House prices falling by c. 2% a month - so falls of 50% over 2 years quite feasible

Austin_Allegro

tro127 wrote: »

I love the way you doom people spin things so you can see your 50% reductions

To be fair to the 'Doom People' (wasn't that a 70s sci-fi series?), the much discussed 50% off figure has a sound basis in that it is what is required to make the average property cost a sensible multiple of the average wage.

At the moment the banks seem to be sticking to safe lending, so it looks like house prices will have to go down to meet these multiples. Of course we can't be sure that will happen (the banks may find some way to lend more money, or the government may prop the market up in some way) but I don't think 50% off qualifies as doomongering anymore - it's a rational prediction.

geoffky

If people think this is going to be all over in a couple of years you really do not recognize whats coming..

WTF?_2

Austin_Allegro wrote: »

To be fair to the 'Doom People' (wasn't that a 70s sci-fi series?), the much discussed 50% off figure has a sound basis in that it is what is required to make the average property cost a sensible multiple of the average wage.

At the moment the banks seem to be sticking to safe lending, so it looks like house prices will have to go down to meet these multiples. Of course we can't be sure that will happen (the banks may find some way to lend more money, or the government may prop the market up in some way) but I don't think 50% off qualifies as doomongering anymore - it's a rational prediction.

I think 50% down in inflation adjusted terms over a 5 year term is entirely likely.

I doubt we will see 50% average nominal falls. There will be a fall followed by a stagnation as inflation eats the real price away.

Once prices make sense the market can start moving again and recovery can start. The longer that the government faffs around trying to 'help', the longer it will take to get to the point where the market recovers.

Basically, we can have the prices fall 'fast' due to the market or fall (extremely) slowly due to inflation. Unless of course inflation rockets.

mr.broderick

carolt wrote: »

Like I said - for discussion. Not quibbling - 40 or 50% - both'll suit me fine.

By the way, the reason I asked about a 2 year period is that obviously I don't see house prices falling to zero or minus figures. Though if sympatex wants to give me his house, I won't say no.....

I guess there is something wrong with the market when professional people like you cannot afford to buy a home.

WTF?_2

mr.broderick wrote: »

I guess there is something wrong with the market when professional people like you cannot afford to buy a home.

Don't confuse not buying with it being a matter of necessity.

I could have bought in late 2006 but chose not to for the simple fact that I didn't see why I should pay tens of thousands of pounds too much for a basic house.

And if you look at incomes to house prices, the fact is that most people could not afford to buy using sensible salary multiples. It means in the latter stages of the decade long bull run on property, a lot of people were overstretching themselves. Including plenty of professionals.

These are precisely the same people groaning about interest rates of five percent being 'too high'!

Yes - there is definitely something wrong with the market when interest rates going above 5% triggers an mortgage repayment crisis for hundreds of thousands of people.

mr.broderick

!!!!!!? wrote: »

Don't confuse not buying with it being a matter of necessity.

I could have bought in late 2006 but chose not to for the simple fact that I didn't see why I should pay tens of thousands of pounds too much for a basic house.

And if you look at incomes to house prices, the fact is that most people could not afford to buy using sensible salary multiples. It means in the latter stages of the decade long bull run on property, a lot of people were overstretching themselves. Including plenty of professionals.

These are precisely the same people groaning about interest rates of five percent being 'too high'!

Yes - there is definitely something wrong with the market when interest rates going above 5% triggers an mortgage repayment crisis for hundreds of thousands of people.

I'm not confused, she wants to buy a house it is why she is here, she cannot afford to so is hoping they come down further..simple...you would have more respect if they were just honest and admit it.

mewbie_2

My my, there is a veritable plethora of newish posters on this thread. Gmail must be working overtime at the moment.

Back to topic. Nice to see the bulls getting frantic over 50% these days. Not so long ago they were equally frantic over 10%. It's finally sinking in I guess.

