Im calling it.....

[Freefaller]

I believe London and UK property prices has hit its peak. Im putting my money where my mouth is and pulling out of buying and will not be buying until I feel there is more stability in the market.

Lets see if I'm right. If I'm wrong and the prices keep going up I'm a little shafted.

Don't live in London! That said property prices even out of London are quite high

Problem is we wanted to buy and move this year, everything was planned for moving this year and we couldn't wait. So we bought and have moved, and we got a good deal but yes, I'm sure there will be better deals out there in the future.

Though the advantage of buying now is mortgage interest rates are pretty low so if you can get yourself on a fixed rate at a low rate when they do rise you'll be a little safer for a while? Or at least know/predict your outgoings a bit better.

 

[dowie]

Oh, for pity's sake. Are you a professional hairsplitter?

The planet won't, according to our best understanding of physics, last forever. Sooner or later, the sun's fuel runs out and it dies. So unless we discover something fundamental that contradicts our current understanding, and we can reverse the sun's internal processes, the planet won't last forever either. I doubt any financial institution, or government finance ministry is factoring it in, but whatever pleases you.

So for the terminal pedants out there, I'll rephrase my original comment. It is extremely likely, to the point of near certainty, that of a probability approximating to but never quite reaching 1, that rates will rise before our sun explodes or otherwise ceases to function within a range consistent with continued human existence, or a giant meteorite destroys us, or an unstoppable treatment-resistent virus kills us all, or aliens destroy earth, or some other natural or unnatural calamity befalls us, that interest rates will rise though I concede that there is a very small possibility that they will stay precisely where they are, all evidence and logic to the contrary notwithstanding, and also a potentially but unproveably larger but still small chance that they will drop to zero or even go negative.

Happy now?

I remain firmly unconvinced that qualifying every single brief remark with sufficient caveats to cover against pedantry actually adds to the flow of a thread.

Now I remember why I put you on my ignore list. Back you go. And please, I beseech you, do me the courtesy, the huge favour even, of adding me to yours, too. Life's too short for this.

wow I don't quite see why you're getting so butthurt over this, it isn't pedantry I'm pointing out that you're making a dubious assumption in saying they can't stay low forever... that isn't some fringe case but actually a real possibility - how do you know that low rates isn't the new norm? That we're not in some equilibrium state (note I'm not arguing that we definitely are just that it is a possibility). You think I'm being pedantic presumably because you consider it highly unlikely - which again means you're falling into the trap of looking at past rates which is what I was trying to point out to you in the first place and ironically what the quote you used in the first line of your post warned against!

as for the ignore list comment, it is the internet, I don't tend to let the fact other people have different views bother me that much, I've got no one on my ignore list so far and if for some reason I did feel the need to add someone I'd just add them, not add them then take them off then get upset with them and tell them that I'm ignoring them when I'm actually not etc..etc.. that is just a bit childish

 

[[FnG]magnolia]

Oh, for pity's sake. Are you a professional hairsplitter?

The planet won't, according to our best understanding of physics, last forever. Sooner or later, the sun's fuel runs out and it dies. So unless we discover something fundamental that contradicts our current understanding, and we can reverse the sun's internal processes, the planet won't last forever either. I doubt any financial institution, or government finance ministry is factoring it in, but whatever pleases you.

So for the terminal pedants out there, I'll rephrase my original comment. It is extremely likely, to the point of near certainty, that of a probability approximating to but never quite reaching 1, that rates will rise before our sun explodes or otherwise ceases to function within a range consistent with continued human existence, or a giant meteorite destroys us, or an unstoppable treatment-resistent virus kills us all, or aliens destroy earth, or some other natural or unnatural calamity befalls us, that interest rates will rise though I concede that there is a very small possibility that they will stay precisely where they are, all evidence and logic to the contrary notwithstanding, and also a potentially but unproveably larger but still small chance that they will drop to zero or even go negative.

Happy now?

I remain firmly unconvinced that qualifying every single brief remark with sufficient caveats to cover against pedantry actually adds to the flow of a thread.

Now I remember why I put you on my ignore list. Back you go. And please, I beseech you, do me the courtesy, the huge favour even, of adding me to yours, too. Life's too short for this.

This is a good post so thank you.

 

[dowie]

You know the really scary thing, is if there is another economic crash in the current climate of low interest rates, borrowing etc, how the hell do the Government inject stimulus into the economy again? We really cant go a lot lower than the current interest rates. More quantitative easing?

more quantitative easing is possible though not without risk maybe we'll have negative rates one day...

but that is the main thing - there are no certainties here, people clearly don't really appreciate or understand that fully to the point where they think it is pedantic to point it out

 

[dowie]

This is a good post so thank you.

mags you don't tend to even contribute opinions most of the time but seem more comfortable taking occasional little snide comments

 

[Scam]

Britain's property market is going to implode as housing nears peak affordability

Also, the more people start talking about a crash the more likely it will happen. If confidence leaves the market then it will be a self-fulfilling prophecy. That's why I talk loudly on the tube about "my mate from Goldman that says they're dumping all their property portfolios" Every little helps *Psst, that's a joke by the way..

 

[dowie]

joking aside, on the subject of banks dumping property - HSBC actually did sell their HQ in 2007 pre-crash then bought it back for 250 million less in 2008 after the crash. Goldman also sold their London HQ two years earlier.

 

[Ant C]

The crash is going to happen, exactly what triggers it remains to be seen but it is coming. Its not an increase in demand that has pushed up prices, the availability of cheap credit has.

