Can you imagine the destruction in the UK if the property market crashed

AG47

Sibbers123 wrote: »

The problem with the housing market at the minute is that it is being propped up by low interest rates, buy-to-let investors, tax breaks for first time buyers, lack of supply and help to buy.

House prices have stabilised as things stand (going down in london due to lack of foreign investment now), but I see interest rates being the biggest potential problem - they can't get any lower. If they go up a couple of %, people can't pay their mortgages, investors aren't getting the yields that could get investing their cash elsewhere and as a result, you'll see a lot more properties on the market.

It is the large investors which are exposed most to an interest rate rise (https://www.landlordtoday.co.uk/breaking-news/2019/3/controversial-landlord-to-feature-on-bbc-panorama-tonight).

The saving grace is that everyone needs a roof over their heads. Just need wages to keep going up inline with house prices.

Also, a Jeremy Corbin government and his rent caps will squeeze the market some more.

There is no way property prices are going anywhere fast.

Very good post, hit the nails on the head there.

Even with all these things propping up the bubble, it's only just preventing a crash.

Interest rates going back to normal as they will have to at some point will bring a large correction in property prices

AG47

Sibbers123 wrote: »

Japan is 54% bigger than the UK.

You also need to mention, most of the UK population is in England (55m out of the 65m) and England is approximately half of the total land mass of the UK.

Depends what you count. I suspect that figure doesn't include Ireland, only N,ireland.

Also it includes lot of obscure Japanese islands that are a long way away from the mainland.

If you compare the mainland Japan not the thousands of islands that are classed as Japan, it's roughly the same land mass as all the UK including all of Ireland. And the U.K. Has half the population

James_Green_1982

AG47 wrote: »

Very good post, hit the nails on the head there.

Even with all these things propping up the bubble, it's only just preventing a crash.

Interest rates going back to normal as they will have to at some point will bring a large correction in property prices

I'm not too sure about this. There's no reason the BoE should need to ever raise interest rates. They could just keep them low and let the pound weaken more and more. With the level of debt in the system (corporate, govt, mortgage and cars) I'm becoming more convinced the govt may just allow a de facto debt jubilee by currency devaluation.

Sibbers123

If inflation goes up, interest rates will need to rise, no doubt about it. To say BoE will never need to raise interest rates is naive. Interest rates used to be as higher as 15%. Don’t get me wrong, I can’t see that happening anytime soon, but there has to be a happy medium (around 4-5% long term).

The theory of letting the pound fall to reduce debt doesn’t work, it does the exact opposite.

AG47

Sibbers123 wrote: »

If inflation goes up, interest rates will need to rise, no doubt about it. To say BoE will never need to raise interest rates is naive. Interest rates used to be as higher as 15%. Don’t get me wrong, I can’t see that happening anytime soon, but there has to be a happy medium (around 4-5% long term).

The theory of letting the pound fall to reduce debt doesn’t work, it does the exact opposite.

This is true, but they will still expand the currency supplies bringing huge inflation, hen they will have to raise interest rates.

The 300 year emergency low interest rates were meant to be temporary it the emergency still isn’t over.

51mm5

Where have I heard this all before ��

MobileSaver

AG47 wrote: »

I'm expecting around 30% crash in real terms over the next half a decade or so.

Of course every prediction you have ever made on MSE has proven to be completely and utterly wrong!

So on that basis it's a racing certainty house prices will be higher in five years time than they are today.

triathlon

MobileSaver wrote: »

Of course every prediction you have ever made on MSE has proven to be completely and utterly wrong!

So on that basis it's a racing certainty house prices will be higher in five years time than they are today.

I don't know why but -30% fall seems to be the magic number and has been for close to two decades now, and at a guess it has been quoted a few hundred times if not more by various people, It started with Professor Oswald and then Motley fool forum and then the good old Housepricecrash.com cult where there are old members still banging on and still quoting that figure having gone from young men to now middle age men and older.

Honestly, it is tragic

andrewf75

I can't really see a major crash happening, more a gradual fall or stagnation, which is ideal really. No-one loses out, but prices become gradually more affordable.

The only thing I am confident about is that property prices won't go up like they have in the last few decades. The same is probably true for stocks. Recently attended a great presentation by a financial advisor who explained this much better than I can, but basically no-one should expect to see anything like the same growth in stocks/property in the next few decades as has happened in the last few. Largely due to quantitive easing etc which artificially kept things going, but this money is now being taken back out.

Its common sense for most of us that see the problems in the world and see that we can't keep going as we are, but its a warning for those like triathlon who just see everything continuing as before forever more.

lisyloo

triathlon wrote: »

I don't know why but -30% fall seems to be the magic number and has been for close to two decades now, and at a guess it has been quoted a few hundred times if not more by various people, It started with Professor Oswald and then Motley fool forum and then the good old Housepricecrash.com cult where there are old members still banging on and still quoting that figure having gone from young men to now middle age men and older.

Honestly, it is tragic

The irony is that even my house did fall 30% I’d still be better off than renting, have my own place that I can personalise and be secure in, not pay a mortgage and have equity if I want to downsize in my dotage.
What’s not to like?

(People say neither smugness or bitterness is attractive but If I had to choose one then I know which it would be)