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And in the 9 years before that??, so if you invested in the companies in the footsie in 1999, you are still behind, with inflation you've done your**
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Look at the chart from 1989 and think about that comment.
My point was that used as an indicator things ain't that bad. |
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shelts
All doom and gloom on here as usual. Not sure why I even bother logging on. There is a correlation between Interest rates and house prices. All the time rates are being driven down there will not be a crash. Seeing as you are a mortgage adviser and have your fingers on the pulse could you remind us what happened to the Japanese housing market? |
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We dont live in Japan!!
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There is a correlation between Interest rates and house prices. All the time rates are being driven down there will not be a crash.
So I'll ask you a different question. Does this theory only apply to this country and in view of historical events in Japan is it possible, even likely, that on this occasion you are wrong? My point is this. Sometimes people overestimate governments and central banks ability to control events. When things go bad and consumer sentiment is bearish then even with 0% interest rates a housing market can be dead. This was shown in Japan. Why will we be different? |
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Could be double whammy with interest rates going down. One they do not work and two up goes inflation and evn more pressure on household budjets
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low interest rates is not all happiness and joy....
see Japan and their ZIRP. couldn't get consumers to start spending again. |
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I have asked shelts the debt pedlar about Japans housing bubble before , of course he convienantly ignored it , there still paying the price of it over there , the UK's previous bubble that burst in 1989 took up to 10 years to level out , he conveinantly ignores it , no point mentioning the 1970's UK housing bubble that was masked by inflation .......he has no idea of whats coming
Shelts , although probably an OK guy clearly lives in his own little insular world and is totally and utterly clueless about the REAL world , another example of this can be shown on this forum , on the previous page to this thread he writes how he thinks it's nothing for people to be paying a mortgage of 1,100 a month for the next 30 years therefore making those that do this into mortgage slaves , YET he starts a thread {i've just bumped it to the top } on this forum whinging and crying about his water bill going up 10% , saying he's going to write to them and complain , and if he installs a water meter they will eventually "rip him off " that way as well . I have just received my bill 3 bed semi , family of 4 is 288 thats 24 a month . So shelts thinks it's ok for banks to charge 1,100 a month for mortgages but it's a rip off to recieve all the clean water a family needs for 24 a month. What a tool he is ...................... |
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Japans housing bubble included , the lost generation , banks going bust , collapse of the Nikkei , 100 year mortgages , intergenerational mortgages ........
No sub prime here though is there .........LOL. |
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I keep playing the same tune but plenty of youngish people have now only known a low volatility, low interest rate economy where debt is not a problem. Too many people on the property gravy-train buying up property which is traDING WELL ABOVE INTRINSIC VALUE. get ready for some burned fingers.
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Grey Shark
You are right . I am a nice guy. I am sure that you are also a nice guy also!! The housing bubble burst in the UK when Interest rates were very high, and people were forced to hand keys back to lenders etc. Unless this happens again it will not happen. The price crash in Japan was due to a number of factors. The first and most important bing the lack of space in teh cities and the ridiculous values that these properties reached .The average price of a 750-square-foot condominium in Tokyo rose to more than 70 million yen, or about $625,000 at current exchange rates in 1991 from about 25 million yen in the early 1980s. After crashing in the early 1990s, the average house price has hovered around 40 million yen, or about $360,000 for the past ten years. The tech bubble burst and with an aging population the prices of property were unsustainable. With respect you guys quoting the Japanese housing market know bug ger all about it!! So stop quoting it. My argument is that unless rates rise here house prices will not crash. It is a nother story if they do rise. I would be very worried. For the average homeowner in the uk with a decent amount of equity the mortgage market is still very competitive, so mortgages will continue to be affordable. My argument is that inflation and Interest rates are no longer linked in the same way as they were in the past. The government sets the target at 2% and has basically agreed that it will be well above this until 2009. Oil is now at $110 a barrell. Some expect the price to fall to $70-$80 by the middle of the year. As I know nothing about oil and why the price now is so high I really can not comment. I do know that OPEC is more than capable of increasing output significantly , but is unwilling to despite political pressure from the US.I am effectively a pedlar od debt and always will be. What i will say though is that I am able to finad a customer the most affordable mortgage given thereir salary and circumastances. Whether house prices rise or fall people will still need mortgages. |
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With respect you guys quoting the Japanese housing market know bug ger all about it!! So stop quoting it.
