The 70% club

novazombie

sabretoothtigger wrote: »

Makes me think actually that 70% would be realistic if you included inflation maybe or if you considered it from the position of another currency.

Take the Price of this house in YEN 2007 then 2010 in YEN, maybe that'd be a 70% fall so I cant say this topic is a rubbish or exaggerated suggestion

Of course the idea of yen valuation seems silly in theory but Im just suggesting if you forget the numbers but consider a houses affordability or consumer buying power I think the statisticians call it

So just imagine if we do have 70% drops in Pound terms? What would this look like in Yen terms?

If we are talking about inflation adjusted then then yes I agree 70% drops are likely. But it is going to happen slowly.


Maybe the only reason we haven't had 70% drops already is because the Gov slashed the base rate down to 1% in an attempt to stop repossessions in every street in the UK. All they have done is delayed the problem.


Let me as this question what would happen if the base rate went back up this year. Maybe even higher than it was?

How many will be in neg Equity or the main question how many repossessions will be happening every week?

It will happen, the base rate will go back up. A lot of people are in a false sence of security, thinking they can afford their mortgage repayments even though they are in neg equity. When huge numbers are losing their jobs and the base rate goes back up it will be catastrophic.

whathavewedone

RDB, you want to know why am I not working? Because (a) my husband earns enough money to pay the mortgage and other outgoings we have and (b) our children are 1 and 2 respectively.

At the moment I would prefer to stay at home with the children than go to work just to pay someone else to - we wouldn't be entitled to help with childcare/other benefits etc.

I don't really see why I'm having to justify myself over this tbh but you can rest assured that your uniquely hard earned cash isn't being used to subsidise this particular household.

Why don't you start a benefit bashing thread since the last one must have died out oooh all of 3 days ago and you're clearly having withdrawal symptoms.

Good grief I wonder what's wrong with people sometimes. Why on earth would you assume that just because someone decides to stay at home with their children that they're on benefits?

Maybe you don't really want to go back to work but you have to. Well that's life, I'd do the same if I had to (and maybe it will come to that before they reach school age if oh loses his job) but I'd like to think I wouldn't start attacking random strangers on the internet because I was a bit fed up.

If I wanted to be as rude as you I could ask you why you had a child when you couldn't afford to pay all your outgoings on one salary. That's if I wanted to be rude. Which I don't.

MrDT

HappySad wrote: »

I am joining the 70%club. I don't mind if my home drops in value as I plan to move to a bigger house in a year & that price will drop even more than my home. As long as I can afford to pay the mortgage I don't really car how much my home is... it is my home .

I get what you're trying to convey, a drop in value doesn't bother you as the gap between your current place and the bigger place will be smaller, so you'll be better off when the time comes to move on.

However, you should keep in mind that you probably won't be allowed to sell your current place if you have a mortgage on it, values drop by 70%, an you end up in negative equity. So you should care about it's value a little bit.

whathavewedone

I doubt that people will be allowed to move and borrow more with negative equity until the market has definitely bottomed and prices are on the rise again.

So it's not a great thing to be in negative equity if you're desperate to move in the next year or so. If you can hold out for a few years then it could work out in your favour.

ukcarper

Do you think people will rent properties when they can buy them for the same monthly payment so I would have thought that the maximum drop would be governed by the rent of a similar property. If you rent you pay rent forever if you buy there will come a time when you live rent free.

sdooley

novazombie wrote: »

the Gov slashed the base rate down to 1% in an attempt to stop repossessions in every street in the UK. All they have done is delayed the problem.

There's a lot of evidence from previous recessions that although government actions merely delay the inevitable for quite a few people, for a larger number a period of breathing space actually allows them to get their house in order.

ukcarperDo you think people will rent properties when they can buy them for the same monthly payment so I would have thought that the maximum drop would be governed by the rent of a similar property. If you rent you pay rent forever if you buy there will come a time when you live rent free.

The comparison is valid but you have to take into account the additional costs of owning (maintenance etc) and the risk of losing your job and being unable to cut the cost of your housing or to relocate to a new job.

Markets tend to undershoot on the way down as well as the way up. But for an individual in a secure job, buying when it's cheaper than renting generally makes sense in the long run, even if you could have got it cheaper with a bit of luck by gambling on further declines. No-one buys at the bottom of the market unless they have to, that's why it's the bottom.

crazygaijin

I saw this story on the front page of today's Independent. This, after Brown's 'slip of the tongue', makes you wonder what they are discussing in Cabinet meetings. What do they know that we don't? A few days ago the head of the IMF was in Malaysia to meet Asian central bankers and he talked about depression too. Looks like we should all prepare for one!

novazombie

Quote:
Originally Posted by ruggedtoast
It would be terrible if London fell from grace. I cant imagine the horror I would feel at seeing this lovely capital degenerate into a dirty, crime infested, eyesore. Hobbled by awful infrastructure, absurd social planning and riven with societal and immigration problems.

Oh hang on no, that all happened already.

This article just sums up what a sham the "boom years" were. What kind of boom leaves a country bankrupt, millions crippled by debt, and some of the worst state run services of any G7 country?

London is an embarrassment. And the fact there will be a few less arrogant prats bombing around the centre in brand new Audis isnt going to make a whole lot of difference.


So why havent prices droped so much yet then?

Peple are still holding out for way too high prices.

I was looking in EA window the other day in N London. Another bloke next to me, I said to him are these sellers living on the same planet I am, with these asking prices?

He said oh Im sure they will accept 10% even 20% bellow asking price. I laughed and said how Japan droped 80% and his face went white, I think he was trying to sell his house.

Yes London has further to fall than the rest of the country. In Japan Tokyo was worst affected by highest %age falls. It will be the same in London.

We are talking 50% down from the top. Maybe those in the 70% club will be proved right but Im staying in the 50% club by 2010.

ad9898_3

whathavewedone wrote: »

I doubt that people will be allowed to move and borrow more with negative equity until the market has definitely bottomed and prices are on the rise again.

So it's not a great thing to be in negative equity if you're desperate to move in the next year or so. If you can hold out for a few years then it could work out in your favour.

In real inflationary adjusted terms, in relation to real earnings, 2007 was the peak that will not return, the banks will just not be allowed to take the kind of risks on 8x income, self cert liar loans etc..... again. And without the money, the prices cannot be sustained, as we can see before our very eyes.

dervish

ad9898 wrote: »

In real inflationary adjusted terms, in relation to real earnings, 2007 was the peak that will not return, the banks will just not be allowed to take the kind of risks on 8x income, self cert liar loans etc..... again. And without the money, the prices cannot be sustained, as we can see before our very eyes.

exactly - what goes up MUST go down.

A better analogy would be to consider the prices of digital watches when they first came out.