Interest rates to rise again

meanmachine_2

A sensible article attempting to apply logic to an irrational market.

It's not so much the actual spending power of half a million Poles, but the reaction and sentiments of the 60 million Brits.

Only an idiot would pay 200K for a terrace if they thought it would be 190K in 12 months time - ergo crash.

But if enough people think it'll cost 210K in 12 months' time, suddenly that stupidly high price doesn't seem so stupid.

It'll take a lot to erase that mindset. In 1989 it was a relatively quick thing. This time it could be a slow grinding down of sentiment and expectations - the worst of both worlds for everyone.

I still think prices will continue to rise until we hit absolutely unaffordability - another 30%-odd rise needed. Then sentiment, alongside an ageing population will do the rest - but it could take years.

roswell

meanmachine wrote:

I still think prices will continue to rise until we hit absolutely unaffordability - another 30%-odd rise needed. Then sentiment, alongside an ageing population will do the rest - but it could take years.

If this is the case why dont you buy now and sell with 30 % profit ?

magyar

meanmachine wrote:

http://www.clpuk.com/swaps.htm

BIG jump in swap rates this month.

Tell me about it, my company has just lost £500,000 in the last few minutes......

talksalot81

roswell wrote:

If this is the case why dont you buy now and sell with 30 % profit ?

Probably because the poster is sufficiently astute to realise that the further it grows, the higher the probability for negative changes. In many respects to buy in with the posters views would be like getting on a train which you know is heading downhill towards a cliff. Sure it might save you a bit of a walk, but can you really be sure you will be able to get off in time?

roswell

Now trains are a different problem, but if your going to choose a fence to stand on you should stick by it, we all know that mean machine is on the crash fence so why doesnt he save himself the ear ache and just say There is going to be a crash .. no time limit .. no expectations.

If i felt there was 30 % left in the market id get a new property tomorrow .. well next week because with 30 % equity at any point of a crash your not risking as much as having a debt of 100%.

talksalot81

roswell wrote:

If i felt there was 30 % left in the market id get a new property tomorrow ..

Would you really?! Would you be THAT confident in your prediction? What if the number was 23%? You would suddenly find yourself trying to sell on a crashing market. I think that any individual who accepts that a crash is coming and who cannot be confident as to when (which basically applies to everyone at this point) would be acting with questionable judgement to try and milk the market. Why not just wait until it crashes and buy at the bottom? That being the case, the property is affordable in its own right, you wouldnt be having to rush to get rid of your property and wouldnt be setup for potential loss if you get it slightly wrong. As far as risk/reward assessment goes, the latter is hard to beat.

roswell

Ok the latter may be hard to beat but how confident would you that you would purchase at the bottom of the market and how likely is the bottom of the market to be any less than prices 5 years ago ?

if you feel that you can make 30 % you would invest other wise the same would go for everything in life, why buy a laptop when it could be cheaper next week / month / year.

I dont feel that there is 30 % left in it and for that reason im not buying. I agree we are in for a fall at some point but im not putting any prediction on it.

meanmachine_2

"Save myself earache"? Who from? I only have myself to answer to. I'm not getting earache from anyone, unless you mean a bunch of estate agents and recent buyers on a website.

If I've learnt anything from watching the UK property market it's that it's extremely irrational.

It's totally inappropriate for investing in. A high risk venture.

I'm merely saying that, if we're going to repeat the mistakes of the past, Britons are going to push prices up to the absolute max, and then they'll start going into reverse.

But who knows?

And who can say what the govt might do to change things. HIPs would have crashed the market in 2007 - but they didn't realise that until very late in the day.

No doubt they'll do something else to bring the party to a sudden end. Tax on BTL?

Anyway, it would be hypocritical of me to buy and then sell, using the market as an investment tool when I have been so hostile on here towards BTLers.

I do actually have ethics.

The property market is a big heaving leviathan. Too big for one person to control. When it rises, it takes the economy up with it. But when it submerges, then look out below.

Hardly the type of beast to hitch a ride on, if you ask me.