Reply to: House price crash signs

[northernladyuk]

Tories take and will take even more money from the middle classes - despite low interest rates there simply won't be enough money to support the bubble, property crash is imminent now that I bought my flat last year...

If it does crash, make sure you don't impale yourself on the kebab rotisserie.

[shaunbhoy]

Plenty of investors like me don't like debt yet have a fair bit of capital to invest.

and in real life, the lovable henpecked dreamer

LOL

[sasguru]

Ultra-low rates will push investors to hunt to yield. So where to invest? Has to be debt driven assets right?

Why does it have to be debt driven assets? Plenty of investors like me don't like debt yet have a fair bit of capital to invest.
The problem is where is the safe place to put it - and you're right in that for most it's property or stock markets.
IMHO the (quite huge) drop in prime London property is due to foreign investors putting their money into booming stockmarkets instead (+ there's also a glut of new build high rise housing in some areas, like Battersea).

[ChimpMaster]

So you're saying stock market and properties will grow continuously forever?
Seen that before

That's not what I said. What I said is written above.

[diseasex]

Nice work PG.

So yes it seems this is a 20 year cycle of ultra-low interest rates aka the Japan Zero Rate Zero Success Syndrome.

Ultra-low rates will push investors to hunt to yield. So where to invest? Has to be debt driven assets right? After all, cheap money drives corporate investment and so drives the stock market higher. Cheap money also allows people to buy property at what might seem inflated prices... but the prices aren't really inflated: it's just the new norm.

There is no property crash; it's just a period of adjustment. Look at the stock market, where the Dow has trebled in value since the credit crunch crash - how can that seem normal? Except it is... people keep on guessing at a crash coming but it isn't and it won't because the current environment won't let it happen, and neither will governments. So what if property or stock prices come down 5% or 10%. That's not a crash, it's just a breather before prices return to an upward momentum.

So you're saying stock market and properties will grow continuously forever?
Seen that before

[ChimpMaster]

1% interest rates is the new normal. The credit bubble is collapsing. We're looking at another 15 years of ZIRP; minimum.

Nice work PG.

So yes it seems this is a 20 year cycle of ultra-low interest rates aka the Japan Zero Rate Zero Success Syndrome.

Ultra-low rates will push investors to hunt to yield. So where to invest? Has to be debt driven assets right? After all, cheap money drives corporate investment and so drives the stock market higher. Cheap money also allows people to buy property at what might seem inflated prices... but the prices aren't really inflated: it's just the new norm.

There is no property crash; it's just a period of adjustment. Look at the stock market, where the Dow has trebled in value since the credit crunch crash - how can that seem normal? Except it is... people keep on guessing at a crash coming but it isn't and it won't because the current environment won't let it happen, and neither will governments. So what if property or stock prices come down 5% or 10%. That's not a crash, it's just a breather before prices return to an upward momentum.

[diseasex]

1694 posts full of unintelligible bollox at last count.

liar
1695

[shaunbhoy]

OK I wonder what kind of "evidence" you have on me

1694 posts full of unintelligible bollox at last count.

[WTFH]

If I was compulsive liar , you'd learn nothing.

That's exactly what a compulsive liar would say

[diseasex]

Just a little

If I was compulsive liar , you'd learn nothing.

[WTFH]

OK I wonder what kind of "evidence" you have on me

Just a little

[diseasex]

Just not in London though, right?

[MrMarkyMark]

OK, but I'm a doer, not talker.

Just not in London though, right?

[diseasex]

Japan also has deflation for as long as I remember

[PurpleGorilla]

House price crash signs

It is worrying that we have a whole generation of new home owners that have only ever experienced rock bottom interest rates. Before the crash, my mortgage rate was something like 4.5%. Going back further it was even higher. In the very early 90's I seem to remember them sky rocketing to over 13%!! Can you imagine what will happen to the market when rates do eventually rise to their normal levels? Example:

£ 300k mortgage over 25 years.

@2% - £ 1,280 a month
@5% - £ 1,773 a month

That's c. £ 500 per month increase, which is enough to put most people over the edge I would imagine, given people are maxing out on what they can borrow already.

1% interest rates is the new normal. The credit bubble is collapsing. We're looking at another 15 years of ZIRP; minimum.