how many REALLY think there'll be a crash rather than a stabilisation ?

rebeccaj

well said, Dithering Dad :T

HokeyCokey_3

To be honest, I think the interest rate rises have come too soon. I don't believe this will make much of a difference on the housing market as a whole, as many people have prepared themselves for this possibility.

I think what will really cause a crash, is if the house prices went up even higher! If you own a home and are thinking of selling up, add an extra £50k to the price ...no doubt some sucker will buy it at the moment. You just have to watch a certain location programme on the tv to realise there are plenty of gullible FTBs who are looking for (quote)''a starter home on a budget of just £250K'. Or a dump, in the case of the couple last night!

I think the market is more likely to stabilize the way things currently are. Anyone who reads 'housepricecrash' will notice that the experts predict further rises for the forseable future.

mystic_trev

HokeyCokey wrote: »

To be honest, I think the interest rate rises have come too soon.

Interest rates are set by the BoE to control inflation, I can't understand your comments?

HokeyCokey_3

mystic_trev wrote: »

Interest rates are set by the BoE to control inflation, I can't understand your comments?

Yes I know that. I was referring to the original question. I don't think a rise in interest rates alone, would be enough to create a house price crash at the moment. It is more likely to stabilize. In my opinion, house prices are still affordable for many FTBs and people moving up the ladder.

Gorgeous_George

Falling prices will lead to less homes on the market. Homeowners will not wish to sell at a loss (real or perceived). Builders will not be so keen on building so are more likely to hold onto land rather than build on it at smaller margins.

Unlike the 90's, we have tens of thousands of people who haven't been able to afford a mortgage, or who chose not to, for quite a few years. There are more wannabe homeowners than ever before - all waiting for a price crash/correction. But with less houses available they are destined to live with mum and dad for some time yet.

Maybe, just maybe, if they want any prospect of owning a home of their own in the next 10 years, buying now isn't such a daft idea. Especially if they can get a house they want to keep for 10 years and secure a historically low fixed rate (for 10 years).



GG

poppy10_2

Gorgeous_George wrote: »

Falling prices will lead to less homes on the market. Homeowners will not wish to sell at a loss (real or perceived). Builders will not be so keen on building so are more likely to hold onto land rather than build on it at smaller margins.

This is not how it works. You just need to look at the 1980s crash or the current US situation to see that.

What happens is:
1)Falling prices lead to more homes on the market

2)Homeowners see prices falling all around them and rush to put their own home on the market before prices drop even further (a herd effect similar to current "Oh, we need to get on the property ladder before prices climb even higher")

3)Builders desperately try to offload their land inventory buy building on it and selling the homes at a discount. Land banks don't generate any cashflow for them, and they can't afford to just sit on vast reserves of land (which are slowly losing their value) without any income to pay their staff and their bills. The only way they can keep their shareholders from revolting is by getting rid of the depreciating asset (land) by building on it and selling cheaply to generate some income. This further depresses house prices.

4) Goto 1)

wecanhelpu

And don't forget the forced sales, pop

poppy10_2

OK, a couple more:

4) BTL-ers see rising interest rates take their mortgage payments well over the rental income they are receiving. It makes no sense to hold onto an asset that is losing you money each month if there are no capital gains being made, so they dump their property. There are huge numbers of BTL properties in the UK currently compared to the 1980s, so this will have a big effect

5) Rising interest rates combined with the ongoing credit crunch also mean that the chickens come home to roost for those who have been living merrily off borrowed money. A sharp increase in the number of repossessions ensues. Banks tend not to hold on to property for months and months waiting for the right buyer to come along - they price to sell, dumping the repossessed properties at below market value, depressing prices further for everyone else.

6) Potential buyers look at all the above and wonder why they should buy now when they can get a bigger/better house for cheaper a few months down the line as prices continue to tumble. Therefore they keep their money in their pockets and continue renting (safe in the knowledge that renting is far cheaper than equivalent mortgage payments at current house prices). Thus demand plummets, supply soars...

7) Go to 1)

kingkano

I dont agree with all your points poppy. I think BTL there will obviously be quite a few stuck in deals, quite a few more happy to see out any short term property fluctuations (afterall they have had a couple of years of 'the market's gonna crash' to prepare themselves for it). There will also be a good percentage as you say that will panic. I'm not sure if enough to really have a big effect - but it could be the clincher in any turn in the market.

But I think you can't have 4 and 6. They are mutually exclusive. All the BTL LLs sell their properties, if all the rental properties are being repo'ed and sold, where are these tenants going to rent?? In this case there will be a shortage of available rental property (the opposite of now) and rental prices will more than likely be squeezed up. This in turn will mean a few more LLs will consider hanging onto their property as the rents approach the mortgage payments again. OR the evicted tenants will then have to buy perhaps stagnating the fall as it is happening. *shrugs*

In your previous post point 2. Most people aren't interested in selling their home?? Sure they are glad its gone up in value and probably see it as a pension later, but where would you live after you sell it? Most people I know wouldnt panic sell. They just hope that come the time they are ready to move on from their HOME they will get a good price for it.

nollag2006

HSBC have already increased their expected house price growth estimate for 2008. Far from a crash coming, house price growth seems to be stabilising in the 5 - 10% range.

As another poster pointed out, what I love about these HPC muppets, who have been peddling their "the sky is falling" message now for 10 years is that even on the very front page of the HPC website all the indicators point to further house price growth, but yet they refuse to acknowledge this ...