Why house prices are certain to fall

Conrad

more on interest only = greater affordability

far less being contributed to pensions = more for brick 'n mortar

Generali

Conrad wrote: »

more on interest only = greater affordability

far less being contributed to pensions = more for brick 'n mortar

=> higher house prices today => lower pensions tomorrow => houses being sold to prop up pension incomes => increased supply => lower prices for homes => other assets being sold to prop up pension incomes => lower other asset prices => homes being sold to prop up pension incomes.......

doire_2

The_White_Horse wrote: »

i think the answer you are looking for is this: house prices are still well overvalued. a three bed house that is worth 300k should really be worth no more than 150k. However, they will not fall to this level for one reason, and one reason only. People are spazzes.

Nail on head!

IveSeenTheLight

the_ash_and_the_oak wrote: »

You (and your contemporaries) wages may well have quadrupled but I’m kinda assuming this is through career progression and promotion (unless you mean that the starting salary of your original position has also quadrupled)

Yes my wages have increased partly because of career progression.
In my original role, I'd say wages have doubled in the same time.
How many people are still on the same salary they started out with?

My point was that these people who earn more through progression could obviously be in a better position to afford more and it's possible that those who do not progress may not be in a financial position to own.

It's maybe not ideal, but I think we will see a lower percentage of people who can buy and they will complain about it.

I've said all along though that the market is set by demand and supply and this will of course reduce demand and could lead to a reduction in prices or possibly less rampant hpi in the future

the_ash_and_the_oak wrote: »

Agree the effect of unemployment may well be overstated - and any effect is more likely to manifest itself in ‘struggling buyers’ than ‘struggling owners’ (which would be a much more slow burning and less immediately perceptible effect)

I would agree with this also, higher unemployment will obviously affect people being able to buy and as a side factor will ripple through to a lot more being wary for their employment and lead to a cautiousness in the market.

Again this will lower demand (which we have already seen) but it remains to be seen how much further if at all it will lower demand.

the_ash_and_the_oak

IveSeenTheLight wrote: »

Yes my wages have increased partly because of career progression.
In my original role, I'd say wages have doubled in the same time.
How many people are still on the same salary they started out with?

My point was that these people who earn more through progression could obviously be in a better position to afford more and it's possible that those who do not progress may not be in a financial position to own.

It's maybe not ideal, but I think we will see a lower percentage of people who can buy and they will complain about it.

I've said all along though that the market is set by demand and supply and this will of course reduce demand and could lead to a reduction in prices or possibly less rampant hpi in the future

.

I don't think many people are on the same salary as they were 10 years ago and i don think many people would be in the market for the same type of property as they would have been 10 years ago. what seems to be the case here is something like this:


you earned £10. a flat was £30 and a house was £60
now you earn £40. your equivalent earns £20. a flat is £90 and a house is £180
you may earn 4 times as much but it is no longer you that is looking to buy the flat, it is your modern equivalent, who is only earning twice as much


agree a lower percentage of people may be able to buy in future (with knock on effects to prices)

mewbie_2

the_ash_and_the_oak wrote: »

you earned £10. a flat was £30 and a house was £60
now you earn £40. your equivalent earns £20. a flat is £90 and a house is £180
you may earn 4 times as much but it is no longer you that is looking to buy the flat, it is your modern equivalent, who is only earning twice as much

Just try out those figures..

you earned £10k. a flat was £30k and a house was £60k
now you earn £40k. your equivalent earns £20k. a flat is £90k and a house is £180k

Nope, can't understand it.

Earnings went up more than house prices? Oh well, could be true.

Thrugelmir

IveSeenTheLight wrote: »

And for a lot of people, including myself, wages have vastly increased over the course of my career, even over the course of my mortgages.

Certainly more than 1.5% per year.

In the last 15 years, my wages have nearly quadrupled, as has many of the people I know.
It's these people that have and can afford higher prices.

Then you personally will being looking from a narrow perspective. As most likely you are in the top 5% of earners. Unfortunately the rank and file , the people that will drive the property market forward in the future haven't been so fortunate.

You can pocket your profits and wait for the inenvitable fall. Before catching the next bull market. Rather like a surfer waiting for a good wave. Trouble is low tide hasn't been reached yet. So better to sit on the beach until it does.

IveSeenTheLight

Thrugelmir wrote: »

Then you personally will being looking from a narrow perspective. As most likely you are in the top 5% of earners. Unfortunately the rank and file , the people that will drive the property market forward in the future haven't been so fortunate.

I'm definately not in the top 5% earners, I'm a just above average full time male sort of guy.
I also don't believe I am looking at this from a narrow perspective, but more so from a realistic one.

You see I do not prescribe to the "house prices must fall so the masses can afford". Some people will unfortunately not be able to afford to buy.
It's possible that the average person will not be able to buy as it was previously in history.

I will give that maybe I am niaive as I don't have to suffer the house prices in London and the South East, but then I have always been an advocator that each area is different and local market research is the key

Time will tell, I suppose.