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View Full Version : House Prices/UK economy due to crash 2006.


mbga9pgf
20th May 2005, 17:06
Discuss.

paco
20th May 2005, 18:28
It's been down for about 6 months already. Just want a bit of stagflation now.......

Phil

Onan the Clumsy
20th May 2005, 19:55
Discuss If you don't have anything to add to the "debate" or even to start it with, why do you expect us to do your thinking for you? :*

Jerricho
21st May 2005, 15:23
Cyclical nature of the housing market. Gonna happen sometime.

mbga9pgf
21st May 2005, 15:32
Sorry.

I believe the housing market price fluctuations are highly linked to market perception. I think the current downturn in economy is as much to do with perception than actual market forces; most the chaps on this site are hard working high earning types I would suggest, with a fair bit of grey matter between the ears. Your opinion counts. I asked.

House prices decline then. By how much?

Im guessing 20% over two years.

BillHicksRules
21st May 2005, 21:57
mbga9pgf,

I think you underestimate the forces of supply and demand. I think the rate of price rises will slow but not reverse.

Cheers

BHR

X-QUORK
21st May 2005, 22:14
The house prices in North Oxfordshire are holding steady or possibly even dropping a tad. I know because I'm trying to sell and it's very quiet at the moment.

I don't think we're due for a crash, but I wouldn't be suprised if things come to a complete standstill for a couple of years.

MungoP
22nd May 2005, 07:19
I do squirm when reading such emotive headlines as "House Price Crash "....it evokes a portent of irrecoverable disaster....This is extremely unlikely...I would say, next to impossible when applied to UK house prices.

The UK is almost unique where house prices are concerned inasmuch as they will rise way ahead of any of the accepted economic growth measurements for two reasons:

1) People in the UK wish to own properties rather than rent them, in most countries the percentage of people renting is very much higher than in the UK....this is a self perpetuating set of circumstances....people have learned since the early seventies that a property is not just a roof over their heads but also a rock solid investment IN THE LONGER TERM....the more people are aware of this then the more determined they are to own their own home and the laws of supply and demand ensure that prices will keep rising....there are variations in percentage rises and falls of values, mostly regional, and in respect of 'type' of property which brings us to factor;

2) The British, unlike most populations have a preferance for older 'character' properties....The French for eg. ( outside of the capitol ) generally have little interest in old farm cottages in need of refurbishment ( Which is why mostly they are quite cheap )while the Brits would sell their children for the opportunity to own one....Again the laws of supply and demand take over...in spite of some fairly attractive new 'period' properties people on the whole prefer the genuine article and you can't go out and build a genuine 'Georgian' house....

Provided that the buyer is looking at the long term the asking price of such a property is fairly academic....on a half million pound period property, especially in the south of England, a 50K or even a 100K price hike when buying is of limited relevance
( provided it's still within the buyers budget ) over say a 10 year period.

On the whole... ( unless one is being forced to sell a property during a period of price stagnation ), a drop in house prices is not even going to be noticed unless the owners have over-borrowed on notional house values and the bank or other lending institution starts to get itchy.....something to keep in mind with the credit cards....

If one IS in the position of having to sell during the slower periods try not to think too much about the notional value of the house last year and think more in terms of what you paid for it...provided that it was more than 5 years ago then you should still do pretty well especially when comparing to other investments such as pension funds....

And.... It's tax free !

(In case anyone is wondering...No, I'm not an Estate Agent ! .I'm a pilot living outside of the UK )

I have noticed one draw-back peculiar to the UK as a result of the 'almost unique' property market....The Brits when buying will be very conscious that the more expensive the property the greater the investment return....hence they go to the absolute limit ( and sometimes beyond ) on borrowing...( and the lending insitutions are always deep in thought on how they can lend even more )...This results in the vast majority of the population having an extremely small disposable income after the bills have been paid. Consequently the nation has become a population of TV watchers....Watch TV at night...talk about TV during the day....

If I ever have to return to the UK for more than a couple of weeks I start to take on the character of Jack Nicholson in the film "The Shining"
:}

cyclicmicky
22nd May 2005, 07:42
Just sit tight!!
historically the housing market has never had a reversal over the greater time periods
My father bought his home in Leamington for £3500.00 in 1964, it's present day value is somewhere around one hundred times what he paid for it.
:O

Loose rivets
22nd May 2005, 08:03
Mmmm..., in 1989 I was told to put my home on the market for £240,000. For one reason or another I didn't, and left it empty while I was here.

I went back to the UK 91-92 and a local agent said "if you want to sell it... £120,000"

Following that, houses were repossessed etc so that by 1998, one could buy a detached new-ish house with nice garden for 48k. A shop in our small town fetched 30k though typically 50k and there were a lot for sale in a road 1/3 mile long. People were going bust au mass.

In the last boom, the house mentioned went to 180k, and the shops more than quadrupled in price.

You can guess, but I simply do not believe that one can predict what will happen next. You may as well apply chaos theory to the equation.

