We're Boomed!

[gingerjedi]

I bought my first property when interest rates were close to 15% and the market had just crashed knowing that rates could only realistically go down and property values could only go up, I fear for people buying now ...and so the cycle continues.

[sasguru]

I bought my first property when interest rates were close to 15% and the market had just crashed knowing that rates could only realistically go down and property values could only go up, I fear for people buying now ...and so the cycle continues.

There are no cycles any more. We are in the glorious uplands where the sun always shines and prices keep rising.

HTH

[Numptycorner]

I bought my first property when interest rates were close to 15% and the market had just crashed knowing that rates could only realistically go down and property values could only go up, I fear for people buying now ...and so the cycle continues.

If you remember last time (many people don't) it took several years for prices to recover, does anyone seriously think house prices will never go down again?

[Lucifer Box]

If you remember last time (many people don't) it took several years for prices to recover, does anyone seriously think house prices will never go down again?

Haven't you heard? House prices will rise at 10%+ per year forever.

[wendigo100]

I don't buy this, rents are not growing at all in real terms, which you would expect if there is such demand and limited supply. The only driver is expectation of further price rises and availability of credit, it's a pyramid scheme that at some point will feck up.

It is plain obvious that:

more people that need housing = more demand for housing

So unless these extra people are all living in trees, there is less housing available for everyone else. And we are talking half a million extra people last year that we know of.

[Numptycorner]

It is plain obvious that:

more people that need housing = more demand for housing

So unless these extra people are all living in trees, there is less housing available for everyone else. And we are talking half a million extra people last year that we know of.

So why are rents not going up?

answer: BTL saturation is driving the market and there's a lot of unrented properties where I am working (SE England)

[NoddY]

I bought my first property when interest rates were close to 15% and the market had just crashed knowing that rates could only realistically go down and property values could only go up, I fear for people buying now ...and so the cycle continues.

The market is seriously distorted by the availability of cheap credit. We have been convinced that low interest rates are a good thing. They can be if people know the difference between good and bad debt. However for liabilities such as the house where you live, the massive increases in prices have offset any advantages of low interest rates:

e.g. circa 1995

Purchase price: £100,000
Deposit: £10,000
Mortgage debt: £90,000
Interest rates: 10%
Monthly repayment: £826.26
Lifetime cost of purchase at 10% rate: £247,878

circa 2005

Purchase price: £200,000
Deposit: £20,000
Mortgage debt: £180,000
Interest rates: 5%
Monthly repayment: £1064.28
Lifetime cost of purchase at 5% rate: £319,284

[Gonzo]

There are no cycles any more. We are in the glorious uplands where the sun always shines and prices keep rising.

HTH

Yes. We have reached a new paradigm where if prices stop rising they will only plateau out.

Now people were saying that about share prices in 1999, and they were wrong to say that about shares. However, when it comes to house prices things are different. They wont go down so fill yer boots!

[wendigo100]

A new paradigm, that's what it is.

[IDB]

I think a crash will come, but not to the extent of the last. There are more people I know that have been made redundant in the last 12 or so months than since the last economic crash. All of them have been in service the service or manufacturing industries. Redundancies are usually "one of the signs" before a crash in most economies.

If redundancies continue, then people will be flogging off houses/downsizing rather than getting themselves into positions where they can't afford the mortgage. This will increase supply and prices will surely have to drop a little at least?