House market crash!

jonnydoe

You only benefit when you sell up and move abroad somewhere where house prices haven't gone up so much.. so you can use your equity effectively

It's not just first time buyers who are suffering its 2nd and 3rd time buyers also.. Stamp duty/ EA fees/ Solicitor fees are a complete joke....

nigel75

My guess is that prices will steadily increase over the next 5 years with a readjustment somewhere along the line. Am quite surprised people have failed to acknowledge so far on this thread that demand for new houses is far outstripping supply. Surely when this is the case, prices increase dont they.

For every person who becomes bankrupt and loses their house I'm sure there 10 times as many people who could take their place!!!

F_T_Buyer

nigel75 wrote:

Am quite surprised people have failed to acknowledge so far on this thread that demand for new houses is far outstripping supply. Surely when this is the case, prices increase dont they.

Demand always equals supply. It's the price level that adjusts to equal the two.

At the moment, first time buyers are at 12% (NAEA). Movers are 50% and the rest is second property and BTL investment buyers.

Usually FTBs account for 40-50% of the market, the shortfall is fullfilled by BTL. They are doing this because 'property always goes up'. But does the BTL sums add up? Look at the link above.

When the BTLers wake up, and stop speculating, prices will stagnate, but who will buy if prices are not rising? BTL Speculators? Why? It's not going up in value (may as well wait). FTBs? no way, they can't afford now.

Therefore prices will fall to a level that allows supply and demand to match. Then the bubble will have popped.

wibble68_2

nigel75 wrote:

My guess is that prices will steadily increase over the next 5 years with a readjustment somewhere along the line. Am quite surprised people have failed to acknowledge so far on this thread that demand for new houses is far outstripping supply. Surely when this is the case, prices increase dont they.

For every person who becomes bankrupt and loses their house I'm sure there 10 times as many people who could take their place!!!

The old supply and demand argument.

Will you use the same argument if inflation takes off?

pigeonpie

We looked at a flat where the owners want almost £50 000 more than they paid for it at the end of 2005 (small 2 bed flat). They are holding out and refusing perfectly good offers as their's is the only flat in this (more affordable....for London) price range with all the agents in this area of London & it has some outside space which is unusual. There is just nothing for sale and hundreds of buyers. This area is good for commuting. So our view is that there will only be a price crash once we fork out for a property
I'll post if and when we do, so you can all take cover! :eek:

icklejulez

All I can say is there were rumours in aug 03 that prices would crash, I live in the NW and my house value has risen by over 50% making me £45k profit and Ive only had a mortgage of £221. So who's laughing? Even if the market crashes surely Im in a better position than someone renting?

To the OP who lives in the NW, I am currently selling my home and as far as I can see prices are still going up.

mystic_trev

icklejulez wrote:

All I can say is there were rumours in aug 03 that prices would crash, I live in the NW and my house value has risen by over 50% making me £45k profit and Ive only had a mortgage of £221. So who's laughing? Even if the market crashes surely Im in a better position than someone renting?

Very well put, this is why if there is a "correction" of 40% it wouldn't affect most people, probably only those who've bought post 2004 or those who've over MEW'd. So although they'd be newspaper headlines saying there was a major housing crash, in reality it would just be a minor correction. The main losers would be the highly geared BTL brigade "properties my pension" They'd be going from Landlord to DSS Tenant in one easy move.

icklejulez

I also feel that enough lessons were learnt last time round and I dont think the government would allow the effect this time round to be anywhere near as bad. They have expects studying this sort of thing day after day. there will always be rumours, but with the elderly releasing the cash in the homes upon retirement or relcation and using this money to share with family etc I really dont think we'll have too much of a problem. there is a lot of well made cash about too!

martyn4764

icklejulez wrote:

I dont think the government would allow the effect this time round to be anywhere near as bad.

Out of interest, what would you expect the government to do/not do?

F_T_Buyer

icklejulez wrote:

I also feel that enough lessons were learnt last time round and I dont think the government would allow the effect this time round to be anywhere near as bad.

Are you serious? People learn nothing from the past. If they did they wouldn't be buying property because "it always goes up in value" when the monthly cash flow is negative. Look at the threads on here, the whole argument for investing is based on prices will rise - exactly like last time!

What do you expect the government to do? I would say the government has made it worse. They put puppet men on the MPC to lower rates last August, and that just pushed up prices further resulting in a greater chance of a crash.

Just like how Gordon Brown forced pension funds to purchase long term government debt bonds, hence pushing down long term interest rates. Yeah, nice one Brownie, destroy future pensions in the process. What about the billions pumped into shared ownership, thus pushing up prices.

This government fails to provide for the future, especially Gordon Brown. Look how he doubled North Sea Oil tax, which resulted in them cutting down exploration. The Gordon Brown says they should increase oil exploration in the area - why would they when he just increases tax!

This government could have introduced endless policies to prevent a crash. But no, they ignored this as voters loves "rising house prices".