So, House Prices can't fall uh?

Generali

The thing is, you don't need fraud or a recession or rising base rates to knock house prices from their current lofty perch.

If banks start to become a little more risk averse (as seems to be happening thanks to this credit squeeze) they will become a little more choosey about their lending.

Maybe they insist on 125% mortgage cover by rents on BTL again. Perhaps make sure that borrowers have a decent deposit and no or few other non-student loan debts. Or go back to only lending 3 or 3.5x income: then HPI comes to a dead stop.

IF HPI stops, MEW largely stops so there goes 6% of consumer spending. There's the start of a recession as 4% off GDP* = growth of about -1%. Negative growth for 2 consecutve quarters is a recession.






*6% off consumer spending is about 4% of GDP I think

BobProperty

Generali wrote: »

....If banks start to become a little more risk averse (as seems to be happening thanks to this credit squeeze) they will become a little more choosey about their lending.

Maybe they insist on 125% mortgage cover by rents on BTL again. Perhaps make sure that borrowers have a decent deposit and no or few other non-student loan debts. Or go back to only lending 3 or 3.5x income: then HPI comes to a dead stop. ....

I agree, though it has trashed NRK shares

dolce_vita

Melissa177 wrote: »

I'm not convinced house prices are going to rise at the same rate they have done for the past ten years across the country, but I'm bullish about London - especially S. London, where I live. Moreover, I *don't* think there is going to be a crash (ie, decrease in prices).

You only get a crash when people are forced to sell. This might happen with some people with the recent rate rises, but not enough to ensue forced selling on a mass scale. Remember that in the US, interest rates had gone from 1% to 5%+ in a couple of years, which is 400% increase. Here we've had about a 30% increase in interest rates over the past couple of years.

People, on the whole, will cut back on eating out and new gadgets before defaulting on their mortgage. The high streets are still busy, and Pizza Express is still full.

In the long term, I see house prices rising due to supply constraints. People are living longer, there are more single people living on their own (my flat could fit two people in it - well, if I reduce my shoe collection first), everyone wants to live in London (me, my friends, and half of eastern Europe), and there are plenty of people who are waiting ready to buy up properties (so we are led to believe) in cash of a crash. (I actually don't think the latter is true - a lot of people are saying that, but it takes some balls to buy in a crash).

I don't see those big City bonuses going away any time soon either.

A comment on the US sub-prime issue: The big problem is that a lot of "prime" mortgages are fixed (sometimes for the entire term of the deal), whereas the sub-prime ones were linked to interest rate rises. No wonder the sub-prime market went t*ts up in the US. And note that the crash occurred in places like Detroit, with it's rather less-salubrious homes, unlike where my parents live in western NC, where house prices are still rising at over 10% a year.

If there is going to be a crash it won't affect London, because I live there. But the rest of the country, where I don't live will crash. Well i think so anyway so it must be true. My flat has gone up in value by 65k since I bought it last week and will continue to do so forever.

Not just my flat though. I'm not that stupid. Other flats within 100 yards of mine will also rise in value. But everywhere else will drop. Unless they are owned by people that work in the city because they earn oodles of money you know and will prop up the market.

In america a similar thing has already happened. Prices are dropping everywhere except within a mile radius of my parents' house. These houses have been rising by 20% per year and will continue to do so forever and ever. How do i know? Because there is a KFC around the corner and it is always packed so people must be really wealthy and can affoird to pay the high prices.

My boyfriend works in the city and he tells me that interest rates will be going down soon and then they'll be going up and then they'll stay the same and then they'll go down again and then they'll go up - or somehting like that anyway.

By the way while i've been writing this my flat has gone up by another 10k.

Melissa177

Fine, don't respond to my points seriously, just mock me.

You've convinced yourself there is going to be a crash, and you're not going to change your mind, so why argue?

mystic_trev

http://news.bbc.co.uk/1/hi/business/6943797.stm

UK house prices were 12.1% higher in June from a year earlier, according to the latest government figures.

The rate of growth was higher than May's revised figure of 10.8%. The average UK house price rose from £210,793 in May to £214,222 in June, according to the Department of Communities and Local Government.

mystic_trev

and for Melissa

The DCLG survey showed that price growth in London remained buoyant, with annual price growth hitting 17.5% in June, up from 14.3% in May.

Melissa177

mystic_trev wrote: »

http://news.bbc.co.uk/1/hi/business/6943797.stm

Someone needs to send this link to the guy on Motley Fool who was stating that house prices were dropping across London...

manhattan

Why the hell is there so many conflicting reports of "house prices rise by there biggest since........." and "house prices fell blah,blah,blah" ?

Where do these people get their figures from or is it just one big "big up the crash" or "big up the HPI"?

Can someone please tell me who is telling the porkies! lol :rotfl:

Melissa177

I think the truth is, no-one knows.

I think it would be very foolish for anyone to rule out a crash - I'm certainly not - but I think on balance house prices will continue to rise to some degree.

The BBC article confirms the experiences of my friends and I in the London housing market at present.

manhattan

Im sure London will hold its own against a correction, but i suspect the rest of the Uk is in for a good beasting :eek: