There will not be a crash

snarffie

dolcevita wrote: »

I think I am right in saying that all banks reserve the right to suspend- at any time- all transactions.

This includes not paying you your money (regardless of the terms of any particular account).

I think I am right in saying that stronboe's 'uncle' and his fabled 'predicament' has no relevance to this thread whatsoever. I think I have made my point, in the absence of any elucidation from strongboe.

The_Dangerman

Paul_N wrote: »

I thought I specifically said BTLs, but you're right a "flat" did slip in their by mistake. Not quite on the scale of mistakingly believing most people in this country have had good pay rises this year.



Of course some people can afford luxuries. What you fail to understand is the cross section of society. There are some people that can afford to cut down on luxuries. There are some people that have already cut down on luxuries and thus have to cut down on other things, such as fuel costs (wear a jumper as you say). Then there are some people that don't buy luxuries, are already wearing jumpers, and can't afford to cut down on anything else. Its the percentage of people who can't manage to cut their costs over the next few months and years that will have the impact on the economy, that will decide such things as average house prices, rents charged etc. The bigger the number of people, the bigger the impact on many things that cost money including house prices.



Last I heard food bills are up. Fuel bills are up. Despite this, rents are going to jump as well? If you're sure rents are going to climb, go ahead and raise your rents. If you can get more, go get more. But I think you'll find you'll get only what people are willing and able to pay. A few posts back some people suggested you had problems understanding what real supply and real demand is, so I don't expect you to see how that works.

Might I also suggest that your posts have an air of 'I'm alright Jack' attitude to them, and my observation is that you fail to acknowledge a world outside your own comfortable one. This may go some way to explaining why you're receiving some hostile reactions. Its hard to keep a polite discussion with someone like you.

Now I've missed too much of The Colour Of Magic. :mad:

As from the 1st March 2008 I did increase one of my rents. Only by 3% and first increase in 18 months because they have been good tennants. Accepted without a fuss.

I think 3% rent rises are perfectly sustainable at the moment, I will be reviewing them reguarly though. If a tennant is good though and doesn't complain then I will try and hold off rises for a little longer, give something back as they say.

Don't worry, I have a thick skin, you don't have to keep it polite, although I refuse to insult people. There is nothing special about me, anything I have done can be done by anyone else.

Besides, if the bitter vitriol keeps coming from the "other side", then I'm only human, so a bit of smugness might show through, but really, I have been more than polite to the nasty responses I have got for suggesting the housing market might not actually crash as is hoped by many.

Lotus-eater

The_Dangerman wrote: »

Don't worry, I have a thick skin, you don't have to keep it polite, although I refuse to insult people.

Besides, if the bitter vitriol keeps coming from the "other side", then I'm only human, so a bit of smugness might show through, but really, I have been more than polite to the nasty responses I have got for suggesting the housing market might not actually crash as is hoped by many.

I believe you have been polite and well done for that.

But if I can pull you up a sec, FTB'rs might hope for a crash, but most of us just believe it will happen, not hope for it.

The_Dangerman

Lotus-eater wrote: »

I believe you have been polite and well done for that.

But if I can pull you up a sec, FTB'rs might hope for a crash, but most of us just believe it will happen, not hope for it.

I respect anyone's opinion that the house prices may crash, fall, stagnate, etc, what I don't have time for is people calling my "stupid, insane, idiot" etc. It doesn't bother me, but whilst I would love to bite my tongue and hide the smugness, I couldn't. Because if I am so "stupid", I wouldn't be where I am now. For that I apologise, but I am afraid I am only human.

On another forum I use, ad-hominem(attacking the person and not the argument) attacks are specifically prohibited. It is a shame they are not here.

I would much prefer someone attacks WHY I think prices aren't going to rise, than attacks my intelligance for suggesting that. I love a good discussion.

brit1234

The_Dangerman wrote: »

I would much prefer someone attacks WHY I think prices aren't going to rise, than attacks my intelligance for suggesting that. I love a good discussion.

It's simple why prices won't rise, its because the banks are ever tightening their lending criteria especially in the last few weeks. They have said the housing market is overvalued and they are now trying to protect themselves as prices fall.

The_Dangerman

brit1234 wrote: »

It's simple why prices won't rise, its because the banks are ever tightening their lending criteria especially in the last few weeks. They have said the housing market is overvalued and they are now trying to protect themselves as prices fall.

Fair point.

To counter that I put forward the fact that lending in February 2008 was only 6% lower than February 2007. Billions of pounds were still advanced for new home loans.

Also, the old favorites of high employment, and more households being created than houses, and historically low interest rates.

I have always said though that my belief is we are heading for stagnation for 12-24 months. That is a real terms devaluation and compared to the past 7 years is very significant.

Generali

The_Dangerman wrote: »

Please, enlighten me then!

(meant with no sarcasm or malice)

Prices are set by supply and demand in a free (or freeish) market - for every seller you need a buyer and vice versa. You have people that want to sell but without a buyer they won't be able to, similarly you have people that want to buy but without a seller they can't.

