How Much Longer Before The Crash

Aurans

abaxas wrote: »

Obviously you werent around in the Newcastle then. Whole areas had zero value, others were unsellable. These type of things will never show up in figures as there were NEVER a sale.

A completely different scenario. Nothing to do with house price inflation, everything to do with the crime and social problems in the relevant areas.

Turnbull2000

Gorgeous_George wrote: »

The tablets must be having less effect.

IMHO, FTBer house prices have reached the maximum possible level. Even if IRs were reduced to zero, the capital would need to be repaid and that alone would be difficult enough. Perhaps a year or two ago, I thought the same but expected continuing demand and low IRs to provide a smoothing off rather than a crash.

I have two kids that should be looking to buying a place of their own but are forced to rent. It is a desperate and dire situation. A HPC won't really help them, I'm afraid. The best that they could do is have 10 kids and sponge off the State.

A HPC could yet be averted but I think a world recession will eventually stuff us all.

Still, no point worrying about things that you cannot change.

GG

So it's the predicament of your own children that changed your outlook?

I agree, an asset price crash as a result of a global credit crunch could be quite devastating - but if that's what it takes to restore sanity then so be it.

But human nature being what it is, those who orchestrated this whole mess will probably walk away scot free and a great deal richer, whereas everyone else risks losing their job or faces a reduced standard of living - only for the entire cycle to start slowly repeating itself again.

For those who tell me I "haven't made it in life", "not responsible enough for home ownership", "prices won't fall, they won't let it happen", or ask smugly if I still "enjoy" lining a landlord pockets*... well, I'm sure I'll take some satisfaction out of telling them "I told you so". And these aren't strangers on the internet either, but supposed friends and colleagues.

*despite currently being much cheaper, having a highly professional landlord who fixes and maintains to a very good standard, and being able to live in a highly desirable location.

Romani_Ite_Domum

pickles110564 wrote: »

Ever since i joined this forum everyone keeps telling me the crash is here/or it is just one one interest rise away.
Yet two very overpriced houses within a five iron shot have both this week had sold subject to contract boards raised.
How much longer do you all think we have to wait now?

The clue is here pickles

two very overpriced houses

The market has reached its peak but it will take a while for those in the denial phase to adjust to the fact that the only way now is down.

If you are trying to get a date for a national fall of 15% nominal. I would say that the crash will be the 23rd January 2008 but will not be announced until March of that year.

Generali

Aurans wrote: »

A completely different scenario. Nothing to do with house price inflation, everything to do with the crime and social problems in the relevant areas.

Have the social problems in that part of the world gone or improved massively? The only thing that's changed as far as I can see is that instead of 20% of the population being on unemployment benefit, they're on sick benefit instead.

For me, it's those little terraces going from being worth eff all to 70, 80, 90 thousand in a few short years in areas where the best jobs are handing everyone else their Giro or running the Discount Fagz 'n' Booze Emporium that show more clearly than anything else that this housing boom is unsustainable.

I can see why a flat in the Barbican or in a beautiful piece of countryside is worth a packet, loads of people want to live there. What I can't understand is why houses are worth a packet in towns* that I've visited where there doesn't seem much of a private (i.e. real) economy, what little there is is provided by the Govt.

*Apologies to the denizens of Bradford, Oldham, Retford, Dundee etc. Nothing against the people or the places, I just don't see how 99% of the population can earn a decent living.

Guy_Montag

The Barbican looked pretty grim to me.

Generali

Guy_Montag wrote: »

The Barbican looked pretty grim to me.

The flats are beautiful and very quiet, you can walk to work (I could anyway), crime is virtually nil, the gardens are beautiful, there's masses of stuff for kids (2 playgrounds, swimming pool in Golden Lane, cricket nets etc), the flats are well built and fantastically designed, and you're in the heart of one of the greatest cities that the world has ever seen.

