Are house prices set to take a tumble? February 2006

tomstickland

Well I'm close to crossing the line from hoping for a crash to hoping that any downward movement is minimal. I've got to the stage where I don't want to wait much longer, so I'm going to buy something. I'm not typical though - I'm going for just over 2 x salary borrowing and I'm going to put a big effort into overpaying on the mortgage.

Neal_2

I purchased a house in the North of Scotland while I lived there. I am now renting it out. The market there is reasonably healthy, and has been for the past few years. The Scottish market did not see the huge and frankly ridiculous price increases seen in the South of England in recent years. However, my house is slowly increasing in price as I make overpayments on my mortgage bringing down the overall term. This slow 'trog' upwards in value is a positive indicator to me that the market in my particular area of interest will continue to grow - it will be slow - but it will grow.

I can see a good arguement from some of the posts here that the prices in England may have to shift downwards a few percent to survive a crash, due to the highly unacheiveable prices of even a starter 1 or 2 bed home.

In my opinion, people have recently become quite greedy with their expectations of resale value of property after only a short time. This kind of downward shift might knock some sense into people who are expecting unreasonable returns in such a short period of time - caused by the surge in the market during the last few years. This may smart somewhat for a while, but a house is really a long-term investment and such a decrease can only be good for the market in the long-term.

I'd be interested to hear if anyone has a contrasting opinion, if they bothered to read this far!

tsman

When I had my first mortgage in 1989 you generally used to be able to borrow 3 * 1st income + 1* 2nd income. With current average salary (approx 25k) this would equate to 87.5k - way short of the average house price.
A large part of the reason for the current bubble seems to be that lenders have changed their lending to "affordability" based on low interest rates.
I believe that if interest rates or unemployment start to rise the banks will change this policy and house prices will drop off a cliff - in my view a good thing for for the majority but catastrophic for a few.

funnyguy

HOUSE PRICES WILL FALL 10-20% after June when the sellers pack comes in,watch and see..From the person who said sell your shares in december 2000,

tomstickland

Mystic meg?

Doozergirl

funnyguy wrote:

HOUSE PRICES WILL FALL 10-20% after June when the sellers pack comes in,watch and see..From the person who said sell your shares in december 2000,

I can see how HIPS might deter some people from putting their house on the market prematurely, but can't see how prospective purchasers are suddenly going to be offering 10-20% less as a result.

Think you need to rationalise this argument, Meg

blue_monkey_2

We are in the position of not being able to afford anywhere, we live with my mum and will do so for the forseeable future unless Mystic Meg above can let us know next weeks winning lottery numbers!!

I have to confess that every week I open the paper and read the property news. I keep living in hope that someone is after a very quick sale for 75k but it is yet to happen, LOL. Now, every week there are huge red circles with Reduced on them over the photos and places are on the market for longer and longer around here. I live in a Hertfordshire/Essex village and the prices are just daft. To get a 3 bedroom place where we are now (and have lived for 30 years) we need 12*my husbands salary. We can't afford to save because we live with my mum, she can't afford the house on her own so we pay everything for her (mortgage, repairs, decoration etc..) as she is very low paid. We have 2 kids, girl and a boy and a 14 year old girl in the holidays so we need a 3 bedroom house but round here it is not feasable as we can't afford to buy anywhere. My husband put in for redundancy so we could move up North and have a deposit but he did not get it, the kids have since started school so I would perfer to stay here now to be honest.

However, a lot of people are selling up down here and moving further north. This is pushing the prices up in the North up because they have the buying power and can afford to buy bigger properties up there. On a personal level I cannot see how prices can be sustained at the level they are. We are not the only one in this position, my sister and her boyfriend are in the same can't afford to rent/can't afford to live together situation. They are both low paid workers and can't afford a place of their own either. we have other friends between us who are also in the same position and are still living with their parents. We was unlucky in that when we did get married by the time we was in jobs that paid enough to buy somewhere the house prices had jumped up again - and again out of our reach. In 1999 you could but a 3 bed semi around here for 55k, now it is more like 220k minimum and that is for a carp area that I really would not want to live in.

