Housing crash increasingly unlikely?

It will come as sure as death will..its pure economics-not complicated at all. The only ones who are in denail (and they know the real truth!) are those who are making big money out of the housing market eg banks,building societies,estate agents etc becuase obviously,as soon as an appreciable downturn comes along,they will stop making as much money!. Remove antispam and add 670 after bra to email

Be a good Global citizen-CONSUME>CONFORM>OBEY

Circumcision- A crime and an abuse.

In message , criticaldensity writes

MMM!

Transactions down by 30%, but no downturn in demand??????

The fact is that, if transactions are down by 30%, demand, (at current prices), has fallen by 30%. (Some might argue falling supply could have created the reduction in transactions, but this would also lead to continuing price rises.

To raise demand, prices would have to fall.

The saving grace of the present market is that people are not forced to sell like they were the last time. If they dont get the price, they dont sell, and just keep paying the mortgage.

I'm going to say what I've said before on this issue.

The BTL'ers (almost 10% of housing stock now) of who can't get a tenant will be forced to sell. If that's 2% of the housing stock that's more than enough to have a noticable effect.

tim

In message , "tim (moved to sweden)" writes

Every buy to letter can get a tenant by reducing the rent. If this doesnt meet the mortgage payments, they can then fund the difference. Better to lose a hundred quid a month, or so, rather than losing £20k or so in a forced sale. In another 10 years +/-, the property will have doubled again, and they can get out from under.

But then, not every buy to letter will be smart enough to see this, so your prophecy may come true.

X-No-Archive: yes In message , Richard Faulkner writes

You're bang on. Actually, letting slightly below the market rate makes good business sense. A letting agent is in position to tip-off good tenants known to him who are unhappy in their present accommodation. Also some cherry-picking of tenants is possible to exclude DSS (as they're known) riff-raff.

It's even more important to encourage good tenants to stay on since many local authorities have now abolished council house discounts. Non-resident owners in Arun District Council's bailiwick used to enjoy a fifty per cent discount until 2002, or a similar discount if the property was unoccupied. There was a time when I had a flat empty all the time. Too damned costly to let that happen now..

In message , JF writes

^^^^^ rect. tax

Damn

House prices have never crashed as such. There is a massive resistance to change from people selling not wanting to reduce selling prices and people buying not wanting to pay over the odds. The principle markers of a likely reduction of price may be indicated when numbers of unsold properties starts to rise. For example, if you look at the figures in the late 80's and early nineties, there was a gradual decline in prices and certainly not a crash. Reduction of house prices takes years.

I anticipate that there will be a general lack of confidence in house prices and that they will generally reduce over the next 4 to 5 years. The state of the economy, interest rates and rates of unemployment will be key to the measure of a drop in price.

In message , Fred writes

Then they will gradually rise again.... and so it goes on

>

"Fred" wrote

Which cancel out, all other factors being equal.

Depends how you look at the stats. Most data from that era shows year-on-year price changes, so if prices went from 100 to 130 in a year the rise is shown as 15. If prices then fell from 130 to 110 to 90 to 70 in three successive years it looks like 3 successive declines of 10. On that basis the crash doesn't look too severe, but the change from 130 to 110 intra-year certainly did feel like a crash.

Eg in early 1988 I paid 85k for a 1-bedder. By late 1988 / early 1989, it was valued at 105k. A year later my neighbours sold a basically identical flat for 59k. No stats from the time show a 45% fall over 2 years, but that's what happened.

"John Redman" wrote

Eh?

30(30%) ?

"John Redman" wrote

Eh??

20(15%) / 20(18%) / 20(22%) ?

No, because most stats that I have seen would show the year's average

*price*, not the rate of change. If the price on Jan 1 was 100 and on Dec 31 it was 130, the average price for the year was 115; which looks like a rise of 15% versus the start point. So if prices went from 100 to 130 in year 1 then back to 110 in year 2, that would tend to look like *another* price *rise* in year 2 as well. Year-on-year the average price went from 115 to 120, when in fact there had been a fairly spectacular bust.

This, I suggest, is why graphs showing the late 80s/early 90s crash make it look like nothing all that terrible really happened, when in fact the fall from the peak was easily 40% in a year in many particularly overheated regions.

"John Redman" wrote

Which stats are you looking at? I thought they normally showed the "average house price" for any particular *month*...

