CITY AM--- Housing no longer overvalued

geoffky

HAMISH_MCTAVISH wrote: »

You hit the nail on the head with that one.....

You cannot price an entire asset class to the lowest of earners.

Its why prices were never going to crash by 70%, or 90%, or all the other mentalist TFH theories.

If prices of flats round here dropped by 70%, I'd buy 3 in cash, and stick another two on a credit card.

Almost everyone I know would do the same. Hence the reason why prices can never fall that far.

but the value of your money would probably fall with houseprices....and never believe we could not become a weimer republic because it has happened once.

Graham_Devon

HAMISH_MCTAVISH wrote: »

If prices of flats round here dropped by 70%, I'd buy 3 in cash, and stick another two on a credit card.

Almost everyone I know would do the same. Hence the reason why prices can never fall that far.

Would you?

I doubt it.

If houses crahed that far, I doubt you would even get a credit card. The banks would be in pure turmoil. Plus, a lot of people like yourself, with that kind of thoughtpath would jump in at 40% down and end up sinking in negative equity.

You are basically saying you would do a Grant Bovey, on a smaller scale, or any of the others who have the same kind of thoughtpath and have ended up bankrupt.

Harry_Powell

geoffky wrote: »

why.what makes you better than a service provider....where you born different to them.why should they not be able to buy as it seems a very elitist view to me.

i am not saying everyone should have everything but a basic as a secure roof over your head to me is not much to ask in life..maybe one day all basic housing will be affordable but at the moment its not and for me that is a sad reflection on our society..

You cut out the bit of my post where I said was a service provider, so clearly I'm not any better than the people I worked alongside. I also had the same background as them and the same opportunities. I decided to go down a path that would be more economically advantageous than remaining in a service job, others stayed put. We all made the choice and have to live with the consequences.

The consequence of their choice means that while they have an easy, stress free and undemanding job they are also low paid an cannot afford the same things that others in society can.

brit1234

HAMISH_MCTAVISH wrote: »

You hit the nail on the head with that one.....

You cannot price an entire asset class to the lowest of earners.

Its why prices were never going to crash by 70%, or 90%, or all the other mentalist TFH theories.

No but you seem to be excluding medium earners as well priced out.

The bubble was produced by easy credit and fraud, both now gone. No matter how much baseless ramping you do the fiances are not there to support such overvalued homes.

Prices will rebalance

Harry_Powell

brit1234 wrote: »

No but you seem to be excluding medium earners as well priced out.

The bubble was produced by easy credit and fraud, both now gone. No matter how much baseless ramping you do the fiances are not there to support such overvalued homes.

Prices will rebalance

I'm a medium earner and I'm buying.

HAMISH_MCTAVISH

Graham_Devon wrote: »

To be honest, most of the problems could be sorted out, from a "population" type viewpoint.

Just limit mortgages to 3.5x a single salary, and 1x for joint.

.

Actually, this would slow down HPI, for a decade or so.

Until people had saved enough to add a big deposit to the mortgage amount via savings. Then prices would start rising dramatically again, as you'd still have a situation where 3 people compete for every one house. And without the price growth for the decade, there would be less profit in building, so less houses would be built, and the shortage would get worse.

Other than that, sounds like a good plan.:rolleyes:

brit1234

Harry_Powell wrote: »

I'm a medium earner and I'm buying.

You must be lucky, I live in London with a good wage and deposit but still can't afford to buy. Prices have a long way to fall here.

Are you not worried that your deposit will be eatern in the comming falls?

Graham_Devon

HAMISH_MCTAVISH wrote: »

Actually, this would slow down HPI, for a decade or so.

Until people had saved enough to add a big deposit to the mortgage amount via savings. Then prices would start rising dramatically again, as you'd still have a situation where 3 people compete for every one house. And without the price growth for the decade, there would be less profit in building, so less houses would be built, and the shortage would get worse.

Other than that, sounds like a good plan.:rolleyes:

HPI would not rise dramtically at all, as you would have new people coming to the market constantly every year, regardless of how much those already in the market have saved. They wouldnt be able to move without those coming to the market, and those coming to the market wouldn't be able to move unless they could afford the prices on 3.5x + 1x.

So in other words, the current homeowner could save 100% of the price of their next home and buy outright. But they still need the younger generation to come in and relieve them of the house they already have, so that house will need to be available at a price these younger lot can afford based on lending.

House builders do not make more profit when house prices go up, not in general, as land costs go up. Just as Tesco's don't make more profit when beans tripple in price.

So that's those 2 "downfalls" discussed.

I know my thoughts would never actually come through to fruition, not unless we had a more socialist government, something I personally wouldn't want. But I do think it would bring massive stability to the economy, or at least, the housing economy.

The only time HPI would rise dramatically is if the same people only had access to the market, i.e. current home owners, who can all afford to trade with each other regardless of prices.

wolvoman

brit1234 wrote: »

You must be lucky, I live in London with a good wage and deposit but still can't afford to buy. Prices have a long way to fall here.

Are you not worried that your deposit will be eatern in the comming falls?

A good wage in London is £50/60k and a good deposit would be £100k or so. If you can't buy with that then you must either be looking to buy a riverside penthouse or you have no balls.

mewbie_2

wolvoman wrote: »

A good wage in London is £50/60k and a good deposit would be £100k or so. If you can't buy with that then you must either be looking to buy a riverside penthouse or you have no balls.

Wow, you must be a 'real' man to buy property in London. Oh my, no chance for me and the 'girls' then.