So now consider what constitutes demand, that is the buyers' side of the matter. You are the buyer and you want to buy a 2 bed terraced house in Barnsley that is up for sale at offers in excess of £100k which is about the market price and the seller is prepared to hold out for the market price. You also have 2 competitors that want to buy the same house. You each have a deposit of £10,000 and need a mortgage for the rest, being able to borrow 4x income.

Alfonse earns £15k pa so can borrow £60k and so can offer £70k in total, max. Britnee earns £20k so can borrow £80k and so can offer £90k max. Dangerman earns £40k pa so can borrow £160k and so can offer £170k max.

As the seller is after a minimum of £100k, the others aren't in the game, only you are able to buy and so only you form part of demand for that house as you are the only one willing and able to afford it. It doesn't matter how desperate Britnee is to buy, she can't afford it. Same goes for Alfonse. So in this instance, supply=1, demand=1. The sale is made and prices needn't rise or fall for the sale to occur unless one side of the bargain is particularly bad at haggling.

The point with demand is that it doesn't matter how much you want something, if you can't afford it you are whistling in the wind.

So consider now what happens to demand in the above example if banks want a bigger %age deposit or will only lend 2x income. You may feel that isn't what's happening now but I believe that it is.

So what happens to supply now, our seller in this example? She may hold out for £100k. The only problem is, none of her potential buyers can afford to buy. She may hold out for the money thinking that her potential buyers are just trying it on or that there may be another buyer in the wings. Some People call this a 'Mexican Standoff'; I have no idea why Mexicans are standing off in Barnsley but Some People are very strange.

My belief is that is where the market is now. Sellers don't wish to cut prices, buyers can't or won't pay what sellers want. Where we go from here is the interesting bit.

PS It's worth remembering that people talk a load of !!!! about markets as well as about supply and demand. A market is just the adding together of the buying and selling decisions that you, I and a whole load of other people make.

brit1234

The_Dangerman wrote: »

To counter that I put forward the fact that lending in February 2008 was only 6% lower than February 2007. Billions of pounds were still advanced for new home loans.

Uhm, that was completed mortgages in February, thats ages ago in terms of what has happened in the mortgage market in recent weeks. The effects of this won't be seen for a minimum of a month but most likely a couple of months.

As for unemployment it was shown that the US house price crash caused unemployment and not the other way round.

The_Dangerman

Generali wrote: »

Prices are set by supply and demand in a free (or freeish) market - for every seller you need a buyer and vice versa. You have people that want to sell but without a buyer they won't be able to, similarly you have people that want to buy but without a seller they can't.

So now consider what constitutes demand, that is the buyers' side of the matter. You are the buyer and you want to buy a 2 bed terraced house in Barnsley that is up for sale at offers in excess of £100k which is about the market price and the seller is prepared to hold out for the market price. You also have 2 competitors that want to buy the same house. You each have a deposit of £10,000 and need a mortgage for the rest, being able to borrow 4x income.

Alfonse earns £15k pa so can borrow £60k and so can offer £70k in total, max. Britnee earns £20k so can borrow £80k and so can offer £90k max. Dangerman earns £40k pa so can borrow £160k and so can offer £170k max.

As the seller is after a minimum of £100k, the others aren't in the game, only you are able to buy and so only you form part of demand for that house as you are the only one willing and able to afford it. It doesn't matter how desperate Britnee is to buy, she can't afford it. Same goes for Alfonse. So in this instance, supply=1, demand=1. The sale is made and prices needn't rise or fall for the sale to occur unless one side of the bargain is particularly bad at haggling.

The point with demand is that it doesn't matter how much you want something, if you can't afford it you are whistling in the wind.

So consider now what happens to demand in the above example if banks want a bigger %age deposit or will only lend 2x income. You may feel that isn't what's happening now but I believe that it is.

So what happens to supply now, our seller in this example? She may hold out for £100k. The only problem is, none of her potential buyers can afford to buy. She may hold out for the money thinking that her potential buyers are just trying it on or that there may be another buyer in the wings. Some People call this a 'Mexican Standoff'; I have no idea why Mexicans are standing off in Barnsley but Some People are very strange.

My belief is that is where the market is now. Sellers don't wish to cut prices, buyers can't or won't pay what sellers want. Where we go from here is the interesting bit.

PS It's worth remembering that people talk a load of !!!! about markets as well as about supply and demand. A market is just the adding together of the buying and selling decisions that you, I and a whole load of other people make.

What you have forgotton is that Alfonsee and Britnee still need a place to live. If they can't save up enough deposit or borrow enough money they will rent. If both of them want to rent because they can't afford to buy there is a demand for rental properties which some BLTer will come along to fill. My letting agent will allow a bigger earnings to expenditure than a mortgage.

If Alfonse and Britnee can't afford the rent maybe they will co-habit. This could possibly result in mini Alfonses and Britnees and everyone is happy.

The_Dangerman

brit1234 wrote: »

Uhm, that was completed mortgages in February, thats ages ago in terms of what has happened in the mortgage market in recent weeks. The effects of this won't be seen for a minimum of a month but most likely a couple of months.

As for unemployment it was shown that the US house price crash caused unemployment and not the other way round.

Yes, February, because obviously the figures for March aren't available yet! We'll see what happens in the future but loans are still available, let's not forget that.