I'm new to this forum. The predictions of a house price crash are crazy. People who predict a crash forget that many houses are bought as investments, and these homeowners are just not going to sell at a loss. Buyers can boycott the market for a while, but they must eventually return. And when they do sellers will have them at their mercy, and will insist on prices that give them a good return on their investment. I predict a 10% rise in house prices next year, and higher rises in subsequent years as buyers are forced to return to the market at the mercy of sellers.

BS

My sentiments exactly!

You obviously were still in school during the last HP crash learning how to spell 'troll'!?

So... BillyShears, are you a boy or girl? and just how much do you owe?





This threads just gonna keep getting fed (don't bite)

Did it take you a whole 12 hours to think of something this insightful?

Oh, BTW AWOOOOOOOOGA!!!!

There are too many vested interests who rely on the housing market continuing to grow. People and organisations have learnt their errors from the previous house crash, and will make sure that the same does not happen again. Banks and building societies have already shown that any amount of house price inflation can be supported by simply increasing the multiples of income allowed for mortgages. There is no reason why this policy cannot be extended indefinitely to support continuing house price inflation in real terms.

BS

This is the madest arguement to say prices will continue to rise. I suppose my dot.com shares have increase in value at 10% per year because I refuse to sell them for a loss.

Normal, ordinary people who buy homes to live in for 20 years won't sell at a loss. Normal inflation will take care of that. Speculators who bought with the bank's money and have to pay interest may have to sell when they can't afford the repayments. When sellers have to sell, they are at the mercy of the buyers.

Ah, so "they" won't let it happen again and it's "different this time" anyway. lol.

Good on you billy. You can't fight maths.

Yep I reckon your right. I earn about 1800 a month. That means that I have 1800 a month to spend on my morgage. I will walk the 7 miles to work everyday, I will not eat, I will not dress, I will not use electricity, gas or water. I will fall down with fatigue, hunger and cold after a week, but at least I will have an 8 x incomes multiple mortgage to service the roof over my head. The light has gone on. Its all coming together for me. I am seeing it now. I will probably lose the roof over my head eventually due ot an extended period in the hospital...

You short sited ****** ! Don't suppose your name is Gordon Brown by any chance?

People have an alternative to buying dot.com shares. Alternative investments such as gold, property, shares in other types of companies, collectibles, and the like. People have to live in houses. They cannot avoid the profit motive of buy-to-let landlords as BTL landlords unable to sell their houses at a profit will recoup any temporary loss by raising rents so that their sum income shows a good return on their investments. So potential buyers are at the mercy of owners in either case.

BS

Welcome to HPC.co.uk, the one and only BillyShears.

This site is not really about boycotting the market in order to force sellers to drop prices. Perhaps it has convinced a few to STR or delay buying but the site does not really have a lot of influence, so I think you are missing the point.

People have stopped buying and the crash is happening *naturally* because FTBs are priced out and speculative sentiment is evaporating. Whether or not a couple of thousand FTBs who read this site buy or not is a drop in the ocean.

You say buyers "must eventually return" i.e. buy. But you're wrong, there is no such thing as a forced buyer. Someone with a housing need can always rent. Furthermore, many renters are paying near or below the cost of servicing a mortgage in some housing sectors, so with prices at best stagnating they are in no hurry.

However, there are and will continue to be many forced or highly motivated sellers: deaths, divorces, reposessions, job relocations, retirees and emigrations to name but a few.

I hope you stick around and continue to debate! We have had too many one-post bull newbies lately.

frugalista

How exactly are people "forced" to buy?

I know plenty of reasons why people are forced to sell, death, divorce, job loss, personal insolvency (a good one for next year)

I don't see any reason why buyers "must" return. There are currently thousands of properties standing empty around this country. I have yet to hear of anyone who has been forced to buy.

Do some reading on what happens when property bubbles burst, Japan didn't want to end up in their economic mess, but it happened anyway.

Australia didn't want a housing crash, but they're getting one right now.

The crash around the UK is now moving into full swing. Quite frankly your comments come across as enormously uninformed.

Stick around and learn something.

"You know I have been for so many years".

See my previous reply about renting which crossed yours in the virtual post.