Architecture's a bit dodgy I admit.

alanobrien

pickles110564 wrote: »

Ever since i joined this forum everyone keeps telling me the crash is here/or it is just one one interest rise away.
Yet two very overpriced houses within a five iron shot have both this week had sold subject to contract boards raised.
How much longer do you all think we have to wait now?

no idea, nor does anyone else :rolleyes: life is always a gamble
but one worth taking..........

dixie_dean_2

Doozergirl wrote: »

I heard the crash was happening while Hell's Kitchen is on later Is that not right?

Remarkably this happened. Well, the piucture went down for 5 minutes. Good call.

movilogo

Let's see how can a crash happen.

Crash means dramatic reduced price for houses.

Assumption: Wage rise is way less than house price rise in recent years

This can happen:

1. Because of IR rise, people can no longer afford paying their mortgage [many are almost stretched to limit]. So, their house will be respossesed by bank and will be sold via auction. So, this will reduce price.
2. FTBs will no longer be allowed to borrow more than 3 times of their income. So, they can't offer asking price. So, desperate sellers will have to reduce price.
3. Those who BTL, will often find that because of IR rise, their rental income hardly covers mortgage. So, they will be forced to sell. These properties are mostly 1-2 bed flats.
4. Some decent people, who plan their finance carefully, will continue to pay their mortgate in spite of some difficulties. They bought their house to live [not as investment] so they will not affect market.
Now, I don't have statistics of what % of people cover each of the stages above. So, I can't comment how the market will crash.
But continuous price rise can only occur if buyers can afford to pay extra price. At one point of time, by fundamental principle, it will not happen any more. So, that point will be the peak (pretty much where we are not already).

Conclusion:

1. We are already in crest of the market [i.e. price is nearly peak]
2. There will be "correction" [more appropriate than "crash"] soon - but will not be very drastic. It will gradually trickle thru the market.
3. Flats/BTL properties will bear the burnt first.
4. Many people will not feel the heat at all [except slight pressure on pocket]
5. More recent buyers will suffer more [obviously, as their outstanding mortgage is highest]

Generali

movilogo wrote: »

Let's see how can a crash happen.

Crash means dramatic reduced price for houses.

Assumption: Wage rise is way less than house price rise in recent years

This can happen:

1. Because of IR rise, people can no longer afford paying their mortgage [many are almost stretched to limit]. So, their house will be respossesed by bank and will be sold via auction. So, this will reduce price.
2. FTBs will no longer be allowed to borrow more than 3 times of their income. So, they can't offer asking price. So, desperate sellers will have to reduce price.
3. Those who BTL, will often find that because of IR rise, their rental income hardly covers mortgage. So, they will be forced to sell. These properties are mostly 1-2 bed flats.
4. Some decent people, who plan their finance carefully, will continue to pay their mortgate in spite of some difficulties. They bought their house to live [not as investment] so they will not affect market.
Now, I don't have statistics of what % of people cover each of the stages above. So, I can't comment how the market will crash.
But continuous price rise can only occur if buyers can afford to pay extra price. At one point of time, by fundamental principle, it will not happen any more. So, that point will be the peak (pretty much where we are not already).

Conclusion:

1. We are already in crest of the market [i.e. price is nearly peak]
2. There will be "correction" [more appropriate than "crash"] soon - but will not be very drastic. It will gradually trickle thru the market.
3. Flats/BTL properties will bear the burnt first.
4. Many people will not feel the heat at all [except slight pressure on pocket]
5. More recent buyers will suffer more [obviously, as their outstanding mortgage is highest]

Interesting but I don't necessarily agree with all the conclusions.

For example, I don't see why BTL should bear the brunt of early losses/pain. According to the CML, the average BTL place is bought on a 40% mortgage so the rent should cover the mortgage unless rates really shoot up. Also, the typical BTLer is middle aged so more likely to be earning a good income and so be able to cover the higher mortgage cost for a while. Finally, if the flat/house is being rented out, there should be 2 people to cover the mortgage, not just one!

I can see BTLers losing a lot of money if house prices fall and effectively being distressed sellers as they try to get out before they lose too much money. I'm not sure that they're all going to lose their shirts. Idiots like my landlord could be in for a lot of pain though (rent £1050, repayment mortgage £2100-ish, residential mortgage, deposit 7.5% - a 10% fall in prices completely wipes him out).