talk of end of year property crash in London...

movieman

Many will even take the opportunity to 'buy on the dips'.

Where will they get the money? Particularly if their 'property empire' is a million pounds in negative equity already?

The early 90's recession was extremely unusual in that falling asset values and rising unemployment were accompanied by high interest rates.

From what I remember, rates dropped through most of the recession.

Look at Japan... rates went down to zero, and prices kept on dropping for over a decade. If people stop buying houses, then prices keep dropping until they change their mind. No amount of interest rate cuts will convince people to buy if they don't want to buy.

As someone once said - don't wait to buy property, buy property and wait.

People who bought overpriced flats in the last bubble often had to wait a decade or more before they could clear the negative equity and move on... if they weren't repossessed. 'Buy at any cost' is a fast track to financial slavery.

Oh, and some people who bought land in America in the 1920s before the Great Depression are still waiting to see the price return to the level they bought at, if they're still alive. And that's in dollar terms, not taking into account the 90%-ish drop in the value of the dollar in that time.

Norroy

There are a large number of individuals and institutions out there, with major cash reserves.Many of them would welcome the opportunity to buy residential units in a 'post-crash' market.

As for BTL products disappearing. Well if values dropped there is no reason to believe that rents would drop by a similar amount (some would argue they may even go up). Investment units would then become more affordable with rents now easily covering the mortgage and of course deposits being lower in absolute terms.

As for the re-writing of UK economic history above- Black Wednesday was in Sept 1992 when interest rates went from 10% to 12% to 15% all in one day.
1992 was the lowest and darkest point of the worst recession to hit London and the south east since 1945.

Not sure how land values in 1920's USA are relevant to property prices in one of the richest cities in the world.Planning policies and simple lack of space will always help to support the London real estate market.

movieman

There are a large number of individuals and institutions out there, with major cash reserves.

Why would they want to buy a declining asset in a bear market? Generally you don't get 'major cash reserves' by throwing money away.

Well if values dropped there is no reason to believe that rents would drop by a similar amount (some would argue they may even go up).

Rents dropped in the last crash. There's a vast oversupply of rental property in most areas, and many people would probably be looking for lodgers to help pay the mortgage while others would move back in with their parents, as they did in the last crash... meanwhile, redundancies would leave people with less money to waste on rent.

Rising supply and less money to spend means rents go down.

1992 was the lowest and darkest point of the worst recession to hit London and the south east since 1945.

And prices kept dropping until the mid to late 90s, while interest rates dropped as well. What's your point?

Not sure how land values in 1920's USA are relevant to property prices in one of the richest cities in the world.

It's a strong counterpoint to 'property prices always increase'. Eighty years later, people there are still waiting to see that magical increase.

As for London being 'one of the richest cities in the world', see how long that lasts without easy credit. Britain's real economy has been devastated with manufacturing at record low levels, and London's economy is largely based on the City moving money from one account to another and skimming a percentage off the top. Why do you think that London won't be hit very hard in a global recession?

Remember, Tokyo was 'one of the richest cities in the world' when their housing bubble burst: people were talking about how it would soon be cheaper to bury dead bodies on the Moon than in a cemetary in Tokyo because land prices were so high.

Now where are they?

But hey, don't worry. 'It's different this time', 'it can't happen here', and 'house prices always go up'.

Sisyphus

Norroy wrote: »

There are a large number of individuals and institutions out there, with major cash reserves.Many of them would welcome the opportunity to buy residential units in a 'post-crash' market.

A bit like the $900m Barclays is trying to recover from the US motgage market or the millions HSBC is writing off there too.

'post-crash' means just that. It doesn't mean they'll try and get in the way.
If anything the canny funds will try and help it on it's way.

At any rate the big banks won't need to buy them, they'll be massively long anyway from all the repossessions, they'll be trying to get shot of them while hoping that the tiny yield spread they've made lending money to sub-prime borrowers will cover the loss.

Dead_Eye_Jones

lazygoose wrote: »

Yep... apparently it's a load of Polish workers earning £5 per hour buying them?:rotfl:

Nah, many Polish workers are educated and get well paid jobs. Probably more so than most Brits! Anyone read the article in Time this week?

I liked the guy who had a growing business in Poland, but no customers, there just wasnt anyone to buy his services. So he packed up, moved to the UK, bought up two Brit companies and doubled the size in 3 years (iirc). I bet he has a nice house now!

Will there be a crash soon in London? I dont see why. Sure prices cant go up at this rate for ever, but there is no reason why they should crash. Plenty of people in London are doing very well. Plenty of people are coming to London and working very hard, population is set to expand by 100,000s every year. I also think that people wont sell the house they think is worth 500k for 300k, unless they have to. They'll just sit on it.

Stagnation and slow down seems the obvious choice to me. But pesonally, it doesnt really matter, Ive always been more interested in securing my position and have no interest on gambling on it one way or the other.

GL.

dannyboycey

Dead_Eye_Jones wrote: »

Plenty of people in London are doing very well.

Yeah, and many in the city are on million pound plus bonuses and buying property like it's going out of fashion! These people help to distort the overall growth figures for the UK - so when you're told property rose by 2% last month, in reality it may have been 0.5%

Norroy

movieman wrote: »

Why would they want to buy a declining asset in a bear market? Generally you don't get 'major cash reserves' by throwing money away.



Rents dropped in the last crash. There's a vast oversupply of rental property in most areas, and many people would probably be looking for lodgers to help pay the mortgage while others would move back in with their parents, as they did in the last crash... meanwhile, redundancies would leave people with less money to waste on rent.

Rising supply and less money to spend means rents go down.



And prices kept dropping until the mid to late 90s, while interest rates dropped as well. What's your point?



It's a strong counterpoint to 'property prices always increase'. Eighty years later, people there are still waiting to see that magical increase.

As for London being 'one of the richest cities in the world', see how long that lasts without easy credit. Britain's real economy has been devastated with manufacturing at record low levels, and London's economy is largely based on the City moving money from one account to another and skimming a percentage off the top. Why do you think that London won't be hit very hard in a global recession?

Remember, Tokyo was 'one of the richest cities in the world' when their housing bubble burst: people were talking about how it would soon be cheaper to bury dead bodies on the Moon than in a cemetary in Tokyo because land prices were so high.

Now where are they?

But hey, don't worry. 'It's different this time', 'it can't happen here', and 'house prices always go up'.

Movieman, not everyone who is repossessed in your hypothetical crash scenario will have the option to move in with their families.

This thread is about the London market. In the capital many people are many miles from their home town. These people will be forced into the rental sector and so putting upward pressure on rents.

The London market was not faling in the mid to late 90s. By 1995 things were very much on the up,especially in the best parts of town.

The key question I would ask you and the other doomsters is, do you still own a house ? If yes, may I presume that it is currently on the market ? If not, why not ? Surely as a logical man you would want to protect your wealth from the impending crash, and benifit from the much lower prices to come.

Deals_2

when was this broadcast?

nelly wrote: »

8 buyers to every house <

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okie dokie

Theres a reason why only the truely stupid belive anything an estate agent says.

Intresting viewing

Deals_2

buying in the cheaper areas.

lazygoose wrote: »

Yep... apparently it's a load of Polish workers earning £5 per hour buying them?:rotfl:

DampProof

Whos' Fred Harrison ?

Are you kidding?

You know!! lives next door to Shirley