Breaking News: House Price Crash Over!!!!!

mewbie_2

Conrad wrote: »

I think the next 8 at 10 months will see the bottom so some will buy now with a hefty price reduction and be perfectly satisfied. Only the pessimist that frets over his pennies will hang around wiating for a big sign saying "bottom reached"

If you think prices will be lower in eight to ten months then I will wait till then and re-assess the situation. Thanks for the tip.

bubblesmoney

Jaime Caruana, director of the IMF’s monetary and capital markets department, said that these problems had been made worse by uncertainty over how much further US house prices would fall. “A bottom for the housing market is not yet visible,” he said.

see link from todays business times online

the bottom not yet visible as per the IMF and they expect credit situation to get worse. without credit wonder how the price is going to rise 25% as some seem to be seeing in their crystal balls.

IveSeenTheLight

brit1234 wrote: »

Its over prices won't rise, they will fall dramatically till they find an equilibrium which will be about 3-4 times salary or less.:exclamati

3 - 4 times salary. I wonder why people still believe this is the case in modern times.

Previously, the 3.5 x salary was set by the banks as a risk they were willing to lend, not by some other arbitrary group.
Now I know there is a credit crunch hanging around, but in the last 25 years (includes the last crash) the UK average peaked at 5.95 x salary (07Q3), troughed at 3.09 (95Q3) and on average was 4.06 x salary.

http://www.hbosplc.com/economy/includes/25_07_08Affordability.xls

It's interesting and understandable that the peak and the trough co-incide wth the house price peak and troughs

If 5.95 x salary was the peak (you can see in the graph below that house prices were above the long term trend)
and
If 3.09 x salary was the trough (you can see in the graph below that house prices were then below the long term trend)

Then maybe this suggests the equilibrium of 4.5 x salary is a pivotal figure nowadays for multiple income families, house prices and affordability

lynzpower

4.5 for 2 earners isnt sustainable is it though! As as we all seem to agree those one person households are growing in nuber due to ageing population. Addititionally 4.5x 2 incomes isnt going to be acceptable if you ar expecting to give up that second income to keep UK plc going by bearing children.

Its about time we in thew UK stopped pricing ourselves out of the ability to offer some semblence of family life, having both parents working all the hours god sends for an overpriced pile of bricks to provide a roof over our family's heads and believing that somehow being a GOOD THING

zappahey

lynzpower wrote: »

4.5 for 2 earners isnt sustainable is it though! As as we all seem to agree those one person households are growing in nuber due to ageing population. Addititionally 4.5x 2 incomes isnt going to be acceptable if you ar expecting to give up that second income to keep UK plc going by bearing children.

Forgive me if I'm missing something obvious but this seems to assume that an average house price of 4.5x average salary is the same as the average mortgage being 4.5x, which, I would suggest, is a false premise.

Also, how does 4.5x average salary become 4.5x household income (assuming that's what you mean by two earners)?

BTLNEWbie_3

brit1234 wrote: »

Conrad, would you like to enlighten us the British Public where the banks will get the money to lax lend again to push prices above there well overvalued level.

From the government!

BTLNEWbie_3

mewbie wrote: »

If you think prices will be lower in eight to ten months then I will wait till then and re-assess the situation. Thanks for the tip.

Here is a tip for you, Give up your dreams now as you will never be able to afford a home of your own.
Go back to your other user name 'Squatnow', least then you had morales.

WTF?_2

lynzpower wrote: »

4.5 for 2 earners isnt sustainable is it though! As as we all seem to agree those one person households are growing in nuber due to ageing population. Addititionally 4.5x 2 incomes isnt going to be acceptable if you ar expecting to give up that second income to keep UK plc going by bearing children.

Don't worry, we can import foreigners from impoverished countries. Not only will they do all the crappiest jobs for a pittance, they also have loads of kids. Also the long term unemployed (who don't want to do the jobs that we import the foreigners to do) are pretty good at popping out sprogs. So the rest of us can get on with paying our taxes and deferring having our own children to support them.

Its about time we in thew UK stopped pricing ourselves out of the ability to offer some semblence of family life, having both parents working all the hours god sends for an overpriced pile of bricks to provide a roof over our family's heads and believing that somehow being a GOOD THING

But your house is worth a packet! So you can go out and borrow massive amounts against it to buy a 4x4, flatscreen tellies, designer clothes, poncy foods and go on short but expensive exotic foreign breaks. Just as long as both partners work themselves to the bone to meet their debt obligations. So long as you don't have kids you should just about be able to afford it all. Now that's living!

Dithering_Dad

Paul_N wrote: »

Divorce - that would put downward pressure on house prices as single income multiples would become more common.

Quite a lot of divorced couples, at least the ones I know, have a hefty amount of equity to split from the sale of a family home. Having a lower income multiple would not impact them too much because they will have a larger deposit and will both be buying a smaller home.

Imagine if you will, a couple in their 40's (kids have left home) get divorced. Dad earns 40k pa and Mum earns 30k pa. They have £100k equity to split.

Dad gets a 2 bed apartment priced at £200k, needs a £150k mortgage and
gets one at 3.75 x income.

Mum gets a 3 bed terrace at £150k, needs a £100k mortgage and gets one at 3.33 x income.

The banks are happy to lend because they both have stable jobs, their main life changes (kids, divorce, etc) are behind them, they have good credit history and they have decent deposits.

Just as a note for forum members, there is a tendency not to look beyond your own peer group, not everyone is a twenty something FTB or twenty something divorcee with no equity. The majority of the UK homeowner population have small or no mortgages and plenty of equity.

baby_boomer

Dithering_Dad wrote: »

Quite a lot of divorced couples, at least the ones I know, have a hefty amount of equity to split from the sale of a family home. Having a lower income multiple would not impact them too much because they will have a larger deposit and will both be buying a smaller home.

Imagine if you will, a couple in their 40's (kids have left home) get divorced. Dad earns 40k pa and Mum earns 30k pa. They have £100k equity to split........

This is a very high "household income" - especially from a couple who had their children much earlier than the average for those sort of salaries.

I'm not saying they don't exist - just questioning how typical, since it's double the median.

Divorce is quite often a financial millstone. It's rarely this straightforward or clear cut.

And don't forget the £35K per child to get them through university and up to 22 yo :eek: before you even think about helping the with their deposit.