House Price (Non) Crash 1

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Gorgeous_George wrote:

Where will they live now. BTL market to boom! Caravan sales take off.

:rotfl:

The 'Buy to let' investment doesn't even add up anymore. It WILL end at some point as affordability is now just a joke. This has only happened due to speculation.

Jon211

To further the point about lower interest rates - when we have low interest rates this generally means low inflation.

Thus it takes a longer period for debt to reduce in value.
At 10% inflation a debt will be worth half its original value in under 7.5 years.
At 2.5% inflation it takes over 28 years for a debt to reduce in value by half.

Thus people who, in times of high inflation, were mortgaged to the hilt quickly found the debt eroded by inflation - thus giving them more more to pump into the economy.

In low inflation periods this no longer happens as quickly and people are hampered by their mortgages for longer.

Who knows if this will this lead to an economic slowdown in a few years?

ManAtHome

People haven't adjusted to the "low inflation" (sort of) world. While everyone's looking at property prices and interest rates, the slow turning of the rack seems to have gone un-noticed.

On average, wages aren't going up by a great deal, but a lot of "essentials" costs are clicking up by the odd £5 or £10 a month. It's a bi like ageing - you see yourself each day so don't really notice, then it hits you rather suddenly. Forget about "if IRs hit 9%", think more about that essential inflation running around 6% pa and after-tax pay rises at less than 2%.

It's unlikely to be The Big Shock, more likely to be the final straw...

talksalot81

In the case of stagnation, what happens in areas where the market is driven almost purely by speculative (and panic) purchasing? If the market stagnates, it must equally crash because all of a sudden speculation would stop and hence no driver at the bottom of the market...

Woby_Tide

talksalot81 wrote:

You may joke, but I think in so doing you show a level of ignorance.

Many of those who would laught at HPC.co.uk are finding themselves with enormous mortgages with the very real threat of rising repayments due to interest rate rises and the threat of market slowing because of affordability issues.

While HPC has to date been wrong and many still do not own their own property, it is full of reasoned arguements which are strictly correct. The arguements to the contrary are almost entirely unable to give fundamental explanation of how the market continues to be strong and how it can be sustained (read affordability).

You may be serious, but I think you show a level of ignorance.

Many of those who laugh at the suggestion that hpc may not be correct yet are finding themselves with no mortgage but prices somewhat higher than when they thought they would crash 3 years ago, coupled with enormous egos and equally enormous chips on their shoulders they're now left with saving face issues.

While mse to date has been wrong and many people still do own property without having mortgage issues, it is full of reasoned arguments which are strictly correct. The arguments to the contrary are almost entirely unable to give fundamental explanation of how the market continues to be strong and how it continues to be maintained.

But as stated in "House Price Crash 36" (or was it 37?) predicting that house prices will rise or fall is about as mystic as Mystic Megs lottery predictions, everyones going to be right one day. It might just take a while

talksalot81

Woby_Tide wrote:

While mse to date has been wrong and many people still do own property without having mortgage issues, it is full of reasoned arguments which are strictly correct. The arguments to the contrary are almost entirely unable to give fundamental explanation of how the market continues to be strong and how it continues to be maintained.

But as stated in "House Price Crash 36" (or was it 37?) predicting that house prices will rise or fall is about as mystic as Mystic Megs lottery predictions, everyones going to be right one day. It might just take a while

Ok then smarty pants - you are going to answer the fundamental question WITHOUT the use of anecdote/opinion. Affordability. We are paying 6x odds incomes and this is rapidly increasing. This means that after repayments, people have less and less left. What happens when they have zero left over?

mystic_trev

Your're both right to a certain extent, and I'm sure House prices will correct sometime, but when? Who knows. At the begining of last year I predicted a "spring bounce" with prices tailing off towards the end of the year, going into reverse for 2007. This clearly isn't happening, even though Halifax give a drop of 1% for December. Sentimnt is what's driving the market and sentiment is very positive.

Woby_Tide

talksalot81 wrote:

Ok then smarty pants - you are going to answer the fundamental question WITHOUT the use of anecdote/opinion. Affordability. We are paying 6x odds incomes and this is rapidly increasing. This means that after repayments, people have less and less left. What happens when they have zero left over?

prices will fall, then they will rise again, then they will fall, then they wil rise again, then they will fall, then they will rise again

I'm not quite sure you're grasping the concept in between all the blustering and bile, but one day, prices will fall, then a while later, they will rise again, some time further in the future, they will fall...It's almost like it is a cycle

lisyloo

amn, I didn't realise that site was populated by economists, I thought they were general members of the public having a chat on a forum just like this one

Hi Alan M,

Sorry to take so long to get back to you.
The housepricecrash website contains forecasts from proper economists, reports and graphs and such like.
Some of the headlines are probably biased towards bearish news but I think all the main reports are there (natiowide, halifax, land registry, ODPM etc.).

There are of course public forums.
I don't go on there a lot but I believe it is largely populated by people that would like a crash so it cannot be described as unbiased discussion.

However YES - there are economists forecasts and reports on house price data and graphs etc.

Personally I prefer the fool website.
I think the standard of debate is higher, but it's still largely populated by bears.

sarah_elton

lisyloo wrote:

However YES - there are economists forecasts and reports on house price data and graphs etc.

Going back to my original post, the full PDF of the FT report lists all comments received by individual economists on the subject of the housing market. There's a lot of interesting views in there, particularly the debate between those looking at traditional metrics, and those citing structural, demographic and sociological changes.

The comment that planners bemoan single people buying and living in 2 bedroom flats made me smile since that's exactly what I did.