House Price Crash Discussion Thread

harryhound

I wonder if we are witnessing a country that has gorged itself on finding black liquid gold, coming back to reality as the mine runs out of its ore?

It is sad that so much of this lucky find has been squandered on a consumer boom, but the party seems to be over and lots of people are suffering the hang over.
I've been checking out, the little bits of "luxury" life-style, that we have come to enjoy:

"Fancy a "spring break" Mrs Hound? "Where shall we jet off to this year?"
- We have not been to Poland yet?!

Out of interest, I've just compared the room rate for "Campanile" hotels in Dartford and Krakow. Well about 55 GBP plays about 70GBP, so those wonderful days of cheap Eastern Europe seem to be on the way out as our money slides in value.
(OK I'm sure that there are plenty of cheap grotty E. European locations but I'm told that migrants are now getting "flyers" from their country of origin, pointing out that their standard of living would improve if they came home.)

It must be about 8 years ago that I was wandering about in Bermondsey, roughly the area at the south end of Tower Bridge; I came upon what looked like a grim red brick block of Edwardian council flats on a life support system.
There were cables and generators every where accessing the block from trucks in the street, through upstairs windows. The program featured a couple with right to buy, intending to rent out their former public property. From memory my favourite quote was "but this looks like somewhere to bring a prostitute back to" as Sarah gave her knowing smile in response.
This was the start of the "Beeny" celebrity TV career. As I wandered further down the street I found a three story newly renovated terraced house for sale at 500K. It probably represented the greatest post WWII price rise in the country.

I enjoyed that first series with down to earth Sara telling how it is. In those days even the most incompetent amateur developers (like me ) ended up laughing all the way to the bank.

I see I have already missed the first episode of the new 8th series as episode 2 is tonight at 20:00.
Sarah's comment "You would have to be very brave to start developing a property at the moment. There is nothing wrong with renting. You will be in a better area, you'll live in a nicer house and you won't spend every weekend on DIY".
[She will get a slapped wrist from Channel 4's "Property Ladder" sponsors for remarks like that and might find herself spending more time with her [strike]MSE [/strike] MSF dating web site:rolleyes: - Shoot the messenger time?]

Harry.

PS I think I preferred her with the "world worn" face rather than the made up/made over current version.

Thali

!!!!!!? wrote: »

Anyone who is stretched to their limit to maintain their current lifestyle and is borrowing to do so is in for one massive shock to their system as they start having to pay it all back (with interest of course) and the basic cost of living rises.

Yes, but do you think the Government (any Government) could afford to let this happen? Happy voters are not homeless voters.

John_Pierpoint

This is what lots of people were saying in the late 1980's. Admittedly we had a different colour of Government, when Lawson was FORCED to apply the brakes, fearing an attack by the old foe "the gnomes of Zurich".

A government has no money of its own, it has our money extracted by taxes, or counterfeit money it prints. I'm not sure the gnomes, some of whom seem to have migrated to China, Dubai, Singapore, & St Petersburgh will be very sympathetic towards the latter option. Especially as they are already nursing losses on their investment in USA/UK plc.

MissMoneypenny

Thali wrote: »

Yes, but do you think the Government (any Government) could afford to let this happen? Happy voters are not homeless voters.

We have had boom and bust before. It's not new to this country.

Joe65_2

MissMoneypenny wrote: »

We have had boom and bust before. It's not new to this country.

The "credit crunch" is an inevitable consequence of reckless lending.

This whole house of cards is built on institutions making money out of lending to anyone.... regardless of affordability.

When the supply of irresponsible lending dries up so will the demand for houses at these currently ridiculous prices.

How else can sanity be restored ?

nelly_2

!!!!!!? wrote: »

We've had good economic times over the last 6-7 years because the credit taps were turned on full.

When people and businesses can borrow money like there's no tomorrow, it's hardly surprising that things go well. Until the time comes when the credit dries up.

which is true but it isnt as the crunch is proving

Sound Economics work, un sound econmics dont work!

living for today on borrowed money means there will be an end to the 'good economic times'.....hello 2008

The credit party is over and the house price rises are over.

only the naive, inept and those that think what has happened will carry on happening belive otherwise...


boll0x to them!... let them!
its not our job to educate the stupid!

Credit was too loose so house prices went stupid and now its time they settled back to normality ( and they will)

All those morons who pulled one off every day at what they thought they were 'earning' are now being fed the real reality of the sham

MiserlyMartin

MissMoneypenny wrote: »

We have had boom and bust before. It's not new to this country.

Thats right. But Gordon Brown promised us 'No more boom and bust' !!!!
Trouble is some people really believed him! So they thought hey this is happy days, lets party like theres no tomorrow and it will never go wrong, Gordon said so - Labour won't ever give us 15% interest rates like the Tories. Lets party.
Trouble is that house prices have tripled since then so by comparison 5% is the new 15%! Plus back then we had MIRAS which reduced peoples repayments further. People also forget that the rates were only 15% for a short time and hovered around 12% mainly. Then dropping down to low levels before Gordon Clown and Co took over.

John_Pierpoint wrote: »

This is what lots of people were saying in the late 1980's. Admittedly we had a different colour of Government, when Lawson was FORCED to apply the brakes, fearing an attack by the old foe "the gnomes of Zurich".

But wasn't that because inflation was very high and because of the ERM. At the moment we don't have inflation anywhere near that if you believe Labours fake measure so they won't put up rates. What we will end up with may be stagflation?

IveSeenTheLight

MiserlyMartin wrote: »

What we will end up with may be stagflation?

I wonder if this is the best outcome for the majority of people.

FTBers will be able to save up a bigger deposit and eventually afford a property.

New home owner or those with high LTV will not find themselves in negative equity. They will be able to move houses / mortgages if required.

Pobby

http://en.wikipedia.org/wiki/Stagflation


``Economists today typically offer two main explanations of stagflation. First, stagflation can occur when an economy is slowed by an unfavorable supply shock, such as an increase in the price of oil in an oil importing country, which tends to raise prices at the same time that it slows the economy by making production less profitable.[5] Second, both stagnation (recession) and inflation can be caused by inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labor markets. The global stagflation of the 1970s is often blamed on both causes: it was largely started by a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to try to avoid the resulting recession (stagnation), causing a runaway wage-price spiral.[6]``

Hmmmmm,now that rings a bell.

WTF?_2

IveSeenTheLight wrote: »

I wonder if this is the best outcome for the majority of people.

FTBers will be able to save up a bigger deposit and eventually afford a property.

New home owner or those with high LTV will not find themselves in negative equity. They will be able to move houses / mortgages if required.

Stagflation is the worst of all worlds.

Ever increasing prices plus poor economic outlook making jobs hard to come by. In the current environment of globalisation and a massive UK trade deficit you can bet that pay won't increase to take account of higher prices either.

You appear to be hoping for some sort of replay of the 1970s where mortgage debts were magically inflated away. Not going to happen - at least we're not going to see the return of big pay rises to offset inflation anyway. Servicing the debts is going to be a great deal harder under those conditions.