There won't be a crash

Keezing

chucknorris wrote: »

No it isn't regardless, it is the whole sales pitch (which you have overlooked)!

The 200 people are not being ignored, they ignited the flame of the initial offers!

The sales pitch worked - it attracted 200 people. Rejecting the 200 people results in no net-gain to the developer. They will likely have found an alternative property by the time their next development is taking orders.

It would be foolish to not consider offers from the 200 people that the pitch attracted.

chucknorris

Keezing wrote: »

The sales pitch worked - it attracted 200 people. Rejecting the 200 people results in no net-gain to the developer. They will likely have found an alternative property by the time their next development is taking orders.

It would be foolish to not consider offers from the 200 people that the pitch attracted.

You are misunderstanding the sales method, it is to encourage people to rush in and buy, if you allow subsequent bids, you take away the urgency of the buyers.

EDIT: Conrad has already explained what their system was, he is a mortgage consultant and has owned investment property, so he knows what he is talking about.

Look at this:
http://www.homesandproperty.co.uk/property-news/firsttime-buyers-queue-overnight-for-launch-of-newbuild-flats-in-hounslow-priced-from-199k-50601.html

padington

chucknorris wrote: »

You are misunderstanding the sales method, it is to encourage people to rush in and buy, if you allow subsequent bids, you take away the urgency of the buyers.

EDIT: Conrad has already explained what their system was, he is a mortgage consultant and has owned investment property, so he knows what he is talking about.

Look at this:
http://www.homesandproperty.co.uk/property-news/firsttime-buyers-queue-overnight-for-launch-of-newbuild-flats-in-hounslow-priced-from-199k-50601.html

It's the same technique in the art market. The sales are made because there is more buyers than product. The moment there isn't, everyone says they'll think about it and nothing gets bought.

Conrad

Keezing wrote: »

Nice story.

Obviously in reality everyone would be given the opportunity to bid and the price would be driven up.

And this is indeed the process applied to another development we were due to see after this one, where sealed bids would apply.

novice_1

The last two crashes were when mortgage repayments became unaffordable (>50% income for new buyers). If you look in this chart on nationwide data, the large falls come directly after affordability shrinks (thin line) and have sustained rises when repayments are most affordable (mid 90's).

How much does the BoE base rate have to rise (in response to Brexit related inflation) before we see ftb mortgage:income ratios above 50% again?

norm_

novice_1 wrote: »

How much does the BoE base rate have to rise (in response to Brexit related inflation) before we see ftb mortgage:income ratios above 50% again?

With the amount of debt floating around the house market I think anything higher than 4% would be a tipping point.

lisyloo

norm_ wrote: »

With the amount of debt floating around the house market I think anything higher than 4% would be a tipping point.

That's highly unlikely though (I would never say never).
We are highly indebted both publically and privately.
We desperately need to deflate that debt, so it's mulch more likely for interest rates to stay very low for many years.

PErsonally I see the biggest risk as a loss of confidence as our economy seems to be running on that at the moment.

padington

lisyloo wrote: »

That's highly unlikely though (I would never say never).
We are highly indebted both publically and privately.
We desperately need to deflate that debt, so it's mulch more likely for interest rates to stay very low for many years.

PErsonally I see the biggest risk as a loss of confidence as our economy seems to be running on that at the moment.

Biggest risk is Brexit, its economic self harm. We will have to become a low tax economy, slash and burn welfare state, increase national debt, increase gap between rich and poor to keep companies interested in dealing with more red tape residing here.

Currently we're not running on confidence but just a very well placed position (in Europe with pound). When that goes we strip our foundations out beneath us.

The crash will be mitigated through tears and debt though, so expect property owners to be relatively ok, for a while.

westernpromise

novice_1 wrote: »

The last two crashes were when mortgage repayments became unaffordable (>50% income for new buyers). If you look in this chart on nationwide data, the large falls come directly after affordability shrinks (thin line) and have sustained rises when repayments are most affordable (mid 90's).

How much does the BoE base rate have to rise (in response to Brexit related inflation) before we see ftb mortgage:income ratios above 50% again?

The flaw in that chart is that it defines affordability naively as house price divided by FTB income. You simply can't do this because this ignores interest rates. Which is more affordable, a house at 3x FTB income with 0.25% base rates or one at 2x FTB income with 15% base rates?

The issue now appears to be the size of deposit you'd need to save to afford to buy, and the limited multiple of salary you can borrow. It is not so very long, however, since crashtrolls here and elsewhere were ranting about 100% self-cert mortgages, and about how back in the good old days, it was 10% deposit, borrow 3.5x your salary and you could slap your wife about as you watched Love Thy Neighbour.

Well, the trolls have got what they wanted and now they've got it they find they don't like it. So we'll know not to ask them again.

Jack_Johnson_the_acorn

lisyloo wrote: »

That's highly unlikely though (I would never say never).
We are highly indebted both publically and privately.
We desperately need to deflate that debt, so it's mulch more likely for interest rates to stay very low for many years.

PErsonally I see the biggest risk as a loss of confidence as our economy seems to be running on that at the moment.

If people haven't figured out by now that increasing interest rates would be economic suicide for Britain then they'll never understand. There won't be significant interest rate rises as everyone would suffer not just people with a mortgage.