How the hell do you know that? Massively presumptuous comment. |
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With respect Gooseman. Go back to reading your conspiracy theories, or go and have a beer with David Icke. If you consider this to be factual information you are posting then you are indeed deluded!! I am getting fed up with this banter!!
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I think you have the wrong bloke mate. I have no clue what you're talking about. If you're trying to tell me that I don't know about Japan's ZIRP then you're way off the mark.
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shelts
The first and most important bing the lack of space in teh cities and the ridiculous values that these properties reached .The average price of a 750-square-foot condominium in Tokyo rose to more than 70 million yen, or about $625,000 at current exchange rates in 1991 from about 25 million yen in the early 1980s.. What percentage rise is that from the low point to the high point and how does that compare with the rise between the low and high points reached in London? Granted London will be lower but I think you will find that the percentages are not that different. It is interesting that you describe the rises in Tokyo as ridiculous. How would you characterise those in our own capital city and beyond? |
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The first and most important bing the lack of space in teh cities and the ridiculous values that these properties reached .
eh? I thought lack of supply was what justified us having a UK house boom, now it causes problems? Average UK house 9 times average UK salary. Rent on average 70%of the INTEREST on a mortgage secured at 90% loan to value. Watching property auction as I write this. 60% unsold, everyone selling 'investors'. Absolute CLOWNS. |
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Nice evidence Reagan thanks.
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Subtle difference between the need for housing in the UK and that of a then booming economy in Japan in early 1990 's!!
Please stop comparing two things that are not even remotely similar. |
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Shelts ,
Yes there are differances between Japan and the UK , but the end result will be the same :) . As for the bubble here i well remember it i bought my 1st house in 1988 sold 4 years later at near 20% loss , wrote the loss off to buy a bigger/better house that to had crashed in price . As for your argument about interest rates in the last crash being higher , yes they were higher , about double what they are today , BUT CRUCIALLY we did not have the crazy income multiples that we have now , nor did we have Amateur developers , BTL , self cert mortgages {lie to buy} INTEREST ONLY etc. etc. So because of the irresposible , lax and aggresive lending the bursting of THIS bubble will be much worse than the last one . |
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Average UK house 9 times average UK salary.
Thats says it all for me. Prices have got way out of line and need to be corrected. |
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SHELTS
Data from the CML who are obviously vested interests in the housing market having to tell it as it is , NEW LOANS down more than 50% from August 2007........ Figures from the Council of Mortgage Lenders (CML) show that new loans for home buyers fell to 50,300 in January, the lowest level for nine years. That was 11,700 fewer than in December and 25,500 fewer than in January 2007. The CML also said that lenders' tougher loan criteria were forcing borrowers to put down larger deposits and accept smaller mortgage offers than before. The credit crunch is now having a meaningful impact on the availability of finance for home purchases . The number of new loans being taken by house buyers is just under half that lent a few months ago in August 2007, when there were 103,000 such loans. NO CREDIT = NO MARKET = PRICES UNSUSTAINABLE |
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my sister has just sold her house after cutting the price by 10%: very lucky imo.
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has she completed yet or just accepted an offer?
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info comes from an unreliable source so can't be sure (wouldn't be surprised if the contracts haven't been signed in which case of course it could all go up in smoke)....apparently two lots of folks were interested. she had it on the market with little interest for at least six months before she dropped the price. think i have convinced her to rent for a while.
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do you think any parts of country may avoid big drop ?