These swings give fortunes to a few, and nightmarish worry to millions. They are nothing short a disaster for home owners, unless of course, they have more than one home...or are leaving the country. Moving becomes an absurd financial burden, with selling costs and then stamp duty often costing more than they paid for the house!

People everywhere seem to make the same mistake about feeling good when their house value goes up. Of course, it's important it does if others do, so damping these swings would have to be universal.

It's vital to dampen the swings at government level, yet we are already over regulated and controlled in almost everything we do. Now there's something to discuss.

Wingswinger
22nd May 2005, 08:14
Generally I agree with what has been written.

A house is worth whatvever the next person who wants it is prepared to pay. No more, no less. If you think you have "lost" on the price you agree to sell for simply drive down the price at which you will buy; given similar market conditions it will work unless, of course, the house in question is so desirable that there are several people chasing it. Obvious really.

Do I think there will be a crash? No, stagnation perhaps. I think all the talk of a crash is little more than an attempt to manipulate the market because some people ( The Bank of England, The Government ) are getting a little nervous and the memories of the early 1990s are raw.

topcat450
22nd May 2005, 08:48
Most the chaps on this site are hard working high earning types I would suggest, with a fair bit of grey matter between the ears

Not here :}

Captain Airclues
22nd May 2005, 08:54
Discuss

You're an obedient bunch here on JetBlast aren't you?

airship
22nd May 2005, 09:30
Gordon Brown saves millions of home owners from impending financial ruin...

Brown unveils cheap mortgage plan (from BBC) (http://news.bbc.co.uk/2/hi/uk_news/politics/4570045.stm) Struggling first-time home buyers could gain cheap mortgages funded by public money under plans revealed by Chancellor Gordon Brown. The Observer said the scheme would affect about 100,000 purchases and cost hundreds of millions of pounds over three years.

The mortgage help will not be restricted to key public sector workers previously helped by the government, and there will be no means test. If new buyers cannot enter the market, selling chains will eventually grind to a halt, potentially bursting the bubble for millions more whose fortunes rely on rising property values.

Nuff said...

16 blades
22nd May 2005, 09:51
Yet more state-sponsored idiocy. And exactly how do they hope to pay for this?????

16B

Lift Fan
22nd May 2005, 10:01
Here are some predictions for UK house prices:

Hometrack: +0% for 2005 (Edited: just revised from +3%)
Nationwide: 0 to +2% for 2005 (just revised from +5%)
Capital Economics: -20% by end of 2006
The Economist: -20 to -25% over next 2-3 years.
Dye Asset Management: -30% over next 5 years.
American Express: -30%
Invesco Perpetual: -30 to -40% over next 4 years.
Durlacher: -45% over next 2 years.


The clever money has been getting out of property over the past few years whilst amateur Buy to Let investors have piled in. Despite poor rental yields the attraction has been the expectation of large capital gains. Whoops!

SpinSpinSugar
22nd May 2005, 10:13
Yet more state-sponsored idiocy. And exactly how do they hope to pay for this?????

By implementing the recommendation of the latest great society-levelling scheme, also in the papers today, that high earners/graduates be made to work until seventy before they can draw a pension. This doesn't of course, refer to those on lower incomes who might vote Labour, who still get to retire at sixty five as apparently the poor darlings from the lower classes live for five years less on average than their better off colleagues.

That, of course, ignores that fact that the supposed extra five years are at the end of one's life, when health issues and the like take their toll, and not when one can first draw a pension and potentially enjoy one's retirement.

:(

M.Mouse
22nd May 2005, 10:26
One thing is being overlooked, the last property crash was caused by interest rates peaking at somewhere over 15% with massive unemployment. I recall my mortgage becoming more expensive almost monthly.

Supply and demand. Peoples ability to borrow and service a mortgage is the key.

I was severely stung by the crash in the 90s and when I recovered I bought my present house because a) I liked it and b) I could afford it.

What it becomes worth in the future is very nice if it goes up but equally i do not care if it goes right back down to what I paid (roughly one third of its current notional market value).

I also believe the economy is heading for a real dive watch this space.

effortless
22nd May 2005, 10:41
I have been in property for over thirty years. In that time I have seen values go up ten fold in the seventies, five fold in the eighties and three fold in the nineties. There was a drastic drop per courtesy of Maggie and Major when the only tool they had in their box was interest rates. This was only short term. A four bed Edwardian terrace in the Brighton and Hove area has gone up from £28,000 in 1980 to £405,000 today. There is a levelling out in as much as sellers are having to lower their expectations. So someone who was really greedy has to be less so.

The biggest problem we have at the moment is buy to let. Every one who has a bit of disposable believes the press about what a good scam it is. This has lead to a gross inflation in cheaper properties pricing first time buyers out of the market. This is the greatest threat to our equity. First time buyers are the lifeblood of the market. The competition is to pay them less money while we who can squeeze out more. We can afford to use property as our pensions / quick profit, delete as necessary, while we squeal about a lack of nurses, teachers etc. to look after us in overpriced, comfortable areas.