The government has done everything possible to prop up prices but I don't see they have any bullets left now.

 

[Buffman]

A real big crash would go down nicely right now. Like massive.

For me too before I buy my first home!

 

[RoboCod]

For me too before I buy my first home!

I think you'd be foolish to wait out in the hope that such a thing will happen. It would seem that the best advice would be what it has remained to be for some time now; get on the property ladder as early as possible.

 

[Richie]

For me too before I buy my first home!

What do you think will happen to the supply of housing should a crash occur and put a lot of, particularly "first step" houses, into negative equity?

"First Step" housing is what I call the 1-2 bedroom flats/houses that FTB's traditionally go for and can afford. These are also, generally, the ones that are resold relatively quickly in comparison to other housing as people and families become more established and therefore dont tend to re-sell.

Also, should this happen, what do you think will happen to the availability of credit i.e. mortgages at higher LTVs?

 

[Rifte]

What do you think will happen to the supply of housing should a crash occur and put a lot of, particularly "first step" houses, into negative equity?

"First Step" housing is what I call the 1-2 bedroom flats/houses that FTB's traditionally go for and can afford. These are also, generally, the ones that are resold relatively quickly in comparison to other housing as people and families become more established and therefore dont tend to re-sell.

Also, should this happen, what do you think will happen to the availability of credit i.e. mortgages at higher LTVs?

This is so true. On an apartment that we bought, we were going to flip it after a year of being in it. Then 2007 and 2008 happened. Most of our equity was chewed up. There was no way I was gonna sell and take a loss. We rode it out, got our equity back and some, and the rest is history.

 

[Scam]

"First Step" housing is what I call the 1-2 bedroom flats/houses that FTB's traditionally go for and can afford. These are also, generally, the ones that are resold relatively quickly in comparison to other housing as people and families become more established and therefore dont tend to re-sell.

But the problem is, FTBs can't afford the "traditional 1-2 bedroom flat" because the prices are sky-high. Also, I don't understand the point you're making

Also, should this happen, what do you think will happen to the availability of credit i.e. mortgages at higher LTVs?

Honest question, but why does a house price crash mean the banks will stop lending?

 

[Rifte]

But the problem is, FTBs can't afford the "traditional 1-2 bedroom flat" because the prices are sky-high. Also, I don't understand the point you're making

Honest question, but why does a house price crash mean the banks will stop lending?

I may be wrong and mis interpreting what he said, but the last crash was on the back of these 'sub prime/toxic' mortgages we kept on hearing about. On the back of that was the term 'credit crunch' etc with banks not lending to each other, businesses and mortgages etc.

This is PERHAPS what he was referring to.

Thats not to say though that a housing market crash will be on the back of a load of risky mortgages not being paid if and when it happens again. So might be related, might be not.

 

[HangTime]

Honest question, but why does a house price crash mean the banks will stop lending?

They won't stop lending but they will tighten up their criteria, requiring lower LTV etc if they believe that prices may fall further to ensure that if the borrower defaults on payment they can get their money back. We saw that following the last 'crash' of 2007/8 whereby the number of high LTV (95%+) products on the market reduced massively. In recent times we've seen those creeping back in. And tighter lending criteria means fewer people able to get a mortgage unless the crash outweighs the effect of that - bear in mind that even a so-called crash of 20% reduction in house price wouldn't help with deposits if suddenly people who could only afford a 5% deposit suddenly needed 10% (8% in old money following the 20% price reduction).

 

[Luckystrike123]

Heard on the radio this morning that Aviva think that the value of houses will continue just as they have for the past 10 years.

Unless you're in the know it's best not to go against the experts!

 

[norm]

Heard on the radio this morning that Aviva think that the value of houses will continue just as they have for the past 10 years.

Unless you're in the know it's best not to go against the experts!

I bet pre-2008 experts thought everything was hunky-dorey too before the abundance of credit disappeared.

I think the hallmarks of a crash are all around, government inflating prices through availability of credit, wages nowhere keeping pace with house prices, the proportion of people in the market able to buy is dwindling because more and more are forced to rent, which equals less demand.

And if interest rates rise and prices drop significantly people may be faced with negative equity and the housing ladder will stagnate as they won't be able to afford remortgage to buy a more expensive property which will only compound the problem.

 

[norm]

Unless the government really gets into gear and builds a lot of new houses then prices wont go down.

Thing is if developers can't sell their stock because of unrealistic prices they won't build in the first place. That's why government backed mortgages/loans exist to encourage/facilitate sales and they're distorting the true value of property.

Without government interference the market probably would have corrected itself already, if anything they've delayed the inevitable and made the effects worse.

 

[dowie]

Honest question, but why does a house price crash mean the banks will stop lending?

he didn't say they'd stop lending but he's mentioned LTV i.e. he thinks they'd tighten up requirements % LTV, affordability etc..

 

[McPhee]

Heard on the radio this morning that Aviva think that the value of houses will continue just as they have for the past 10 years.

Unless you're in the know it's best not to go against the experts!

Source please, as I believe you've misheard. I'm not aware of (and cannot find any links to) a study that Aviva has recently done looking at house prices. All I can find is the story about 1.2 million more young people living with parents by 2025. When conducting this study, Aviva assumed prices would rise at the current rate for a further 10 years. There's no mention of them checking that such an assumption is reasonable (it isn't).

Also, Aviva are 'experts' on the property market? Lol.