There will not be a crash

snoopy78

I did not believe that a house price crash was on it's way until recently, here is what changed my mind.

For the most part house sales rely on first time buyers to come in and take the lower end properties so as others can move up the ladder. Your classic chain, without the person at the bottom of the chain nothing moves. Now mortgage companies have taken off practically all the 100% mortgages, this means that the first time buyer now needs a deposit. Well we all know in the UK that saving is not our strong point, that is made worse by increased rental prices, utilities, food etc, eating into what we (could potentially) save.

Whilst there are some first time buyers who can save (ie if you live a home with mum and dad) the vast majority can't. This means the lower levels of the ladder has gone, in turn ... well you are all clever enough to work out the rest.

It may take a while as mortgage offers last for several months but it is one of the major factors that could tip a house price fall.

I am a Financial analyst and I have to admit my guess is as good as a school leavers guess. And bear in mind I am looking for a house at the moment so a housing crash would be very timely so this would means I see evidence that I'd like to see.

The_Dangerman

Calm down dear, it's just a slowdown ;-) (Not aimed at anyone in particular)

Low interest rates, high employment and more households being created than houses being built is not a reciepe for a crash.

Sure, there is no doubt we're at the end of a good run, and maybe inline for a run of a year or two of stagnation and a further 3 years (in my estimation) of slow growth while wages catch up but that is all.

dannyboycey

snoopy78 wrote: »

I did not believe that a house price crash was on it's way until recently, here is what changed my mind.

For the most part house sales rely on first time buyers to come in and take the lower end properties so as others can move up the ladder. Your classic chain, without the person at the bottom of the chain nothing moves. Now mortgage companies have taken off practically all the 100% mortgages, this means that the first time buyer now needs a deposit. Well we all know in the UK that saving is not our strong point, that is made worse by increased rental prices, utilities, food etc, eating into what we (could potentially) save.

Whilst there are some first time buyers who can save (ie if you live a home with mum and dad) the vast majority can't. This means the lower levels of the ladder has gone, in turn ... well you are all clever enough to work out the rest.

It may take a while as mortgage offers last for several months but it is one of the major factors that could tip a house price fall.

I am a Financial analyst and I have to admit my guess is as good as a school leavers guess. And bear in mind I am looking for a house at the moment so a housing crash would be very timely so this would means I see evidence that I'd like to see.

Good post, and I applaud your honesty at the end.

The_Dangerman

snoopy78 wrote: »

For the most part house sales rely on first time buyers to come in and take the lower end properties so as others can move up the ladder. Your classic chain, without the person at the bottom of the chain nothing moves. Now mortgage companies have taken off practically all the 100% mortgages, this means that the first time buyer now needs a deposit. Well we all know in the UK that saving is not our strong point, that is made worse by increased rental prices, utilities, food etc, eating into what we (could potentially) save.

The FTB has been replaced by the BTL landlord who rent out to what would have been the FTB for the interest only cost of the mortgage which allows the rent to cover the mortgage.

Hoario54

The_Dangerman wrote: »

Calm down dear, it's just a slowdown ;-) (Not aimed at anyone in particular)

Low interest rates, high employment and more households being created than houses being built is not a reciepe for a crash.

You keep on hoping...;)

The_Dangerman wrote: »

Sure, there is no doubt we're at the end of a good run, and maybe inline for a run of a year or two of stagnation and a further 3 years (in my estimation) of slow growth while wages catch up but that is all.

Of course, that's what happens to all bubbles when they run out of puff...:rolleyes:

Hoario54

The_Dangerman wrote: »

The FTB has been replaced by the BTL landlord who rent out to what would have been the FTB for the interest only cost of the mortgage which allows the rent to cover the mortgage.

So who (in the longer term) is going to move up the ladder to keep the market turning?

Paul_N_4

The_Dangerman wrote: »

Calm down dear, it's just a slowdown ;-) (Not aimed at anyone in particular)

Low interest rates, high employment and more households being created than houses being built is not a reciepe for a crash.

Sure, there is no doubt we're at the end of a good run, and maybe inline for a run of a year or two of stagnation and a further 3 years (in my estimation) of slow growth while wages catch up but that is all.

Does the significant lack of credit at competitive rates (i.e. the credit crunch) not factor into your detailed analysis of the current economic climate?

The_Dangerman

Paul_N wrote: »

Does the significant lack of credit at competitive rates (i.e. the credit crunch) not factor into your detailed analysis of the current economic climate?

Not really, it's still cheap by relative terms. I've not found it overly burdomsome to acquire a BTL mortgage, albeit that bit more difficult to get an 85% one.

dannyboycey

The_Dangerman wrote: »

3 years (in my estimation) of slow growth while wages catch up but that is all.

How will wages rise by 30-50% in 3 years? Tightening of credit, slow economy, recession, rising inflation, rocketing fuel bills.... Where are these companies going to find the cash for these wage increases!??

Generali

It's pretty much impossible to compare now to the late 80s, early 80s or mid 70s, the times of the last 3 house price falls in terms of macro economic environment except that in all three cases, the money supply (measured by M4) had increased and later decreased.