House prices at least 20% too high

napoleon

They've been saying house prices are 20%,50%, 100%, etc + too expensive for years but they keep going up in price.
:eek:

Gorgeous_George

napoleon wrote: »

They've been saying house prices are 20%,50%, 100%, etc + too expensive for years but they keep going up in price.
:eek:

You are right of course. The difference now is that IRs are higher than the the recent (5 - 7 years) average. And it is IRs that drive prices.



GG

napoleon

I hope you're right. A crash would be great. Well at least for me, anyway

dolce_vita

It's the same as it's ever been-

The banks have fuelled HPI (with loose lending and low interest rates) and the banks will cause the crash (with a credit crunch and high interest rates).

They are now ready to do just that.

Gorgeous_George

It is hardly the banks' fault that FTBers are prepared to pay more when IRs are lower. Whilst I accept the argument about higher lending multiples, that is not entirely the banks' fault. If people are prepared to borrow more than they can afford, they must be prepared to accept some of the responsibility.



GG

tomstickland

they must be prepared to accept some of the responsibility.

Don't be silly. They'll claim they were mis sold the massive loans and though it wasn't a problem because everyone did and it was the only way onto the housing step ladder.

Generali

tomstickland wrote: »

Don't be silly. They'll claim they were mis sold the massive loans and though it wasn't a problem because everyone did and it was the only way onto the housing step ladder.

As gruuby a business banking is (and I should know) the banks can't be held for an irrational belief amongst the British that house prices can rise rapidly forever. Even if they put a big notice in the window explaining compound interest, most would ignore it and ask for their 5x income 125% IO mortgage.

epz_2

you would have assumed the banks have an element of self interest in preventing the such massive bubbles and the bad debt which happens after (1) but then there may be better money riding the whole cycle, or possibly just better bonuses.

(1) i can see plenty of btl "businessmen" using the easier bancrupsy laws soon

mystic_trev

http://www.youtube.com/watch?v=YsjVcToDI7o

bet he wishes he'd given the vindaloo a miss!

Jonbvn

mystic_trev wrote: »

http://www.youtube.com/watch?v=YsjVcToDI7o

bet he wishes he'd given the vindaloo a miss!

Sorry but that vid was total !!!!!!!

I do not see why property should not be subject to similar market forces like stocks and shares. However trying to guess either market is a mugs game. Therefore assuming no down side is clearly wrong.

The only thing that I can say is that in the longer term, most shares and property are likely to rise in value, faster than your average savings account, based on previous performance.