Bull: "You're crazy to suggest 10%"
Fact: "There you go matey"
Bull: "You're crazy to suggest 20%"
Fact: "There you go matey"
Bull: "You're crazy to suggest 30% and I hate your mother"
Fact: "There you go matey"
etc.

carolt

!!!!!!? wrote: »

Don't confuse not buying with it being a matter of necessity.

I could have bought in late 2006 but chose not to for the simple fact that I didn't see why I should pay tens of thousands of pounds too much for a basic house.

And if you look at incomes to house prices, the fact is that most people could not afford to buy using sensible salary multiples. It means in the latter stages of the decade long bull run on property, a lot of people were overstretching themselves. Including plenty of professionals.

These are precisely the same people groaning about interest rates of five percent being 'too high'!

Yes - there is definitely something wrong with the market when interest rates going above 5% triggers an mortgage repayment crisis for hundreds of thousands of people.

Absolutely - I think having children sharpens the mind marvellously on this one. As an adult, you can rationalise to yourself moving to an unsuitable/too small/grotty/overpriced property or a dodgy area on the grounds it's 'a step on the ladder'. You just can't do that with kids.

You can't explain to a 5 year old they've got to move to a house with a postage stamp garden and can't take their climbing frame/slide/sandpit etc because mummy and daddy get a really important piece of paper in return. Or explain that mummy can't be there when they get back from school anymore because she has to work every minute to pay the mortgage, as they've moved to (bought) an identical house to the one they previously rented in the next street, where mummy was there for them every day. And you can't even begin to think about slumming it in unsafe or dangerous areas.

Seen through a kid's eyes, renting versus buying at those prices had only one answer. It made and still makes pefect sense for us - financially and emotionally.

In due course, as prices fall, the 2 choices will become equal again or buying may well become far cheaper again, as it was in the 90's. At that point, we shall buy.

Simple.

mr.broderick

carolt wrote: »

Absolutely - I think having children sharpens the mind marvellously on this one. As an adult, you can rationalise to yourself moving to an unsuitable/too small/grotty/overpriced property or a dodgy area on the grounds it's 'a step on the ladder'. You just can't do that with kids.

You can't explain to a 5 year old they've got to move to a house with a postage stamp garden and can't take their climbing frame/slide/sandpit etc because mummy and daddy get a really important piece of paper in return. Or explain that mummy can't be there when they get back from school anymore because she has to work every minute to pay the mortgage, as they've moved to (bought) an identical house to the one they previously rented in the next street, where mummy was there for them every day. And you can't even begin to think about slumming it in unsafe or dangerous areas.

Seen through a kid's eyes, renting versus buying at those prices had only one answer. It made and still makes pefect sense for us - financially and emotionally.

In due course, as prices fall, the 2 choices will become equal again or buying may well become far cheaper again, as it was in the 90's. At that point, we shall buy.

Simple.

I'm glad you like renting as i feel you will be renting for some years to come carol, i feel for you to be honest as i can sense your desperation. Good Luck.

GDB2222

Max_Headroom wrote: »

Crikey, that must be depressing mustn't it, paying out of your salary each month to top up the rent to cover your mortgage on a fast depriciating house.

I know someone who is doing just this on a place she bought this time last year. I remember her glibly crowing "houses have been the best investment of anything over the last 10 years". I dryly commented that that was probably true, in which case it would be interesting to see what happened over the next ten as a result, but there was no point getting into a discussion with her, she'd already bought (and I doubt there was any point before she bought, she was convinced).

Intrerest only mortgage too, still, she's in it for the "long term" apparently. Well, she is now whether she likes it or not! :rolleyes:

There is a real possibility that large numbers of BTL landlords will come to the conclusion that they should sell now, even at a modest loss, so as to forestall an even bigger one. If that happens, there could be a snowball effect, and prices could really plummet. Remember, also, that there are many BTL landlords who bought some time ago who could get out now with a profit. They may be very tempted to do so.