Reply To: Will people rent or stay away now the boom is over?


First of all, what is a “crash”. Lets say >20% off a peak – a common rule of thumb in the stock market.

Let’s say a “correction” is a decline of 10% off a peak.

Now which one is more likely?

If ANYONE can show me a period when house prices slumped at the same time interest rates are being reduced I’ll eat my PC.

Is there going to be a major recession/high unemployment in the CDS buying economies. Probably not. No recession – no slump.

For a slump to occur you have to have many, many FORCED SELLERS. Not a couple of hundred but thousands. Don’t see it myself.

Is there lack of confidence in property at the moment? Yes, so a decline can be expected.

Is there oversupply? In some areas, yes, so prices may decline.

Are off-plan prices so low that developers have stopped work or not started on new developments? Here and there, yes, perhaps. But on the whole the cranes still grind on and the bulldozers still clear new sites.

In short, it is virtually impossible for prices to slump unless major economies tip into recession and/or interest rates massively increase. There has NEVER been a housing “crash” without BOTH of these events. NEVER, NEVER, NEVER!

So, I reckon a soft landing in all but the most overdeveloped/overpriced/badly built areas exposed to lower income/highly mortgaged consumers.