oh dear™: UK house market is ‘heading for crash’

[Francko]

It pains me to say it, but sas is right. This is an island, ridiculously overpopulated, more coming in, not enough housing stock by far, etc. There'll be peaks & troughs, as per, but, overall, it's a no-brainer. People want their own homes, there aren't enough to go 'round, and so housing is, correctly, the numero uno cash cow.

There is something that I don't quite agree with this line of thinking.

I mean there have been crashes in the past. In the 90s England was also an "island, ridiculously overpopulated, more coming in, not enough housing stock by far, etc.". So how could this has happened then? And yes even at that time there was lots of immigration, legal and not-legal.

[sunnysan]

Property

This is

Becuase of rising house prices and low interest rates, people took risks and put them selves in a position of weakness by taking on masses of unsecured debt and speding equity of their assets in the knowledge that in the next few years their property will increase enough so they can withdraw and continue to fund as lifestyle that is leaving them financially worse off.

House prices rises have been marginal and in some cases non-existant. So the equity has dried up in many cases. But 90% of mugs who live like this would have carried on spending and now suddenly they are faced with a black hole where the nice little chunk of equity used to be. So they need to lend again, but without security the money is more expensive and they get deeper into the brown stuff.

I still maintain that unless you have over 40% equity inany investment property now, IMHO its time to sell and sit on the cash. You are not going to lose anything and renting is cheaper than buying at the moment.

And lets face it, having a mortgage is not really owning your own home. You have the option on it which means that the bank owns it and you take the risk, which in times past has meant growth.

So if you think about it that way, and forget that its a house you are buying and think of it as a generic commodity, would you take the risk? I wouldnt buy an equity under those auspices.

The population argument IMHO does not make a difference. House prices values are affected by the profitability of the lending market.

If it is no longer profitable to lend money, institutions wont or the deals will be more expensive and more selective, thereby reducing the pool of people eligable to buy a house.

So even if 60 000 people arive in England this year, what difference does it make? None of them can afford to buy a house anyway.

[wendigo100]

There is something that I don't quite agree with this line of thinking.

I mean there have been crashes in the past. In the 90s England was also an "island, ridiculously overpopulated, more coming in, not enough housing stock by far, etc.". So how could this has happened then? And yes even at that time there was lots of immigration, legal and not-legal.

Our population was stable in the nineties. Immigration was controlled, and those coming in approximately balanced those leaving.

It is out of control now.

[Sockpuppet]

Is "Supply and Demand" such a hard concept to grasp?

Yes, but it works both ways.

When the bank run off crying because they have lost lots of money on people going arse over they will stop lending to all but the safest of bets.

When that happens they artifically remove demand as no bugger can afford to buy.

[Francko]

Our population was stable in the nineties. Immigration was controlled, and those coming in approximately balanced those leaving.

It is out of control now.

That's what the Government used to tell you and you all believed. But being in London in the 90s wasn't that different from today, still people from all around the world many of them working irregularly and not much control.

[hugebrain]

And lets face it, having a mortgage is not really owning your own home. You have the option on it which means that the bank owns it and you take the risk, which in times past has meant growth.

Why is this relevant on a contractors' board? Are things really that bad out there?

[rootsnall]

Our population was stable in the nineties. Immigration was controlled, and those coming in approximately balanced those leaving.

It is out of control now.

I don't think it was particularly controlled, a lot of it is jobs driven, if the work dries up the immigration flow will stop and probably reverse. Certainly a lot of the professional immigrants ( inc IT work ) will not hang around if the economy has a bad spell.