50% house price falls

harryhound

BobProperty wrote: »

1. You can only decide that there has been a crash in retrospect.
2. Show me any house price index / measurement / whatever that has "stagnated" or had a "soft landing" when it reversed.

These figures are for a modest estate house in the South East (outside London) taken from the Nationwide index:

1973 10,000 (We were enjoying an oil crisis and Ted Heath mishandled
1974 10,089 the miners creating a 3 day week)
1975 10,205
.
.
.
1980 22,714 (M.Thatcher & then R.Reagan came to power preaching;
1981 23,479 There Is No Alternative. In the country as a whole there
1982 23,479 was a slight dip; BUT there was an overhang of unsellable
1983 26,870 houses, many of which were rented out).
.
1987 48,258 (Following the October '87 world wide stock market crash
1988 59,179 Chancellor Lawson pumped up the money supply (sounds
1989 75,654 familiar?) but most of the money caused a house price
1990 66,323 bubble; with inflation getting out of control, the breaks
1991 57,701 were slapped on and at the same time interest tax relief
1992 53,589 was reigned back and assigned per property, not per
1993 49,915 person & eventually cancelled. - A relative of mine
1994 51,297 managed to sell his posh house and bought a block of
1995 51,585 flats in a repossession sale - knocked 2 into 1 suite & lived
1996 54,871 in it ; thus getting tax relief on his business BTL mortgage).
1997 59,616
.
2000 87,514 Hurray, the 89-99 negative equity is over.
.
.
2007 200,000 ???? Where to now?

These figures under report the pain, there have been 2 stagnations and a definite slump, BUT when prices head south the market freezes, so even without negative equity, you can be stuck with a sub prime house that sits on the market for ever, risking being undercut by repossessions.

Harry.

codger

harryhound wrote: »

These figures are for a modest estate house in the South East (outside London) taken from the Nationwide index:

1987 48,258 (Following the October '87 world wide stock market crash
1988 59,179 Chancellor Lawson pumped up the money supply (sounds
1989 75,654 familiar?) but most of the money caused a house price

1993 49,915 person & eventually cancelled. - A relative of mine
.
2000 87,514 Hurray, the 89-99 negative equity is over.
.
.
2007 200,000 ???? Where to now?

These figures under report the pain, there have been 2 stagnations and a definite slump, BUT when prices head south the market freezes, so even without negative equity, you can be stuck with a sub prime house that sits on the market for ever, risking being undercut by repossessions.

Harry.

Super post, Harry. Re Lawson: I recollect him organising a toffee sale in a sweet shop and then blaming the nation for the state of its teeth. The ending of double income mortgage tax relief was always going to be a shambles but turned out to be more inflationary than the bosom of Mr Lawson's illustrious daughter.

The house price figure of £75,654 in 1989 compared with the same house's value of £49,915 four years later should've been a salutary reminder this time around, but unfortunately consumers have had no choice but to stay in a market that's been distorted by deliberately excessive lending in order to make the lenders deliberately excessive profits -- who know they can always come back in and grab some asset value.

As to the earlier post re Spain property prices: the malaise is becoming pretty general in Europe now (Spain's was initially caused by over development: supply exceeded demand) so what will happen now is anyone's guess -- the market place has differed from here in that whereas in the UK, anyone can be an estate agent, in Spain etc, everyone can be an estate agent, so you can get a dozen agents all trying to flog the same property, and each with a vested interest in maintaining identical asking prices as if that somehow reflects the property's true value.

Only belatedly do many find that in escaping from a UK marketplace rigged in favour of unscrupulous lenders they have landed in an overseas marketplace rigged in favour of unscrupulous (i.e., mutually non-competitive) estate agents. I hope the hard rain isn't going to fall on any buyers who for whatever reason have come in at the top of the market in recent times. . . but the outlook ain't good.

golddustmedia

carolt wrote: »

I'm a potential FTB and we've been looking for a suitable house in our village for years, dispirited as houses kept racing up.

So what you're saying is, years ago you thought the market was going to crash so didn't buy. Then it kept rising and you lost out and found it even harder to buy.

Yet, had you bought somewhere years ago you'd now have a property that had increased in value and if you're happy to rent could now sell for a profit.

Anyone want to bet whether the house prices in your area will be higher still in another 5 years?

golddustmedia

Generali wrote: »

You say, "No market has crashed by 50% ever. ". HK housing did (65%). Tokyo housing did (50%). .... I wouldn't debate economic history without doing my research first if I were you.

Since you mention history lets look at WHY those foreign markets crashed...

Hong Kong: Britain (A capitalist state) vacated and handed back a massive economic zone to a communist country, this involved the mass migration of thousands of people OUT of the country. Obviously you get lots of people leaving an area and selling their property and the prices will fall. Doesn't seem likely given the current UK immigration that we'll see that repeated in the UK.

Tokyo: During the 2nd world war an ENTIRE generation was effectively killed, when I visited Japan in the 1990's I saw only 1 elderly person in a 10 day stay. 60 years later and Japan is facing a new problem; RETIREMENT and old age. For the first time (in modern economic terms) the country is having to cater for pensions, caring for elderley relatives etc and this has had a major economic impact on them since overheads and costs are increasing as they pay for persons who are unable to contribute either economically or practically to the country. Again, this isn't about to be repeated in the UK since we were not affected to the same degree by the war, i.e. we have significantly more OAP's than Japan has until now.

As such, although it is interesting that other countries have seen massive property market crashes, there has in each case been a significant historical event that can be seen to cause the crash. Unless there is some major event in British history I'm not aware of then it's unlikely a crash will occur. Yes the EU is a historical event, however ironically this has led to massive immigration to the UK and only pushed demand and prices higher.

