Property Price Drop

LittleMissAspie

ukcarper wrote: »

People keep mentioning property prices dropping to 4x salary + deposit but what type of property. It’s been a long time, if ever that a FTB has been able to afford the average house.

A family home. FTBs should be able to afford small houses or flats. People don't get average salary at the start of their working lives.

ukcarper

most FTB don't buy houses at the start of their working lives but I agree they should be able to buy a flat or small house.

kier333

Thanks for all the advice, have to say i'm now very confused.

Not sure what to do but would really like the flat and can certainly afford the repayments.

It seem most people think buying now is a bad investment, does that mean the flat i have mentioned will only be what i paid for it in 5yrs time?

ad9898_3

kier333 wrote: »

Thanks for all the advice, have to say i'm now very confused.

Not sure what to do but would really like the flat and can certainly afford the repayments.

It seem most people think buying now is a bad investment, does that mean the flat i have mentioned will only be what i paid for it in 5yrs time?

Of course no one has a crystal ball, but I would say there is a very good chance it will be worth less, much less. As property falls in price, flats start to get overlooked as 'houses' are now within reach of people. This is what happened last time, and it is sure to happen again.

Cleaver

macaque wrote: »

The house price boom of the late 90s to 2007 was arguably the biggest suckers rally in history. It convinced many people that wildly overpriced houses represented a new reality. The fact that many people were buying houses they could not afford did not matter. In a rising market, the lenders could always recover the outstanding loan when borrowers defaulted.

Houses will never return to 2007 prices (in real terms). They will fall until lenders feel safe again (3 to 4 times earnings). Thereafter, they will track inflation. I also suspect there will be a fair bit of overshoot on the way down.
Anyone who is hoping for another roller coaster is going to be out of luck. Lenders have come close to bancrupting the world (and we are still not out of the woods). Banks will never be given the freedom to lend again like this.

If you are trying to get a house at the best price, I should wait a few years. Renting is comparatively good value and getting cheaper. House prices are a one way bet for the next few years. If you are looking to make money, I think you are probably 15 years too late.

I always enjoy your posts Mr Monkey, even though I don't always agree with them.

With regard to the above, what makes you think that suddenly houses prices will start nicely tracking inflation and that we'll never go back to silly multiples and wanton lending? For that to happen, people would need to learn lessons, the whole culture of the country would need to change and people would need to stop seeing property as an 'investment vehicle'. But I just can't see that happening really as I think people have short memories, banks will go back to making stupid amounts of money soon and people will want a nice big house that makes them lots of money again. And the government will be happy to oblige.

I think it may be between 7 and 10 years before we see property heading for 2007 levels again to be honest, but it wouldn't surprise me if in 2017 we're seeing house price inflation at double figures.

Ahh, who really knows? Maybe you're right my simian friend. I know that in the imediate future Mrs Cleaver is just making a cup of tea that we're going have in bed whilst watching a couple of episodes of The Wire. Who cares about house prices when life is that good eh?

kier333

So confused i'm thinking of cancelling the bank taking the booking fee tomorrow and carry on renting and saving.

Thing is i'm tired of renting and the flat i'm close to buying is in Cricklewood which has a £4 billion regeneration program so in 5 years should give me back what i paid plus a little more (maybe) although i'm looking for more of a home than a quick profit.

I also agree houses are a better investment but a house in NW2 is aroung £350-400k totally out of my reach on just under 50k pa salary.

kier333

ad9898 wrote: »

Yes, keep renting, is the flat good value ??, I don't know, but if I was a betting man I would say not. Losing 20k pa is grim and if you go for a 2 year fix now, I can pretty much gaurantee you will be paying more in 2 years time, whilst your 18k deposit will have gone the way of dodo and you will be NE. Not good.

However, as has already been said, it looks like you have made your mind up, in that case good luck, you're going to need it.

so is 5 yr fixed better than 2 yr fixed?

ad9898_3

kier333 wrote: »

so is 5 yr fixed better than 2 yr fixed?

I would say the longer the fix the better, however you will pay with a higher interest rate..... with the fees, the deposit req. the interest rates etc.... the banks are more or less telling FTB's not to buy at this time. This i only my opinion though, so it's not gospel, a few other guys on here see things differently, but I just look at how things are in the economy and make a judgement........ it's right for me, is it right for you ??, I would get some advice from an IFA, put your hopes and fears to them and see what they say.

kier333

ad9898 wrote: »

I would say the longer the fix the better, however you will pay with a higher interest rate..... with the fees, the deposit req. the interest rates etc.... the banks are more or less telling FTB's not to buy at this time. This i only my opinion though, so it's not gospel, a few other guys on here see things differently, but I just look at how things are in the economy and make a judgement........ it's right for me, is it right for you ??, I would get some advice from an IFA, put your hopes and fears to them and see what they say.

I am taking the mortgage with HSBC 90% LTV fixed for 2 or 5 yrs both have same booking fee and rate BF £999 both at 6.79% so you think the 5yr is best?

chucky

kier333 wrote: »

Thanks for all the advice, have to say i'm now very confused.

Not sure what to do but would really like the flat and can certainly afford the repayments.

It seem most people think buying now is a bad investment, does that mean the flat i have mentioned will only be what i paid for it in 5yrs time?

5 years is a long time - most of the more extreme views don't see it lasting that long, the general consensus is that late this year early 2010 will be the end of this for the UK. maybe in your area it may be earlier.

if it's in London you'll find that it's an area that is more recession proof than most others in the UK. property prices may drop or have dropped in large amounts but not in percentage terms - so it's not the worst thing that you can do.

for me personally there is a massive difference between renting and buying a property - your home is your home not one that you're there on a temporary basis. for me that's a big thing and feel better owning my own home.

it's all up to you and is best to do what you feel best - good luck