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Anyone else picking up Russian Bot vibes here?
I would have to agree with your friend. A lot of people seem to think all these investors are buying all these houses with cash, although some are.
This is why we have to start looking at the bigger picture and the wider economy. With rampant inflation, I really don't see any way out of this one as we can't just flick a switch and turn inflation off. There is a bad choice and a worse choice. The bad choice is to fight inflation and let interest rates go up so everything will collapse. The worse choice is to continue to create inflation to avoid that and postpone to consequences of hyperinflation.
If we only have tiny interest rate hikes and provide cheap money, it will not be cheap enough to keep this bubble going. A lot of the bubbles in the stock market are already down, some by 50%. We are going to have the worse of both worlds inflation & recession. Inflation will drive the cost of living up so high, we are going to spend a very high percentage of our incomes on basic necessities, food, energy, rent, mortgages, etc, so people won't have any money left over for other things for leisurely things. This will drive unemployment up and lead to very tough times.
Unfortunately, the government won't be able to print any more money this time around because this will drive inflation much higher. They don't really have the tools to get us out of this one. This crisis we are going to have is manufactured just like the one in 2008 but this time around this one is going to be a lot worse. It will be even worse than what we had had in the 70s-80s because the government have so much debt this time around.
It is not me painting a picture of doom and gloom, don't be blindsided, it's just the reality.
The better question would be to ask one self .... What can I do to have effect on this situation....
At that point I realise - **** all(other than not vote Tory) and then go about ensuring that me , my family and my loved ones are as best prepared as we can be to weather the storm.
There's an element of being self aware enough to see what's going on while also being aware that people have been citing this mantra for the 20+ years I've paid attention to the housing market.
I agree with everything you say, you have got everything spot on.
Many households have routine monthly spend on stuff like car lease, amazon prime, Netflix, sky, Spotify, phone contracts etc etc - they will all show a downturn long before any housing market crash. We're just about seeing some decline with Netflix's recent announcements but that may also be tied to a post pandemic correction.
Oh, and random bold statements don't add much to a post
nailed it trail_rat
I hadn't really thought of it like that but I've never exposed myself to debt excessively and I reckon it would take an awful lot for me to end up worse than going without luxuries.
@tony_teacake - what's your view on gravel bikes?
Are they a fad, the answer to Life's many questions or a revolutionary new form of transport ?
I am not sure normal economic 'rules' apply. Following Brexit and the pandemic, the UK has a shortage of workers; I suspect most people who are unemployed have chosen to be or are unemployable (and my apologies to anyone looking for work, if I'm wrong). If the economy is resource limited, not demand limited, a drop in demand won't necessarily lead to a recession.
Anyone else picking up Russian Bot vibes here?
Not a bot as such but someone equipped with a generic and widely applicable pre-prepared set of paragraphs to cut and paste. The neat formatting, lack of typos and mostly decent grammar interspersed with some jarring anomalies are a dead giveaway.
Or maybe I'm just being cynical...
STW forum, where you talk about anything but MTB biking... It's Fight Club Mk2! 😆
Dropper house next big thing
Well it is the chat forum after all. There's another section for bikes.
Easily done if you aren’t a longtermer. A scan down the forum overview and it’s more Mumsnet than Singletrack.
Then there’s a signing up page.
I’m very sceptical seems very much fake grass.
Not a bot as such but someone equipped with a generic and widely applicable pre-prepared set of paragraphs to cut and paste.
Um....
https://www.bbc.co.uk/news/business-60734392
don’t panic. it’s just the new world order enacting their plans. all the governments are working for a shadowy elite group of child abusing, super rich communist liberal baby killing cabal who won’t stop until they have your pension. once we all wake up to the fact that the war in ukraine is staged (or is it trump closing down bill gates’ virus labs? i forget) the price of oil can go back to normal and we’ll be fine.
what i can’t work out is if the new world order is good or bad. they want to introduce universal basic income. this sounds good to me.
anyway, if interest rates go so high that people can’t afford their mortgage, this will be a bad thing. it seems unthinkable that any uk government after seeing what happened in the 90’s would let this happen/do this again.
what i wonder is, if inflation is being driven by the scarcity of food, fuel and other essentials as a result of war, covid and brexit, how will raising interest rates help?
what would be “interesting” to see is what happens to house prices if high interest rates lead to a lot of folk defaulting on their mortgages. hopefully that doesn’t happen. my head says that they will drop, but if don’t perhaps we do have a group of medaling elites trying to own everything.