Anyway, let's assume you're right and the prices quoted are an average for an entire year...

"John Redman" wrote

OK...

"John Redman" wrote

OK, but what was the average price across the preceding year?

"John Redman" wrote

*What* "start point"? Are you suggesting that the average price across the preceding year was 100, as well as the price ending-up at 100 at the next 1st January??

"John Redman" wrote

Ie assumed about 115 at mid-year...

"John Redman" wrote

Ie assumed about 120 at mid-year...

"John Redman" wrote

That's because the previous rise, from 100 (mid-year - same as end-year!!) to 115 (mid-year), didn't include the later increase at the end of the first year (from 115 to 130). You'd expect that later increase to come into the rise ( / reduce any fall) for the second year.

"John Redman" wrote

Mid-year to mid-year, yes.

"John Redman" wrote

115 at time 1.5 to 130 at time 2.0 to 120 at time 2.5.

That's not a *bust* at all - apart from a few houses bought in the middle of that year, all others increased (on the average) from value 115 to value 120 across the year.

"John Redman" wrote

Perhaps you need to look at the *monthly* average price stats??

"John Redman" wrote in message news:d8kmm2$64b$ snipped-for-privacy@newsg2.svr.pol.co.uk...

Friend had a similar problem with a 1-bedder. When prices fell, most people leapfrogged to 2-bedders.

It took over 10 years for the negative equity to disappear, IIRC.

"Doug Ramage" wrote

Yup. A year later an unsold 3-bedder in the same development finally sold. Original asking price in 1988 130k; price achived in 1990, 84k.

By 1997 local agents were telling me they 'could see 95 for your place by now' (it was let out). So yeah, best part of 10 years before one could sell and recoup the costs of so doing.

"Tim" wrote

I'm reacting to a previous post suggesting that serious price falls rarely happen. If you looked at year-on-year stats you coudl easily come to that erroneous conclusion. If you were there, you know differently. In west London the drop was, IIRC, about 40 to 50% from peak to trough and it happened in about 18 months to 2 years.

In message , John Redman writes

And..... Up to 6 months ago, or so, it would probably have sold for around £190K, and maybe £150K/£170K now.

I remember Adam Faith once saying, "It's not a profit until you take it", (he may not have been the origin of the quote and, in the same way, "It's not a loss until you sell", so why dont we live in our homes and forget profit and loss until it really matters?

"Richard Faulkner" wrote

I saw it up for rent a year or so ago at 240 a week. At the time, rent *

1,000 = price (roughly); that said I'd be surprised if anyone paid 240 a week for it. So yes, 190k or so figures.

It matters most of course if the scale of your loss prevents you selling, which was the case in the early 90s. With a 72k mortgage on a 59k flat I would have needed about 40k in cash to move, pay off the negative equity, and put down a 10% deposit on somewhere else. Grim was not the word.

I think the 'why' of your question goes to the core of our problem with house prices. All is vanity. Even those who are not in the slightest bit interested in selling - and that clearly represents the vast number of owners - are VERY keen on the idea that their property is worth a lot of dosh and for two reasons.

- the sheer pleasure of that virtual reality, the feeling that one has been 'sharp' enough to make a sound investment decision, and it's usefulness at dinner-party tables for boasting matches.

- that even though selling may be a distant prospect, very few will accept that the market situation is likely to be anything but rosier, with even higher prices, at the exact point when they come to sell or bequeath - even though a quick glance at any HP graph gives the game away (though of course at any nadir it's a fair assumption that things will climb).

And the net effect of all that is what we call market 'sentiment' - a mass wallowing in joy when prices are rising and a wringing of hands when they're falling. And, most critically of all, this absolutely determines, or more accurately 'infects', the mood of that relatively small pool of people who are actually buying or selling.

As you rightly ask, if we're not in the market why don't we just get on with our lives? I don't think brits know how to do that.

At the last election, without the feelgood of the 'strong economy' - and for most that was code for "my house is worth lots now" - New Labour would have had a significantly tougher time than they did - possibly even a loss.

In message , John Redman writes

Exactly my point. It only really matters if there are pressures which are forcing you to sell. In all other circumstances, you can sit it out.

I agree that some people might like to sell, but couldnt, but that's life sometimes - a bitch!

Why did you want/need to sell? Did you sell, or sit tight?