The property boom

marie_hc

The property in the late 80's very early 90's. Does any remember the exact years when they peaked and then fell drastically.

I think it was 89 the very highest peak and the bottom fell out !!!

Does anyone remember.

CB1979_2

no i was 10

Generali

According to HBOS the peak was in May 1989.

Fin Year House Price Fall
1989-90.......7.15%
1990-91.......8.51%
1991-92 ......4.56%
1992-93.......3.98%
1993-94.......2.50%
1994-95.......3.13%
1995-96.......1.39%

A cumulative fall after inflation of 31.23%. In nominal terms (that is not allowing for inflation) prices fell by 6.5% between April 1989 and March 1996.

From April 1996-March 2007, house prices (according to HBOS's index) have risen by 179% in nominal terms or 115% allowing for inflation.

dunstonh

It should also be noted that the gains made in the years before that drop were not as high as the gains that have been seen in this bubble. I dont have the exact figures but someone did post a comparison chart a few months back. Hopefully they are reading and can post it again.

vansboy

Historically house prices double every 7 years.

That's according to the lady mathematician, (can't recall her name) who started investing in property during the last years of the market bottoming out.

There was a tv prog, featuring her & hubby, telling just how they built their empire, of rental properties. This was shown at around the same time they began offering bonds & the chance for small investors to join them.

Wonder if that was a free bit of publicity, care of the BBC!!??

VB

asandwhen

vansboy wrote:

Historically house prices double every 7 years.

That's according to the lady mathematician, (can't recall her name) who started investing in property during the last years of the market bottoming out.

There was a tv prog, featuring her & hubby, telling just how they built their empire, of rental properties. This was shown at around the same time they began offering bonds & the chance for small investors to join them.

Wonder if that was a free bit of publicity, care of the BBC!!??

VB

yes I saw this - "How I made my property fortune" she spent £3,000,000 on property in 1 day when interest rates went down to 3.75% - she has all her houses mortgaged on interest only mortgages and rents them out cheap - She is probably resposible for the property price increases in her area (Kent I think)

Generali

vansboy wrote:

Historically house prices double every 7 years.

After inflation (according to my dodgy sums at least) that's not true:

Year............Real increase/%
1983-93...........25.42
1984-94...........20.48
1985-95...........10.12
1986-96............3.60
1987-97...........-2.70
1988-98..........-13.45
1989-99..........-25.61
1990-2000........-9.60
1991-2001.........0.60
1992-2002........25.80
1993-2003........56.96
1994-2004........88.90
1995-2005.......105.52

I may have gone wrong somewhere with my methodology (I'm not a statistician) but I took the av. house price from HBOS, divided it by the RPI so that everything is in '1983 £s' and then measured the rise over each 10 year period. Only in the period 1995-2005 did house prices double.

dunstonh

yes I saw this - "How I made my property fortune" she spent £3,000,000 on property in 1 day when interest rates went down to 3.75% - she has all her houses mortgaged on interest only mortgages and rents them out cheap - She is probably resposible for the property price increases in her area (Kent I think)

What she should really be saying is "How I got myself into large debt and helped the banks own lots of properties".

Gorgeous_George

dunstonh wrote:

What she should really be saying is "How I got myself into large debt and helped the banks own lots of properties".

Maybe so but, if it all goes dramatically wrong, she'll just go bankrupt and the banks will have loads of houses to get rid of and an equal number of tenants needing to buy them at knock-down prices.

So many people today go bankrupt after acquiring huge debts by buying trash like mobile phones, ipods and the like or by living beyond their means. The lady in question will be making a good, honest living - until it all goes wrong. IF it all goes wrong.



GG

RufusFrog_2

From personal experience of riding that particular roller coaster (all in Beds/Bucks):

Property was reasonably priced in 1986 (my half of a 2-bed house cost £21,000) in September that year.
Prices shot up over the next two years; at the end of 1988, I sold my half for £36,000 and bought a whole 2-bed house for £70500 completing in March 1989. I remember the prices starting to fall almost immediately (but my memory could be faulty).

When I came to sell in November 1995 the market was at almost rock bottom. It took me ages and I accepted £47,500 in May 1996.

By then I had an OH and we bought a house for £85,000, moving in in Septmber 1996. Last year we put it on the market and accepted an offer of £260,000 (still waiting to move).

Although I had some sticky moments with my second house (massive negative equity) I never regretted getting into the market. Even friends I know who first bought at the worst time in 1988/9 eventually got out of their debt and back on and up the property ladder.

Now I don't fear another market drop - we are buying a house for £340,000, over half of which is 'virtual' money, profit from our current house that we haven't 'earned' - and I just don't foresee prices ever dropping by half!

Generali

RufusFrog wrote:

and I just don't foresee prices ever dropping by half!

Not sure about this - if prices can double they can halve!