House Price Crash 5

talksalot81

I dont honestly think you will see 'set in stone' signs of a crash. You need to read between the lines. The finances are pretty much either 'yes, you can have the mortgage' or 'no you cant'. In general the whole market is consistent and is saying yes. The switch to the answer being no could be very sudden and the only way to predict it (NOT see a sign of it) is to guess what the cause will be...

The potential causes have been well documented here and elsewhere so I will not repeat them. What I think should be noted is that these causes DO have signs.

So in summary, if you want firm signs of a crash before it happens, I think you are optomistic. To be ahead of the times you need to see matters through a secondary level.

lisyloo

I agree.
Do you think we are seeing preliminary signs of a crash yet?

Personally I don't, but I think the stage is set e.g. rising interest rates.

Through the last few years there have always been individual anecdotes of prices dropping and they actually HAVE been dropping in some areas.
The housing market is not really a national market.
But in general it has been rising.

I agree with you that to be ahead of the game you will have to "read between the lines" but that doesn't mean that every anecdote or poor piece of journalism means that a crash is coming (I've heard people saying this for 5 years).
Equally just because people have been wrong for 5 years doesn't mean it's not round the corner.

talksalot81

I most certainly dont think we have seen signs that a crash is going to happen tomorrow. However, I am very strongly of the opinion that, as you put it, the stage is set. I dont think it would take much to induce a crash of sorts and it will be interesting to see what happens when we have the traditional spring time 'boom' in property for sale.

You are also spot on about the market being very localised. Some areas on the mainland have basically settled down and are sitting sensibly. But then some areas of NI are seeing growths of 65% pa. To be honest, I think that the more rapid the growth, the greater the risk of a crash. If the market in an area is pretty stable, I think it will take a significant change to induce a crash.

Snow_Dog

Reality check there, thought I was on housepricecrash2003/4/5/6/7 for a second..........

Then noticed it was a rational discussion and realised it was MSE after all. Phew.

Give it about seven or eight years and I will be able to let you know when the crash started, till then its wood and trees.

raino144

I suppose whether the conditions which have given us the current situation are true or false! I see the logic in 'limited land' etc but why is it now (and not say 10 yrs ago) the prices have rocketed?

Probably it's down to the (historically) low interest rates and also the abscence of any real shocks to the system which have allowed the current situation to develop?

As a potential FTB (24, attached, saving deposit) |I'm hoping the bubble goes 'pop' sooner rather than later! The current things I see which can make this happen are as follows:

- RPI now pushing 4% (OK this isnt the 'favoured' measure but is used in many wage negotiations)
- Unemployment creeping up
- US data showing housing numbers/values stagnating at best
- Average house price to average earnings at historical highs (nearly 7x - this is higher than in 1992?)
- Short-termism in borrowers (I work for a firm of CAs and only 1 in 12 staff pays into a pension?)
- Increase in interest only mortgages
- More BTL landlords now being forced to sell (low yields/voids - only c. 50% apartments in some developments in Manchester currently let)

I can't see why the terraced house I was looking at was worth £60k in 2001 and £130k now... something definitely feels wrong!

I apologise if the above appears one-sided but it comes down to wishful thinking! ;-)

albacore1854

All for it.

What may set it off is offshoring.What are all the 50K+ IT guru's going to do when they lose their jobs to an Indian firm charging out at a fraction of the rate.If they own BTL, or country cottages, and they go on the market in any quanitities it could tip the balance.

I went through the last crash, and it wasn't much fun losing a fortune, but long term we need an adjustment.

lisyloo

However, I am very strongly of the opinion that, as you put it, the stage is set.

You will have to excuse me if I don't get too excited until there is firmer evidence.
I have been hearing similar things for 4 years.

At one time the trigger was meant to be the Iraq war, then hurricane Katrina, then Iran, then bird flu, oil prices etc.
At the moment inflation and interest rates look the main concern, but as I said I won't get too excited as it could be like SARS and bird flu and just never materialise into anything.

What are all the 50K+ IT guru's going to do when they lose their jobs to an Indian firm charging out at a fraction of the rate

Well not all of them will lose their jobs.
I work as an IT person and we need people who speak good English to travel within the UK and to European sites to communicate with customers.
Despite what you may have heard the English skills of our Indian colleagues aren't up to it.
My job is to translate between customers and Indians and back again.
There will always be people needed over here even if the "handle turning" stuff goes abroad.

I would have thought that a lot of offshoring has already taken place.
Do you think that there are still a large number of firms yet to do this?
Surely they all did it years ago?

albacore1854

Hasn't even started yet.

They've started slowly getting little bits of the action, gaining the relationships at higher levels.

The handle turning is just the beginning, its when they start charging to answer why the handle needs to turn that the fun will start

roswell

""I would have thought that a lot of offshoring has already taken place.
Do you think that there are still a large number of firms yet to do this?
Surely they all did it years ago?""

Wrong, Many IT firms have outsourced there helpdesk yes, but what you havent seen is that outsourcing of NT admin / DNS / Server monitoring / 3rd and 4th level support models etc to sub saharan Africa ... you heard it here first watch out next year.

As for the house price crash I Think the wise words of my driving instructor many years ago can sum up the current situation "Always expect the unexpected." I hope it doesnt happen just as much as i hope it does happen but either way a little preperation for either wouldnt be a bad thing. In all honesty its going to be a down turn in the economy that will cause any price correction and at that point it wont matter how cheap houses become unless you have cash. Becaue the banks dont lend to people with out incomes.

ManAtHome

You don't need many shops to support internet sales, you don't need many IT people to support a single sales channel and/or a package solution - and it doesn't really matter where they are...