I don't know the answer. I do feel that the destruction of industry by Maggie was short sighted. It left tracts of England as wastelands. The turning of ours into a "service economy" has meant that the better paid jobs were in the south-east. This has lead to a mass migration down here, hence the huge disparity across the country.

Lift Fan
22nd May 2005, 10:56
One thing is being overlooked, the last property crash was caused by interest rates peaking at somewhere over 15% with massive unemployment. I recall my mortgage becoming more expensive almost monthly.

It’s true; interests rates are still “historically low”. But they are only one of two factors that determine the all-important burden of debt servicing costs that people have to pay. The other factor is the total debt outstanding. Since interest rates have been low for several years, people got used to them being low and, instead of keeping their repayments low, many opted to keep their payments flat and raised their debts to the maximum they could afford.

UK households currently spend nearly 15% of their disposable income on mortgage repayments. This is worryingly close to the 15.8% level the UK reached in the second quarter of 1989 at the very top of the last house-price cycle.

Worse, if you add the costs of servicing unsecured debts, the nation is already spending more than 20% of disposable income on debt servicing. No matter that interest rates are low in relative terms, thanks to our huge debts, we are now suffering just as much as we were at the top of the last housing bubble.

But, you say, unemployment is low (according to Goverment figures showing those claiming Job Seekers allowance ie. excluding those on Disability Allowance and the New Deal):

The economy was also strong in the late Eighties, at the top of the last housing bubble, and only weakened after the house-price collapse. House prices move closely with the economy and each of the last three housing downturns was accompanied by full-blown recessions.

The housing market falls first, with the impact spreading to the wider economy. This is not surprising when you consider that mortgage equity withdrawal (MEW) equates to 8% of total consumption expenditure. We have already seen that a lack of confidence in the housing market has led to lower MEW, causing consumer spending to fall too. The problem with consumer-debt financed growth is that it can evaporate almost overnight.

The same is true of unemployment as it always tends to be low just before a house-price correction. After all three previous house-price reversals, unemployment had started rising sharply within a year. It appears the economy lags housing, not the other way around, so instead of citing a strong economy and low unemployment as support for the housing market, we should all be afraid of what a falling housing market may do to the state of the wider economy

mbga9pgf
22nd May 2005, 13:04
Do you think that gordy is worried that like never before, people are using house prices as an alternative pension?

That the typical house price/earnings ratio ON AVERAGE is around 13? Yoy traditionally can only get a mortgage for 3.5 X wage.

That Lyiarbour PROMISED no more boom and bust?

That the actual value of a house is far less than the current going rate?

That 40% first time buyers, essential for the property market, are leaving university with on average 17 grand of debt, and are now facing bleak times ahead as they are unable to buy, the traditional way to live in the UK?

That taxes are going to rise compounding the problem? Gordy is 10 billion short apparently at present.

That Buy to let is going to collapse if house price rises stall, (they need an average of 4% rise pa to support a profit) initiating house price crash?

That house prices are highly dependant on market perception and strength of the economy (seen many profits warnings of late)?


Im on 36 grand and I CANT AFFORD A BLOODY HOUSE!!!!

Flyrr100
22nd May 2005, 15:44
It wont help you guys, but us Brits overseas are waiting for a slump in the economy in the UK. I need a UK fix. With the dollar up at 1.80-1.90 it's very expensive for us poor folks.

Paterbrat
22nd May 2005, 18:33
GBrowns plan to help new homeowners is simple use taxpayers money.

CUNIM
22nd May 2005, 19:27
I spent some seventeen years in Brussels where the house inflation is fairly stable as compared to the UK. If you want to sell a house, the land valuation is according to the official values in that area and the square metreage of the floors of the house make up the building cost, add the two together take into account that the purchaser needs to add 20% VAT and you arrive at the sale price. Result, most of the population buying houses there can afford to go out of an evening for a meal and have a reasonable life.

Now the question, who gets the main profit in the UK market? Why, the banks, building societies and estate agents - 2% of 500,000 is better than 2% of 350,000. Who makes the loudest whinge when the market cools - why the three above. If you have a house worth 20% more than when you bought it, then buying a similar one will cost you 20% more - result, punter nil gain, our threesome wander off into the sunset chuckling.

ETOPS773
22nd May 2005, 20:39
I'm fortunate to be living with parents still,in a well paid job.I refuse to pay these prices unless I really have to.
It really saddens me seeing my friends in their early 20s having to stretch everything to the limit just to afford a tatty flat or 2 bedroom house-most have no decent leftover change to actually live a life with.Its such a struggle for many,and they will suffer in a housing crash.

I live in Worthing,near Brighton.A decent flat in the area in 2000 would have cost about £60,000 (my sister got somewhere for 52,000) now the same places would be going for around 108,000.

Something doesn't add up don't you think? Has the population surged by 30%...no!? The average worker surely cannot earn 30% more in 5 years.I know its not as simple as that but things cannot have changed that much.The maths just don't seem to add up.We are paying more that the property is worth,surely it cannot continue.