I say it once again, aside from short term fluctuations, the property market does and will continue to rise as it has done for the last 50+ years.

All the people who say they've put off buying for the last 1/2/5 years etc.... bet you wish you could buy a house today at the price when you decided not to those few years ago?

tr3mor

golddustmedia wrote: »

All the people who say they've put off buying for the last 1/2/5 years etc.... bet you wish you could buy a house today at the price when you decided not to those few years ago?

Good plan.

I graduated 4 months ago. Now where did I put that time-machine? :rolleyes:

Turnbull2000

golddustmedia wrote: »

So what you're saying is, years ago you thought the market was going to crash so didn't buy. Then it kept rising and you lost out and found it even harder to buy.

Yet, had you bought somewhere years ago you'd now have a property that had increased in value and if you're happy to rent could now sell for a profit.

Anyone want to bet whether the house prices in your area will be higher still in another 5 years?

If only I'd snapped up a couple of properties 8 years ago...if only.

And if only every FTB had your awesome powers of perception and prediction.

The poster hasn't "lost out". Prices have been too much of a strech for most FTBs for years. They could cost 300k or 3 million, either way prices are beyond normal salaries.

Turnbull2000

golddustmedia wrote: »

I say it once again, aside from short term fluctuations, the property market does and will continue to rise as it has done for the last 50+ years.

All the people who say they've put off buying for the last 1/2/5 years etc.... bet you wish you could buy a house today at the price when you decided not to those few years ago?

So you're acknowledging that we're currently in a short-term fluctuation then?

Of course the prices will increase over 50 years. And so will the cost of all other assets and commodities. That's inflation for you.

And once again you preach the useless force of hindsight.

golddustmedia

harryhound wrote: »

1973 10,000 (We were enjoying an oil crisis and Ted Heath mishandled
1974 10,089 the miners creating a 3 day week)
1975 10,205
.
.
.
1980 22,714 (M.Thatcher & then R.Reagan came to power preaching;
1981 23,479 There Is No Alternative. In the country as a whole there
1982 23,479 was a slight dip; BUT there was an overhang of unsellable
1983 26,870 houses, many of which were rented out).
.
1987 48,258 (Following the October '87 world wide stock market crash
1988 59,179 Chancellor Lawson pumped up the money supply (sounds
1989 75,654 familiar?) but most of the money caused a house price
1990 66,323 bubble; with inflation getting out of control, the breaks
1991 57,701 were slapped on and at the same time interest tax relief
1992 53,589 was reigned back and assigned per property, not per
1993 49,915 person & eventually cancelled. - A relative of mine
1994 51,297 managed to sell his posh house and bought a block of
1995 51,585 flats in a repossession sale - knocked 2 into 1 suite & lived
1996 54,871 in it ; thus getting tax relief on his business BTL mortgage).
1997 59,616
.
2000 87,514 Hurray, the 89-99 negative equity is over.
.
.
2007 200,000 ???? Where to now?

On an earlier post someone was VERY negative when I claimed that even through recession property has DOUBLED in value every 10 years.

Well there's the proof;
1973 - 1983 = MORE THAN DOUBLE
1983 - 1993 = Nearly double (but mid recession)
1993 - 2003 = No figure but assuming will be over 100k then DOUBLED.
2003 - 2013 = ??? Well if it was £100k in 2003 then as it's £200k in 2007 it's ALREADY doubled!!!

We've had recession, war, immigration etc etc how long will it take for people to see property IS an excellent long term investment.


I now see this thread is mainly 2 groups of people;
- Those who believe in the crash who largely do not own/want to own property or are having a bad time with their mortgages.
- Those who DO own property and are happy with their investments and are not convinced by the crash fears.

Seems to me those who are making money on property are happy to continue to do so and those who are not are willing a change in the market so they can join those who are making money. Whats the bet that if the market changes and they buy, then suddenly they want the market to grow so they can cash in too?

In 2003 I was in the 1st camp, without property and negative about the whole thing. 4 years later I own 2 properties and have about £150k in equity. I work full time and am just a normal working class chap, I'm just willing to take a gamble on something that in my eyes seems to be a good and fairly safe deal. After all you could leave all your money in the bank and still lose it if the economy turned. (Please don't start a debate about banks/government 7 history!).

golddustmedia

Turnbull2000 wrote: »

So you're acknowledging that we're currently in a short-term fluctuation then?

Of course the prices will increase over 50 years. And so will the cost of all other assets and commodities. That's inflation for you.

And once again you preach the useless force of hindsight.

What my posts have pointed out is that property has historically increased by MORE than inflation, MORE than bank interest and more than most other forms of investment.

It's not hindsight if I'm pointing out that property has increased AND WILL CONTINUE TO DO SO!!!

I'm trying to tell you all that if you stop trying to make a big gain short term then buying a property is a sound investment, whether you did it last year, this year or next year.

To be quite frank I'm almost sick of saying it. So I'll tell you what, DON'T buy a property... PLEASE! I've got one I rent out, and if you and everyone else don't buy then I'm more than happy to buy some and rent them to you. What's more when those properties have increased in value quite significantly I'll be more than happy to sell them, in fact if you're renting one of them I'd be happy to sell one to you and retire on the profits

Thinking about it, the more people who don't enter the property market at the moment the better off I'll be.

Hindsight, yes.... all those years I wasted my money on rent before I bought. Have you had the benefit of hindsight yet?

hgllgh

Running_Horse wrote: »

We bought our house to bring up our daughter in for the next couple of decades, and don't care what prices do during that period. Our new mortgage is still cheaper than rent. For those that do worry, if prices collapsed by 50% then BTLers and FTBers would pile in and push prices back up.

Running Horse .... you're obsessed with house prices :rolleyes: