UK house price to crash as global asset prices unravel

lisyloo

luvpump wrote: »

Tonight this doesn't look quite as unlikely as some would wish to imagine, with the FTSE down to 2012 levels .:eek:

Keep calm !!

Why is it people are prepared to look at property as a long term investment but panic when the ftse drops over a periods of days.
I'm investing for the long term and I'd like to buy at low prices so anyone with a pension should welcome low prices whilst they are buying.

As chuck has said, those who've invested should be unconcerned by short term volatility. If not it's their own fault.

padington

luvpump wrote: »

Tonight this doesn't look quite as unlikely as some would wish to imagine, with the FTSE down to 2012 levels .:eek:

Partly because a lot of Chinese people and others are thinking 'sod this for a game of soldiers' and selling up in a view of embedding their money elsewhere like London property for safer a ride.

The previous form showed that gold and silver took a battering when the last storm came. London Property went up by 6% between 2008 and 2013.

This time the difference will be starker because of the new expectations set from last time.

Think of all those Russians and Chinese looking at their friends who had carefully invested in UK property before this crash.

Next time it will be different, they will all be doing it.

chucknorris

lisyloo wrote: »

Keep calm !!

Why is it people are prepared to look at property as a long term investment but panic when the ftse drops over a periods of days.
I'm investing for the long term and I'd like to buy at low prices so anyone with a pension should welcome low prices whilst they are buying.

As chuck has said, those who've invested should be unconcerned by short term volatility. If not it's their own fault.

I can't deny I am disappointed that it has fallen so far, but that isn't my main concern, my main concern is how much more can I get invested at this low level before it goes up again. Yes of course it might even go lower, but I don't care about trying to invest at the lowest point, that is mere luck.

chucknorris

Joeskeppi wrote: »

Do you think I should sell up and invest it all in silver?

No, buy Labradors, they always shoot in value only a few weeks after owning them.

Jason74

luvpump wrote: »

Tonight this doesn't look quite as unlikely as some would wish to imagine, with the FTSE down to 2012 levels .:eek:

This is true, and while others disagree, my view is that there is more downside risk in London property (in particular) than at any point since before the financial crisis, and that brief period apart, now is imho probably the riskiest time to buy London property since the early 90s. The combination of a weakening global economy, the (connected) slow down in foreign interest, and the sheer extreme high prices create a cocktail of risks rarely seen over the past 25 years.

But against that, employment numbers seem strong, and perversly, the global weakness means that interest rates are likely to stay even lower for even longer than previously thought. Those factors will prop up prices to some extent even allowing for the risks. And on the ground, my corner of S.E London is still moving very quickly. That might change in a few weeks of course once it becomes to late for BTL buyers to complete before April, but for now, my local market remains surprisingly busy.

Taking all that into account, I find it hard to believe (and I'm just talking about London here, I don't know enough about anywhere else to comment with any knowledge) that we're not close to the top for this cycle. But for prices to really fall significantly, imho we either need significantly higher interest rates, or rising unemployment. The former doesn't seem likely any time soon, and although the latter could eventually be a result of the economic weakness, there's no sign of it yet.

So a few more months of rises followed by long (ish) term stagnation is probably my most likely bet, with the caveat that the chance of my being wrong is heavily weighted to the downside. But, I've consistently underestimated the strength of my local market in the past couple of years, so I would be foolish not to acknowledge that I could be very wrong.

Jason74

chucknorris wrote: »

No, buy Labradors, they always shoot in value only a few weeks after owning them.

Maybe, but I'd be guaranteed to lose all my "investment" buying Labradors. Buying something and then not selling it because it's to cute and loveable is not generally a good way to make money!

padington

Jason74 wrote: »

This is true, and while others disagree, my view is that there is more downside risk in London property (in particular) than at any point since before the financial crisis, and that brief period apart, now is imho probably the riskiest time to buy London property since the early 90s. The combination of a weakening global economy, the (connected) slow down in foreign interest, and the sheer extreme high prices create a cocktail of risks rarely seen over the past 25 years.

But against that, employment numbers seem strong, and perversly, the global weakness means that interest rates are likely to stay even lower for even longer than previously thought. Those factors will prop up prices to some extent even allowing for the risks. And on the ground, my corner of S.E London is still moving very quickly. That might change in a few weeks of course once it becomes to late for BTL buyers to complete before April, but for now, my local market remains surprisingly busy.

Taking all that into account, I find it hard to believe (and I'm just talking about London here, I don't know enough about anywhere else to comment with any knowledge) that we're not close to the top for this cycle. But for prices to really fall significantly, imho we either need significantly higher interest rates, or rising unemployment. The former doesn't seem likely any time soon, and although the latter could eventually be a result of the economic weakness, there's no sign of it yet.

So a few more months of rises followed by long (ish) term stagnation is probably my most likely bet, with the caveat that the chance of my being wrong is heavily weighted to the downside. But, I've consistently underestimated the strength of my local market in the past couple of years, so I would be foolish not to acknowledge that I could be very wrong.

The big new government credit will come online for FTB in London up to 450k very soon. Have you factored that in ?

If you're already sitting pretty with cash. I think London property is a very safe place to park your cash right now. You could split cash into seven or eight banks. Personally I would prefer a place to live and really cheap lodger allowance making a regular income.

Messing about on the share market right now would be a pure gamble. Maybe a massively leveraged bet against Glencore could be wise, maybe buying Glencpre shares right now could be wise. I wouldn't like to watch all my chips spin on that reel though given the circumstances

I think we'll see the capital of the world doing well again this year. Now is the time for finding safe places and fortunately London property is regarded as the worlds reserve capital.

A nice place to be if you ask me, especially with a massive government credit subsidy coming its way.

chucknorris

Jason74 wrote: »

Maybe, but I'd be guaranteed to lose all my "investment" buying Labradors. Buying something and then not selling it because it's to cute and loveable is not generally a good way to make money!

You don't sell them, you love them, and appreciate them and enjoy them for many years, best money you will ever invest. There will be the odd incident though, like today when he ran off for about 45 mins, while I was absolutely dying to go to the toilet and also freezing cold. My shares are down about £125k from their recent peak, that is absolutely nothing compared to losing my last dog.

EDIT: The S&P 500 rallied later in the day and finished a lot higher than it was earlier and just closed at 'only' down about 1.17%.

Jason74

padington wrote: »

The big new government credit will come online for FTB in London up to 450k very soon. Have you factored that in ?

If you're already sitting pretty with cash. I think London property is a very safe place to park your cash right now. You could split cash into seven or eight banks. Personally I would prefer a place to live and really cheap lodger allowance making a regular income.

Messing about on the share market right now would be a pure gamble. Maybe a massively leveraged bet against Glencore could be wise, maybe buying Glencpre shares right now could be wise. I wouldn't like to watch all my chips spin on that reel though given the circumstances

I think we'll see the capital of the world doing well again this year. Now is the time for finding safe places and fortunately London property is regarded as the worlds reserve capital.

A nice place to be if you ask me, especially with a massive government credit subsidy coming its way.

Yes' I've factored in the London HTB. Personanally, I both think and hope it's impact is going to be a lot less than many people think. On a more general level, the issue I have with analysis like yours is that it seems to basically consist of a view that all news is good news as far as London property is concerned.

Based on your logic, if the news is (in the general sense) good, it means London house prices will go up because people will want to spend their money on a London pad, causing prices to rise. And if the news is (in terms of the wider economy) bad,no problem. People will want London property for a safe haven, so prices rise.

The reality is of course nowhere near as simple as that. Sooner or later, overall affordability kicks in for domestic buyers, while for foreigners the big difference this time round is that in 2008, most emerging currencies were appreciating against the pound (making foreign purchases cheaper), now most of them are depreciating (making purchases more expensive).

London property has (if you see more and more people being priced out of ownership as a good thing) had a very "good" run in recent years, and I'm not suggesting that values are about to collapse. But to take a view (as you and one or two others eem to) that recent levels of gains will continue forever, and that pretty much all events support that one way or another is a long way wide of the mark imho.

padington

Jason74 wrote: »

Yes' I've factored in the London HTB. Personanally, I both think and hope it's impact is going to be a lot less than many people think. On a more general level, the issue I have with analysis like yours is that it seems to basically consist of a view that all news is good news as far as London property is concerned.

Based on your logic, if the news is (in the general sense) good, it means London house prices will go up because people will want to spend their money on a London pad, causing prices to rise. And if the news is (in terms of the wider economy) bad,no problem. People will want London property for a safe haven, so prices rise.

The reality is of course nowhere near as simple as that. Sooner or later, overall affordability kicks in for domestic buyers, while for foreigners the big difference this time round is that in 2008, most emerging currencies were appreciating against the pound (making foreign purchases cheaper), now most of them are depreciating (making purchases more expensive).

London property has (if you see more and more people being priced out of ownership as a good thing) had a very "good" run in recent years, and I'm not suggesting that values are about to collapse. But to take a view (as you and one or two others eem to) that recent levels of gains will continue forever, and that pretty much all events support that one way or another is a long way wide of the mark imho.

No recent gains won't go on forever, London prices right now are however are going to go up because

1) Purchasing power by first time buyers is going to go up through new HTB scheme.
2) interest rates will stay much lower than people think for much longer
3) London is fairly unique in that it's supply is heavily restricted whilst it desirability factor and diversity factor is second to none.

When purchasing power decreases with new government schemes and we enter into an era of medium to high interest rates and when London desirability factor tanks we will see the end of the boom.

Neither of those factors are on the cards. The government wants HP inflation, it's a part of its economic strategy ( it just wants to tax BTL landlords for political economic reasons ). The era of Low interest rates is nowhere near over. Look what just happened when the U.S. Raised its rates. This era is here to stay.

That leaves a black swan event like a Corbyn like politician getting in power or a nuclear attack.

Both of which will happen one day I'm sure but in the next five years, not so sure.

Hence why myself and the majority of the market is betting on London property and will continue to do so for next couple of years at least.

Also when the !!!!!! really hits the fan and really big UK banks look days away from folding. What do you think the government will do, keep the promise to honour all monies lost or quickly move the goal posts to keep the nation from bankruptcy ?

At the end of the day when things go really wrong economically and you own a house, the house tends to remain standing with you inside it. Most of the other stuff is just promises written on paper and can much more easily be torn up and left to flutter into the wind.