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    Can the boom in housing prices continue? Or is the bubble bursting inevitable? What are your thoughts?
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    It certainly won't keep up at the current level for long. Especially if the interest rates go up
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    Sale for a house went through last month. Woo hoo! Best possible price, IMO.
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    (Original post by Ellie4)
    Can the boom in housing prices continue? Or is the bubble bursting inevitable? What are your thoughts?
    no it wont burst - tho i think that house prices are at the peak/near the peak right now..and then will slown down and drop gradually...but i cant see us having a bubble burst atm
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    (Original post by Ellie4)
    Can the boom in housing prices continue? Or is the bubble bursting inevitable? What are your thoughts?
    It will reach a point where half of these overrated houses will need to be knocked down as they will be dead decrepit, then who knows!!!
    It will have to reach a stop..
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    Houses are rising considerably faster than wages at the mo, are they going to fall at the same rate as they are currently rising? If so a lot of people are going to be left with negative equity, especiall people who have bought their houses recently.
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    (Original post by Ellie4)
    Houses are rising considerably faster than wages at the mo, are they going to fall at the same rate as they are currently rising? If so a lot of people are going to be left with negative equity, especiall people who have bought their houses recently.
    yea this inflation of house prices will go to a point where it will be totally unsustainable, but government will raise interest rates...etc
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    (Original post by Illuvatar)
    yea this inflation of house prices will go to a point where it will be totally unsustainable, but government will raise interest rates...etc
    Well it'll be the Monetary Policy Comitee not the gov., but yeah, I guess so.
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    (Original post by Ellie4)
    Well it'll be the Monetary Policy Comitee not the gov., but yeah, I guess so.
    is gordon brown or the gov more important in making economic decisions?

    (Original post by Ellie4)
    Can the boom in housing prices continue? Or is the bubble bursting inevitable? What are your thoughts?
    I believe that it will inevitably collapse. The current situation with the housing market is very much like that of stock market a few months before 9/11. Several months before 9/11 the American and European stock markets were doing too well - FTSE, for example was at its peak - 6,000 or 7,000 points I seem to recall (forgive me for laymen terms). Between 1998 to 2001 people were speculating that the bubble would have to end. The stock market was rising very quickly in part because of the .com explosion. But, nevertheless, the bubble lasted for those several years. But then it just ran out of steam and began to fall. 9/11 didn't cause the end of the bubble in the stock market but it did exacerbate it.

    I would give the current bubble in the housing market 2 maybe 3 years and then it will come crashing down.

    Why do I believe that it will crash down and not simply fall?

    Simple - people have borrowed too much and have based it almost exclusively on the hyper-inflation of their house prices. Literally millions are securing vast loans on their property, using all available equity. But if their property value decreases by just a little bit millions will be in negative equity - i.e. owing more than the value of their property. Mortgage repayments will not be maintained. People will spend less. Jobs will be lost. Less people then can afford their mortgage and become bankrupt. This will decrease spending. More jobs will be lost. And so on.

    And the above account is not even taking into consideration unsecured borrowing - credit cards, loans, overdrafts, store cards etc.

    So I predict a general economic collapse in 4 to 5 years. By then we shall be in the middle of a third term of a Labour government. Taxes will have gone up by then, harming the economy even further at the worst possible time. The large amount of legal migrant workers we have at the moment will become a target of anger. Support for extremist parties will increase, perhaps even to the 17% figure in France.

    The only way to avoid this disaster is if the government immediately invests billions into building more housing (demand for housing currently severely outstrips supply). But the government’s response to the housing crisis is to build 100,000 new homes in the southeast...in 10 years time. Far too little (more than 100,000 people come into this country each year alone), far too late.
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    i disagree about the 'collapse' but concur with the drop...Britain's has a fixed amount of space, the supply of housing over both the short term and long term is pretty inelastic, due to gov. not permitting to build at green sites...etc. So fixed amount of supply, but there is an BOOMING increase of demand, with thousand of people coming in the country + natural population growth...therefore the price should not collapse surely

    I wish to also add that the current Government has now borrowed up to £30 billion. This will have to eventually be repaid. And when the time comes to repay it we will be stuck in an economic depression.

    What Germany is suffering now we will suffer in 5 years - ie having a socialist Government at the very worst time. Socialist governments are a luxury to be wasted when the economy is going well, not when heading for disaster.
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    (Original post by Supreme Emperor)
    if you want to find out go on a goverment or somekind of website. the people on this forum have no idea on economics and are just doctors of lameness.
    Because you're obviously the font of all knowledge on this matter. If you've got nothing intelligent to say, don't post.

    (Original post by TheWolf)
    i disagree about the 'collapse' but concur with the drop...Britain's has a fixed amount of space, the supply of housing over both the short term and long term is pretty inelastic, due to gov. not permitting to build at green sites...etc. So fixed amount of supply, but there is an BOOMING increase of demand, with thousand of people coming in the country + natural population growth...therefore the price should not collapse surely
    Salaries are not increasing sufficiently to keep up with the house price increases. House prices must come down even just a little bit. And when that happens millions will suddenly be paying more for a property than it's actually worth. And this slight, prima facie innocent drop will be sufficient to trigger the chain of events as described above.
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    (Original post by TheWolf)
    i disagree about the 'collapse' but concur with the drop...Britain's has a fixed amount of space, the supply of housing over both the short term and long term is pretty inelastic, due to gov. not permitting to build at green sites...etc. So fixed amount of supply, but there is an BOOMING increase of demand, with thousand of people coming in the country + natural population growth...therefore the price should not collapse surely
    But with house prices rising at a much faster rate than inflation, it's reaching the stage where very few people are in a position to buy houses. I know our generation is going to find it very hard as first-time buyers. Demand will remain high, but if a large proportion of these people can't afford to buy the houses anyway, what will happen? More major borrowing?
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    (Original post by Gandalf)
    Salaries are not increasing sufficiently to keep up with the house price increases. They must come down even just a little bit. And when that happens millions will suddenly be paying more for a property than it's actually worth. And this slight, prima facie innocent drop will be sufficient to trigger the chain of events as described above.
    but surely the massive demand factor would prevent this 'collapse'? :confused:

    (Original post by TheWolf)
    but surely the massive demand factor would prevent this 'collapse'? :confused:
    A small decrease will make perhaps a million bankrupt.

    This reduces spending in the economy.

    Jobs are lost. More people become bankrupt.

    This further reduces spending in the economy.

    Etc.

    30% of the population become unemployed. This reduces the demand for private housing (the Government does not pay the mortgage repayments for the unemployed) to the point where demand equals supply and the house prices reflect reality.
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    (Original post by Gandalf)
    A small decrease will make perhaps a million bankrupt.
    most people have savings to pay the debt :confused:
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    (Original post by TheWolf)
    most people have savings to pay the debt :confused:
    I doubt that very much. Very few people have savings (of any real size anyway), and so many people are securing loans against their property. If the housing bubble does burst, it's going to leave a lot of people up sh*t creek without a paddle.
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    (Original post by Ellie4)
    I doubt that very much. Very few people have savings (of any real size anyway), and so many people are securing loans against their property. If the housing bubble does burst, it's going to leave a lot of people up sh*t creek without a paddle.
    i still find it hard to believe that there will be a collapse in the housing market unless there is something terrible happens to the british economy
 
 
 
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