Off Topic: House Price Crash

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
I was just wondering if any fellow MAAT's or other people had any interest in the housing market?

Does anyone think the housing market is going to crash, continue to boom or stabilise?

My votes in for a crash. Look at the business section on the BBC says interest rates rising to 5% next month, 5.25% in the new year, and 6% in the medium term. And the they always downplay this sort of thing in my opinion.

The debt in this country is to massive to cope with higher than trend interest rates.

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    I'm looking to buy offices so ideally i'd like it to crash but realisticly I think it's going to stabilise.

    You have an interest for property then?

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Yes but its just an interest.

    It just seems to me that one of the biggest house price crashes of all time is on the cards, and yet everyone seems to think that prices are going to boom even further?
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    I know, did you see the "tonight" programme on the other night?

    People just buying houses, getting themselves in massive debt because "oh it's property, we're bound to release some equity from it!"

    They now reckon that the "first time buyers" average age is 34!

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Yes I think we can expect alot more programmes like that, especially as a lot of people seem to be talking about it.

    Take a look at this graph of house prices:

    http://www.housepricecrash.co.uk/graphs-average-house-price.php

    The "I must have it now culture" has totally maxed out debt in this country, and the money supply has rocketed due to the low interest rates and lax lending.

    You can read the horror stories about taking on to much debt in this forum and other forums at the same site:

    http://forums.moneysavingexpert.com/forumdisplay.html?f=76
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    That forum is quite worrying! :shock:

    People have the debts and interest rates as signatures! :shock:

    Regards

    Dean
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    The doom and gloom mongerers have been quoting housepricecrash.co.uk as a definitive source of the impending crash for a number of years. My personal opinion is that the statistics are a little bit Michael Moore (i.e. one-sided).

    Economic circumstances are very different now compared to how they were in the last crash of the late 80's/ early 90's. Employment figures.. inflation.. interest rates.. all wildly different.

    For me, I live just south of London and it is largely a case of supply and demand. London continues to expand into the boroughs and a shortage of housing will always keep demand high. I bought my current property almost at the height of the last mini-boom 2 years ago. Since then, prices stabilised initially and are now rising modestly. Given demand is still high, I do not envisage prices correcting in this area just yet.

    A price crash may well hit harder away from major cities where demand is not so constant.

    As for commercial property, well that is a whole different ball game..
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    I'm not being funny deanshepherd, but what you just came out with sounds exactly what the estate agents say in the news. sorry!

    A bubble has even the most financially astute convinced. Do you not think the "things are different now" approach is just a little short sighted?

    But I guess no-one knows for certain. I also guess we are both biased as you have purchased recently and i'm looking to purchase in the future.

    I do think things are moving closer towards the "bear market" end of the spectrum.

    Look at this: http://news.bbc.co.uk/1/hi/business/6090754.stm

    and the BBC loves to ramp up the prospects for the property market.

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    I am far from a property expert and, as you suggest, everyone in the property/investment industry has their own agenda. Share price crashes in recent years have always rallied shortly after because the demand is there. Same for property - certainly in my area. In the long run demand will always outstrip supply in the UK, we are an island after all!

    Nothing in the BBC article suggests any change to the status quo to me. Inflation is trying to rise which means people have money to spend, albeit borrowed. If inflation starts to fall without the Bank of England having to step in then I will start to worry. Devolving authority for interest rates to the Bank of England was a great move in my opinion and is probably the greatest single reason for economic stability in recent times.

    I know a number of people 5 or more years ago who sold their houses and lived in rented accommodation because they were adamant that house prices would crash again and they wanted to profit on the drop. I guess they are feeling pretty stupid now! The financially astute experts have a woeful record on predicting rise and falls in any investment area.

    As with the stock market, there is never a bad time to 'get on the ladder' as long as you are investing for the long term. Even prices after the heavy crash in the late 80's were back up within 10 years.

    Providing you can afford to rise and fall with the market then you will be ok. Just don't bite off more than you can chew!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Interest rates rose again today. Anyone got any more opinions on a possible future house price crash?
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Again?!

    Did they rise yesterday as well? Last week perhaps?

    The rise this month was inevitable and very much predicted. Not sure what impact that has on any impending crash.

    (Excuse my petulance, just got back from the in-laws..!)
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Cornwall: average wage £17,100 pa; average house price £218,000. I'm earning slightly more than that but I still haven't a hope in hell of affording a house round here. I for one am longing for a price crash.

    Chris
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash
    deanshepherd wrote:
    Again?!

    Did they rise yesterday as well? Last week perhaps?

    The rise this month was inevitable and very much predicted. Not sure what impact that has on any impending crash.

    (Excuse my petulance, just got back from the in-laws..!)


    oo touchy. It being inevitable does not heighten or reduce its impact.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash
    lincs wrote:
    oo touchy.


    lol

    What impact??

    :?
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Not sure I can answer that without sounding sarcastic, i'm sure I am just misunderstanding you though.

    If adjusting interest rates didn't have an impact we wouldn't adjust them would we?

    Some things that spring to mind when interest rates rise:

    1. Inflation might fall.
    2. Consumer spending might decrease.
    3. Level's of personal debt might fall (or rise!).
    4. The marginal propensity to save will increase.
    5. Bond prices fall.
    6. And....ahem...property prices might fall leaving us first time buyers a chance to nip onto the ladder. 8)
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    Ah yes, but if those things were likely to happen then the Bank of England wouldn't have raised interest rates.

    I suspect the main effect will be a slowing of the growth of inflation which is already above government targets. I don't think an anticipated 0.25% increase will throw us into deflation, or even recession.

    I think your points 1 to 5 will all happen to some degree. I can guarantee your point number 3 will happen! :wink:

    Number 6 is probably a step too far in your economic model..!

    But I guess we're always going to disagree on that one until reality bites and proves one of us wrong!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Off Topic: House Price Crash

    I'll bore you with one last nerdy economic point.

    Obviously if you pump money into the economy say by just printing loads more of it (its actually fractional reserve banking thats doing it), you get inflation - as there is the same amount of goods to buy, but alot more money chasing them.

    The current increase in money supply is 14% per year! The highest its ever been (I think), and this is why inflation is going to rise alot - in my opinion, and in the opinion of alot of people alot cleverer than me.

    But the media dosen't tell you about this, it would spoil all the property shows they have saying property only ever goes up. Although they do seem to be changing their tune a bit.

    But then again knowing my luck property will still hyper-inflate and wages hyper-deflate. :cry:

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