The real question is why house prices aren't falling faster?

WTF?_2

Cannon_Fodder wrote: »

It took between 4 and 6 years for prices to drop between 11 and 22% according to Halifax/Nationwide figures for the early 90's "crash"...

We've had around -10% in 1 year some sources say, so extrapolating we could hit between -40% and -60%...

Even the most raving HPCer would be happy with those numbers...

No-one would seriously extrapolate current MoM falls over the next 3-4 years.

Once asking prices fall into line with what can safely and sensibly be loaned against property, the market can start to move again.

That means on average 3.5x single, 2.5x joint salaries and max 90% LTV.

wymondham

Chris2685 wrote: »

From my experience, it seems they are drying up fast... If they do dry up, I sure hope you're right about prices dropping like a stone, and hopefully they will drop like a stone within the next couple of months if they do!!

'Normal' First Time Buyers have pretty much dried up (sensibly sitting on their hands), those still willing to buy on these schemes are keeping the market artifically high, so once these also dry up then the tap gets turned off and the whole house buying process effectively breaks. I recon prices will then drop considerably, and fast, as the economy worsens, unemployment climbs, and repossesions then enter the market in greater numbers..

Between the next 9 to 18 months will probably see the best time to buy in a generation (if you have a job!)

All guesswork!!

But hey it's not all bad, the sun is shining and only 4 months to Christmas!!

Jumping_Bean

pickledpink wrote: »

That aside I can see a further widening between the haves and have-nots - now that the banks are really tightening up on their lending criteria many ftb's are NEVER going to get their foot on the ladder.

If first time buyers can't buy then the market comes to a halt which is what's happening now. First time buyers are what feeds the market without them everything stops.

pickledpink wrote: »

There's a few nice properties about - but not that many!!!

It must be very different where you are compared to myself. Where I am (South East) there are huge amounts of all sorts of properties on the market. These range from studio and 1 bed flats right up to huge Georgian town houses and barn conversions. A large amount of these I can guarantee can be classed as "Nice". None (Or very few) are selling. Quite a few are being put on the rental market because the sellers have obviously got fed up waiting and won't / can't drop their price. This in turn is driving down rents.

Not everyone who owns a nice house has got lots of equity. People overstretch themselves right up to the top of the ladder.

pickledpink wrote: »

They may well be cash buyers with no need for a mortgage - putting them in a great position.

It's the FTB's who have a small deposit that will feel the brunt of this. They just WON'T get a mortgage unless they're squeaky clean; have a really secure job........and even then they'll have to be earning a packet as the banks are only going to lend 3 times your salary.

I think it's actually going to get HARDER for FTB's to get on the ladder. And if they do they'll be limited as to what they can buy.

If first time buyers can't get a mortgage then the market will not pick up and prices will continue to fall until they can. The relatively few cash buyers won't have any effect on this.

Chris2685

wymondham wrote: »

'Normal' First Time Buyers have pretty much dried up (sensibly sitting on their hands), those still willing to buy on these schemes are keeping the market artifically high, so once these also dry up then the tap gets turned off and the whole house buying process effectively breaks. I recon prices will then drop considerably, and fast, as the economy worsens, unemployment climbs, and repossesions then enter the market in greater numbers..

Between the next 9 to 18 months will probably see the best time to buy in a generation (if you have a job!)

All guesswork!!

But hey it's not all bad, the sun is shining and only 4 months to Christmas!!

It's not bad for those able to wait, but there is no way we can stay where we are once the baby is born. There would then be 7 people living in a 3 bedroomed house, across 4 generations! I would much rather risk a bit of a loss in value over the next few bumpy years, but have a house which is mine, rather than waste money (roughly £600 a month for something crap) on renting a flat...

If I didn't have other things to consider, then every bone in my body would tell me to hold off buying and to not use these schemes!

Conrad

!!!!!!? wrote: »

That means on average 3.5x single, 2.5x joint salaries and max 90% LTV.

Halifax allowed up to 5.5 x income for a remortgage client last week at 90%ltv. His credit score was average at best. He is a mannual unskilled worker and the property is an ex local flat.

Jumping_Bean

pickledpink wrote: »

The few nice ones are mainly owned outright by the sellers (or they have massive equity) and they may want to upsize or downsize. The falling market makes no odds to them; if their property has dropped so has the property they'll be looking to buy. Makes no difference.

It does make a difference unless the property you're buying is worth exactly the same. It's better to trade down in a falling market or one thats about to fall. Because the cheaper house you've just bought will loose less value than the expensive one you've just sold. ie 35% of £400K is a lot more than 35% of £200K. Conversely if you're trading up your losses will be bigger.

Jumping_Bean

Chris2685 wrote: »

I would much rather risk a bit of a loss in value over the next few bumpy years,

It's the "bit" that's debatable. That bit could be pretty large.

Chris2685 wrote: »

but have a house which is mine, rather than waste money (roughly £600 a month for something crap) on renting a flat...

It's not wasted money if it means you don't have to buy at the moment.

Why not rent a house if that's what you want?

Gangstabird

Cannon_Fodder wrote: »

It took between 4 and 6 years for prices to drop between 11 and 22% according to Halifax/Nationwide figures for the early 90's "crash"...

We've had around -10% in 1 year some sources say, so extrapolating we could hit between -40% and -60%...

Even the most raving HPCer would be happy with those numbers...

I am bluddy sure it happened fast than this. Remember interest rates were in double figues and repos were all over the shop. I was an EA in those days.

Chris2685

Jumping_Bean wrote: »

It's the "bit" that's debatable. That bit could be pretty large.



It's not wasted money if it means you don't have to buy at the moment.

Why not rent a house if that's what you want?

I am considering it if this deal falls through... The cheapest I have found is £750 pcm for a 2 bed house in a not-so-bad area. So if I stay there for 2 years, thats 18k gone on rent already...

On the other side of the coin, if the forecasts of major property values losses is true, any property I could look at may have lost more than 20k in value anyway... I suppose it is worth considering!

meester

pickledpink wrote: »

It's actually those buyers who bought in the last couple of years', or those who took out secured loans against their property that may need to sell,

The rest, like for example those who bought as late as 2006 will just wait until the tide turns. Take the average couple in their 30's who have had a mortgage for the last 5 (maybe 10) years' - they would have a lot of equity in their home and with the rising price of inflation their mortgage repayments would be very, very manageable.

Most people just have no need to sell, and while the market is in a dip they won't. The slow bursting is proof that many people already made enough money out of their properties to sit tight!;)

Why do you think people buy and sell houses?

Outside of flats, 95% are buying somewhere to live. They buy and sell as their family, job, wealth, etc. changes, and price has little practical effect on their situation.