You make a lot of assumptions about people losing jobs, abandoning houses, landlords folding. People tend to make a lot of sacrifices to hang onto property and the government will do what it can to support this for a few reasons.
However as you state economic conditions are a bit rubbish and going to stay that way. You stated inflation at 15-20 %, but that's a blip caused by energy prices that will stabilise at this higher number so expect it to stay higher than the last ten years, but not that high. Itdoesn't necessarily follow that interest rates will track that rate entirely as the BoE etc. try to avoidstagflation. There may well be a recession, or it might just be technically dodged.
The above balance out as stagnant prices overall for the next few years, tho' there will always be areas that go down, and a very few that go up.
You should buy a bike, it will help you relax a bit . Ditto Chew
This is a great point if interest rates go so high that people can’t afford their mortgage, this will be a bad thing. it seems unthinkable that any uk government after seeing what happened in the 90’s would let this happen/do this again.
Like I say we have 2 choices.
1. Is to fight inflation and let interest rates go up so everything will collapse.
2. The worse choice is to continue to create inflation to avoid that and postpone to consequences of hyperinflation.
This is why no matter which way the government steers this one it will end in disaster either way. They can't really print more money. Everyone will suffer from inflation and it could be here for many years. CPi is 6.2% (supposedly) and we have the BOE at 0.75%. So in negative terms this is over 5%.
Or maybe I’m just being cynical…
I'm waiting for the punchline, it's bound to come along soonish.
What do you reckon:? Crypto or a pozi scheme.
if interest rates go so high that people can’t afford their mortgage, this will be a bad thing
I recant my earlier cynical post - tony_t's making some original and insightful points here.
I am very relaxed thank you. Thanks for your comments, very interesting.
In regards to people losing their jobs. Consumer spending has dropped rapidly for the month of March. This is an indication of the real economy taking a big hit which inevitably will lead to many job losses down the road because many businesses will make job cuts.
Also we know there is going to be another huge hike in energy prices in October at 54%. This will be detrimental to many households and businesses.
No you don't have just those two choices in a stagnant market. You can decide to do not very much... there is little value in trying to fight inflation with higher interest rates as that is a surefire way to kill any growth and make things a lot worse.
Why do you think the BofE hasn't immediately slammed up interest rates to try and catch this early. Because that will makes things a lot worse instantly. The worse choice you describe is not a likely economic outcome
That one made me laugh Dyna-ti. No scheme here to buy gold or crypto. I will leave that one to the YouTubers.
To be honest what gets me wound up is these property investors telling people this is the best time to invest in property so don't miss out. As if it is not hard enough for First Time Buyers to get on the ladder. I've lived through the crashes in the late 80s and 2007. The whole housing system is flawed and it's a shame our younger generation will end up renting for a very long time while these landlords benefit.
Bear in mind that in those crashes the amount of price drop was very variable locally. If you live inEarlsfield, a lot, next door in Wimbledon, zero.
What do you think will happen with unemployment?
So correct me if I am wrong are you saying we should let inflation run even higher? If that is the case the cost of everything will be to high and most things will just be unaffordable, a lot of businesses will cease to trade.
Also doing nothing is just kicking the can further down the road so they will see an even bigger crash in the economy.
The BOE hasn't been aggressive with interest rates yet but this may well change. In other countries, they have started to raise them a lot quicker.
I live my house so it doesn't really matter if the price goes or down, unless it gets to negative equity and we get trapped.
I live my house so it doesn’t really matter if the price goes or down, unless it gets to negative equity and we get trapped.