BS

In many cases BTL "landlords" will not be able to increase rents due to the huge amount of competition around. Look at many new build flats and there are numerous To-Let boards up. If rents can't go up then a landlord is stuffed and many will be renting out at a loss.

I assume you know the Portman will no longer lend to BTL new builds because they feel the market is unstable?

High house prices are killing the British Economy, it really is that simple!! You believe that house prices shall continue to rise whilst the British Economy goes down the pan!! Like Mervyn King said 'House prices are a matter of opinion but the levels of debt in this country are very real'

I bet you probably don't even know who Mervyn King is.

You should do some reading about how inflation is measured, it forms part of the "basket" of goods measured by the MPC.
A rise in rents is one of the factors that contributes towards higher rates.

Besides this minor point, one of the effects of extremely high house prices has been a flood of new properties, simply because there is so much profit to be made by the developers.
And if you had a look at some basic economics, you would know that price is determined by supply and demand.
Right now there is far too much supply, and with the economy looking like it's heading into recession, demand is likely to fall.

Newbie BTL idiots are in for some real trouble. The smart money was out of property last year.

You are basically saying that renting is not an alternative because rents will rise in line with house prices. However if you actually look at the evidence, rents have risen only slightly above inflation over the last few years, unlike house prices which have doubled or tripled. For example, I am renting today for the same money I paid in the year 2000. This is IMHO the best evidence that the recent boom was speculative.

Of course there is only a limited pool of prospective tenants and landlords must set the rent according to market conditions or face a loss-making void period. Recent BTLs cannot raise rents to whatever they like. The main reason for this is that they must compete with landlords who acquired property a few years ago, have a lot of equity and are prepared to make a reasonable income based on the money they *originally invested* rather than the current market value of the property.

frugalista

Who are these "vested interests"?

When no one can afford to buy a property with such high house prices, what happens to all the mortgage brokers/providers, estate agents... they are out of business. So it's not in their interests.

When no one can afford to buy a property with such high house prices, what happens to all the sellers... they can't sell and release equity/move... so they are stuffed for changing jobs/retiring. So it's not in their interests.



How?

By the way there wasn't one "previous house crash".. there have been many, so what makes this one different? Let me guess its because you own a property.. and hence have a vested interest?



Extended indefinitely.. so what happens you need the all worlds gold reserves to buy a studio flat in Penge?

I look forward to some sensible bull arguments please

A few weeks ago I went to view in a affleunt town no less than 4 empty houses.
They are still on the market 4 weeks later.
Unfortunately they weren't any good to me but the squatters might be happy to live without a garden and a kitchen that needs updating. It's very risky having a property stood empty IMO.

You signed off as "BS". I take it that stands for Bullsh*t right?

The market for "new builds" being "unstable" supports my claims. Because everyone needs housing, you can only have "instability" in localised portions of the market. People can shun "new builds" because there is an alternative, which is to rent or buy existing housing. But if there is a lack of interest in "new builds", then there must be an equal and opposite rise in interest in other types of housing. That will boost the prices of these "other" types of housing, and the "new builds" will become "bargains" by comparison. This will eventually lead to people abandoning the other types of housing, and boost "new builds" so that their prices will catch up. And so the market as a whole keeps going up.

The same applies if there is greater mobility in the rental sector. It is difficult for landlords to raise the rent for sitting tenants as there is psychological resistance to the rent changing by more than trivial amounts without a corresponding (and expensive) rise in the level of service. But with more property on the market, clearly without sitting tenants, this allows the landlord to set a new "clean slate" rent without this limitation, leading to a long term rise in income.

BS

so Great Auntie Mary, who passed on to that celestial cloud, has 5 beneficiaries under her will. They all say "lets keep the house as an investment, rather than sell it now at a loss." Similarly the divorcing couple will want to keep their jointly owned house as an investment? And the downsizers, who don't want to spend the money on the running costs or the upkeep, where they have a reduced income.

No-one bought houses as an investment before the last crash? Its all different now?

Lets put your money where your mouth is. We'll value my house at current market value, and then we'll enter into an agreement for you to buy it in a year's time for 10% more than this value. Or are you scared?

I believe BillyShears is a good example of the average person on the street, these people really do believe that houseprices shall simply rise forever!! They believe all the spin fed to them by those with a vested interest.

