'50% drops'

GDB2222

stevetodd wrote: »

That's more or less what people were telling me back in 1990 when I ventured into the BTL market, everyone around me was selling, very few were buying. Thank god despite being inexperienced at the time I didn't listen to them then.

I appreciate that you want to buy at the point of maximum despondency - the question is whether that point has yet been reached?

brit1234

stevetodd wrote: »

What you are not taking into account is people like me (and I am not alone) when prices have fallen by 30% I intend to buy 3 more houses.

:rotfl:


I take it you have 25% deposit for each of these properties in cash (typical b2l LTV deposit now). Remember 30% fall takes a lot out of your equity of your existing properties so I doubt you will have much to spare. Surely your cash if you have it would be better put into your existing properties due to the huge cost in remortgaging making you portfolio more stable.

Anyway today again in the markets you can see why there will most likely be a overcorrection in house prices based on how widespread medias reach and reporting whats happening and its adverse affect on sentiment.

50% falls - back to real houses prices
60-70% falls over correction driven by media and sentiment.

Heyman_2

brit1234 wrote: »

:rotfl:


I take it you have 25% deposit for each of these properties in cash (typical b2l LTV deposit now). Remember 30% fall takes a lot out of your equity of your existing properties so I doubt you will have much to spare. Surely your cash if you have it would be better put into your existing properties due to the huge cost in remortgaging making you portfolio more stable.

Anyway today again in the markets you can see why there will most likely be a overcorrection in house prices based on how widespread medias reach and reporting whats happening and its adverse affect on sentiment.

50% falls - back to real houses prices
60-70% falls over correction driven by media and sentiment.

At auction, maybe - but you will not see those drops on a nationwide basis. You're talking about houses going back to 1990 prices!

brit1234

Heyman wrote: »

At auction, maybe - but you will not see those drops on a nationwide basis. You're talking about houses going back to 1990 prices!

50% represents 3.5 times salary and that will be nationwide, cheap credit is over for a very, very long time. The over corection (60-70%) will ocur mainly in ex council properties or dodgy locations such as motorways etc and of course newbuilds and auctions.

Cannon_Fodder

Have you factored in that it could be two years (or more) to reach the "bottom", during which inflation-led pay-rises will shift the salary calculation by a few percent...?


Not disagreeing with the direction we are heading, or the fact it will probably be substantial, just that a few percent of the extent might be "mitigated" by time/inflation...

pickledpink

brit1234 wrote: »

50% represents 3.5 times salary and that will be nationwide, cheap credit is over for a very, very long time. The over corection (60-70%) will ocur mainly in ex council properties or dodgy locations such as motorways etc and of course newbuilds and auctions.

You're dreaming!:rotfl:

ALREADY properties have only dropped at an average of just 14% this year - and IF they drop at the same rate next year, until they stabilise and pick up again -you're looking at an AVERAGE of 28%.

But as we all know, averages are skewed.

If you look on PropertyBee or PropertySnake it's only the really-hard-to-sell properties (some of which went on the market prior to the boom!) that have fallen furthest.

Most properties have only dropped by as much as 10 to 15%.

The horrible overpriced c*appy places have dropped a lot more - but no-one really wanted them in the first place!!

The NICE properties are becoming even further out of reach for FTB's or those on a salary of, say, £25k a year - you'll not buy much for £75K - even if it's a repo in a s*hithole.

The gap between rich and poor is widening at an alarming rate.:money:

brit1234

I'm a little unsure. All us keyworkers have technically had our wages cut with well below inflation rage rises (1.9% against RPI of 5% or CPI at 4%).

WTF?_2

pickledpink wrote: »

The gap between rich and poor is widening at an alarming rate.:money:

You're only 'rich' if you own the asset outright.

Having a huge mortgage on a falling asset puts you in debt. If the mortgage isn't covered by selling the asset, you're not just in debt, you're in s**t.

Conrad

I'm fretting as I cant decide how far out the bottom is.

At the same time there is this nagging feeling that bottom has more or less been touched (awaits smutty jests) ahead of steep interest rate cuts.

GDB2222

Conrad wrote: »

I'm fretting as I cant decide how far out the bottom is.

At the same time there is this nagging feeling that bottom has more or less been touched (awaits smutty jests) ahead of steep interest rate cuts.

Really, it's mortgages that buy property, not people. (I know that people are involved, but only peripherally.) So, it's not just interest rates that matter but also the availability of finance. The bottom will have been reached when all of the following have happened:

• Finance becomes reasonably plentiful again, at salary multiples that are enough to let people buy houses at the sort of prices vendors want to achieve
• Deposits are set at levels that people have - so that may mean people having to save more or %age deposits reducing
• Buyers are reasonably convinced that prices have stopped falling
• The supply of forced sale properties lessens

This is of course all IMHO ofc. Ever so 'umble!