Get ready for the housing crash part II

carolt

Not my words, read the article:

http://www.lovemoney.com/news/the-property-ladder/get-ready-for-the-housing-crash-part-ii-3994.aspx?source=1000417

IveSeenTheLight

Thought I'd correct there headline

"After the usual ‘spring / summer / autumn bounce’ , what’s next for property prices? "

Well a lot of us here have said prices are likely to lower ofver the winter months.

Will there be another spring / summer / autumn bounce next year?

Graham_Devon

Personally I'm starting to lean on the side of a winter bounce too.

Really2

I like this bit.

Of course, low mortgage rates mean better affordability, which is a key factor influencing the property-buying decision. The big problem as I see it is that, for the base rate, the only way is up. After all, we're within two quarter-point cuts of a zero base rate, so there's not much left in the tank.
Hence, when the base rate eventually begins its upward climb (not expected before late 2010), millions of mortgage borrowers will suffer severe 'payment shock'. For me, this could be the trigger for another downward leg in property prices.

So do they really think a lender goes "the IR is 3% instead of 6% so you can borrow twice as much." and that borrows thin IR will never go up!

Thrugelmir

Has this crash even ended yet?

After all, in the previous housing crash, house prices didn't hit a low for more than six years,

So bound to be ups and downs for a lot longer yet.

Heyman_2

The comments underneath are more interesting than the article.

Thrugelmir

Really2 wrote: »

I like this bit.



So do they really think a lender goes "the IR is 3% instead of 6% so you can borrow twice as much."

No but if you lost one of two incomes through unemployment. Moved your mortgage onto interest only basis already, things may still be manageable. But with no jobs and higher interest rates. The balance could tip.

Really2

Thrugelmir wrote: »

Has this crash even ended yet?



So bound to be ups and downs for a lot longer yet.

To be fair that is another bad bit of journalism the "real bottom" may have been 6 years after. Nominal is a lot sooner than that (I think around 18 months).

But Agree we could be bouncing around the bottom for 6 years, but that would be a reason to buy now at a low IR and overpay not wait until rates go up. So it contradicts it's self a bit.

Really2

Thrugelmir wrote: »

No but if you lost one of two incomes through unemployment. Moved your mortgage onto interest only basis already, things may still be manageable. But with no jobs and higher interest rates. The balance could tip.

That is the same for any time not just a recession.

the_ash_and_the_oak

Really2 wrote: »

That is the same for any time not just a recession.

True on an individual basis - but in terms of overall number much less likely. Also if you really had to sell then you would hope transaction levels would be high enough outside of a recession that selling wouldn't be difficult if that was necessary

Really2

the_ash_and_the_oak wrote: »

True on an individual basis - but in terms of overall number much less likely. Also if you really had to sell then you would hope transaction levels would be high enough outside of a recession that selling wouldn't be difficult if that was necessary

True but if you did go to IR I think housing benefit covers you for 2 years.

That gives plenty of time to stop being a "forced seller" and could be part of the reason why prices have not fell this year.