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Hi Charlatan
Your sisters house was probably overpriced by the agent when they visited her and took it on. The fact that she took an offer 10% below her asking price does not mean she took 10% off the value. Agents are still valuing properties high as they need to get the properties on the books. They spin customer a yarn once they have them tied in for 16 weeks about the demise of the market and hoodwink them into taking low offers. Working in mortgage market and with estate agents properties are taking longer to sell. People are turning down a lot of cheeky offers as a buyer in this market would be daft not to offer below the asking price. It is a buyers market so if a buyer is patient and willing to walk away from good quality property they will eventually pick up a bargain. I would not like to be desperate to sell my property as there are unscupulous companies out there that will buy property in very short timescale for 20-30% below the asking price. Not sure how hard the selling tactics are but if anyone on here is looking to sell quickly do not sell to these companies. Also be careful of big chains with investors at the bottom. They are starting to pull the plug at the last minute by withdrawing their offer and offering much lower. The tactic is to get everyone else in the chain to contribute to their investment and meet teh shortfall. |
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Feel like I am becoming a little obsessed with this thread. Reagan has misquoted me in capital letters so suggest he read what I actually posted about Japanese property market boom!! Muppett!!
To the guy who asked about the property market in different areas absolutely. House prices will rise in some area and fall in others. That is the joy of buying a new home. Rail links, regeneration etc can ensure house values increase substabtially. Apparently some parts of Scotland are increasing quite quickly. Not surprising given the Scots being given free prescription and university tuition. Always think carefully when buying your home. The last thing anyone wants is negative equity or to lose the savings they took years to build up. |
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shelts
you ignored this ........... As for your argument about interest rates in the last crash being higher , yes they were higher , about double what they are today , BUT CRUCIALLY we did not have the crazy income multiples that we have now , nor did we have Amateur developers , BTL , self cert mortgages {lie to buy} INTEREST ONLY etc. etc. So because of the irresposible , lax and aggresive lending the bursting of THIS bubble will be much worse than the last one . Also the CML post at 18.07 , new mortgage approvals CRASHINGGGGG by more than 50% in less than 6 months .......... |
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Once again Grey Shark you use information which is misleading. Up until 1992 Interest rates had not been much under 8% so income multiples at 3 times salry 2.5 times joint were right. Since the peak in 1989-1990 Interest rates have reduced to levels under 6% from 1998. Obviously it was therefore understandable that Income multiples have been increased to 4-5 times joint salary from some lenders. The numbers are affordable to people who do not continually spend on credit cards and take out loans for cars etc.
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... and add to the fact that Interest rates fell from 14% in 1983-7.5% in 1987 when prices rose.. They crashed because interest rates doubled to 15% in1989 when the crash began. If someone borrowed 3 times their salary in 1983 after adoubling of Interest they would obviously struggle with their payments. Since 1990 rates have reduced dramatically. Hence lenders are able to lend more based on affordability. Interest rates have not doubled. They had increased to a peak of 5.75%. They are now 5.25% and are getting lower.
HOUSE PRICES ONLY FALL SIGNIFICANTLY WHEN INTEREST RATES RISE SIGNIFICANTLY. FACT |
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Shelts - Houseprices fell significantly in the 1930's when interest rates fell. Likewise in Japan Houseprices have fallen in price over the last 18 years during a period in which interest rates fell to zero.
What causes house prices to fall is credit tightening. This may or may not be accompanied by increases in interest rates |
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Your sisters house was probably overpriced by the agent when they visited her and took it on. The fact that she took an offer 10% below her asking price does not mean she took 10% off the value.
think she switched agents a couple of tiems and the last one went with a lower price. if you ask me she has sold it for about 30% above its value but someone clearly disagrees with me! |
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When the true state of house prices dawns on poeple and they stop spending; they will stop slending on services. Why because these are the things people can most easily do without. Unfortunatley its the biggest sector of the economy. Unemploment- crash.