Still he has cheered me up no end, as I realise these poor sods with their bull arguments don't have a leg to stand on.

Welcome BillyShears. I am on your side, but I hasten to say that your argument needs to develop a little more before you will gain any credibility here.

Yep, he's welcome on this site as far as I'm concerned.

And a new friend for TTRTR.
You've got a lot of reading to do mate!


btw TTRTR, I like the new avatar.

Judging by the logical construct and the strength of the argument I would estimate that the poster is around 13 years of age, and would be better served concentrating on his homework and leaving the discussion of such weighty issues to the grown ups.




Limpet

Ok so your argument goes something like this:

1) If new build BTL's are unsellable because they are oversupplied then property prices will be boosted in other sectors.
2) If there are more vacant BTl properties due to oversupply then rents will rise.

Err?

http://www.housepricecrash.co.uk/forum/ind...showtopic=20768

Just because we're on the same side, doesn't mean I think he'll help my team win......

He may be best left on the benches.

No I would suggest he is an University student reading Property Finance and Investment, who is being serious not realising himself he is a windup.

DMU
BS ?

Edit: Are you looking to buy in the big M.

Fair point

Many of the vested interests are changing sides. Not only this, but they are acting to deflate the bubble.

The government liked HPI because of the great feelgood factor and the MEW boost to the economy. But now they are facing criticism over priced-out young people and key workers, let alone personal debt levels. They want to get the correction over with before the run up to the next general election. Why do you think they withdrew the SIPPS policy and are planning to help supply millions of new homes?

The estate agents loved HPI because properties sold quickly and the size of ther commissions just kept rising. But now transaction volumes have fallen, they have started to switch over to convincing vendors to accept lower offers. If the vendors don't accept, the estate agent risks getting no commission at all, or spending months conducting costly viewings for each property. Every lower offer accepted sets a precedent for the next sale. Read some posts by EAs on this site, they confirm the above.

Large scale landlords were VIs but some anecdotes suggest that now they are taking profits and entire portfolios are being sold. This has the effect of driving down prices, and making them vested interests in the crash.

Finally, the biggest VI of all, the mortgage lenders. If they rashly lend huge income multiples to FTBs or huge sums to overvalued BTLs they themselves are taking on a default risk. To offset this risk they are beginning to tighten lending criteria. A recent example is Portman who have stopped all lending on newbuild BTLs. The tightening of lending criteria is self-reinforcing. For example, some borrowers may come out of very low interest 2-year fixed deals arranged in 2003. They will look to remortgage to avoid going on the standard variable rate. But they then find that the conditions have tightened and no-one will lend to them on the same terms as 2 years ago. If they have MEWed, they might even end up stuck on the SVR, not an enviable position.

The only VI left aboard the sinking ship is the stubborn "investor" who clings on to the fading bubble-hype, hoping against the odds, like Mr Micawber, that their retirement will somehow work out fine.

frugalista

I agree with you TTRTR

Personally I welcome any bull who can argue their cause with reason, explaination and facts... something which BillyShears, as you say, needs to do before they will gain any credibility here.



Noticed it and didn't release is was TTRTR's ... as a bear I think it is quite bearish... and cool

Although going easy on the opponent is not my strong point I think its best not to be too hard on Billy and anyone else who comes here with this level of argument and this position. To learn to argue there needs to be a forum to practice and that forum needs to offer enough counter argument, skill and compassion to allow the novice develop without sending him running scared and battered in the other direction. Since a long time ago I was there myself, I know this too well. I welcome the intercession from TTRTR (even if you are WRONG, WRONG, WRONG mate )

We'll make a bear of you yet Billy

Billy - DO NOT BUY THE BEAR CLAPTRAP!

Most professional forcasters can see that Brown will inject money into the housing market via keyworker schemes etc... Housing now represents 50% of all the real wealth of the UK from under 18% not so long ago.

The forecasts are by RICS etc.. of 4%-6% HPI in 2006. This is underpinned by massive immigration levels, full employment, and low interest rates.

However, I do believe the real economy will continue to collapse as real incentives disappear.
If houseprices rose by 10% as you say, thats another few years wages that a worker will have to find from somewhere in rent or mortgage payments, reducing consumption and saving.

