'We've reached a tipping point' Signs of house price weakness

Rota

gbsilp wrote: »

35% in real terms. This can be achieved by wage inflation outstripping house price inflation (which was Grant Shapps' stated aim when he was housing minister) or an outright drop.

They would have (and should have) dropped more had the gov not stepped in, bailed out banks, devised schemes and the boe dropped rates. The latter was probably the biggest saviour in two ways.

Firstly people's monthly repayments dropped, allowing more people to stay in their homes. Secondly, dropping rates hammered the pound, which made property appear cheaper to foreign purchasers.

I think the recent rise in the pound has crimped foreign demand for London properties, and I also think the recent clampdown in china regarding currency controls (Chinese nationals are only supposed to be allowed to take USD50k it of the country per year) is also taking its toll on London and the environs.

I think the national indices are heavily skewed by the south east, so if London goes, the rest of the country will likely follow as confidence will evaporate.

Nice reply, I hope you are right on wage inflation! Although I fear that just leads to inflation on everything or massive immigration to slow wages down.

Blooloo

ukcarper wrote: »

You will have to put down at least 20% on each property if prices fall you not the banks will take the hit.

I believe that is the essence of what I said.

ukcarper

Blooloo wrote: »

I believe that is the essence of what I said.

This is what you said



"Unscrupulous BTL dont give a monkeys cuss of course...its all borrowed money after all"

wotsthat

gbsilp wrote: »

35% in real terms. This can be achieved by wage inflation outstripping house price inflation (which was Grant Shapps' stated aim when he was housing minister) or an outright drop.

I can understand you say you'd buy if prices fell by 35% overnight. However why would you buy just because everyone else got a pay rise too?

It seems highly unlikely, although not impossible, but if you read your post again you've listed reasons why prices should have been al this level in 2008. Then you've listed reasons why they aren't i.e you were WRONG and are still wrong 6 years later.

Why have you got it right this time? What if you've missed something again?

My bet would be anyone into HPC for a couple of years or more wouldn't breakeven with 35% falls. Dances with Sheeple will never breakeven whatever the crash.

Do you know how much you've invested in project crash yourself so far or is the principle of buying at fair value more important?

wotsthat

Thrugelmir wrote: »

People have become infatuated with property treating if it's the holy grail of investing. Like everything in life, with hindsight it can all be rationalised into cause and effect. Over leveraging with debt is still a national pastime . Hence the what appears to be the heavy handedness of the FCA , PRA and BOE. A very gradual tightening of the thumbscrew on both lenders and borrowers alike.

If you'd followed this thread you'd see that sensible borrowing allows many to achieve home ownership more quickly and at lower cost than waiting for the thumbscrew to turn and paying rent in the meantime.

wotsthat

Philuk wrote: »

If an household can only pay £1000 and decide to go for interest only they can borrow 480k on 2.5% tracker. If the rate goes up to 4.5%, the household is enable to pay the monthly charges and have to sell. Other than that, if you are equity reach, no probleme

It's been pointed out that this isn't a real world scenario. Making stuff up and trying to imply it's mainstream can't really be used as evidence of a tipping point being reached.

So again, decisions to buy are being based on other people's (non existent in this case) circumstances.

lukeh23

wotsthat wrote: »

Why didn't you buy after the last 20% drop?

Because I did not have any money then (unless you're talking about London).

Also for the record, I am not here to predict a crash. I am just someone saving hard to get a place for my young family. So if property in my area dropped by 20% it would improve my chances a great deal.

I would like nothing more then to get out of renting an own a place.

I just feel its a pretty dire situation to see my hard earned savings get 1% in an ISA whereas a house see's 10%.

lukeh23

Rota wrote: »

So London has gone up around 20% (give or take) in the last year. Why didn't you buy 12 months ago?

Because I don't want to live in London.

Hold on, we have been through this before...

Is your username 'Rota' as you keep going round in circles?

ukcarper

lukeh23 wrote: »

Because I did not have any money then (unless you're talking about London).

Also for the record, I am not here to predict a crash. I am just someone saving hard to get a place for my young family. So if property in my area dropped by 20% it would improve my chances a great deal.

I would like nothing more then to get out of renting an own a place.

I just feel its a pretty dire situation to see my hard earned savings get 1% in an ISA whereas a house see's 10%.

I would be happy if prices hadn't increased like they have and although I'm not sure I would welcome a big crash I would be quite happy with stagnation and a small fall. If you can't afford to buy then that is unfortunate and I can understand why you want price falls what I don't understand is people who can afford to buy but gamble on a crash and their attempts to show that they are better off.

gbsilp

Rota wrote: »

Nice reply, I hope you are right on wage inflation! Although I fear that just leads to inflation on everything or massive immigration to slow wages down.

Of course, I am referring to real wage inflation.....