Are house prices set to take a tumble? February 2006

Former_MSE_Archna

Poll Title: Poll Started 21 February 2006: Will house prices crash? What will happen to UK house prices over the next year?

A. Increase over 20%
B. Increase 10-20%
C. Increase 5-10%
D. Increase 2-5%
E. No real change
F. Decrease 2-5%
G. Decrease 5-10%
H. Decrease 10-20% (smaller crash)
I. Decrease over 20% (crash)
J. I really have no idea

Click here to vote or click reply to discuss.

ReportInvestor

If house prices are set to take off (which I doubt), please don't tell meanmachine .

But the poll so far seems to undermine the negative nature of the initial question from MSE Archna. In spite of the known fact that such questions do influence polls.

Is this positive view because MSE is a site peopled by contented homeowners who would like to stay that way? Discuss.

ManAtHome

Do contented homeowners really care? Sure, if prices go up you are 'richer' but you have to downsize or sell up and rent to realise the cash. Even then, it's being funded by your descendents.

blue_monkey_2

No, homeowners don't care right now because they have somewhere to live. I guess they will care when their kids are still with them at the age of 35 because they cannot afford to buy!! That is of course if they can afford to have the children in the first place.....

tango

Personally i hope there is no crash, i was a home owner when the last crash happened in 1991,saying that i cannot see the house prices rising much at all,first time buyers are essential to a healthy housing market,and they are getting squeezed out

Johnathan100

House prices have got to take a dip.

Despite what the estate agents might like to think, there is little or no increase in the amount of movement in the housing market at the moment.

This is because money has no velocity at the moment.

So whats the reason for this, well it cant be interest rates, after all they have been sat at a reasonable level for some time now. The simple reason is, fewer first time buyers have the income to buy into the housing market, at todays prices.

DirtyDes

I thought that there would be little movment in house prices over the coming year, however I know of two houses near me where they have got more than the asking price and sold very quickly.

As a house owner I feel price stability is important it refelects a stable economy, were as rising prices means inflation is still with us.

Lions21

I don't think it will crash just yet purely because the demand is still there. In the short term a slight adjustment downwards to enable the first time buyers on to the ladder is more probable.

However, from discussions I've had, many people have really over extended themselves with self-certification mortgages and no savings as a back up. The worst I've heard of is 9 times income which is just ridiculous. If this is as common as I think it is, then when interest rates start climbing again we could see a fair few casualties and a major downward price adjustment.

Sheffieldstag

I'm in the process of househunting at the moment. We have placed an offer on a 2 bedroomed semi at £95,000. As I have a decent job I can afford this....just. But generally we have struggled to find reasonable houses in reasonable areas at our price range. We have taken the decision to buy now whilst we still have the chance.

I'd have thought that house prices will probably stay the same with maybe a small rise in some areas. I truly hope prices dont crash as obviously the first house being a starter home we will be looking to move in 5 or so years.

richiethekid

I know of one couple in their mid-20s who have recently bought a tiny 2-bed terrace in a relatively undesirable area. I don't know what they paid for the house but I do know they put down a sizeable deposit and the monthly mortgage payments are more than double what it would cost to rent an equivalent property. I also know a slightly older couple who bought a similar property in 1999 for around £35k. That same house would now sell for at least £90k.

It seems that younger people are being squeezed out, and houses traditionally bought as starter homes by first-time buyers are instead being bought by the buy-to-let crowd. This keeps prices high as buy-to-let investors can afford to pay over the odds in the first place, plus they can raise the money quickly and there is no chain involved. This in turn means that fewer young people can afford to buy, which increases demand for rental properties, which in turn forces prices up, or at least keeps them at their current hugely inflated levels. My theory is that someone in government has made a conscious decision which has allowed this to happen, and the cynic in me would call this a form of social engineering, keeping the rich richer and the poor poorer.

jodyapple

I’m a first time buyer (and also a first time forum poster… hello everyone x)and I made the decision to buy just after Christmas when a friend who is in the same financial position as me (but with more debt) was accepted for a Mortgage with Northern Rock. They will lend her and her partner up to 5 x her income on an interest only repayment scheme, with no deposit, no savings, nothing and it will pay off her debts. I’m in the luck position of having some early inheritance money put on one side for a deposit and because of this I am being bombarded with mortgage deals that are making me dizzy. The one thing we don’t have is savings for fees etc (if I dip into the deposit it will effect the mortgages I can take out) and I’m stuck in the dilemma of do I jump on the property ladder now while Mortgage companies are willing to accept me and I can just about afford to buy– or do I not take the risk and maybe miss the boat for the next few years? The one thing I know is that a mortgage will be slightly more than my rent – but only on an interest only repayment basis – and £100 - £150 more a month on repayment. It’s stressing me out because no one knows what is the right thing to do! 

……. Help.