House Price Crash draws closer

I think you'll find that one of the signs that an asset bubble is about to burst is the proliferation of articles on the subject of how the asset bubble will continue unabated. Since instead there are many sites and articles saying that house prices will crash, it seems likely they wont.

FWIW do you own a house?

I think you forgot to add "This time it is different" at the end of your pro house bubble tirade.

Thats where youre wrong smartarse. Most of the articles, TV progs, radio broadcasts etc dealing with house prices spin the line that house prices are having a 'soft landing', and generally will head upwards forever. Theyre promoted by vested interests and are aimed at persuading muppets to buy at the top of an overheated market .

There is a small but growing voice, mainly on the web and from some of the more independant economists, putting the opposite view ie that house prices are an enormous bubble fuelled by the availability of more cheap credit than ever before. Things have changed however, the cheap credits drying up, sentiment is changing and prices throughout most of the UK have been sliding since last summer. The crash is imminent. Expect falls of 30% or more.

Yes I own a house but WTF has that got to do with anything ?

Thats where youre wrong smartarse. Most of the articles, TV progs, radio broadcasts etc dealing with house prices spin the line that house

prices are having a 'soft landing', and generally will head upwards forever. Theyre promoted by vested interests and are aimed at persuading muppets to buy at the top of an overheated market .

There is a small but growing voice, mainly on the web and from some of the more independant economists, putting the opposite view ie that house prices are an enormous bubble fuelled by the availability of more

cheap credit than ever before. Things have changed however, the cheap credits drying up, sentiment is changing and prices throughout most of the UK have been sliding since last summer. The crash is imminent. Expect falls of 30% or more.

Yes I own a house but WTF has that got to do with anything ?

Where did I mention a house price bubble, or say that it would continue?

And do you own a house?

Because itsa test of what you really think will happen. If you own a house, then by your own beliefs you're a mug, since you could sell it and buy it back again much cheaper after the 'imminent' crash. At least 30% cheaper, according to you. Don't you believe your own propaganda?

We've discussed this, you cannot buy _it_ back, you could buy a reasonably equivalent house if you invest a large amount of time in finding one.

A more reasonable question would be about what people are wanting to move are doing?

Jim.

I'd be happy to buy a similar house to mine, and have 100k or so spare, and I suspect most people would, after all chances are you'll buy a different one at some anyway.

But, if people dont think they should sell their houses, then whats all the fuss about a crash, whats the point about the continued postings about imminent crashes if they dont actually do something about it?

I suspect very few are moving into rented. After all, if you find the house you really want to move into, presumably the same argument goes, e.g you couldn't buy that exact same house in say 6 months time, so you should buy it now and never mind the (say) 100k loss? And if you move into rented, you are incurring extra costs and hassle. If people that really believe (so they say) a crash is coming, wont take the hassle of selling and moving into rented to get a large sum of money ,why would the ordinary punter?

"Jim Ley" wrote

Do you think people are currently living in the *best* house for them? Do you really think that is likely??

It doesn't have to be the *same* house that is bought later - it could quite easily be an even **more suited** one for the person in question. So, they'd be in a better house for them *plus* have extra money in the bank -- but then they obviously don't believe their own propaganda enough!

FWIW, are you heavily involved in BTL?

The last crash didn't result in a vast army of STRs (I think that's what they call themselves - sold-to -rent or something?) and, if there is a crash, there's no reason to suppose it will this time.

In any case, the function of propaganda is to mischievously engineer a result; he who disseminates it is bent on producing the result as an 'effect' of his propoganda, not necessarily to mirror the current state of affairs. He doesn't need to believe it.

And neither do you need to believe your own.

:-) , no I dont have any BTL at all, and I dont have an axe to grind either way. I suppose I'd be better off if prices crashed, because I could sell this one and get a better one easier as the differential would reduce. 50% would do nicely.

I do wonder what the agenda is of all the people who prattle on about an imminent crash, and yet dont do the obvious things you'd expect, like take the chance to make oodles of money by selling up and buying back at least

30% (apparently) cheaper in a few months. For some reason they all seem content to sit in their houses and lose lots of money. So why do they post if they dont make any change in their behaviour, and therefore cant expect anyone else to?

People have been posting here for 2 or maybe 3 years about an imminent crash, we've heard it all before; from the people who post how a set of figures show a crash is starting (when actually they merely showed a lower rise than before), to people who say there will be an imminent 30% crash at least, and yet turn down the chance to make significant money from it.

You must and will do what you must.

Why do they post? Several reasons I can think of.

• That's what usenet is for.... debate for the sake of it, and your responses are grist to their mill.