Take a look at the link below,from the BBC news feedback section...

Looks like the punters are as cynical as us! (http://news.bbc.co.uk/1/hi/talking_point/4570619.stm)

I sense Gordon Brown is making a last attempt to stop a much bigger chain of events happening with the economy etc.I'm not sure how it will work out,I just hope people earning average wages can afford to 100% buy a decent property without having to live on pot noodles.

Failing that I'll head up north.Hear the house prices in the North Pole are much more reasonable :sad:

allan907
23rd May 2005, 04:09
I think you will find that the housing market crashed in the late 80s/early 90s because a glut of council houses came onto the market at extremely cheap prices. Suddenly, the first-time buyers were staying put in houses that were an absolute bargain. It was only after the usual 5 year 'stagnation' period ended when those self-same new owners got fed up with their ex-council houses and wanted to trade up. Also a new-ish generation of first-time buyers had come onto the scene and were there to pay the increased prices for the ex-council houses (by this time tarted up with psuedo stone cladding and central heating installed).

This then was the real legacy of Margaret Thatcher. She gave universal home ownership and a 'stand on your own feet' philosophy but buggered the general economy! (and a population of 'chavs')

Lift Fan
23rd May 2005, 07:53
Hometrack have just released their latest report on UK House prices:

UK House prices have dropped for the 11 month in a row.
Prices are 2.3% lower than a year earlier.

"The forecast for the next couple of months looks set to remain dreary," said John Wriglesworth, Hometrack's housing economist. "The ongoing market malaise has caused us to revise our house price forecast for 2005 from 3 percent to 0 percent."

So Hometrack and Nationwide have now revised their forecasts. But, they are still the major optimists amongst the pack!

airship
23rd May 2005, 13:36
I had expected a deluge of complaints from resident JBers concerning Gordon Brown's intended and somewhat camouflaged handout (http://news.bbc.co.uk/2/hi/uk_news/politics/4570045.stm) in order to prop up the UK property market. :confused: And in doing so, to continue to satisfy the average homeowner's "feel-good" requirements. In order that they continue to "borrow and spend", keeping "the ship afloat" so-to-speak?!

I mean, had we been talking about additional handouts for all those poor unmarried teenaged mothers, the lazy scroungers on unemployment benefit etc., everyone would have been up in arms and writing protest letters to their MPs by now. Instead, we have an ominous silence...?!

Dear Gordon Brown,

Your latest initiative to protect the (our) homeowner's interests is touching. Pursuant to our unwritten agreement, we've been building up our capital and spending the greater part of it as we're unwilling to cash-up and relocate, just as you surmised. More people own their own homes in the United Kingdom than don't today. We've also got used to the fact that we make more out of our homes than we could ever hope to make from working 9 to 5 all year round. In doing so we've not only kept UK plc going, we've also kept wage-inflation down too IMHO. It's so much easier being able to accumulate capital in our home and benefitting from generous CGT deductions and low interest rates instead of paying all those nasty income taxes and social security charges that the lesser unwashed have to contend with!

Keep up the good work!

BTW, Maggie would have been so proud of you. Gordie, so much more popular-sounding than that John Major bloke...yer both likewearing kilts on occasion though don't cha?!

Lift Fan
25th May 2005, 10:26
So, the BBC now refers to the "Housing Crisis". At last, people may wake up and realise the majority lose when houses are 30% or more over-valued.

Gordons plans to release more land are a step in the right direction. But, ask all those who cannot sell their homes if we have a supply crisis.

Shared equity? It may well be shared negative equity in the not too distant future. The FT Letters page makes good reading:

http://news.ft.com/cms/s/f267242a-ccb9-11d9-bb87-00000e2511c8.html


First-time buyers better served by letting prices return to more affordable equilibrium values
By Philip Davis
Published: May 25 2005 03:00 | Last updated: May 25 2005 03:00

From Prof E. Philip Davis.


Sir, The proposals announced on Monday by Gordon Brown for aiding first-time buyers by having the government share in the housing equity along with the lender, while having obvious political attractions, would seem to be fraught with dangers ("Brown proposes help for first-time buyers", May 23).

Introducing such a scheme when house prices are, by most estimates, up to 30 per cent above their equilibrium levels (based on income, interest rates and, in some cases, demographics and housing supply) would seem likely to perpetuate or even increase the misalignment. The eventual correction when an inevitable "shock" to confidence occurs could hence be yet more painful.

Furthermore, moral hazard can arise from this policy at a number of levels. The most obvious is that belief may grow in the existence of a "Brown put" at a macro level, whereby the government is expected to introduce measures to underpin the housing market, for fear of negative equity, whenever a fall is likely. The history of the "Greenspan put", which extended the equity price bubble in the 1990s and thereby aggravated the correction, is a painful reminder of the related dangers.

Second, there may be moral hazard vis-à-vis the borrowers, who may hold the government responsible for any future negative equity, given its "agreement" in the original price paid for the property. Third, the lenders may feel over-confident as a consequence of the government's involvement and hence fall into excessively lax lending practices; the abuses of the savings and loans crisis in the US spring to mind.

