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Author Topic: Rise of prices  (Read 6088 times)

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Helen1963

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Rise of prices
« on: May 18, 2021, 08:59:45 am »
I'm observing the market and I'm quite worried.
Since we're in the pandemic, the prices for houses have gone really up.
I've seen and know the reasons why, but in this case we are creating a bubble that will pop soon and we will have another crisis. The question is, when will it happen?
I believe in two or three years the prices will drop since the economy will plummet strongly, although I hope it won't be that bad. What do you think?


New Home Expert

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Re: Rise of prices
« Reply #1 on: May 22, 2021, 07:14:07 am »
House prices have risen because of government policies which have been around for years, Help to Buy, ultra low interest rates and stamp duty holidays being the main drivers.

It is clear to me that there will indeed be a reckoning. I am of the opinion that anyone buying a home now is buying at the very top of the market, although I have thought than for a few years. However, this time the governments around the world are devaluing their currencies through QE and a rise in inflation is a real danger.  CPI inflation in USA doubled last month to 4.5%.
There is talk of a danger of seventies type inflation in the UK (15%-25%)  Can you imagine that?

If inflation rises, interest rates will have to rise, perhaps to normal levels perhaps even nearing 10%.
So those that have over extended themselves will be needing to make mortgage payments up to ten times what they are now, in a time when jobs will be being lost and a recession.

A great many will be repossessed by lenders flooding the market with homes that cannot be sold or bought. Prices will crash perhaps by 30% from today's levels.

But as it stands, all the talk is on getting on the ladder (via government subsidies) creating a bubble which is fuelling a fear of missing out in those that don't think.
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Frank1972

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Re: Rise of prices
« Reply #2 on: January 24, 2022, 12:16:57 pm »
For now the situation is only getting worse. All the prices are going up along with the inflation. Perhaps this bubble will end in not too long, at least I hope so. We've had this many times already, but without an epidemic.