Property crash soon???

Live-on-Less

This will hopefully get all you prospective first time buyers, or indeed anybody else contemplating taking on a bigger/more expensive house thinking.

It really worries me that so many people are getting into something (that in my opinion) is going to cause them so much future misery when prices collapse as I think they must.

1. House prices are are now at record highs in relation to earnings. Property pundits - usually those with a vested interest in prices staying high - will go on about today's low interest rates, and how "affordable" property now is. Don't just look at the interest payments, look also at how much a month you will have to find to repay the capital over 25 or 30 years?
How can something that has doubled in price over the last 5 or 6 years now be "more affordable?!" :eek:

2. When you look at what drives the house market its interest rates sure enough, the cost of money - like any other commodity - affects demand. However, absolute house price levels don't much affect those who have had a house for some time and are moving sideways - if you've already got a house and move to another similar one you aren't much bothered if it's £80,000 or £800,000, you've got to live somewhere. (Moving costs - stamp duty, legal fees etc do of course go up - it's sooo expensive to move today for this reason.) So, house price levels only really affect first time buyers and those moving up in size, usually younger people. The lenders have actually contributed to this housing bubble by progressively relaxing their lending criteria, bigger earnings multiples and self certified mortgages have played a large part in driving up prices to their present crazy levels.

3. The "Buy to Let brigade" have also driven them up by increasing demand for smaller properties, and competing with first time buyers. I personally know of people who have actually borrowed on credit cards in order to fund deposits for buy to lets. Buy to let makes no sense today, the yields on your investment are pathetic, they are just hoping prices continue to rise.....

The market is currently teetering on the edge, any upset in the general economy will precipitate a crash. Those who have recently entered the market will be left with massive negative equity, so if you are thinking of buying, very carefully compare the true total costs of renting vs. buying, and you'll probably find it's cheaper to rent and wait until prices fall to more normal levels in relation to earnings. The end. Phew! :T

distilled

Absolute rubbish!

MORPH3US

Whilst you may not be wrong in what you say, I don't think its helpful to be scare mongering based on your own opinion, NOT facts!

Buying your first house is scary enough without you contributing to it. If someone is buying a house then I would trust that they are fully aware of the situation that they are getting themselves into.

Live-on-Less wrote:

The lenders have actually contributed to this housing bubble by progressively relaxing their lending criteria, bigger earnings multiples and self certified mortgages have played a large part in driving up prices to their present crazy levels.

As for the above, some might say that the lenders have had to relax their lending criteria to keep up with the price increases. Its no good offering everyone mortgages for £50,000 any more because I doubt that'd even buy someone a caravan now, let alone a house!

SamMoffatt28

Blimey, I hope you feel better after all that!

Not sure I agree with you though, lol.

B52

We are FTB and currently in the process of buying our first house here.

Many people think house prices will only go up but I have seen/experienced/suffered major price crash in the country we used to work in, so we are more prepared this time.

Saying that, I think everyone will be affected, incl. FTBs, non-FTBs, property developers and even people who are only renting because one will suppose a big downturn of UK economy for a major house price crash to happen?

Doozergirl

That's got to be the bravest first post I've seen! Welcome.

(fetches comfy cushion and popcorn to watch ensuing debate)

HGLTsuperstar

Shift up doozer, I'm settling down with you. Come on meanmachine, where are you. BTW Morpheus, our caravan is on ebay for £700 and you wont have to pay stamp duty!

Live-on-Less

If the lenders keep lending people more and more, then the upwards price spiral will tend to either continue or stabilise until either: 1. Interest rates increase significantly. 2. People generally come to believe that prices must fall. 3. There is some economic shock - massive spike in oil prices, recession, unemployment etc. None of these things has yet happened. But where do you think house prices would be now if lenders had stuck to their "old fashioned" criteria of 3 times your salary and that's all? After an initial surge 4 or 5 years ago much lower I'd say.

Live-on-Less

distilled wrote:

Absolute rubbish!

I guess you'd be one of those pundits I mentioned.... maybe you could elaborate on why its "rubbish!"

nmiah786

Doozergirl wrote:

That's got to be the bravest first post I've seen! Welcome.

(fetches comfy cushion and popcorn to watch ensuing debate)

Anymore space left on the sofa.....

btw are those popcorn sweet or salty!!!! :cool:

Doozergirl

nmiah786 wrote:

Anymore space left on the sofa.....

btw are those popcorn sweet or salty!!!! :cool:

Bring your friends!

Popcorn's sweet You'll have to bring your own if you want the evil stuff.