House price crash brigade - doomsayers/mongers or optimists?

Turnbull2000

I'm curious what people think. A couple of Times journalists regularly use the term doomsayers/mongers against those (such as FTBs or potential upsizers) hoping for a significant drop in the cost of housing. Estate agents, surveyors and investors also seem to take pleasure from this phase when quoted in the media. The News of the World were at it today.

Seems kinda perverse to me. Beyond the short term pain (thanks to Labour's borrow and spend policy), lower house prices will bring increased equality, improved quality of live, increased disposable income, the ability to save for a pension, the choice to have children at an 'ideal' age - if at all. What's doom and gloomy about that?

If we're to experience a much heralded, yet never in history has occurred 'soft-landing' - usually defined as matching inflation or slightly below inflation rises - an entire generation or two could be written off as earnings sluggishly play catch up.

Running_Horse

I think house prices should and will drop. But the apparent glee with which some come on here and sneer at current buyers about crashing prices is distasteful, to say the least. In this society most people want to own a property, and for most that means buying during their personal window of opportunity. Sour grapes against those who bought when prices were cheaper is pointless.

gillbee

Optimists

I'll go with optimist. Living in a bought flat in Glasgow and hoping to sell up and upsize next year. Housing market seems to have slowed a bit however demand for flats is still high here and I don't think I'll have an issue selling.

As for buying - we're going in at nothing more than 3 times our combined income and hoping to head to an area in a good school catchment which usually keeps prices fairly stable. I'm also hoping that Glasgow's regeneration program linked with the commonwealth games win and increased investment in the city will keep demand high.

That said, if the value decreases then we're not looking to move on. Short of a rate increase of 400% I think we'd ride out any rough years.

DaveyDave_3

Optimists

With the exception of landlords and recent FTBs, lower house prices are a good thing for all in my opinion. The problem is that the economic problems to come will go beyond house prices to lead to recession, job losses and repossessions and clearly these are all bad. This is not the 'fault' of lower house prices. It's mainly down to irresponsible lending on the part of the banks and the fact that Gordons 'miracle ecomony' has been based on huge amounts of debt which is now running out. The country will end up bankrupt IMO. Gordon has sold off all the BoE Gold, raided people's pensions, run up huge country debt and we have an increasing trade deficeit. 2008 is going to be bad!.

I just love how the media have hyped the situation though. House prices have pretty much increased month-on-month for the last 12 years. Now we have 3 months of negative HPI and everybodys getting stressed!!.

Despite the obvious inflation that is and will continue to increase due to BoE lowering interest rates, I'm keeping my savings in the bank and will buy when prices are sensible again.

dolce_vita

House price affordability is at its worst by whatever measure you choose.

And when that happens, a correction is due.



And by correction of course, I mean crash.

free4440273

I vote 'Realists' (although perhaps there is an element of Wishful Thinking

Generali

Turnbull2000 wrote: »

I'm curious what people think. A couple of Times journalists regularly use the term doomsayers/mongers against those (such as FTBs or potential upsizers) hoping for a significant drop in the cost of housing. Estate agents, surveyors and investors also seem to take pleasure from this phase when quoted in the media. The News of the World were at it today.

I suppose it depends if you're buying or selling!

Turnbull2000 wrote: »

Seems kinda perverse to me. Beyond the short term pain (thanks to Labour's borrow and spend policy), lower house prices will bring increased equality, improved quality of live, increased disposable income, the ability to save for a pension, the choice to have children at an 'ideal' age - if at all. What's doom and gloomy about that?

If we're to experience a much heralded, yet never in history has occurred 'soft-landing' - usually defined as matching inflation or slightly below inflation rises - an entire generation or two could be written off as earnings sluggishly play catch up.

Short term pain? Look at what's happened in Japan since their equity and house price bubble in the 80s. The 'Lost Decade' has gone on for 17 years so far and still isn't really over IMO.

Ok, things are different here to Japan (our banking system doesn't have the cross holdings - owning each others' shares - that made a bank's woes so contageous for example) but there are things that could make things as bad if not worse (eg credit default swap - a type of insurance for lenders - holdings between banks).

dolce_vita

Cheap houses are good news for everyone in the long run.

The trouble is at the moment they are too expensive for the average person on an average income. House price affordability is at its worst by any conventional measure you chose.
This situation is unsustainable and eventually will lead to a price crash.

It's just the way western capitalist economies work........bust follows boom.

And you get those who through skill or good fortune come out unscathed and get to start the new cycle at the bottom.

And those who are unable to meet their financial commitments going to the wall.

You could call it economic darwinism.


happy christmas to all my readers

Pobby

Optimists

I guess it is a combination of things.Gordon Browns 'miracle economy'(now where did I hear that before,ah yes,Old Mother Thatchers ``economic revolution``),a whole bunch of people believing the lies,total plonkers that thought rising equity was theres to spend by withdrawing it----oh heck daft low interest rates,silly mortgage``products``,it just goes on and on.Sadly i feel,the party is over .even ole Merv at the BOE warned that ``house prices are a matter of opinion but debt is debt``.Shame no one had the guts then to attempt to get it under control.

Any c-ap about it``all being different now``,I am afraid,will not hold water.I have never,ever seen a boom that didn`t result in a bust.

dolce_vita

Pobby wrote: »

....I have never,ever seen a boom that didn`t result in a bust.....

You obviously haven't seen my list of previous booms that ended with soft landings.

So here it is again............






































Did you count them all.

tr3mor

Optimists

dolce_vita wrote: »

You obviously haven't seen my list of previous booms that ended with soft landings.

So here it is again............

I heard about an explosion in a pillow factory... :rotfl:






I'll get my coat!