be classed as a major cause. You'll see the opposite effect on the way down!

That explains the doubling of house prices in the last few years then, 4% more buyers.

Generali wrote:

Asset prices are set at the margin - small increases or decreases in supply and demand of illiquid assets (like houses) compared to the total stock can lead to large price movements. 8% of the housing stock changing hands in a few years can have a large effect on prices.

So that's all the current BTL's on the market "in a few years", then?

I made the comment as some people seem to think that all recent house price inflation has been caused by people buying BTLs.

CB1979_2

BobProperty wrote:

I made the comment as some people seem to think that all recent house price inflation has been caused by people buying BTLs.

what, you mean it's not! lol

Blasphemus, I tell thee

roswell

All house inflation is caused by banks offering more money there for people are able to pay more, i think it was in 2003 I watched 2 men fighting outside an estate agents they were both offering above asking prices for 1 property and oddly each of them was getting more aggressive as the other offered more I think it was about 30 000 over asking price that they started fighting it just didnt make sence but then if the banks have said they can have that much who is going to stop them borrowing ??

Snow_Dog

Reasons I can immediately see for HPI between 1997-2004:-

1. Low Interest rates
2. High unemployment levels/ low unemployment
3. Relatively stable employment (more secure than early 90s)
4. Collapse or fall or certain stock markets
5. The belief in "bricks and mortar"
6. Increasing population.
7. Jumping on the bandwagon (bubble followers)
8. Fictional ONS reports including inflation figures.

Whats still pushing the whole barrel along still is momentum, media, and a few city bonuses. When it runs out of steam, thats when its time to batten down the hatches.

However, global interest rates are rising, unemployment is rising, insolvency is rising along with bad debt. When the banks tighten the money supply because they cannot "get" it cheap from very low rate economies that is when the bite will come. For now there have only been a few warning shots across the bows from the Asians. I'm not doom mongering, these are basic facts.

As for who wants a crash, if there is anybody stupid enough out there who really believes that a crash is what we need then you've either never lived through one or the rose tinted glasses and bad memory really are working well.

As for the STR's and the like, well its all well and good sitting on your stash thinking, "hey I will pick me up a bargain at the bottom of the crash", but lets face it HPC have been inaccurately predicting the crash is round the next quarter for the last 3 to 4 years so how in hell are they going to pinpoint the bottom within any accurate timeframe? (not that I have anything against STR as was considering heading down that route earlier this year).

jyonda

That 8% isn't spread out nice and evenly across all housing types and areas though is it? The majority of BTL's will be lower end properties in urban areas which could have a significant impact across the whole market if a lot went on the market at a similar time because interest rates had made BTL unprofitable. Of course, those high interst rates will also make mortgages unaffordable for most FTB's so prices will have to drop more, then no-one will want to buy in a falling market so will 'wait and see' whilst confidence and prices freefall.

Or prices could carry on doubling and doubling whilst interest rates, bad debt and unemployment all rise. House prices never go down. Everyone knows that.

PoorDave

Ad wrote:

There should be a CRASH to bring some sanity back to the UK housing market. Some will get burnt but if they borrowed more than they can afford then thats their own fault.

The Btl brigade deserve the most punishment being a major cause of the rampant speculation going on.

E-V-I-D-E-N-C-E spells evidence. Do you have any to back your last statement up?

meanmachine_2

Snow_Dog wrote:

Reasons I can immediately see for HPI between 1997-2004:-

1. Low Interest rates
2. High unemployment levels/ low unemployment
3. Relatively stable employment (more secure than early 90s)
4. Collapse or fall or certain stock markets
5. The belief in "bricks and mortar"
6. Increasing population.
7. Jumping on the bandwagon (bubble followers)
8. Fictional ONS reports including inflation figures.

You forgot reason zero: 0. A crash between 1989 and 1996
You can't have a boom without a starting point of undervaluation.

Funny how people forget that when talking of house prices rising forever.

Nah. They rose because property became the equivalent of leprosy and the only way was up. The rest was band wagon jumping.

manhattan

house prices are, in my opinion overvalued by between 30 and 40%. the market needs to come down to a sensible level, before everything grinds to a halt and people get burned.
a quick question for home owners here,do you "honestly" think todays house prices are reasonble?

roswell

I as a home owner say there not reasonable, as a tenant i say they need to drop even though that will down value my property i dont care as i need to purchase another property and not sell my existing property.