Finally, such schemes, once introduced, are hard to reverse and might be subject to pressure for extension. This raises the question, How much housing equity (which could, in some cases, be negative) is it wise for the government to hold?

While it may sound harsh, first-time buyers would in my view be better served by allowing prices to return to more affordable equilibrium values, as well as reducing the equilibrium itself by allowing supply to expand.

E. Philip Davis, Economics and Finance, Brunel Business School, Brunel University, Uxbridge, Middlesex UB8 3PH

Widger
25th May 2005, 16:24
I agree with the sceptics. It is not just about the housing market but the economy as a whole. I, like many of the professionals on this website are in the top 10% of earners in this country and I cannot afford to buy a house. When the fuel is exhausted the fire will go out. There are a huge amount of households out there Mortgaged to the hilt because building societies and banks have allowed self certification and lent stupid amount of money.

One of the previous posters put his finger on the button, in that we have the highest amount of personal debt..ever! I am no exception but the difference is, that I can pay it off. Many cannot and we have already got reports of bankrupcy levels rising, repossesions on the increase, spending in the high street declining (Bar TESCOs), Taxes going up etc. Running a car is Bl**dy expensive and I bet most of those high earners pay a small fortune if fuel tax etc.

Things are not going to get better. Although the base rate may not rise, the pressure on all our wallets is going to. The cost of living alone is enough without NI increases, Council tax increases and god forbid, redundancy.

Our economy is based on finance and the service industry, they both rely on people spending money of which, we have less and less to spare. The future does not look bright I am afraid.

mbga9pgf
26th May 2005, 16:12
Thanks for the responses guys. Having seriously considered whether to buy a house in the next three months I have decided not to... seems far more logical financially.
Hope its not going to be as bad as some have predicted... god labour have raped this country.
:mad: :mad: :mad: :yuk: :*

Astrodome
26th May 2005, 18:57
I do feel that the destruction of industry by Maggie was short sighted. It left tracts of England as wastelands. So according to you, one day Margeret Thatcher woke up and said 'Hey this week I am going to f8ck up the manufacturing industry of this country'.

Couple of points you need to consider with that assumption.

1 Large companies, particularly in maufacturing were always Conservative donors, so it would have been madness to alienate the very senior people who not only donate but also control a large part of the economy.

2 Your bland statement fails to recognise that UK industry was generally inefficient by world standards

3 The taxation regime applied by the preceeding (Labour) Governments had brought about a lack of investment in infrastructure and equipment

4 The unionised workforce, supported by Labour's fiscal policy and overall economic mismanagement, had brought many Companies to their knees with strikes.

5 Labour's economic mismanagement meant that our products were not competitive against those from overseas. Remember the price of foreign produced TVs, radios, etc??

6 You forget conveniently the strange 'British' disease of rubbishing our own products. After all what does everyone do when they come into money?. Why they buy a BMW or an Audi or a Mercedes.

7 Most EU (EEC/EC as it then was) Countries were (and still are) illegally subsidising their own Industries whilst we blindly followed the 'Rules' of membership. Remember the French Golden Delicious 'wars' when we had to grub out our Orchards? The burning of lamb exports at French ports?

8 The former Soviet Union, desperate to resolve its own financial crises was dumping coal onto the world market at Ports of arrival at less than it cost us to mine it.

9 There was a WORLD recession in the early 1980's. It affected everyone, not just us.

You also seem to have forgotten the need for the UK to go 'cap in hand' to the EMF for money loans in order for the Uk economy to continue. These loans came with many strings attached, including requirements to undertake financial measures to repair the economy.

Had Labour won in 1979, then the recession would still have happened and the UK economy would still have had to have been repaired. Looking back at the mess they made between 1973 and 1979, thank God they were out of power as who knows what shape the Country would have been in.

Anyway you can have your very own re-run of those days now, only this time under 'new' Labour.

BenThere
26th May 2005, 20:06
Who knows what house prices will do? When I lived in Northern California for 24 years I always thought San Francisco house prices were over the top and would soon crash. I began thinking that way when the median price there pushed past $100,000. Now you've got to pay nearly a million for a decent place to live. Prices soften and even decline from time to time, but no one, anywhere is sorry they bought a house 20 years ago and held on to it.

Now I live near Ann Arbor, Michigan, a great college town, cosmopolitan, great neighborhoods, etc. I bought two new condos for $180,000 each that I would have paid $700,000 for each in the Bay Area. Location means a lot, but I think the downside risk is nil in my low cost area, and it's actually a much better place to live, raise children, etc.

My advice is to look where the general housing cost is relatively low in relation to comparable housing units elsewhere. Brits still have a great opportunity to buy American property while the £ is still very strong vis-a-vis the $. Argentina is a steal now, but carries with it a little political risk.

