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In the UK it is. The market is too big to fail. The government props up the market, because otherwise they'll get booted out by the millions who have staked th

In the UK it is. The market is too big to fail. The government props up the market, because otherwise they'll get booted out by the millions who have staked their retirement on property, plus the taxpayer owns £ billions of equity via the help to buy scheme, so the govt takes a direct hit of prices go down. Local homeowners prop it up by ensuring no new housing gets built near them. On the monetary side, the bank of England props up the market (e.g. funding for lending scheme), because our economy couldn't handle a crash, our banks are loaded to the gills with mortgage debt, they don't have enough capital to withstand a crash.

tonyedgecombe 9y ago
No, I lost 25% of the value of my first property after buying at the peak in the eighties. Prices can fall and sometimes the government can't or won't stop it.
- walrus1066 9y ago
  Sure, it's not impossible, but there's a powerful alliance of political and economic forces that will do their utmost to prevent this from happening. I can only see three scenarios where prices fall materially: a) big interest rate hike (I believe this caused the 89 crash) b) massive increase in homebuilding (250k+ p/a, sustained) c) mass emigration out of the UK. I really doubt a) will happen, the BOE is loathe to raise rates as our household debt is 90% of GDP, twice what it was in 1990, our economy wouldn't handle it, our banks would be insolvent as they have <5% capital. Inflation would need to be double digits before the BOE's hand is forced. b) also very unlikely. Homeowners make up the biggest voting block, a huge vested interest group. The green belt is a sacred cow. Every time the govt hints at liberalising the planning system, the mail+telegraph kick up a 'hands off our land' campaign. c) maybe if brexit goes really badly, but we'd be in a true economic catastrophe if this happens. Probably wouldn't have a job with which to pay for cheaper housing.
  - tonyedgecombe 9y ago
    "Sure, it's not impossible" I'd say it's inevitable, the only question is when.
sgt101 9y ago
The market that scares the bejezzus out of me is the commercial property market. Every bank in the UK has massive portfolios of loans leveraged to the 9's vs commercial property with returns calculated on rentals. At the same time high streets are emptying left right and centre. If rents come down then shops can compete, but if rents come down then the bank loans all go south via breached covenants. If rents don't come down the income to service the loans dries up as shop after shop goes out of business due to "internet".

tonyedgecombe 9y ago

No, I lost 25% of the value of my first property after buying at the peak in the eighties. Prices can fall and sometimes the government can't or won't stop it.

walrus1066 9y ago
Sure, it's not impossible, but there's a powerful alliance of political and economic forces that will do their utmost to prevent this from happening. I can only see three scenarios where prices fall materially: a) big interest rate hike (I believe this caused the 89 crash) b) massive increase in homebuilding (250k+ p/a, sustained) c) mass emigration out of the UK. I really doubt a) will happen, the BOE is loathe to raise rates as our household debt is 90% of GDP, twice what it was in 1990, our economy wouldn't handle it, our banks would be insolvent as they have <5% capital. Inflation would need to be double digits before the BOE's hand is forced. b) also very unlikely. Homeowners make up the biggest voting block, a huge vested interest group. The green belt is a sacred cow. Every time the govt hints at liberalising the planning system, the mail+telegraph kick up a 'hands off our land' campaign. c) maybe if brexit goes really badly, but we'd be in a true economic catastrophe if this happens. Probably wouldn't have a job with which to pay for cheaper housing.
- tonyedgecombe 9y ago
  "Sure, it's not impossible" I'd say it's inevitable, the only question is when.

sgt101 9y ago

The market that scares the bejezzus out of me is the commercial property market. Every bank in the UK has massive portfolios of loans leveraged to the 9's vs commercial property with returns calculated on rentals. At the same time high streets are emptying left right and centre. If rents come down then shops can compete, but if rents come down then the bank loans all go south via breached covenants. If rents don't come down the income to service the loans dries up as shop after shop goes out of business due to "internet".