My husband and I, when we met, had both been renting privately and both caught in the poverty trap back then and in low paid work so there were no savings and we certainly do not have parents that can help us out financially either. I know of several people who have or are losing their houses to debt recently. And this will go on. With the price of Gas and Fuel rising people are buying houses and setting themselves budgets, when Gas goes up 22%, what do you cut back on? Other bills, food? You only have to read the debt board to realise that there is a huge problem lurking around the corner and people are also downsizing as they can see the problem around the corner. What happens to people who lose their houses? The BTL buy them on the cheap at auction and then rent them out to the people who have lost the houses with the Housing Benefit people picking up the bill. You used to be able to go to the auction houses and get a house on the cheap - now you are fighting with the Property Tycoons who have shedloads of unlimited money, buy them and renovate them to rent out or resell, to get more money and then to do the same with the next property. They are the only winners these days.

We have been on the Council housing list for 6 years now and I have been told the list is now closed unless you are an urgent case or homeless. Sadly you have to lurk around waiting to see who has died in your area and then asking if you can have the house as soon as the body has been bought out. Sadly this is not a joke! Our need is not urgent and things will get worse for us as my husband is about to lose his job (he now has occupational asthma and he is in for tests right now, so by next month when the cause is confirmed he will be told to leave - he has been banned from entering the conpamy right now - but he also cannot do the other job he had to fall back on as they are contracted to work in the place he is now). Heaven knows what we will do. But, tomorrow is another day I guess.

On the plus side though, they are building a 2nd runway at Stansted so in a couple of years time they are all going to be leaving in droves and selling their houses for peanuts. Bring it on. I'll be first in the queue as it will be nice to have our own place - I am sure we'll get used to the sound of aeroplanes, they are loud enough where we are now (we live on the outbound flightpath) and you don't hear them half the time as you get used to the noise.

JBEILBY

In the area where I live we have a high amount of btl as we have the highest population of Koreans outside Korea - their companies are obviously contributing some if not all the rental costs on 3 bed houses. Despite this in my own neighbourhood there are now a number of properties in the price ranges of £300k to £800K that have been on the market for well over a year and their prices have been reducing but still no takers. Below the £300k they still seem to sell quite quickly and on millionnaires row they too move quite well. It seems to be the middle market that has the problems. I am fortunate that I only have just over 6 years left on my mortgage and although I would like to downsize before my early retirement I can see my chances of selling receeding as I am in the middle part of the market.

whatamess_2

We live in the south east. 5 minutes from the beach very desirable area for holiday homes. We have just managed to sell our house for 180k the same as we paid for it a year ago. Prices have got to come down or people have got to stop being greedy. Had three valuations top one was 220k bottom was 170k. I knew there was no way we would get 220k for the house.

Viewed a property that in good conditio would be worth 145k needed 20k spending on it so made an offer to reflect that. Offer was rejected on the grounds she wants 140k.

I am not going to spend 140k for the house 20k doing it up plus all the fees to end up with a house worth 145k.

A house on the sea front sold in May 2004 for 390k the same house sold again in Nov 2004 for 690k. How on earth did they make that much in such a short space of time.

Merlin_BikeCharity

Hi all

My take is that the global economy is going to take a dive due to rising oil costs, which effect not just transport, but manufacture, agriculture (fertilisers and pesticides), heating, elec. generation, and such forth.

The global economy is interlinked, so there are knock on effects. George Soros has said many times he does not know how it doesn't collapse.

And the economy is built on never ending growth, which is nuts, and has been based on oil in recent years.

I can send links if anyone wants more info.


I've a friend who's applied for a job in Scotland, and rent for a 2 bed place is £250/ month, which looks way cheap when you're in Brighton!

Cheers

Merlin

P.S. Thanks for the charity donations to Re~Cycle, shipping used bicycles to Africa