How many would buy more than one house if prices fell 60%?

Blacklight

I hear a lot of talk about how people today can't afford to buy two cars a big TV, a shiny tracksuit, an illegal dog and still have change for a six bed detached in Mayfair and a bag of chips on the way home - whereas their parents did (apparently).

We've seen the 2007 - 2008 crash and prices are rising back to normal levels, but lets just say we could go back in time... be honest now, how many bears would pick up a bargain and join the BTL brigade if prices dropped? Or would you seriously take your STR cash, but a little cheap semi and keep the rest in the bank? Hmmm?

lostinrates

I don't want a cheap semi and money in the bank. Honestly, I think its highly likely we'd buy two places if we could afford it: as we would still be renting in London for DH to work. so, not a holiday let, or a BTL...although I have nothing against good landlords...its just not for me

nearlynew

Blacklight wrote: »

We've seen the 2007 - 2008 crash and prices are rising back to normal levels......................

I didn't realise there was a "normal level"


(thanked you by mistake, by the way)

Graham_Devon

Blacklight wrote: »

I hear a lot of talk about how people today can't afford to buy two cars a big TV, a shiny tracksuit, an illegal dog and still have change for a six bed detached in Mayfair and a bag of chips on the way home - whereas their parents did (apparently).

We've seen the 2007 - 2008 crash and prices are rising back to normal levels, but lets just say we could go back in time... be honest now, how many bears would pick up a bargain and join the BTL brigade if prices dropped? Or would you seriously take your STR cash, but a little cheap semi and keep the rest in the bank? Hmmm?

The issue here is assuming that funds would be freely available, and easily achieveable through loans to buy. And at 60% down, I doubt funds would be easily achievable.

The other point you haven't thought about is that at 60% down, you would have been through 20/40/50% down. MANY would have been stung jumping in at those levels. Would mean less and less are putting themselves up to buy when they had already been stung.

You don't just get to -60% overnight and think "oh, bargain now....wasn't when it was -50%, I'll buy a street".

silvercar

You don't just get to -60% overnight and think "oh, bargain now....wasn't when it was -50%, I'll buy a street".

You think, "good price now, I'll buy and hold onto it. So what if prices fall another 10%, I'll have bought when I thought prices were low at a price I can afford. Not out to make a quick buck".

brit1234

Blacklight wrote: »

We've seen the 2007 - 2008 crash and prices are rising back to normal levels

Sorry is this a typo, surely you mean prices are falling to normal levels? As prices fell last month and predicted to be down on the year.

However if you are being serious can you define what normal levels are and why they are normal? For historical average is a lot lower lower say 40-50% and that is classed normal.

Prices at the peak in 2007 were vastly abnormal, greatly distorted by mass fraud, too low rates levels, easy credit and no controls. That led to the credit crunch, hardly normal going and classed as the worst economic downturn in 70 years.

Normal prices are a lot lower than this and that is why they are falling and will fall a lot more now the stimulas is almost gone.

As for the question I would manage to buy 1 property at 3-4 times my average salary and my hard saved 25% deposit.

DaddyBear

Houses should be seen as a home, not an investment. Taxation needs to be used to make houses less attractive as an investment and easier for people to purchase a home. No stamp duty on a first property but significant stamp duty, say 5% on any further properties, plus an annual taxation related to the purchase price, say 2% per year.
If houses cost next to nothing I'd buy one for myself and that is it.
It's time thus country concentrated on productive and sustainable investment, not speculation on unsustainable bubbles.

chucky

brit1234 wrote: »

Sorry is this a typo, surely you mean prices are falling to normal levels? As prices fell last month and predicted to be down on the year.

However if you are being serious can you define what normal levels are and why they are normal? For historical average is a lot lower lower say 40-50% and that is classed normal.

Prices at the peak in 2007 were vastly abnormal, greatly distorted by mass fraud, too low rates levels, easy credit and no controls. That led to the credit crunch, hardly normal going and classed as the worst economic downturn in 70 years.

Normal prices are a lot lower than this and that is why they are falling and will fall a lot more now the stimulas is almost gone.

As for the question I would manage to buy 1 property at 3-4 times my average salary and my hard saved 25% deposit.

make sure that you filter this one out Brit... but you're wrong for a change....

here's normal - it hit the long term average in Q1 2009.

Graham_Devon

silvercar wrote: »

You think, "good price now, I'll buy and hold onto it. So what if prices fall another 10%, I'll have bought when I thought prices were low at a price I can afford. Not out to make a quick buck".

Yes, but if you were going to do that, the liklihood would be that you would have already done that at 25% down. Or 35%. And lost a packet.

No one who had the thought of jumping in would wait until 60% down.

Mr.Brown_4

Graham_Devon wrote: »

No one who had the thought of jumping in would wait until 60% down.

I might do. Because I am not really interested in property as an investment. Therefore 20-40% off is not very interesting. But 60% off would make yields attractive, and a strong possibility of capital gains. Like going back to when the BTL craze kicked off really.

It might be worth tucking a couple away as part of retirement planning.

Graham_Devon

Mr.Brown wrote: »

I might do. Because I am not really interested in property as an investment. Therefore 20-40% off is not very interesting. But 60% off would make yields attractive, and a strong possibility of capital gains. Like going back to when the BTL craze kicked off really.

It might be worth tucking a couple away as part of retirement planning.

You'd need a hefty wodge of cash in the bank that you were prepared to gamble after seeing prices tumble 60%.

I very much doubt people would be getting investment loans after price falls that severe.