1.5m homeowners face 'disaster' if house prices keep falling, MPs warned

housesitter

Really2 wrote: »

One thing for sure if you done buy you will be renting all the way through your retirement (Could be a lot of money)

Yes. Potentially.
Maybe the kids would build me a grandad flat in lieu of inheritance

Thanks for the calc BTW, I was using the RPI duh...


whathavewedone: The deposit will have come from trading up twice previously and taking advantage of property rises. The last time we moved we came from a 70K house in an area considered the place to be but now looks like a total hole.
He was lucky, certainly.

I'd love to have a 300K deposit :rotfl:

I don't think that bending for 4x is bad but as you say ridiculous multiples is certainly not teh way to go. However the UK has a culture where you cannot tell someone that they cannot have something. Lots of people are not prepared to accept no for an answer. They will eventually find someone who says yes.

the_ash_and_the_oak

Really2 wrote: »

One thing for sure if you done buy you will be renting all the way through your retirement (Could be a lot of money)

The other points are not really relevent as you dont know they will happen.
You could live to 120 and pay 55 years rent, you would regret it then, but like your points it is a possibly but not fact.

my grandparents have been renting for over 4 years!

housesitter

b0rker wrote: »

I have had little financial education from anyone and have now had to educate myself. It will I am sure serve me well in the future.

I had it inferred into me by my parents being generally tight. It does.

I wonder how many of them are the very people on this thread telling me how irresponsible I was to borrow at under 3x our salary with no other debts between us and the ability to save £30K between us in 2 years.

So you've got the 30K now to cover your predicted fall?
If so and the mortgage is affordable then TBH I'd say it's more sensbile having the cash in hand now than in the house, so long as you can get a re-mortgage. If not, you have the csah to pay for the NE if you don't spend it.
If inflation rockets, you can stick the cash into assests which may grow in value and watch the mortgage erode over time.
Lots of if's tho huh.

Okay if you bought in with a 125% mortgage you shouldn't really expect any security but not if you are initially prudent.

Someone should sit them down and tell them the rammifications. I'm sure many wont listen, but...

This should not come down to luck. You are not told that the long term ownership of your home is based on luck when you go to an IFA or MA as a first time buyer. In my opinion you really should be.

When you get any major work down on your house, car, or purcahse a new TV, dishwasher etc. Do you shop around and talk to many people or just go for the first deal ?

I see houses as being a fairly unique purchase. It's pretty much the only thing you'll ever buy which is likely to go up in value over a long time. Consequently, it's the one thing you should take the most case about purcashing. I'm not saying you didn't but many otehrs didn't

Certainly, if you are sitting with two good stable jobs, a 100K mortgage at a good rate and 30K in the bank I'd say that now all the info is out, it wasn't the worst move in the world.
If you didn't have the 30K then it's not so good.

If 100K is less than 3times your combined salaries, then a 30K savings pot over two years is achievable.

housesitter

the_ash_and_the_oak wrote: »

my grandparents have been renting for over 4 years!

Actually, thinking about this again.
I'd be living rent free.
It's reasonable to expect that the interest on my savings would be paying the rent (not stuck in a bank account). Essentially the same as mortgage free.
Pension pot seperate to savings.

whathavewedone

The point I was making was that a 60k deposit back in 1986 amassed by property price increases could easily amount to 300k today if he had sold and bought again during the boom.

If you also take into account wage inflation so that your father's wage would be around 48k today he would have a mortgage of around 2x his salary - so that 400k house would be almost as affordable today as it was in 1986.

Not saying that houses aren't overpriced, just don't think that the example you gave was a particularly good one!

It is also fair to say that a lot of people who took risks with 100% mortgages in 2002/2003 made a lot of money. People who bought in 2006/2007 with 100% also took a risk but a hpc had been predicted for such a long time and never happened. It might have been the case that the hpc didn't happen until 2010 in which case the risk could have paid off.

b0rker

housesitter wrote: »

I had it inferred into me by my parents being generally tight. It does.

Wow.

You're a breath of fresh air on this site.

You appear to be neither a bear nor a bull. You appear to be logical...

Scarey.

lostinrates

If I were petless aspects of renting in old age really appeal: six months London, six months Monaco one year, then maybe six months Paris, six months Portugal ...who knows. I'd possably feel very different if I had children, but its really the animals and a retirement with out thm that wouldn't appeal. A toy dog I might be abl to passport and take, but taking a horse around would be very much harder, and I certainly hope to ride into old age. Absolutely accpt it isn't for everyone but the idea that its for noone that comes up here over and over again does grate a little.

housesitter

I rented fro ma retired couple for 9 months who had their house paid off. They transferred their bits into the loft and went off round Europe in their motorhome for 9 months seeing many countries and meeting up with the same people every year from around Euope who did much the same thing.

It's not for everyone but it's the sort of thing I'd consider.

leveller2911

nickmason wrote: »

Sorry, but poor judgement has a lot to do with it.
If people showed greater judgement, greater awareness that economic cycles (Tory, Labour, or any hue) were unavoidable, didn't believe the illogical "prices can only go up", then this bubble would have been smaller. Of course you can blame all sorts of external influences, and you can also blame the government for not cooling the fire. But....
prices don't go up without buyers
sensible buyers don't buy at clearly unsustainable prices

Prices now are still above the long term average. So forget all the excuses - this correction was going to happen come what may.

Those who have bought recently have fuelled the very bubble that they are now complaining about. There might be all sorts of reasons why it was still good for them; security, etc. and the wise among them will have discounted the imminent downturn against those benefits, and will be happy with their position now. But those that showed the judgement of withstanding those other pressures and got or stayed out of the bubble effectively acted to deflate it.

If you don't like property boom and bust, then reward those that acted rationally. If the poor judgement of those jumping on the band wagon is rewarded, then we'll only repeat it all over again, but worse.

Spot on !!. I totally agree with all of the posting,I would also add that in the "old days" they would only to lend to couples 3x biggest earner and 1 x the lower earner which basically equates to 4 x salary.For the vast majority of people this worked.For a poster to say we only borrowed "3x joint salary" equates to 6x 1 salary, thats around an extra 30% which is Not sustainable.

House prices CAN'T keep rising at the rate they have as earnings haven't kept up.Its basic economics and could never carry on.Anyone with an ounce of common sense could see 2 years ago this was on the cards.

House prices WILL come down to around 50% from their peak,they will have too as banks will not allow borrowers to borrow 100% again, so economics dictates that the only was the "housing ladder" will move .There WILL be a big adjustment on property prices.

sb44

If you have negative equity and your mortgage payment is going down as they are at the minute and people aren't looking to buy another house what is the problem?

Sorry but I am not well up on the financial side of things so excuse the ignorance.

Surely their mortgage payments are still less than they would be paying to rent somewhere in most areas.