And I thouhgt that the flood of money being put into the system was to stimulate the economy. Its to stop bear Sterns from going bankrupt, to protect any other major bank and to prop up any other instition that might give away the real state of the american and therefore the world economy . Playing for time. To hide the depth of Americas recession for as long as possible. When the american reccession bites here there will be unemployment here -double whammy. Soory shelts I ike the way you fight your corner. There would be little discussion on here otherwise. But unemployment causes crashes in house prices. Regardless of interest rates. |
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First time I heard this country being described as being in reccessin was today on radio 4.
Also an american economist describes banks exposed to sub prime loans as**roaches. See one and you know there are thousands hiding away in the dark places. Come on lets here from all those people who think everything is all right. Except for Gordon. Gordon I don,t belive you. Not just becassue no politician can ever admit the true state of a rotten economy; becasue that would just make it worse; but also because you are a liar; you said you were prudent when you where not. |
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Melv
The pumping of billions by the FED , BOE and other central banks are a ATTEMPT to get the credit , money markets moving , there is just so much debt , hidden losses etc. out there no one knows where it all is , large amounts of debt has been packaged up by banks and sold on to pension , insurance companies , hedge funds etc. , a lot of this debt is toxic subprime , it was allowed to get out of control and now the bankers who caused all this are pleading to central banks , governments and eventually the tax payer to help them out , truly sickening , and people like shelts think's it can just be swept under the carpet .......... This is a debt based econmy , this is financial engineering and it's ucked in a big way . |
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Grey.
Oh so everythings allright then. Lol. |
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The tech bubble burst and with an aging population the prices of property were unsustainable. With respect you guys quoting the Japanese housing market know bug ger all about it!! So stop quoting it.
so we dont have an huge amount of baby boomers about to retire? lets hope their pensions are not too reliant on the stock markets eh. when they all start trying to sell up for or for paying for their care home bills. think the younger generation can buy with all their over burdened debt and probably increased tax bills to pay for said baby boomers. this is like shooting fish in a barrel. the debt junkies have overdosed time for some detox. its going to be painfull but it is going to take place. only troube is we are all paying the detox bill via inflation |
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Feel like being a dreamer for a bit. Heres a thought experiment.
Is it time we stopped reassuring ourselves that prices will fall, this site beleives they will. Can we start looking at the disantages of sky high prices. I was OK to have a Mcdonalds- Costa Cofee economy. But people desevre to know when they are living on a bubble. Who was it ever ultimately good for anyway except for lenders and profiteers? .You have an asset whose worth you count in fraction of the million, But if you do not want to change your way of life; which I don.t it means nothing. Infact if I wanted to "improove lifestyle" ( I am now vomiting) I am less able to upgrade now than i ever was because the gap to the "nicer" property is unaffordable Any other advantags of crash and recession.? So lets have the crash and the reccession. A generation learns a leson the hard way and can we start teaching in schools that you don't get owt for nowt. Will a good hard lesson stop us being such a lazy minded price of everything value of nothing greedy little country. If we can't when people get poorer and unemployed they will do more crime as they feel they must grab cash by any means neccessary. Another worry now is that renters will now exploit a weak housing market by raisng rents. Are there any down sides for them? My guess is that if they charge too much tenants will stop paying and just play for time till eviction becasue in hard times the first bill you don,t pay is the rent. This is a weak point aren't renters going to have a field day at times of falling house prices. They of course will plead poverty. They will plead and tennants will bleed. Won't it be nice if young pople can buy a house without enslaving themsleves. All that is needed is people to stop being greedy. A very hard lesson willbe needed for this.Sell your house for what its worth and stop trying to grab money you have not earned. And stuff the green belt. Government; build houses for the workers only the price of a very small war like iraq. OOps sorry I forget socialism is dead; senilty strkes again. |
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There is not just the interest rate issue involved here. The near month LIBORs are very high and represent the credit risk posed by lending.....
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So bush says do not worry i know we can**it. Are people really going to belive him?
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