In any case, having recently moved here from Italy, my opinion is that all of Western Europe is highly overpriced and due for some very hard times in real estate. You can live on the ocean in Hawaii for the price of a rickety flat in Leeds. That ain't right.

mbga9pgf
26th May 2005, 20:35
Well a house in the states or Hawaii is no use to me or my partner, I need one within 30 minutes of my work!

Unfortunately, me like many other First time buyers are not buying because we cannot aford to - a sorry state of affairs. Plus, many now feel resentment towards those who have treated the UK property market like some bloody great big pensions boost Buy to letters tyhis means you - Property should be about having an affordable home, not about saving up for some slush fund to millions. Frankly, I couldnt give a sh*t if these greedy sods end up in reams of debt.. they should have thought about that before inflating the market for their own gains.

TURIN
27th May 2005, 08:53
So, let me get this straight.

Buying is bad.

Renting therefore must be a good idea at the moment.

Therefore....erm, buy to let is good?:confused: :confused: :\

mbga9pgf
28th May 2005, 05:39
no, living in the mess for 40 quid a month is good.


Sharing a rented flat with some mates is good.

Renting a room off a genuine hownowner (not Buy to let racketeer) is good.

Boy_From_Brazil
28th May 2005, 13:21
After being a UK house owner for 35 years, I have now bitten the bullet and are selling up completely. In my opinion property prices have come down off their peak and will gradually drop for the next couple of years.

There are far better and cheaper countries to buy property than the overpriced UK market. I had never thought about buying in Brazil before, but with the exchange rate, a booming economy, cheap properties and a wonderful way of life, I really dont want to live anywhere else.

Example....a beautiful 6 bed / 3 bath farmhouse, 10 acres, swimming pool, paddocks, 4 car garage, staff quarters etc, only 1 1/2 hrs from Rio only US$135,000.


BFB

BenThere
28th May 2005, 16:20
Smart move, Boy from Brazil.:ok:

Do you have to make a living there? Are you on a permanent visa? Do you pay any taxes in Brazil? Is it safe where you are?

Sounds like a good retirement plan.

GearUp CheerUp
28th May 2005, 18:21
Have a look at http://forums.ft.com/2/OpenTopic?q=Y&a=tpc&s=646099322&f=451094803&m=650101561

It is a 90 odd page forum relating to this very subject.

There are a lot of very clever people there all of who see between -20 and -40 % in the next 2 or 3 years.

X-QUORK
29th May 2005, 18:50
I commented earlier that I thought house prices would stop rising and then sit in the doldrums for a while, but I'm beginning to think we might well see a downward correction over the next 12-24 months.

I don't claim to be an economist, but I've looked at house sales data going back three years, and the one thing that stands out is the huge drop in sales over the last two quarters. The trend showed house sales increasing gradually over the period, and then a sharp drop for the period Jan-Mar 05 to approx 50% of sales in Oct 04. It seems the house prices are flattening off, but we may well be seeing the top of the hill prior to the downward fall...who knows?

My house is on the market so I'm quite sensitive to local house prices, and nearly every house in my area has had to bring down the asking price in order to get people through the door, it's all just so quiet. Even estate agents are admitting that the market hasn't picked up since the election as they'd hoped.

Supply is inceasing and demand is falling, which can only result in lower house prices. I am now seriously considering renting if we manage to sell.

GearUp CheerUp
29th May 2005, 19:37
Take a look at http://www.propertyfacts.co.uk/old/default.htm click on the third link down on the right called house price trends.

Where do you think the line is going next? House prices never stay level for long, they either go up (driven by expectation of further rises / greed) or down (driven by expectation of further falls / fear.

Its all to do with sentiment and flocking behaviour you see.

heretic
29th May 2005, 22:22
Had a look at the link and by my calculation it shows house prices rising at 2.32% above inflation. This is about the same as the rise in average earnings.

mbga9pgf
30th May 2005, 10:17
Interesting graphs, especially the one that looks like climb to everest....


Now, Ft and various economists have mentioned that House prices should soft land even though this has NEVER happened before, if employment remains high, yet employment is slipping.

Heretic, its a shame for the past 7 years they have been going up so rediculously. I think you will find year on year house price is due to go negative next month... heardthat predicted by a number of economists.

Boy_From_Brazil
30th May 2005, 15:45
BenThere

Anyone can buy property in Brazil. You can also live here as a Permanent Resident if you are retired and have sufficient income.

At the moment I am an expat on a Temp visa. We are applying for a Permanent Residency based on the fact that I am opening up a company and bringing in funds.

Brazil would make a great place to retire to with the low cost of living and way of life.

If you need more info please PM me

Cheers
BFB

airship
30th May 2005, 16:44
Boy_From_Brazil, I've been designated your handling agent from BenThere. Forget you ever heard of him, BTW. What we're really interested in is whether you've developed any good contacts over there? The key to ensuring safe resale values back home in America etc. is Brazil. After which, Venezuela and Cuba will be a piece of cake... :E

Boy_From_Brazil
30th May 2005, 19:56
Airship

I am delighted you are my designated handling agent, but I am not too sure exactly what you are asking in your post.

