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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (6862)	11/15/2002 11:58:43 AM
From: Steve Lee	Read Replies (1) \| Respond to of 306849

There are some things that are worth bearing in mind when considering the possibility of a UK housing crash 1) The govt unemployment stats are worse BS than the US numbers 2) We pay mrotgages where rates are fixed for usually at most 5 yrs, and often less. When bank rates go up, mortgages go up. 3) UK population is not rising, unlike US. But many more homes exist now than in previous decades when pop levl was the same as now. 4) Lenders are, IMO, being irresponsible with what they lend. You can get mortgages that will lend five times gross salary and give you 100% of the purchase price. 5) Taxes are pretty high here and likely to move up as the budget deficit gets worse. There is a big burden for supporting unemployed and assylum seekers. Income tax rate is 40% for high earners, there is also 20% "National Insurance" tax up to about £30k. Sales tax is 17.5%. Capital gains tax is 40% regardless of length of holding. Then there are all sorts of taxes on motoring, smoking, alcohol. Gasoline costs over five dollars per gallon. Homes attract on average over £1000 in property taxes each year. House sales have a levy imposed. etc etc. Personal finances for many inthe UK is not looking good. London high end prices are already coming down due to the devastation of the highly paid banking industry. There is a good argument that lower priced housing will maintain price levels as people are froced to abandon higher priced properties that they cant afford. It only takes a few people to lose their jobs and put properties on the market simultaneously to produce a rush for the exits. The house market madness is driven purely by low rates, and people taking on the biggest mortgages they can currently afford, based on the "fact" that house prices always rise. It's just history repeating itself. I sold 7 propertuies in the UK over the last couple of years and reinvested in mainland Europe. The only UK property I own now is the house I live in, and am seriously considering selling that too, becasue of the gain I am sitting on, and the increased quality of life I can get for the same money in a different country. Last point - buying to rent out was a very good business in the 90's. In the last couple of years there have been all sorts of books, courses and newspaper articles promoting this business, along with all sorts of tailored financing. A lot opf people have jumped on the bandwagon and, I think, are going to get badly burned.