• This is an interesting topic for doommongers - doommongering is a usenet staple over and above the activity of debate for it's own sake.

• Aside from STRs there's a much bigger army of would-be hopeful first-time-buyers who need a crash to 'get on the ladder'. They have a vested interest in propaganda which will precipitate a crash. The HPC website I gather has been a great help for them and is growing quickly in popularity/unpopularity.

I have a friend who sold last summer because of a burgeoning neighbour problem - I'm fairly sure she wouldn't have done so otherwise - but with an average 2 hours per week on the estate agent's web sites she knows she is now at least 15% better off now as a cash-buyer in waiting (less approx 4% transactional charges - interest on cash covering rent) and will go back into the market when she thinks fit. Not yet she says......( some properties here (w.sussex) have asking prices reduced by 25%+ and a huge proportion of hose that haven't been reduced have had their for-sale signs up since late last summer ).

With the exception of a few remaining hot spots, those at the sharp end - by which I mean those who are trying in vain to sell very ordinary houses at extraordinary prices or those who are going ahead and buying in what is very obviously a buyers market - already know that prices have fallen. Those who have no interest in selling or buying - such as yourself apparently - are unlikely to have a very clear picture.

I don't necessarily say that prices will fall further (4 years of inflation could bring prices-wages into better harmony with the current housing market) but if the next 12 months are anything like the last 12 then prices could be nominally down 25% on their highs - AVERAGE. I suppose some will say that isn't actually a crash.

But that's what usenet is for.........

Some good points there, what are you doing posting on usenet? Where i live (near Reading) some areas are still attracting (what seems to me) very high prices that, AFAICR are still higher than a year or two ago, with new 4/5 beds just up the road having asking prices of 700k upwards. And they seem to sell. I'd welcome the chance to buy one at 1/2 the price but I dont see it happening ....maybe I should go and make them an offer :-)

And there is a huge amount of infill going on in this area, typically large house with huge garden being converted to small block of flats. The 1 and 2 bed flats being 200k upwards (judging by the posters outside them). Most seem to sell within a few weeks. Of course, I have no idea what they actually end up being sold for, the 200k is just the price on a poster I suppose. But 3 or 4 years ago I'm sure they would have been 100k or thereabouts.

In message , curiosity writes

Have they actually fallen in value, or merely price? i.e. have they risen and fallen since last summer, or have they merely stayed at the same value, whilst prices have been increased?

If I remember the numbers correctly, the average wage is up about 10% in the same few years that the average house price has more than doubled. Where are we going to get 90+% wage inflation from to justify those high prices, when jobs are rapidly being outsourced to China and India for $0.50 an hour?

The idea that wage inflation will bring about a 'soft landing' after prices more than doubled in a few years is a fairy story for the overindebted, nothing more. Worse than that, increasing taxes and inflation in essential goods is going to leave people with even _less_ money to spend on paying a bloated mortgage.

The housing bubble is entirely a product of the huge amount of liquidity Bliar has thrown into the market by running artificially low interest rates for years: there is no rational reason why house prices would more than double over such a short period of time, and odds are they're going to drop more than 50% in the crash.

Mark

I think 25% is, officially, a crash. I think prices will drop more, perhaps 30-35% but there is no reason why some won't go more, others less, like in '89-91. My grandad, who made millions trading shares so I guess he knew something, always rented. He told me that houses lost 90% of their value in 1929 so there is nothing intrinsically safer about bricks and mortar. We could hope that GB or at least his team, know slightly more about managing the economy nowadays.

Markets are driven by fear and greed, after Friday we will be moving firmly into fear territory I...erm fear.

I have a house and BTL flat - I was a STR before the last boom but won't be STRing this time although I believe this could be a good strategy - if I had more properties I would have already sold some though. I would personally prefer a soft-landing but due to F&G I don't think this has ever happened in the UK property market.

justify

I couldnt agree more. Anyone buying a house now at the top of this overheated market is going to be in massive negative equity within months. Why risk chucking away a hard-earned deposit. Prices are falling and these falls will accelerate as credit becomes harder to obtain and sentiment towards the house market changes. There are also tax/NI rises in the pipeline, aswell as council tax rises and re-rating to come, its possible also that interest rates still have higher to go, and unemployment(heavily disguised by inv/sick benefit) seems to be rising.

Buying a house now seems crazy when waiting a few more months could save you a small fortune. However you can lead a horse to water but you cant make it drink ! Anyone thinking of risking your money on bricks and mortar why not take a look at these sites first :

Or that it'll turn out to be a credit crash when everyone is expecting a house price crash.

Of course if folks can't get mortgages...

FoFP