I myself have quit the process of self employment burn-out. The self employed could see from 1997 what a disaster Brown was. I honestly thought that Brown would be turfed out by 2003, but apparently not because people view endless HPI as a good thing.

Houseprices will not crash, as they have a 'Brown put' via all sorts of schemes.
However, this will destroy the real economy as people quit the treadmill of hard work, disilluisioned. Productivity will start to dive.

My guess is that a lot of people will be thinking the same as taxes rise - screw this crap what am I killing myself for! Lets hope they realise this before the population register and ID cards engulf them in 2008.

REAL INCENTIVE has gone.
Ordinary hardworking folk are all much poorer, even the ones with a home.

Real output will fall, and houseprices will rise even further upwards. Liabilities will increase and taxes will rise further, enforced with a population register and ID cards, removing real incentive still further in a spiral.

I can't beleive there are 3706 members!

I wonder for how many posts in response the bet was?

Hear hear.

BillyShears is sticking to economic arguments, and avoiding the bear taunting which has characterised newbie bulls over the last few months ("sad renters", "doom mongers", "missed the boat", "get a life" etc.). Those of you not making him/her welcome should think more carefully about the credibility of the forum as a whole.

frugalista

Yes Uni students like a laugh don`t they?

Judging by the nearly impeccable English of the poster, well above average on this site, I would say he or she probably doesn't need to do too much homework.

I knew from the first vote off 9 weeks ago that Shane would win the XFactor. He has age, looks and sex appeal on his side, and his vocal range is excellent. Now my last four choice I got that a bit skew whiff, I had it as Shane, Andy, Maria and Brenda but there you go, I never said I was perfect. Nothing against Journey South mind, grand lads but I see them as a good club act, but not volume record sellers.

Judging by the syntax I would say that he is about 18 - 20. I think you are being a big meany Limpet (and wasting the opportunity for a convert )

I agree totally with you, and like someone else said (paraphasing them) "we've had too many one post bulls here".

I do welcome bulls who make reasoned arguements (and agree it can take time which to settle in) but similarly I dislike the bears who call aw***ga on every post they disagree with.

When you say the "forum needs to offer enough counter argument, skill and compassion to allow the novice develop without sending him running scared and battered in the other direction".. your spot on.

BTW perhaps webmaster could set up a "bull corner" for the certified bulls, so they get some peace from all us bears sometimes.

The AWOOGA troll siren is beginning to lose its original meaning. London Landlady even suggested it now stands for "Anyone with opposite opinion go away".

HPC regulars, I suggest we use the troll siren only in the event of taunting trolls, such as Property Guru etc. Otherwise I will be forced to start charging royalties on it.

frugalista

Welcome aboard BillyShears. I hope you'll find this forum as enlightening as I have (even if you - as I - don't agree with everything said).

To challenge one of your points. My parents have rented all of their life and have never found it necessary to "return to the market" (they could never afford to).

I have also always rented since I left school. I'd very much like to buy - but not at current prices. And I'm quite happy to wait a couple of years to see what happens (while saving as much as I can).

If your predictions on HPI turn out to be correct then the missus and I will return to the housing market as you predict (but not in this country I'm afraid). The money we'll have hopefully saved by then will go a lot further in my other half's home country (we could comfortably live off the interest).

Great, so where is the money going to come from exactly? Lots of people out there couldn't afford to buy at the silly prices today let alone at your fantasy of an arbitrary 10 percent.

Every market sings between imbalances on eitherside, in this case as prices rise too much you choke off buyers, see 'demand destruction'.

buyers at 'the mercy' and 'forced to buy' were not the kind of words i was expecting in a free democracy.
and with this attitude - it just makes you want to avoid paying tax wherever you can. however small the claim.

The relatives and divorcing couples will sell their houses. But they aren't the types of owners who are driving the market. The houses sold by relatives and divorcing couples will probably be sold to property developers who will then make sure that they get their return on investment. As more and more houses are purchased by professional owners with a profit motive, the more solid the foundations of continuing HPI.

As for buying your house... I don't wish to buy random houses for random prices, if I'm going to buy a house I'm going to research it properly and buy at the best price.

BS




We do not live in a free democracy. Please tell me which political party the poor and weak in our society can vote for that BOTH has their interests in heart AND has a realistic chance of achieving power.

BS