How far will house prices fall [volume 4]

[okgo]

W124 said:

Whoever gets in will have far less incentive to keep the housing market afloat. Up to the election it's been a priority but if you know you have five years?. As I understand it, prices in central London have been cooling for a number of months. It will only take a small change in sentiment to tip it over. I make no value judgement about this - I just find it interesting that people assume prices will keep going up the way they have - and that the credit boom will go on forever.

Well they have fairly good reason given the chart of house prices for the last god knows how many years, its a fairly obvious upward curve with a few blips...

[anonymous-user]

okgo said:

W124 said:

Whoever gets in will have far less incentive to keep the housing market afloat. Up to the election it's been a priority but if you know you have five years?. As I understand it, prices in central London have been cooling for a number of months. It will only take a small change in sentiment to tip it over. I make no value judgement about this - I just find it interesting that people assume prices will keep going up the way they have - and that the credit boom will go on forever.

Well they have fairly good reason given the chart of house prices for the last god knows how many years, its a fairly obvious upward curve with a few blips...

Yep, they always go up long term. No changing that!

[W124]

Yes - long term is likely to be up. Inflation of things in general tends to mean the prices of things go up. My point was quite specific. The next gouvernment will have less incentive to keep the market afloat than the current one. Furthermore, it will have less incentive to worry about the votes of people hocked up to the eyeballs. Absolute political necessity has been the driver for a long, long time.

Edited by W124 on Friday 24th April 10:35

[okgo]

I did read it, you said "I just find it interesting that people assume prices will keep going up the way they have" = I said they're probably correct, as that is what happens.

[foliedouce]

W124 said:

Yes - long term is likely to be up. Inflation of things in general tends to mean the prices of things go up. My point, which you would have noticed if you had actually read the post, was quite specific. The next gouvernment will have less incentive to keep the market afloat than the current one. Furthermore, it will have less incentive to worry about the votes of people hocked up to the eyeballs. Absolute political necessity has been the driver for a long, long time.

Agreed, but if we do have an SNP / Labour coalition, the so called mansion tax will have an impact on house prices, that said I think they will water it down from the alarmist headlines. Although they have little incentive to support the market, they have less incentive to crash the market.

[W124]

Ah, I realised that was a bit shirty so I deleted it. Yes - long term most things go up. But my post was really about the immediate short term where, IMHO, the seas look very choppy.

[W124]

foliedouce said:

Agreed, but if we do have an SNP / Labour coalition, the so called mansion tax will have an impact on house prices, that said I think they will water it down from the alarmist headlines. Although they have little incentive to support the market, they have less incentive to crash the market.

Truthfully, I don't think it makes a great deal of difference who's in. Should the market waiver, I don't see any driver for the gouvernment to try to support it. Furthermore, every lever has been used by Osbourne already. I don't blame him BTW - I'd have done the same in his position.

[sugerbear]

W124 said:

foliedouce said:

Agreed, but if we do have an SNP / Labour coalition, the so called mansion tax will have an impact on house prices, that said I think they will water it down from the alarmist headlines. Although they have little incentive to support the market, they have less incentive to crash the market.

Truthfully, I don't think it makes a great deal of difference who's in. Should the market waiver, I don't see any driver for the gouvernment to try to support it. Furthermore, every lever has been used by Osbourne already. I don't blame him BTW - I'd have done the same in his position.

What about the banks whose balance sheets rely on house assets not falling through the floor? I think there is every incentive for a government from whatever party to at the very least maintain house prices and allow what little inflation there is to slowly erode house prices over the 5 years than have an instant correction. That is the only conclusion that I can think of as to why the current government hasn't done its utmost to maintain the bubble.

[W124]

Neither the banks nor whatever shower gets in can do much about sentiment. The present lot have, understandably, done as much as possible to maintain the status quo. My point is that, should the buying public get the heebs about it all, the resultant chaos is not going to have an impact on an impending election. Ergo - an absence of a main driver.

[Mr Whippy]

sugerbear said:

What about the banks whose balance sheets rely on house assets not falling through the floor? I think there is every incentive for a government from whatever party to at the very least maintain house prices and allow what little inflation there is to slowly erode house prices over the 5 years than have an instant correction. That is the only conclusion that I can think of as to why the current government hasn't done its utmost to maintain the bubble.

Since the 08/09 stuff, most lenders won't give good rates without big deposits. Given the time scales already, I'd imagine most banks shouldn't have too many risky assets on their hands. Ie, 25% deposit allows a 25% drop, plus the capital repaid since the lending occurred.

With a poor rate, small deposit, then the interest repayments should have covered their risk adequately too.

Any banks that struggle due to residential mortgages have clearly done something very stupid... just like they did pre 08 crash. If they have, they deserve to crash. Survival of the fittest and all that.



But really our entire society is full of bubbles now.

Ie, farm land is currently very expensive. No one could buy land to farm and EVER make it pay by farming it. Even with interest rates near nothing. It's THAT expensive.
Money has rushed into the asset looking for yield/security and by doing so it's appeared secure and offering a good yield, but also in doing so it's become a risky bubble because fundamentally you can only apply so much value to something before it's value is based on faith/confidence than fundamentals.



If you're dumb enough to borrow money or put your money in dodgy investments (read, not fundamentally sound), that is your fault and you should lose, as should the lender.


Another bailout would be interesting to see. Especially if Conservatives end up in power.

Cameron saying 'reward for doing the right thing' would be ironic if savers and the savvy pay out *again* to cover the stupid and greedy!

Dave

[W124]

Good Lord. I used the word 'waiver' instead of 'waver'. My mind is going, through sheer bloody tiredness.

[VX Foxy]

loafer123 said:

I am pretty well connected in the property market, and I wouldn't hang about if I were you.

Feel like expanding on that?

[fido]

VX Foxy said:

loafer123 said:

I am pretty well connected in the property market, and I wouldn't hang about if I were you.

Feel like expanding on that?

I'd be interested to hear as well. On a selfish level, having got myself debt-free and ready to move I can't say a small drop wouldn't be a bad thing. Ancedotally, the local EA used to be open on Saturdays but it's been very quiet the last few months.

[okgo]

VX Foxy said:

Feel like expanding on that?

Where did you quote that from, has he deleted it?

[VX Foxy]

okgo said:

Where did you quote that from, has he deleted it?

It was a reply to Cheib on 9th April.

[p1stonhead]

VX Foxy said:

loafer123 said:

I am pretty well connected in the property market, and I wouldn't hang about if I were you.

Feel like expanding on that?

A few of people I know who invest heavily in London property think it is very undervalued at the moment and expect swift rises from straight after the election to perhaps a year after depending on who gets in.

[walm]

Mr Whippy said:

Money has rushed into the asset looking for yield/security and by doing so it's appeared secure and offering a good yield, but also in doing so it's become a risky bubble because fundamentally you can only apply so much value to something before it's value is based on faith/confidence than fundamentals.

Just to note that as the asset price rises the yield looks worse and worse.
While it might be considered a "good yield" given almost nothing with any security offers much yield right now that will all change if anyone ever grows a pair and actually raises rates again.

So landlords are sucking up measly 3% rental yields because they easily make it up an asset price appreciation.
Obviously that process can reverse, and reverse fast. AKA bursting that bubble.

[VX Foxy]

I Got the impression that Loafer was suggesting the opposite.

[toohangry]

walm said:

Just to note that as the asset price rises the yield looks worse and worse

Unless rents track house prices. I don't know the answer to that - anyone?

[VX Foxy]

toohangry said:

Unless rents track house prices. I don't know the answer to that - anyone?

They don't.