Property values in the better areas of Rio, ie Ipanema and Leblon have gone up by 50% in the last two years but are still good value. There is very limited building land so I believe local properties are going to go up at a similar rate for the foreseable future. Consequently I do not see any problem in getting back into the UK housing market if I really wanted to. The only issue is, perhaps, exchange rate fluctuations. But there again, I dont have any intention of ever buying again in the UK.

What sort of contacts are you interested in....??

BFB

BenThere
30th May 2005, 20:36
Boy from Brazil,

I'm about 7 years away from retirement, but as the time draws near I'll be looking for possible situations like yours, where my money goes the furthest in a safe, stable environment. Could be Brazil, could be Africa, might even be the US.

Congrats to you.

Cheers,

FFP
1st Jun 2005, 12:36
Go to Canada.

Big houses. Lots of land. Nice people. Good exchange rate for £GB.

Canada good. UK Crap.

Emigrate.

Lift Fan
1st Jun 2005, 21:41
Had a look at the link and by my calculation it shows house prices rising at 2.32% above inflation. This is about the same as the rise in average earnings.

Err .... no!

The ratio of house prices to average earnings provides a dramatic indication of how massively over-valued UK houses are.

According to the Nationwide, in the third quarter of 2004 the average house price peaked at 5.94 times the average wage. The figure is the highest ever recorded (records start in 1952) and compares to a figure of 2.9 in 1995.

The three previous peaks were in 1974, '79 and '89 which coincided with the beginning of the last three crashes. Worse, even those peaks were less than 5.0!

A simple average gives a value around 3.5 ie. the average house tends to cost 3.5 times the average wage.

Despite the ups and downs the long term trend for house prices has been up. Buying at the bottom of the cycle is lucky. Paying top of the bubble prices is for the ignorant.


Data here:
http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

Burnt Fishtrousers
1st Jun 2005, 22:41
There comes a time when the watershed of maximum affordable mortage based on salary is reached, particulary with more people single and not combining resources, and for the first time buyer in many cases this has been reached.In the near future the market will be hampered by students leaving uni with huge debts and not being able to afford to get themselves on the housing ladder until later on.This has effects further up the property chains. House prices have been soaring and inflation hasnt so salaries havent kept pace.Its only the lenders that have shored up the market by lending 4/5x your salary inorder to get on the housing ladder. As a non expert with a bit of common sense i'd say the market will stagnate and perhaps drop a bit but not crash. If id written this in the FT everyone would take this as gospel.....what mugs we are...

I must admit retiring to Rio and looking out in g string clad girls from Ipanema sounds appealing....if the heart doesnt give out that is...:ok:

SpinSpinSugar
2nd Jun 2005, 02:49
Go to Canada.

Big houses. Lots of land. Nice people. Good exchange rate for £GB.

Canada good. UK Crap.

Emigrate.


It's a nice idea but the queue is pretty long these days. The processing time is approximately two years at present; we're somewhere in the middle of that.

Cheers, SSS

Jerricho
2nd Jun 2005, 02:55
Big houses. Lots of land. Nice people. Good exchange rate for £GB.

Big houses yes, but things are starting to catch up with elsewhere around the world. Intrest rates are very low here at the moment, but that could change very quickly.

simon brown
2nd Jun 2005, 23:39
Big houses. Lots of land. Nice people. Good exchange rate for £GB

Yeah but what about the neighbours...Downhome gum chewing overweights with too many guns and not enough brain cells who would like to forcibly illicit porcine sounds from behind any city dweller of the same sex, who visits the countryside on a weekend.....

..ever been to the Forest of Dean in the UK.....( sound of dueling banjoes springs to mind)

BenThere
2nd Jun 2005, 23:42
Simon,

I think you have issues and should stay where you are.

Loose rivets
3rd Jun 2005, 04:40
I must admit retiring to Rio and looking out in g string clad girls from Ipanema sounds apealing....if the heart doesnt give out that is...


Coastline look familiar?



http://img.photobucket.com/albums/v703/walnaze/GirlfromIpenema.jpg

acbus1
3rd Jun 2005, 06:53
Coastline look familiar?
Mexico!

Her moustache gives it away.

mbga9pgf
5th Jun 2005, 12:56
Oh b*gger.



FT article (http://news.ft.com/cms/s/ccd46d10-d495-11d9-9db0-00000e2511c8.html)

Looks as if a storm is brewing...

