How far will house prices fall [volume 4]

[Burwood]

anonymous said:

[redacted]

You can still buy a lovely mews off Cheyne Walk for under 5M. That is where my green would go. I used to work very close to the location you mention. It's a bit err commercial. I missed that bit

[WCZ]

z4RRSchris99 said:

you would have seen my scheme

penthouse at Neo sold this year 19.75m to s Brit who saw it in the FT

the views on SE1 towers are great, if you've got a spare hour I'll give you a butchers from 150m up

I've always been a fan of Neo bankside, posted a fair bit in the thread on skyscraper city
would love to come and have a look but i'm rarely in London these days
how many of the apartments views has the tate extension ruined?

[z4RRSchris99]

WCZ said:

I've always been a fan of Neo bankside, posted a fair bit in the thread on skyscraper city
would love to come and have a look but i'm rarely in London these days
how many of the apartments views has the tate extension ruined?

I dont do neo, one of the others. but if say a fair few of the views are fked

[jonny70]

i find it "interesting" that some members on here believe house will just keep going up wont fall at all. Its cause there is a shortage go houses, not enough being built, millions of immigrants, interest rates are going to fall (even at 0.5?) , we are going to see negative interest rates? , every pensioner and there dog is going to cash in his pension and buy a house up North.

Gordon Brown said back in mid 2000's He abolished "boom and bust" He was only ridiculed later when the bust happened. No one at the time thought he was a nutter.


Some of the people on this thread seem to hold Gordon Browns policy of "abolishing boom and bust" in high regard when it comes to house prices.

Remember only a few years ago the market impression was that gold was going to hit way over $1500 and platinum over $2000 . The business pages, analysts and the pundits couldnt keep blabbing on about it . What happened?

What about oil ? Its now $60 a barrel , anyone forecast that ? Remember not so long ago they were saying it would hit $200 a barrel cause of demand etc

I guess houses are different ,right ?

Im not advocating a crash just that in this volatile world anything is possible and those that dont believe a housing price crash is possible belong to the same school of economics as gordon Brown abolishing boom and bust.

[turbobloke]

jonny70 said:

Some of the people on this thread seem to hold Gordon Browns policy of "abolishing boom and bust" in high regard when it comes to house prices.

. . .

I guess houses are different, right ?

From what I can recall of recent posts I'd say there's a view that house prices aren't going to correct nationally in the near future, but no strong view that any form of cycle has ceased to exist - since outside of London and the SE the situation isn't so febrile.

jonny70 said:

Im not advocating a crash just that in this volatile world anything is possible and those that dont believe a housing price crash is possible belong to the same school of economics as gordon Brown abolishing boom and bust.

It's possible but as always the first key question is when.

Not imminently in my view but who knows!

[Mr Whippy]

jonny70 said:

Im not advocating a crash just that in this volatile world anything is possible and those that dont believe a housing price crash is possible belong to the same school of economics as gordon Brown abolishing boom and bust.

They did want to crash, but low interest rates allowed high prices to be maintained by protecting bad debtors, and also allowed higher borrowing to sustain house purchases because interest payments were lower.

For anyone who hasn't worked away at their credit in the meantime, or just borrowed more because they could, just leaves us back where we were in 2007... with the market bubbly and wanting to correct.


The question is, how much will government want to protect people *this* time. Maybe this time there is no more protecting because there is no where to go now.


Interesting times whatever happens!

[NewNameNeeded]

jonny70 said:

Im not advocating a crash just that in this volatile world anything is possible and those that dont believe a housing price crash is possible belong to the same school of economics as gordon Brown abolishing boom and bust.

Wait till teleportation is invented and become commercially viable. No way I'm living within 200 miles of London then

[jonah35]

What we have seen is that the govt will not prop up oil or gold but they go to great lengths to prop up property. Stamp duty refers, reduced rates, help to buy etc.

Property in the north is still at 2004 prices yet rates are low and the economy is picking up.

I just can't see terraced houses dropping 50% because I'd buy more! Rents never really fall on residential stuff.

The pensions thing will be big news.

Personally I think rates could go lower before they go higher. Look at Switzerland and the ECB.

[Pork]

jonah35 said:

I just can't see terraced houses dropping 50% because I'd buy more! Rents never really fall on residential stuff

I guess that if prices dropped 50%, many will be waiting for 55%....or trying to wait until things bottom out.

A drop like that would, in my opinion, only be caused by a massive drop in the availability, or a huge increase in the cost, of finance. If you're a cash buyer, you're quids in as you could avoid either. If you're not, you'd subjected to the restrictions the rest of the potential buyers would be subjected to so perhaps unable to buy streets full of seemingly bargain priced terraced houses.

[jonah35]

Pork said:

jonah35 said:

I just can't see terraced houses dropping 50% because I'd buy more! Rents never really fall on residential stuff

I guess that if prices dropped 50%, many will be waiting for 55%....or trying to wait until things bottom out.

A drop like that would, in my opinion, only be caused by a massive drop in the availability, or a huge increase in the cost, of finance. If you're a cash buyer, you're quids in as you could avoid either. If you're not, you'd subjected to the restrictions the rest of the potential buyers would be subjected to so perhaps unable to buy streets full of seemingly bargain priced terraced houses.

The government would do everything in its power to avoid this happening.

I suppose if anyone disagrees they can always sell and rent

[Pork]

jonah35 said:

The government would do everything in its power to avoid this happening.

I suppose if anyone disagrees they can always sell and rent

The government have

And I think many did 'STR' and now find themselves left behind.