The negative equity is only a problem if you plan to sell or you wish to remortgage and have no equity in your house. Then the LVT comes into play and the option of lower rates becomes inaccessible.
To answer the OP. No, there will never be a housing crash as long as free market capitalists run the government. The whole economy is based on home ownership and the lending market dedicated to it.
With such a high inflation I think a house is one of the best investements one can make now.
It's very unlikely you'll get more % gains with your stock market investments than the inflation rate as it stands now, whereas a house will raise its value with inflation, at least medium to long term.
I might be wrong though!
So you say " No, there will never be a housing crash as long as free market capitalists run the government. The whole economy is based on home ownership and the lending market dedicated to it".
Do you mind elaborating in detail on this for me so I can fully understand why you think there won't be a crash?
Lots of se vende signs in Galicia. Not sure if that helps the debate. Back home in France there's not much for sale, not much being sold and prices are said to be down, but not on properties I'd buy. Madame says horse prices are still rising.
A stock market crash is caused by two things: a dramatic drop in stock prices and panic. Here’s how it works: Stocks are small shares of a company and investors who buy them make a profit when the value of their stock goes up. The value and the price of those stocks are based on how well investors believe the company will do. So, if they think the company they’re invested in is headed for hard times, they sell that stock in an attempt to get out before the value drops.
The reality is, panic has just as big of a role in a stock market crash as the actual economic issues that cause it. Now, this is how I think this will play out this year or early next year. I do believe this will be a massive crash because we have had 2 very strange years during the pandemic and the stock market has been on steroids.
This will be the biggest crash we have ever seen in history and house prices will plummet up to 50%.
This will be the biggest crash we have ever seen in history and house prices will plummet up to 50%.
You've heard it here first folks.
You are dead right about not voting these tories back in. They are a bunch of greedy liars like most politicians are.
The thing is I have not been seeing this crash in the last 10 years. I have only seen it brewing over the last 18 months. This time around though we are dealing with a totally different set of circumstances in the economy and there are too many red flags to see for anything to turn out positive in the near future.
Are you just writing in the style of mystic meg so that if it does come true you can point back at your wild speculation and say I told you so ?
Mystic Meg I like that. You have made me laugh. I might be choosing that name for my next profile.
A stock market crash is caused by two things: a dramatic drop in stock prices and panic. Here’s how it works:
Lifted directly from
https://www.ramseysolutions.com/retirement/stock-market-crash
Still trying to work out the end game for our Tunnocky friend.
TT - not a real person.
This will be the biggest crash we have ever seen in history and house prices will plummet up to 50%.
You’ve heard it here first folks.
Sshhh! You don't want to cause a panic!
What will this do to teacakes?
Teacakes will be selling like hot cakes!
@tony_t - are these words yours?
Easily done if you are
n’ta longtermer.
Ftfy. I forget this is a bike from regularly and didn’t realise you had to be mad into cycling to participate in the chat section.
Better get my bike out the garage and do some miles before I’m booted!
Those of us old enough to know how to suck eggs now know enough about food hygiene not to.
Whether your prefered method is based on first-year economics or crystal ball gazing a rise in interest rates in keeping with current inflation would stop not just the housing market but the whole economy dead.
Between runaway inflation and stagflation I suspect the Tories will go with inflation. Housing will still be a good long term hedge in that case. You might get lucky with sell and rent for some short term period but you'll need better than a crystal ball to time that, I suggest a time machine trip or ten.
If they are your words, how come I'm finding some of your answers are copied and pasted from elsewhere?
For example:
https://www.ramseysolutions.com/retirement/stock-market-crash
A stock market crash is caused by two things: a dramatic drop in stock prices and panic. Here’s how it works: Stocks are small shares of a company, and investors who buy them make a profit when the value of their stock goes up. The value and the price of those stocks are based on how well investors believe the company will do. So, if they think the company they’re invested in is headed for hard times, they sell that stock in an attempt to get out before the value drops.
I'm not sure I've ever brought a hot cake, also most modern cakes have some form or sugar based icing, therefore cake being hot would melt said icing. This doesn't sound like a good future.