A very very very bad day for the housing market

lypsey

CB
I have attached a very old BBC interest rate chart because I couldn't quickly find a current one that goes back past 2004

http://news.bbc.co.uk/1/hi/programmes/newsnight/3693789.stm

Anyway people like you who have nothing to say apart from "your wrong" always say the last housing crash was caused by a doubling of interest rates to 15% back in the 1990's
You will notice from the graph that rates were from late 2001 to Jan 2003 were 4% then they were 3.75 and below to mid 2004. Therefore if interest rates go to 6% the best case senario is an increased mortgage of 50% and worst case senario is a 71% increase in payments. I very much doubt if even a clever person like you has had wage inflation of 70% over the last 3 years
Now do a calculation on what happens if interest rates go to 7%

You also have to remember that according to Halifax etc etc the average house price is 200k , the average wage is 23.5k that means the average mortgage today is over 8.5 times salary. This has NEVER happened before and it cannot be supported long term

One final point and he is far far richer and much cleverer than you and me . Warren Buffet always says " I can never sell at the top or buy at the bottom but if I do so somewhere in between I am very happy". Before you come back with one of your statements that I am a F&&&wit then try and use some of your grey matter and come back with something of relevance

One passing point is take a look at the oil price today and come up with something interesting as to why this won't have a MASSIVE effect on inflation.

CB1979_2

@ phlash - as said I don't need to back it up, cos it's not happened!

yes the signs are there that things are more LIKELY to have an affect on house prices, but as of yet I haven't seen any DEFINATE affect????

for every piece of HPC "news" there is, no doubt I'll be able to go and find something to go against it and vice versa.

but do we really need an update everyday about different articles from different media?

we know it's pretty much a dead cert that IRs will rise in the next couple of months, but will that have an affect on the House Prices? who knows, we can all guess but no one knows

phlash

hearts wrote: »

"The same question goes to you CB, that I just posed to mr.Broderick in another thread. Stop trying to discredit an argument or theory because it hasn't come 'true' yet."

No offence m8 but surely if it hasn't happened......? Is this not proof to discredit it?
Now I'm not saying it will never happen. But its like saying "The end of the World is nigh" I'm damn sure if we wait long enough one day he (or his grandson ;-) ) will be right.
Since the doom mongers have been spreading this "word" prices have probably risen by 30% now asuming we see a fall of 20% (which we won't) then the buyer then is still ok.

I'll answer that this way:

Bush ignores warnings of impending disaster in New Orleans;
http://news.independent.co.uk/world/americas/article310195.ece

Omagh bombing warnings ignored;
http://www.guardian.co.uk/Northern_Ireland/Story/0,2763,614890,00.html

Warnings are often ignored, our history is riddled with examples, and quite often there are devastating consequences.

So for me, just because it hasn't happened yet, does not mean that it is proof of an argument/warning being discredited.

Generali

Interest rates don't need to rise to cause house prices to fall. All that needs to happen is for the biggest fool to buy ((c) JM Keynes).

CB1979_2

@ lypsey - I never mention anything about the past, apart from circumstances are so much different now.

socially it's completely different.
1) more divorces = 2 homes needed where previously 1
2) more immigrants
3) more 2nd properties owned nowadays
4) people living longer

to name just a few

Generali

Interest rates since 1975.

Somewhere I've got a thing of interest rates going back to the C17th. Back then, if interest rates used to change several times in a decade, things were pretty volitile.

sortofok

Yesssss.

I've been waiting for the "it's different this time" line.

CB1979_2

i didn't say it's different this time.

I said it's completely different circumstances!

I'm not saying it won't happen, just saying the details are nowhere near the same, so using past "glories" as reasoning for "well it's happened before, so it MUST happen again"

who says it MUST?

Generali

CB1979 wrote: »

@ lypsey - I never mention anything about the past, apart from circumstances are so much different now.

socially it's completely different.
1) more divorces = 2 homes needed where previously 1
2) more immigrants
3) more 2nd properties owned nowadays
4) people living longer

to name just a few

The person 10% from the top of wage earners in this country earns just shy of £70k pa. The average house in this country costs £200k near as dammit.

If houses increase by 10% pa and wages of the top 10% of earners by 5% pa, by 2033, average houses=10x the wage of the person that sits 10% from the top of the earning scale (earnings=£235k, houses=£2.38 million). By 2107, a house would cost 316 times his income (£8.7 million vs £2.75 milliards)!

This is clearly unsustainable.

CB1979_2

i don't think I ever said it was sustainable???

just didn't say it was happening now.

but most IMPORTANTLY NOBODY knows when!