House Price Boom to Bust

deemy2004

In the Uk the housing market tends to move between one of two extremes.

1. Grossly over valued
2. Grossly under valued.

A the moment the market has achieved the grossly over valued stage.

Now, as always at every peak, a plethora of arguments can be put forward to support house prices that have reached inflated levels, as is what is happening at the end of the current boom.

Nevertheless, no matter what is said, or done, there is only one direction house prices are likely to trend towards and that is a to level that is grossly under valued.

We can all sit here imagining falls of 10%, 20%, 30%, or more but the fact is that house prices will hit bottom, when there aren’t any more speculative buyers anymore.

Just as the housing peak ended with an almighty buying frenzy, with buy to let mania sweeping the country.

SO In all probability the housing slump will likely be both longer and deeper than that which can be imagined at this point in time. No matter what is said about the economy or x,y,z fact AS the there will be plenty of reasons to support the slump brought forward by so called economists to explain why house price slump was so severe.

cafenervosa_2

Its going to be interesting to see what happens to prices in the next 12 months. Especially so if interest rates rise and rise. What was all this talk a while a go of rates rising to 8% , if the current rate is causing panic imagine what it would be like over 6%!

dizzyhead_2

trying to decide whether to buy or not - help!!

meanmachine_2

Well I can't wait for there to be a bust - then there won't be quite so many "crash or not crash?" threads on this website.



The big problem at the moment is that the high street lenders - like Nationwide - are desperately trying to claw back lost business from Northern Rock, A&L and others, and loosening their purse strings like there's no tomorrow.

If even the mutuals are going full speed off a cliff, tha's going to fuel the fire for a while yet.

On the other hand, it tells you that the quality of remaining borrowers is getting quite poor.

manhattan

as soon as house prices become realistic again,we will buy.


but at this moment in time,we are just concentrating on a new business.

"what goes around comes around"

dizzyhead_2

when will they become realistic again though? and who's to say they will?

FaTB

The madness must come to an end eventually, and the sooner the better !!

With unemployment rising, with IR's sure to follow later this year, the ball will get well and truly rolling by next year, and who knows how it will all end.

But one things for sure it aint gonna be pretty !!

My plan to protect myself is to stay debt free, save like mad for a deposit, also handy in case of unemployment.

I will buy when everybody says property is the worst possible investment I could make, that will be somewhere near the bottom of the market IMO.

manhattan

dizzyhead wrote:

when will they become realistic again though? and who's to say they will?

well if it dont happen, we will go blow the money on holidays and the good life! lol

Pobby

cafenervosa wrote:

Its going to be interesting to see what happens to prices in the next 12 months. Especially so if interest rates rise and rise. What was all this talk a while a go of rates rising to 8% , if the current rate is causing panic imagine what it would be like over 6%!

Yep,a scary thought what will happen if IRs hit only 6%.I know people with interest only mortgages paying around 1,200 a month!What is there to think that this will not happenor even 8% and higher.It would seem that rates are on the move up.In the USA they had rates as low as 1% but now they have reached 5%.

In my opinion lower IRs have only served to distort the economy.I don`t think that things will be very pretty over the next couple of years.

poopscoop

cafenervosa wrote:

Its going to be interesting to see what happens to prices in the next 12 months. Especially so if interest rates rise and rise. What was all this talk a while a go of rates rising to 8% , if the current rate is causing panic imagine what it would be like over 6%!

a great post from 2004. We just have to see what happens each year

Woby_Tide

cafenervosa wrote:

Its going to be interesting to see what happens to prices in the next 12 months. Especially so if interest rates rise and rise. What was all this talk a while a go of rates rising to 8% , if the current rate is causing panic imagine what it would be like over 6%!

rate on 10th Oct 2004 4.75%
rate on 10th Oct 2005 4.5%

so not very interesting 12 months at all