Observer (http://observer.guardian.co.uk/business/story/0,6903,1499277,00.html) Times online (http://www.timesonline.co.uk/newspaper/0,,176-1637214,00.html)

Bets are on for an IR cut this month.... Wonder where the dollar will be trading next week. Cant imagine the Euro vote will do us any good either (although personally a hardened NO vote camper)

airship
5th Jun 2005, 15:10
From the FT article, Central banks are also aware of the potential impact of a housing market crash and are accordingly reluctant to tighten monetary policy. So let's try and be honest (at least amongst ourselves) here and expand on just why a socialist UK government feels it necessary to subsidise 1st time buyers...:

£64bn was wiped off the value of British companies as the London Stock Exchange suffered its biggest one-day points fall since 1992. (http://news.bbc.co.uk/1/hi/business/1236067.stm)

...also acknowledge that over the past three years, some $13 trillion has been wiped off stock markets worldwide - $2,000 for every man, woman and child on the planet. (http://news.bbc.co.uk/1/hi/business/2729811.stm)

Now, $2,000 (€1,640; £1,131) isn't a huge sum. I regularly accumulate that much on my VISA card each month. But as far as I'm aware, there are billions of men, women and children who survive on just $1 a day or thereabouts but are nevertheless assumed to be included when it comes to having a part to play...?! :rolleyes:

Somewhere, somehow, this loss will have to be "made good" if capitalism is to continue in its present form. I personally believe that the primary reason for the low interest rates we've experienced recently are due to governments' hopes to keep up the semblance of economic health by the use of cheap credit in all its' various forms in order to buoy up consumer spending. I think most governments have been somewhat surprised that their subterfuge has worked as well and as long as it has.

Meanwhile, some of us have been putting down stocks of gold coin, canned corned beef, trying to remember exactly where we buried the Bren gun etc. :O :uhoh:

mbga9pgf
5th Jun 2005, 20:23
Well it looks as if UK consumers are all spent up and their home made "feel happy" economy is about to bite them hard on the arse....

Wouldnt mind betting Labour dont get in for another 30 years after the dust dettles on this one...

How the hell are we going to pay the national debt they have run us into with growth permanently stalled?

TURIN
5th Jun 2005, 21:19
So let's try and be honest (at least amongst ourselves) here and expand on just why a socialist UK government feels it necessary to subsidise 1st time buyers...:

Er... UK government.....socialist?

You sure?:p

mbga9pgf
6th Jun 2005, 17:13
Verging on communist.


some more doom and gloom out today


Moneyweek article (http://www.moneyweek.com/article/772/investing/property/housing-crash.html)


Citywire Article (http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=74759&MenuKey=News.Home)

Other report (http://www.internetional.se/freshstart.htm)


Going down to ladbrokes and putting 30 quid on Gordon Brown not being the next PM....

That toad will not be even able to show his face in public once the crap hits the fan :mad: :mad:

X-QUORK
2nd Nov 2005, 16:58
The Land Registry data for UK Q3 property sales comes out next week and it'll be interesting to see what exactly's been going on. The property pages in our local rag are stuffed with houses that have been on the market for 10 months+ and the 'For Sale' signs are up all over the place.

arcniz
2nd Nov 2005, 23:32
This might add some fuel to the fire:


http://www.sunshinecable.com/~eisehan/V80-10en.htm

Blacksheep
3rd Nov 2005, 00:38
During the long period of relatively stable house prices up to the seventies, banks didn't like lending on houses; building societies were the source of almost all domestic mortgages. They usually lent only 75% of the valuation (but would go to 90% in particular circumstance) and the maximum loan was 2.5 times the husband's salary plus 1 times the wife's. Then the banks entered the market and things went haywire. If we look back at the old situation, when Mr. Upwardly-Mobile white collar worker wanted to buy a standard three bedroom semi in a S.E English suburb, he could borrow only 2.5 times his salary of 40,000 pounds (in todays money), plus his wife's salary of 29,000 pounds. That 69,000 representing 75% of the valuation and he had to provide the remaining 23,000 pounds. In a situation of stable house prices (house price inflation was directly related to wage inflation.) he wouldn't realise much gain on his existing home and must save the balance from his income. The most he could afford pay was thus around 92,000 pounds (at the equivalent to todays prices) and the market for suburban semis stabilised at around that price.

Today a similar house will be on the market at over 250.000 pounds and Mr. Upwardly-Mobile has excess cash at hand from the sale of his first property. Say 100,000. So he takes out a 150,000 pound mortgage and forks out the asking price. Leaving him not much room for savings from his income. One result being that any increase in his wealth becomes restricted to the paper profit from ever escalating house prices.

The crash will come when the number of first time buyers entering the market becomes insufficient to support the system. That's what happened last time and there are signs that it is happening again.

tinpis
3rd Nov 2005, 05:17
Blacksheep then the Govt of the day uses our money to prop up a first home buyers scheme.
This increases the cost of the property by(you guessed it) the value of the first home buyers scheme.
The Govt realises what a winner they on so they increase the amount of {taxpayers) funds available for the first home buyers scheme.
Meantime every half smart merchant and his dog are using the funds via his children second cousin children hell even old granma to buy up large portfolio.
Ah so.

Unwell_Raptor
3rd Nov 2005, 12:37
From the BBC, this week:-




Nationwide sees house prices rise

House prices rose in October according to the latest survey from Nationwide building society.

It said prices increased by 1.3% last month, leaving the average house price at £157,107.

This pushed up the annual house price inflation rate for the first time this year, to 3.3% from 1.8% in September.