[gibbon]

Mr Whippy said:

They did want to crash, but low interest rates allowed high prices to be maintained by protecting bad debtors, and also allowed higher borrowing to sustain house purchases because interest payments were lower.

For anyone who hasn't worked away at their credit in the meantime, or just borrowed more because they could, just leaves us back where we were in 2007... with the market bubbly and wanting to correct.


The question is, how much will government want to protect people *this* time. Maybe this time there is no more protecting because there is no where to go now.


Interesting times whatever happens!

Why do people constantly talk about the base rate as if its sole purpose is for the control of property prices.

The financial crash was not due to house prices wobbling, the wobble in prices was due to the crash. Low interest rates arnt to stimulate house price growth, its to stimulate the economy. The base rate is meant to be a tool to control inflation and growth in the economy.

Causes and effects are so often confused with this stuff, house prices are not the primary economic concern of the government however they seem to be the primary concern of the uk home owning public.

[Derek Chevalier]

gibbon said:

Why do people constantly talk about the base rate as if its sole purpose is for the control of property prices.

What easier way is there to put more money in peoples pockets and give them the impression of prosperity (in the short term), thereby helping to get the current Gunment relected (especially when the average punter is so massively leveraged)?

gibbon said:

The financial crash was not due to house prices wobbling

The driver was when they wobbled up by >100% between 2000-2007

gibbon said:

Low interest rates arnt to stimulate house price growth, its to stimulate the economy

Same thing

gibbon said:

house prices are not the primary economic concern of the government

Which Government committee do you sit on?

gibbon said:

Causes and effects are so often confused with this stuff

Agreed

[Burwood]

Nope, the crash had nothing to do with house prices. It wasn't even a crash. It was a short term correction. Between 2000 and 2007 try 200%
For 50 years so many scratch their heads as to why housing outperforms inflation. The answer is its finite supply.

[z4RRSchris99]

in London there is oversupply. by my count in z1/2 looking at 75,000 units ish over the next few years

unfortunay they are all priced as so the normal Londoner can't afford them

[Derek Chevalier]

Burwood said:

For 50 years so many scratch their heads as to why housing outperforms inflation. The answer is its finite supply.

It's not 50 years, it's only the last 15-20. If you look over a larger time period (I recall this book covers 400 years) you will see it is a very recent phenomenon.

http://www.amazon.co.uk/Houses-Historical-Analysis...


If it weren't for the fact that

Large parts of the rest of the world also boomed during this time
Rents haven't been affected by this perceived shortage
Property prices relative to earnings were as low as 2.5X earnings as recently as the mid 90s

then one could almost believe it wasn't an enormous speculative bubble

[ClaphamGT3]

Derek Chevalier said:

Burwood said:

For 50 years so many scratch their heads as to why housing outperforms inflation. The answer is its finite supply.

It's not 50 years, it's only the last 15-20. If you look over a larger time period (I recall this book covers 400 years) you will see it is a very recent phenomenon.

http://www.amazon.co.uk/Houses-Historical-Analysis...


If it weren't for the fact that

Large parts of the rest of the world also boomed during this time
Rents haven't been affected by this perceived shortage
Property prices relative to earnings were as low as 2.5X earnings as recently as the mid 90s

then one could almost believe it wasn't an enormous speculative bubble

You are incorrect. With only three relatively brief periods of downward pressure, house prices have trended upwards in most areas of the country since 1971/2

[Derek Chevalier]

ClaphamGT3 said:

Derek Chevalier said:

Burwood said:

For 50 years so many scratch their heads as to why housing outperforms inflation. The answer is its finite supply.

It's not 50 years, it's only the last 15-20. If you look over a larger time period (I recall this book covers 400 years) you will see it is a very recent phenomenon.

http://www.amazon.co.uk/Houses-Historical-Analysis...


If it weren't for the fact that

Large parts of the rest of the world also boomed during this time
Rents haven't been affected by this perceived shortage
Property prices relative to earnings were as low as 2.5X earnings as recently as the mid 90s

then one could almost believe it wasn't an enormous speculative bubble

You are incorrect. With only three relatively brief periods of downward pressure, house prices have trended upwards in most areas of the country since 1971/2

Not disagreeing that they have trended upwards (unadjusted for inflation/earnings growth), it's the spectacular disconnect with earnings that is a new phenomenon

[jonah35]

Yes but more people work now. Both man and wife now tend to work rather than just the one so that doubles income straightaway.

Plus, if you think about it, why should people have a mortgage paid by retirement. Why not borrow now, interest only and pass that on to kids and so on.

People will scream it's a bad thing but if your great great great great grandfather bought a country pile in Hampshire for £4,000 in 1850 and you still had a £4k interest only loan would you be grateful or sad?

People that aren't borrowing are, sadly, losing out.

[Derek Chevalier]

jonah35 said:

Yes but more people work now. Both man and wife now tend to work rather than just the one so that doubles income straightaway.

Compared to when?

jonah35 said:

Plus, if you think about it, why should people have a mortgage paid by retirement. Why not borrow now, interest only and pass that on to kids and so on.

Many people do - it's called renting

jonah35 said:

People that aren't borrowing are, sadly, losing out.

And this is where the Government are building up a massive issue for the future. Hopefully for the Tories post 2015

jonah35 said:

People will scream it's a bad thing but if your great great great great grandfather bought a country pile in Hampshire for £4,000 in 1850 and you still had a £4k interest only loan would you be grateful or sad?

Depends if he could pay for the upkeep and survive through volatile interest rate periods. A large percentage of the country today could not cope with the latter. Difficult to compare the past with present/future